Venture Capital's FTX Mistake, Elon's Twitter Plan, Investing in Labor Tech— With Roy Bahat

Roy Bahat is the head of Bloomberg Beta, a venture capital firm that invests in companies building the future of work. Bahat joins Big Technology Podcast to explain why he — a VC — is investing in labor-organizing technology. We spend the first half speaking about how VCs trusted FTX, where the economy goes from here, and whether Elon Musk's plan for Twitter can work. Join us for a fun, lively discussion that takes some unexpected twists and turns. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Alex Kantrowitz?

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• 0:43Alex Kantrowitz?

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• 1:03Speaker 01

  LinkedIn presents.

• 1:19Alex Kantrowitz?

  Welcome to Big Technology Podcast, a show for cool headed nuanced conversation of the tech world and beyond. Our guest today is Roy Bahat. He is the head of Bloomberg Beta, an early stage firm that invests in companies working on the future of work. And Roy is actually one of the early guests on Big Technology Podcast. If you're a recent listeners, you can go back and check out our episodes. Thank you, Roy, for helping us kick this thing off the ground. And it's great to have you here today.

• 1:44Speaker 02

  Thank you. I feel like you're the one, you know, hosting good conversations. So you're the one helping the ecosystem. I'm just, I get to show up and talk with people I like and respect.

• 1:53Alex Kantrowitz?

  Awesome. Well, I'm stoked to speak with you today and the origination. So the reason why, you know, it seemed like it was a great time to have you back on is because you and I were speaking a little bit ago, maybe a few months ago, and you had mentioned that you had seen enough. Opportunity in labor organizing, that there was growth in labor organizing and needs in labor organizing, that the labor movement in the US and potentially worldwide was growing to the point where now there was a real opportunity when it came to investing in a technology that empowers that type of organizing. So I definitely want to spend most of today talking about that opportunity, where the software is going to be, that's going to enable this, and then the impact of labor unions being able to use that technology,

• 2:35Alex Kantrowitz?

  and whether they should, whether, you know, what the benefit is in terms of, you know, for workers, for management. We'll question all of that. First, though, I think we really should get to the news, because there's been so much news breaking in terms of the tech world. Just last week, we're recording this on a Friday, the episode goes live Wednesday, but, you know, we've seen that Meta laid off 11,000 people, Salesforce is going to engage in layoffs, Amazon is doing cost cutting, Twitter, of course, is this rollicking mess under Elon Musk, and FTX, one of the biggest crypto exchanges, is, you know, basically gone kaput overnight. So if it's okay with you, why don't we touch on some of these news stories, and then we get into the labor stuff?

• 3:19Speaker 02

  Yeah, my only worry is that by Wednesday, you know, will any of this even still be there for us to talk about?

• 3:25Alex Kantrowitz?

  Yes, so apologies to listeners if the world is no longer standing, and we-

• 3:29Speaker 02

  If the time machine is done poorly by us.

• 3:32Alex Kantrowitz?

  Right. But I think there are some things that will hold, including this FTX story, which will definitely have cascading effects, it's filed for bankruptcy. Right, you're an investor. How do investors, I mean, Sequoia had this big investment in FTX, they wrote this fawning, long profile of Sam Bankman-Fried, who was the founder and CEO, on their website. How do investors get something like this so wrong? What needs to go wrong inside a VC firm in order to support such a disastrous outcome, which evaporated 32 billion overnight?

• 4:07Speaker 02

  Yeah, I'm going to do my caveat first. My caveat first is, none of us can know what they knew or didn't know, what they were told or weren't told. We only say what folks are sharing in public. And, you know, these are firms with long track records of really good decision making, you know, and so on average, and in the venture world, on average, a weird thing is, you know, I like to say, it's not the kind of world where your batting average needs to be good, or even your slugging percentage, it's only about the tape measure distance of your longest home run, meaning if there's a chance the thing could grow by orders of magnitude, that can excuse a lot of failure. Now, at the same time, that means that sometimes you make big honking mistakes. What might have happened in this case? I'll give you

• 4:52Speaker 02

  scenarios. I don't know, and I don't want to speak to the specific firms, because I really don't know the details, but I'll just say, number one, there could have been fraud. We just don't know, right? There might have been material misrepresentations of actual numbers. The second thing is that interdependencies between the various entities that they were looking at investing in were just outside of view, and so they didn't consider them. In a typical, I mean, I tweeted the other day, you know, this is where VCs learn the difference between an income statement and a balance sheet. And in part, you know, I noted Sequoia said, well, you know, they had net income of X the year before. And it's like, yeah, you can be making money and still obviously be subject to a blow up if,

• 5:35Speaker 02

  especially if you're in a business like a financial technology business, where you have a ton of assets that are there to provide some safety cushion, but if they're not safe, then all of a sudden customers start withdrawing. It doesn't matter how much profit you made last year, you're out of cash.

• 5:51Alex Kantrowitz?

  Yeah. I mean, a Ponzi scheme's income statement looks pretty damn good until the withdrawals come in.

• 5:56Speaker 02

  That's right. And I don't, I have to admit, I don't fully follow the math of how this in particular could have been a Ponzi scheme. It looks much more like what CoinDesk kind of originally reported, but I'm not a deep expert. I don't know. But that's the way it could have been missed. And, and, you know, to be fair. Traditionally in the soft, so I see this as a function of a couple of things. One thing is it's a function of tech, big tech to, you know, podcast name notwithstanding, entering into new industries other than pure software provision. And because in a software business, this kind of stuff is easy. Software companies, to make a software company go bankrupt is actually very, very difficult because you don't really need to borrow money. Usually you usually raise it through equity capital.

• 6:39Speaker 02

  You, you can make it, by the way, it can go to zero, but, uh, but to have this kind of bankruptcy that's driven by having levered up assets basically doesn't happen. But as tech enters, financial services, real estate and other industries that have different kinds of capital requirements and complexity, there's all this stuff that we're just not in the habit of doing that we now have to learn.

• 7:01Alex Kantrowitz?

