The Role of Business in Political Change, with Christine Lagorio-Chafkin [Episode 875]

Christine Lagorio-Chafkin is a senior writer at Inc. Magazine. In this episode we discuss her recent article, “Business Leaders Spoke Up After the Capitol Riot. Will Their Voices Remain Strong?” and the response of the business community to the events of January 6. As Christine puts it, these dramatic events cause a real surge in activism among business leaders (or at least stop them from hiding behind a professional curtain of non-partisanism). So we dig into the issue of what the appropriate role of business is, or should be, in driving societal and political change. When the stakes are so high, is it possible for business to stay on the sidelines?

Episode Transcript

Andy Paul: Christine welcome to the show. You recently wrote an article title for Inc Magazine titled Business Leaders spoke up after the Capitol Riot, will their voices remain strong? So first question I have for you is what is a strong response by business ?

Christine Lagorio-Chafkin: Yeah, I think that it was at first sort of a subtle response. And then all of a sudden the sort of numbers of responses just grew and grew in snippets. So quickly, I just had never seen, like this letter signed by close to 200 CEOs urging Congress to accept the election results and ensure no further delay in the orderly transfer of power.

Then all of a sudden business round table, the US chamber of commerce, the national association manufacturers, like everyone was speaking up and it was almost this rush to just show support of our democracy, which is not a crazy idea. Of course. Is this your numbers. If you looked at Twitter, you just saw everyone and LinkedIn, you saw every business leader, just putting their foot down and saying like this is unacceptable.

I don’t think it was overly shocking in that, like I said, like every business wants wants to order and any instability is bad for business, right? Like this, it wasn’t a political statement at first. It was just a, Hey, please respect the rule of law.  And I think that, business did step up in, in a way there.

And I thought that was meaningful, whether it was a hugely political choice at first, I think is it’s still up for debate.

Andy Paul: Yeah it’s all right. It seemed like that it all came at the last minute. I was building to a head and it seemed to me in many cases came even after the fact and the, after the fact of January. And yeah. I don’t know, it seems of opportunistic to me to some degree, and that, how much of the business response was shaped by the prospect of Democrats winning both the Senate seats in Georgia and the desire to be in their good graces now they’re going to be the party in power.

Christine Lagorio-Chafkin: Yeah. Every time we see the transition of power from party to party, we see and I think Silicon Valley is a really good kind of bellwether of this. We’ve seen it.  Every transition and now that Silicon Valley has so much lobbying power to it. Money invested. We’ve seen that shift already.

Just like we did four years ago. It seemed more subtle then, and now it’s because of the instability and because of the events of January 6th, like it was very abrupt and we saw it immediately. We saw VCs tweeting just very much more political than,  the leaders of banks and very big businesses, but they were tweeting very politically. And I think that. They opened up a bit more. And they felt a lot more freedom to if they were already Democrats speak their mind for sure.

Andy Paul: Yeah. It’s one thing that sort of struck me was, still how few, sorry, individual business leaders spoke out. There’s certainly the collective groups and the business groups. So you had that letter signed by CEOs, but it seemed like a safe thing to do as we came into the beginning of January and the.

Yeah, past administration still seem to be doubling down on their story about the election. And so on. I’m trying to say it as nicely as possible. It seems, I don’t know. To me, it’s Geez. How did, why did January 6th have to be the bridge too far? Yeah. If what you really value is stability above all things.

In the case of business, you want predictable markets on the, like that you sell into. Yeah, it seems, it seemed like almost too little too late, given the impact that could have, cause there’s some school of thought and we’ll get into what the businesses actually should be playing a larger role in societal and political change.

Christine Lagorio-Chafkin: Yeah, I think that, that’s really interesting. And of course true. I think that, for me as a reporter, I follow what happens on social media and what, how these big social companies work and how the, some of the smaller social companies work as well. And watching, I think exactly how you say that was, Why was January 6th, the bridge too far.

