Can Venture Capitalists Help Reimagine Democracy?
Quick—predict the next nation in the world that will adopt a democratic form of government.
Let's see. Burma (or maybe Myanmar) is a good bet, thanks to the persistent efforts of Aung San Suu Kyi. Bhutan has experienced change into a democracy at a remarkable pace. And there's Libya—in 2012, they experienced the largest jump in The Economist's Democracy Index, though it is still classified as an authoritarian regime.
Democracy neither advances nor regresses at a predictable pace. One might argue that a nation with an undemocratic regime but a healthy reform movement is just as likely to leap to the head of the pack. Similarly, countries that seem like they are on a steady path to reform can suddenly lurch in the wrong direction. Seasoned veterans of the global scene might argue that guessing when any country might experience a revolution is folly.
But pretend for a moment that it's possible. Let's say we knew which country in the world will be the next to make it work—to hold elections and stick with the results, to respect the rule of law, to ensure that civil servants and the military obey the will of the people, the whole shebang.
The economic value of such knowledge alone would be invaluable. The new democratic nation would likely experience a "democracy dividend," a boost in development some scholars think accompanies the rule of the people. It would become the latest source of opportunity for every industry that depends on freedom to grow, as well as the place where the next generation of social entrepreneurs realize their dreams. The geopolitical advantage to other democracies would also be enormous if they could count on a new nation joining their fold.
In the context of such advantages, even a smidgen of data on a nation's democratic future would be worth obtaining. And imagine the good we could do if that data also helped us hasten democracy's arrival by a year or two.
But the problem today isn't a lack of information, but far too much of it. In virtually every undemocratic nation there are weak signals indicating that democracy could be nigh, yet in none of them can we count on it as a sure thing. There are just too many pieces that need to fall into place. In America, our government as well as our philanthropic institutions desire to see democracy flourish around the world. But in the midst of such a complex game, how can we know where to place our bets?
Fortunately, some very smart people have been thinking about this exact problem for the past several decades—not in the realm of foreign affairs, but business. It's the particular skill honed by venture capital investors.
VC folks know success is improbable. Most new companies, even ones run by smart folks with sound ideas, fail. It's almost impossible to know which bright kid with a piece of code will be the next Mark Zuckerberg. Yet a small investment at the right time can lead to exponentially greater returns.
Venture capitalists have developed an ethos that helps them make decisions under these conditions. Some of it is precious, but much of it is prescient. And using it to reimagine the way we think of American investments in democracy abroad is just the sort of crazy idea I can't leave alone.
As a director at Insight Labs, the philanthropic think tank, this is what I do. We regularly root around in unusual metaphor sets seeking unorthodox answers for the common good. For example, in a project earlier this year where we imagined new design criteria for international organizations, I did preliminary qualitative research with a family therapist, a museum curator, and a historian of Major League Baseball. This coming December, we'll be doing it for democracy in partnership with the Carnegie Endowment for International Peace and the participation of the U.S. State Department.
We've been calling the hypothetical model we're cooking up "venture democracy." While it may not share all the attributes of venture capital investing, we think it will probably have a few key elements in common:
- Investing in many different projects with a very long time horizon
- Investing in ways that help make sense of failure, particularly by recouping non-traditional returns like relationships and knowledge
- Investing in ways that advance the state of the art, incorporating those advances to improve more developed organizations
Plenty of other concepts will inform the work we're doing as well. It's not just VC folks who are interested in these problems; this year's Nobel Prize in economics went to three thinkers whose ideas informed the way markets in general handle a surfeit of signals weak and strong. We know a few game theorists who could surely lend a hand. We also see promise in ideas from epidemiology. As Nate Silver observed in his book The Signal and the Noise, public health officials make elaborate predictions about the course of a disease, but they also hope the interventions they design will make their predictions wrong. So instead of measuring their predictive success, they "model for insights" into the entire system as they try to save lives.
All of these ideas will inform our work in the Lab, yet none of them alone are sufficient. That's because we won't be seeking to impose a narrow, technical discourse on democracy. Instead, we'll seek what only a group of intelligent amateurs can—design principles for the way human beings ought to make decisions under these conditions. We trust the experts to fill in the rest.
In this session, we'll be working with a special group of enlightened amateurs. The day before the Lab, they'll all have taken a masterclass with Frank Barrett, professor at the Naval Postgraduate School and author of Yes to the Mess: Surprising Leadership Lessons from Jazz. Fees for the masterclass, advance coursework, and a design workshop will support the pro bono work that Insight Labs does all year long. Click here to learn more about how you or someone from your organization can participate.
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