  Yeah. Are you, are your VC group texts now saying, oh, maybe we shouldn't have gone all in on, on crypto or people a little bit more wary of investing in crypto?

• 7:09Speaker 02

  No, I don't think anybody's really saying that. First of all, because I don't know how many people really went all in on crypto. I mean, obviously all the folks who went all in professionally on crypto, like, you know, they have, they had and have long-term views, you know, they knew crashes would come. I don't know, you know, Noah Smith was speculating that maybe this is more than just a crash of FTX that unwinds all of crypto. I have no idea that that may be the case. I, you know, I should acknowledge I continue to hold Bitcoin and ETH.

• 7:38Alex Kantrowitz?

  It is astonishing though, how many of these firms end up in the, in the death spiral mode. I mean, them, Terra Luna, Three Arrow Capital.

• 7:45Speaker 02

  Uh, yes. And so here's the other thing I'd say is again, not as a deep expert, it strikes me as a incredible testament to the success of US regulation.

• 7:59Alex Kantrowitz?

  Right.

• 8:00Speaker 02

  Because Coinbase so far seems to be fine. FTX US seems to be fine. And it's like, yeah, if you do all these things that were disallowed in the financial industry in the US a long time ago, like combine an exchange model withholding customer assets, guess what? Things could go boom.

• 8:17Alex Kantrowitz?

  Yeah, exactly. So, speaking of things going boom, there's also been this interesting moment where so many tech companies have, and I'm gonna, we have Ryan Peterson from Flexport, CEO, founder of Flexport, coming on next week. I'm gonna go into this with him in depth. So listeners, if you're interested, come in.

• 8:34Speaker 02

  I'm biased because we were the first, I think, to say yes, we wanted to invest. Oh, no, we're not just in there. We are in there.

• 8:41Alex Kantrowitz?

  Yeah. So, one of the interesting things that we're seeing is that so many founders and CEOs have expected the conditions in the pandemic to last forever. And that was something that was particularly caught my eye with Mark Zuckerberg's letter to employees after he laid off 11,000, that he said, "I thought these conditions would continue forever." And they didn't. And you see, you're seeing this, you know, not only in the layoffs, and there are, there are plenty of layoffs, right, like I mentioned at the top, but also companies' operating strategy, the way that they report to Wall Street, the way that they're viewed on Wall Street. Why do you think, so let's, I feel like you're really good at the macro take. So, on the macro take, why did so many firms, and I'm curious if this applied to some of the startups that you're working with, take this belief that the conditions

• 9:25Alex Kantrowitz?

  inside COVID would persist forever? Because we were eventually going to go back, you know, and start living outside of the digital world.

• 9:33Speaker 02

  Well, first of all, I don't know that what's happened is going back. You know, we're in this environment that did not exist before COVID either, of high inflation and all kinds of other stuff that feels fresh and new. It's definitely not what happened during COVID, but it's also not a return to what came before. One of the tragedies of companies is that the decision, the risk that may make sense for a company to take may be catastrophic for its employees. So, for example, if I'm sitting there thinking, well, will things like this, I'm sitting there in the height of some benefit to my company during COVID, and I'm thinking...

• 10:13Speaker 02

  Our condition is going to persist. Of course, nobody ever knows 100%. Everything is about judging risks and odds. But if there's a good chance it might persist, well, then I want to keep fighting to grow and hire as many people as I can and dot, dot, dot. And so, you know, getting it wrong, it might have been the rational decision at the time. And this correction might be rational. Like, that's not necessarily a sign of a huge error, other than the fact that it really harms employees, which is tragic and catastrophic for many, many people. And I used to have a more sanguine attitude about layoffs in tech, like, you know, even the 2008, 2009, you know, which I also lived through.

• 10:58Speaker 02

  It's like, well, you know, people in tech get laid off, but the vast majority of them end up in good jobs reasonably soon after. This is now at a scale where I'm not sure if that's the case. And so I think this could feel a lot more like layoffs in the auto industry.

• 11:14Alex Kantrowitz?

  Roy, you got me thinking about another thing I'm working on, which is how bad this could get. You know, I wonder if we're, you know, seeing all these layoffs, you know, there's one view that this is the end, just the necessary cuts that need to modulate back to where people, you know, companies need to be. And then there's another end that like, what it sort of feels like, you know, to me sometimes, which is that we're kind of in the roller coaster on the way over that first drop and, and things are really about to whoosh down, downward. What's your view on, on it?

• 11:43Speaker 02

  I don't do predictions. Ironically, given my occupation, if I pretend to-

• 11:48Alex Kantrowitz?

  But you have to have some sort of hunch in terms of-

• 11:50Speaker 02

  Yeah, no, no, not exactly. I don't have to have a hunch. What I have to have is a belief about the distribution of what might happen and prepare myself for various scenarios. No, I will. And I'll just say, you know, what, a couple of things I'm informed on by this. One, in a very narrow sense, is our business partner at Bloomberg Beta, Karen Klein, was, you know, set up the first soft bank fund in the US. Had to unwind a bunch of dot com one disasters like she was involved in shutting down Webvan. And so she's always like, listen, things could fall apart at any moment. Behave as if the wheels could fall apart at any time. And I was always, in part, as I learned from her, this like little mini doomsdayer who founders would be like, well, I'm gonna blah,

• 12:33Speaker 02

  blah, blah, blah. And I'd be like, okay, but you know, the world could fall apart tomorrow. And when COVID happened, I was like, I didn't want to be that right. But okay. So first of all, I believe that. Second, just a matter of personal stuff, a matter of personal perspective is, you know, I'm the grandson of Holocaust escapees. I know from family lore how bad the world can get. And so I always think, well, you know, what is the full range of possibilities here? And so do I think it could get much worse? Absolutely, it could. If you believed it was going to, would you take actions any differently? You know, most of the time, we're advising startups, raise as much as you can on fair terms from people you trust. Spend as little as you need to de-risk the next thing and then grow as rapidly as

• 13:18Speaker 02

  you can. And, you know, the companies that have upside down unit economics, we are very rarely involved in that kind of company because we're really careful about that. Can always happen. The companies that are, you know, borrowing a lot to push their growth at the risk of imploding, we're very rarely involved in part because we don't invest in financial services and some other domains that tend to be risky on that. So I just kind of believe in constantly having a stance of preparation for the unpredictable, even though it's a lot less fun than somebody saying to you, Alex, I know exactly what's going to happen. Here's why. And then a month later, if they were right, they retweet themselves.