You can say that exact thing for Twitter and Trump’s account. And yeah. For how Facebook responded to the, political ads and to misinformation about the election. There were so many times previously when they could have made the right calls there and failed to. And how did it get too literal insurrection of the Capitol, to, for everyone to say, Oh, wait, this is too much. We should have done something more now.

Andy Paul: Yeah. It’s not like the warning signs weren’t there.

Christine Lagorio-Chafkin: Right?

Andy Paul: Yeah. And that’s why I think, yeah, not to be too cynical about it, but not a coincidence that Facebook’s makes the decision to D platform president Trump on January six when. Oh, yeah. Yes, they did. We just did that Arman’s direction at the Capitol, but also two democratic senators. This are the two Senate Democrats on the Senate seats, open Senate seats in Georgia, and suddenly, as the new sheriff in town for them.

Christine Lagorio-Chafkin: Certainly, and, they’ve been waiting for this time at any way to say, okay, there’s a new administration. Like how are they going to attempt to regulate us now and to try to stay in the good graces right. Of, of folks who are more eager to jump back on looking at section two 30 of the, of the 1986 communications decency act or looking at antitrust.

We’re going to. I see a lot of talk about antitrust over the next six months.

Andy Paul: Yeah I think it’s coming from both sides now.

Christine Lagorio-Chafkin: Absolutely. Section two 30 this phrase that no one, when I wrote my book about Reddit had ever heard of now, all of a sudden is a rallying cry from both sides. It’s fascinating, but fascinating to watch.

Andy Paul: It is because on one hand you have the Republicans feeling like they’re being censored on these platforms. And on the other hand, the Democrats thinking that it’s the Wild West and to be regulated .

Christine Lagorio-Chafkin: And it’s not strictly along those lines, always. There’s all these shades of gray in between, but that said, yeah, I mean it’s, if something needs to be done and everyone agrees and now it’s just that big question of what is that. Thing. And how do we get there and  what can we regulate?

Certainly, I think the discussion has gotten a lot more interesting now that more folks are savvy about, about since even since the de platforming, we want to call it that since I would call it, since the is upholding their actual values and doing what yes. Yeah, exactly.

Can we, you can say, okay, hate speech is not allowed on this site right. Easily. That is fine. That is what they have been doing and should be doing better. But can you say this algorithm, that accompany uses. Needs more scrutiny and needs to be regulated or needs to be, is it, the algorithm is the problem. That’s what amplifies all of this this speech and that’s what is causing the problem. That’s really interesting. That’s something people have been talking about more and more, both in the backrooms and out and in public. So I’m curious to see, like, how is is an algorithm, a piece of content that someone wrote?

Andy Paul: That’s interesting Is It something that you could use?

Yeah, I was just listening to the pivot podcast with Scott Galloway, Kara Swisher, and talking about this specific issue about, yeah, it’s really, it is the algorithm in many respects. So listen, I think it was Scott Galloway was talking about this, that, that serves up the content .

Christine Lagorio-Chafkin: Oh, absolutely.

Andy Paul: And they were saying that at least a statistics, he, our data he was showing was talking about was that in terms of extremism in any dimension, is that it’s actually relatively a very few number of accounts that are generating the overwhelming majority of this content that the algorithms pick up and serve to increasingly large numbers of people.

Christine Lagorio-Chafkin: Sure. I agree that it’s like in the architecture and that architecture allowed this kind of outrage to be kindled and amplified. And I think it, it comes from all different directions and including even after January we would see ads for body armor being served up against some of the militia groups as these militia grocers, the Facebook’s attempting to shut them down. It’s even when they’re trying really hard, a different part of the algorithm is working against the best effort .

Andy Paul: but

Christine Lagorio-Chafkin: I,

Andy Paul: it does raise the question is how hard they actually are working?

Christine Lagorio-Chafkin: Certainly.  And how does that get fixed? How do you, can you mandate a company hire more moderator, more moderators or fix their moderation? I don’t know.

Andy Paul: Yeah, I think that’s our this discussion that’s going to take place because it, it does I don’t know, putting star stark relief. I think for a lot of people is, yeah. Does business have an obligation or what obligation do they have in a situation like this to prioritize or give priority to political concerns as opposed to profits?

