7 min read

How Early Stage Companies Can Make Responsible Technology a Competitive Advantage

Tech giants face rising backlash over the enormous influence they wield in our lives, elections, economy and beliefs.

Tracy Barba

Head of ESG and Global Stakeholder Engagement. at 500 Global.

Published

30.10.20

The intersection of technology and society is in a precarious place currently. Tech giants face rising backlash over the enormous influence they wield in our lives, elections, economy and beliefs. Just ask Facebook, Google and Twitter. 

For entrepreneurs, this makes embracing responsible technology a pressing issue for our time. “We’re really at this point where there is a fever pitch of techno-skepticism,” says Lyel Resner, an adjunct professor of public interest technology and social innovation at NYU, and a fellow at the MIT Civic Data Lab. “It’s a frightening time on a number of fronts.” 

Lyel Resner: “Don’t be the person who lays awake at night with regret about your contribution in tech and society.”

Resner recently joined a fireside chat hosted by 500 Startups, where we discussed the growing intersection of technology, business, politics and social responsibility, and why now more than ever responsible tech is a business imperative. 

He’s well-placed to explore this subject. Alongside his work in academia, Resner is the co-founder of Swayable, a public benefit corporation that uses data science to create more persuasive media for the ACLU, Airbnb, Google, Girls Who Code and The Rockefeller Foundation, among others. 

As Resner sees it, technology is experiencing a moment of reckoning, which he likens to Mary Shelley’s Frankenstein. “Frankenstein is ultimately about being careful about what you create, because the thing you create could ultimately become the thing that destroys you,” he says. 

History repeats itself

This isn’t the first time society has questioned the benefits of technology, where people have been fearful about whether technology is impacting the greater good, says Resner. That drama has played out through the ages (he cites Socrates, who feared the written word would “cause forgetfulness in our souls”). But the last decade has upped the stakes. 

“Back in 2008 we were running high on the fumes of techno-optimism,” he says. The iPhone had recently come out, President Obama was promising change and companies like Facebook were eying IPOs. In short, everything was awesome, says Resner. 

That conflict is being inflamed in different ways, including online misinformation and conspiracy theories, foreign interference in elections and tension around personal data. Meanwhile, there are growing threats to the privacy and security of everyday citizens, which disproportionately affect vulnerable populations, specifically people of color.

“There are a lot of things broken right now and the tech community needs a moment of introspection to think about what role we have played,” says Resner. Here, he quotes the historian M. Kranzberg: “Technology is neither good nor bad. Nor is it neutral.”

How does this affect entrepreneurs?

It’s not just Facebook or Google in the crosshairs when it comes to technology’s unintended consequences. Many companies have faced existential and ethical troubles because they didn’t give enough forethought to certain issues. Resner ticks off examples, from Airbnb and WeWork to Clarifai AI

Tech entrepreneurs face a variety of risks that can later haunt them: from products used in unforeseen ways to weak security and changes in norms and behaviors. Unfortunately, it’s easy for early stage startups to ignore how their product could impact society in unforeseen ways. 

Founders may think it’s too early to worry about. They’re busy finding product-market fit, engaging customers and fundraising, so discussions around potential unintended consequences fall down their list of priorities. Others might think responsible tech isn’t relevant to them, or they care about it but don’t know where to start. 

“These issues are not going away. The public has noticed and is fearful and distrustful of the technology community,” says Resner. “They’ve seen the damage. So have regulators and folks in the public sector.” That means it’s critical for early stage companies to consider responsible technology alongside other challenges, like product-market fit. 

It’s certainly on the tech community’s radar. According to UK think tank Doteveryone, 28% of tech workers have witnessed decisions they felt could have negative consequences for society. Simultaneously, nearly two-thirds of these tech workers want more resources and time to think about the impact of their products.

Ultimately, there’s upside to developing technology in an ethical way from an early stage. It can attract and retain diverse talent at a time when tech workers are pushing back against bad employer behavior; it also helps generate consumer loyalty and can build social capital, as people expect more from brands now. Importantly, it also prevents future headaches. Resner compares it to insurance—the upfront costs will help avoid time-consuming and costly issues down the line. 

“As you’re building your company, these are long-term trends that will in all likelihood affect your day-to-day,” says Resner. “Getting ahead of them is almost certainly a business imperative.” 

What’s next for founders?