• 13:56Alex Kantrowitz?

  Yeah, that sounds like half of Twitter. So

• 13:58Speaker 02

  Yeah, yeah. Well, the half, half of the Twitter that was, by the way, I've been thinking about like, you know, what dinner party would you want to go to with people living or dead? The Shabbat dinner or whatever it would be with Elon and SBF talking to each other about their last week. That would be a fascinating conversation. I saw this AI thing between,

• 14:20Speaker 02

  Slavoj Djijek, I don't know if he pronounces his name exactly, and Werner Herzog, I think, like an imagined infinite conversation between them. I'll take the imagined Elon SBF infinite conversation right now.

• 14:29Alex Kantrowitz?

  Well, it really would have been so SBF, I think, through an intermediary did reach out to Elon about investing in.

• 14:34Speaker 02

  Oh, yeah, those texts hit the airwaves.

• 14:38Alex Kantrowitz?

  Right. And Elon's response was like, does he have tons of money? And he did. But I don't think he ended up making the investment. But that would have been, that would have been wild if he was involved in this as well. Somehow that seems like it would have been poetic. But should we do maybe, I know we're doing like a mini podcast in a podcast, but this is fun. Let's roll with it. Should we do a couple of minutes on what's happening on Twitter?

• 14:58Speaker 02

  Sure. What do you believe?

• 15:00Alex Kantrowitz?

  I wanted to ask you, what is, so you are, as an investor, an optimist?

• 15:05Speaker 02

  Yeah.

• 15:06Alex Kantrowitz?

  What is the most optimistic take about what Elon is doing at Twitter right now? What would you say is the case that he's actually doing a good job?

• 15:18Speaker 02

  That is a beautiful question. And while I am not in the like fanboy of everything he says camp, he does say some things sometimes that really land. And somebody asked him, is he an optimist or a pessimist? And he said this thing about like optimism, pessimism, I don't think about it. I just get it done, something like that. And I kind of am somewhat the same way. But I do think there's a case. So I will, the case that he's doing the right thing. For sure, Twitter was wildly overstaffed.

• 15:47Alex Kantrowitz?

  Yes.

• 15:48Speaker 02

  And the costs needed to be cut. For sure, it lacked any product energy. And right now, say what you will, it's got product energy. It may be frenetic Tasmanian devil type energy, but it's got energy. And so the best case is that they discover some interaction that makes Twitter feel more rewarding for many more people.

• 16:12Speaker 02

  And that they do not ruin the ability of Twitter to have whatever détente it often had with bad actors. Maybe they even make that better because Twitter was a, you know, an awful place in many ways before for misinformation. And, and particularly for people, I mean, look, here we are, two white guys talking to each other. We have the easiest time of anybody on Twitter. But, you know, particularly for people from underrepresented groups, and that one of those techniques allows them to make enough money that it ends up being a going concern. I could care less what happens financially to the company. You know, I'm, you know, we have no interest in it financially in any way, shape or form. But as a user and

• 16:56Speaker 02

  as a citizen of the world, I care a lot about what happens to it. So I think that's the best case is that they basically Tasmanian devil energy and they hit something wild that ends

• 17:06Alex Kantrowitz?

  Right. And Elon keeps saying that the user numbers are hitting all time highs and he's released the charts. They've, this is like a once, I mean, a never seen before growth curve that Twitter's had.

• 17:18Speaker 02

  Yeah, I'm hesitant to call it a curve because that sort of implies even that word implies long-term trajectory. And I mean, look, rubbernecking at a car crash produces a lot of vehicles on the road, too. So it's just so hard to say. And I think I've tried, you know, one of the hard things about anybody visible and Elon as, you know, one of the most, if not the most visible people in certainly our neck of the woods, this happens is people tend to array themselves in looking at it along whatever tribal lines they find themselves. If you are team hustle porn, team, you know, white man genius brain, then you look at Elon and you're like, everything he does is brilliant. This is crazy. Of course, we need people

• 18:00Speaker 02

  sleeping on the floor in the office. And if your team eke power is too concentrated, then everything he does is terrible. And so I'm trying to be in a place where I look at it with open eyes. And I would say, he, if Twitter can be destroyed through shaky action, he's certainly testing that hypothesis. Certainly Twitter seems to be robust enough. Um, to withstand that so far, but we shall see.

• 18:24Alex Kantrowitz?

  Yeah, this verification thing is is an absolute disaster. You can't tell who's real, who's fake. I have really enjoyed the people who show up in the mentions.

• 18:33Speaker 02

  Totally.

• 18:33Alex Kantrowitz?

  And are calling me an idiot. And, you know, this militant defense of Elon, and they don't have the blue check. And I just respond, okay.

• 18:40Speaker 02

  Pay eight dollars.

• 18:41Alex Kantrowitz?

  Now pay eight dollars.

• 18:42Speaker 02

  Pay, now pay eight dollars. That's great. Yeah, I mean, it is. It is a bit of a disaster. It is a disaster.

• 18:48Alex Kantrowitz?

  Yeah.

• 18:48Speaker 02

  In terms of what's happening. And also, who knows where it's going to ultimately end up.

• 18:53Alex Kantrowitz?

  Exactly.

• 18:53Speaker 02

  A few days of disaster. I don't know. But what I'm really worried about is whether it becomes a more hospitable place for the awful. And I think, you know, one of the guys who's been engaging with Elon, I've just been watching in part because he's a founder who we backed is Amjad Masad. You know, engaging with him on Twitter. I don't know anything beyond that. Um, uh, who, who, Amjad had this theory that if users could pick their own algorithms, they would make better choices for themselves and have a better experience. That may be true. I think one of the questions of the moment is, under what circumstances do people left to their own devices choose hate? And when do they choose something constructive? And Elon is going to give us a lot of data to test that case. I just don't know.

