21st century unions

Unions were a fixture of the 20th century, serving as a stabilizing force against corporate and investor interests in business, creating deeply influential voting blocks for elections, and creating community among individuals who otherwise might not have known each other, or been close.

In modern times, the labor union is at its lowest ever approval rating in the United States. 2009 represented the nadir, when the population may have been reacting to the first national democratic victory since the 90s. But it’s stayed low. One wonders if the laissez-faire liberalism that won the Cold War is what precipitated this trend, or the accompanying period of relative prosperity in the 90s. Even now that wages are stagnant, inequality is persistent, and the topic du-jour is very much the ‘haves’ and ‘have-nots’ the unions are still unpopular. We suspect that is very soon to change.

There are a few prominent industries today where the need for a 3rd-party arbiter is particularly pronounced, where one class of participant does a lot of heavy-lifting, is much more likely to end up broke and alone, where the ability to connect with peers creates outsized value and influence, etc. The first is our industry: venture-backed entrepreneurship! Venture capitalists, even if their investments go badly, are protected, in part by their fund cycles, in part by the amazing willingness of LPs to fund managers who don’t have results, and mostly because they tend to have money to begin with. Failing entrepreneurs, on the other hand, end up broke, sometimes friendless, often really alone, and so forth. As for valuations and deal terms, the venture capitalists had incredible control and agency over these for the first 30 years of venture capital. while the Series Seed documents by Ted Wang at Fenwick and AngelList1 have done extraordinary things in rebalancing the power in negotiation, one organization has done far more: that’s why we think YCombinator is the first truly successful 21st century union.

Once you’re a YC alum, there is a community, a 3rd party who will arbitrate disputes on your behalf (with muscle, if necessary), and peers who will provide resources in the form of proprietary information, as well as safe landings in the event that things don’t go well. When Sam said that he specifically wanted more women and people of color to apply to YC, I couldn’t help but applaud, because entrepreneurs who are already marginalized need the added protection the most. 500 Startups, AngelPad, Techstars, and others are working hard, with varying degrees of success, to create a similar effect. I think the wake of YCombinator’s efforts will create a rising-tide-lifts-all-boats, rather than a winner-takes-all. The incubators will be the unions for the entrepreneurs.

The collaborative economy is the other big one. Let’s just take the drivers of Uber, Lyft1, Sidecar, Hailo, etc. To-date, they are a big and very fast growing population, who have no ability whatsoever to set their own wages, to ensure benefits (health insurance, actual property-and-casualty insurance for their work) or to get access to proprietary information about the work they are doing, or that their peers are doing. Sounds familiar, right? There was an interesting piece in New York Magazine last week about the “contract worker problem” referring to the math on being a supplier in a peer marketplace, and how the economics work out. I was far from convinced, but it did remind me that this is a community that is heretofore not fully organized, and needs resources to protect the participants, far beyond the current status quo. The drivers, as an example, are already doing it themselves. The subreddit for ridesharing drivers is lively, and a great resource for any new driver. Follow along this forum to see that that Uber drivers are hacking community in absence of somebody creating one for them.

Freelancers Union, who were probably the first organization to identify the trend of moving toward the gig economy has created tens of millions of dollars of revenue offering health insurance to its members, the freelancers of New York City, and with their national benefits program will expand even further. Peers.org is doing a great job as an advocacy organization, as well, launching internationally, and focusing on supporting the platforms’ right to operate in cities. But a crop of startups recently has taken a purely for-profit approach, which we find very interesting: Zen991, Guild1, Benny, SherpaShare, Guevara, and others have appealed to the participants in the collaborative economy to provide resources for them. In my opinion, the organization that wins the trust, and the network, of the people powering the on-demand economy will represent the next great 21st century union. And that organization will be best-poised to win the next generation of influence in business, policy, and technology.

  1. AngelList, Reddit, Lyft, Zen99 and Guild are Collaborative Fund portfolio companies.  2 3 4