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OgilvyRED The Future of Work by Jess Kimball Leslie

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On the economy millennials will create from circumstances they have inherited.

Published in: Leadership & Management

OgilvyRED The Future of Work by Jess Kimball Leslie

  1. 1. APRIL 2017 OGILVYRED THINK SERIES By Jess Kimball Leslie, Chief Futurist The Future of Work: On the economy millennials will create from circumstances they have inherited
  2. 2. NEVER BEFORE HAVE AMERICAN COMPANIES TRIED SO HARD TO EMPLOY SO FEW PEOPLE. - The Wall Street Journal February 1, 2017
  3. 3. ANORMALLYCHILLBARACKOBAMA ISSUESONEHELLOFAWAKEUPCALL INTRODUCTION 4
  4. 4. ChameleonsEye/Shutterstock.com 5
  5. 5. “We’re going to have to redesign the social compact in some fairly fundamental ways over the next 20 years. At some point, when the problem is not just Uber but driverless Uber, when radiologists are losing their jobs to AI, then we’re going to have to figure out how do we maintain a cohesive society and a cohesive democracy in which productivity and wealth generation are not automatically linked to how many hours you put in, where the links between production and distribution are broken, in some sense. Because I can sit in my office, do a bunch of stuff, send it out over the Internet, and suddenly I just made a couple of million bucks, and the person who’s looking after my kid while I’m doing that has no leverage to get paid more than ten bucks an hour.” -Barack Obama to David Remnick, November 28, 2016, The New Yorker. 6
  6. 6. The Social Compact (noun) – The voluntary agreement among individuals by which, according to any of various theories, as of Hobbes, Locke, or Rousseau, organized society is brought into being and invested with the right to secure mutual protection and welfare or to regulate the relations among its members. Also known as the social contract. Images (left to right): Thomas Hobbes, John Locke, Jean-Jacques Rousseau. 7
  7. 7. THINKABOUT BARACK OBAMA’S WORDS FOR A MOMENT. 8
  8. 8. Our 44th president—a man who has been accused on many occasions of being way too even-keeled—has stated that we need to reinvent our entire society. Then he added that we’ve only got 20 years in which to do it. History fans might read Obama’s words and recall Dwight D. Eisenhower’s final remarks upon leaving office—specifically Eisenhower’s warning that the swelling postwar defense budget meant that the United States risked becoming a “military-industrial complex.” Those proved to be some sage words. It could be argued that a president leaving office is perhaps our best informed citizen, and that his or her warnings merit substantial consideration. 9
  9. 9. Obama is not unique in his beliefs. In recent years, an onslaught of the world’s brightest economists and academics—Columbia University’s Joseph Stiglitz; Harvard University’s Thomas Piketty; Stanford University’s Nicholas Bloom; Oxford University’s Richard Susskind; MIT’s Erik Brynjolfsson and Berkeley’s Emmanuel Saez —have sounded the same alarm, vociferously declaring that the economy has begun rapidly changing, and we must alter the way society is structured to match its demands and constraints. Marx and Engels, ever the diligent futurists, created a system for thinking about periods of extreme change in human history back in the 1800s. Marx and Engels paid close attention to times of “contradiction” in modern history, specific times when the way things were socially done by the groups of regular people were very different from the way things were economically organized by the powers-that-be. Whenever social behaviors clash the economic models, said Marx and Engels, revolution becomes an inevitability. Let’s stop there to apply this very timely idea to today… 10
  10. 10. MARX NAPSTER Here’s a fun example of a Marxist “contradiction” decimating a market: remember the 2000s? I was in college at the time, and the way that we acquired our music was by illegally downloading MP3 files on Napster. At the time, the way the music industry wanted us to acquire music was to either download it from iTunes, or to buy and store it on compact discs. Hell no, we said to that! We’d rather wreck a $2,000 computer with a virus than pay $.99 for a song. So it’s easy to see, in retrospect, that there was a massive contradiction in the way that people behaved vs. the way the music market was organized. That same contradiction cleared the path for revolution, thus iTunes gave way to Spotify,andnowartistsyoulovecanmakebetween $0.006 and $0.0084 in exchange for a play. Music in the year 2000: How business was organized vs. How people behaved 11
  11. 11. OBAMA, PIKETTY, MARX OR SEAN PARKER If you don’t believe Evan El-Amin/Shutterstock.com12
  12. 12. In addition to these academics, the world’s most visionary CEOs have quietly prepared their business models for a world in which our economy is no longer structured around scarcity of resources (for example, oil and natural gas), but an unlimited abundance of them (for example, the sun). That’s a pretty huge change. Businesses built around the scarcity of resources represent a crazy percent of capitalism as we know it. JEFFBEZOS Then consider… 13
  13. 13. The choices made by the world’s top CEOs speak volumes: there is a reason why Jeff Bezos has built his company’s new headquarters inside a working biome; why Brian Chesky has equipped Airbnb to help millions of Americans who can’t afford their (menacingly structured, subprime) mortgages with a new way to derive income from that same, ultimately unaffordable asset; why Elon Musk’s most treasured contribution to the world might be his solar-powered tiles. (And those little tiles, at scale, could decimate not 1 but 2 of the world’s 3 most valuable industries.) “It’s probably hard to overstate how big of an impact artificial intelligence is going to have on society over the next 20 years.” -Jeff Bezos, Chief Executive Officer, Amazon 14
  14. 14. Those CEOs are not stopping, either: in December, 2016, CB Insights uncovered illustrations from an Amazonpatentforan“airbornefulfillmentcenter.” In other words, a patent for drones that can ferry goods to and from convenient, flying, unmanned warehouses. Imagine being at a ball game and ordering all kinds of beverages and snacks from an Amazon Airborne drone. That’s the type of use case the patent cites in its filing. These CEOs all know about the future reality to which President Obama alluded—they see that society is restructuring itself in some pretty fundamental ways—and while other companies are carrying on business as usual, those CEOs are running around making their investments and preparations. As was true when limitations of mercantilism gave way to the expanse of capitalism in the late 1700s, periods of great economic tumult always yield great opportunity— for those who can see what’s happening. 15
  15. 15. THECHANGE THATISTOCOME THE CHANGE THAT IS ALREADY HERE,
  16. 16. In my last trend report, I posited that there is no longer such a thing as a traditional “competitive set” in business—that is, a notion that your company’s competitors are merely the other companies producing similar products. Instead, I believe your competition is everyone. I also believe that your competition is always Alphabet and Amazon, because these two guys like to gobble up industries for sport. Radu Bercan/Shutterstock.com18
  17. 17. Source: http://www.nytimes.com/2017/01/04/technology/techs-next-battle-the-frightful-five- vs-lawmakers.html?smprod=nytcore-ipadsmid=nytcore-ipad-share The New York Times agrees with this thesis. Writing in January, 2017, Farhad Manjoo stated that Microsoft, Apple, Amazon, Facebook and Google have become the ‘Fearsome Five,’ with ‘no true competition’ in sight. In Mr. Manjoo’s words: “The Five are poised to jump beyond their corner of the lagoon. Over the last few years they have begun to set their sights on the biggest industries outside tech — on autos, health care, retail, transportation, entertainment and finance. With the Five, unlike in previous eras of tech, it is not clear that there are many potential disrupters among today’s start-ups. The battles for dominance in cloud services, artificial intelligence and data mining, voice-activated assistants, self-driving cars, virtual reality and most every other Next Big Thing are being waged among the Five.” 19
  18. 18. OHBOY,T H E HARD PARTI promise that this report gets more fun soon, but first we have to talk about how truly bad things have gotten, in order to see how truly inevitable change is.
