The Fourth Stakeholder In Tech

Silicon Valley and the tech industry have been getting considerable heat lately. The San Francisco housing crisis and gentrification in the Bay Area are some common examples. It doesn’t feel good — especially to a hard-working, risk-taking community committed to not only building big businesses, but making the world a better place.

The tech industry has done much to improve the standard of living, health and prospects of the Bay Area. But not everyone has benefited. We need to open our eyes to the full impact on the community in which we operate and live — and provide it greater empathy and support than we do.

We are among the most fortunate people in the history of the world. The average salary for a software engineer in the Bay Area is $103,367. That puts Silicon Valley’s “average Joe” in the top 20 percent of American wage earners. The distorting effect of large inflows of this kind of wealth into the Bay Area’s communities is hard to overstate. It’s time to take responsibility for the changes — and yes, the pain — we’re inflicting on our local communities.

The tech industry has a responsibility to do something about how Silicon Valley and San Francisco are evolving, and the displacement we’ve created. Each and every company has an impact on the people who live here — whether that’s on their health, homes, well-being or environment. We can’t be cavalier about the grim prospects many of the Bay Area’s low-income residents face. All businesses have a responsibility to their stakeholders — investors, customers and employees. We have to start thinking of the members of our community as stakeholders, too.

What’s the problem?

Silicon Valley grew out of the humble dreams of a Stanford engineering community, fighting off the hubris of hierarchy and gleaming office towers in the early days of Hewlett-Packard. But with each innovative wave of investment and growth, the impact was more pronounced. Back in the 1980s, the South Bay and Peninsula used to be home to not only chip fabrication facilities, but also fruit farms. PC computing was just starting to attract new workers and capital. Those were exciting times — except for those who depended on the fruit trees for a living.

Fast-forward a few decades and the landscape has completely changed. Rapid growth has turned many scrappy little startups into massive corporate campuses that dominate whole communities. Mid-size and newer companies are now taking hold wherever they can find room. And let’s not discount that younger people today tend to prefer living in urban areas. Nationwide, outlying tech suburbs are now slowly but steadily encroaching on their nearby metropolitan cities.

Expansion into already crowded and pricey markets has led to skyrocketing costs for housing and property rentals, with San Francisco taking the title for the most expensive area in the United States. Some bemoan the uncertainty facing  “unicorn” tech companies. But we should be equally mindful of the tremendous social costs that came with overheated valuations, among them homelessness and the threat of displacement.

Legions of people are underemployed in low-paying service sector jobs which, when combined with our region’s soaring rents, put them at substantial risk of homelessness. Last year, San Mateo County’s rents increased by 8.2 percent, making the county the highest cost rental market in the nation — tied with San Francisco and others.

The tech industry has a responsibility to do something about how Silicon Valley and San Francisco are evolving.

Now, it’s nearly impossible for someone who doesn’t make a lofty tech base salary to move, live or rent in our community. The Economic Policy Institute — which is admittedly left-leaning — calculates that the average two-parent, one-child family needs to earn $84,490 to get by. Fortunately for many tech employees, they take home well over that minimum.

But plenty of residents, unfortunately, do not. Recently, I was with my wife just east of Highway 101 near her office in Menlo Park. She pointed out dozens of large vans. She has worked in Bay Area non-profits for the entirety of her career, and currently works for LifeMoves (formerly InnVision Shelter Network), which helps the Bay Area homeless get back on their feet. She explained that these vans belong to a new breed of working homeless commuters. They live in Stockton or other lower-cost cities, drive to the Bay Area on Monday, work in construction and drive home on Friday. They are the “part-time” homeless.

In the short term, the tech industry has dislodged and disrupted local residents. In the long term, those transitions are painful. While this displacement might not be as visible as the homeless encampments under the 101 overpass, it’s still happening. And of course, a growing tech industry in the Bay Area means some job opportunities for those with non-technical skills. But many industries that no longer can afford to operate here, like manufacturing, are forced to migrate outward. That means more job loss, retraining efforts and mass migration from a city that so many have called home for years.

I’m the CEO of a tech company myself — and have been in this industry for the better part of two decades. I’m part of this too, and that’s why I feel strongly about it. I see all too often a point-of-view gap in our line of work, and it’s not on purpose. But it’s up to leaders in our community to convey how important this issue is, how much we should all care and why it’s our duty to do something about it.

So how can we help?

No matter the ups and downs, the tech industry is still booming. It’s a sector awash with capital — many of us even make enough money to donate portions of our own salaries to local organizations right off the bat, regardless of how our companies are doing or whether they’re profitable yet. We don’t have the excuse that older, slower-growth, less-valuable industries do. In fact, this makes our responsibility to do right by the community even greater.

As an industry full of talented people, we should share what we know.

If nothing else, businesses in the tech industry have a responsibility to help fund these organizations and account for the changes they have fostered over time. When Marc Benioff started Salesforce, he pledged to donate back to his local community one percent of profits, one percent of equity and one percent of employee hours (now widely known as the 1/1/1 Pledge) — and many other large tech companies, like Google, followed suit.

But for venture-funded startups indebted to investors and their backing, it might be difficult to help out financially. At a minimum, startups can encourage their employees — who, again, are handsomely compensated — to give of their money and their time and get involved. Volunteer. Hold a food or fund drive, as Jobvite employees do annually. These are all ways to get people to stop, think and start caring. We also can do something involving our skills.

As an industry full of talented people, we should share what we know. Tech workers must work to inspire young people to learn programming or practice coding — critical skills that will prepare them for successful careers down the road. If we work harder to help young people envision what going to college or a career might look like, they’ll have more concrete and attainable goals to work toward.

We also have the power to meet halfway those affected by this displacement. We can do our best to combat the difficulty of re-training through internships or job fairs. Apprenticeships, where companies couple on-the-job training with some kind of educational plan, are growing popular in other countries like Germany. This is a model we can adopt here.

No matter the form it takes, we have to acknowledge our impact. We need to realize that by giving back to the communities in which we operate, we are doing a tremendous service to both the people within those communities as well as our own companies, employees and all our “stakeholders.”

Especially now, in the face of fewer IPOs, lower valuations and a potential tech industry slowdown, downsizing and layoffs could become an even harsher reality for even more people — so now’s the time to act. This is how we become less “to blame” and more “responsible” for evoking positive change. This is how we create a cycle of improvement that lasts.