Shift Commission Candid Conversations: Albert Wenger of Union Square Ventures on capital, labor, and AI

Dec. 12, 2016

Albert Wenger is a partner at Union Square Ventures in New York City and a member of the Shift Commission. He was previously the president of through to its sale to Yahoo. He holds a BA in Economics and Computer Science from Harvard University and a PHD in Information Technology from MIT.

In the interview that follows he talks about the immense impact artificial intelligence is about to have on the world, particularly with regards to how it influences capital. He expands on his views outlined in “World After Capital” to argue that government needs to be willing to re-think how it structures society in light of the increasing capabilities of machines.

Listen to the podcast here.


Jack: Tell me about yourself and why you’re involved with the Shift Commission?

Albert: I’m a partner at Union Square Ventures. We invest in technology startups and as such we get to see some of the things that are lying ahead. One of the things that’s coming is a further transformation of the world because of digital technology. Digital technology is fundamentally different from anything that’s come before.

I’m here because I have a personal belief that we are in a transition from the industrial era to something new, which I think of as the knowledge era, and that transition is as profound as going from the agrarian age to the industrial age.

Jack: Why are we talking about this now as opposed to a year after the iPhone had come out, when people began to realize this type of networked, mobile platform, would have a huge effect on the economy?

Albert: I think we’re having the conversation now because it always takes us a long time to wrap our head around things that should be fairly obvious. There’s a great decoupling chart that shows that GDP growth has not brought an equivalent growth for labor with it for almost thirty years now. We could have caught on to this significantly earlier. Some things have happened in the last couple of years that have made it much more palpable. The breakthrough on self driving cars is the single most identifiable event that is making clear to people that ‘wait a second, this time really could be different.’

For those of us who’ve been around computers for a long time, we’ve known that there are two things about digital technology that make it fundamentally different: zero marginal cost and universality. Economics doesn’t speak to a world that has these things: we’re used to tools that you can use for one thing, but not a tool you can use for anything.

Jack: It seems like he big change we’re beginning to anticipate from technologies like machine learning is the ability to retrofit large amounts of capital equipment, whether that’s cars or industrial robots or wind turbines, at lower costs. What do you think?

Albert: I couldn’t agree more. I write about this in my book “World After Capital”. To me the essence of this transition is that capital and the formation of physical capital is no longer the binding constraint for humanity. Rather, the binding constraint now is attention. What is it that we individually and collectively decide to spend our time on? Are we individually spending our time refreshing our Twitter feed or painting, singing, researching? And collectively are we spending our time figuring out how to make ads run better or are we spending our time figuring out how to fight climate change?

Jack: There’s deep anxiety when you talk to people about what these changes will bring and there’s a sense that these gains may not be shared equally. Why do you think that is and what do you think government and industry needs to do to make sure these changes actually benefit the population by and large?

Albert: Change is always somewhat scary for many people. Change of a very foundational nature is even scarier. I think it’s important to understand that when we moved from the agrarian society to the industrial society we had to change just about everything. We changed where people lived, where their livelihood came from, where they took their sense of purpose from. We changed all of those things and we will have to change them once more, at least.

The big danger here is the government is obsessed with trying to fix the industrial system. It’s all about work and the future of work, not a future without work. We want a future without work, not a future of work. We need to really take that first intellectual step which is the step to say ‘we need a completely new system’. That means many, many things need to change.

Once we make that determination, then we need to admit that we don’t know what all the things are. In my book, I advocate for creating more individual freedom together with some binding parameters on responsibility to let individuals choose how to adjust to this rather than the government saying, “we know exactly what the right thing is for this future system”, which I don’t think we know.

Jack: If we go in a time machine to find you, twenty years ago, and we brought you here today and asked you to look at the economy, look at technology, look at where we are, what would have been most surprised by when you looked at how things have evolved?

Albert: I think the thing I would be most surprised by is our lack of understanding as to what’s happening and our lack of historical perspective, and our willingness to embrace strong men and to do away with democracy. This is happening in many part of the world. That this movement would be so strong, that we would have such a strong anti-science movement around the world, that I think would have really caught me by surprise.

Jack: One of the factors in this is if you look at productivity figures in America, they have not risen at nearly the rate the level of technological change would suggest. It feels as though policy makers aren’t measuring the right things. We don’t have the right telemetry to look at where the economy is going and that seems to create this sense of confusion and anxiety. What could we be measuring or looking that would give us a clearer idea of the curve we’re sitting on?

Albert: I believe we need to understand better notions of consumer surplus. My former thesis advisor at M.I.T, Erik Brynjolfsson, he’s doing some work on exactly that. They’re using conjoint analysis to try and measure consumer surplus from free services. I do believe we need some of that, but I believe more than measurement, we need vision. We do not have a vision of a knowledge era and that a knowledge era could exist. We are stuck in trying to patch the industrial system. It’s just like a company: you can’t build a company on measurement, you build a company on vision and then you say, “if this is the vision, what are the kind of things I want to measure to get to this vision”. We need to start with that and that’s what’s sorely lacking.

Jack: We need a national vision or an international vision.

Albert: I believe we need an international vision, not a national vision. We need a international vision that says there is a new type of society possible, a knowledge society, and let’s figure out what that society is.