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BEYOND20


bottom of the economic ladder in 2019, according to the Public Policy Institute of California. Unfortunately, not all tech jobs are created


equal in terms of quality. While on-demand ser- vices have created flexible work for millions of people, ‘gigworkers’ still struggle tomake ends meet. For example, after fees and costs, Uber drivers take home an average of $9.21 per hour, according to the Economic Policy Institute — 52% less than California’s basic minimum hourly rate. Social media has facilitated connections,


but as we are now painfully aware, it is also a conduit for disinformation. Agents and organi- sations are capable of manipulating Twitter, Facebook and Instagramto propagate conspir- acy theories that are damaging to democracies. Misinformationabout Covid-19 vaccines is ram- pant.Advances in computer-generated imaging and artificial intelligence can make disinfor- mation more insidious, with the use of such tools as deepfakes,which distort identities. Another example is privacy violations.


Some90% of US consumers expressed concerns about the access, collection and storage of their data by social media companies in a 2018 Verizon Media survey. Nearly 20% of users say they experienced privacy violations on social media. Those can be costly, not only financially but also to a company’s reputation, as Facebook found out when it received a $5bn fine for mis- using user data. Unintended consequences lurk. For exam-


ple, fintech apps facilitating cash advances to gig and low-income workers could turn out to be another form of payday loans, sinking their customers into debt. It is imperative to pair such lending tools with financial literacy. Another potential area is cryptocurrencies


and their impact on the environment. Mining digital coins, for example, requires a substan- tial amount of energy, as Elon Musk recently pointed out. Things can turn out differently if tech


company founders, who often start out with the best of intentions, take the time to answer a few questions to help them avert unin- tended consequences.


Roadmap One way to address those issues is to establish a framework for a company’s operations by applying environmental, social and govern- ance (ESG) criteria. Venture capitalists can guide founders by formulating a set of ques- tions, asking:


■Is thecompanyaware of any potential health and safety risks for its staff, customers, and sup- ply-chain partners? If so, are there guidelines in place to manage these risks? ■ Does the company have a process in place to protect sensitive data, such as customer and employee information? ■Does the company monitor energy and water


August/September 2021 www.fDiIntelligence.com


COMMENT


SOCIAL MEDIA HAS FACILITATEDCONNECTIONS, BUT IT IS ALSOACONDUIT FOR DISINFORMATION


sources and consumption? ■ Does the company’s product, service, tech- nology or field of activity help to promote or achieve any of the UN Sustainable Development Goals? ■ Does the company view the integration of ESG as an opportunity to identify additional opportunities and risks for their own entrepre- neurial activity?


The IFC exclusion list and the 10 principles


of the UN global compact are good places to start. The Omidyar Network, in collaboration with the Institute for the Future, has also developed a useful toolkit called the ‘Ethical operating system’. This encourages founders and other stakeholders to analyse emerging areas of risk and social harm, and adopt “proofing” strategies. By building such considerations into the


fabric of a company, venture capitalists and companies can help thwart unforeseen nega- tive consequences. A start-up that hires and nurtures a diverse workforce, for example, can begin to address income equality and uneven access to opportunity.


Hindsight is20/20 Afewdeveloping start-up ecosystemsare taking note. In Singapore, investors are starting to take an interest in start-ups that are developing sus- tainable food processes. Saudi Arabia’s public investment fund governor recently acknowl- edged that ESG principles can help economi- cally. And in Latin America, the Association for Private Capital investment in Latin America now considers responsible investment an important area of focus. Stakeholders can start laying the ground-


work for responsible and inclusive tech, adapt- ing it to their economy and culture. By asking the difficult questions as they chart their jour- ney, the fallout fromunintended consequences can hopefully be mitigated.■


Christine Tsai is the chief executive and founding part- ner at 500 Startups. Since the firm’s inception in 2010, she has led the growth of 500 to more than $650m in committed capital, more than 2500 portfolio compa- nies and a vibrant community of founders spanning 77 countries.


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