Mark talks to Jake Taylor, a researcher on quantum information science with experience in a wide array of institutions, including the White House’s Office of Science and Technology Policy. Here, Jake talks about how he’s taking the lessons learned in the quantum space about how to create effective public-private partnerships via the Consortium model, and how we can scale this to other public-purpose topics.
Guest:
Jake Taylor has been doing research in quantum information science and quantum computing for the past two decades, most recently at the National Institute of Standards and Technology. He also spent the last three years as the first Assistant Director for Quantum Information Science at the White House’s Office of Science and Technology Policy. In his research as a TAPP Fellow, Jake is looking at how lessons learned in implementing science and tech policy for his home emerging field (quantum) can enable public purpose in other areas. You can follow Jake’s work on his personal website, quantumjake.org.
Credits:
Produced by Mark Lerner
Music by Zach Pfeifer
Artwork by Zihao Wang
Mark Lerner 0:03
Welcome to Fellow Fellow, a new podcast from Harvard Kennedy School's Technology and Public Purpose project. I'm your host, Mark Lerner, and I'm a fellow at the TAPP project. In this podcast, I interview my fellow fellows about their research and perspectives on some of the most interesting challenges at the intersection of technology and society.
Alright, welcome to another episode of Fellow Fellow. Really, really excited to have Liz Sisson, who is an amazing fellow fellow of mine who I've had the pleasure to get to know. Liz is the Chief Operating Officer of Urban Us, a venture group investing in startups that are improving life in cities and combating climate change. She was also at the Roosevelt Institute where she managed programs that researched and implemented public policy initiatives in local communities across the country. She's worked on a wide variety of subjects, including economic development, transportation, climate change, and housing. And right now she's working on helping venture capitalists care about public purpose. Liz, it is so great to have you here. And I'm really excited to chat.
Liz Sisson 1:16
Thank you for having me.
Mark Lerner 1:18
Yeah. Could we maybe start, I mean, there's so many questions already that I have. And you and I have talked a lot about your project, just because I'm super fascinated by it all. And also, I'm a dunce when it comes to venture capital. But I would love to just get a quick overview of what it is that you're working on here at the Belfer Center.
Liz Sisson 1:33
Sure. So for this year, I am working on venture capital and public purpose. So basically helping VCs go through diligence and, sort of, post investment in considering public purpose for those investments. So a lot of sort of impact investors, or ESG investors, are using existing frameworks to consider impact or ESG. But what I've discovered is that public purpose is sort of a little bit more broad than a lot of the, sort of, ESG - which is environmental, and social and governance frameworks - public purpose is a little bit more broad. And I want to focus on the sort of unintended consequences of the technology. So basically, what - even if this technology succeeds, or this company succeeds, what are the sort of externalities of the technology or the unintended consequences on society because of that technology? I always like to sort of give the example of obviously Facebook and what happened with democracy in 2016, and arguably 2020. You can look at Uber and what happened in California or really all over the country with sort of labor issues and thinking about those major issues of public purpose. And for a lot of startups that would not have survived, they would have definitely collapsed if they had those major issues, but also the the sort of problems to society that those startups and those technology have created.
Mark Lerner 2:59
Gotcha. You mentioned ESG, a couple of times, and it was - what was the environmental, societal and governance, governance? Is that what it was?
Liz Sisson 3:06
Yeah, yeah.
Mark Lerner 3:07
Could you maybe explain a little bit about why that's - why those frameworks aren't enough.
Liz Sisson 3:12
Yep. So, you know, a lot of times, I'll ask folks that are working in investing, you know, that are maybe in those spaces, you know, "Do you think about ESG? Do you think about impact? Like, what do you think, what is the difference between the two?" And it's, it's always interesting to sort of hear how people respond to that question. You know, I think, impact a lot of times is thinking about what is the sort of intentional product or intentional company doing for their services or their products. So for instance, let's say there's a startup that is creating a technology that will help reduce greenhouse gas emissions. And it's this intentional impact that this startup in this technology will make. ESG a lot of times is looking at sort of more of the internal or the operations of how a company is existing, right? So like, let's say the E of ESG, their supply chain management, you know, how environmentally friendly is their supply chain? Or if they're looking at sort of the S of ESG, what are their hiring practices? You know, are they making sure that they have an equitable hiring process? And, you know, once someone is working there, what is their experience? So it's a lot of this sort of - what I'm looking at is both of those things, and not forcing people to choose between ESG or impact, but also sort of what are the other larger areas that are maybe not covered in impact frameworks, or ESG. frameworks.
