Seattle Week in Review: VC Culture, Income Tax, Ayn Rand
The tech industry’s sexual harassment problem—and some potential avenues to address it—came home to Seattle this week. Meanwhile, pet services company Rover raised $65 million, A.I.’s impact on global GDP could be $15.7 trillion by 2030, and the city approved an income tax on high-earners, likely to be challenged. We’ve got more details on all of this, including a look at whether tech employers in Seattle are using the lack of an income tax as a recruiting tool. Read on for details.
—Redfin, the Seattle-based tech-focused real estate company preparing for a $100 million IPO, is orchestrating a new campaign to diversify startup company boards of directors. For its #DiverseFromTheStart campaign, Redfin enlisted big names in venture capital—DFJ, Greylock Partners, Madrona Venture Group, and Pioneer Square Labs—and Boardspan, a company providing software and advisory services for boards of directors.
“The venture firms will encourage new portfolio companies to recruit an independent, diverse board member within two years of institutional funding,” write Redfin CEO Glenn Kelman and chief technology officer Bridget Frey in a post outlining the initiative. They will begin encouraging the practice with investments made beginning in September.
Redfin supported the campaign with research suggesting that while some modest progress has been made in gender diversity at venture capital firms, the startup companies they invest in have not moved the needle. A startup company’s early decision-makers have an outsize impact on the company culture—including on issues of diversity and inclusion, Kelman and Frey write.
“But the startup stage is also perhaps the least-appealing stage for diverse employees, especially when a startup embraces a raw, Wild West culture that isn’t far removed from a founder’s apartment,” they add. “It is exactly these companies, and their founders, who most need other perspectives on their board, as a sounding board on what customers want, and on how to develop the management team as leaders and managers.”
This essay by Mitch Kapor and Freada Kapor Klein calls VC culture broken and questions whether it can be saved. Describing venture firms’ reactions to past allegations of misconduct and harassment as “a rush to roll out platitudes and quick fixes that, however well-intentioned, don’t address any underlying causes,” the Kapors—direct investors themselves, as well as limited partners in a dozen funds—see the VC industry as stuck with an entrenched values system that has enabled unacceptable behavior by men in positions of power. “The combination of the single-minded pursuit of wealth above all, paired with a culture that looks the other way at its bias, elitism, and lack of accountability has become a combustible mixture,” they write.
They do offer specific solutions for LPs, VC firms, and startup founders.
Also see Xconomy San Francisco editor Bernadette Tansey’s look at the ways women in technology are using professional networks to support each other as the tech industry confronts these issues.
—Seattle-based pet services company Rover raised $65 million in new funding from investors including Spark Capital, whose general partner, Megan Quinn, joins the company’s board as its second female director. Susan Athey, economics of technology professor at the Stanford Graduate School of Business, joined Rover’s board in 2016, a company representative said via e-mail. The new cash comes a little more than three months after Rover acquired its top rival, DogVacay. We used up all of our dog puns in that story, so here’s some detailed coverage of the new funding in GeekWire.
—The Rover investment is the largest for a Seattle-area company this year. We broke down VC funding stats for the first half of the year based on PitchBook data. Seattle has seen an increase in deals and investment compared to 2016, countering a national trend.
—Microsoft emphasized the societal benefits and ethical controls surrounding its 7,500-employee A.I. push this week. But artificial intelligence is also undoubtedly a huge business. PwC released a report Wednesday with an eye-popping number for A.I.’s potential contribution to the U.S. economy by 2030: $15.7 trillion, mainly resulting from increased productivity and automation—which will benefit manufacturing-heavy China the most—and increased consumption of personalized and higher-quality goods, as Bloomberg reports.
—The Seattle City Council unanimously approved a new citywide income tax on high-earning individuals and families. It would tax income above $250,000 for individuals or $500,000 for families at 2.5 percent. A legal challenge is certain. State Supreme Court rulings from the 1930s defined income as property, rendering its taxation unlawful under Washington’s constitution.
Washington companies, including tech employers recruiting talent away from states that do have income taxes—such as California—have, in the past, used the lack of an income tax as an additional enticement to move here.
I asked Seattle-based augmented writing startup Textio, which recently raised $20 million from investors, to look into its trove of data on millions of job listings for any insight into whether the “no income tax” issue is raised more frequently by local employers today.
They found that job listings in five other states—Nevada, South Dakota, Wyoming, Alaska, and Tennessee—mention “no income tax,” “tax free state,” or “no state income tax” more frequently than those from Washington companies.
“Generally, what we’re finding is that it’s not particularly prevalent in Seattle or in the tech industry,” says Textio’s communications director Marissa Caughlin. Large tech employers based here do tout other local attributes to entice out-of-towners to take jobs in Seattle, such as kayaking on Lake Washington.
The most common job type that mentions a lack of state income tax is in healthcare, according to Textio.
And, since 2015, Textio found a decrease in the number of listings that mention no income tax both nationwide and in Washington.
Seattle’s tech economy has grown so dramatically recently that perhaps the lack of an income tax is no longer the necessary enticement it might once have been. And, anecdotally anyway, it sounds like many people moving here for tech jobs are already aware of the situation. Both Coughlin and the Textio data scientist who looked into the issue moved here from states with income taxes, and both were already aware that Washington had no state income tax, Coughlin said.
—Not surprisingly, the income tax vote sparked a range of responses, including this one from former MTV VJ Kennedy, now a Fox Business Channel commentator, in which she described our fair city as a “socialist hellhole” led by “do gooder authoritarians.”
— FOX Business (@FoxBusiness) July 12, 2017
This was my first encounter with Lisa “Kennedy” Montgomery since the 1990s, and I was surprised that the diatribe was mouthed by someone who existed in my memory as more liberal than libertarian. (And also not so mean. We’re still morning Chris Cornell, Kennedy.) Though she was apparently a lifelong conservative—this is all according to her Wikipedia entry—Kennedy kept her political leanings to herself during her early MTV days. She embraced a more libertarian worldview after reading Ayn Rand at the suggestion of Kurt Loder.
The writing and philosophy of Rand, of course, have also been adopted by many political, business, and technology leaders, as James B. Stewart chronicles in a New York Times column Thursday. These include President Trump, Secretary of State Rex W. Tillerson, hedge fund magnate Ray Dalio, Whole Foods founder John Mackey, and, until his recent departure for self-reflection, Uber founder Travis Kalanick.
An interesting note in Stewart’s column: Amazon founder Jeff Bezos, “who, while often likened to a fictional Rand hero, has not mentioned her books when asked about his favorites.”
That was all a set up for this:
—Speaking of the modern Randian avatar, an image of muscled Bezos at the Allen & Company retreat of global elites in Sun Valley, ID, made the rounds this morning with all manner of backdrops photoshopped in. Here’s one:
Here you go. pic.twitter.com/A7QMSyfxnH
— Jesse Lansner (@Jesselansner) July 14, 2017
Have a great weekend!