I loved that the FT published a version of Cory Doctorow’s Marshall McLuhan Lecture in the FT Magazine. On the surface it seems so ‘unFT’ – both in style and approach – but it’s reflective of a lot of conversations I have with people in the tech and finance worlds.
They’re often called ‘Big Tech’ but the biggest tech firms aren’t just big, they’re ginormous – both in terms of their financial power and influence over our lives and politics. They’re Big with a capital B. And I don’t think it will last forever.
The backlash among activists and people in the industry has been going on for a while but as Cory points out, now the experience of users and customers (often advertisers) is getting worse and worse. At some point, people and Governments will break.
It strikes me that the moves by some of those large companies to do share buybacks and even (whisper it) pay dividends smacks of desperation. It’s a defensive play to prop up share prices for a bit longer and an admission that they’re not the best allocators of capital for innovation.
I think that leaves lots of space for new startups to create value in a more sustainable way. And if those startups learn what the current generation of giants forgot (that you need to be able to demonstrate that you have a positive impact on the world), then the future of tech is rosy. Those companies that success will still be big but not Big.
I’ve been working around the edges of machine learning and AI for many years now. We implemented some basic machine learning in the startup I was running in 2006 and I watched as many other startups implemented similar things during the 2010s. As an investor at BGV I’ve seen our portfolio companies use AI to differing extents to build successful businesses and have a positive impact.
So I knew that the recent spate of LLM innovation was coming. It’s impressive to see what companies like OpenAI and others have achieved. There’s something uncanny about the interactions you have with ChatGPT or Bard and the like and I’ve watched it already have an impact on the stuff I read.
Unfortunately, the most obvious thing in my case is inbound unsolicited marketing emails. As I’m fairly public about my contact details, I’ve always had a fair amount of speculative sales messages from recruiters, outsourced software development houses, lead generation and many other services that I just never use. It doesn’t get flagged as spam but I use software called Sanebox (itself an interesting application of machine learning) to filter it and then have a quick scan once a day.
In the last couple of months, the nature of those emails has changed. They are now mainly generated by chatGPT and the like. Because there is enough information about me and BGV in the public domain, they can ‘personalise’ the approaches in a way that wasn’t possible. I’ve also noticed a fair amount of ChatGPT generated posts on Linkedin, Twitter and the like. It’s an interesting twist to sales and marketing but it leaves me underwhelmed.
Despite how impressive the technology is, so far I’ve found limited use cases for ChatGPT in ‘doing’ any part of my job. I find it useful for sense checking and improving the quality of output but it’s not capable of fundraising or making investment decisions. It can help but it’s a long way from being a direct replacement for human activity.
I’ve been asked quite a few times in the last six month about the relationship between tech for good and AI. The short answer is that it’s no different from any other technology. A tech for good AI startup will set out to intentionally solve a particular social or environmental issue and it will measure its impact as it tries to do that. No other AI startup will be tech for good. You can’t accidentally be tech for good.
Part of the reason for this post is that I think ChatGPT and the like will lead to people writing less and that is a shame. Seeing it in action has spurred me to do something which I’ve been thinking about for a while and start blogging again.
I’m going to try to write a weekly post, usually about tech or impact investing. Maybe I’ll just be talking to the bots. Does anybody ready blogs anymore? I’m not sure!
Everything on the internet is wrong so don’t take me too seriously. But I hope it will help me improve my thinking which is something that leaving everything to AI certainly won’t.
Bad Blood is a fantastic book and an amazing journalistic feat. The drama is still playing out as I write this with the main characters facing criminal charges and likely to stand trial this year. Like Enron: the Smartest Guys in the Room it’s a brilliant set of lessons about how a company can be rotten but the system of investors and regulators forget to trust their sense of smell. And like the Enron book (in that case Bethany McLean who wrote an article in Fortune magazine posing a simple question — how, exactly, does Enron make its money?), John Carreyrou helped uncover the scandal — he’s part of the story, which makes it an even better tale.