Mark Lerner 4:36
I see. So it's sort of like, it's not just how the company itself operates in terms of how it hires or where it gets its materials. But should the business model of this company exist, what impact will it have second order third order out into the, into the world does that sound about right?
Liz Sisson 4:54
That's right. And I think a lot of times people will, will pick, they'll either embrace an ESG framework, or they'll take, you know, they have an impact thesis, if you will. For instance, Urban Us, the fund that I've been working with for almost five years now, their, their mission and their sort of impact is really looking at climate change and how cities play a part with climate change, both creating all the issues of climate, but also mitigating the issues with climate. And, sort of that, you know, that is our big area of impact. And I wouldn't even call us necessarily impact investors. But you know, for us, we're very much mission driven. So of course, every investment that Urban Us makes we consider how is this really going to affect climate change? How is this really going to affect cities? But, sort of on the other side of that, you know, impact investors, a lot of times will think about, are you creating jobs? Or how does this impact marginalized communities? Those areas aren't huge for Urban Us. Of course, we'll consider, you know, what are the labor practices? Are we creating jobs or taking away jobs? But it's not core to our decision making? It's part of, maybe some part of diligence, but it's not - you know, if it's really helping mitigate climate change, then that's, that's the number one most important thing. There are some investors that that care about everything related to impact, they'll measure a ton of different things. They'll report on a bunch of different things. Urban Us is not one of those funds that's reporting on a ton of impact numbers.
Mark Lerner 6:24
Gotcha. You mentioned care about, you know, helping venture capitalists care about public purpose, and there are venture capitalists that care about this and report on it. And recognizing that there's a wide spectrum of venture capitalists out there that invest in companies, what is the thought process of VCs right now, when it comes to caring about public purpose? How do investors think about this right now?
Can you dive a little bit more into into that piece?
Liz Sisson 6:44
Yeah. So, I would say that, you know, a lot of times when people are considering impact or ESG, they sort of look at it on the side. It's either, you know, for the investors that maybe it's not core to their, their mission. They'll, they'll look at the business itself. They'll look at sort of, how big can this thing get, you know, who are they selling to? What are the risks that the product has right now?
What does the next, sort of, six months, what does the next 12 months, what does the next 18 months look like for growth? What is their reoccurring, um you know, their MRR, their monthly reoccurring revenue? And then they say, okay, and then let's look at impact on the side like, what, what are they going to - what are the cool things that they're going to do to make society better? Or, what are the things that they're putting into place for their supply chain management to make sure that they are not, you know, doing destructive things with their supply chain? Or what are their hiring practices? Are they making sure they're creating, sort of, an open and inclusive environment for their employees? When I'm saying is, those things should not be separate. You should be looking at, like, what is the core to the business? Right? Like, what is the actual product? And directly asking like, well, where are they sourcing these things, right? Or if you are hiring talent, like who is the talent of the company? And then quickly saying like, okay, well, how did they hire those people? What is their plans to bring on more talent? Like, what is the culture of the company? What kind of space are they creating? And really, it's turning what is typically thought of as risks into really opportunities. And it really allows VCs to dig into these potential areas of risk, and what could come up at this startup. And I think it's really important for early stage companies where the littlest thing could really collapse a company and you have to be really careful. I really think that if you consider public purpose, it just there really is that business case.
Mark Lerner 11:28
Would it be fair to say that a lot of companies look at these types of issues more as sort of marketing opportunities, like, "Oh, if we do this sort of thing, we can say that we did that sort of thing, "as opposed to actual business opportunities?
