28: Out of the valley

Mar 16

There are stories of all-powerful gods, and those of gods who are flawed. Lazy gods, reluctant gods, petulant gods, hedonistic gods who indulge themselves in the spoilings of the celestial rather than attending to earthly matters below: these stories call to us, because they remind us of ourselves.

Two of my favorite stories about flawed gods orient around a similar thematic axis. Roger Zelazny's Lord of Light imagines gods as a super-class of humans who developed technology to make themselves godlike, and who retain control over mortals by preventing further technological advancements. Likewise, qntm's Ra tells us of an elite group of humans with access to advanced technology who secretly hoard this knowledge for their own benefit. Their shared crux hinges upon a tragic asymmetry: The gods had every imaginable resource available, and yet they kept it all to themselves.

Last fall, in a post titled "The Shitposting Gods of Silicon Valley," Pirate Wires' Mike Solana recounted Elon Musk's taunting of the UN World Food Programme, whose director, David Beasley, claimed that 2% of Elon's wealth could help solve world hunger. Musk's response:

Elon's response was widely lauded on Twitter. But while perhaps the UN won't be the one to solve world hunger, Solana challenged Elon to come up with an alternative (emphasis mine):

Our shitposting Gods of Silicon Valley have only recently begun to sense they can tell their own stories...[t]hat’s amazing — really, I love this evolution for us. But on the other side of the incredible, growing influence of sovereign influencers is duty...In between these truly excellent dunks, we could really use a plan.

In other words: while it's fun to watch Elon dunk on ailing institutions on Twitter, wouldn't it be even more fun to watch him actually do a better job of it, as he did with SpaceX and NASA, or Tesla and the automotive industry?

First, we learned how to coax the glass serpent out of its desert sands; then we made it dance for gold. Startups produced an immense amount of wealth in the 2010s, driven by technological advancements, strong public markets, and cheaper upstart costs. California (at least, pre-pandemic) is home to the most millionaires in the country, by a long shot, many of whom made their fortunes in Silicon Valley.

Tech is no longer an industry these days: it's a system of values, a way of interacting with the world. (If you don't believe me, try to define what "tech" actually means. It doesn't refer to software, or hardware, or fintech, or manufacturing, or...) Tech is a gushing oil well that buoys new, unproven ideas up and up, spraying them down to the masses.

And yet, with all the resources and all the best talent and all the ideas in the world, tech is notoriously navel-gazing. It took a pandemic to finally pry tech out of its hidden enclave in Silicon Valley, where it lay sprawled on the floor, face strapped and transfixed to a reality of its own making, eyes darting back and forth while the city decayed around it.

I've never wanted to live in New York, but I'll concede that the city is a testament to human civilization, its residents a tightly-networked hive mind, flitting among grand feats of urban planning that remind us what we're capable of. San Francisco, by contrast, is a reminder of our shortcomings: its denizens withdrawn, buried in their phones, picking their way amongst the wasteland. Any physical charm that San Francisco has (and there's much of it to be had), whether its rolling green hills, foggy shrouds clinging to the Golden Gate Bridge, or cheerful Victorians, existed before tech came to town. We inherited its beauty; we didn’t create it.

But it's not that tech doesn't care about humanity, and this is where mainstream media gets it wrong with its eat-the-rich discourse, weaponizing tech's silence to expound upon the failings of capitalism. Public hostility doesn't help either, paralyzing those who might otherwise get involved. But, as Stewart Brand wryly wrote in the Whole Earth Catalog many years ago: "We are as gods; we might as well get good at it." (Or as Solana put it: "It sucks, but suck it up.")

I've pondered tech's unassumed noblesse oblige for awhile now, though from a much more modest standing place. I originally fell into tech from the social sector. My first gig out of college was a research fellowship, funded by a family foundation, to explore how nonprofit endowments could be invested towards addressing climate change. Afterwards, I worked at an education nonprofit in San Francisco that also happened to be a technology company, which is how I found my way into tech. My open source research wouldn't have happened without an initial grant from a large philanthropic foundation. And I've even dabbled in grantmaking myself, with an experimental microgrants program that I ran for two years.