• 19:36Alex Kantrowitz?

  Yeah, it's gonna be, it'll be interesting. I think this point that you made of we don't know at this point is so, is so important. And we always want to have nuanced conversations on this podcast as part of the tagline. And I've been astonished to see all these stories saying that Twitter is dead. Anything that's done in a day can be reversed in a day.

• 19:53Speaker 02

  Yeah.

• 19:54Alex Kantrowitz?

  And, you know, this is, well, not, maybe not completely.

• 19:57Speaker 02

  Well, you can reverse the product choice.

• 19:59Alex Kantrowitz?

  Right.

• 20:00Speaker 02

  What you can't do is reverse the community. That's sort of to me like saying, everybody's at the party. They're having a good time.

• 20:05Alex Kantrowitz?

  Right.

• 20:05Speaker 02

  You flip the lights on and it kills the buzz.

• 20:08Alex Kantrowitz?

  Yeah.

• 20:08Speaker 02

  You can flip the lights back off, but that won't restore the buzz necessarily. But still, we don't know.

• 20:13Alex Kantrowitz?

  Yeah.

• 20:13Speaker 02

  And, you know, my team is Make America Nuanced again. Uh, and we'll just see.

• 20:17Alex Kantrowitz?

  Nice hat.

• 20:18Speaker 02

  Uh, yeah, right. I'm trying to observe this as openly minded as possible. It is so difficult. I'm definitely afraid. And at the same time, you know, my fingers are crossed so hard they might break.

• 20:31Alex Kantrowitz?

  Yeah, well, I definitely want to leave at, you know, at least this entire second half to the labor conversations.

• 20:36Speaker 02

  Let's talk about it. Because I do think one of the things, somebody tweeted and then deleted, some guy Twitter, I can't remember, like, hey, man, we should form a union. And then he took it away. And I do wonder if the Twitter employees had been organized, if their power as a constituency might have been, well, I think it certainly would have affected this all differently, for the better, for the worse, that I can't quite say. But, but, you know, it's an example of why there's so much potential in labor organizing.

• 21:05Alex Kantrowitz?

  Yep, so we'll talk about that and more after the break. We'll be back here in just a minute with Roy Bahat, the head of Bloomberg Beta. This episode is brought to you by AppPoint. Everyone's racing to roll out AI right now. Co-pilots, chatbots, agents doing real work. But here's the part nobody loves talking about. All that AI runs on your data, and most teams have no single way to see it, secure it, and prove it's under control. That's exactly what AppPoint does. For 25 years, they've been the trusted layer beneath the world's most demanding data, now extended across your entire AI estate. Your data, your cloud, and the agents acting on your behalf.

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• 23:17Alex Kantrowitz?

  And we're back on the Big Technology Podcast for the second half, talking about labor, technology, worker organizing. Roy Bahad's with us. He's the head of Bloomberg Beta, early-stage venture fund that invests in the future of work. Roy, I wanted to start here with a big question, which is, what is the, what is the historic moment and the historic context that the current labor movement finds itself in? Because I, just to set it up, we had the New Deal, of course, granted labor rights, very big, powerful labor movement in the 70s in the US, and then just a true diminishment after that. And to be frank, it, you know, the, many of the labor movements or labor unions have

• 23:58Alex Kantrowitz?

  been corrupt, have, you know, wielded their political influence in extremely, I would say gross ways. I seen it in my, you know, my previous career, when I, you know, spent a couple of minutes in New York City politics, how nasty it was. And many of them have lost legitimacy. However, we do see this movement now, places like Starbucks, places like Amazon.

• 24:20Speaker 02

  Apple.

• 24:21Alex Kantrowitz?

  Places like Apple are starting to see some organizing. And those are the big names. It's hard to tell exactly where we are overall. So, so how would you answer that question?

• 24:30Speaker 02

  A caveat to start with again, which is, I don't speak for the labor movement. I speak for myself as an observer of the business world and an ally to trying to make the business, the, the economy work for everybody. So.

• 24:43Alex Kantrowitz?

  Yeah, it's a good caveat. It's kind of fascinating. I mean, here having, you know, you typically have capital against labor and you're a venture capitalist who I think is fairly pro labor. So.

• 24:52Speaker 02

  Yeah. And it's been complicated. I mean, I definitely have people in the business worlds who are like, what are you doing? And people in the labor world were like. Who are you? And uh, and so I'm just gonna try to speak for myself. And I'll say, I, I, I'm really, I have this in the brain because of our last conversation before the break about Twitter. Whereas like, if you want to really hear mansplaining, go in your college roommate's text chat on Signal about what's happening with Twitter and everybody can explain to you what's going on. And so I don't want to be that guy about things I don't know about. And so I'll speak from my own experience, which is I encountered labor unions early in my career, but only in a very limited way. Like I ran a nonprofit a long, long time ago and some of our employees were unionized.

• 25:37Speaker 02

  And you know, I didn't really think very much of it, didn't have that much of a daily effect. We would do things like organize a demonstration and tons of people would show up. And I'd be like, where did these people come from? They're like, oh, they're with the union. And I'm like, wow, like that's something, but I really didn't think about it much. To be honest, I thought about it. This is a sad admission on my part. I thought about it, I think there may weigh many people in the business world do. And many people who go through, you know, higher education in the US, I thought of it kind of like the library in the sense that it's an important institution whose time in its past form had passed. And therefore you just didn't pay much attention to it. That's not fair about the library either, but that's how I thought about it.