Christine Lagorio-Chafkin: Oh, absolutely. Yeah. And that’s exactly what we’re going to see more conversation about antitrust as well. There’s, it’s already ongoing, 38 attorneys general have filed lawsuits to break up Google and 48 States have and the FTC have brought up lawsuits to slice up Facebook. So we’ll see.

Andy Paul: What do you, what are you, if you had to make odds?

Christine Lagorio-Chafkin: I

Andy Paul: are you getting?

Christine Lagorio-Chafkin: know. I don’t know. That’s tough. It’s tough. Cause you see, you can see the Biden administration already working on such a breadth of issues that I do think that the next 180 days is key for this, but I don’t know if it’s going to happen that quickly.

Andy Paul: Yeah yeah, I think any sort of antitrust movement, in the case of film IBM and Microsoft and so on these things take years, right?

Christine Lagorio-Chafkin: And will we still have the momentum in years?

Andy Paul: Yeah. You’d hope this is not an incident that people forget.

Christine Lagorio-Chafkin: Sure. I certainly hope not. Yeah. Yeah. Yeah.

Andy Paul: So one things you wrote about is that you wondered in your article about whether the events of January 6th were enough to cause a real surge in activism, among business leaders, you call it or at least stop hiding behind a curtain of nonpartisan. Do you think that be the case?

Christine Lagorio-Chafkin: I think that it’s certainly possible. I think what we’ve seen already is we’ve seen a strengthening of voices ever since the black lives matter movement this last summer, and certain types of businesses are really hitting their stride and finding their voice. And yet it is, it’s a small section, segment of companies that really have a, an activist bent already.

Andy Paul: Salesforce is obviously one that’s near and dear to our audience’s heart.

Christine Lagorio-Chafkin: Sure.

Andy Paul: Perhaps one of the best examples, I think actually of being led by a core set of values from the top of the company. I just wonder if you had any other examples.

Christine Lagorio-Chafkin: Was going to say that I know of several that, have worked really hard to on get out the vote efforts and made weighed strict great statements about black lives matter, like Warby Parker, but they are still standing from, and that they are not saying anything, political quote unquote, and they won’t back a candidate. They won’t Say anything that is partisan. And that makes sense. They’re a big company with stores, all in cities, all over the country. They don’t want to alienate customers. And I think that’s, it’s so interesting because they’ve. Chipped away at it a little bit with saying, anything that’s a human rights issue or anything that’s, a social justice issue.

His game is fair game for us, but, getting into anything that’s even more partisan than that, that is actually partisan. They won’t touch. So yeah, that a lot. We’ve seen that with, gosh I’m sorry. I’m blanking sandwich company, but a major fitness brand as well, had some struggles with that and decided, Nope, we’re going to be.

Non-partisan here. So I think it was, it could have been an emboldening moment and certainly we’ve seen some voices out of Silicon Valley become more political at after January 6th. But I think that the big companies are just going to go right back to saying how keeping the kind of their lips zipped and only stepping forward when they really feel like it’s an issue of democracy or human rights.

Andy Paul: Yeah. And I was just going to say that I think that. Yeah, how do we, I don’t think the issue of, at least me personally, the issue of preserving our democracy is political or partisan, but it seems to become so right. And I think that’s perhaps one of the roles of, in my mind for businesses to say, look as yet. This isn’t right. These business owners that, that step forward, by and large, they chamber of commerce supports their Balkan party. That’s fine. Yeah, of course they’re gonna have a political bent, but it was good to see them say, God, this isn’t a political issue. This is, our democracy and without our democracy, we’re not a country.

Christine Lagorio-Chafkin: Yeah, absolutely. Yeah.

Andy Paul: So along with that though, I was wondering if, when you’re talking about nonpartisan, whether whether that’s ever really existed in business, certainly the Republican party has been associated with business historically. But I do find it interesting too though, that, that. Corporate political giving.