It’s particularly interesting to me because in one version of the story Theranos could have been an amazing tech for good impact investment. It made me wonder how we would have reacted at BGV — would we have spotted the fake?
Theranos was founded in 2003 by 19-year-old college dropout Elizabeth Holmes. Her dream was to revolutionise medical diagnostics by creating a simple, cost effective way for people to get their blood tested from a tiny sample. If she had achieved that, it would indeed have had a huge positive impact on the world. The trouble is that it’s a very hard thing to do.
Holmes was joined at the helm of the company by Sunny Balwani, who made some money in the first dot-com boom and was also her boyfriend. Bad Blood is littered with examples of them making terrible mistakes and hiding information from people (including that they were a couple). Their paranoia was extraordinary — to the extent of fitting bullet proof glass in Holmes’ office and having people trailed when they left the company. What they were covering up for was that the technology they promised didn’t work.
In the business it’s known as ‘fake it til you make it’ and all tech startups do it to a degree. You often have to convince investors that what you’re going to do will be revolutionary before you’ve actually built it (after all you need their money to build the thing). One famous example is the video that the Dropbox founders created to judge whether or not it was worth building the software in the first place. But raising peoples’ hopes of better document synching is one thing — raising the hope of quick, painless diagnosis of diseases is another. Richard Waters is great on the subject in this FT piece.
All the signs were there with Theranos. But hindsight is a wonderful thing and there were many investors, customers and journalists who were duped. Holmes and Balwani got plenty of things wrong but it was the system that allowed them to gamble with peoples’ lives that was really rotten — and it still is.
It’s a strange story when Rupert Murdoch comes out of it pretty well. Despite losing the whole $120 million he’d invested he refused Holmes’ attempts to spike the story at the Wall Street Journal which he owned.
One aspect of the story makes me think we wouldn’t have fallen for it at BGV is that most of the investors seem to have made their decisions based on who else was involved. A classic case of groupthink. We’re always the first investor so don’t have the ‘luxury’ of seeing who else is investing. We also don’t invest very much to start off with so we get to work with teams (usually in very close proximity) before we decide to invest larger amounts. I’d like to think we would have worked out that the Emperor wore no clothes in this case. And finally we’re very sceptical of ventures that insist on secrecy — we think there’s an important link between true tech for good and openness and transparency.
2018 was the year of tech for bad. An annus horribilis for the reputation of the big tech companies and mistrust of the technology industry. I fear there’s more of that to come this year with new revelations and scandals.
But on a more positive note, we’ll see tech for good continue to grow in 2019. At BGV we meet more and more founders wanting to solve the world’s most pressing social and environmental problems and that’s why I’m still optimistic. If there is a market correction (aka a crash), tech for good companies will be the ones that prevail. The motivation of the founders and teams is just so strong.
Here are a few areas that could be interesting this year.
More fintech for good
Now that the hype cycle of blockchain has started to pop, we’ll actually see some useful and beneficial applications of distributed ledgers. I have to admit we usually groaned when teams tried to shoehorn blockchain into their applications to BGV in the past, but I’m more interested now it’s less sexy.
Plastic alternatives
The plastic problem is much worse than people thought and pressure on companies to replace plastic in their packaging and products is intense. Our own Panda Packaging is part of that charge.
Agritech will grow
Agriculture is responsible for about a quarter of greenhouse gas emissions and lots of old techniques for increasing output seem to be coming to the end of the road. We’ll see more meatless foods being created (animal production is accounts for 70% of agricultural land use) and completely different ways of growing crops. BGV company LettusGrow is doing great work on this and Farmerama is a fantastic way to learn about new approaches to farming.
WorkerTech starts to work
WorkerTech really seems to be growing in profile now. As precarious work (sometimes caused by technological change) has grown so have the effects on income security, health and mental health. We’re seeing more and more good ideas for ventures to use tech to help tackle this. Organise, LabourXchange and WorkerBird are just three.