Liz Sisson 11:41
You know, I think that is very common. And I would say that sort of a ethics washing, PR stunt. You know, that happens. You see it in corporate America all the time, when you look at, you look - when you go to an LGBTQ parade, you go to a pride parade, and you see all these corporations that are there, and then you actually dig into the experience of their LGBTQ employees. And you're like, "Wow, there is a disconnect here." You know, and I think that that happens all the time. That is not necessarily making the business case, right? What I'm saying is, if we go earlier, if we go smaller, and the startup really starts thinking about these things really early on, this is where you're sort of setting the foundation. You know, we always say at Urban Us, that it's much easier to build a good culture or it's really, it's really easy to, sort of, care about public purpose early on, then years down the road, then try to build a culture. Or down the road, try to rebuild public purpose. I think that's why it's really great to do this, with early stage investors mostly, and, and really early stage founders and startups because he really setting that foundation now. So it doesn't - so it's not just down the road.
Mark Lerner 12:51
Right? So you're building it into the organization from when it begins, from its early investments. One of the things that strikes me is that the example you gave of Facebook and its effects on democracy - Facebook is an incredibly massive company, incredibly successful by all, by all of the standard business metrics. And by and large, has not done a lot of the sort of framework thinking that you are talking about, or at least that's, that's the, you know, what we're going with right now. How do you talk to companies that look at Facebook as an example and said, "Why should I care about this, when there is a massive company that has not cared about it and has done so well?"
Liz Sisson 13:29
I think that kind of goes back to my sort of spectrum of thinking that there's some folks that are sort of pure capitalists, like pure markets, the regulators will figure it out. And I, I, you know, I would love to change all of their minds and really get around to them that they should care about these things. But there's just some people that won't. But I think if you look at what Facebook went through, they, you know, they were lucky enough to have - and they have been lucky enough to have - so much money and so much power to get through this. But I think that a lot of times, and I think most startup founders would recognize that - they're called unicorns for a reason. Facebook has has the advantage of being so big, but most startups would not be able to survive that kind of situation. They will not be able to make it through large issues, either PR or operational - you just couldn't survive. And so I think if you're just more intentional, intentional and strategic, I think that it will just help them in the long run. So they don't have to deal with these things as they continue to grow. And of course, keeping in mind that Facebook, it didn't set out to do what it did, right. There was never that sort of, again, that intentional impact of getting involved in democracy. It was really supposed to connect people, build friendships, all of that, get Mark Zuckerberg some dates at Harvard. But over time, things evolve. And so that's why what I'm building is not just a due diligence tool. It's not something that investors and founders could use pre investment, but actually over the lifetime of a company, and all the different life cycles that a company will go through, and all the different things that you have to consider. You know, for instance, a really early stage hardware company is maybe not thinking about supply chain just yet. They're still trying to figure out what their product is. But at some point, maybe when they raise their series A or their, you know, their pre, their seed plus and they're, they really need to start thinking about how they're going to ship their product, that's when you need to start thinking about well, what are the supply chain options that we really need to consider?
Mark Lerner 15:35
Right. And could you maybe paint the picture of your vision for what these companies would actually be doing in in this realm that you that you have in your mind? Right, like you're creating this tool, which I guess one part of this question is, what is this tool potentially going to look like? If you have that figured out right now. But what, is what is the sort of end state that you're shooting for with this work?
Liz Sisson 16:00
So I think it's probably good to understand what due diligence for a VC and a startup looks like. You know, after - I'll just tell a little story. So know, when you're a VC, and you've talked to a startup, and you're really interested in what they're doing. You've had a series of conversations, you've probably gone through a thousand decks with them, you've - they've met your you know, the other partners, or they've met your colleagues, and you've met their colleagues, and you're really sort of building that relationship. You go into diligence with them. And that's really like lifting up the hood and digging in, and every VC has their own way of doing diligence. It's part of the "secret sauce", if you will. What are the things they're really looking for? How are they measuring all the things like what metrics are they focusing on? For the impact investors, sort of Like, how are you assessing the impact that this company is saying that they will provide? And that is the area that I want to focus on. And, you know, because due diligence is the "secret sauce". And I think a lot of folks keep those questions or the way that they assess companies sort of close, close to the chest, I really want to just build a tool that can sort of add on to existing due diligence and say, all of these VCs can sort of set their thresholds for these different areas of public purpose. For instance, Urban Us, who I'm with, you know, climate is huge for