Heart of Darkness? Tech Capital San Francisco Now Has Income Inequality Similar to Rwanda

Tech was supposed to be the great  equalizer, the literal 'Revenge of the Nerds' that disrupted the established order and put the potential for power and profit in the hands of anyone with access to a computer.

With the advent of smartphones it was supposed to get even easier: the growth rates in Asia and Africa suggest the potential benefits.

But meanwhile, back in the epicenter of tech's real world, inequality has gotten so skewed that even coders can be forgiven for thinking that the economic order has tilted against them.
 
So what happened? First, this is a tale of two techs: that of the fortunate few with the connections and the educational credentials to grab the attention of similarly endowed venture capitalists. And then there is everyone else: the IT folks who wheel those carts stacked with electronic effluvia around your office and could be working for minimum wage; the aging boy-and-girl wonder coders and salespeople who grew up in the industry but have never hit pay dirt; the young guns with ideas and energy who can't get anyone to listen.

Yes, nobody said it's easy or fair. But history teaches us that winner-take-all societies tend to be short-lived. JL

Nellie Bowles reports in Re/Code:

San Francisco, the heart of the tech industry, now has the fastest-growing income inequality in the country, a gap on par with Rwanda’s.
Marc Benioff, the philanthropist and billionaire founder of Salesforce, may have been the angriest man at last week’s Code Conference, held at the Terranea Resort in Rancho Palos Verdes, Calif.

Onstage, Benioff launched into a fervent monologue, calling out the audience for failing on a range of social initiatives. The income discrepancy was growing, and techies were being too stingy. Benioff called out conference presenter Re/code for not having a charitable component, and asked people there to raise their hands if their companies had charity programs. Fewer than half did.
“You’ve got to show that we are part of the solution, not just part of the problem,” said Benioff, his voice rising in intensity.
San Francisco, the heart of the tech industry, now has the fastest-growing income inequality in the country, a gap on par with Rwanda’s. This has led to range of protests, including those that have begun targeting public tech symbols like Google’s commuter shuttle buses.
The connection between inequality and the tech industry may be fair: Innovation tends to make things more efficient, so fewer people can accomplish more work (in the Bay area, the WhatsApp texting service sold for $19 billion with 55 employees, while the Gap, worth about the same, has 136,000 employees).
So, what did the wealthy and influential attendees at Code — which was held at a secluded and exclusive beachfront resort — think about income inequality, the housing shortage, and whether tech was to blame or not?
The responses were varied, but the most common answer — no surprise, perhaps — was that tech wasn’t the cause of San Francisco’s income gap, but rather the best solution.
“Tech is solving the problem, because now we have these new qualified, nonprofessional market verticals,” said Mike Jones, CEO of Science and former CEO of Myspace. “You’re qualified to drive a car, but not professionally doing it. Congratulations, boom, you’re making [a] $90,000-a-year average Uber salary.”
For DogVacay, one of Science’s investments, for example, Jones said the company’s highest-rated dog-sitters were people who had never worked in the industry before. “People like enthusiasts who are just doing it because they enjoy it,” he said.
Scott Cook, one of the founders of Intuit, also mentioned new taxi services like Lyft as potential boons for a new middle class.
“There are so many new employment opportunities for people now … the tech community being the backbone building that industry, and tech community being the customers,” he said. “You need wealth to create wealth.”
Jeff Jordan, a partner at Andreessen Horowitz and former top eBay exec, was standing next to Cook, and nodded in agreement. “I call them ‘people marketplaces.’ For me, it started with eBay and realizing that a million people were making an income off of it.”
These jobs, however, could become automated. After Google debuted its self-driving car at the Code conference, Travis Kalanick, the founder of Uber, mentioned that there could be synergy in the future.
“The reason Uber could be expensive is because you’re not just paying for the car, you’re paying for the other dude in the car,” he said, referring to the driver, who could be rendered obsolete in the self-driving future.
Philip Engelhardt, managing partner of PhilQuo Ventures, said he thinks smartphones have begun to level the playing field for ambitious young people, in a version of the “pull yourself up by your own bootstraps” meme.
“The consumer has never been an educated part of the species, but once we dropped smartphones in their hands, they started to feel empowered,” he said. “And you know one of them is going to be one of the kids whose single mother got a smartphone at work, and she’s taking night classes. He takes that thing and goes online and learns to code and has a vision of an app that no one else has. In the old days, he had that vision alone on a plain in India with skinny cows all around him, and he couldn’t do anything about it.”
Some at the conference said they felt that tech was unfairly pilloried by protesters of the Apple and Google buses.
“Boo-hoo, tech,” said former Apple executive and current venture capitalist Jean-Louis Gassée, who rubbed his eyes to mime crying. “We are not that bad.”
Still, some executives said they were quite worried about income inequality.
Mark Pincus, the founder of gaming company Zynga, said the income gap is a problem that had been worsening for a long time, but people are only just starting to notice it.
“A lot of these tech success stories were happening in the South Bay for a while, but now that tech’s moved up to the city, instead of people building enormous homes hidden in Woodside, now you can see [it here],” he said.
He noted that he and Benioff have been involved with the Tipping Point charity, which has had significant success convincing tech companies to donate.
Another tech-favored charity is Code.org, founded by Hadi Partovi, who argued that one part of the problem is that students aren’t being trained for programming jobs, which are proliferating.
“Computer science degrees are literally the best kind of degrees, by far,” Partovi said in an interview, noting that 90 percent of high schools don’t offer the course. “If you heard 90 percent of schools wouldn’t allow black students or women to code, you’d be up in arms.”
Zander Lurie, the founder of nonprofit CoachArt, said that when tech executives do donate, they don’t give enough, considering their wealth.
“When you look at the wealth creation and the impact they have, I don’t think it’s enough, at all,” Lurie said. “You don’t want to be the only castle in the slum.”
Some attendees at the conference said they thought the situation was more serious.
“The existential crisis we face as a country is rising inequality and mobility decreasing. We argue technology is a major factor in that,” said Joe Green, the founder of FWD.us, and perhaps one of the most vocal activists in tech. “At some point in the future, the nature of work will physically change. Androids will build androids. Then what will we do?”
So, the time of machines taking over is here? “We’re in this inflection moment, and it is not inevitable that people continue to support the system as is.”
Did he mean that a revolution was coming?
“I don’t think it will be a violent one. But yes, I think there will be a big shift,” Green said. “And it won’t come from the 55-year-old factory worker, but the 22-year-old with pretty good grades who can’t get a job.”
Later, at lunch on a long lawn under white tents, Marc Benioff elaborated on his feelings about his industry giving back. Does this make him tech’s arm-twister for do-gooding?
“Somebody has to be,” he said.
“Throughout history, where we’ve seen jobs getting eliminated, we’re also seeing jobs getting created. Potentially, with the data sciences, we’ll see jobs eliminated at a faster rate than they’re created,” he added. “And everyone here has been so lucky … it’s all the same — another wave of entrepreneurs, another wave of investors, still stingy.”
“We’re a stingy, stingy industry,” said Benioff, as he walked away.