Silicon Valley Unions

On today’s show we talking about a cultural shift that is underway in one of the technology companies that defines the current era in which we live.

On today’s show I’m going to connect the dots as a thought experiment.

I’m going to draw a parallel between the post office and Google.

The post office is a utility that provides some of the basic plumbing for our society. There are private companies that have tried to compete with the post office in providing this basic transportation of goods. It’s a commodity. You know that it’s a commodity because you simply expect it to be there. The postal service is ubiquitous. It’s not conspicuous. Nobody drives down the street and says “oh cool, there’s a mailbox.”

The post office would be more conspicuous by its absence. The post office is also unionized. The collective bargaining for employees by unions has tied the hands of the leaders at the postal service

In this discussion, the outcome has been pretty consistent across nations. We could be talking about the US, France, England, Canada. Attempts to innovate within the postal service have largely failed. This is the world of slow decision making and bureaucracy that has come to exemplify quasi government organizations.

The technology world on the other hand is the world of innovation, of experimentation. Technology companies create new prototype products and services in a race to create value ahead of the competition.

In some cases, the technology companies will develop the new capabilities internally. If they move too slowly, then acquiring and integrating a startup can be an effective shortcut.

Google acquired YouTube. Facebook acquired Instagram. You get the idea. These moves were made with the speed and agility of a startup.

In an earlier part of my career As Vice President of Engineering, I was leading the microprocessor development team that my company acquired from IBM. This was back in 2004. There were two parts of the team located in France. We had a team outside Paris, and a team just outside of Nice. I used to spend a week a month in France with the team face to face and naturally on the phone with them on a daily basis. I can tell you from first hand experience that the goals of the business leadership is to maximize the growth of the business in order to create the opportunity for all the stakeholders of the business to benefit. That means healthy compensation for the employees, it means employee stock plans and stock options for employees. The goals of the union are not shared with the goals of the business. The net result was that the union representing the roughly 10,000 IBM employees in France filed a lawsuit challenging the validity of the acquisition in the courts. The net result was that all 110 employees in France ended up back at IBM and I built a new microprocessor design team in Austin Texas and in Silicon Valley. Only a handful of the people in France chose to relocate to the new design centres in the US. So when I heard this week that more than 225 Google engineers and other workers have formed a union, I was surprised to say the least.

The Alphabet Workers Union, which represents employees in Silicon Valley and cities like Cambridge, Massachusetts, and Seattle, gives protection and resources to workers who join. Those who opt to become members will contribute 1% of their total compensation to the union to fund its efforts.

For now, this is a minority union. It will not have the power to negotiate compensation on behalf of employees.

I find this particular effort to be important because we see a company that has maintained its startup culture now being bogged down by increasing public scrutiny, a justice department anti-trust lawsuit, and now a union movement. Companies that have their hands tied through government bureaucracies are destined to be about as agile and as innovative as the post office.