us. But again, like I said, labor is not that important. I would say both climate and labor are massive areas of public purpose that we should care about. But we would sort of set our thresholds for what we care about. And then we would, we would actually work with the startup to sort of figure out how the startup is dealing with all of these areas of public purpose. Maybe some of those areas are not relevant to them, right? Like, if you're building, if you're building a hardware company that has nothing and could never have anything to do with democracy, then you don't need to assess them on democracy. But you know, you'd probably assess them on climate, right, and supply chain. And so it's a matter of really asking the hard questions to the founders, which you typically do in diligence, and seeing how they respond. And then the VC is able to, sort of, see the response and, sort of, gauge their response to that. And they would either flag it and say, "They really don't have good answers to that. That scares me a little bit. Is it enough for us not to invest in them? No, I think we should still invest in them. But it's something that we want to remember and remind ourselves about down the road." And then when you go, let's say 18 months later, and that same startup, let's say it's a hardware startup, and they're ready to ship, they, they, you know, figured out all of their supply chain issues, and they're at, they're asking for more money, right? They're, as they're raising another round, they want their existing investors to double down. You have that same diligence, you have that same, that same questionnaire, but updated this time to sort of match the stage of the company. Last time we flagged that they didn't really have a good answer to supply chain. Over the last 18 months, have they thought about this more? Have they done a good job of doing all the considerations? And then you're able to sort of check in and sort of say, "You know, what, they still don't have a good answer to this. I'm not going to double down on them this time. You know, we really wanted them to focus on the supply chain things, we actually think this is going to be a massive risk to the company for PR reasons or cost reasons, whatever it is, I don't think it'll roll down." That's, of course, an extreme situation where it helps to make that decision, right? I think a lot of times, you know, there is a bias that happens in due diligence. And I think there's oftentimes a sort of pre-investment biases that if you're sort of looking for a reason to say yes, right? And post-investment, you're looking for a reason to say no. Because you've already invested in that company, you already believe in that company. So I think what, what really this will do, beyond just due diligence for investments, but it's also - if you take a board seat, or if you're observing the board, this tool can also help you while you're sitting in that room. And there's this, sort of, starts of governance conversation of sort of who is directing the company, but it allows you to sort of bring up these maybe tough subjects that either other investors haven't thought about. There's other competing priorities, but that you think, are really important to the company and the success of the company, and then a broader society.
Mark Lerner 20:26
Right. So just to play it back for you, this tool and this process that you're really thinking through, let's a VC fund, take a look at a company and say, or take a look at their own values, and say, "I care about democracy at level five. I care about labor at a level seven, and I care about, you know, environmental impact at level three."
Liz Sisson 20:51
Mm-hmm.
Mark Lerner 20:52
And then as, you know, they input those things into this tool, the tool outputs a questionnaire or you know, a series of diligence items that they can then go to these companies and say, "Okay, you have to meet these different requirements." And if you don't, it's still a conversation. It's still it's not like a yes, no, invest, not invest. But it's basically a way for people to talk about these different issues. There is a level of implicit trust that's needed here, right? If you're going to be asked in the company, these sorts of things, it's implied that the company has to respond truthfully. And, you know, if the, if the venture capital fund gets to set its own levels of what it cares about, there's an item here of why wouldn't it just set all these numbers at at one -
Liz Sisson 21:33
Sure.
Mark Lerner 21:34
- or whatever the lowest is. So I'm really curious to dig into more of these kinds of things. I would love to dive into these sorts of things, as soon as we come back from a quick break. So let's pause for now and then we'll come back in just a second.
If you want to follow along with Liz's work, you can find her on LinkedIn at in/elizabethsisson. That's Sisson spelled s-i-s-s-o-n.
And we are back with our conversation with Liz Sisson. Talking about venture capital and public purpose. We left off just about at a point in the conversation when we were talking about trust, and talking about how companies and venture capital firms themselves, why would they opt to be truthful about, you know, where they are, what their thoughts are? Or why are they opt to take these sorts of tools and, and, you know, put these sorts of self restrictions on themselves of what they invest in. And you've already talked a little bit about this, about how this is actually good for business, and that there's, you know, a lot of evidence to show that doing these sorts of things is not just good for, you know, feel good and good for society. But really it is, it is a measure of risk. But it gets into this idea of, you know, the underlying incentives for the startups in the underlying incentives for these venture capital firms. So could you maybe talk a little bit, just at a high level, about why it is that the environment that we have right now with startups and venture capital - what are the incentives that have put us into where we are right now?