I was doing some research in advance. This is about, this was, has really dropped pretty significantly as a percentage of overall political donations. So it seems like businesses are starting off.

Christine Lagorio-Chafkin: Just this year.

in

Andy Paul: The trend has been, is that yeah, greater mounts are coming from small donors, individual donors, and, the impact of business giving I found interesting has really dropped.

It’s like less than 10% of total. Don’t corporate PAC giving to, to campaigns and so on.

Christine Lagorio-Chafkin: Yeah, that is interesting. And I wonder how that will trend. Certainly since January six we saw the. But even the big banks like JP Morgan, chase and Citibank shutting down their political funding for the near term, we’re certainly going to see those numbers have an effect this year.

I wonder how it will look in the future, whether that sort of influence whether companies are just saying, let’s. Let’s stay away from this because it gets them into trouble occasionally.  It’s not a good look when a company gave so much money to, a president who caused an insurrection, it’s not a good luck and maybe that do they need to be doing that? I think it’s interesting.

Andy Paul: Yeah. I wonder whether that’s part of their calculation. I think it’s, this is a topic that sort of flows over into this whole idea of sponsorship as well and cancel culture and blah, blah, blah is, do you see the activism? Based on your interviews with business leaders and so on is taking a form of being more proactive, going forward about maybe declining to sponsor certain programs on certain media outlets that, that are propagating hate speech or something like that.

Do you see them being proactive or is it just gonna be continue to be served? Mill will monitor and then react.

when appropriate.

Christine Lagorio-Chafkin: Yeah. I think it’s a mix. I don’t know. I don’t have a great survey, based a feel for that. Right now it’s ongoing Yeah. We’ve certain companies. It depends. It depends like what kind of personality that company has, what kind of values it has, what whether it’s a main street brand or an activist brand.

And yeah it’s, I think we’ve seen there’s a couple different things going on, right? Like with the advent of social media and with. Certain executives and entrepreneurs having their own personalities online, they are putting their values out there a little bit more.

They are being themselves while they lead a company. You see that kind of the, be your authentic self thing, right? And this year with the bent of activism that happened and with just the sort of extreme. Stuff, always in the air. And I think we saw more people just put their foot down and say this is how I feel like you don’t live with it.

And some people offended customers by doing that. And I think they had to be okay with it. I, I. Do you see, like now on Twitter now on Reddit, there’s such a kind of democratization of voices. And you even saw that happen, this week with the whole GameStop thing. There, there’s this idea that people can band together and make an impact.

And and it’s not necessarily, it doesn’t have to be this top down thing.  But a lot of companies in. At least in the social media space, which I study quite often. They did, I think the companies like Facebook, Twitter, Apple over the last month have seen those like act the activism come from the bottom up. They come from employees yes. Yeah. And we’ve seen that in the past with Google, right? The employee like walkouts and Twitter had a whole memo prepared for, from employees, for Jack Dorsey before he decided, okay let’s cut down Trump’s account here. And I don’t think they actually had to deliver it, but it was ready and they, the employees were ready to act. And they were saying this is wrong that we allow this.  So if. If a leader is not ready to put their foot down on something like that, the employees may force their hand going forward.

And I think that’s the new reality.

Andy Paul: Yeah. Interesting. You brought up GameStop cause I know you’d written a book about Reddit and the certainly being driven from Reddit, a particular Reddit in particular, it is a form of act. It is, this is a form of activism.

Christine Lagorio-Chafkin: Yeah, it is in a sense. And even it’s, it doesn’t mean it matter if it came from a silly place or not, it’s still is activism.  And a lot of it, the conversations online start can start out casual or jokey, but but then they get serious when a lot of people band together on it.

Andy Paul: So in the case of, let’s say of GameStop itself, was this not as familiar? What the origins of what, with the WBS is. Was it specifically targeting the shorts on that sock? They go, we’re going after the hedge funds, they knew shorten. Is that how it sort of the Genesis or WSB?

Yeah.

Christine Lagorio-Chafkin: Wait, what was the question? I’m sorry.

