In this exclusive interview, venture capitalist and author Nick Hanauer talks to Laura about the cost of inequality to our pocket books, the need for "disruptive" civic innovation, and the perils of the "trickle-down" myth.
Laura Flanders: All right, folks. Are you ready? We are actually allowing an investor and entrepreneur to our cameras. Nick Hanauer is actually a lot more than simply a venture capitalist and entrepreneur. He is someone who is raising alarm bells everywhere from Ted to Davos about the perils of inequality, not to your conscience but to your pocketbook and to the sustainability of our world as we know it. Nick Hanauer, welcome to the program. Glad to have you.
Nick Hanauer: Thank you
Laura Flanders: We have a lot of grassroots activists and people who are against people like you so I want to give you a chance to talk. [...] Give us a bit of background. Where did you come from?
Nick Hanauer: I live in Seattle and I grew up in a family business. A bed pillow and down comforter manufacturing business and grew up in that business. Still own and help manage that business but starting other companies when I was very young and am now basically a technology entrepreneur and venture capitalist.
Laura Flanders: You were genius to invest in a company that maybe some people heard of called Amazon.
Nick Hanauer: Yeah, I had a very early interest in the internet and as luck would have it had a friend who had a early interest in the internet and his name was Jeff Bezos and so I became the first non-family investor in that and from that experience made a lot of money, obviously, and from that experience starting other internet companies including a company called Acquantive which was an internet advertising company you may not have heard of but we sold to Microsoft in 2007 for $6.5 billion. But dozens of others, I mean, I think I've helped with 35 companies.
Laura Flanders: Fair to say, you have a lot of money.
Nick Hanauer: I do.
Laura Flanders: You could be off, I don't know, vacationing in the Bahamas.
Nick Hanauer: Yup. I do that sometimes.
Laura Flanders: But you don't only do that.
Nick Hanauer: No
Laura Flanders: You also have an organization called Civic Ventures.
Nick Hanauer: Yes.
Laura Flanders: Tell us a bit about the campaign that you've gotten involved in over the last few years.
Nick Hanauer: Well, I mean, Civic Ventures is my political organization and we try ... Our slogan is "Disruptive innovation in the civic sphere" so my business has been disruptive innovation and technology entrepreneurship and investment and the same tools and strategies that you use to disrupt an existing industry work in the civic space.
Laura Flanders: How so?
Nick Hanauer: Well, I mean, if you're clever you can turn things upside down and ... What's important I think to recognize is that human prosperity is linked to innovation, right? Innovation is how we solve problems and improve living standards. Innovation always creates disruption because it creates change. In a healthy society the rate of civic innovation must match the rate of technological innovation.
Laura Flanders: How are we doing?
Nick Hanauer: Well, in Seattle, Washington we're doing pretty well. Around the country we are not. A lot of the problems that the society faces can be thought of as the gap between technological innovation, disruption, and change and the pace at which we are adjusting to it.
Laura Flanders: Give us an example.
Nick Hanauer: Well, I mean, the minimum wage. So if the minimum wage had tracked inflation it would be $10 bucks. If it had tracked productivity gains it would be $20. What happened to the economy for good and bad reasons is that it became a service economy. It was a manufacturing economy with high wage jobs. It became a service economy with low wage jobs.
What's important for people to recognize is a barista at Starbucks who gets paid $8 an hour isn't less well-trained than an auto worker in prior years, doesn't create less value than an auto worker does, they're simply paid less because they have less bargaining power and that's a consequence of the changes in the economy.
We have to make adjustments for that to sustain the economy because if people don't have any money then who will capitalists like me sell to, right?
Laura Flanders: The implications of that are enormous and not just with respect to minimum wages. The transformation of the economy that you are talking about, what else does it affect?