Liz Sisson 23:54
Yeah, I think VC, and I guess you could say private equity as well, more so than other asset classes, sort of creates its own rulebook. Of course, there are regulatory restrictions, I don't want to say that that's the complete Wild West. But there is this sort of laissez faire way about how VC operates, and it is based off of, you know, people's own bias and people's own perceptions of startups. You know, and it kind of touches upon what I had said earlier about sort of the the VC "special sauce" and how VCs assess things is really their, sort of, their way of trying to find their, the next big unicorn or the next big investment. And any sort of standardization, sort of takes away from that special sauce. And so you do rely on your own lived experiences or your own expertise in investing to find that next big startup. What this tool is doing is, is just really almost helping VCs who maybe haven't had the chance or haven't - they don't have maybe the lived experience or the tools or the know-how to really think about public purpose even though they want to, right? Because there aren't, there aren't that many incentives for them to care about public purpose. I mean, why would you - why would you change doing what you're, what you're doing if what you're doing is working, right? And I get that question a lot like, as an investor, I have all of these exits, my startups are doing great. And I haven't cared at all about public purpose, why am I going to change now?
I don't think this tool is necessarily for those folks. What I really want to- who I really want to work with are the folks that are saying, "You know, what the business case has been made, and times are a-changing, and VC needs to care more." And I think, as VC continues to diversify, because VC has a massive issue with diversity, and who is actually managing funds. But over time, more women, more people of color, younger folks, more diverse backgrounds are really stepping into these roles, and really being able to sort of manage the money. I think it's, it's that diversification of venture capital that has created this somewhat awakening, if you will. And I think Black Lives Matter, and I think COVID and just the crazy year that 2020 has been has also really opened people's eyes to why we should care about these things. And so, I think that the industry is educating itself, I think the industry is evolving. And this is me, this is me being hopeful, in that it will continue to. And that more funds will be seeking these type of tools, because they want to be intentional, they want to think about these things, they want to help their startups.
Mark Lerner 26:32
Right.
Liz Sisson 26:33
And, honestly, and I think on the other side of it - I think founders are really smart. And I think founders are really intentional. You know, we're talking about startup founders who have paused their lives to build these companies. And I think a lot of times they have this mission or this idea. And then when they bring in a new member of the board, or they they raise more money, that mission is maybe diluted or that they have other sort of competing priorities, and they have to grow fast. And they have to do all these things. And they have to iterate. And I think a lot of times the public purpose, or their mission or their intentions, sort of gets pushed aside. And what I'm saying is, let's, let's make sure as investors that we're not pushing those things aside, that we, were listening to the founders, and we're maybe flagging and helping them in these area. Not because every investment should be an impact investment, but that public purpose is, is just good for business.
Mark Lerner 27:28
For sure. Now, I imagine that you, you know, in your line of work, you have felt the various different pressures on you to make these sorts of decisions on whether to invest or not to invest, or you've seen the inside, that "special sauce", which - how, how have you personally balanced these sorts of considerations with all the other pressures that you have as a funder?
Liz Sisson 27:52
It really comes down to who you're working with and team. So, you know, I'm- on our team at Urban Us, I'm by no means the like, the sort of business chops of venture capitalists, by any means, I'm, I've always been the person in the room that's quick to say no to investments, because I think that they could have negative externalities on society. And that's been me as the policy person in the room. And to think about, like, what are the regulatory issues, or what are the policy issues that could affect its business? But I think it's I'm also the one that's like, "Well, you know, what are the labor considerations? Or, really, what is the safety insecurity behind this?" And, and that, and I think a lot of times VCs don't have that person in the room to, sort of, just help direct that conversation. And so- and I think similarly, team is also really important on the startup side, as well. And sort of like, who is on their team to help direct these things, and, and how have they thought about these things? Do they have any experience in the past on these things? And so, I think team is just really crucial for both the VC side and the startup side.
Mark Lerner 28:58
Gotcha. What is it that venture capital firms actually go through to make the decisions right now? Is it a lot of just like gut feeling? Or are there studies that show that the questionnaires that people use right now actually do indicate, you know, success or failure for businesses? Is this something that, you know, you're basically plugging into an existing framework? Or are you going to be creating a tool that'll change how people do their work?