More chief ethics officers
While ‘what’ you do is important in tech for good, ‘how’ you do it is just as vital. Big tech companies are starting to do this by hiring new people to set policy and interrogate the way that products and services are created but it’s important for startups as well. New frameworks to help are beginning to emerge.
Funding options diversify
While the way we tackle social problems and start businesses has changed rapidly over the past decade, traditional forms have finance haven’t (think bank loans, grant making and even venture capital). I’ve got a feeling there will be greater diversity of funding models for tech for good in the future. Take a look at the Indie.vc model for one early sign of new approaches.
It’s struck me for a while that there are similarities between really good investors and great investigative journalists. The most obvious similarity is that they both ask good questions but I think there’s more to it than that.
As a journalist you have to uncover a story that nobody else has told. You have to zig when others zag, not just to be contrarian but because you believe in the importance of the story even though nobody else might at the time. I’ve lost count of the number of movies where journalists have to convince their editors that the story they’re working on is worth pursuing (why is it that editors always come in for stick?). Journalism is often a fairly lonely business in the early days of a story. You might get a big team working on a story once it has grown but when you’re finding out about it for the first time, it’s one or two people.
There’s also their role in uncovering information. Both professions rely on hard facts and those facts might not seem hard when you first come across them. In the case of journalism, it might be that somebody is trying to hide facts from you. In startup investing, it’s often that even the founders are struggling to spot the hard facts themselves. It takes pattern recognition to notice when things are really important and when things are inconsequential.
Then there’s the importance of telling the story in both professions. For journalists that’s obvious — if you can’t tell the story well you’re not going to get very far. But as an investor, the process you go through is one of helping founders to tell their own story to customers, other investors and the outside world. I think this is even more important for impact investments where the story of the positive social or environmental effect that the company’s product or service has should be an integral part of its value.
There’s a similarity in the temperament of great journalists and great investors that I’ve noticed as well. Both are hooverers of information — they read huge amounts and are constantly are looking for the next story/venture. They know that many of their investigations will come to nothing but all of them are good lessons.
“It’s unpleasantly like being drunk.” “What’s so unpleasant about being drunk?” “You ask a glass of water.”
― Douglas Adams, The Hitchhikers Guide to the Galaxy
I’ve been thinking a lot about our relationship with alcohol recently. This article in the Economist about alcohol misuse in America particularly peaked my interest.
Between 2006 and 2010, an average of 106,765 Americans died each year from alcohol-related causes such as liver disease, alcohol poisoning and drunk driving — more than twice the number of overdoses from all drugs and more than triple the number of opioid overdoses in 2015.
The trend, particularly among women, minorities and the elderly in America is getting worse.
That’s not good because the health implications of alcohol are, as the article implies, very bad. David Nutt is one of the most interesting scientists in the field and in this programme for the BBC he talks about how alcohol would fare in the current testing regime for drugs were it to be tested for the first time today. His conclusion is that by current standards we would recommend something like one glass of wine a year.
The social implications of alcohol are no less problematic. The total tax take from alcohol is about £11 billion but the costs of policing Friday and Saturday night drinking hotspots is billions alone, not counting the impact of crime on citizens.
At the moment Brits drink more than Americans, but the trend on this side of the Atlantic is in the opposite direction. Each year we’re drinking less.
BGV portfolio company Club Soda’s Mindful Drinking Festivals and have tapped into this brilliantly. There are a whole host of new drinks companies springing up and the established brands are also creating new product lines that cater to people who would rather remember their evenings. It’s interesting to watch the large drinks companies realise they have a problem.
I do drink but I’m also acutely aware that alcohol is a habit and the amount I drink is socially influenced, particularly when it comes to work events. I totted it up and I go to nearly a hundred work-related evening events a year and alcohol is the norm. Although it was a bit awkward for us (as Nesta is one of our investors), I did like Laura from Club Soda’s public return of their New Radical Award. Nesta aren’t the only culprits of this but she’s absolutely right.
