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Tuesday, August 4, 2020

Big Tech Forgets Its Foundations (Capitalism and Conservatism)

In 2017, Mark Zuckerberg gave the commencement address at Harvard. As was noted at the time, Mr. Zuckerberg’s speech was laden with socialistic talking points. I wondered then, would the Mark Zuckerberg of 2017 have started Facebook? Likewise, would the Mark Zuckerberg of 2004—who was instrumental in building the world’s largest, most popular social networking website in the world—have given the 2017 commencement address at Harvard University?

In other words, how could a man who led the development of one of the world’s leading technology companies give a speech that touts principles that run completely contrary to what is necessary to build such a company? Tragically, as recent events have made clear, Mr. Zuckerberg is far from alone.

“TheFacebook” was launched in February of 2004. While Zuckerberg wrote the code for what would later become “Facebook,” the company never would’ve become the technology behemoth that it is today without a wide array of—gasp!—venture capitalists. In the summer of 2004, Peter Thiel—co-founder of, among other things, PayPal—made a $500,000 start-up investment into Facebook. Thiel was Facebook’s first outside investor.

With over two million users, by the spring of 2005 Facebook was valued at nearly $100 million. At that time, American venture capitalist firm Accel made a $12.7 million investment in Facebook. After Facebook went public in early 2012, Accel was listed as the second biggest—behind Zuckerberg—stakeholder in Facebook.

Almost exactly a year after Accel’s initial investment, a second round of funding was acquired. This time, several venture capitalists put up over $27 million. Thiel and Accel also provided additional investments. Such capitalists made Zuckerberg into a millionaire. According to The Guardian, “In 2008, Zuckerberg aged just 23, was named the youngest ever self-made millionaire by Forbes.” This was thanks in large part to American capitalists and capitalism.

According to Investopedia, as of June, 2020, after Zuckerberg, the next four largest shareholders in Facebook are all investment management companies—i.e., capitalists—such as Vanguard and T. Rowe Price. Facebook has created numerous millionaires and multiple billionaires. Almost all of this is the result of revenue generated from advertising—from companies like Panasonic and Microsoft (both early advertisers). You know, companies that sell us things—in other words, companies that engage in capitalism.

Of course, Facebook is far from alone when it comes to modern technology companies that owe their rise to capitalism. Google was officially incorporated in a garage in Menlo Park, California in September of 1998. Less than a year later, in June of 1999, venture capitalist rivals Kleiner Perkins Caufield & Byers and Sequoia Capital together made the first large (nearly $25 million) investment in the young company. Initially, Google co-founders Larry Page and Sergey Brin opposed the idea of an advertisement-funded search engine. According to Planet Google, “In an April 1998 academic paper prepared when [Page and Brin] were still students, they criticized ‘advertising funded search engines,’ which they believed would be ‘inherently biased towards the advertisers and away from the needs of the consumers.’”

Nevertheless, in an effort to monetize their work—something that capitalism demands—in the year 2000, Google began selling ads that were associated with search keywords. The advertising of products—of course which leads to people buying things, sometimes referred to as “capitalism”—has been very good to Google. Again, according to Investopedia, “The bulk of Google’s 162 billion dollar revenue in 2019 came from its proprietary advertising service, Google Ads.”

In an effort to (gasp!) capitalize on the explosion of the internet, in 1994, Jeff Bezos left the Wall Street firm where he was employed and started—also in a garage—an online bookstore that would soon be known as Amazon. According to Amazon.com, Inc. History,
After reading a report that projected annual Web growth at 2,300 percent, Bezos drew up a list of 20 products that could be sold on the Internet. He narrowed the list to what he felt were the five most promising: compact discs, computer hardware, computer software, videos, and books. Bezos eventually decided that his venture would sell books over the Web, due to the large worldwide market for literature, the low price that could be offered for books, and the tremendous selection of titles that were available in print.
Of course, selling books was only the beginning. Amazon now sells almost anything that can be purchased. It is an “Everything Store.” In other words, Jeff Bezos saw the awesome opportunity the internet provided to sell things, and he led the creation of one of the world’s largest companies built on that principle.

To get the company up and running, in 1994 Bezos began pitching his idea to several dozen family, friends, and other investors. He hoped to raise around $1 million. About 20 agreed to invest and just over $980k was raised. In 1995, Amazon got $8 million from venture capitalists Kleiner Perkins Caufield & Byers—who, as noted above, were also early investors in Google.

How do you think Mr. Bezos got those first 20-something investors to write him checks? What was the lure? Of course, like everyone else starting a business and looking for investors—whether behemoths like Amazon, Facebook, and Google, or a small, single-location restaurant in your hometown—no doubt what got people to buy in was the hope of a return on their investment.

The idea that private citizens can freely start, own, invest in, or otherwise make money from a business is the essence of capitalism and is (or is supposed to be) as American as apple pie. As author W. Cleon Skousen points outs, the U.S. was the first nation on earth of any size or consequence “to undertake the structuring of a whole national economy on the basis of natural law and the free-market concept described by Adam Smith.”

Called the “Founding Father” of capitalism, Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations—more commonly known as The Wealth of Nations—is one of the most important literary works in the history of humanity. A collection of five books, The Wealth of Nations is widely considered the world’s earliest, most comprehensive defense of a free-market economy.

As is noted in The Miracle and Magnificence of America, The Wealth of Nations, published in 1776, would have an almost immediate impact on government financial policy—especially in the U.S.—and is considered by many to be the most important treatise on economics ever written. Writing to John Norvell in 1807, Thomas Jefferson said that on “the subjects of money & commerce, Smith's Wealth of Nations is the best book to be read.”

If conservatism seeks to conserve anything, it is those things that have been settled for all time. As history has clearly demonstrated, no economic system has proven better than the free-market economics touted by Smith and embraced by America’s Founding Fathers, the free-market economics that allowed for the creation of Amazon, Facebook, Google, and the like. Thus, if conservatism seeks to conserve anything, it is capitalism.

On the contrary, the American left and the modern Democrat Party seek to destroy capitalism in America. Led by the likes of Ilhan Omar and Alexandria Ocasio-Cortez, this is especially true of younger democrats. The Democrat Party has gone so far left that democrats now significantly prefer socialism to capitalism. More than three-fourths of democrats say that they would vote for a socialist for President of the United States.

Likewise, in spite of the fact that their companies were built on, and their fortunes were made because of, capitalism, and in spite of the fact that conservatism is the political philosophy that embraces, promotes, and protects capitalism in America, Mark Zuckerberg, Larry Page, Sergey Brin, and Jeff Bezos time and again demonstrate that they are, if not openly devoted to leftism and the Democrat party, typically very hostile to conservatives and conservative principles.

Thus, we again see that—after having employed and personally benefitted from the forces of capitalism, and thus, conservatism—Big Tech leftists have hypocritically decided that what worked for them is simply not for everyone else. 

(See this column at American Thinker.)

Copyright 2020, Trevor Grant Thomas
At the Intersection of Politics, Science, Faith, and Reason.
Trevor is the author of The Miracle and Magnificence of America

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