The organized labor movement has a new ally: venture capitalists

The staff at PEN America made the announcement in June: They were forming a union.

Like their fellow workers at Starbucks stores and Amazon warehouses around the country, the employees of PEN, a literary and human rights nonprofit, decided to form an independent union, unaffiliated with any of the dozens of major labor unions across the country. But in this case, there was a twist.

“We’re so grateful to have been supported by @UnitUnionizing throughout this drive,” the union drive leaders tweeted. “We’ve learned so much from their organizers, legal advisers, and comms experts!”

A startup backed by Silicon Valley venture capitalists, Unit of Work is an unlikely candidate for the role of labor-movement champion. Its outside investors have made fortunes backing technologies such as artificial intelligence, cryptocurrencies and video games. One is among California’s foremost critics of public-sector labor unions.

But these people used to multi-billion-dollar exits see a big opportunity in the atomized, restive condition of America’s workforce and the possibility of transforming it through a new era of unionization. “We only invest in areas where we think we can get a return,” said Roy Bahat, head of Bloomberg Beta, the venture arm of billionaire Mike Bloomberg’s media empire.

Unit’s business model works like this: The startup’s organizers provide free consulting to groups of workers organizing unions within their own workplaces — helping them build support to win elections, advising them on strategy in contract-bargaining sessions, guiding them through paperwork filings and around legal obstacles. Once a contract is in place, members of the new union can decide to pay Unit a monthly fee — similar to traditional union dues — to keep providing support.

Jamie Earl White, Unit’s founder, got his first taste of labor organizing as a grad student at MIT, helping organize a solidarity campaign with campus janitors pushing for better pay and working conditions.

After MIT, he co-founded and ran a medical device startup called Common Sensing. After stepping down as president in 2018, he considered his next move.

“There were a couple areas I was interested in, like education and direct-to-consumer healthcare, where I thought we could subvert the perverse incentives of the healthcare industry,” White said. “But what I kept coming back to was bringing my tech and organizational skills to the labor movement.”

Unit of Work founder Jamie Earl White

(Jacob Benton)

The movement could use the help. Only 10.3% of U.S. workers (nearly 16% in California) are in a union, down from a peak of nearly 35% in 1954. In the private sector, only 6.1% of U.S. workers are union members.

Yet 68% of Americans say they approve of labor unions, according to a 2021 Gallup poll. White believes that gap — along with the recent wave of unionization at Starbucks and other employers — reflects a situation where demand for the kind of workplace protections unions offer outstrips the supply of unions willing to help workers organize. Unit’s goal over the next decade is to restore private-sector union density to 8.1%, a rate last seen in 2003.

Some of the largest labor unions, such as the Service Employees International Union and the Communications Workers of America (the parent union of the Newsguild, which represents workers at the Los Angeles Times), have pushed for new organizing. But a recent analysis published in the leftist magazine Jacobin found that organized labor as a whole is sitting on its assets defensively rather than spending on organizing drives to grow its footprint.

White believed he could help push the pendulum back by targeting workers who might otherwise not receive organizing resources from a major union and building better tools for organizers, who typically rely on a hodgepodge of tech platforms and software to run their campaigns.

He contemplated going the traditional path and starting a nonprofit to help workers organize. But after talking to people at labor nonprofits, he concluded that “if the idea was to very quickly be able to spin up and meet a lot of worker interest — including software, which is notoriously expensive to build — being able to raise money quickly was important.”

So he turned to tech investors.

Bahat led Unit’s $1.4-million pre-seed round. A rare outspoken supporter of the labor movement among venture capitalists, Bahat has concluded that it’s the best path toward restoring economic justice in the U.S. economy.

“Work has failed millions and millions of people in the U.S., who have tried to work hard and been unable to provide a decent life for themselves and their families,” Bahat said, and “organizing is one of the ways that workers can demand more.” He recently attended the Labor Notes conference in Chicago, a gathering of the left wing of the U.S. labor movement, and is convening an Aspen Institute roundtable on organized labor.

He sees Unit as a sound investment, likening its business model to the recurring revenues of software-as-a-service companies such as Salesforce. “From my perspective as a businessperson, whenever a community has a want that’s going unfilled, there’s an opportunity for companies,” Bahat said.

One concern Bahat had was liquidity: Who would acquire a union-organizing startup, giving a payday to investors like him? What would it mean to go public?

White’s solution is to plan an “exit to community.” Once the company starts earning income, it plans to buy out its investors and give their equity to the unions it helped organize, effectively transitioning corporate control to the customer base. “Financial investors fundamentally should not be part of the long-term economy” of Unit, White said, but they were the shortest route to startup financing.

The approach has attracted some strange bedfellows. The second investment firm in the round, Draper Associates, is led by Tim Draper, a third-generation venture capitalist, Bitcoin evangelist and outspoken critic of organized labor. Draper has publicly laid California’s ills at the feet of unions, and public-sector unions in particular. In 2021, writing that “union bosses have taken California schools from the top to the bottom, they have made it so that there are fewer jobs, more homeless, and people are fleeing the state to work,” he launched a ballot initiative to ban public-sector unions in the state.

Tim Draper, founder of Draper Associates, which invested in Unit of Work

(Cody Glenn / Getty Images)

Draper pulled the plug on the ballot measure in January but hasn’t had a change of heart. “Unit of [W]ork is making unions decentralized,” Draper wrote in an email explaining his investment. “That will be awesome. Centralized unions tend to restrain trade, and government unions create bloated bureaucracy and poor government service on the whole. Government unions are the antithesis of a free country. The US is supposed to be run by the people. California is run by union bosses.“

White noted that none of Unit’s investors has a board seat, and they control only roughly one-fifth of the company’s shares. “Roy is passionate about labor, Tim is passionate about a lot of things, including decentralized technology,” but ultimately both are pursuing a return on investment and will be phased out of the company’s structure in the same way, White said.

Despite Draper’s enthusiasm for independent unions, as opposed to nationally affiliated labor organizations, Unit’s leaders and its website make clear that they support their clients if they decide to affiliate with a larger union.

“We help people get started, and they may end up affiliating” once they’re organized, said Megan McRobert, Unit’s director of organizing and a career labor organizer with stints at SEIU and the Writers Guild of America, East, on her résumé.

“It’s really all about getting more unions,” McRobert said. “People are ready to go. I’ve never seen this much labor organizing and demand for resources. We want to make the tools more broadly accessible, because no one’s taught how to form a union.”

McRobert said she herself was skeptical about the venture financing model but has been reassured by the lack of investor pressure on Unit’s work.

PEN America voluntarily recognized its workers’ union the day after it was announced, making it Unit’s second organized workplace, after workers at Piedmont Health Services, a community health clinic chain in North Carolina, won their union election in March with Unit’s assistance.

Unit said that it’s actively helping other workers organize, but those campaigns are not ready to go public.

Unit is still developing its tech tools for organizers but does have a sign-up system where workers can ask for support organizing their workplace and an ever-expanding organizing guide on its website. Regardless of the tech support, the workers at PEN America are still going through the process that any new union must face: bargaining their first contract.