Andy Paul: Where they specifically the guy, I forget the guy’s name, who started it, but was he specifically targeting these hedge funds that that were in big, short positions on GameStop?

Christine Lagorio-Chafkin: Yeah, I think that it was I think at first he was actually, and this has happened, many times in the past he was  just into the game stop stock. He thought it was undervalued and it was a casual thing. And, he kept posting about it. And and got more people interested.

I think others helped him put together the analysis of that, that folks were shorting it. I don’t think it was at first very intentional to be a take-down of a specific hedge fund at all.  But with others and with enough kind of rallying and with enough posting about  it became a huge phenomenon that we’ve seen.

And. Now there’s a piece today. And that times a piece of day in the wall street journal about the sky Keith Gill at his basement workstation and making his roaring kitty videos and making millions and millions of dollars on GameStop.

Andy Paul: That’s what I was wondering is, yeah. So there, there’s certainly this theme as you read posts and so on about this, the surf yeah. Generational intergenerational struggle. Hey yeah, millennials, gen Z is we’re going after the boomers. I’ve seen that many times. And I’m sure there’s lots of opportunities in there as well, because as you said, lots of people have made a lot of money on it.

But it’s interesting. It is. It is. And someone was like, that’s yeah, they’re attacking the status quo.

Christine Lagorio-Chafkin: Yeah. Yeah. And I think what they maybe don’t realize is that they are also by bringing this thing to the front page of newspapers, they are opening up the world to this information to more people. They’re saying like, Hey. In your heart of hearts that Tesla’s overvalued, that the stock market is a hype machine.

The same way. Our social media is it’s just one that, that generally is driven by people with more money and more power. And I can’t help, but when I read about this all, I can’t help. But think of I forget whose quote this was, it’s an old one, all trading is insider trading.

It just makes me think of that because, if you’re making any trade you think you have some information, even if you don’t. And and these guys, the S diverse crew of Redditers and others online, following, along, putting in little bits of money, it has had such an impact. nd

Now I think we’re going to see a huge fallout from that going forward, whether it’s, forcing Congress to investigate or forcing some legal action against GameStop and or not GameStop, excuse me, game stock has nothing, no legal action, but I’m against, the investment funds at that are working on it and including Robin hood which is now the target of so much higher .

Andy Paul: They stopped trading.

Christine Lagorio-Chafkin: Yes. Exactly. Exactly.

Andy Paul: Was in essence, if you consider this as a, what was happening in the game, stop movement of the game, stop and AMC stocks, a serve of a political statement of some degree.

Christine Lagorio-Chafkin: Yeah.  Yeah.  And, and now you’ve got rhetoric threatening legal action, and just so upset. And meanwhile, the, I are also on Reddit is against the mainstream media for underestimating them, which I think is really fun. Cause you dig, if you dig into the wall street bet, sub Reddit, you see these guys are like, Oh no, you just wait.

I actually have. My secure, my nice, good 401k portfolio. And then I have my fun money. They don’t, they’re not, they don’t want to be th they’re not, I’m sure they’re not, they don’t have their own hedge funds, but they’re not unsavvy investors.  And I think that’s one of the kind of common myths right now, too.

Andy Paul: Yeah a spring something last night, I think it was the wall street journal about even this notion of investigating all the registers that we’re investing in because apparently some regulation about collusion to drive up stock prices to manipulate stock. Okay.

Christine Lagorio-Chafkin: Oh, sure.

Andy Paul: Hey, this is our game. We get to collude on those things you guys can include on that.

Christine Lagorio-Chafkin: Absolutely. Who gets to collude?

Andy Paul: Yeah. Those inside the fence, get to clue that those on the outside don’t yeah. It’s I suspect we’ll see more of this.

I think it’s good.

Christine Lagorio-Chafkin: Oh, sure. And the PA it just shows the power of these communities. And we saw it political weekly. I wrote about this in my book. The, in the, the lead up to Donald Trump’s election his sobriety was just so popular and stuff. Such a force on Reddit and that it broke the site for, at T at times.