I migrated to tech for the same reason I was originally attracted to the social sector: because it seemed like the best way to make interesting things happen in the world. Years later, I've seen many friends succeed through their efforts in startups. But despite their financial success, very few are active philanthropists, despite having the resources, as well as an interest in shaping the world, that would otherwise make them perfectly suited for it.

To be wealthy in tech and participate in philanthropy is itself a subculture, rather than a default state. I find this asymmetry puzzling, and for years have tried to articulate a good answer to this question: Why are some of the world's most well-resourced, high-agency people utterly disinterested in philanthropy?

The simplistic take, of course, is that tech people are selfish and greedy, or perhaps just lazy. But that doesn't resonate with my experiences of friends in tech. On the contrary, many of them are hyper-interested in doing things that have prosocial outcomes. Their disconnect isn't with the underlying goals of philanthropy; it's with the philanthropy sector itself, which they perceive to be ineffective at delivering on those goals.

Philanthropy is often conflated with charity, a sort of blank-minded "giving back" to those less fortunate, but these are actually two distinct areas of work. Charity refers to direct services that assist people in immediate need. Donating to a homeless shelter, for example, or to COVID relief efforts, is an example of charity.

Philanthropy, on the other hand, refers to using private assets to generate public outcomes. The earliest modern philanthropists remind me of startup founders, driven less by benevolence and more by the hubris to believe they can shape the world to their liking. If venture capital is risk capital for private goods, philanthropy is risk capital for public goods.

We take philanthropy for granted in the United States, but it doesn't really exist anywhere else at our scale. Europe, for example, has historically relied on religious and government funding for its public institutions. In America, everything from universities, to libraries, to public health initiatives and science research have their origins in philanthropic experiments, which were later adopted and expanded by government. The Flexner Report, commissioned by the Carnegie Foundation, revolutionized medical education in the United States. The General Education Board, established by John D. Rockefeller, led to the formation of a public high school system (previously nonexistent) in the Southern states.

[Philanthropy]...is free to choose its own directions without severe governmental control....All our social services, even those now taken over by government, were pioneered with funds given voluntarily. The American genius for discovery and invention under free enterprise has been applied in the field of social discovery no less than in inventions useful to business.

— F. Emerson Andrews, "Attitudes Toward Giving", 1953

Philanthropy, then, can be understood as a form of self-expression. It is complementary, not competitive, to government: citizens have the right to use their private assets to experiment with new ideas, and government has the size and longevity to scale and maintain them. Everything from tiny libraries and Patreon backers to much grander experiments is a participation in, and upholding of, that great American tradition.

Like freedom of expression, philanthropy is inherently pluralistic. A difference in ideologies, goals, and strategies simply means more ideas that can thrive in an open marketplace. (This is why effective altruism, despite its popularity, cannot singlehandedly meet the civil purpose of philanthropy.)

It's not clear why this definition of philanthropy – widely understood by scholars and professionals – is so absent from our public discourse. From an academic perspective, this feels like a failing to translate years of American history into public-facing insights. From a practitioner lens, it reflects the growing irrelevance of philanthropy over the last few decades.

There is no shortage of bipartisan critique these days, aimed at donors and nonprofits who preoccupy themselves with incremental tasks, instead of tackling big, impactful work. But for all the criticism that modern philanthropy has suffered, the most striking condemnation is that the average American thinks very little about philanthropy at all, despite the fact that its sole purpose is to benefit the public sector. The failure of philanthropy is its failure to stay relevant, to inspire us with what's possible.

It's unsurprising, then, that philanthropy has largely unappealed to tech's newly wealthy. But if we return to the idea of philanthropy as risk capital, it's easier to see how it could resonate with tech. "Using private assets to experiment with public goods" might mean starting a university or media organization, but what about Uber or Facebook, both of which disrupted public markets through private means? After PayPal was acquired by eBay, Elon poured half of his $200M fortune into starting a new company, SpaceX, in hopes of making affordable rockets widely available. Does lowering the cost of space transportation count as philanthropy? Why or why not?

