Rana Foroohar’s deeply reported new book takes direct aim at the financial industry and calls for a new compact between business and society.
Every so often a book comes along that works its way into a majority of the interesting conversations you have with both friends and colleagues. Such is the case with Rana Foroohar’s Makers and Takers: The Rise of Finance and The Fall of American Business. Foroohar was kind enough to send me an early draft to read several months ago, and I found myself quoting from it in nearly everything I subsequently wrote, in every talk I gave, and even in various Slack channels at work. Makers and Takers is that rare work of journalism that both appears at a fortuitous moment in history, and captures the essence of that moment’s core narrative.
Foroohar chronicles the rise of the financial industry and its destructive impact on the global economy. And she has the credibility and the chops to pull it off — over the past 15 years she’s covered the financial industry for Newsweek and Time. She’s been the global economic analyst for CNN for the past three years as well. Foroohar is not only passionate and opinionated about her field of work, she’s a lucid and compelling spokesperson for change in not only finance, but also in the purpose-driving business, and the social compact that binds us all as citizens in a global economy.
Austin voters have spoken — and Uber and Lyft have both left town. Officially it was about fingerprint-based background checks, but in reality it was about bruised egos and bad campaign tactics. Joshua Baer argues we need to get everyone back at the negotiating table for a fresh start.
My good friend and mentor Rick Westervelt taught me that when things go wrong, it’s usually not because of just one mistake or failure — it’s because three or four things all failed at the same time. If just one thing had gone wrong, you might have been able to recover, but when mistakes pile on top of each other it can become impossible to dig yourself out.
I believe that’s what happened with Uber and Lyft and the recent Proposition 1 election in Austin, Texas, a local election that pitted the ride sharing services against the city of Austin. In trying too hard to win over new voters, Uber and Lyft turned many of their strongest supporters against them.
Our Jobs Are Going Away. Why Isn’t That a Good Thing? Nearly nine million Americans make their living either as truck drivers or working in that industry — and that doesn’t count supporting industries like truckstops. It’s not hard to see that self-driving trucks are going to hit us like a human-driven truck. Scott Santens’s long, important piece traces the inevitability of self-driving technology and its impact on our economy. We’ve seen massive disruption before (the interstate highway system decimated small towns around the U.S.), so how can we prepare? Santens is an ardent basic income advocate, so that’s his solution for how to reap the benefits from the upcoming technology dividend. He concludes: “No one should be asking what we’re going to do if computers take our jobs. We should all be asking what we get to do once freed from them.” (Also by Santens this week and even more controversial: an extended take on why the recent AI-beats-human Go match shows that jobs are for machines, not people.)
Uber and Lyft: Part of the System, Not Just Disruptors More than 20 percent of people surveyed in major American cities sold their cars and didn’t replace them because they rely on a mix of car-hailing services and mass transit. So it follows that Uber and Lyft customers are more likely to use public transportation, according to a study by the trade group American Public Transportation Association. Hoping to increase its public transit ridership, Los Angeles County is considering a partnership with Lyft to connect commuters with the companies and share data. Washington D.C. — along with Boston the U.S. city with the lowest per capita car ownership and highest highest public transportation usage — is considering contracting services to transport people with disabilities via Uber. The UberACCESS pilot program connects disabled people to vehicles that can accommodate a wheelchair. On a wider scale, such a move could save billions of dollars. Becoming a fundamental part of a city’s transportation system is a nice way to position yourself for a driverless car future (see above). In cities where Uber hasn’t been well received, supplying rides to people with disabilities could be a step toward becoming a valued part of an existing system — not just a disruptor.
Uber Not Taking Advantage of D.C. Mess Also on the Uber-trying-to-be-part-of-the-solution tip: Yesterday’s hastily announced shutdown of the Washington, D.C., Metrorail system caused all sorts of annoyance, but Uber wasn’t the culprit. Yes, surge pricing came into effect, but it was capped at 3.9x (Washington Post). That’s an expensive ride, to be sure, but it’s nowhere near what happened New Year’s Eve, when Uber in some cities surged to 9.9x.
The Next Smartphone Revolution The smartphone wars are supposed to be in the last round, down to a limited number of platforms globally and carriers in each market. Nope. An Andreessen Horowitz chart we saw via a Benedict Evans tweet predicts that the market for smartphones worldwide will double by 2020. Commenting on it, Fred Wilson opines that this second mobile revolution “may be an opportunity for US-based VCs like me. But more likely it will be an opportunity for VCs and early stage investors who have had the courage and foresight to set up shop in these emerging locations.” We’ve previously identified this as “the biggest business opportunity on the planet.” Local and regional players are uniquely positioned to understand the next generation of services worth building — yet another proof point to our thesis that Silicon Valley won’t always be the epicenter of entrepreneurship.
