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The Away Luggage Saga Shows Venture Capital Needs a Reality Check
Silicon Valley is indeed changing the world, and not always for the better
Yesterday the millennial-beloved luggage brand Away came under fire after The Verge exposed its internal culture, which former employees described as bullying, cutthroat, and clique-y. A VC came to Away’s defense, dismissing the accusations by stating: “to build a $1B+ disruptive business requires speed & intensity. Startups are hard, period.”
Rather than a heartfelt defense of visionary entrepreneurs chasing their dreams and breaking a few things in the process, this sentence reveals the deeply faulty foundations of VC investing today.
It has long been known that the short time horizon of the VC model stifles true innovation. While a new luggage or CBD brand can (and regularly does, per the Verge’s article) speed up their growth to meet exits, startups working with A.I., blockchain, or biotechnology require longer implementation horizons. They are unlikely to have a breakthrough within the timelines enforced by VCs. Couple this with a decrease in federal funding of science over the last 40 years, and it’s clear that we need a new model of investment.
VCs rarely seem to think about how ideas they fund fit within the existing social and economic infrastructures.
But the VC industry needs a reality check beyond reckoning with the pace of scientific advancements. As Uber, Tesla, Deciem, WeWork, and now Away and Equinox show, VC-fueled startups aren’t held to the same business and operational standards as their publicly traded counterparts.
The fact that it’s never been easier and cheaper to start and grow a venture should force us to be disciplined about addressing their negative externalities. VCs rarely seem to think about how ideas they fund fit within the existing social and economic infrastructures. “There is nothing innovating about underpaying someone for their labor and basing an entire business model on misclassifying workers,” California State Senator Maria Durazo said of Uber. Benefits of Amazon’s two-day (and soon to be one-day) shipping were welcome until they started clogging our…
