As Software Eats Up Jobs, Startups Need To Consider Ethics Of Marketplaces

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The Valley Has Nothing To Fear But Fear Itself

Anger can be a deeply chilling emotion when coursing through politics, and we have witnessed our fair share of it over the past few years. In San Francisco, we watched as protesters blocked buses, broke Google Glasses and demanded billions in compensation in front of tech executives homes. Nationally, we have seen the frustration of millions across the country through the Tea Party and Occupy Wall Street movements. More ominously, far-right parties had one of their best performances in this week’s European elections, with many voters expressing discontent over the direction of the continent.

It’s easy for us in the startup world to choose to be ignorant about these changes in our society. Frankly, political protests and debate isn’t generally relevant in our day-to-day work, since building startups is about engineering, product management, marketing, and sales. Politics has little value, except for startups in spaces like Bitcoin or healthcare that directly target regulated industries.

Today, employment is the most important issue in the world. Founders seem to understand that, given the interest I have heard from them over the past two years in several dozen different conversations. And really, how could they not? While we talk enthusiastically about disruption, we all understand that there is someone on the other side of our product’s efficiency who might well have been automated out of a job.

We haven’t had successful labor marketplaces until recently, but now we have several, and dozens more that hope to find gold. That means we have thousands of people across the United States and globally who rely on the startup community for their paychecks. As our influence has grown though, we have failed to take a leadership role as a community in ensuring that our marketplaces are ethical for workers.

As I alluded to in my inaugural column, there is increasing tension between the progressive vision laid out by startup founders, and the desires of workers to avoid displacement and poverty. However, we do have an opportunity to set the tone for the rest of society. We can choose to build our businesses in ways that are more fair than existing companies, which can put us again in a positive light.

One of the challenges when discussing policies and politics in the startup community is that our values often don’t have to be defined to build our businesses.

One of the challenges when discussing policies and politics in the startup community is that our values often don’t have to be defined to build our businesses. Many of us come from an engineering or technical background where a focus on pragmatism in the search of solutions is the key to success, not philosophical discussions of right and wrong. Few engineering programs require a rigorous examination of the ethics of our work, and those that do have courses usually keep them light.

Unfortunately, engineering is deeply political. Our products interact with our society, and thus, society’s politics become our own. Think of the way that some social networks require real names, or that a labor marketplace pays all of its laborers as contractors, or that an enterprise sales platform builds for large companies over small businesses. None of these, necessarily, has a positive or negative valence. But all of these decisions have a political import.

Given that political nature, I think it is worth the effort to debate more openly about what exactly workers should expect from our marketplaces. I realize that developing a series of values for startups approaching the labor space is fraught with danger. There is incredible diversity in work that can be done through labor startup services, and thus, any set of values is likely to have exceptional cases.

Nonetheless, I feel it is appropriate that there at least be some guideposts to think about when designing a labor marketplace, or using the labor of anyone as part of a startup. I have developed four such guideposts, which I hope can spur more discussion about what labor marketplaces can do for laborers. It is clear that we need a wider debate, although there doesn’t yet exist a good forum for this sort of discussion.

The first principle is around stability. People need stability in their jobs in order to plan for the future and properly budget. Many startups like labor marketplaces or even large service businesses like fast-food chains place the burden of business instability on the laborers themselves, by forcing them to forgo income in times of diminished revenue. That might work well for the bottom line, but businesses also have the aggregate power to absorb the vagaries of the market for their workers. When designing payment systems, we should find ways of cushioning workers from the market where possible.

The second principle is around identity and credit. As our economy has become more specialized, it has placed increasing emphasis on the skills and experience of our workers. Getting credit for our work is key to our success, as it increases our likelihood of finding other work and therefore ensures our long-term economic stability. Yet, some startups don’t allow workers to get any credit for their work. Instead, the worker is meant to be an anonymous figure who does work behind the scenes. This is deeply unfair, and unnecessary. Workers should always be acknowledged for what they do, and should benefit from the success of their work as much as the startup.

The third principle is around due process and fairness. Many startups engaging with workers use reputation systems to build fair marketplaces. Yet, the rules for these marketplaces often are mercurial or completely non-existent. Workers may be fired without cause for any reason, and there are few protections. While there are no unions for these workers, we do have a responsibility to ensure that people have the opportunity to hear complaints and improve their performance.

The fourth and final principle is around advancement. Too many startups create class distinctions between their workers in the field and the workers in their headquarters. Part of that, I am sure, has to do with the notion of “building culture” that is so important for founders. But that distinction between workers on one side and startup talent on the other can be toxic and ultimately deleterious to a startup’s growth.

Companies should promote diversity, ensure safe workplaces, provide grievance methods through human resources, and others required of all employers in the United States.

As great performers are identified, consider ways of providing them more responsibility. For instance, a top worker may understand how to use a startup’s platform better than almost anyone else, and could be an excellent product manager to improve the product with their unique vantage point. Regardless of the path, startups should move beyond rigid castes to create ways for everyone in the company to contribute more value.

Beyond these four values, there are others that are obvious yet deserve repeating. Companies should promote diversity, ensure safe workplaces, provide grievance methods through human resources, and others required of all employers in the United States. It goes without saying that we in the Valley have not always lived up to these minimums, and we must.

Building a set of values for our labor marketplaces is important because it gives founders building their businesses a reference on best practices. I have introduced four initial values, but don’t expect these to be comprehensive or complete, but included them because they are among the first choices a new founder has to make in building a startup that uses labor. Certainly, some startups do particularly well by these values, while others could definitely improve. Either way, they provide the means of thinking about how to support a strong labor force while building a great business, and I hope to see more discussion of this in the future.