Philanthropy, like tech, is not a single tax designation or asset class, but a way of interacting with the world. It is not, nor has it ever been, synonymous with nonprofits – and in fact, many of the major new philanthropic initiatives in tech, established in the last 5-10 years, are LLCs rather than 501c3s, and fund both nonprofit and for-profit work.

Startups, then, could be considered an essential part of tech's philanthropic culture, though they're not explicitly discussed this way. San Francisco's version of New York-style philanthropy has long been the angel investing ecosystem, a way to pay it forward to future founders. And for awhile, these cultural differences offered a reasonable explanation as to why tech didn't participate in traditional philanthropy. Old Money had philanthropy, putting their names on museum wings; New Money had angel investing, putting their names on startups.

More recently, however, we've seen a confluence of changes in macro conditions – the aftereffects of a tech backlash, starting in the mid-2010s; a flurry of startup exits and IPOs; and a global pandemic riddled with failed promises from legacy institutions and "trusted experts" – that changed this calculus.

Startups are capable of solving a lot of problems in the world, but some public sectors – science, academia, media – require other creative solutions. For the first time in recent history, starting an ambitious new project that's not a startup has re-entered tech's thinking. As Solana put it, tech has "only recently begun to sense they can tell their own stories," and we’re just at the beginning.

If that weren't exciting enough, we've also seen the emergence of a new crypto wealth class in parallel, starting in 2017, that is rapidly progressing through these stages of development at an even more compressed rate than traditional tech. Crypto is like tech's weird cousin, or perhaps the wild-haired uncle in a Hawaiian shirt who talks too loudly at the family reunion – while they share similarities with tech in how they're regarded by the rest of the world, on a more granular level, they’re pioneering different theories of change. Whereas tech is using its wealth from startups to fund culture-building work, crypto is trying to develop new ways to fund public goods directly.

Thirdly, the way in which wealth is generated is changing rapidly. For most of the 20th century, self-made wealth required taking on enormous personal risk. Only a handful of founders and executives got massively rich from, say, Standard Oil. Tech expanded access to wealth by popularizing a new innovation: equity compensation for employees. Crypto took this one step further by making it possible for anyone – not just employees of a firm – to participate in collective ownership of appreciable assets. This means that the members of our newest wealth generation look very different from any other time in human history.

Here's what I'm not interested in writing about, by the way. I'm not interested in billionaire discourse, which feels tiresome and fetishizing. I'm not interested in the same five "tech" billionaires that are endlessly fawned over in the media, because most of them are so far removed from tech culture at this point (by virtue of their outsized impact) that they're better understood as High Quality Imitation-Tech, propped up dollishly on stage for mainstream entertainment. (Also, red-dot airplane.) I'm not interested in watchdogism in the name of "transparency," because, as previously stated, I believe that philanthropy is a uniquely American freedom for private citizens to experiment, not a pair of shackles.

Instead, I'd like to take an ethnographic lens to understand how tech, broadly, as a subculture-turned-hegemony and rising wealth class, views its obligation to society. What does it mean for tech to act prosocially, and how is that changing? How do tech and crypto's values overlap or diverge, and what are the differing philosophies within each of these? Historically, how do major wealth booms shape society, and what does that tell us about our future?

While altruism is often thought of as intrinsic to human nature, philanthropy is a manmade system that requires upfront investment, just like startups. The "founder's urge" to build things might stem from a deep creative drive, but Silicon Valley's ecosystem wouldn't have flourished without Sand Hill or Y Combinator.

We aren't hard-wired to do this stuff. The default state of a suddenly wealthy person is to quietly buy the boat or the vineyard in Napa, raise a family, and avoid confronting the power they've been given. But the industrial wealth class, which preceded our digital wealth class, wasn't hard-wired to do this stuff, either. Andrew Carnegie and John D. Rockefeller deliberately campaigned to make philanthropy (initially called "scientific giving", to distinguish it from charitable giving) attractive to their peers.

If we don't talk about philanthropy, we risk repeating the mistakes of our European predecessors – recoiling into America's ancestral shell – instead of following in the footsteps that the industrialists so boldly laid out for us in the last great technological wealth boom. The failure mode of today's ascendant wealth class would be a backslide into aristocracy, perpetuating the bloat and disquiet of generational wealth, instead of finding ways to discharge it back into society, further shaping how the world turns by increasing opportunities for others to succeed.