• 26:17Speaker 02

  And um, and you cited the numbers, which is steady decline in the private sector for sure over a long period of time. And I think what happened in the US was labor movement became synonymous with union. And there are obviously many forms of labor organization that are not unions. And I'll tell you when the light bulbs in my head started going off. The first thing is we've been focused on the future of work since we started our fund 10 years ago. And people would often, we were also the first, we were first firm to focus on the future of work. We were the first firm to focus on AI. Over my objection at the time, I was obviously dead wrong. And we became involved in these conversations about like, would the robots take away all

• 26:58Speaker 02

  the jobs and what would happen? And we did this year-long study with New America on what would the effect of technology be on work? And this is a few years ago. And the thing I realized is despite all the conversation about the future of work, almost every problem we have with the future of work already exists today. People already don't have a fair shot today. People already, like the typical person in America who works hard and plays by the rules, does not have a reasonable shot of providing a good life for themselves and their family. And so I started to see that as a powerful source of want. And I'll use an economic word, which is the word demand. And I was like, well, what are workers going to do in this? And in the middle of that study with New America, which was called

• 27:40Speaker 02

  the Shift Commission, in which we had wonderful participants. I mean, Andy Stern, who had run SEIU and wrote a book about raising the floor for workers. I got to know him around some guaranteed income advocacy that, you know, folks like Y C were involved with back then. You know, he was saying, unions, the way we've done it is not the answer. And I was like, huh, maybe this needs a reinvention. And I just kind of had that question in my head. And in the middle of the Shift Commission, Trump gets elected. And I was like, okay, one way to look at this is working people wanted a fair chance, and they didn't, couldn't figure out how to get one. And many of them fell into the kind of racist hateful answer that Trump gave them. So that happened. But it obviously then didn't work for them.

• 28:23Alex Kantrowitz?

  And also break the system, break the system.

• 28:25Speaker 02

  That's right. That's right. Just frustration presents that. And it's like, look, if I was playing a game I couldn't win, that was my whole life, I'd flip the table over too. And we had George Floyd, and we had, I mean, you know, obviously, the history of racism in the US. We had all this stuff happening, you know, COVID, revealing what essential workers were going through. So that pressure just kept cooking. And I kept wondering, what are working people going to do about this? And because voting for an extremist didn't work. Rioting on the streets didn't work. And, or, I mean, it worked in some fashion, but it didn't solve the problem. And that's when I began to wonder, are they going to turn to organizing in new ways? And at the same time, what I saw happening in the tech industry was Project Maven.

• 29:09Speaker 02

  The Amazon women organizing on climate change, Project Maven was when a bunch of Google employees got Google to stop selling AI, a certain kind of AI to the government. It's like, oh, my gosh. Relatively modest numbers of employees when they work together or working people, people who work for a company, when they work together can change what these monarchical tech, you know, giants want to do. It's like, there is real power here. And then the last piece to me is during the 2020 election in the middle of COVID, obviously, my family, my wife's from Wisconsin. We decided to move to Wisconsin and temporarily during the election, we voted and organized there. We still spent a lot of time there, but we were there for long enough to, you know, vote and be part of the community.

• 29:53Speaker 02

  And what I saw was how bad the political infrastructure is of the US in actually engaging people politically. I'd never lived in a swing state during an election, but wow, I just saw like, what is get out the vote? It's like a bunch of digital banner ads, which fine if they convert. And then like a stranger knocking on your door being like, hey, this thing that you might do once every four years, it's not like if you do it individually, if we all do it, it matters. If you do it, I don't know. It's kind of like going to the DMV, please vote. And it's like, well, of course, people don't really vote. And then I started wondering what might make people more politically engaged. And there's this political science researcher who I got to learn from a little bit in college. She's a role model of mine named Hari Han, and she has this line, she's a professor at Hopkins. She has this line, democracy is a muscle.

• 30:39Speaker 02

  And what she means by that is when you practice it, you get more of it. And so then I started seeing like, wow, we have this economic force that's going to happen. It might have political consequences. And basically then I did have a hunch, which is the hunch I had, or at least the possibility I began to entertain. This is now two plus years ago is what if we immediately have a lot more labor organizing in the US because workers want to be treated fairly and this is the best way they can get it. And then Starbucks happens, Amazon happens, Apple happens. And so now the way I see it is we are inevitably is maybe a slightly too strong word, but I believe we are very likely to have much more labor organizing in the US because it's a way that workers can get a fair shot. I think that's a fact that we all have to face.

• 31:24Speaker 02

  And I believe that for it to work, it needs to be very different. I'll speak now as a business person. First, and how business people relate to it, that this is not the enemy showing up with some existential risk. This is not a third party. In tech, we always talk about talent, talent, talent. When talent tells us what it wants as an organized group, that's a thing we gotta listen to. And so, at the moment, my current belief, and then I'll shut up because I know I've gone on a rant here, and you can interrupt with all questions, is we are likely to have much more, and we probably need much different, which when I talk to labor leaders, they usually acknowledge this, the leaders do, more and different labor organizing in the US. The business people agree it should be different, but not necessarily more. Many labor people agree it should be more, but not necessarily different. And

• 32:06Speaker 02

  that's the synthesis, the collision that we're gonna have to navigate as a, as a society and economy.

• 32:15Alex Kantrowitz?

  Terrific setup. So I want to talk a little bit about the more, and then the different, and then we can discuss what type of technology opportunity there is to serve more and different. So first of all, you say more. These conditions that you're talking about of like, workers trying to get their, their voice out there, trying to find some way to make it work, that's not new. That's happened. So, why specifically now, more?

• 32:39Speaker 02

  Well, I guess I'd say it's a threshold question. It's like, well, the heat's been under the water for a long time. Why did it just start to boil now? It's like, well, sometimes enough is enough. And, and again, I think there is this process I went through of, of trial and error to try to figure solutions. I used to think the free market could have the solutions. Training, I was very early in the learn to code movement. I think these things are important, but I don't think they're solutions. I was in the government, like, hey, we should look at UBI and all that stuff. But you can't get that without an electorate. And so I think it is basically just enough is enough, is the reason. That's my best reason.

• 33:16Alex Kantrowitz?

  Right. But why is, what are you seeing that makes it seem like enough is enough now? Because if this is gonna be a thesis for you, it is a thesis for you. The compelling event is super important. That's why I'm trying to drill down on it.

