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Capital Factory founder responds to criticism of unpaid internships

(BUSINESS NEWS) Capital Factory founder, Joshua Baer responds to criticism of their recent blog post featuring participating companies’ internship opportunities.

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The center of gravity

Capital Factory is the self-proclaimed “center of gravity” of the tech and entrepreneurial community in Austin, soon to celebrate a decade in operation as an accelerator, incubator, coworking space, and guide for the industry. If you’re in the Austin tech world, you’ve been to one of the many events in their space, from Ignite speaker series, the Austin Diversity Hackathon, Women Epic Office Hours (kind of like speed mentoring), to the Nonprofit Tech Club, or [name any coding language] networking meetup.

In fact, according to founder Joshua Baer, the 40 person team that operates Capital Factory is 75 percent women and is comprised of two lone white males. The opposite of what most tech startups internationally can say.

The scrappy company has endlessly made something out of nothing, so to speak. “We lead by example,” Baer asserts.

Why then is the company currently under fire?

They recently asked all of the companies participating in their program if they had any internships opening up that they could promote for them. Then, they posted the openings, most of which are less than part time. Here is the original internship posting that ignited the debate.

Sounds innocent enough. But some in the Austin community rejected the fact that some of these internships are unpaid.

Ironically, two positions have been commonly taken, both on and off the record. The first is that unpaid internships anywhere exploit people and benefit the company with free labor. The second is that the wealthy are disproportionately advantaged because mommy and daddy can pay their bills while they pad their resume by working for free at a startup.

Baer calls accusations of exploitation “ridiculous” and favoring the rich oxymoronic. He responds by challenging anyone to find an unpaid intern from any of these startups that feels exploited.

Whichever opposing viewpoint you may subscribe to (it exploits people or favors the rich), the ethics are subjective.

What is not subjective is the law

Lawyers tell us the internship postings aren’t clearly illegal, nor are they clearly legal. Baer said that they did not review the listings for legality, but that Capital Factory pays their interns, again, leading by example.

When asked if the tone of the job postings could be the source of the ire, given that they failed to focus on what an intern would learn, rather on what their required skills and duties at the company would be, Baer called this a “learning moment.” As their role is to guide, not operate these companies, he said that perhaps they can help guide their entrepreneurs to write better job descriptions in the future.

What the federal law boils down to is that unpaid interns may not benefit the company financially, and that it cannot be unpaid unless it passes the stringent Department of Labor test of six criteria:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

The DoL goes on to say, “If all of the factors listed above are met, an employment relationship does not exist under the FLSA, and the Act’s minimum wage and overtime provisions do not apply to the intern.” Meanwhile, unpaid internships are pretty kosher in Texas, but they point back to the restrictive federal laws.

Baer calls the whole exercise a “waste of time,” noting that “the Department of Labor isn’t going to enforce this, it’s a waste of their time, they have bigger fish to fry, so it’s not going to change,” several times alluding to the DoL’s focus being on larger companies like IBM, not such tiny early stage startups.

CF also under fire for not enough melanin

Also part of the internship posting are pictures of the teams, most of which are two to 10 people large. Although not exclusively all white males, many complained that the pictures were revealing of the startups present in the Capital Factory ecosystem.

In response, Baer reiterated that they lead by example by being one of the most diverse teams in town, working hard to “combat brogrammer culture.”

Some believe the negative response about diversity is a knee-jerk reaction that every event host is familiar with (there are more men on the panels than women, you sexists!), and every startup has heard (there are no black people on the team, you racists!). Others believe pointing out a lack of diversity is critical in impacting change.

“The Austin startup scene is becoming a parody of itself,” Redditor Travis_Williamson commented. “All of the upper middle class white guys in those photos are just creating shit for themselves at this point.”

Skin and pay aside, what’s the real issue?

The troubling undertone of public and private conversations surrounds the nature of Capital Factory. Since their inception, they’ve been an unquestionable force in the Austin tech world, unavoidable even. Success breeds jealousy and they’re often the victim of vague criticism for that reason.

But this line of conversation is different, more venomous. More substantial.

