Shaun Morgan

*Does freedom undergird a safe society?*

*Does safety undergird a free society?*

*How are the terms “freedom” and “safety” defined?*

*How do you decide what is free and safe?*

These are the questions big tech companies have been wrestling with in recent years.

Indeed, Mark Zuckerberg, Sundar Pichai, Tim Cook, Satya Nadella, Jack Dorsey, and Jeff Bezos have left the traditional jurisdictions of a business CEO and have been tasked with answering questions more suited for a moral philosopher.

FB, GOOGL, AAPL, MSFT, TWTR, and AMZN1 are no longer symbols that simply represent platforms of business products and services—they represent companies that operate from a set of values. This is, of course, not only true of the big tech companies, but it is also true of every company of every size in every sector.

__*All businesses are values-based businesses.*__

All companies have a purpose and that purpose is driven by a set of values. The functions of a business—its products and services—are the physical means to achieve its values-driven purpose.

Adam Mosseri, head of Instagram, recently tweeted this:

*We’re not neutral. No platform is neutral, we all have values and those values influence the decisions we make.*

We would do well to understand this reality. It is important. __*A company’s values will drive its outcomes*.__ And its outcomes, as the big tech companies have helped us realize, tremendously impact society.

__Evaluating the Impact__

In Plato’s book, *[The Phaedrus](https://www.amazon.com/Phaedrus-Penguin-Classics-Plato/dp/0140449744)*, Socrates tells a myth about a god named Theuth, who discovered numbers, calculation, geometry, astronomy, as well as the games of checkers and dice, and—his favorite discovery—writing.

Theuth wanted to share his discoveries with all of Egypt, so he went to the King, a god named Thamus, to tell him how each of his discoveries would benefit the Egyptians. As Theuth presented his final discovery, writing, he claimed that it would do great things for the Egyptians, including make them wiser and improve their memory.

Theuth represents the modern entrepreneur. He creates things and then seeks to adopt what he creates. Writing would undoubtedly change civilization forever, and it was incumbent on Theuth to explain why he believed the change would be good, namely, because it aided the virtues of wisdom and memorization.

Thamus, the King of Egypt, disagreed with Theuth. He believed that this new discovery would not be good for society because people would rely too much on the written word, causing their memory to atrophy and give people the appearance of wisdom without actually learning.

Neil Postman explains the lessons of this myth in his 1992 book, *[Technopoly: The Surrender of Culture to Technology](https://www.amazon.com/Technopoly-Surrender-Technology-Neil-Postman/dp/0679745408/ref=sr_1_1?dchild=1&keywords=technopoly+neil+postman&qid=1611292406&s=books&sr=1-1)*:

*And this is what Thamus wishes to teach us—that technology imperiously commandeers our most important terminology. It redefines “freedom,” “truth,” “intelligence,” “fact,” “wisdom,” “memory,” “history”—all the words we live by. And it does not pause to tell us. And we do not pause to ask.2*

Thamus knew well just how much impact writing would have on the Egyptians. The very technology of writing had a values-driven purpose—to promote wisdom and memory. But he was skeptical about its promise to achieve its purpose.

And to Postman’s point, Thamus recognized that any new technology also has the power to do far more than what we ask it to do. It can redefine terms like “freedom,” “truth,” “intelligence,” “fact,” “wisdom,” “memory,” and “history.”

The skepticism that Thamus had towards writing is strangely familiar to the skepticism we now have towards the promises of connectedness, simplicity, and efficiency advertised by technology and the big tech companies. And what is perhaps more telling is that these companies have been taking on an increasingly powerful role in redefining the terms of our fundamental virtues.

Postman’s indictment of technology is equally relevant to the companies that offer it. In other words, we could just as easily say, “Big tech companies do not pause to tell us” that they are taking on this role of redefining terms.

Postman’s observation of society is similarly indicting:

"We as a society do not pause to ask" them any questions.

We do not pause to ask these companies the deeper questions concerning the values and purposes that are truly driving their businesses. This applies to consumers. But it also applies to those who have financial investment in these companies. To put it bluntly, these companies didn’t take on this powerful role without investor participation.

__Investor Participation__

A simple barometer to measure the growth of a company is its market capitalization (market cap), which is the total value of all of a company’s stock. It’s calculated by multiplying the company’s current share price by the total number of outstanding shares.

A share price rises as a result of more investors showing demand for the company’s stock by purchasing more of its shares. Companies interpret the increased demand as approval for the way they run their company and then continue on the same path to increase demand, resulting in an even higher share price.