• 33:27Speaker 02

  Yeah, it's a really good question. I guess I don't think it's like, oh, my gosh, we've hit a 90-degree turn at this moment and the light switch was flipped off and now it'll be flipped on. I think it's more like the conditions have been there all along. People have been trying all along and now they're experimenting and trying something new and examples matter. And so the example of Starbucks, I think matters a lot to inspiring other action. I think the example of organizing at the tech companies matters a lot. I think Amazon labor union matters a lot because now we have live examples that are getting propagated. You have media companies like More Perfect Union out there telling these stories. And so I've spent a lot of time with labor organizers over the last couple of years. You know, I went to Labor Notes, which is the big conference of 4,000 people.

• 34:11Speaker 02

  You know, I've done a bunch of private events and I just, I don't know what to tell you other than like, why is, I used to work in the media industry and you'd have these cultural trends that would sweep through Hollywood. And it's like, why is this year the year when such and such kind of reality show happens? That's a trivial example. Sometimes it's just in the air. And that's the best I can describe is there is this kinetic, powerful, pragmatic, motivated, fierce energy among people who are doing labor organizing. And it is a force of nature that I think the rest of us would do well to understand and respect.

• 34:52Alex Kantrowitz?

  Let's talk a little bit more about more before we go to different.

• 34:55Speaker 02

  Yeah.

• 34:55Alex Kantrowitz?

  You mentioned Starbucks, Amazon, Apple. Obviously, for this to be a real movement, it needs to be something that maybe is inspired by those examples, but takes hold everywhere else.

• 35:04Speaker 02

  That's right.

• 35:05Alex Kantrowitz?

  So are you seeing this, you know, of course, we have these like high-profile examples, but are you seeing the substantial middle underneath them as well?

• 35:13Speaker 02

  Yeah, I mean, I, we are seeing experiments all over the place. I mean, you know, I was aware of like a new small union formed in a right-to-work state. So I think we're seeing experimentation everywhere, but despite what some others have said about like organizing it as at an all time high in the data so far, what we really see that has survived like a few years worth of ups and downs is just that sentiment is really high, meaning

• 35:39Alex Kantrowitz?

  Oh, okay.

• 35:40Speaker 02

  The American public and particularly young people are supportive, in this case of unions at a higher rate than they've been, I think, since the 60s, something like that. So that's what we see right now in the data, but will we definitely have more? No, we will not definitely have more. A lot of that depends, by the way, on companies and how they respond to it. And one of my tasks has been to meet with business leaders who are, and maybe this will transition us into different.

• 36:04Alex Kantrowitz?

  Yeah.

• 36:05Speaker 02

  Because I don't think I have a satisfying answer for why more. I mean, it's sort of like, why is, why is it windier today than it was yesterday? I mean, confluence of forces? I don't really know.

• 36:13Alex Kantrowitz?

  Right, right.

• 36:13Speaker 02

  I'm just observing what I'm seeing. For business leaders, I think one of the tasks is to try to understand this. I mean, I don't know about you and your college experience or if you went to journalism school or something like that, but I went through-

• 36:22Alex Kantrowitz?

  Boy, actually, yeah. I studied labor relations in school, so.

• 36:26Speaker 02

  I didn't know that. I'm humiliated that I didn't know that at Cornell or somewhere else.

• 36:29Alex Kantrowitz?

  At Cornell, yeah.

• 36:29Speaker 02

  Yeah. So you know, you can, you can correct me on this, but I got through a college education, a graduate school education in economics, and I can't remember ever hearing the word union in class. Maybe once in an economics class around an example of what they would call dead weight loss of shifting, you know, the supply curve for something. And so the first task is just a task of understanding, and I can't tell you how many examples of ignorant idiocy I've seen. Like, I was on stage with a person from SEIU, got introduced by a journalist as the head of SEUI, which is a huge, like, and, you know, I, when Chris Smalls came and spoke at a conference, a business leader came up

• 37:12Speaker 02

  to him and I just overheard the conversation. He was like, Chris Smalls, Christian Smalls is the head of the Amazon Labor Union. He said, explain to me about Amazon Labor Union. He said, you got Amazon Prime, you got Amazon Fresh, how does Amazon Labor Union fit in? And you could see that Chris was like, and I, and I had to kind of lean over and intervene and be like, no, no, no, Amazon Labor Union is not like a business line of Amazon. He's like, well, then how do they have the right to use the Amazon name? And I was like, oh my God, like, this is like basic American labor construct. And so I think the first task is just a task of understanding. You had it at I L R, but not everybody has that.

• 37:47Alex Kantrowitz?

  I'd love to hear your perspective on what the different form of organizing might be than the traditional union, if that's the direction you're pointing in. And when it comes to like, what workers ask for, like traditionally, the union asks for, you know, better wages, more time off and healthcare. So maybe better working conditions. So is there, is there not only like a different way of organizing, but a different ask?

• 38:09Speaker 02

  Yeah, I think that yes, to all of those questions. So let me again, start with grounding in like, I'm a business leader. I've got this group that we've been forming with the Aspen Institute that's called the Aspen Business Roundtable on Organized Labor, which is a group of business leaders who are interested in just reexamining how business ought to relate to labor. And so what it starts with for me is how do business leaders respond to this differently? Because it's not just, it's a two-way street, everything. And the business leader response has been union busting, almost exclusively. And to be fair, I mean, I teach at Berkeley. You can't find a business school course about how to deal with organized labor

• 38:52Speaker 02

  as a business leader, or how to, and so I'm going to teach what I think is kind of the first course of its kind that I can find across the country. MIT Sloan and Tom Koehn there has done years of great work on this. Obviously, I L R has tons of stuff, Equinell, Rutgers, there are plenty of places where this is studied. But I believe that we just need to start with assuming that it may not be some cataclysmic awful event if workers want to express themselves collectively and learning how to manage it. You know, if you're a CEO and a hundred of your people, I'll just give you a more pedestrian example. A hundred of your people come to you having signed a petition, an internal petition. You don't have any preparation from business school or whatever else you learned about how to do that? These are the crises that matter. So the first thing is reexamining how business

