This story reflects the views of this author, but not necessarily the editorial position of Fast Company.
Last month, venture capitalist Tim Draper wrote an op-ed for the Mercury News complaining that “every great innovation leads to more government departments and more regulation, lessening the incentive to innovate.” That idea isn’t exactly original, but it does seem odd to rehash it now. After all, the Trump administration–with its slew of agency vacancies and its vigorous slashing of everything from financial and environmental to nondiscrimination regulations–is hardly the epitome of “big government.”
But in continuing to disparage the power of government for good, much as Trump did on the campaign trail, tech leaders like Draper aren’t just echoing that populist talking point and amplifying the president’s own destructive message in the process. They’re also shooting themselves in the foot. Less than a year into Trump’s presidency, some business leaders have become vocal critics of the White House, but that’s too little by half if they don’t go further and learn to champion government’s potential for good.
To be fair, current levels of executive-branch dysfunction might make the present moment seem like the absolute worst time to kick off that kind of cheerleading. But in truth, Trump’s presidency is a belated confirmation of beliefs like Draper’s: that our democratic institutions have become obstacles to progress. This view is widespread in American society, but it’s long held particular sway (and exerted disproportionate influence) in Silicon Valley. Tech leaders–and not just vocal Trump backers like investor Peter Thiel–have spent years framing government as hopelessly divorced from almighty innovation at best, or wholly antagonistic to it at worst.
While faith in government is at an all-time low, tech companies are enjoying a high tide in public opinion. Only 32% of Americans have confidence in our democratic institutions, according to a 2016 Gallup survey; Congress has a 15% approval rating, and Trump’s own approval lingers at a historically low 39%. Yet tech companies are beloved. According to research firm Morning Consult, 79% of Americans have a favorable opinion of Amazon, 75% do so of Microsoft, and 69% feel positively about Apple.
That may sound like great news for those companies, but it isn’t. The low trust in government that paved Trump’s road to the White House is already harming private enterprise. From the uncertainty around NAFTA to the loss of high-skilled immigrants, to immigration-friendly Canada, the tech sector is already being hurt by the policy tumult, and it’s only likely to get worse. The most innovative companies need to use some of the goodwill they’ve accrued to rebuild confidence in government–which is possible to do, even while criticizing government policies.
Not only will the tech industry benefit from laws and policies that create more stability, but the sector is an unusually good spokesperson for positive, productive government intervention. Indeed, despite numerous public statements to the contrary, Silicon Valley long been one of the biggest beneficiaries of government help.
Larry Page and Sergey Brin represent one well-known example verging on the cliché: Both were working at the Stanford Integrated Digital Library Project, thanks to the support of a $4.5 million grant from the National Science Foundation, while developing the technology that would become Google. There’s also famously Apple’s Siri, which the tech giant acquired from a research company that was working at the time on a $150 million government project to innovate speech recognition. There are more recent examples, too, including genetics company 23andMe, which was built upon discoveries from the Human Genome project, backed by some $2.7 billion in mostly government funds.
But government doesn’t just play a crucial role in idea generation or R&D. Public universities educate workforces. Public pension funds are among the largest investors in venture capital and private equity. Local governments dangle millions of dollars in economic incentives to get companies to relocate inside their borders. New Jersey lawmakers just announced a plan that would give up to $5 billion in tax breaks to Amazon for setting up a second headquarters there. In fact, one little-known program, the Small Business Administration’s SBIC program, founded in 1958, provides additional capital to venture funds at absurdly low interest rates (about the cost of a residential mortgage).
One of the beneficiaries of that last program? Tim Draper himself. On LinkedIn just a few months ago, he posted a surprising statement:
I am not known for being a great supporter of government programs, but I would like to take this opportunity to thank the SBIC program for taking a chance on me way back when I was 26 years old and starting out in the venture capital business. I was able to take a $2 million SBIC and use SBA’s 3:1 leverage to have a fund where I could use their $6 million to start investing in tech startups.
What’s more, Draper’s venture capital firm DFJ was an early investor in Elon Musk’s companies, including Tesla, SpaceX, and SolarCity (now merged with Tesla)–all of which have relied on heavy government subsidies and contracts, meaning that taxpayers have directly supported the return on those investments that Draper and his partners have reaped.
So the selective criticism and quasi-libertarian posturing of tech leaders like Draper isn’t just disingenuous, it’s counterproductive to U.S. companies’ own business interests. On the other hand, though, it’s encouraging when even the public sector’s biggest detractors can spot the advantages of a more collaborative relationship with government. Not only do we need more of that, but it’s something that consumers increasingly demand.
One study from Weber Shandwick and KRC Research found that 56% of millennials want business leaders to engage in “CEO activism.” Indeed, by not taking a stand on issues of public policy, CEOs run an increasing risk of consumer blowback. In the aftermath of Trump’s comments on the deadly riots incited by white supremacists in Charlottesville, Virginia, last August, not only did members of Trump’s business councils quit, but the ones who were slow to do so saw huge customer pressure and online protests.
On the flip side, when tech companies have banded together to push for specific government action, rather than denigrate government wholesale, they have seen success. When major internet companies including Google and Reddit temporarily “blacked out” their sites to protest the SOPA/PIPA legislation in 2012, which would have allowed for entire websites to be blocked for individual copyright infringements, the bills were quickly squashed. And on the state level, it was largely businesses that killed a discriminatory anti-transgender “bathroom bill” that the Texas legislature was considering this summer.
Companies should go even further, though. Tech leaders must become vocal advocates for government efforts that support innovation, not just activists who push back against policies that threaten it. Sanyin Siang, author of The Launch Book and executive director of Duke’s Fuqua/Coach K Leadership and Ethics Center, points out something that many business leaders are coming to recognize firsthand, occasionally the hard way. As she recently put it to me, “Different from their predecessors, CEOs now operate in a volatile, uncertain, complex, and ambiguous environment,” the terms commonly abbreviated as “VUCA.”
But it’s no longer just because of changing technology and shifting markets, Siang explains. It’s because the very government some business leaders have so effectively disparaged has now become a top source of VUCA. So now, says Siang, CEOs “need to consider how a broader set of factors outside of their business relate to and affect their business.” Thriving in an environment like this takes proactive partnerships between industry and government, in addition to well-placed criticism.
The first step, though, is changing the way Silicon Valley leaders speak about government. Tim Draper’s point of view may fit our industry’s self-conception, but it neither reflects the full reality of tech innovation nor helps advance its interests–right now or in the future.