While we always make sure there are non-alcoholic alternatives at BGV evening events, we do still assume that some people will want alcohol. Perhaps we shouldn’t. This piece by Bethany Crystal at USV got me thinking — it sounds like a worthwhile challenge to create clear-headed evening events.
It’s ten years since we began running Social Innovation Camps, the precursor to Bethnal Green Ventures. We created them because we wanted to help people use their technology skills to have a positive social and environmental impact. Our eventual aim was to help tech for good become mainstream.
So how far have we come? Are we any closer to making tech for good the norm? Well, yes and no.
Industry events are a pretty good way of judging the temperature of the tech sector and I’ve been to a lot recently. My impression is that interest in tech for good has definitely risen up the agenda at the big tech events like Slush, Web Summit, SXSW and VivaTech.
I remember a BGV portfolio company founder telling me about their visit to Web Summit in Dublin four years ago. It was a pretty depressing experience. They were dismissed as ‘charity’ and there was even an out-and-out argument with the founder of an ‘adult’ dating app in another exhibition booth who was firmly in the ‘business of business is business’ camp. I don’t think his business is in business these days.
Thankfully those arguments are much less common these days. Tech for good startups and positive discussions about social and environmental impact are commonplace now. I’d say we’re at the ‘promising support act’ stage, usually on panels away from the main stage. The people who come along to the talks are those already in the tech for good sector as well as those who are finding out about it for the first time. Each time I get a note afterwards from somebody saying ‘I wish they’d do more of this stuff’ or ‘how do I get involved?’.
At Web Summit this week there were whole areas given up to social impact and a day of ‘planet tech’ talks which was very good. As I mentioned yesterday, the tech for good startups I met in office hours showed great potential.
Then you can look at what the big companies are doing. It’s great to see companies like Facebook and Google starting to support the profit-with-purpose side of tech for good. Both run programmes for tech for good startups in London. The Campus Residency for Google and LDN_LAB ‘Deep Tech for Good’ for Facebook. We’re involved in both.
Investors are starting to join the movement too. I’d say it’s mainly limited to new investors starting firms rather than existing ones changing strategy. A few of the mainstream VCs have made occasional investments in impact companies. But it’s only when a big successful VC decides to become an impact investor that we’ll have won that battle.
Sometimes I get asked what percentage of startups are ‘tech for good’ and I don’t have a good answer to that I’m afraid. All I know is that there are more than there were. My definition of a tech for good venture is one where it’s the explicit intention of the founders to have a positive impact. So being ‘medtech’ or ‘edtech’ doesn’t necessarily put you in the tech for good boat. You can create a startup in those sectors that reinforces existing problems or inequality — and isn’t ‘for good’ at all.
So there are many positives but tech for good isn’t mainstream yet. I’d give us 6/10. It’s a good start.
If there’s one thing guaranteed to make me angry, it’s investors hating on startups. I’ve been at Web Summit in Lisbon this week and I’ve heard quite a lot of it. Usually it’s investors talking to other investors, make a negative comment about a particular idea or rolling their eyes about a founder or a pitch they’ve heard before.
Usually they do it in private but it’s also become more common in public. I’ve noticed a rise in investors posting moans about founders disguised as ‘advice’ — but really they’re just being disrespectful to the people who make the tech industry anything at all.
Not all investors are alike of course. There was a dinner for VCs on Monday night in a spectacular venue in Lisbon and I got chatting with an investor from a firm that I respect. We commented on how privileged our position is. We get to see the firehose of positivity of founders as well as exposed to the future before most people and we get to play a small role in helping the best firms make it. It’s no surprise to me that everybody wants to start a fund. Investing is a huge amount of fun and even though it’s not a very reliable way to make money, it’s a unique opportunity to have an impact. And the chances are that you’ll learn a lot too.