  19. 19. Not 20%, not 50%, 90%. It’s a very hard number to really understand, so here’s a series of charts that we can ponder as a collective. 90% of America is really, really struggling right now. Here’s a painful reality that many of us have spent far, far too much time ignoring: 22
  20. 20. When it comes to the pace of annual pay increases, the top 1% wages grew 138% since 1979, while wages for the bottom 90% grew 15%. Cumulative change in real annual wages, by wage group, 1979-2013 Measuring employment becomes a moot point when 90% of Americans are earning a stagnant wage. Source: EPI analysis of data from Kopczuk, Saez, and Song (2010) and Social Security Administration wage statistics. Reproduced from Figure F in Raising America’s Pay: Why It’s Our Central Economic Policy Challenge. Cumulativegrowthinannualwagesince1979 200% 1980 1990 2000 2010 150 138% Top 1% Bottom 90% 15% 100 50 0 -50 23
  21. 21. Outsized U.S. Income Inequality Persists in 2014 The incomes of the top 1% and 0.1% of U.S. families dwarf the bottom 99% Source: Emmanuel Saez and Thomas Pikkety’s analysis of IRS data. ©2015 Washington Center for Equitable Growth. Chart source: http://www.epi.org/publication/charting-wage-stagnation/ Averageincomeineachgroup $6m Bottom 90% Top 10% Top 5% Top 1% Top 0.1% $4m $33,068 $295,845 $448,489 $1,260,508 $6,087,113 $2m $0 No surprise that stagnant wages produce wild net worth and savings deficits. 24
  22. 22. Long Robots, Short Human Beings Manufacturing output grows because of technology, not wage work Source: BofA Merrill Lynch Global Investment Strategy, IFR, Bloomberg. Millions 1.75 1.50 1.25 1.00 0.75 0.50 0.25 0 ’73 ’76 ’79 ’82 ’85 ’88 ’91 ’94 ’97 ’00 ’03 ’06 ’09 ’12 ’15 20 12 14 16 8 10 Global Industrial Robots U.S. Manufacturing Jobs 25
  23. 23. Manufacturing: Total Employment and Production Source: Federal Reserve Board of Governors, U.S. Bureau of Labor Statistics. Manufacturing Employment Manufacturing Production 2009=100 16,000 120 ’47 ’52 ’57 ’62 ’67 ’72 ’77 ’82 ’87 ’92 ’97 ’02 ’07 ’12 14,000 100 12,000 80 10,000 60 8,000 40 6,000 20 4,000 0 26
  24. 24. Where do you work? Estimates suggest a sharp increase in the percentage of the U.S. workforce that isn’t employed directly by the company where they work. Source: Lawrence Katz (Harvard University) and Alan Krueger (Princeton University). The Wall Street Journal. 1995 2005 2015 16 2 4 6 8 10 12 14 0 Independent contractors On-call workers Temporary help agency workers Contract-firm workers with more than one client Contract-firm workers with one client After successfully increasing profits with technology, savvy CEOs are milking more money from employing less full-time workers. The freelance economy thrives because it’s highly desirable because it’s as profitable (for companies) as it is desirable (for their most expensive workers). Note: A janitor who is employed by a contract firm and cleans five unrelated offices a week is counted as working for more than one client. Data for 1995 and 2005 don’t include exact comparisons for that group. 27
  25. 25. FOR 90% OF AMERICANS, A HARSH REALITY IS ABOUT TO GET HARSHER With those charts in mind, we can fairly say… 28
  26. 26. “The problem with the status quo is that it isn’t static. It’s always getting worse.” -from a talk with Paul Mason at The Guardian Live, July 23, 2015 “Work hard, play hard” has been the overeager motto of a generation in training for… what?—drawing hearts in cappuccino foam or plugging names and numbers into databases. The gleaming tech no-future of American capitalism was long ago packed up and sold to China for a few more years of borrowed junk. A university diploma is now worthnomorethanashareinGeneralMotors. We work and we borrow in order to work and to borrow. Meanwhile, what we acquire isn’t education; it’s debt.” -Communiqué from an Absent Future, 2009 “We’re not only talking about three and a half million truck drivers who may soon lack careers. We’re talking about inventory managers, economists, financial advisers, real estate agents.” -The Great AI Awakening, The New York Times, December 15, 2016 29
  27. 27. So we just looked at charts that show where we are today, now let’s talk about where we’re going. The next chart is from an Oxford Martin study on the future of employment. A note on how to read the chart, because it’s a LOT—from left to right, we see the likelihood of a computer taking a job away. The colors represent pools of workers in different sectors of industry. The reason the sectors’ colors are “smeared out” horizontally over multiple probabilities is because there’s a lot of deviation within a single sector. For example, certain kinds of construction workers face a medium likelihood of being replaced by a robot, and other kinds of construction workers face a very high likelihood. The cumulative charts we’ve just looked at are, in various combinations and permutations, often used to make the argument that capitalism has failed our post-technology society. In capitalism’s place, the aforementioned academics, CEOs and sitting president believe that we are now headed toward a post-capitalist future. 30
  28. 28. Source: http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf Management, Business and Financial Computer, Engineering and Science Education, Legal, Community Service, Arts and Media Healthcare Practitioners and Technical Service Sales and Related Office and Administrative Support Farming, Fishing and Forestry Construction and Extraction Installation, Maintenance and Repair Production Transportation and Material Moving Employment(millions) Probability of Computerization 400 0 0.2 0.4 0.6 0.8 1 200 300 100 0 Low 33% Employment Medium 19% Employment High 47% Employment 31
  29. 29. W I T H A N D WIKIPEDIA EXAMINING POST-CAPITALISM HOT DOGS
  30. 30. So what the hell does that mean—that ‘post-capitalism’ thing Obama thinks we need to restructure the U.S.A.’s “social compact,” aka society Academics agree with him CEOs agree with him Federal Reserve, Census Bureau of Labor Statistics data agrees with him A REALLY FAST RECAP 01 02 03 04 34
  31. 31. Paul Mason, Erik Brynjolfsson, and Jeremy Rifkin believe that capitalism has failed to keep pace with the demands of technology, and therefore must be abandoned for a new model—a new social compact, if you will. These thinkers believe that capitalism was pretty well set up to navigate the past—to deal with a world where factory workers competed with other factory workers to produce the best product at the best price. Capitalism, however, doesn’t know how to cope with the one knowledge worker working in the basement, the one who writes the code that makes all those workers moot. 35
  32. 32. “The art of management has been defined as knowing exactly what you want men to do, and then seeing that they do it in the best and cheapest way.” -Frederick W. Taylor 36
  33. 33. The “art of management,” as Frederick Taylor defined it, was built around the notions of centralization and hierarchy. In Taylor’s world, workers showed up from 9 to 5 on weekdays in order to be managed by a superior, who knew everything about what they were doing. These workers needed each other in order to be productive (the factory line can’t run with only 4 of its 20 people), and they also needed the manager to puzzle through any inefficiencies. The more efficient the group became with their time, the faster those goods got produced, the more money management made. Centralized factories—and companies—competed with each other to build the very best thing. Capitalism ‘got’ Ford vs.GM vs. Honda, for sure. What the aforementioned thinkers argue that it doesn’t ‘get’ is the Uber. 37