The legitimacy of the startups in the internship posting is under heavy fire. Mean-spirited comments about their model permeate communities like Reddit where Baer is accuse of being “less of a keen startup motivator and more of a rent queen,” with others saying that if the CF ecosystem is so hot, the companies should be able to at least afford minimum wage, not just an honor badge.

Baer, used to being a target, says the online commenters are “complainers” and brushes off the entire critique.

Baer insists they teach entrepreneurs how to be “resourceful,” and “scrappy,” reiterating that an unpaid intern won’t be the only unpaid person on some of these teams that are being guided to make something out of nothing. It is also important to remember here that Capital Factory doesn’t own or operate these companies, they’re an incubator/accelerator designed to incubate/accelerate.

So although the internship posting was a simple gesture from the actual Capital Factory team toward the companies in their offices, it triggered numerous online and offline debates about unpaid internships, then about diversity. Baer firmly believes they lead by example with a diverse team and paid interns, but with the postings focused on job duties and not on intern learning opportunities (the core tradoff of unpaid internships), it created a vulnerable moment for CF that the internet jumped on.

The future of unpaid internships at CF companies?

Baer argues that a “three person startup can’t barely even pay payroll and doesn’t really even know what they’re doing and are just trying to figure it out? Yeah, they can have unpaid interns, sorry. I don’t think that’s a problem.”

Will Capital Factory reconsider their position on unpaid internships? Absolutely not.

In fact, Baer doubled down, asserting, “I’m not going to discourage them from doing that. I’m going to encourage them to be creative about finding other ways they can not pay for things, or defer paying for things, and do other things that allow them to create something out of nothing, which is what creates jobs for other people and allows them to eventually pay for them.”

#unpaidinterns

Lani is the Chief Operating Officer at The American Genius and sister news outlet, The Real Daily, and has been named in the Inman 100 Most Influential Real Estate Leaders several times, co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

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2 Comments

2 Comments

  1. Paul O'Brien

    April 20, 2017 at 4:59 pm

    Interesting. There is much to be said for why and whether or not we should be having to reinvent the wheel of entrepreneurship. The point that startups are 3 person teams without even enough capital to pay themselves is VERY valid. So too is the point that people need to be paid. Someone not getting paid in a startup is part of the team. An intern is there to learn and further paid to work; what I look to in internships if from whom the intern will be learning and if that’s lacking, one has to wonder how an intern can benefit.

    What I find here (In Austin, relatively speaking to my experiences on the coasts) though is that startups are unwilling, discouraged from, or unfamiliar with how to deal in equity (and more importantly – how to ensure that equity is valuable). Owners are neither interns nor employees unless they are too that. I own a piece of a business, that’s why I work on it; AND I am paid by a business, for my position in it.

    There is a real challenge for us to collectively consider when venture capital isn’t prolifically available, funding rounds are relatively smaller, and outcomes average a fraction in size compared to elsewhere, if exits occur at all: equity is both at once more precious and less valuable. Founders want to retain just a bit more, early investors hesitant to relinquish as much, early supporters seeking their ROI. Likewise, Angels press for a little more ownership to offset the relative rate of return.

    What then is available to build good teams?

    By no means an answer or a way forward for us. Just an observation of reality that relatively less capital, less valuable companies, causes the circumstances with which we need to work. Startups can’t succeed without teams, and young professionals will struggle to get the good experience they want/need, and can provide, if businesses can ill afford them. Let’s solve the challenge.

    Business capitalization, valuation, growth, and establishment is NOT remotely easy. We might be experiencing a lot of a cart before horse situation where we think we need more startups to find their way, to get more capital injected, to get interns and executives paid, to drive further outcomes. Maybe we’re going about it wrong and need to work the other way with more leadership and education to drive outcomes, get more executives and interns involved valuably, injecting more capital into the ecosystem, enabling us to fuel more startups.

  2. Pingback: Summer 2017's best paying internships - The American Genius

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The best jobs in America, 2018 edition

(BUSINESS NEWS) Is your job on the list of the best jobs? Is this your year?

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Whether you love or hate your job, like any other human, you want to know how it ranks on the list of all occupations. And also like any other human, you know that the tech industry is going to dominate any ranked list of this nature.

And of course, you’re right.

Indeed’s 2018 list of The Best Jobs in the United States, the top 25 are mostly tech jobs.

