A leading Silicon Valley exec says Big Tech prioritized lower costs over employees’ wellbeing, and it’s created a feudalist system where workers are left to fend for themselves
September 29, 2020 | technology | No Comments
- Maëlle Gavet is a leading Silicon Valley executive, entrepreneur, investor, and most recently, the chief operating officer at real estate platform Compass.
- The following is an excerpt from her first book, “Trampled by Unicorns: Big Tech’s Empathy Problem and How to Fix It.”
- In it, she examines how Big Tech’s failure to empathize with customers and workers has led to “digital era’s equivalent of feudalism.”
- In her in-depth critique of the world’s largest tech corporations — including Amazon, Uber, and Google — she crafts an earnest call to action for industry leaders, board members, employees, and consumers to get tech back on track.
- Visit Business Insider’s homepage for more stories.
Right now the jury is still out on whether the tech economy is ultimately a job creator or a job destroyer. As with many of the points in this book, that topic is complex, nuanced, and polarizing.
As of today, while tech has upended some businesses, it has helped drive expansion in so many industries that the net effect is likely more jobs, even if there is disagreement over how to quantify it. Whether that will be true as automation driven by artificial intelligence expands throughout the economy is another matter. Either way, it is critical that we look deeper than simple employment numbers.
Tech defenders argue that the information revolution is no different from others in history. One can certainly draw parallels to the industrial revolution, for example: Powered by relentless innovation, it, too, created new jobs while killing others.
What is different is the degree to which tech companies, and unicorns in particular, have changed the nature and financial underpinnings of work, and the relationship between employers and workers.
Whereas the industrial revolution paved the way for a new middle class and lifted overall prosperity, the tech revolution has helped to hollow out the middle class and catalyze a greater level of income inequality than at any time in modern history.
And no matter what some tech executives, venture capitalists, and their investors claim, these trade-offs need not be the inevitable consequence of progress.
The human impact of tech disruption
Understanding how different the current revolution is starts with the underlying ethos of the tech industry, which — in the name of delivering more efficiency, more capabilities, and at lower cost — is to disrupt deeply entrenched legacy businesses and processes.
And to be clear, if legacy businesses are bloated, delivering poor quality and bad service at high prices, they deserve all the disruption they get.
But to compete, tech early on identified the cost of labor as among the biggest inefficiencies of its targets. Thus, tech avoided unions at all cost. Compensation at many startups was a mix of low salaries and stock options that might or might not ever attain significant value. The idea of pensions (at least in the United States) was relegated to the dustbin. And the widespread use of independent contractors and gig workers without any kind of social protection supported the economics of many Big Tech businesses.
In the early days of the tech boom, it was easy to be dazzled and distracted by all the new toys we were getting and by all the newly minted millionaires, some of whom were secretaries and cafeteria workers lucky enough to be hired at the right time by the right tech firms.
But we are now seeing the bills come due, especially when it comes to the so-called gig economy.
Take Uber, a company closely associated with welcomed disruption, Ride-hailing apps are reckoned to account for about 75% of the ground transportation market in the US for business travelers, so it comes as little surprise that the overnight growth and popularity of Uber, Lyft, and similar services have sliced through the livelihoods of many traditional taxi, minicab, and private-hire drivers.
To be sure, the old-school taxi business, especially in the major metropolitan centers like New York City and Chicago, was no paragon of virtue. It was notorious for its corruption and poor customer service and in dire need of reinvention.
Yet the arrival of disruptive digital technology in the form of smartphone-enabled taxi apps has had a catastrophic effect on the incumbent industry’s workers.
Indeed, in New York the suicides of at least six drivers over a six-month period in 2018 may be attributable — at least in part — to the plunging value of taxi drivers’ medallions and plummeting incomes due to the popularity of ride-share apps.
In February 2018, a 61-year-old delivery driver shot himself in front of City Hall in lower Manhattan. Hours earlier Doug Schifter had written a Facebook post about his own perilous financial situation and how he was sometimes obliged to work more than 100 hours a week to make ends meet. Schifter blamed politicians for permitting the city’s streets to be flooded with Uber’s cars, which was also affecting traffic.
I will forever remember the reaction of two of my friends working at Uber at the time when, over dinner, I asked them how they felt about these suicides and the working conditions of Uber drivers that were starting to become public knowledge: “This is very sad but this is the cost of progress. The taxi industry needs to be disrupted and we’re not forcing people to drive for us.”
Unfortunately, over the years, I’ve heard variations of these words abdicating any responsibility and justifying human pain in the name of technological progress so many times and from employees of so many different tech companies that I can’t remember them all.
There’s no doubt that the gig economy has offered new work opportunities, additional revenue sources, and much-needed flexibility to tens of millions. In the developing world it has some additional benefits too, such as in India, where Foreign Policy magazine reported “higher relative incomes, more jobs, less corruption, and, eventually, a formalization of the labor market.”
But there is also no doubt that, overall, gig work is short-term, insecure, high-pressure, low paid, and precarious, with few worker rights or protections.