• 39:34Speaker 02

  relates to organized labor. And I believe that there are many opportunities. Where there could be win wins, where labor unions and organized labor could be good for business. I think about as a CEO, things like trying to figure out what healthcare package to offer to employees. I would have loved to just hand that over to a democratically elected organization of workers and have them say, you pick which healthcare you want. Or I would have loved when we were trying to roll out some new policy to say, ask their elected representatives, what do you think? And work it out with them. So I could see ways, and I'm not a Pollyanna, I don't think like all the solutions are win-win, but I do think if we want, if we need labor organization, which I think we probably do, I think it's

• 40:15Speaker 02

  probably necessary, then it probably has to be good for the health of American business generally. I'm focused on the US here, because otherwise, if the parasite kills the host, then the parasite dies too. And so there's this business side of it. On the labor side of it, what I'll just say is, I am a believer, as a matter of philosophy and approach, in experimentation of all the tools. So you have nonprofits doing innovative things, you have folks like Jobs with Justice, and Organization United for Respect, and lots of National Domestic Workers Alliance. You have unions trying new stuff. You have SEIU's been trying to innovate and grow for a long time. CWA, AFL-CIO has new leadership. You know, everybody's trying new stuff, and I'm a deep believer in that because

• 40:59Alex Kantrowitz?

  Yeah.

• 40:59Speaker 02

  I think we just need the data on what works. And one of the sad things about unions in the United States is how few new unions we have. We have fewer, as near as I can tell from the data, fewer than 20, maybe even fewer than 15, new unions per year on average in the US. Not a new local chapter of a new union, but a brand new union. And the startup person to me says, well, if you want innovation, you need new entrants. You need the, the, the contest between those new entrants. And, you know, look, I'm not, we can talk about some of the business opportunities here. I know we want to get into that. I'm not a

• 41:34Speaker 02

  Every form of experimentation has its strings attached. You know, nonprofits have their strings attached from their funders. Business experimentation has the strings attached from the sources of capital. And so it's all complicated, but really what we need now is just trial and error.

• 41:49Alex Kantrowitz?

  Yep, so I definitely want to leave at least 10 minutes for the different tech that is interesting to you and companies you've invested in. But could you like quickly rapid fire before we get into that, the different, you know, you talk about different approaches. What are some different approaches?

• 42:03Speaker 02

  Yeah, so some of them are non-union approaches. So you look at some groups that have just created a lot of Facebook groups of people who work for a company and they just start talking to each other. I mean, at a lot of companies, one horrible consequence of inequality is our inability to relate to each other's experiences. And so I think for a lot of folks who work in jobs like yours, mine, you know, imagining just how isolating the experience of being in a role at some of these companies, like a working class role, let's say can be, is just difficult to imagine. I mean, there are companies where you can't access your healthcare benefits information unless you're in the office, in the same room as a manager.

• 42:47Speaker 02

  Like, that kind of stuff is pretty terrible. And so some of it is just new communication channels. Some of it is legislative advocacy. We've certainly seen that in California with all the gig worker-related legislation that folks have tried to pass. Some of it is, a big thing in the labor movement now is independent labor unions, by which they mean small unions that are unaffiliated with one of the major unions. So Amazon Labor Union is a good example of an independent labor union. And then some of it is just trying to go into new industries. And you see, you know, unions like News Guild have been active in organizing folks in the media industry, for example. So those are a handful of the different kinds of approaches.

• 43:31Speaker 02

  You know, there's also been political advocacy around the fight for 15. You know, there's been the attempt to organize people who are not necessarily W2s. And so, meaning if you're not a W2 employee, under US law, you cannot be in a labor union. And so, there's a few carve-outs, but basically that's true. And, you know, and by the way, I'll also just add, managers can't be in a labor union. And if you're a junior manager at Amazon, you probably have more in common with the people who work for you than with Jeff Bezos. But, you know, so those are a few of the kinds of things that are happening. And we can talk about the tech side in a second.

• 44:04Alex Kantrowitz?

  Great. Yeah. So what are you investing in to enable this? And VCs also like always look for these like big returns. So what makes you believe that the tech that you're investing in is gonna, you know, lead, lead to big, big returns?

• 44:17Speaker 02

  If you don't mind, I'd love to start with some of the stuff we're not invested in that just inspires me that there's possibility because there is tech stuff that's nonprofit tech stuff. You know, if you look at coworker.org, you know, they had somebody from change.org is one of their co-founders. They have all these tools that you can use to educate yourself about how to organize. They have like, uh, basically it's, uh, I don't want to mischaracterize it, but it's something like a petition platform that is software. Then you have things that weren't intended for labor organizing, but are just used like crazy by labor organizers. Signal is one example. Discord, Slack. I mean, all these employee communication tools create communication among employees, which is that's a major fundamental building block in labor organizing. As far as where we're investing, caveats first yet again, which

• 45:02Speaker 02

  is I get that there can be a deep potential conflict between an investor like me who wants to see, as you said, an enormous financial return. And I'm not running a charity. I'm doing this because I believe that we can be successful as business people by doing it. And the interests and class interests of working class people who have traditionally been exploited by investment. And I'm not going to sit here and say, oh, well, not all VCs and something is different. There is inherent conflict in there. And to me, one of the critical lessons actually that I've learned from the labor movement is what is solidarity? Solidarity is not kumbaya of lots of people coming together. It's people

• 45:46Speaker 02

  with violently opposed ways of looking at the world, sometimes who hate each other. This author Vanessa Veselka said something like this, and you know, I think she may have said it in New York Times op ed piece she wrote or somewhere. It's like, it's people who hate each other coming together for common cause. And so that's okay. Like, I'm all for real politik on this stuff. Where we believe that there is opportunity, and I'll talk about some of how those conflicts might be resolved, is basically in services that give working people the things that they want. And what they want is more pay and more say. I mean broadly speaking, you asked, you know, how has it changed in terms of what working people want? You know, more pay and more say, and the more say part is expressed in new ways.

