SHINING A LIGHT ON CAPITALISTIC ABUSE IN THE TECH INDUSTRY| David Heinemeier Hansson with Jason Calacanis on This Week in Startups

Check out the TWiStartups Show Episode Page & Show Notes

Key Takeaways

  • Why work remotely? “It’s just a better quality of life in all the factors” – DHH
    • Working 100+ hours a week is nothing to brag about. If work is your only satisfaction and meaning in life, that’s a problem
  • On Uber & door dash: “they’ve built their wealth off exploitation and violation of people in misclassifying them as contractors instead of workers” – DHH
  • College shouldn’t be about producing people with very narrow skill sets
    • “I think we have a larger responsibility to society than simply cranking out workers. We should be cranking out citizens” – DHH
    • “I don’t give a shit about whether someone went to Stanford or Harvard. . . . I went to Copenhagen business school…I didn’t get an amazing education. I got a good education. That was all I needed and that’s what most people need. . . .They don’t need a luxury retreat for 50 grand a year.”
  • It’s great that Jeff Bezos is donating $10 billion to climate change, but the question is how much damage has Amazon cost the world? 
  • On the super wealthy: Being greedy benefits rich people only in the short-term. The lower and middle class “are sharpening the guillotines and I think rich people . . . are going to thoroughly regret that we took so much and left so little”
  • “Companies like Facebook and Google have found that this is the golden opportunity to turn shit content into gold content”  – DHH

Intro

  • David Heinemeier Hansson (@dhh) is a Danish programmer, racing driver and the creator of the popular Ruby on Rails web development framework and a partner at the web-based software development firm Basecamp
  • Host – Jason Calacanis (@jason)

Books Mentioned

  •  David and Jason Fried started the company Basecamp and worked remotely since 2001–The two of them wrote a book about remote work called, Remote: Office Not Required
  • In the book Drive by Daniel Pink, the author says that employees are motivated by three things: mastery, autonomy, and purpose
  • The book, Punished by Rewards by Alfie Kohn, outlines scientific research on why incentive systems don’t work
  • David calls, Winners Take All: The Elite Charade of Changing the World by Anand Giridharadas, a great book about the truth behind most philanthropy 
  •  The book, Goliath by Matt Stoller, “details how the trustbusters in the twenties and thirties took on JP Morgan and took on standard oil” – DHH

Remote Work

  • David and Jason Fried started the company Basecamp and worked remotely since 2001
    • The two of them wrote a book about remote work called, Remote: Office Not Required  
      • Why work remotely? “It’s just a better quality of life in all the factors”DHH
        • You don’t have to commute, abetter schedule, more personal space
  • “What makes a good remote worker makes a good worker period…What makes a good remote working environment is what makes a good working environment, period.”  – DHH

Work Culture

  • When it comes to creative development, estimates are garbage. Instead, focus on the budget (money and time)
  • In the book Drive by Daniel Pink, the author says that employees are motivated by three things: mastery, autonomy, and purpose
  • Be careful of incentives systems, even the ones with best intentions can lead to negative outcomes
    • The book, Punished by Rewards by Alfie Kohn, outlines scientific research on why incentive systems don’t work
  • If you’re working 100+ hours a week, that’s nothing to brag about. If work is your only satisfaction and meaning in life, that’s a problem
      • Even professional athletes have off-season
        • “You make a great athlete by doing concentrated lessons and then you have tons of rest. I think this goes for everyone.”
    • The 40-hour workweek is well-designed: You get 8 hours to sleep, 8 hours to work, and 8 hours to yourself

Problems With The Gig Economy

  • On companies like Uber or door dash: “they’ve essentially built their wealth off exploitation and violation of people in misclassifying them as contractors instead of workers”DHH
    • Tech companies give amazing benefits to their treasured employees (engineers, project managers, etc.) but give few benefits to their gig workers or call center staff
  • Gig workers are being exploited. They don’t make the $12-20 an hour because they’re not being paid for their expenses (car, maintenance, time spent waiting between jobs, etc.
    • Having a private chauffeur is expensive and a luxury. It shouldn’t be so cheap to get a ride to anywhere if it comes at the expense of the driver barely making a living wage
  • Uber isn’t as safe as some people may believe. They report about 2,000 rapes a year
  • The US has one of the lowest rates of social mobility, Meaning the people who are born at the bottom 10% of income rarely rise up to the top 10%
    • “ If you were born poor, you are likely to end up poor” – DHH