It gamed like the entire system, the Redditors working on the subreddit called the Donald found so many ways to use their strength and numbers to spread posts, virally, and to gain subscribers to their own section. It was wild and that was the same kind of behavior. As we’ve seen with this with GameStop.

Andy Paul: Which also then brings to mind the all the BTS stands and the tick tock. Manipulation. They did over the campaign that they did over the summer like for Trump rallies and so on.

Christine Lagorio-Chafkin: Yeah absolutely. Yeah. And we’ll see this power wielded on other social platforms as well. Don’t underestimate kind of the power of the smaller platforms and the more niche community is I would say going forward it’s not just take, talk and read it like there’s communities elsewhere.

Think of like minor networks, like things like Spotify or even like whatever running app you use, it has a community on it, right? There’s, so these communities are really powerful, even when there’s, even when they’re smaller. When people join together, it’s it can create change.

And whether that’s in activism in business or in,  in stock trading,

Andy Paul: I think it’s a. It’s really interesting to think about, and I know we’ve gotten way off the track, but  it’s fascinating to think about it that way, because if there’s anything that’s, I think was maybe a result of just certainly not the last four years, but it’s been a trend since the eighties.

And you saw Tom Friedman write about it in the New York times this week about, and Scott Galloway is written about socialism for the rich and capitalism for the rest of us. And where people are feeling disenfranchised, not just the vote, but in many respects in terms of participation in the upside of the economy, it is now you can see how do people organize.

If they feel like conventional or political channels are close to them,

Christine Lagorio-Chafkin: Yeah, I agree. And I think this year is going to as we come to summer. And if main streets have just been hurting so badly this year and the smaller businesses have just, it’s been just really, it’s been rough to report on, honestly, because. It’s been so wide, so much widespread pain in business that I think we’ve got a lot to, we’ve got a lot to look forward to if some of the businesses can just make it a few more months really.

And and I think we’ll see after that. I do, I hope that some of the spirit of community and banding together does continue. And I think, we may see it go to wackier places. I, just my own, my perspective on Reddit is that honestly, historically there’s always something crazy that happens on it.

When people are bored, like when school is out for the summer or something weird will happen, or during Thanksgiving break that’s when stuff will happen. When it’s like high schoolers are bored. And I think we’re at this point in the pandemic where there’s this like deep border

Andy Paul: Oh, yeah, for sure.

Christine Lagorio-Chafkin: And pent up. And it’s cold out in so many parts of the country and people are stuck inside and third just doing stuff. And we may see another couple of really wild things happen online in the next few months.

Andy Paul: Yeah. And that’s fine. I think that, yeah, the argument that comes is just, yeah. You want to encourage that at what point? There’s too much. And hopefully that, yeah, hopefully that lesson is one that we’re learning from.

Christine Lagorio-Chafkin: Yeah. Yeah. Going back to what we, where we started this discussion, at what point do we like, is this too disruptive of our, of the existing systems and starts to shake the democracy again?

Andy Paul: Yeah. It was at least from my perspective, it was scary the last few months.

Christine Lagorio-Chafkin: Yeah. Yeah.

Andy Paul: Yeah, there’s may were awful lot to be thankful for that, that certain people weren’t more competent if they had been, could have been really bad. So what, Christine, it’s been great to have you here.

You’ve written a book on Reddit. If people want to find out about that, where can they do that?

Christine Lagorio-Chafkin: Oh they can go to Christine .com. My book is called. We are the nerds. It is about the tumultuous life of Reddit. It’s a story of two founders and their lives and how they built one of the most popular websites in the world.

Andy Paul: Yeah.

Christine Lagorio-Chafkin: And I’m I’m a reporter at Inc magazine by day.

These days, I write about small business entrepreneurship, a little bit of sales and marketing every now and then certainly about trends online. And you can find my work at Inc. com.

Andy Paul: Thank you very much.

Christine Lagorio-Chafkin: Sure. Thank you so much. Nice being here. And and the show is just so great. I’m just happy to be here.