  34. 34. WAGE WORKERPeter Drucker WAGE WORKER The would soon be replaced by the KNOWLEDGE WORKER 38
  35. 35. Before we delve deeper into the post-capitalist argument, it is now worth mentioning that one of post-capitalism’s founding fathers was the late, great Peter Drucker. He was the ultimate capitalist, the ultimate sharp-shooting, steel-eyed, practical exec in one hell of a suit. Peter Drucker was a legend who, in postwar America, all but invented the consulting models that minted McKinsey and its competitors. Peter Drucker was called “The Godfather of consulting” by no less than The Harvard Business Review. He was the original CEO whisperer, the man who helped boards and execs tweak their organizational practices and structures to be just that little bit more profitable and efficient. And then he saw the networked computer. 39
  36. 36. Through some miracle of clairvoyant intellect, this same man, at 80 years old, took a long look at the (pre-internet browser!) digital network and predicted that it would shatter capitalism altogether. Writing in 1992-1993, Peter Drucker said that the wage worker would soon be replaced by the knowledge worker, and that the trouble with these new knowledge workers would prove impossible for CEOs to manage or value. These workers wouldn’t need to all show up at the factory at 9am. These knowledge workers would be decentralized. The best of them would be unmanageable. In a lengthy 1992 interview with The Harvard Business Review, Drucker explained that the best of these women and men would be their most profitable and productive when left to do whatever they wanted, and that the best CEOs of the future would quickly learn to accept this reality. Unlike wage workers, knowledge workers wouldn’t need to be managed* . “So how would company hierarchies work?”, HBR asked Drucker, representing the question in all of its readers’ heads. Well, Mr. Drucker replied, They wouldn’t. The company hierarchy is dead. Mr. Drucker wrote a whole book about this whole theory, ultimately positing, that certain knowledge workers’ hours might become so valuable, they’d be worth 10,000 wage workers’ hours. 40
  37. 37. Inthepost-capitalism,knowledgeworkereconomy, this would mean that a company could post the exact same profits on that 1 person while firing some or all of the other 9,999 people. Once those 9,999 people* were left without a way of supporting themselves, their lack of economic relevance would mark the decimating blow to capitalism’s status as society’s main organizing principle. After all, capitalism can’t “organize society” if it leaves 90%+ of society out. *For those of you arguing that there are other potential outcomes for those 9,999 workers, look up Paul Krugman’s seminal 1997 “hot dog” theory; it’s extremely Googleable. Krugman’s answer, in short, is Well, yes, there are sort of other outcomes for those other workers, but ultimately no, not at sustainable scale. Wage Economy Knowledge Economy Paid by the hour Paid by the value of their contribution Work regular hours Work whenever they want to Work in one location Work wherever they want to/need to Hierarchical (Bosses/ subordinates/peers) Networked (It’s more complicated than that) 41
  38. 38. SO WOULD THIS BE UTOPIA? UH, NO.42
  39. 39. It is worth noting here that post-capitalism is not Marxism or socialism: there are still companies in a post-capitalist world, and they still make hearty profits, they just employ far far far less people and tend to give a lot more away for free (or for “close to free”) than current companies do. More on that in a while. And one of post-capitalism’s main beliefs is that society ultimately will also have to—as Obama said—create a social welfare system for the 90% or so of people who are left out of work, rendered irrelevant by machinery. 43
  40. 40. 1723 - 1790 WAIT! THERE’S ONE MORE POST-CAPITALIST. ADAM SMITH 44
  41. 41. Now for some macroeconomics comedy—the original post-capitalist might have been the father of capitalism himself: Adam Smith. Most of us only read excerpts from the first few chapters of The Wealth of Nations in school—the ones that cover the concepts like “The Invisible Hand.” When we read about Smith’s ideas in news articles it’s probably most often as a sort of Republican, anti-regulation argument, an implication Smith’s capitalism never wanted for government monitoring and involvement because its “Invisible Hand” would see to it that business was fair, that the best businesses would win and the others would fail. There’s just one small problem with our vague notion of Smith as the ultimate anti- regulatory capitalist… 45
  42. 42. GOD IS IN THE DETAILS ADAM SMITH’S “INVISIBLE HAND” Google Search Results: 10MM+ Actual Mentions in The Wealth of Nations: 1 Smith never talks about “The Invisible Hand” as being some giant justification for unregulated capitalism, for governments stepping aside to ‘let businesses do what businesses do.’ Smith mentions the concept once, in a chapter on regulating imported goods. 46
  43. 43. Smith mentioned the word ‘regulation,’ however 123 times in The Wealth of Nations. Smith was a big, big fan of heavy government regulation. He went as far as to say that in any capitalist system without government regulation, man “generally becomes as stupid and ignorant as it is possible for a human creature to become.” Smith was not the limited government capitalist that some might like us to think he was. In fact, he was a Scottish Enlightenment thinker who harbored deep concerns about where machines and capitalism would ultimately lead society. Adam Smith, like Marx, foresaw that ever-increasing efficiencies would either render regular workers to a state of unhappiness, a state of uselessness, or both. In 2015 Katrine Marçal wrote an outstanding book called Who Cooked Adam Smith’s Dinner? In the text, Marçal delightfully points out that Smith was also something of a giant adult baby, as he lived at home with his mother for most of his life. Marçal’s goal was to poke holes in his theories of capitalism as being a representation of anything exhaustive— capitalism, in the way Smith outlined it, leaves a lot of important workers out of its model. 47
  44. 44. Marçal’s thesis is that capitalism, as a idealogical system, is flawed. And likely now fatally so. Case in point, whilst Smith penned his various theories on how the economy works, his mother was making his food and washing his clothes. In hiswritings,Smithconvenientlyvaluedhismother’s contribution to the global economy at zero. Her work was ghost work, or what economists call ‘shadow work.’ Marçal argues that, by Smith’s definition, most of the world’s work is ghost work, and entirely left out of economic measures. (So Capitalism = A model that leaves out most work.) This ghost work is also much of society’s most important work, such as child-rearing, caring for the elderly and sick, housecleaning, chores. While we were able to get away without discussing “ghost work” or as I like to say, “most work,” for a handful of decades, Marçal argues that the creep has been too great. Capitalism as a system no longer behooves our reality. 48
  45. 45. 49
  46. 46. SWEETLORD,W H AT D O I D O A B O U T ALL THIS?Let’s examine the future through two lenses — First, let’s look at the death of the company, as we previously understood it to exist. And then we’ll start examining how new careers are changing form to meet the demands of a different economy.