The jobs themselves range wildly in terms of salary, required education level, field, and availability, though all fall above the $75,000 per year mark. As is to be expected, a large number of the jobs in question are located in the tech field, though you might be surprised to see several other fields holding prominent spots as well.

One such field is construction, though there are a couple of caveats in the field’s growth itself. As job persuasions such as construction management and construction estimator make their way onto the list of the top 25 jobs of 2018, the respective hiring departments are forced to contend with decreasing searches for construction jobs as the year has progressed.

While the results should speak for themselves, it’s clear that anyone looking to hire in the construction field will have a bit of pandering on their hands.

Tech jobs such as full stack developer and computer vision engineer are still at the top of the list – a position which hasn’t changed much from last year – and the actual number one spot, while not quite as tech-oriented as past years, is commercial project manager.

Indeed notes that the position of the role of machine learning engineer is especially surprising (spot number 4) given its number 17 spot on last year’s list.

Naturally, the rise in self-driving technology and the interest in AI has most likely influenced the sudden jump this year; if you’re someone with the proper education and skills in the machine learning department, this should be your year.

A couple of outliers on the list include plumbing engineer (spot number 14), registered nurse in the infusion field (spot number 24), and optometrist (spot number 7). As Indeed points out, healthcare roles in 2018 have made an unexpected appearance on this list; naturally, such positions fall on the “more education” side of the spectrum, but their involvement makes for a nice contrast with the normal tech backdrop.

The full top 25 list:

  1. Commercial project manager
  2. Full stack developer
  3. Computer vision engineer
  4. Machine learning engineer
  5. Preconstruction manager
  6. Construction superintendent
  7. Optometrist
  8. Data scientist
  9. Chief estimator
  10. Development operations engineer
  11. Agile coach
  12. Construction estimator
  13. Senior talent acquisition manager
  14. Plumbing engineer
  15. Project superintendent
  16. Staff pharmacist
  17. Head of sales
  18. Commercial real estate agent
  19. Construction manager
  20. Project architect
  21. Product owner
  22. Senior clinical specialist
  23. UX researcher
  24. Registered nurse – infusion
  25. Partnership manager

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How the Lean concept can have the biggest impact on your bottom line

(BUSINESS) Using the Lean business concept and asking the non-sexy question of “What’s dumb around here?” your business will outpace your competitors in no time.

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Entrepreneurs love solving problems. That’s what they’re good at doing. In fact, the more complex, difficult and messy the problem, the more the entrepreneur will enjoy the challenge. Entrepreneurs are especially good at solving problems that nobody knew were there. Think about Steve Jobs: He knew that we needed a pocket MP3 player before we even knew what it was.

While entrepreneurs are coming up with the next “big” thing, we need the non-entrepreneurs in our organizations focused on solving the small problems in our company with the same enthusiasm. Imagine if every one of your team members were consistently looking for opportunities to improve your systems, processes and service delivery. Those subtle changes made in the non-sexy parts of the business usually have the biggest impact on the bottom line.

This is a business concept called Lean, in which a company changes their processes to create the most benefit to the customer using the least amount of resources possible. Lean is commonly used in the manufacturing industry, but its principles can be used in any business to change the way of thinking and doing things.

I recently witnessed a great example of how Lean principles were used to improve one of my clients, LuminUltra – a leading provider of microbiological testing hardware, software and services. The company serves industries that need to know quickly and accurately what’s living in their water. At a recent quarterly planning session at the LuminUltra offices in Fredericton, Canada, COO Charlie Younger shared a powerful story about the company’s manufacturing facility and challenging the status quo.

During the expansion of the company’s manufacturing facility, one of the team members was lamenting to Charlie about how much time it took to complete a lengthy step of the manufacturing process – one specific quality check that was very time-consuming. He remarked that in the history of the company they never had a single machine fail the test. Charlie’s first thought was, do they even need to perform this specific test again?

After more discussion with colleagues, the team realized that the other quality checks performed earlier in the manufacturing process would always identify a defective unit. With this knowledge, the manufacturing team asked for permission to perform minimal testing to still provide assurance with less work. When presented with the information, the company leadership agreed that it was a great idea and would save time and money as well as improve the employee experience. But the bigger question was: Why hadn’t anyone ever questioned this lengthy step of the manufacturing process before?