Liz Sisson 29:27
So I think that a lot of people have these ideas of VC that it is all gut. And I think there was a sort of controversial New Yorker piece that came out that had a lot of VCs talking over the last couple of weeks because it sort of profiled VC as this, sort of like, crazy, you know, the crazier you are and the more money you'll get, and it sort of profiled a bunch of companies, particularly WeWork in relationship with SoftBank. I think that that's probably a wrong assumption. I think, of course, there are some funds that probably operate in that way.
And have the sort of assets under management and the capital to just be crazy maybe? Or their crazy actions have just resulted in great returns. But I would say for the most part, especially for emerging managers, and smaller funds that there is this sort of combination of an art and a science that goes into investing. There's, of course, things that you want to look for, you want to look for the specific growth metrics, or you want to see what the expertise of the team that's building this company, what they've done in the past, or you want to look at the overall market, like who are the competitors, and what have they run into, what makes them different. There are those sort of, like, scientific business things that you look for. But there is the, sort of, the art side of it, of course. There's the sort of, you know, let's say, you've been an investor for 30 years, you've seen how these types of companies play out. Or, you know, you, you get this sort of like gut instinct from the team. Maybe they haven't built anything, but this is their second company. And you know, that the first company, they they just knocked out of the park, they had just great instincts as a founder. So I would say it's a combination. And I think that's sort of what makes this tool sort of special, because it allows for the art and the science. The art is the interpretation of these areas of public purpose. The science is the themes that they should really be considering. And, you know, and I've listed a couple of them. But you know, I'm really looking at democracy, I'm looking at the climate, and, sort of, the environment, I'm looking at labor, I'm looking at privacy, and safety and security. And sort of other larger themes of public purpose that you should really care about, that maybe people just really haven't had the time to think about how they should care about it.
Mark Lerner 31:46
So, this tool also really strikes an interesting balance on this spectrum that we talked about a lot at the TAPP project, which is self regulation versus external regulation. Right? So this tool, doesn't seem to me like it would be something that you're advocating as a regulatory framework from government. But it seems like it's a self regulatory aspect that venture capital firms would elect to use, but that's generally like a publicly available and publicly known framework.
Liz Sisson 32:20
Yeah, you know, I am definitely on the self regulatory side of this. My project is. I don't know, personally, I'm on the self regulatory side. I would say, like I said, I'm my instinct is to put on a policy hat no matter where I am. So - and I do think, and my hope is, is that on the government side, I do think, you know, government, the government is an investor in a lot of cases. And I think, I don't know what it looks like to be an investor in the government. But I have a feeling that they could probably use a tool like this as well to think about public purpose. But yes, this is this is something that people would voluntarily sign up to use. That there is no - again, there's really no incentive other than this is what they want to be doing. Of course, you know, LPs - the limited partners, those are the folks that are investing in funds - they, you know, you have to do what your LPs want you to do as well. But I do think LPs are getting really smart, and they're realizing there is this business case, and they do care more about public purpose. So I think when the three sort of major stakeholders, which are the LPS, and then the investors themselves, and the startup founders come together and say, "We all really care about public purpose," there is this tool that they can all use, basically.
Mark Lerner 33:33
Right. So, why not go at a more regulatory angle? Seeing as you personally, you mentioned that you're a little bit more on the policy based regulation side. Why not approach it from that perspective?
Liz Sisson 33:45
You know, there's been a lot of conversations about, around anti-trust and, sort of, the regulation around, obviously, monopolies and firms that are just gobbling up competitors and whatnot. And, you know, it is a larger conversation about all of these areas of innovation and what regulation does to innovation. I think that regulation could help the issues of innovation. I think that it would only make things better. I think it could make things more- there's a better environment for competition, that there is not this winner take all mentality. But I don't think everybody agrees with me. And I think the world of venture capital, and I think Silicon Valley, is very torn in this area. What is good business environment is totally up for interpretation, depending on your political leaning, or how you think about economic policy. And so I just don't think at this point right now that regulation from the government on the investing side would be smart. I just think that it would just cause a lot of noise. Do I think it's important down the road? Do I think that there, there is some sort of dangerous behavior that happens in venture capital? Do I think that there should be more considerations around public purpose, and it maybe should be, sort of, something that is brought out through regulation? Yes, of course I do. But I just think industry would, would not be very happy about that. And I think that's why this is sort of important to say, can we do this without the government regulating this? Can we can we try to do this on our own to care about these things? I think it won't, it won't hit everybody. Not everybody will sort of jump on that wagon. But I do think that it will at least help the industry in some way.