  47. 47. COMPANIES NEW THE
  48. 48. “In the next 10 years, 40% of the Fortune 500 companies will be -2014 study from the John M. Olin School of Business at Washington University. GONE 54
  49. 49. Is Dollar Shave Club: A COMPANY? A SUCCESSFUL STARTUP? They sold every product at a loss A NEW PRODUCT? The production was entirely outsourced to Dorco, a South Korean company (the same product can be bought directly from Dorco) A POWERFUL BRAND? Do brands have to be profitable to be successful? IT’S A BIRD, IT’S A PLANE, IT’S A… COMPANY!? Here’s a fun business guessing game: What is Dollar Shave Club? A B C 55
  50. 50. The internet has made it possible for venture-funded, $100MM-in-revenue retailers to pop up virtually overnight. Kleiner Perkins’ Mary Meeker warned about this new phenomena this summer. Let’s look at Mary’s report: traditional retail had a wretched 2016, and they’re about to have a far worse 2017. Why? Their businesses have become bloated, leaving them as easy for tech to undermine as the entertainment industry was in 2001. Here’s the trend, as beautifully analyzed by the prophetic Ms. Meeker: In the forthcoming chart, Ms. Meeker explains that it is now possible for an upstart company to quickly develop a quality product (say, a mattress, a la Casper), delete as many legacy costs as you can (like retail space, distribution inefficients, etc), hyper-target your advertisements using the Facebook ad exchange, and build a $100MM brand in a year or five. 56
  51. 51. Many internet retailers/Brands @ $100MM in Annual Sales* in 5 Years… Took Nike 14 years, Lululemon 9 years and Under Armour 8 years Viral Marketing/Sharing Mechanisms (Facebook/Instagram/Snapchat/Twitter…) + On-demand purchasing options via mobile/web + Access to Growth Capital + Millennial Appeal = Enabling Rapid Growth for new products/brands/retailers) Sales growth for select internet retailers*, USA First 5 years since inception Source: Federal Reserve Board of Governors, U.S. Bureau of Labor Statistics. $100 $80 $60 $40 $20 $0 0 1 2 3 4 5 Years since inception AnnualSales($MM) Average 57
  52. 52. THE CONVENIENCE ‘STITCHED’ INTO THESE BUSINESSES IS OFTEN DELIGHTFUL Look at Stitch Fix. Why would anyone go to Macy’s when there’s that thing!? Clothes picked out just for me, by a real stylist, based on my needs, and sent to my home? Oh and wait, you mean Stitch Fix is just going to get betterandbetterandbetter,thankstomachinelearning? And Rent the Runway is going to make ‘buying’ many typesofclothes(likethingsforpartiesandevents)totally moot, because renting is smarter, easier and cheaper? (Short the big bloated retail stocks, now, people!) Source: Internet Trends 2016 – Code Conference, Mary Meeker, June 1, 2016, www.kpcb.com/InternetTrends 58
  53. 53. 59
  54. 54. POST-CAPITALIST COMPETING IN THE NON-RIVAL, AGE 60
  55. 55. As mentioned earlier, a capitalist economy was built around the concept of scarcity, but post-capitalist companies must be built around abundance. This is because goods in a capitalist economy were rival, meaning that they were made from materials that were limited in supply (either labor or resource) and thus had a certain cost of reproduction. Now many of the most valuable goods of post-capitalism are non-rival—meaning that they have zero cost of reproduction. 61
  56. 56. Here’s a simple example, which I’ll rehash from Paul Mason’s excellent book – if I drink your beer, you have to go buy another one. You can’t just click a button and reproduce your beer, because it’s gone. That’s an example of a traditional capitalist good. POST-CAPITALISM: A GUIDE TO OUR FUTURE Trong Nguyen/Shutterstock.com62
  57. 57. Extend the beer example out to the economy, and competition occurs through the creation other, rival beer companies making other kinds of beer, with the market determining the winners and the losers. The winner is thus determined by that “Invisible Hand” thing economists have so loved talking about for so long. 63
  58. 58. Information-based goods can be copied—for example, both of us could use my Kendrick Lamar MP3 at the same time if you stole it from me, unlike with my beer. Hal Varian and Carl Shapiro first wrote about this idea in their crazy excellent 1998 book Information Rules. Tech companies “build” with zeros and ones, which are a type of ideas that can be instantly copied for free, aka a non-rival good. Their rules are inherently, entirely different than a rival good’s governing rules. DON’T WORK THIS WAY AT ALL, BECAUSE THEY’RE BUILT WITH INFORMATION AND INFORMATION IS NON-RIVAL Post-capitalism’s priciest goods, however… 64
  59. 59. Take Uber’s $70B valuation. What’s so valuable there? Largely its code. Google’s search engine and ad exchange? A pile of code. Facebook’s social networks and ad exchange? Code. Three streams of code, each producing billions and billions every quarter, and technically anyone could copy them. The network should hold intrinsic value, but many of these networks can be replicated very quickly, as Curb proved to Uber. 65
  60. 60. Aside from the obvious need to protect IP at all costs, these business models create other new challenges. Uber has made the specific point of being responsible for as little in the physical world as it possibly can—Uber’s drivers are left to assume the financial responsibility for their car leases. Sure it’s nice to be nimble as Uber is—it’s the business version of receiving all the benefits of marriage without having to actually care about another person—but that unlimited supply of zeros and ones can mean it’s extremely hard to create an entrenched advantage. 66
  61. 61. Let’s look at Uber vs. the new taxi-hailing service Curb. Built by Verifone, Curb is an Uber copycat that thanks to non-rival goods, was able to “copy paste” a bunch of Uber’s most important ideas (tethering cars to a map via GPS, etc). When Uber—long known for being cavalier— responded insensitively to President Trump’s Muslim ban, young people took to Twitter and implored each other to #deleteUber. The campaign went so viral, Uber’s often-ignored competitor Lyft became one of the 10 most downloaded apps. 200,000 Uber accounts were deleted. One day Curb didn’t exist, and then one day it did. One day Lyft was an unpopular step sibling to its private stock superstar older brother Uber, and the next day (literally, the very next day) Lyft was one of the hottest companies in the country. That’s post-capitalism in action, and the immense complexities of competing in a world of networks and non-rival goods. 67
  62. 62. Innovation has always been “combinatorial” in nature, aka reliant on several things being invented and popularized at once. We wouldn’t have mass media without the telephone, radio and electricity. The term “combinatorial innovation” refers to a different kind of convergence—one where the “puzzle piece”—like nature of technologies mean that companies can open up their code to each other and almost instantly create something new. Combinatorial also refers to the abundance of technologies and systems that many companies can instantly build upon. So it’s not just innovation because Uber can team up with restaurants and create Uber Eats, it’s the existence of GPS, peer economies, big data cloud servers, etc etc etc. COMBINATORIAL INNOVATION: THE INNOVATION MODEL OF POST-CAPITALIST, NON-RIVAL GOODS-BASED COMPANIES 68
  63. 63. Here’s a chart that’s frequently used to show how combinatorial innovation works: Source: Frank Diana Internet Logistics internet Energy internet Maker Economy Autonomous Vehicles Sharing Economy Connected Healthcare New Generation Automation Smart Cities Next Generation Education Smart Homes Connected Car Social Mobile Cloud Big Data - Analytics 3D Printing Renewable Energy Internet of Things Cognitive Systems Robotics Technology Progression Foundation Unknown Disruptive Scenarios New Economic Paradigm Smart Grid Accelerators 69
  64. 64. COMBINATION INNOVATION LET’S PUT IN HISTORICAL PERSPECTIVE FOR A MOMENT 70
