Kickstarter's Union, Activism, and Tech Class Conflict

Last week, Kickstarter employees voted to unionize, creating the tech industry’s first union of white-collar workers. Responses were mixed, to say the least. Presidential candidates applauded the move. Venture capitalists, on the other hand, tended to be less impressed.

Skepticism of the union fell into two major categories. The first is that Kickstarter employees are already well-paid tech workers with cushy jobs who do not need union protections. It’s hard to argue against the plushness of tech company perks, but recent years have seen a surge of tech worker activism, most notably a walkout of over 20,000 Google workers in November 2018 protesting the company’s handling of sexual harassment cases.

Smaller-scale employee activism has taken root at other large tech companies, including Microsoft employees petitioning against contracts with Immigration and Customs Enforcement (ICE), and some Amazon employees making public statements about the company’s contribution to climate change. The companies are taking these efforts seriously; Google has hired a union-busting firm in response to growing unrest.

All of these employee activism cases have one thing in common: they didn’t focus on “traditional” organized labor topics: higher wages, healthcare, or other material benefits of union members. All centered around social issues involving the companies. Workers weren’t asking for more perks, but rather for their version of more socially responsible leadership.

This was also true in Kickstarter’s case. The seeds of the union were sewn when workers disagreed with management’s decision to pull a controversial comic book titled “Always Punch Nazis” off its platform after criticism from the right-wing website Breitbart News.

The cover that started a movement

The second, and more interesting union criticism, is that startup employees should already have their incentives aligned with the founders/management/investors, because of the standard startup practice of giving an equity grant to almost every employee. If the company succeeds, they succeed.

There is no conflict between labor and capital, because (in theory) everyone has capital. So, all the unnecessary bureaucracy and dysfunction that unions inevitably introduce can be avoided.

Elon Musk used this argument while he was battling the United Autoworkers over their attempt to unionize Tesla factory workers. He claimed that unionization was unnecessary because, among other reasons, employees had equity, which was better than a union.

The possibility of getting rich off of startup equity is a primary motivator for employees who join these companies instead of taking a larger salary at Google. This gospel is preached by people who got rich off their equity grands, and are now venture capitalists who write blog posts telling people to work at startups. Who wouldn’t want to be a part of the next PayPal Mafia?

This philosophy has taken a battering recently. Engineers are increasingly pessimistic about equity grant valuation (see: any recent Hacker News thread on this topic). More empirically, Dan Luu makes a convincing argument that the compensation at big tech companies has risen so fast that even good startup outcomes fail to match the years of earning a higher salary at a tech giant.

Furthermore, employee activism isn’t the only area where the interests of the “management class” of VCs, successful founders, and serial startup executives seem to have diverged from those of rank-and-file workers. Of all current presidential candidates, Google employees have donated the most money to Elizabeth Warren and Bernie Sanders. Both advocate for breaking up Google, Amazon, and other large technology companies.

This is epitomized by WeWork (disclaimer: most tech companies aren’t WeWork). As its valuation plunged from $47 billion to $5 billion in the aftermath of a disastrous IPO, the founder/CEO was ousted, but not before walking away with a $1.7 billion golden parachute package. Employees, predictably, mostly got laid off. Not to mention that many early WeWorkers got no equity at all. Although this is an extreme case, many startup employees still see the values of their equity wiped out because of liquidation preferences and other terms in investors’ preferred stock.

So, could the Kickstarter Union be a bellwether for more tension between rank-and-file tech workers and the management class? I’d say yes. In light of the surge in big tech company employee activism, it’s hard to not see this as the continuation of a trend. My take is that the next step could be a successful small-scale tech employee strike. Given how tight the labor market currently is (especially for software engineers), I bet that smart labor organizers could pull it off.

It is ironic that Kickstarter became the first tech company with a unionized workforce. They’ve made overtures towards being a better-than-average corporate citizen, most notably reincorporating as a Public Benefit Corporation so that they could “unshackle from the extractive, inhuman, and societally unsustainable framework that compels companies to optimize for profit over everything.” That’s a direct quote from their press release, even though it sounds like a Bernie Sanders tweet.

Tech job tenures are notoriously short, with employees staying at top companies for about two years on average. Perhaps workers caring enough to unionize and attempting to fix problems from within, instead of job hopping, is a good sign for Kickstarter’s future.