Where does the buck stop?

Source: https://entrackr.com/

I have been contemplating about vernacular platforms and the proliferation of, lets say, sleazy and entertaining content and as an investor, the thought occurred to me if I would risk my reputation by investing and associating with a company that has this type of content and believes this to be a means to an end. I paused for a bit to digest this, here’s why:

This is important for multiple reasons — on one hand startups are under constant pressure to their grow user base and use any and all marketing hacks to grow while on the other hand this brought forth the ethical debate on just what is really fair game in this business. I have already written about Chinese apps and how difficult it could be to compete against them, you can read it here. Recently, NewsDog founder famously said “…entertainment pulls maximum traffic. It sells like hotcakes in any country at any time” and this has been the playbook of a lot of content start-ups going after this space.

So I began to ponder as an investor, where should start-up founders and their VC backers draw the line on using “entertainment”. What I mean is, is there a moral and social responsibility around this?

One side of the argument goes something like this:

  • If this is what the users want, then the platform should serve that need
  • We are not in the business of censorship
  • If we don’t do it, then someone else will (this is the most often heard)…

All of these are valid points, now having said that, does it also mean that the “grow at any cost” theory is what it takes to win this market?

The recent news about underage children publishing and consuming this content is rather disturbing, to say the least. Which brings me to the key question, what role can investors play in such a scenario.

As a sample, I downloaded the Like app, post installation, I was not verified, my age was not asked, there was no registration and this was my landing page

Things got murkier as I scrolled down and saw visibly underage children (not putting up those pics here for obvious reasons) in various videos which can only be described as very unsettling. One gets a very similar experience and feed with other short video apps in this category. Some of them do require you to log in via your facebook/email/phone but the safeguards are still either very rudimentary or non-existent.

I can only imagine the plight of a parent if they found their underage daughter or son on these apps!

A welcome move came from the Indian govt. to regulate these social/short video content apps, but it is still applicable only to those who have over 5M users. Any startup in the consumer internet space will tell you that if you have reached ~5M users, loosely speaking then half the battle is probably already won (at least in terms of product market fit), in other words, any regulation that kicks in at that stage is simply too late. Government regulations tend to be reactive as opposed to being proactive and they are almost always slow and not comprehensive. I don’t believe the ecosystem can any longer hide behind the “we can do this as currently there are no regulations” argument in today’s day and age, particularly in the aspect of user generated content.

Which brings me to my original question, as a VC investor what should we do:

I do believe that investors should spend sufficient time understanding the core value proposition of the company, the founder’s values and beliefs and then take a call if there is alignment with the founder, the VC himself and the VC firm‘s internal ethos and guiding principles.

While VC’s are not in the business of censorship, they must try and ensure that the companies they invest in have the best possible safe guards to protect privacy and ensure that anyone who is not supposed to see this form of content is protected.

Investors have a moral and social responsibility, beyond delivering returns to their investors and shareholders and this must extend to their portfolio companies.

There is no right or wrong answer but I do hope that this triggers a healthy debate around this topic, particularly at a time when we, as a nation, are at a crucial juncture where tech/mobile led disruption is completely changing the way we consume content across ages, geographies, social classes and languages.

Ravi is a VC investor at WaterBridge Ventures, an early stage tech VC firm. He is passionate about technology, venture investing, human psychology and football.