Mark Lerner 35:31
It's an interesting tension, because, I think that we, I think that we have hit a point where we can see that a hyper focused view on innovation above all else has led us to many companies where we have seen extremely detrimental impacts to public purpose for the sake of business growth. And I guess there's a debate to be had there of whether or not we've already reached the point where we need higher level regulation. And when I think about regulation, I don't just think about, like, government bigwigs coming in to say what's right. I think about public representatives coming in to express the voice of the public and to, to pull together the power of the people against these corporations, which are too large to combat individually. How do we, how do we know when we've reached that tipping point?
Liz Sisson 36:24
I agree with you on a personal level that we've reached that tipping point. I think the conversations around big tech, what to do with big tech, what to do with Amazon, what to do with Facebook. I think - and Google - I think we're there. And I definitely don't want to make it sound like you know, we're still waiting for it to get worse before we can improve it. I just think that the industry of, of technology, and Silicon Valley and VC are very torn in this area. It's a, it's a topic, and there's a lot of competing opinions on it. You know, of course, it's tough, because, for instance, a lot of the big tech companies, sort of, acquire a lot of startups. And that's how you get an exit. And that's how VCs make their money as an exit. So there's these competing incentives to say that, you know, we shouldn't allow these folks to be gobbling up other firms. And, and it's a really difficult conversation to have. I, I absolutely think something needs to be done. I think it'll only really help the world of innovation and startups and entrepreneurship grow if we, if we do a better job of this. But I think it's just a really, really difficult conversation. It's just something that a lot of people have very strong opinions on. And there definitely isn't one collective belief in Silicon Valley or VC.
Mark Lerner 37:36
Is there anyone that you can point to any venture capital firm, or group of startups or incubator, what have you, that you feel like is doing this right? And is a model to follow?
Liz Sisson 37:47
Doing what right, would you say?
Mark Lerner 37:49
Raking into account public purpose as part of their investment strategy. And we are - you know, taking this as part of our core business values and operating on these principles and is showing results?
Liz Sisson 38:05
You know, that's a hard question, because I've only worked in one VC fund. So I can only really speak on Urban Us, I know that there's some funds that are doing impact investing really well. There's frameworks that people are following that are that seem to be working really well for different folks. But I think it's also what, what I'm focusing on, public purpose, talking about the sort of unintended consequences or the externalities - I don't think many people are really thinking about that. That's sort of the opportunity I see here with my project is, like, I don't really think that many frameworks or funds are thinking about these things that much. I also think that, like with anything, you have to assess how effective it is. And I think, because a startup, you know, will take seven, eight years to really grow and be big and for that exit time. But, so it's sort of hard to measure really what is effective until you get to that point. So I'm not going to mention any specific names just because I don't know. It's hard to say they haven't been there. But I am hopeful that both impact funds and generalist funds will continue to be better about thinking about public purpose and really putting it as core of their diligence and post investment assessment.
Mark Lerner 39:12
Liz, this has been an incredibly, incredibly informative conversation. Any final thoughts or anything that you want to leave the audience with?
Liz Sisson 39:20
Mostly just I would love to talk to folks. I would love to talk to founders who have taken venture money. I would love to talk to investors who are thinking about these things, or are not thinking about these things, but they but they want to be, or ESG and impact investors either in VC or outside of VC. I just really want to talk to folks who are interested in this sort of investing and public purpose space.
Mark Lerner 39:44
Perfect. Thank you so much for talking to me. It's been an absolute pleasure.
Liz Sisson 39:48
Thanks, Mark.
Mark Lerner 40:11
Fellow Fellow is a podcast produced at the Harvard Kennedy School's Belfer Center, as part of the Technology and Public Purpose project. Music is by Zack Pfeiffer artwork by Zi Wang. I'm your host, Mark Lerner. Join us next time as we talk to the other fellows about the problems they're tackling. Thanks for listening.