Silicon Valley startups need stricter oversight


America is in danger. The United States has had a storied past as the world’s hotbed of corporations, serving as the cradle for behemoths such as Ford, General Electric, Walmart and McDonald’s. The 20th century engendered a new breed of companies, bigger, mightier and seedier than ever before, churning out products and profits at an astonishing rate. As corporations grew, the U.S. government outlined rules and restrictions that checked businesses’ power, thus keeping companies in line by establishing business taxes, a minimum wage, insurance requirements and further ethical and economic guidelines. However, the “Dot-com boom” at the turn of the 21st century begot another, more alarming, species of companies: startups.

From the conception of startups, their popularization has been accompanied with a mix of curiosity and encouragement from the general populace — how could one not respect a venture dreamt up in the American way by a couple of pals in a rustic garage? The past 15 years have seen startups extend across a variety of industries, from transportation to personal security.

Money from venture capitalists has swollen personal projects into multi-million and even billion-dollar private corporations. Yet, despite acquiring so much wealth, many successful startups maintain the auras of small businesses, which allows them to circumvent typical restrictions put on larger companies worth millions or billions. Herein lie two pressing concerns: how are startups affecting other American industries and how should people truly view startups?

To answer these questions, consider Airbnb, Craigslist and Uber, three of the 21st century’s most lucrative private startups. Airbnb, valued at $25 billion, connects travelers with homeowners and apartment tenants to expedite temporary living arrangements. Craigslist is worth $5 billion and makes money by establishing a network of people willing to do odd jobs as well as those looking to buy and sell goods and services. Uber is valued at $50 billion, a figure it achieved by linking people seeking transportation with drivers using their own personal automobiles.

These three companies all have counterparts and thus rivals in the American economy: Airbnb competes with the hotel industry, Craigslist competes with all-purpose stores and employment agencies and Uber competes with taxi companies and public transportation.

Despite being undoubtedly characterized as companies, none of these three startups are required to pay corporate taxes or guarantee the national wage and insurance standards set by their employers, thus skirting major American corporate laws. Because of this lack of regulation, these startups can easily outcompete rival public corporations by providing lower prices and earning higher profit margins. Airbnb does not have to pay hotel and service taxes and is a simple, cheap alternative to staying at a hotel. Craigslist is an unrestricted marketplace, one that federally-regulated stores cannot measure up to. Uber is almost singlehandedly eradicating the taxi industry, posting fares cheaper than those of city cabs and undermining the rigorous training process which taxi drivers receive. The government is making comparatively little money off of startups, while other equivalent companies that adhere to American labor laws are suffering.

It is also important to understand the societal and behavioral connotations of startups. The next generation is growing up amid a flurry of start-up culture, and needs to be mindful about the potential dangers of many of these commonplace companies. Any twisted psychopath can rent out his or her home as a part of Airbnb, prostitution and drugs can and have been solicited via Craigslist and violent predators (what happened to “never get into a car with a stranger”?) can easily take advantage of Uber.  American industries currently being taxed by the federal government are established enterprises with health and safety protocols: startups are the Wild West of health and safety laws.

Extremely wealthy startups are not inherently bad, but should be subject to the same regulations as public corporations in order to remain legitimate. Frustratingly, many of the new companies’ most active clientele do not see that they are sinking money into dangerous, albeit well meaning, efforts.

The people of America should understand that many of the services they have grown to love are direct violations of the law. It is time for million and billion dollar startups to cast off the guise of the lemonade stand and assume the responsibilities of the American corporate system.