I had a fascinating exchange with a venture capitalist the other day. I made the mistake of having a private conversation about the industrial relations reforms (yes, I know, religion and politics), which he overheard. I was delighted when he exploded next to me – “I can’t stand listening to this socialist crap any longer!” Readers, I am not now, and have never been, until last week, accused of being a socialist.
Apart from my calls for the workers to unite, my Eastern European ancestry, suspicious facial hair and the hammer and sickle I was using to eat my dinner, I don’t know how he got such a false impression.
What I was saying, quite uncontroversially, is that labour reform alone will not result in sustained increases in productivity – it requires investment in education and skills for workers and investment in technology and R&D. This is not an idea I came up with on my own, but something I heard Heather Ridout, CEO of the Australian Industry Group, and Greg Combet, Secretary of the ACTU, say on the same platform.
It should be noted that investment, be it by government or business, is a much longer-term proposition than changing industrial relations laws. I also boldly asserted that more socially democratic policies, like subsidies for education, health and welfare, were not necessarily contradictory to higher productivity.
Leaving aside whether that makes me a Little Red Book-carrying, salsa dancing, vodka-swilling lovechild of Vlad Ilyich – his assessment of the economic and political clime was unusual to say the least.
Apparently, unions are parasites. As are people on welfare. As are politicians (of any denomination) and bureaucrats. As are, wait for it, big business executives! In fact, the world he described to me was populated almost entirely by parasites (good news for those in the pest control industry).
Although his reform agenda was not entirely clear, it seemed to involve free education and health care for all (presumably he was thinking of his progeny), but taking a machete to everything else. Decimate the bureaucracy, slash welfare, crush unions (or what’s left of them), create a uniform tax rate – 30 percent, kick the cat and swear at the neighbours, even if you don’t know their names.
However – Hallelujah – he told me there is a niche industry that is dynamic, innovative and adds value to society…the venture capital industry.
And where would we be without the venture capitalists? If not for their sage-like ability to take other people’s good ideas and, for a swag of equity, turn them into a commercial entity, the fabric of society would literally be torn asunder.
Is it just me who likens them to the taste and ethic-free recording company A&R executives, who throw money into things they often know nothing about, in the hope that one of them will come good, and they’ll make off with the profit, leaving the founders/ artists with enough for a cab fare and a souvlaki?
I jest, of course. Without venture capitalists, many of the innovations and technologies we take for granted may never have come to fruition. The role that VCs play in terms of providing expertise, and paths to capital, is vital.
However, might it be that venture capitalists and their industry have a tendency to suffer from a kind of myopic elitism – that ‘if you ain’t making something or commercialising something, then you ain’t nobody’? This attitude can lead to a false belief in liberal individualism, which promotes maximum individual rights, minimal government intervention, absolute moral freedom and unhindered free market capitalism.
This philosophy is fine, so long as you are privileged and economically independent, which most people reading this are. But most people aren’t.
At the serious risk of sounding like Dustin Hoffman’s character in ‘I Heart Huckabees’ , as individuals and as an industry, VCs and entrepreneurs do not exist in isolation. They rely on workers as employees and everyone as customers. Many rely on government for seed funding and to regulate to protect them. They may also rely on big business as medium/end-stage investors and distribution channels. The system is fl awed, there is no question, but VCs and entrepreneurs are as much part of it and dependent on it as anyone else.
Zac Teichmann is a Director of HTT Associates, a boutique government relations consultancy firm based in Melbourne. He has represented and given strategic advice to top companies from the development, financial services, IT, resources and defence sectors.