I met with ten startups for Web Summit office hours this morning — they were all trying to do brilliant things. The founders were passionate about education, healthcare or improving the environment. I wasn’t the right person to help all of them, but I hope I was supportive and positive right back at them even if I couldn’t help directly.
We should never forget the whole tech for good sector (and tech sector more widely) is completely reliant on founders. They give up a huge amount with often very little reward. They take the biggest risks. They feel the heartache of failure most acutely. I think it’s our responsibility to be positive and supportive.
Less snark, more generosity. That’s what I’m hoping for.
I stumbled across Five Books this morning. It’s a fantastic archive of interviews with people who recommend the best five books on their chosen subject. It ranges from Diane Coyle talking about the best economics books of 2016, through to Tyler Cowen on the best books about information theory or Jeremy Mynott on the best books about birdwatching. Whether or not you agree with their picks, it’s a real treasure trove with over a thousand topics covered so far.
It got me thinking about what my five books would be. I think I’d choose ‘values and invention’ as my topic at the moment (with a bias towards understanding how we can create the most positive social change from digital technologies) and my five would be:
The Lunar Men by Jenny Uglow is the story of the pioneers of the industrial revolution who met on the full moon each month in Birmingham in the 1760s to swap ideas and invent the modern world.
Where Good Ideas Come From by Steven Johnson is the best explanation of how we think innovation happens. Spoiler alert: it’s not the way that governments and big companies think it does.
What the Dormouse Said by John Markoff explains why Silicon Valley is a pretty confused place ethically. The mixture of military money and 60s counter-culture made for some strange ideas.
The Making of the Atomic Bomb by Richard Rhodes is the ultimate history of how the brightest and best scientists and engineers of a generation found their skills put to work on something that almost none of them thought was a good idea in the end.
Microserfs by Douglas Coupland is an ordinary (and very funny) tale of what it’s like to work for a technology company when nobody really asks why you’re doing what you’re doing.
I’m in America so in honour of my hosts I’ll skip the ‘u’ in labour for this post. Yesterday was Labor Day here which — because I had the day off — got me thinking about what work and labor mean today.
The nature of work and the way it’s organised are two of the biggest issues we face in the twenty-first century. Both are hugely intertwined with technology because very few jobs have been untouched by the information age and we’re now really starting to see changes in the way that work is organised, particularly because of the ubiquity of mobile phones.
This throws up some big questions about the negative impacts we’re seeing like conditions for workers in the gig economy, the debate about automation and the inequality created by tech companies themselves.
The gig economy companies know that they’re in the front line of the upcoming wave of regulation of tech companies that will almost certainly come. If that’s done well (big ‘if’ there) and we avoid monopolistic behaviour amongst the platforms I think things could improve.
Gavin Kelly has done a great corrective job on media hyperbole on how many jobs will disappear because of automation. It’s a risk of course but I agree with Gavin that it won’t happen as dramatically as some reports have said. There’s a big opportunity for automation to create better jobs if it’s done well.
Inequality is a much more difficult issue with no simple answer. I was struck by this graph which is an example of correlation rather than causation but striking nonetheless.
Fred Wilson has written about Union 2.0 and that’s an area I’m really interested in. At the moment though I’m not convinced that existing large unions are where the change is going to come from. They seem to feel they have a lot to lose and are unwilling to take big risks with new services. Ideally new unions should provide services for workers that have network effects.
I’m still to be convinced that UBI is an answer to rising inequality. I get the appeal of it but, as soon as you get into the detail, unintended consequences abound. I think the experiments in Oakland, Finland and Canada are great but I’m not sure they’ll give answers that are particularly transferrable.
At BGV we’ve been searching for and funding startups in ‘workertech’ for almost a year now and have found all kinds of interesting ideas. It’s been really great working with the Resolution Trust who care so much about the issue and have access to amazing data, particularly on the economics of modern work. It’s made me an optimist that things will change for the better as I’ve met so many people who want to make a difference in this arena but there’s still so much more to be done.
