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On vendor lock-in and golden handcuffs

Doug Belshaw wrote a post the other day about the effects of vendor lock-in on wages and retention:

But going one step further, if you’re making more profit through vendor lock-in, you can pay higher wages to your staff. In fact, you might have to do this, because your product isn’t well-liked by end users. People end up mainly joining your company because of the salary and perks.

I think there are some common assumptions here that need to be challenged.

Fundamentally, I don't agree with the idea that ethical ventures are inherently less profitable, or that people who work on them should expect to be paid less. In fact, I think it's important to show that ventures that operate on ethical principles can be every bit as profitable, and that people who work on them can expect to make a good living.

First, I think it's important to call out that people who do ethical jobs do tend to be paid less across society. For example, teachers and nurses don't make salaries that are in any way proportional to the importance of the work they do. It's not by accident that these jobs were historically were often considered to be womens' work. The effects of sexism are endemic and generational, and feminism is an important force for good that benefits everybody. And it's certainly not right or fair that people within the tech industry get paid more (ditto bankers, etc). This could be the subject of another post, or a book, or a lifetime's body of work.

If we zoom in and consider just the tech industry as an ecosystem in and of itself, we can consider some ventures to be more ethical than others. Doug highlights vendor lock-in: the idea that once you purchase a company's service, it is very hard to move away. The service is designed like a trap that lures you in easily, but then keeps you subscribing not because the service itself provides immense value, but because you would lose something important of yours if you left. For example, you might lose data.

I would add (and I suspect Doug would agree) a commitment to privacy, concrete steps to ensure inclusion, opposition to tracking, and a resistance to fake markets. For example, Uber can't be an ethical company because it allows employees to see your data, its treatment of women has been appalling, it has undermined employment rights for the people who drive for it, and it's engaged in predatory pricing.

It's incredibly valid that we should be looking for the services we use and work for to do better. But I would argue that services that don't do those things should not be expected to be less profitable, or to pay their employees less well. In fact, I think it's really important to build ethical businesses that are every bit as profitable as an Uber.

Okay, bad example. Every bit as profitable as a WeWork?

Hmm. As a ... a Docusign?

No? Wow. Okay.

Look, the point is, ethical businesses should be good investments. In fact, because so many unethical businesses have engaged in predatory strategies that depend on being buoyed by investment dollars that aren't guaranteed to continue, they should be better investments. As the economy changes and we begin to see more regulation around privacy and anti-trust, we should see that ethical businesses that earn profit "fairly" are actually more robust investments, in the same way that investing in fossil fuels will be a losing endeavor over time.

We can't expect these businesses to pay their employees less.

People aren't really motivated by money, past a certain threshold; instead, it's about making good progress on meaningful work. But in an employment market like San Francisco, it's also about the salary and benefits you can offer. Potential employees aren't looking for one or the other - they're looking for both. If a company makes a product that really sucks, morale will be through the floor and people will leave in droves, even if they're paying above-market rates. If a company makes an amazing product but the people who work on it can't afford to make rent, they'll leave too.

It's also an inclusion issue. Who can afford to take below-market rates to work on ethical problems? Mostly people who otherwise have strong safety nets and come from wealthier backgrounds - who, it turns out, are disproportionately white. If we care about diversity of our teams, we need to make sure that people who build software get paid well for it.

I'm not necessarily capitalism's greatest cheerleader, but in our current reality, money matters. If we care about an ethical industry that treats people well, we've got to build ethical companies that do well while doing good - and allow their employees to do the same.