  65. 65. The economists Richard Lipsey and Kenneth Carlaw created a set of constraints around what defines a very important technology, which they call a “General Purpose Technology.” By its definition, a General Purpose Technology, or GPT, is: A single, recognizable generic technology Initially has much scope for improvement but comes to be widely used across the economy Has many different uses Creates many spillover effects A GPT can be a product, a process or an organizational system. 01 02 03 04 71
  66. 66. Let’s look at the qualifying General Purpose Technologies that man created before the computer: GPT Spillover Effects Date Classification Domestication of plants Neolithic Agricultural Revolution 9000-8000 BC Process Domestication of animals Neolithic Agricultural Revolution, Working Animals 8500-7500 BC Process Smelting of Ore Early metal tools 8000-7000 BC Process Wheel Mechanization, Potter’s wheel 4000-3000 BC Product Writing Trade, Record keeping 3400-3200 BC Process Bronze Tools Weapons 2800 BC Product Iron Tools Weapons 1200 BC Product Water wheel Inanimate power, Mechanical systems Early Middle Ages Product Three-Masted Sailing Ship Discovery of the New World, Maritime Trade, Colonialism 15th Century Product Printing Knowledge economy, Science education, Financial credit 16th Century Process Factory systems Industrial Revolution, Interchangeable arts Late 18th Century Organization Steam Engine Industrial Revolution, Machine Tools Late 18th Century Product Railways Suburbs, Commuting, Flexible location of factories Mid 19th Century Product Iron Steamship Global agricultural trade, International tourism, Dreadnought Battleship Mid 19th Century Product Internal Combustion Engine Automobile, Airplane, Oil Industry, Mobile warfare Late 19th Century Product Electricity Centralized power generation, Factory electrification, Telegraphic communication Late 19th Century Product Automobile Suburbs, Commuting, Shopping Centers, Long-distance domestic tourism 20th Century Product Airplane International tourism, International sport leagues, Mobile warfare 20th Century Product Mass Production Consumerism, Growth of U.S. economy 20th Century Organization 72
  67. 67. Okay, so that’s a lot of recognizable stuff. Notice, however, the vast gaps of time in between each innovation—wherein society has centuries, and sometimes millennia, to adjust to the new stuff altering their existences. Oh look, there’s the three-masted sailing ship. That’s pretty cool! Those people’s grandkids invented the next thing on that list: the printing press. As we know, it was a big deal. Martin Luther forever altered Europe in 1517 with a (printed) list of theses questioning the church’s power. In the late 1700s, when the invention of the steam engine and the factory system collided, the change was so societally tumultuous that, among myriad consequences, the Luddites protested the Industrial Revolution for years. That’s why the “combinatorial” word is so potent in combinatorial innovation: if 1-2 technologies “hitting” at the same time spurred an Industrial Revolution, then what can 10 simultaneous new technologies do? That’s basically the question society is about to answer over the course of the next 10+ years. Here we get at many economists’ arguments for Trump-ism; the election was largely decided by a few Midwest “Rust Belt” states, places wherein the key issue was the economy. Trump’s promise of an economic time machine—and his past- tense sloganeering of “Great Again”—was actually addressing the most pressing societal issue of the day: jobs. His team just seems to lack the understandingObama’shad—thatdependablejobs, real middle class jobs, protected by unions, tenure and benefits—aren’t ever coming back again. 73
  68. 68. Many of us had access GPS and digitized street maps well before Waze existed, by way of Mapquest or perhaps a Garmin device in our car. These products could effectively tell us where we wanted to go. What makes Waze special is that it layered together many non-rival goods to make a delicious sandwich that can tell us where we want to go as efficiently as possible, in that exact moment. As Paul Mason argues in his book Postcapitalism: A Guide To Our Future, there’s no Waze without DARPA. There’s no Waze without Google, even before Google bought the thing. The products had to combine. Adam Smith never imagined such situations. (Marx, to some extent, did, in a text called Fragment on Machines). Waze was only made possible through the existence of other semi-open source, semi-free things. ALL THE WAYS WAZE IS COMBINING TECHNOLOGY TO MAKE A NEW SUPER-TECHNOLOGY TAKE WAZE 74
  69. 69. TRADITIONAL GPS Anetworkof24geosynchronousGPSsatellites built and maintained by the U.S. government DIGITAL STREET MAPS A global API created by Alphabet LOCATION COORDINATES FOR CARS Broadcast by the Waze app—this is a little of the special sauce that they added A SOCIAL NETWORK For users to chat about traffic conditions through a series of alerts WITH 75
  70. 70. DID HISTORY REWRITE ITSELF? ON MARXISM, THE PROLETARIAT, AND THE QUIET COMPROMISES OF THE BOURGEOISIE In Yuval Noah Harari’s outstanding new book HOMO DEUS, he reflects on the rampant similarities of today to Marx’s time—the few holding all the wealth and power, the many attempting, often in vain, to alter that reality. At one point in his 1993 book, Peter Drucker argues that Marxism was “wrong” because Marx’s predictions of revolution never happened at the scale he imagined. Or as Harari writes in 2016, we never bore witness to Marx’s prediction of “an increasingly violent conflict between the proletariat and the capitalists, ending with the inevitable victory of the former and the collapse of the capitalist system.” Harari goes on to make the fascinating argument that because Marx wrote Das Kapital and people actually read it, he prevented the very future he predicted! 76
  71. 71. In Harari’s words (and I strongly recommend reading the entire book): “Marx forgot the capitalists know how to read. At first only a handful of disciples took Marx seriously and read his writings. But as these socialist firebrands gained adherents and power, the capitalists became alarmed. They too perused Das Kapital, adopting many of the tools and insights of Marxist analysis. In the twentieth century everybody from street urchins to presidents embraced a Marxist approach to economics and history. Even diehard capitalists who vehemently resisted the Marxist prognosis still made use of the Marxist diagnosis. […] As people adopted the Marxist diagnosis, they changed their behavior accordingly. Capitalists in countries such as Britain and France strove to better the lot of the workers, strengthen their national consciousness and integrate them into the political system. Consequently, when workers began voting in elections and the Labour gained power in one country after another, the capitalists could sleep soundly in their beds. As a result, Marx’s predictions came to naught. This is the paradox of historical knowledge.” 77
  72. 72. Ah, the power of reading 78
  73. 73. Speaking of reading (or the present cultural lack thereof), let’s turn to my favorite economist- slash-humorist, Joe Bageant. Mr. Bageant wrote 2007’s mind-altering book Deer Hunting With Jesus: Dispatches From America’s Class War. The book audaciously predicted that America was becoming so unequal, soon the labor class would find a way to rise up and revolt against the country’s ruling class. Mr. Bageant, a journalist, was raised in rural Virginia. (You can think of his writing as a less personal, more researched predecessor to the 2016 bestseller Hillbilly Elegy). After George W. was elected for his first term, Joe began writing about how his New York City friends didn’t know or care about his Virginia friends— Joe’s original American community and family. Joe’s writing very thoughtfully worries about his Virginian friends’ declining relevance in the global economy—and their lack of understanding of this situation. “Malcolm X had it straight when he said the first step in revolution is massive education of the people,” Joe wrote. In his final blog post (entitled “America: Why are r peeps so dum?”), written in 2010, Joe Bageant wrote that “Societies declining into obsolescence understandably resist looking forward, and hang onto their past mythologies.” I often wonder what Joe would have written if he’d lived to see the golden 757 touring America, and the crowds of people proudly sporting their made-in-China American greatness hats. With typical Bageant sprite, he carried on: “Meanwhile, here we are, American riders on the short bus, barreling into the Grand Canyon. With typical American gunpoint optimism, we’ve convinced ourselves we’re in an airplane.” I write this section not to provide answers, but context. 79
