Is startup culture (secretly) authoritarian? Is Big Tech? Are you?

A seven-point guide to whether companies are authoritarian or democratic

Democracy and Authoritarianism are battling around the world. Some call it the pivotal tension of this moment in history, like tectonic plates colliding under our feet and sending tremors throughout the planet. How should people work together, how should we build our communities and organizations and countries?

Here in the Western tech & startup world we like to picture ourselves in the democratic camp. We live in, and support, societies with free elections and independent press. We are actors in free markets, we are beneficiaries and promoters of the open internet.

But what if that is lazy thinking, or convenient fiction? What if our private companies are trojan horses of authoritarian norms that subtly undermine democratic societies from within? 

In the past few weeks we’ve heard that argument about Facebook in particular. Maria Ressa, the winner of this year's Nobel Peace Prize, is using her global spotlight to argue that Facebook is a threat to democracy. The editor of The Atlantic recently made it clear that Facebook has veered into authoritarian territory.

To make it personal, what if the startups I’m working on are premised on authoritarian social structures? What if the companies you all work for are not that free or democratic? Visionary founders who call the shots, teams who are tasked to execute quickly, targeted advertising on Facebook to influence the masses. What if you and I are secretly, accidentally, authoritarian sympathizers?

To help me think this through, and be more intentional in creating startups, I made this handy seven-point guide about whether companies are authoritarian or democratic.

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Wait, is this about business or politics? Consider Bloomberg...

When Michael Bloomberg launched his campaign for President last year, I admit that I was seduced. When I worked at Google, Bloomberg was revered as a guru by the company leadership. Larry Page even reorganized his office to be more like the “bullpen” that Bloomberg created at City Hall. Bloomberg represented a model of management that was effective, meritocratic, transparent, and supremely professional. I wanted those things for my country’s government.

But Bloomberg spent billions of his own money on sophisticated propaganda to support his campaign, and isn’t that a pretty clear violation of democratic norms? Bloomberg’s management style is meritocratic and transparent, but ultimately it is also autocratic: he is the boss, he is accountable to no one other than himself, he makes the final decisions. Isn’t that more like an authoritarian norm?

The renowned political scientist Jeffrey Winters says that today’s neo-authoritarians tend to come from three different backgrounds: military intelligence, religions, or corporations. All three train people to work in linear hierarchies where the leader has absolute control without significant checks or balances. Bloomberg, Inc. (and Trump Corporation) fall in the same category as the KGB. 

The Bloomberg case is interesting for two reasons: first, it shows that the boundaries between organizations are porous. Governments, private businesses, and religions exist in separate domains, conceptually, but in reality they overlap. We all live amongst each other, we sit next to each other at restaurants, we read the same newspapers, and often (very often) our leaders switch from one domain to another. When they do, they take with them a set of values, habits, and assumptions about how things work. The norms of how we work together are contagious. 

The way we organize our businesses has significance beyond the confines of industry.

Second, thinking about Bloomberg shows that the definitions of “democratic” and “authoritarian” are multifaceted. We often use the word “norms” when we talk about these two ideologies, because each ideology is more like a cluster of practices. Bloomberg embodied some democratic norms, yes, but also some authoritarian ones. Democracy and authoritarianism are actually not binary.

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So what are Authoritarianism and Democracy, exactly?

There are about as many definitions of democracy and authoritarianism as there are PhDs in political science. But the terms are tied to politics, so the definitions tend to be political.

Since the ideological split plays out in companies, too, I started searching for a definition based in the business world. My search was not frivolous or just theoretical: it is important to me to build, and work for, companies that embody the democratic values I care about. I am not neutral in this pivotal battle of our time, I am a card-carrying anti-authoritarian. No single individual is above accountability to their peers; it is dangerous and irresponsible to concentrate power in too few hands; independent press and judiciary are some of the best ideas we’ve ever had and ought to be protected. True cooperation with respect for all is difficult and slow, but totally worthy of difficulty and slowness. These are values I hold dear.

I didn’t find a definition of how these abstract values apply to companies. So I tried to create one here.

This list is surely incomplete, so consider it a work-in-progress. I am eager to hear your feedback. 

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The 7-point guide to Democratic vs. Authoritarian Companies

Without further ado, here is my draft of the 7 dimensions:

1. Ownership

Who prospers when a company succeeds? Even within the bounds of free-market capitalism, there is a wide variety of answers. 

On one end of the spectrum, a single individual, the leader of the company, owns everything. I call this authoritarian because it concentrates power in the hands of an individual. On the other end of the spectrum, ownership is shared amongst all the stakeholders of the business: leaders and investors, yes, but also employees, customers, producers in the supply chain, perhaps even local communities. Coops are an extreme example.

