With Michael Moritz’s revelation that he sold a stake in Facebook – long rumoured – the worth of the company has been estimated at £150bn. More practically, this means Moritz’s company – Sequoia Capital – made a little over a billion in profit, largely by taking a firm that was a public by default in the US, and inflating its value before the IPO. No coincidence, or reflects a different strategy than a reliable source revealed, that Moritz sold 1.5 million shares in Facebook during the $131bn (£93bn) IPO.
In short, Sequoia’s approach to entrepreneurship – or what we might call, in the west, the age of big business – was gilded with luck. We have not been there in manufacturing. For the time being, the high street seems doomed. If the UK economy takes a hard hit in the medium term from Brexit, people’s spending power will shrink. And, given the reach of online retail, the co-ops and local stores that survived via creative adaptations, are going to be wiped out. Increasingly, you can walk into a store for information, expert advice and products; outside, someone is writing a Facebook status. A shopper with a thousand apps and websites to navigate will find herself lost. And if you are incapable of navigating, you’ll have no hope in how you pay your bills, or how much you earn.
The second red letter day in the history of the internet, in truth, was the dotcom bust of 2000, when it was obvious we were all in a new digital economy. Technological progress has been a life-changing development for all, not just the creators and followers. Capitalism has a lengthy history of providing opportunities for industrialisation, and with it a system with a lower tax take – and that is where most industrial advances have come from.
Mark Zuckerberg’s focus is like that of the Soviet states of old: according to Business Insider, all hiring is started by assessing where the potential customer is. This is aimed at smart sellers; just as they are monetised by being able to sell beyond reach or reach beyond your reach, they are incentivised to sell to those who have a relatively tiny income.
But crucially, what they are incentivised to sell is products through platforms that don’t subsidise the selling of their goods: Amazon’s tax advantage is for benefits offered to third-party sellers that don’t allow them to avoid paying tax. The working agreements of many of the biggest retailers – Tesco, Sainsbury’s, Amazon, Poundland – fail to offer basic protections, when worker rights are threatened. With footfall falling, and the harm already done from the recession, real people are going to be at further risk of losing their homes, their jobs and their livelihoods.
The hallmarks of capitalism are profit, profit, profit. It’s fine to complain about companies that treat workers poorly, but when it comes to the system itself, we are almost powerless to do anything about it.