We're at a critical time in which new public institutions are being built as we speak. In the past couple years, a number of experiments have already launched in academia, science, media, politics, and the arts; a smattering of examples include Institute for Progress, FROs, CityDAO, Future Fund's regranting program, University of Austin, KlimaDAO. If we're lucky, there will be many more in the years ahead.

The institutions we have today are all we've ever known, so it's easy to think they are immutable. But most of them are less than a century old, and reflect the needs of a populace that’s much different from today. Institutions can change, and they will be rebuilt again.

So, that's what's been on my mind. I'm not sure what it'll turn into yet, but I've been exploring these ideas in book form. There's just so much history to learn from, and context and world-building to lay out, that it feels right to do this in longform. I'll occasionally release chunks of thinking (like this science funding piece) as I go.

For those who've been following my work for awhile, I've run into a bunch of interesting challenges in approaching this topic, compared to my open source research. In open source, conversations are default-public, with tons of documentation and blog posts and issue trackers to pore through. With philanthropy, the most interesting details are reserved for private conversations behind closed doors between trusted relationships.

Another big difference is that open source has a fairly modest academic scholarship; most of my learnings came from talking to people and gathering my own data. (Open source is, after all, just a few decades old.) Philanthropy is...well. Pretty much as old as you want it to be. Even modern American philanthropy, which started in the late 1800s, still has more than a century's head start on open source. That's meant reading a lot of historical texts, both about philanthropy, and also to understand the context in which decisions occurred. Philanthropy is also just a much more robust academic field: there's a lot to build on and learn from, and it's taken time to get myself up to speed.

I'm grateful to Tyler Cowen and Emergent Ventures, who've awarded me a grant for this work. And finally, to make an explicit ask: if you're 1) someone in tech or crypto who's thought about any of these topics above, or 2) someone who spends time in philanthropy, within or outside of tech, I'd love to talk to you!

Thanks for your support as I embark on a brand new chapter of independent research <3

I'm in group (1). I think you're right that ~tech hasn't done the 3rd part of a Carlotta Perezian tech cycle: Institutional change.

I've wonder why. Code for America, US Digital Service, etc show that many have tried. With some success on the margins. My hunch is that the new forms are crowded out by the old forms (i.e. the industrial bureaucracy).

Another issue w/ philanthropy as risk capital for public goods is that many of the baumol cost disease issues (housing, healthcare, education, etc.) are crowded out with existing institutions that are able to block new kinds of approaches.

my pet theory: the high-modernist institutions (large executive branch, bureaucracies, etc.) had a totalizing bent. postmodernism will purge them from the inside. I hope there will be enough of the social institutions left for the meta-modern to come in afterwards. i.e. there's a sort of Perez-ian supercycle of kinds of institutions

Someone else worth talking to here is Dave Guarino, who spent lots of time in the trenches trying to graft ~tech institutional style onto industrial institutions with california food stamps. Also knows his Theory of Political Change history: https://twitter.com/allafarce

I’m eager to read your explorations of this fascinating topic, and always happy to chat of course.

I’m particularly interested in the psychological dimension you alluded to in that the ‘default mode’ for new wealth is to retreat into itself and avoid directly confronting the power structures that led to its success.

I wonder to what extent a more individualistic, pluralistic culture of philanthropy is stymied by fear of vulnerability, or reputational risk in a pc world. It makes sense that philanthropy is so secretive: failure is arguably higher stakes in philanthropy-- and especially charity -- than in VC, which seems to me to have more of a culture of betting.

Peter Singer’s drowning child thought experiment comes to mind. The notion of drowning children around us is deeply uncomfortable to confront head-on, as is the idea of wading in and ruining your new suit just to discover you couldn’t save the child after all. I imagine for the less brave it’s just easier to enjoy your nice suit, change your profile picture to show everyone how much you care, and secretly hope someone else will figure it out.

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© 2022 Nadia Eghbal
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