  74. 74. WAITPEOPLE ENJOY WORKING FOR FREE? 80
  75. 75. (The Majority of) Movies: Made by unionized workers, for agreed wages (The Majority of) YouTubes: Made by regular people in their down time Does anyone pay you to update Facebook in the afternoon, adding to its value and intelligence? How about YouTube? Twitter? Instagram? Wikipedia? 250 million new photos are uploaded each day to Facebook. 43,000 hours of new YouTube videos are added each day. Then there’s the starred reviews on Amazon, Tripadvisor and Yelp. You see what I’m getting at: little bits of unpaid labor are cumulatively adding up to something powerful. 6 OF THE INTERNET’S 10 MOST VISITED SITES ARE CREATED ENTIRELY FROM USER GENERATED CONTENT, OR, IN OTHER WORDS, UNPAID LABOR. 81
  76. 76. This is a super confusing notion for capitalism, because capitalism doesn’t have a reason as for why someone would want to complete unpaid labor. More complex is the fact that these unpaid, unmeasured labor pools can eat away at the revenue streams from the traditional, paid labor pools. Research done by the authors of The Second Machine Age (the source of the above perspective on unpaid labor markets) estimates that “a correct accounting for computer-related intangible assets would add over $2 trillion to the official estimates of the capital assets in the United States economy.” All those YouTubes providing entertainment in the place of movies, Wikis usurping encyclopedias, craigslist ads circumnavigating the newspaper ads. That’s $2 trillion released from the labor market over to the non-labor market—thus those tasks becomingthesametypeofshadowworkthatSmith didn’t account for his own mother completing— thanks to computer networks. Things people do for free. The work that people are willing to do for free is capable of eating entire industries. Here’s an example of what I mean—think about the movie that a couple doesn’t go see in the theater because they spent their Saturday evening watching funny YouTubes, instead. Let’s say many of those YouTubes were made by people who were never paid to post them—they merely captured funny, interesting stuff that happened for the sake of sharing it with the world. 82
  77. 77. 83
  78. 78. Think about how Kodak must feel about those aforementioned Facebook photos—or the fact that 3.5 billion photos were taken last year. (That’s a full 10% of the 3.5 trillion photos taken since 1838). Money is still made off of photos—lord knows the kids at Instagram have the bank accounts to prove that one—there’s just less of it to go around. This is the reality of companies of the future. urbanbuzz/Shutterstock.com84
  79. 79. 85
  80. 80. LESSPEOPLE, SAMEPROFITS 86
  81. 81. This is a Foxconn Foxbot. Foxconn employs over a million Chinese workers, but 60,000 of those employees were just terminated and replaced with robots. Foxconn wants to build the world’s smartphones as a fully automated factory. No human employees working the assembly line. That’s its goal for the future. (Hey Trump: this future’s inevitable.) 87
  82. 82. FOXCONN IS NOT SOME CRAZY OUTLIER 88
  83. 83. Image courtesy of Rethink Robotics, Inc. 89
  84. 84. This is Baxter, the humanoid robot that made a memorable cameo in the book The Second Machine Age “To train Baxter, you grab it by the wrist and guide the arm through the motions you want it to carry out. As you do this, the arm seems weightless, its motors are working so that you don’t have to. The robot also maintains safety; the two arms can’t collide (the motors resist you if you try and make this happen) and they automatically slow down if Baxter senses a person within their range. Baxter has a few obvious advantages over human workers. It can work all day every day without needing sleep, lunch, or coffee breaks. It also won’t demand healthcare from its employer or add to the payroll tax burden. And it can do two completely unrelated things at once.” Image courtesy of Rethink Robotics, Inc.90
  85. 85. In 1964, the nation’s most valuable company, ATT, was worth $267 billion in today’s dollars and employed 758,611 people. Alphabet is worth $370 billion but has only about 60,000 employees. Facebook is worth two hundred and seventy billion dollars and employs just thirteen thousand people* . It’s not just that companies will be able to profit with less on staff, the companies able to harness the best talent will be able to compete in more and more categories. I sometimes joke that the… Fortune 500 is becoming the Fortune 5. The trouble with cheaper and cheaper technology is that employs less people. Ford cites the example of one of their factories—a facility in Gaffney, South Carolina that produces 2.5 million pounds of cotton yarn a week. It has fewer than a hundred and fifty workers. The New York Times ran a story about the Gaffney factory with the headline “U.S. textile plants return, with floors largely empty of people.” 91
  86. 86. “The most important thing happening in Silicon Valley right now is not disruption. Rather, it’s institution-building — and the consolidation of power — on a scale and at a pace that are both probably unprecedented in human history.” -“The Great AI Awakening,” The New York Times, December 15, 2016 92
  87. 87. According to The Economist, “The share of GDP generated by America’s 100 biggest companies rose from about 33% in 1994 to 46% in 2013. The five largest banks account for 45% of banking assets, up from 25% in 2000.” 93
  88. 88. Nataliya Hora/Shutterstock.com94
  89. 89. A casual segue to a chat about AI “Should robots pay taxes? It may sound strange, but a number of prominent people have been asking this question lately. As fears about the impact of automation grow, calls for a “robot tax” are gaining momentum. Earlier this month, the European parliament considered one for the EU. Benoît Hamon, the French Socialist party presidential candidate who is often described as his country’s Bernie Sanders, has put a robot tax in his platform. Even Bill Gates recently endorsed the idea. The proposals vary, but they share a common premise. As machines and algorithms get smarter, they’ll replace a widening share of the workforce. A robot tax could raise revenue to retrain those displaced workers, or supply them with a basic income.” -Ben Tarnoff, The Guardian, “Robots won’t just take our jobs – they’ll make the rich even richer,” March 2, 2017 95
  90. 90. OKAY, SO, THIS WHOLE AI THING A 2016 Forrester report writes that robots, or AI, will eliminate 6% of all U.S. jobs by 2021. AI of course is not some single technology, some futuristic meta-app. Rather AI is a collection of technologies that are applied to specific tasks. Of course, we don’t know exactly how this “AI” future will play out, just like how in 2007 we didn’t know exactly what apps the iPhone would ultimately yield. There are three predominant theories of what will end up happening when it comes to AI: it usurps us, it enhances us, it rules us. There’s plenty of room for a future that combines 1 and 2. 96
  91. 91. (Think back to the section on General Purpose Technologies, and how all previous generations of civilization either had 0, 1, or sometimes 2 brand-new technologies to contend with—verses the number of new technologies that we have today, and we will have tomorrow…) Equally good are these 4 charts: When will AI really happen? In 2015, the blogger Tim Urban saw his posts on “The AI Revolution” go extremely viral (to the point that Elon Musk then asked Mr. Urban to blog about Tesla’s work. Talk about good compliments!) Mr. Urban’s blog, called “Wait But Why?” is well- knownforitsextremelyresearchedexplanationsof really hard to comprehend things. Here’s the chart that became most well-known from his report on the current state of AI, and its likely future: Source: http://waitbutwhy.com/2015/01/artificial-intelligence-revolution-1 97
