The Unicorn Tax

Tech people love them some contrarianism. You see it on the front page of Hacker News. You see it while working at startups.

They love “informed heresy.” Little-known stories and bits of trivia that refute popular myths. Newer, smarter ways of doing things. Disruption. “Life hacks” and normal hacks. Davids toppling Goliaths with clever leverage and perfect timing.

In this particular case, David has already become Goliath. Silicon Valley is no longer shorthand for a budding industry near San Jose, but for a global attention economy. It is spread across the globe and ruled from walled kingdoms like Google, Apple, Meta, and Amazon.

How does a group that enjoys tearing down popular myths grapple with the popular myth around itself? Though they may have once engaged in skillful rebellion against larger forces as scrappy underdogs, lone rangers, and crack teams, they emerged victorious. They are no longer underdogs but overlords.

They have not been able to decide; they continue to claim both roles.

When tech companies can benefit from government services or collective trends, they do so, like when they accept government subsidies or change their logos during Pride Month.

When they can benefit from publicly smearing government services and collective trends as “corrupt” or “socialist” or “woke,” they do so, like when they protest against regulations that protect workers, or condemn unions that bargain for better pay and working conditions.

This tension between “scrappy underdog” and “titan of industry” has led in practice to something I call the “unicorn tax.”

Here’s how it happens. You’ve been pumped full of money for years without needing to be profitable. (You’re just a scrappy underdog, after all.) So you cut corners, because you can. You have to, right? You have to be lean and mean.

The legal structures protecting your customers from the corners you cut — “pesky regulations that slow down innovation” — are rendered increasingly toothless by the lobbying of people like your owners. All kinds of unfair practices, all kinds of health and safety risks, are on the table, but you can’t worry about those now. You’re still scrappy, still trying to survive and grow.

But suddenly, you’re big. The pied piper finally comes. It’s time to become profitable or close up shop. You scramble like a college student on a deadline.

Some respond more traditionally. Uber and Airbnb jacked up fees. Daily Harvest, a meal delivery company in the vein of Blue Apron and HelloFresh but with a more earthy aesthetic, cut corners in other ways, costing a couple dozen people their gallbladders after sending out a bad batch of French Lentil and Leek Crumbles. (Their statement about the offending ingredient has not been validated by the FDA and there’s currently no way to ensure the company won’t do it again.)

Some who are especially unprepared and fraudulent shrug and say “we’ve got nothing” like Theranos and WeWork. (Even then, your executives escape with golden parachutes.)

Some readers may be chafing against the negativity. “Fine. Don’t buy from them. Don’t use their products.”

Ah, but what if refusing to buy from these companies is increasingly unfeasible for the exact same reason that the unicorn tax exists?

The same people pumping money into these companies largely don’t care if they become monopolies or oligopolies. They prefer it. You have Google and Apple controlling smartphones; you have Amazon controlling everything else you can buy; you still have Uber and Lyft controlling rideshare; you have companies like Daily Harvest gunning for new sectors like food, gallbladders be damned.

These people and companies, you see, are increasingly omnipresent, and increasingly accountable to none but themselves. The unicorn tax is a result of taxation without representation, of them “keeping money in the family.” They speculate and gamble with each other while the rest of us deal with the results. They’re more than happy to give $350 million to the guy behind what may have been the biggest financial fraud in human history. I bet you someone is trying to find a way to help Elizabeth Holmes get back in the game, too.

What would fix this is companies’ actions being controlled not by unaccountable boards and VCs but by whole companies. Economic democracy. Software engineers and warehouse workers being treated as humans, not as golden geese or robots given no structured say in how their companies are run, how they hire and treat and fire people, how they donate money to political candidates.

Some are waking up to this — warehouse workers, nurses, teachers, baristas, and flight attendants. And to the software engineers, product managers, and designers, I ask: why should we stay stuck in golden handcuffs? If we realize and exercise our power in numbers, we can just melt the handcuffs down and keep the gold for ourselves.