Denmark Healthcare > US Healthcare

  • Capitalism isn’t perfect, education and healthcare tend to operate poorly under market economics
    • Denmark’s healthcare is way better than the US even though Denmark spends about 8% of its GDP on healthcare while the US spend roughly 18%
  • Jason hears from a lot of people that they can’t go work at certain startups because the healthcare isn’t good enough
  • “I can afford any kind of healthcare I want and I’ve gotten any kind of healthcare I’ve wanted and this system is still completely insane” – DHH
    • “I go into get some sort of checkup, I have to fill out more papers then,…applying for a driver’s license in the Soviet Union would have required…the system is just bust and it needs to be replaced.”
  • “I guarantee you I would never have been qualified to…start the company and run it for 20 years with him if the Danish state had not paid for my healthcare, had not paid for my education” – DHH

Thoughts On College

  • College shouldn’t be about producing people with very narrow skills. It should make people into citizens–-“I think we have a larger responsibility to society than simply cranking out workers. We should be cranking out citizens” DHH
    • “We need fewer people who just know JavaScript and more people who know JavaScript and ethics and geography and all these other things, right?”
  • When it comes to college, you don’t need an amazing education to become successful, you just need a good education
    • “I don’t give a shit about whether someone went to Stanford or Harvard. I went to Copenhagen business school…I didn’t get an amazing education. I got a good education. . That’s what most people need. They just need a fine education. They don’t need a luxury retreat for 50 grand a year.”
      • Bernie’s programs in Denmark wouldn’t be considered radical but would be centrist
      • “This is how we ended up with 1.5 trillion in student debt in the US
  • Lambda School is selling off their student ISAs (Income share agreements) like subprime mortgages
    • “There’s just something extremely revolting around packaging people’s lives up in this way, slicing them, and then selling them as a securitization” – DHH
    • Lambda School would never work in Europe because students can go to university or take college courses for free
  • Lambda School isn’t sustainable. Actual placement rates are low.

David’s Beef With Billionaires

  • David isn’t a fan of billionaires like Jeff Bezos or Elon Musk going around to state governments and asking what incentives they can offer for their companies.
  • Jeff Bezos tweeted asking for advice on how to give his fortune away. One step would be to pay Amazon warehouse workers a better wage
    • Step two would be picking a city like Pittsburgh to be Amazon’s HQ2 and don’t ask them for billions in incentives
    • “Philanthropy does not make up for dysfunction”
  • David calls, Winners Take All: The Elite Charade of Changing the World by Anand Giridharadas, a great book on the truth behind most philanthropy 
    • It’s great that Jeff Bezos is donating $10 billion to climate change, but the question is how much damage has Amazon cost the world? 
      • In New York City alone, there’s 1.5 million packages delivered every day driven by diesel trucks  
        • “The damage has been more than 10 billion.” – DHH
  • Being greedy benefits rich people in the short-term. The lower and middle class “are sharpening the guillotines and I think rich people are going to thoroughly regret that we took so much and left so little”

Break-up Big Tech

  • Facebook should be broken up and WhatsApp and Instagram should be separate companies
    • According to David, the founder of WhatsApp actually regrets selling the company to Facebook
    • According to Jason, the founder of Instagram “has nothing good to say about Zuckerberg
      • “Even the people who worked for him and the people he made rich, hate him” – Jason Calacanis
  • Google, Apple, and Amazon should also be broken up
  •  The book, Goliath by Matt Stoller, “details how the trust busters in the twenties and thirties took on JP Morgan and took on standard oil” – DHH
  • David believes targeted ads should be banned
    • “This whole idea that relevant ads are a bonus to people is, is a complete manufactured talking point by the ad tech industry” DHH
      • Targeted ads are an invasion of privacy and they aren’t even that effective. If more than one person uses your router because you’ll see ads targeted towards your partner and not you
  • “Companies like Facebook and Google have found that this is the golden opportunity to turn shit content into gold content”  DHH
    • “The only thing that matters is engagement. So if you can find the most outraging content that’s going to be the most engaging content,
  • You should have the option of paying for a service and in exchange, you don’t get ads or have your data tracked (like YouTube Red which both David and Jason enjoy using)

Email Is Ripe For Disruption

  • Basecamp is working on a competitor to Gmail, you can learn more at Hey.com
    • Why create a new email company? 
      • Roughly 5 billion people use email, you only need a tiny fraction of the market to build a great business
      • Google has a monopoly on email and hasn’t innovated on it for quite some time
      • The network effects with email are weak

Additional Notes

  • There are been almost no rise in income since the 1980s, but three basics needs (housing, education, healthcare) have all skyrocketed
  • Don’t spend your life chasing money once you’re well off and comfortable–A can of Coke tastes the same to a billionaire as it does to a bum
  • David is a big believer in progressive tax and fines
    • If you’re a NHL player making millions of dollars a year, a $100 speeding ticket means nothing to you, but if it’s a progressive fine, you could be fined $100K for speeding
This Week in Startups with Jason Calacanis :
Notes By Alex Wiec

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