Charlie, having run Lean programs in the past, has seen this issue before: People continue to do what they’ve always done even if they think there is a better way. He thought this would be a great opportunity to use a fun, simple but elegant technique to capture other status quo breakers – in other words, he decided to use the same principles for changing the company’s production process to make other company decisions.

With that, he posted a whiteboard in the manufacturing room with the title “What’s Dumb Around Here?” and encouraged team members to capture possible “dumb things” to add to it. These topics are discussed and vetted during their Lean process meetings to determine if they can be improved.

When I discussed the new process with Charlie, he noted, “First, you have to create an environment where people are willing to question the status quo. We have always been highly focused on quality and accuracy, so the team thought it was outrageous to openly question a quality check we had been performing for years.”

He continued, “You have to help your management team be open to receiving ideas that might seem crazy and not overreact to the suggestions. Instead, simply ask them to explain their logic. More often than not, the front line knows a better way to do things but does not know how to navigate the change. The beauty of using Lean techniques is that you now have an easy navigation path to discuss, approve and roll out changes. Suddenly, you have an energized front line solving problems with minimal involvement from management – how great is that?”

While LuminUltra continues to grow their product line and expand into new markets, it expects that its implementation of Lean principles will help it make subtle but important modifications to processes that will positively affect its bottom line. The CEO, Pat Whalen, remarked, “If we can produce our products faster and more cost effectively and get them into the hands of our customers faster, we can have an even bigger impact on the water sector with our microbiological monitoring products. I need all of our team members thinking how we can improve every single day. The water sector needs us.”

Every visionary, big-thinking entrepreneur needs a team that challenges the status quo. How are you encouraging your team members to identify, “What’s Dumb Around Here?”

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Verb develops your team’s talent while making a major social impact

(BUSINESS NEWS) Any sized team can improve their talent, but add in a dash of social good, and Verb has the platform to rule them all.

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More organizations are looking to offer training opportunities for their employees (but with an emphasis on more efficiency, cost effectiveness, and impact than traditional classroom instruction) – and there are a number of solutions. Organizations can seek to leverage those same on-demand resources that consumers are using (Like Lynda.com) or using their own internal corporate learning solutions to host content (like Cornerstone On-Demand, Accord, or other LMS (that’s uh – Learning Management System, non-talent TD folks)) providers, and hope by doing so they develop employees and solve the variety of skill gaps that are emerging for a millennial and post-millennial workforce.

Verb seeks to offer a flexible learning solution that also solves a secondary challenge: getting employees to be more engaged with work.

The product offers subscription style learning, offering focusing on the core skills like communication and leadership skills. Specific skill development is bestowed upon employees through four types of learning elements: articles, activities, courses, and impact programs. This suggests that the learning is focused not only on content and theoretical learning, but also activity based and impact styles of learning to help employees transfer those skills into the workplace.

The standout of this learning solutions it that it seeks to drive in something that a lot of young professions seek – purpose.

Verb connects with social impact organizations to facilitate learning opportunities and promote development. A great example from their blog is a Summer partnership with United Way for Greater Austin (check it out) where they conducted a five-week leadership program that taught local nonprofit professionals how to communicate their organizational strategy and mission more effectively with pitch decks.

Adding in purpose is an emphasis on mentoring, where social entrepreneurs can become impact partners and connect with brands to help improve their visibility, awareness, and credibility.

Social entrepreneurs have a real opportunity to generate their visibility and gain more attention, companies like Sproutel (which have this awesome story about Jerry the Bear – you’re gonna cry if you watch it!) or TOMS both have gained some attention via Verb.

The benefits here are pretty clear – organizations can get a learning solution that helps them develop their employees more effectively and can collect learning metrics that help justify their expense and demonstrate impact.

The most highly regarded quality is mentoring opportunities created to connect them with social impact organizations – and those social entrepreneurs benefit from their visibility. From a learning professional – the opportunity to have experience learning, mentoring, and an engagement opportunity seems like a rare bundle – and one that can be particularly valuable for large and small organizations.

Talent development is a significant investment, and Verb looks like a pretty awesome solution that can nestle in beside other talent development strategies.

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