• 46:28Speaker 02

  It used to express, and I'll get to specifics in a second, but it used to express in what they called co-determination. So co-deter, what they call co-determination is when, you know, a labor group can participate in the managerial and strategic decisions of the firm. That was actually in the US, the template for modern W two work was really signed by UAW with General Motors in what was called the Treaty of Detroit. And in the Treaty of Detroit, workers got things like, you know, steady annual raises, retirement, healthcare benefits in exchange for giving up co-determination. And, you know, now workers are asking for that. They're also, by the way, interested in the social stances their companies take.

• 47:12Speaker 02

  And all the companies are like, I don't want to do this. I don't want to be bullied by my employees and just sort of taking social stances. My basic view on that is that companies have been for years saying to their people, bring your whole self to work. They give you clothes that have the company logo on it. They want it to be your identity beyond just, you know, the time that you are clocked in or at your computer or something like that. And a consequence of that is people are going to say, okay, I want the company to reflect my views. And so then we're going to have to have hard conversations at work about that. So that's some of what I see workers wanting. But again, it's really not for me to say, that's for the worker organizations to say themselves.

• 47:53Speaker 02

  And I think we genuinely have an experiment in small scale democracy happening here of like, when workers want to organize at a workplace, what do they want to say? Not what is the union rep, you know, informing them on, but what do they want to say?

• 48:08Alex Kantrowitz?

  Right, so we have like basically four minutes left.

• 48:10Speaker 02

  Let me do it.

• 48:11Alex Kantrowitz?

  Let's get like three different companies you've invested in and, and what they do.

• 48:15Speaker 02

  Yeah, I'm going to do it. So now, now the conclusion is I'll give you one example of a company is Open Collective. Open Collective allows you to host an organization without having to incorporate, allows you to manage things like the finances of that organization transparently. And people use it for lots of things. They use it for funding open source software projects. But they also use it, by the way, there's a whole unity between all this labor organizing and ways of doing software. But they also use it for things like mutual aid, which is like, hey, workers, let's pool all our money together in this place. And if one of us gets in trouble, the rest of us will bail them out, you know, that kind of thing. Another example is we invest in a company called UNIT that forms, that works with workers

• 48:56Speaker 02

  to support them in forming an independent labor union. And so these kinds of tools, I think we want to continue to see. I'd love to see a thousand more founders take on these things. So those are a couple of examples, and I'd love to see more.

• 49:11Alex Kantrowitz?

  Yeah. How about one more?

• 49:12Speaker 02

  I got two.

• 49:13Alex Kantrowitz?

  Okay. And how, when did you start funding those companies?

• 49:18Speaker 02

  You know, there wasn't a day, I don't remember the exact year, but it's been gradually over the last few years. And part of it is, I don't want, there are many companies like Discord that benefit work organizing. I'm not an investor in Discord.

• 49:31Alex Kantrowitz?

  Right.

• 49:31Speaker 02

  But labeling them as doing this, it's so charged right now. I mean, it's crazy how charged it is. Hey, Roy, I saw you said something positive about labor unions. You're freaking me out. And it's like, oh, I mean, like, what? Yeah.

• 49:45Alex Kantrowitz?

  Yeah, it's interesting. I mean, so obviously, I spent my undergrad studying labor unions and came out with a realistic, but largely favorable opinion of them, the fact that we need them. And I've seen some of their, you know, I feel like I've seen, you know, some of their action in real life, working in politics, you know, seeing.

• 50:05Speaker 02

  Complexity.

• 50:07Alex Kantrowitz?

  Yeah, seeing this at the BuzzFeed when BuzzFeed unionized and I was, you know, there throughout the drive and.

• 50:15Alex Kantrowitz?

  Yeah.

• 50:16Speaker 02

  Every single person I know who's been through it says something like, says something like, it might have been necessary, it could be good, it was also awful. And that's what we got to figure out. That is the task to all of us.

• 50:29Alex Kantrowitz?

  Yeah, and I think just to close, like this idea that there's something going, going wrong in the country when people don't, people can work their butts off and feel like, you know, they can't provide for their family. And that's got to be fixed one way or the other. And maybe it's unions, maybe it's legislation.

• 50:46Speaker 02

  And let me just pick on that for a second.

• 50:48Alex Kantrowitz?

  Yeah.

• 50:49Speaker 02

  Which is, you said, that's gotta be fixed, which is passive voice. What I would say is the people suffering from that are taking action to fix that. And how that action expresses itself and what we all do. I'm not a person who personally suffers from that. There have been times in my life I've been unemployed, my parents are immigrants to this country, you know, we came with no money, but we had community and like all kinds of other benefits. Obviously, I'm white, you know, like lots of benefits. But people are going to take action. It's not the weather, people are going to take action.

• 51:16Alex Kantrowitz?

  That's right. Roy Bahat, thank you so much for joining. Great having you as always.

• 51:19Speaker 02

  Amazing questions. Thank you.

• 51:21Alex Kantrowitz?

  Thank you. I wish we could do this for another couple hours. Maybe we do it again.

• 51:24Speaker 02

  Do it again.

• 51:24Alex Kantrowitz?

  Sometime soon. Thanks, everybody for listening. Thank you, Nate Glatney, for handling the audio. Thank you, LinkedIn, as always, for having me as part of your podcast network. Thank you, listeners. Great having you every week as always. Ryan Peterson will be here, CEO, founder of Flexport, one of Roy's early investments. Don't miss it. He'll be here next Wednesday and we hope to see you next time on Big Technology Podcast.

• 51:55Speaker 03

  Now, more than ever, we need someone on our side. But Rob Whitman? Whitman's votes drove up costs, cut Medicaid and risked 350,000 Virginians healthcare to pay for tax breaks for himself and his donors. He's not on our side. Shannon Taylor will fight corruption, cut taxes and bring down costs. This November, vote for Shannon Taylor. She's for us. Paid for by HMP, the HouseMajorityPact.com. Not authorized by any candidate or candidate's committee.