The Rise of Woke Capitalism
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The Rise of Woke Capitalism
Have you ever found yourself frustrated with a company that is outwardly professing some level of social responsibility, while still employing the same destructive techniques inside their organization?
As corporations continue to engage with their consumers on social media, they have taken up causes that don’t seem to realistically line up with their business practices.
Vivek Ramaswamy, one of the recent guests on Sucess Story, believes that this fake posturing has been done simply for financial gain, dubbing it “woke capitalism.”
Ramaswamy is an incredible example of the American dream; a man born of immigrant parents who has become a leader in the healthcare tech industry, led a successful hedge fund, become a best-selling author, and is now striving to untwine the tangled mess of capitalism and democracy he believes is destroying the country.
I warn you, this isn’t a light listen. Ramaswamy and I dug into serious, sometimes difficult topics, and I don’t agree with him on everything. But I’ve taken one of those topics and distilled it into this newsletter, to try and explain one of his many interesting viewpoints.
They can’t take away something that you know
One of the first lessons that Ramaswamy remembers learning is that material things can be taken away but knowledge can’t. He dedicated himself to the pursuit of the latter and found himself graduating from both Harvard and Yale.
His work ethic landed him as a partner with QVT Financial, which he later left to create his own enterprise, Roivant Sciences, which put him on the healthcare tech map.
In 2021 he stepped down as CEO of Roivant to pursue other things, including the release of “Woke, Inc: Inside Corporate America’s Social Justice Scam” — an instant New York Times bestseller.
Changing focus
“Earlier this year, I turned my attention from working on biological cancer to working on what I view as a major cultural cancer.”
It’s at this point Ramaswamy and I focused most of our interview.
Without putting words in his mouth, his belief that the corporations of America have found a way to placate the masses and have even the most progressive among us turn a blind eye to their more destructive business practices, as he put it, “threatens the future of the United States.”
By connecting their brand to a social cause (or at least pretending to), they’ve made it easy for us to see their products as a tool of change and twisted the idea of “wokeness” from what it originally meant.
Born out of crisis
Ramaswamy traces this back to the 2008 financial crisis, when, as he notes, all of the big corporations were the “bad guys” in the eyes of the American people. The battle at that point was regular folks trying to redistribute some of the wealth, and stop Wall Street from preying upon those less fortunate.
But in the time since, as focus turned to social injustices like systemic racism and misogyny, those same companies saw an opportunity to recast themselves, and remove the villain’s cloak.
“A bunch of big banks met a bunch of woke millennials. Together, they birthed woke capitalism, and they put Occupy Wall Street up for adoption.”
From the mountaintops of Davos
When I pressed for examples, he discussed one that included one of his former employers, financial giant Goldman Sachs.
In 2020, the massive investment bank proclaimed — “from the mountaintops of Davos” as Ramaswamy called it — that they would not take a company public unless there is at least one “diverse” board candidate, with a focus on women.
He noted that by the end of 2019 (before this announcement) there already wasn’t a single company in the S&P 500 without a woman on its board.
The real crux of the issue can be seen in Goldman’s announcement. As they were pushing for more diversity on boards, they explained it with data that showed companies with at least one diverse member saw a much higher rise in average share price — 44% compared to 13% — within a year of going public.
The point is right there for everyone to see: they aren’t fighting for diversity, they’re fighting for money.
Take it out of the ballgame
Sometimes, in today’s social media discourse, which often just boils down to people yelling at each other, I often see a repeated line: “stick to _____.” That blank is often filled with the word sports, as some believe that the world of athletics and social causes should be separate.
That is what Ramaswamy argues, though a little more eloquently than the average Twitter warrior. His point is that America, to function properly, needs to have separate spheres where people on both sides of a political issue can come, interact, and communicate.
On the topic of Major League Baseball moving their All-Star game from Atlanta to Colorado in response to Georgia voting laws, he put it this way:
“It hangs America out to dry because it eviscerates one more space that could have brought us together in a divided moment.”
Fixing the system
You know I wasn’t going to let Ramaswamy off the hook without asking him about how to fix this problem that he so passionately rails against.
He broke it down into three things.
1. Cost-benefit analysis
“CEOs just do whatever makes life easiest for them. If there’s going to be one vocal stakeholder group that they need to appease, and there’s no cost to appeasing them, they say ‘Okay, we’ll go woke.’”
The point is to change the cost-benefit results for the CEO so that simply putting out a support campaign, slogan, or whatever it may be, isn’t enough. Either they have to put actual money behind something, or stop pretending they are part of a movement.
2. Legal benefits
While he doesn’t go completely in-depth into these benefits (you can read more about it in his book), Ramaswamy explains that corporations hold legal protections that things like political campaigns don’t, despite having a similar impact on the cultural agenda. Limited liability for shareholders, business judgment rules, and others are given to companies that are “effectively waging the equivalent of a political campaign.
3. Generational differences
“I think that the hardest work we’re going to have to do as an American people is reviving the shared sense of identities and causes that bind us as human beings.”
We have distilled each other down to so few categories that suddenly, a whole generation is starved for community and identity, and will be loyal to brands even if they just show the bare minimum of support.
That is, of course, despite these companies still having the goal of making the most money possible.
“Much like Virginia Slims might have targeted insecure teenage girls in the 1990s, now companies are targeting a morally insecure generation as a way of preying on those insecurities to make a buck.”
It is up to us, he argues, to stop following a company just because it does the bare minimum of pledging support for a social cause. Do not find your identity in a product, even if it does claim to purport the same ideals as you.
Final thoughts
Like I said before, this wasn’t always an easy conversation to be a part of, but I think it is important to talk about these issues in the open. There is much more that Ramaswamy and I touched on, including:
Turning his back on the investment industry
His focus on medical advancements
Critical race theory
Coming out of the pandemic
Finding meaning in failure
And much, much more
If you would like to check out the full interview, be sure to head over to the Success Story YouTube channel, where we have hundreds of podcasts available for free.
Thanks for tuning in. I’ll be back next week with more Success Stories!
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Thank you for reading,
-Scott