So, how have investors viewed some of the big tech companies over the past five years?

Let’s look at the market caps of some big tech companies from January 2016 and compare them to their market caps in January 2021:3

__January 2016__
__January 2021__
__Facebook__
$319B
$784.7B
__Amazon__
$276B
$1.65T
__Alphabet (Google)__
$517B
$1.27T
__Twitter__
$12B
$37.83B
__Microsoft__
$435.72B
$1.72T
__Apple__
$540B
$2.4T

Judging by these numbers, it would appear that investor demand for these companies has been extremely high over the past five years. __Investors have enthusiastically cheered as these companies have rolled out their new technologies and increased their customer base, all the while increasing their influence over society.__

Who were these enthusiastic investors?

Some of the top shareholders of the big tech companies listed above are fund managers like Vanguard, Blackrock, and SSGA, all of whom manage the world’s largest exchange traded funds (ETFs). The investors in these ETFs consist of everyday people who have 401(k)s, IRAs, self-managed brokerage accounts, or accounts managed by a financial advisor.

The millions of investors that are purchasing the stock of these companies, and many of the other largest publicly-traded companies, are everyday people who may or may not know which individual companies they are invested in because their money is being allocated for them based on the criteria set by the respective ETFs.

Each investor’s values are different, and their values may be compatible with most of the companies they hold in their portfolios. Even so, given the reality that an investor’s returns are a result of a company’s practices, many investors may want to pause to ask if they truly endorse the source of their profits.

__Pausing to Ask__

Companies seldom post their definitions of freedom, safety, truth, and wisdom on their websites; so how does an investor determine a company’s values? Investors can explore two dimensions of a business’s impact to help determine if a business aligns, at least consequently, with their values:

1. __The net effect of the business’s product or service__
In the myth of Theuth and Thamus mentioned above, the two were analyzing what the net impact would be on society if the technology of writing were to succeed. Similarly, the products and services that all businesses produce will have an impact on society. What do your values tell you about the net effect that you would like for a business to have on society? If a business makes a product that is harmful to society, would you want to profit from its sales? Or, would you prefer to invest in a business that you believe is adding value to society by meeting an important need?
2. __The impact of the business on its stakeholders__
Every business has stakeholders—customers, employees, suppliers, host communities, the environment, and the broader society. What do your values tell you about how each of these stakeholders should be treated? Would you prefer to profit from businesses that succeed by *adding value* to their stakeholders or by *extracting value* from them?

No company will be perfect. There will always be unintended consequences of a business’s products and services. No *stakeholder* will be treated perfectly.

But for investors who manage their money themselves or for those who have others invest on their behalf, it is important to pause and ask:

*What values are important to me for a business to have?*

and

*Am I investing my money accordingly?*

__Conclusion__

The questions that the big tech companies are addressing highlight the reality that a business’s activities and operations reflect a set of values that greatly impact society.

Grocery stores, commercial real estate developers, shipping logistics operators, airlines, and biotech companies are all values-based companies, and their business activities will impact society, including redefining how we understand things like health, safety, community, efficiency, leisure, and work.

Each of these businesses face values-based questions that fall outside of their traditionally-assigned jurisdictions. Which should cause investors, too, to consider asking values-based questions that fall outside of their typical jurisdictions.

__Notes__

3. These companies were chosen as they are perceived to be companies associated with the "big tech" term used by the general public. Eventide is not intending to provide a negative or positive view of the listed companies.
4. Neil Postman, *Technopoly: The Surrender of Culture to Technology* (New York: Vintage, 1992), 9.
5. “Largest Companies by Market Cap,” accessed January 25, 2021, [https://companies marketcap.com](https://companiesmarketcap.com/).

**Photo by [Simon Abrams](https://unsplash.com/@flysi3000?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText) on [Unsplash](https://unsplash.com/?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText)*
*This communication is provided for informational purposes only and expresses views of Eventide Asset Management, LLC ("Eventide"), an investment adviser. There is no guarantee that any investment strategy will achieve its objectives, generate profits, or avoid losses. Eventide's values-based approach to investing may not produce desired results and could result in underperformance compared with other investments. Any reference to Eventide’s Business 360 approach is provided for illustrative purposes only and indicates a general framework of guiding principles that inform Eventide’s overall research process. Investing involves risk including the possible loss of principal. Past performance does not guarantee future results.*

Eventide

Insights

A company’s values will drive its outcomes

INVESTING | Jan 31, 2022

Big Tech: We All Have Values

By: Shaun Morgan

Investing that makes the world rejoice®

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