In today’s startup ecosystem, most companies fall in the middle of the spectrum because employee ownership has become common. Unfortunately it remains very difficult, technically and legally, to build a true cooperative business on the democratic side where all stakeholders have some ownership, even though in theory this kind of cooperative structure is totally compatible with founders becoming rich and VC investors making profit. (Note to self: perhaps there is an opportunity to build a new company that facilitates the cooperative ownership structure using blockchain technology.)

2. Governance

Who gets to hire and fire the CEO? Who gets final say on big strategic decisions? Who holds the management team accountable?

For most companies, the answer is the Board of Directors. But there are many ways to structure a board and write the rules of governance. In companies that are more authoritarian a single individual has effective power over the board, either because they have veto power, or because they get to appoint the other members of the board, or because they control a majority of the votes. In companies that are more democratic, different constituencies of stakeholders like employees, producers or customers get to vote for representatives on the board, the board is governed with no single individual having outsized power, and there are sometimes term limits for any individual. 

In many countries, notably Germany, companies are required to have governance schemes that are on the democratic side of the spectrum. This is not the case in the US or France. There is a lack of tools here, as well, to facilitate the building and running of truly democratic companies.

3. Management style

There are many ways to manage a team. And while a company may have as many styles of management as there are managers, most of the time a certain style becomes endemic in a company. This is both informal, as best-practices are copied and existing managers recruit new ones with similar values and practices; and also formalized via company training programs and HR guidelines.

The stereotypical autocrat who manages by giving orders is clearly authoritarian. The “hands off” manager who sets targets, holds teams accountable, but does not intervene is actually on the authoritarian side of the spectrum, because the power relationship remains strictly hierarchical. 

More democratic styles of management exist and are usually found to be more effective. The manager can be a coach who helps her team improve and grow, who sees her role of training and calling the plays as complementary to the people on her team. The manager can be a participant, a leader among peers. 

The word “style” actually understates the importance of this dimension. Management style is a way of saying power structure. Companies can be very different beasts depending on how power is used within.

4. Transparency

Is information shared by default within a company, or need-to-know by default? Which tools are used for communication and document-sharing? Who gets invited to meetings?

This one is rather straightforward. It is interesting to note that modern work tools like Slack and Notion make it easier for companies to be transparent-by-default.

5. Decision-Making

Who gets to make decisions on the daily, weekly and monthly questions that come up in a business? Who gets to set the quarterly and annual goals? This is related to the style of management, but deserves a separate treatment because key decision-making processes become standardized within companies. 

In most of the companies I have worked for, we use a system called OKRs to set goals. But the OKR framework does not necessarily tell you who gets to set the goals, even though it is designed for bottom-up goal-setting. I have seen many startups that use the OKR framework, yet it is the founders or the CEO who decides, unilaterally, what the goals will be.

There are more democratic ways to set goals and make decisions that usually lead to better outcomes. In many agile engineering teams, for example, there is a weekly meeting to prioritize the next round of work. What will get done first, and what might get left out? Many teams use a quick vote to make the decision, and it is an awfully effective way to make decisions.

6. Personal Life vs. Work

What happens when an employee gets pregnant, or has a sick kid or parent? What happens when an employee has an opportunity to take a great vacation or join a volunteer group? 

In an authoritarian ideology, the state / organization / project is of supreme importance, so the norm is that personal needs are subordinated. This plays out in companies all too frequently.

Democratic norms have more respect for the needs of each individual.

In many companies, there are processes for taking time off that are well-defined and can even be generous. I put this in the middle of the spectrum, because it still treats personal life as a tradeoff against work.

On the democratic side of the spectrum is a philosophy where work is only one part of a person’s life. Where a company is as powerful, diligent and creative as its people, so the health of the company is nothing more than the sum-total of the health of team members. This was wonderfully articulated in the book Let My People Go Surfing by the founder of Patagonia. 

7. Means vs. ends

This one is the hardest to measure but perhaps the most important. It is also the most damning when considering the case of Facebook.

Inside a company, do we constrain ourselves, tie one hand behind our backs, by only using methods that are clean, open, high-integrity? Or do we allow ourselves to use techniques that exist in moral gray-zones, but are worth it because they enable our supposedly noble end-goal? These days, using Facebook advertising seems like a moral gray-zone as a means.

This one is binary. It is a clear decision that can be made, and as you can imagine, I believe there is only one right answer.

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Where do you fall?

It seems clear to me, looking at the seven points, that Facebook is awfully authoritarian, a true trojan horse in democratic society.

But also clear is that it is possible to build companies that are carriers of democratic norms. It requires the intention and the diligence to apply democratic values throughout the project. It requires building companies that are unusual by the standards of today’s business culture. But it is possible.

I can sleep peacefully knowing that I am not a secret authoritarian. But I also have a lot of work to do to more fully align my work with my values.