  92. 92. Artificial Narrow Intelligence This is what we have now. Intelligence that’s super good at one thing, like instructing a car on how to get to a place. Artificial General Intelligence That’s intelligence that’s as smart as a human being. It can do anything we can do. ***Important note: AGI is exponentially more complex than ANI. Lastly… Artificial Superintelligence Artificial Intelligence is often broken out into important sub-categories, and they’re worth understanding. Here are the most commonly referenced sub-categories of the AI universe: 98
  93. 93. Here I’ll quote Tim’s blog post: “Oxford philosopher and leading AI thinker Nick Bostrom defines superintelligence as ‘an intellect that is much smarter than the best human brains in practically every field, including scientific creativity, general wisdom and social skills.’ Artificial Superintelligence ranges from a computer that’s just a little smarter than a human to one that’s trillions of times smarter—across the board. ASI is the reason the topic of AI is such a spicy meatball and why the words ‘immortality’ and ‘extinction’ will both appear in these posts multiple times.” This one changes the entire planet in ways we cannot imagine. As in that’s part of the literal definition: it’s computing power that’s so smart, we cannot as human beings imagine how it will draw conclusions and what conclusions it will draw. Additionally, its intelligence is recursive, meaning that it will progress in giant, unimaginable leaps. Fun times! 99
  94. 94. This is one of the best big questions to ask about artificial intelligence. (One note: there is still a whole world of economic upheaval that can happen within the Artificial Narrow Intelligence stage in which we now live… For example, those millions of Americans who make money by driving things places can still be replaced within an ANI world). Again, I’ll pass the question entirely off to Tim Urban (and I recommend reading the entirety of his posts on the subject of AI if you’re intrigued by his delightful style of information presentation). SO WHEN WILL WE GET FROM ANI TO AGI? 100
  95. 95. From Wait But Why: In 2013, Vincent C. Müller and Nick Bostrom conducted a survey that asked hundreds of AI experts at a series of conferences the following question: “For the purposes of this question, assume that human scientific activity continues without major negative disruption. By what year would you see a (10%/50%/90%) probability for such Human Level Machine Intelligence to exist?” It asked them to name an optimistic year (one in which they believe there’s a 10% chance we’ll have AGI), a realistic guess (a year they believe there’s a 50% chance of AGI— i.e. after that year they think it’s more likely than not that we’ll have AGI), and a safe guess (the earliest year by which they can say with 90% certainty we’ll have AGI). Gathered together as one data set, here were the results: Median optimistic year (10% likelihood): 2022 Median realistic year (50% likelihood): 2040 Median pessimistic year (90% likelihood): 2075 So the median participant thinks it’s more likely than not that we’ll have AGI 25 years from now. The 90% median answer of 2075 means that if you’re a teenager right now, the median respondent, along with over half of the group of AI experts, is almost certain AGI will happen within your lifetime. 101
  96. 96. The Facebook Ad Exchange removes much of the mystery and guesswork in understanding how a company’s marketing investments pay off (or don’t pay off). Gone are the days of the mystery of the purchase path, and the “Awareness = Reach x Frequency” calculations used when companies guessed at how “aware” a public was of their ad campaign by looking at the number of times it played/potential audiences that saw it. Now we can know exactly what interactions Jim and Jane have had with the Samsung 4K TV they’re thinking about picking up before the Super Bowl. Facebook’s exchange can also know their income, savings, entire browser history, friends, and reams of other deeply identifying data. 1 WAY COMPANIES WILL SAVE BUT THERE ARE OTHER WAYS, TOO ROBOTS 102
  97. 97. In an attempt to understand the full power behind the Facebook behemoth, which is systematically eating its way deep into the $1T advertising industry (that’s about 1% of the GDP), ProPublica built a Chrome extension that it encouraged people all over the world to download. The extension had a way of figuring out everything that Facebook had a way of figuring out about you. When analyzed collectively, this data become quite revealing. “[Facebook] are not being honest,” said Jeffrey Chester, executive director of the Center for Digital Democracy. “Facebook is bundling a dozen different data companies to target an individual customer, and an individual should have access to that bundle as well.” -“Breaking The Black Box,” ProPublica, October 28, 2016 From the list of what Facebook understands about me (and all spookily accurate). 103
  98. 98. THE INCREASE OF FREELANCERS ACROSS MANY PROFESSIONS As we talked about earlier, perhaps the defining trait of shifting from capitalism to post-capitalism is that we decentralize. This decentralization is, of course, thanks to technology. Decentralization means they don’t have to come to the factory anymore to have management oversee their work; they can work just fine (and in many professions, much faster) from home. Decentralization also means the end of Frederick Taylor-style management policies and company structures. Networked professionals are far less hierarchical. There’s no VP-SVP-EVP needed chain of command among freelancers. In the companies of the near-future, executives will simply hire out the best freelance teams for whatever needs they have that year. They’ll scale up or scale down depending on the tasks at hand. 104
  99. 99. $1,000,000 950,000 900,000 850,000 800,000 750,000 700,000 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 1,200 thousands 1,100 1,000 900 800 700 600 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 10% 9 8 7 6 5 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 Average revenue per employee, in 2016 dollars Estimated number of outsourced workers in manufacturing Source: SP Global Market Intelligence and the Wall Street Journal (revenue per employee); Matthew Dey (Bureau of Labor Statistics), Susan Houseman (W.E. Upjohn Institute for Employment Research) and Anne Polivka (Bureau of Labor Statistics) (manufacturing workers and direct-hire employees). Efficiency Boosters Average revenue per employee at the largest U.S. companies has climbed 22% since 2003. The jump could reflect the growing use of contractors and temporary workers, who aren’t counted as employees. Outsourcing is having a major impact in manufacturing and might have inflated official measurements of labor productivity from 2009 to 2015. Outsourced workers as percentage of direct-hire employees Note: Revenue figures are adjusted for inflation and include about 430 companies that were in the SP 500 from 2000 to 2016. Direct-hire employees usually have full-time jobs with benefits. 105
  100. 100. THE INCREASE OF AUTOMATION ACROSS MANY TASKS Robots aren’t immediately coming for all of our jobs, but they are coming for our most mundane tasks. Who enjoys filing their taxes every year? Almost no one. Accounting is also repetitive, rule-driven work, making it one of the first candidates to be gobbled up by software. Your CFO will employ fewer and fewer people as these tools become more sophisticated. 106
