Yahoo Finance 'I may be contributing to the growing inequality’: Venture capitalist on the conundrum of Silicon Valley
The Justice Department’s lawsuit this week accusing Alphabet’s Google (GOOG, GOOGL) of operating an illegal monopoly through search and search advertising was cheered by direct competitors like Yelp (YELP) and TripAdvisor (TRIP).
Venture capitalists, many of whom have built or led large tech companies and are public market investors themselves, have a more nuanced view of the case.
Rodney Sampson serves as chairman and CEO of the Opportunity Hub, which is a portfolio of businesses committed to increasing racial equity, including a non-profit and an investment arm. He believes a broken up Google could potentially open up more opportunities for entrepreneurs, especially those of color. Sampson, who is Black, co-founded and sold several startups, including Multicast Media Technologies and EFactor.
“You have a lot of executives and professionals that have been working in those companies that sometimes would pivot and become suppliers and vendors themselves. When you think about how those companies make a race to come to cities like Atlanta or other smaller markets, we have to be intentional about the community benefits agreements that we negotiate, because they can basically re-gentrify a community really fast,” he said in an interview with Yahoo Finance’s “On the Move” this week.
Rather than pitting startups against big tech, this lawsuit should spark a more collaborative mentality, says Sampson.
“Personal investors have to look at their own respective moral compass. I mean, look, I'm an investor. And to some degree, I may be contributing to economic inequality. That's why I am just as intentional about the partnerships. So for every dollar I make, I'm thinking about what dollars can be reinvested into those who may not have the same opportunities that I have,” he said.
“If you look at this pandemic, and you look at 39% of Black people are out of work, 41% of Black businesses are out of [business], the question is, does industry have the resolve to solve this? Or are they only going to look at the federal government to solve it? I think everyone plays a part,” added Sampson.
Opportunity Hub, along with Steve Case’s Revolution funds, Morgan Stanley’s Multicultural Innovation Lab and 100 Black Angels, have partnered for the Rise of the Rest Virtual Tour, a $2 million startup pitch competition for Black-founded companies across the United States that are headquartered outside of Silicon Valley, Boston and New York City. Startups must apply for the competition by October 25.
Case has been trying to chip away at the hegemonic Silicon Valley status quo since leaving AOL, which he co-founded, in 2003. Seventy nine percent of all venture capital investment dollars go to California, New York and Boston, and as cities try to brand themselves as innovation hubs with monikers like Silicon Prairie (Dallas), Silicon Peach (Atlanta) and Silicon Slopes (Salt Lake City). He advocates for a more collaborative approach between tech juggernauts and burgeoning upstarts.
“These companies, Google, Facebook, etc., are amazingly successful and hats off to them. But I think venture capital is very reluctant to fund a company that's going to compete with Google or compete against Facebook, and they are using their platforms in a way that does advantage some of their own businesses and disadvantages other businesses,” he told Yahoo Finance.
“Historically, antitrust had been focused more on protecting customers. I think this is more around trying to encourage competition and make sure innovation does flourish everywhere. And I think Silicon Valley, big tech, does have a role to play, including partnering with some of these startups in other parts of the country to help them scale up, being a little less insular..looking more broadly...I think more scrutiny has been inevitable for a while.”
Melody Hahm is Yahoo Finance’s West Coast correspondent, covering entrepreneurship, technology and culture. Follow her on Twitter @melodyhahm.
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