It’s well within the grasp of founders to focus on responsible tech from the start. “It turns out you have quite a bit of agency over these issues, even at the stage that you’re at, even with the constraints that you’re under,” says Resner. 

Early stage companies can anticipate risks and engage in consequence-scanning, while also training staff in ethical or social risk, and even tying compensation to ethical or social-good metrics. Startups can set clear product policies (establishing how a product can or can’t be used) and commission third-party ethical audits of their products. They can also establish ESG advisory boards, as well as create staff roles devoted to ethics or social responsibility.

Companies can set up as public benefit corporations, allowing them to maintain a fiduciary responsibility not only to shareholders, but to stakeholders including employees and customers. That gives founders flexibility to be mission oriented, says Resner. There’s also B Corp certification. “We need to be thinking about responsible organizational design when we talk about responsible tech,” says Resner. “B Corp is a really terrific framework when thinking about that. 

There are many tools, organizations and thought leaders providing help and guidance to founders exploring responsible tech. One example is the Ethical OS toolkit. It’s a guide that includes a checklist of risk zones to help identify emerging areas of risk and social harm most critical for a team to start considering now. The zones cover things such as disinformation and propaganda, economic inequalities, the surveillance state and data control and monetization. 

No Regrets

Entrepreneurs need to consider the implications of what they’ve built before their company becomes a runaway success. By that time the ship is too big to turn and bring meaningful change, says Resner. He mentions a quote from an anonymous Facebook employee, from a 2017 Vanity Fair article: “I lay awake at night thinking about all the things we built in the early days and what we could have done to avoid the product being this way.” 

Part of responsible tech means thinking about what founders want to accomplish while also ensuring their company is helping create a more just and prosperous world for everyone. “Don’t be the person who lays awake at night with regret about your contribution in tech and society,” says Resner. 

 

This post is intended solely for general informational or educational purposes only. 500 Startups Management Company, L.L.C. and its affiliates (collectively “500 Startups”) makes no representation as to the accuracy or information in this post and while reasonable steps have been taken to ensure that the information herein is accurate and up-to-date, no liability can be accepted for any error or omissions. All third party links in this post have not been independently verified by 500 Startups and the inclusion of such links should not be interpreted as an endorsement or confirmation of the content within. Under no circumstances should any content in this post be construed as investment, legal, tax or accounting advice by 500 Startups, or an offer to sell or solicitation of interest to purchase any securities advised by 500 Startups. Prospective investors considering an investment into any 500 Startups fund should not consider or construe this content as fund marketing material. The views expressed herein are as at the date of this summary and are subject to change without notice.  This post includes the views and opinions of independent third parties that are not related to or controlled by 500 Startups. All views and opinions presented herein by such third party participants do not represent those of 500 Startups or any of its affiliates or representatives. 500 Startups makes no representations as to or guarantees of specific outcomes from relying on the contents of this post.

 

Tracy Barba

Head of ESG and Global Stakeholder Engagement. at 500 Global.

Tracy Barba has demonstrated expertise leading marketing and fundraising initiatives for investment firms, networks and funds. She was most recently the Head of Global Marketing for Bamboo Capital Partners, a private equity firm investing in the financial services, renewable energy, and healthcare sectors across emerging and frontier markets with a portfolio of investments operating in more than 30 countries. The firm secured more than $30 million in funding during her tenure. She was formerly the Director of Communications at Social Finance US, the pioneering firm behind the Social Impact Bond and Pay For Success financing model. Prior to that she was the West Coast Executive Director of Golden Seeds, a 275-member angel investor network investing in women-led companies, where she recruited members, expanded investment pipeline, chaired pitch sessions and deal syndication process. She has also provided program design and member recruitment services to Hub Ventures, an accelerator funding early-stage social enterprises followed by Big Bang, a venture philanthropy network syndicating funding for seed-stage enterprises with demonstrated and scalable impact, and New Media Ventures, a national network of angel investors funding startups creating progressive political change. She was the VP of Marketing at VantagePoint Venture Partners, a $4B private equity firm investing in energy innovation and efficiency, where she led the launch of the energy practice and fund. She directed marketing initiatives at InterWest Venture Partners, a $3B fund manager investing in early-stage Life Science and Information Technology companies, and Gabriel Venture Partners, a $300M fund manager investing in disruptive models and capital efficient companies. She has served as mentor and faculty member to leading accelerators and fellows programs including Mulago/Rainer Arnhold, Echoing Green, Tony Elumelu, GSBI among others.

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