Indeed, the on-demand/freelance-labor model that companies such as Uber, Lyft, Instacart, Deliveroo, Postmates, and TaskRabbit favor — which poses as “flexible” and worker-friendly — leaves workers to fend for themselves or shifts the burden for retirement benefits, sick pay, parental leave, and healthcare back onto government in places where there is still a taxpayer-funded safety net.
And while this new normal is increasingly being met with protests from workers — and is being examined by regulators, policymakers, and in courtrooms around the world — the gig economy, in one form or another, is here to stay.
In effect, Big Tech has instituted the digital era’s equivalent of feudalism, the hierarchical social system in medieval Europe of overlords, vassals, and serfs, only this time with fortunes built on data rather than land.
In Valley terms the nobility and the clergy (founders and venture capitalists) are masters and owners of all they survey and generally mingle only with the royal ministers and powerful merchants (leadership team and top product and engineering employees).
The vassals (non-engineering employees) are considered important but not critical and somewhat replaceable. At the bottom of the pyramid are the serfs and the peasants, who in this analogy, rather than working the land, drive for Uber or Lyft, or deliver packages for Amazon or meals for Deliveroo or DoorDash, or worse still work for paltry amounts in sweatshops (See Figure 4.1).
In my experience, even when an executive at one of these firms brags that they “know what it’s like” to drive for a ride-hailing app because they were a driver for a day a few months ago, in reality they have not the faintest clue about what it really means to be dependent on getting enough work on any given day to be sure they can feed their family or pay for next week’s gas.
The situation has been exacerbated by the spread of COVID-19, with many gig economy workers unable to afford to stop working despite a lack of coverage for sick pay or related benefits. (It should be noted that, as I write, Amazon, Instacart, DoorDash, Uber, and Lyft had all offered their gig workers up to two weeks of sick pay if they can show they have been diagnosed with or quarantined because of COVID-19.)
In this new era of relentless insecurity and volatility for tens of millions of people around the world stuck in this new feudalism, it is becoming harder not just to raise a family or buy a home, but simply to get by.
Disturbing stories about life as a food delivery driver or next-day delivery courier or warehouse/fulfillment-center worker abound. If anything, the situation for manual workers is worse still.
In 2019, the Vox Media–run tech website The Verge obtained documents that revealed that Amazon’s automated system tracks fulfillment center employees and “automatically generates any warnings of terminations regarding quality or productivity.” More worrying still, it even tracks “time off task,” known as TOT, where employees can be warned or fired for taking too long between scanning individual packages.
Some workers avoid bathroom breaks as a result, reported the site, which also revealed that an attorney representing Amazon admitted that the company had fired “hundreds” of employees in a single facility between August 2017 and September 2018 missing productivity targets.
It doesn’t stop there. A deep dive investigation by Buzzfeed, titled “The Cost of Next-day Delivery,” paints a picture of the crushing pressure placed on contracted-out courier services working for Amazon, who are frequently expected “to deliver hundreds of packages each shift — for a flat rate of around $160-a-day — at the direction of dispatchers who often compel them to skip meals, bathroom breaks, and any other form of rest, discouraging them from going home until the very last box is delivered.”
The Buzzfeed feature discovered that drivers often have to deliver at least 250 packages a day, which works out as less than two minutes per package based on an eight-hour shift.
“Amazon goes further than gig economy companies, which insist its drivers are independent contractors with no rights as employees,” the piece reported. “By contracting instead with third-party companies, which in turn employ drivers, Amazon divorces itself from the people delivering its packages.”
That allows it to avoid legal liability for accidents, as when one driver hit and killed an 84-year-old woman in Chicago, in the run-up to Christmas 2016. “The damages, if any, were caused, in whole or in part, by third parties not under the direction or control of Amazon.com,” its lawyers said in a court filing.
The story added that “public records document hundreds of road wrecks involving vehicles delivering Amazon packages in the past five years, with Amazon itself named as a defendant in at least 100 lawsuits … including at least six fatalities and numerous serious injuries.” And that, it noted, is likely to be a significant underestimate because many accidents involving third-party contractors will not be reported in a way which would link them to Amazon.
Excerpted with permission of the publisher, Wiley, from “Trampled by Unicorns,” by Maëlle Gavet. Copyright ©2021 by Maëlle Gavet. All rights reserved. This book is available wherever books and eBooks are sold.
One of the tech industry’s brightest stars, Maëlle Gavet has been named a Young Global Leader by the World Economic Forum, one of Fortune’s 40 Under 40, one of the Most Creative People in Business by Fast Company and was fifth among Time magazine’s List of the Top 25 ‘Female Techpreneurs’. After six years as a Principal at the Boston Consulting Group she went on to become CEO of OZON.ru, Russia’s largest e-commerce site, and executive VP of operations of the Priceline Group, the largest online and travel agency in the world which includes brands like OpenTable, Kayak, and Booking.com.
Most recently Gavet was Chief Operating Officer at real estate platform Compass, valued at over $6bn. She has spoken regularly at the leading technology industry events and her writing has appeared in Wired, the Harvard Business Review, the World Economic Forum, Fast Company and Fortune magazine. Her first book, Trampled by Unicorns: Big Tech’s Empathy Problem and How to Fix It, will be published by Wiley on September 29th.