Turns Out Airline Passengers Don’t Want To be Treated Like Cattle What happens when companies stop treating their customers poorly? You’re finding out if you fly Ryanair, the European discount carrier with a CEO notorious for calling his customers “stupid” and treating them accordingly. A dramatic turnaround in the company’s fortunes (WSJ) is being attributed to cutting fees, easing restrictions, and “telling staff to be less confrontational.” The company still has a long way to go in treating its employees better (the company chose to leave its Copenhagen base rather than follow local labor laws), but passengers, at least, are responding positively to the changes.
At TEDIndia in 2009 Jane Chen, cofounder and CEO of Embrace Innovations, asked the audience to close their eyes and imagine what might fit in their hands — an apple, a wallet, something small. Next came an image of a premature baby, not much larger than the hands holding it. According to the World Health Organization, 15 million babies are born premature each year. Embrace notes that more than one million die within the first month. For those who survive, some will suffer severe long-term health problems — diabetes, heart disease, low IQ. Chen said, “many of these problems could be prevented if these babies were just kept warm.” To date, Embrace Innovations has helped 150,000 babies across 10 countries with its simple, cost-effective infant warmers and an interesting business model — it’s both a nonprofit and a for-profit social enterprise.
Embrace’s first infant warmer — it looks like a tiny sleeping bag — started as a class project at Stanford University in 2007. The course, Design for Extreme Affordability, challenges teams of MBAs and engineers to develop affordable technologies for people living on less than a dollar a day. That year, Stanford asked students to design an intervention for neonatal hypothermia. It needed to cost one percent of what a traditional incubator cost (in the U.S., that’s about $20,000). Chen, along with Linus Liang, Naganand Murty, and Rahul Panicker, designed the Embrace Infant Warmer to help premature and underweight babies in the developing world. Together they founded Embrace and registered as a 501(c)(3) non-profit in 2008. Then they moved to India.
There are also petitions floating around the Internet to do things like have the comic-book character Deadpool host Saturday Night Live or deport Donald Trump to Mexico but those petitions aren’t binding. In California, where there are ballot propositions, this could become law. So far, 40,000 signatures have been collected. 365,880 are needed by June 28 to get the petition onto the ballot this fall.
The wealthiest corporation in the world and the most powerful government in the world are fighting over a single smartphone. And the future of our social compact with both corporations and government may hang in the balance.
While the U.S. government says it cares about just one phone — an iPhone 5c used by one of the San Bernardino terrorists that it wants decrypted — Apple says a judicial order to create a special operating system for the government creates a backdoor that threatens all of its customers’ privacy. It maintains it’s challenging an order from a federal judge to protect “tens of millions of American citizens.”
A new job title has emerged in cities around the world to advocate for night owls and young creatives. Night mayors encourages drunk people to keep it down, nurture the arts, and instigate neighborhood revitalization. Some appointed, some elected, night mayors act as an intermediary between nightlife industries and government.
Typically, when people in cities talk about carcass-eating vultures, it’s a joke about lawyers or developers or something, not flying scavengers.
In Lima, Peru, a team of actual vultures equipped with GoPros and GPSs are locating illegally dumped trash. The birds don’t just help spot areas where trash needs to be removed. Their work can help reduce disease or keep poisonous chemicals from contaminating local water, particularly in poor neighborhoods. A similar approach may be helpful in other cities with trash dumping problems, like Beirut and Bangalore. This idea came from U.N.-backed climate talks that focus on what cities can do to reduce climate change. Those talks, which started last year in Lima, continue this fall.
Robert Reich’s Saving Capitalism: For the Many, Not the Few is a readable rant that — should you disagree with Reich’s central premise — will elicit eye-rolls and summary dismissal. But while his well-known political ideology (he served as Secretary of Labor under Clinton) is on constant display, I found Reich’s book both timely and important.
I am drawn to any work that posits a better way forward, and as you might expect, I agree with Reich far more often than not. You have to be willfully ignorant to pretend our current economic system is equitable (Reich argues we’re in the “second Gilded Age”) or capable of creating long-term increasing returns. And while many in our industry cling to libertarian fantasies in which technologic silver bullets solve our every social need, back here on earth we need to do better than pine for the singularity. Fixing income inequality and the loss of the middle class requires hard policy choices and a re-framing of the problems at hand.