  101. 101. Comparison of wages and automation potential for U.S. jobs Ability to automate, % of time spent on acitivities1 that can be automated by adapting currently demonstrated technology. Note: The analysis used “detailed work activities,” as defined by O’NET, a program sponsored by the U.S. Department of Labor, Employment and Training Administration. Using a linear model, we find the correlation between wages and automatability in the U.S. economy to be significant (p-value 0.01), but with a high degree of variability (r2 = 0.19). Source: O’NET 2014 database: McKinsey analysis, McKinsey Company. r2 = 0.19 20 40 60 80 100 120 100 20 40 60 80 0 Hourly wage, $ per hour 107
  102. 102. IMPROVED NETWORK INTELLIGENCE Our social networks haven’t really changed in more than a decade, and they’re beginning to look a little long in the tooth. Last year my publisher and I were trying to find the best illustrator to design my book jacket. Because the book’s a bit specific (it’s about technology, yes, but also hopefully funny and entertaining, as well) so there wasn’t an established “go-to” designer in mind. How would I find the best designer for me? LinkedIn was useless, as was Behance (too much to sift through with both services). I reverted to the oldest way possible—I went to a bookstore and wrote down the names of jackets I liked that I thought had something in common with my book. LinkedIn is already working on tools that help organizations find exactly the right freelancers for their business challenges. These tools will no doubt improve in under 5 years. 108
  103. 103. Alf Ribeiro/Shutterstock.com 109
  104. 104. BEHOLD THE TEMPORARY ORGANIZATION “Corporations once built to last like pyramids are now more like tents.” -Peter Drucker to the Harvard Business Review, 1992 110
  105. 105. One way to deal with all of this change is to think of your company—or parts of your company—less like a pyramid or a skyscraper, and more like a tent. Look at Facebook and Google/Alphabet, how many projects do they routinely shut down, entire branches of their company that they cut off on a moment’s notice. Just as quickly things can go up, like Uber entering the catering business virtually overnight with Uber Eats. What opportunities could you scale quickly with technology, with the intention of then shutting them down? DW labs Incorporated/Shutterstock.com 111
  106. 106. THE NEXT BIG TRENDS – SIMPLIFICATION AND AGGREGATION -From Scott Belsky, The Interface Layer: Where Design Commoditizes Tech 112
  107. 107. “Fast forward; It’s the year 2020 (or sooner!) … I woke up this morning and grabbed the nearest screen. I selected my transportation for the day, refills of groceries I am running low on, what sandwich I want for lunch, a time window for my apartment to be cleaned, a dry-cleaning pick-up, and a reservation for dinner. I also selected a gift for my sister’s birthday, from a suggested list curated for me. After a productive 5 minutes, I got up and had breakfast. You may assume I used Uber, and then Fresh Direct or Amazon Fresh, and then Seamless, and other specialty apps and services striving to iron out the logistics from my life. Maybe I did, but I’m not sure. Why? Because I took all these actions through a beautiful (or invisible?) and customized interface that aggregates such services and blends them all together into a more integrated and frictionless experience. The era ahead is all about simplification and aggregation. Atomization went too far, and now the pendulum is swinging back in the direction of one-stop solutions for integrated services.” 113
  108. 108. CONCLUSIONS, THE NEW COMPANIES WHAT DOES THIS MEAN FOR ME? Let’s talk about potential business models for the near future. Think about your company: what does it produce that you currently limit through “artificial scarcity,” and how soon can you loosen those limits? Think about things ‘wanting to be free,’ and think about how you can free them. Here are a few very successful adaptive examples: 114
  109. 109. Overall, think about your industry: how could it simplify or aggregate? Financial services is a classic industry that requires people to self- aggregate, gathering many products from diverse companies and trying to make them work together… THE NEW YORK TIMES The New York Times allows every person to read 10 free articles per month. They charge for those who want to read more, who thus support the ‘free’ portion of the NYT’s contribution. AMAZON Amazon leaves all its texts searchable, so that, say, a student looking for a very specific line in a book can use their search tool to find exactly that page, and read it without buying the book (I can’t explain how amazing this feature is when you really start using it to your advantage…). HULU AND YOUTUBE Hulu and YouTube are free with commercials, they charge more to partially/entirely avoid those commercials. LYFT Attempting to make their rides ‘more free,’ Lyft has created Line, which can reduce the cost of a car ride to something far closer to a public transit fare. 115
  110. 110. CAREERS NEW THE
  111. 111. Kanye West THE REAL OWNER IF THE BOSS GETS A SALARY? WHO’S 118
  112. 112. There are many ways to think about what a “job” is to a society, but one of the more interesting descriptions is that a job is simply a way of distributing wealth throughout a society. The distribution is supposed to be somewhat even. And for a brief while, it sort of was. But as the section on companies has proven, this is no longer the case. The job, as we know it, is on its last legs. 119
  113. 113. SO WHAT WILL PEOPLE DO?120
  114. 114. For today’s young people, it is time to give up thinking of jobs or career paths as we once did and think in terms of taking on assignments one after the other. [It’s about] taking individual responsibility and not depending on any particular company… The stepladder is gone, and there’s not even the implied structure of an industry’s rope ladder. It’s more like vines, and you bring your own machete. -Peter Drucker to the Harvard Business Review, 1992 121
  115. 115. For the past forty years, those are probably the most uttered words inside any high school guidance counselor’s office. Have a rational plan, the advice goes, (like becoming an accountant) in case your irrational plan (like becoming a movie star) doesn’t work out. It’s good advice. However, that kind of guidance is no longer applicable. Today’s kids won’t have careers in the singular sense. Instead they’ll have something that looks more like a professional ecosystem, a series of things that they do for varying reasons. I can imagine my 10 year old son Beckett’s career looking something like this: HAVE BACK ON TO FALL SOMETHING “ ” 122
  116. 116. days a month he volunteers inside the vertical farms in his apartment building. His CSA share is directly proportional to the hours he puts in. Beckett works enough to provide for himself and his longtime girlfriend. days a month he tutors math students to the sweet tune of $100/hour. Beckett’s always been great with math, and his patience makes him a favorite with the kids. This is his most dependable income. days a month he works on his first commission as an architect. This is a big deal. Beckett spent almost a decade acquiring the skills and the reputation to get this commission. He’s taking a big fee cut in order to develop his portfolio, though. 5 10 2 123
  117. 117. days a week Beckett publishes articles on design. He doesn’t make any real money from publishing, either, but it’s what built his reputation as a thinker in the architectural world (and what earned him that first commission). day a week Beckett hosts architectural tours of NYC to tourists and shows how math can be seen in the architecture of the everyday world. He runs these tours through Airbnb, where he is a 5 star super-host, so his tours fill up. These tours combine almost all of Beckett’s hard and soft skills—his public reputation, his math and architectural know- how, his storytelling ability, and his gentle way with people. 1 4 124
  118. 118. Beckett works in 4 of the different ways we’re about to talk about— he’s a service worker (people skills, the farming, tutoring and the touring), a knowledge worker (writing, architecture, math), and a super-worker in one category (he’s highly paid for his math skills, and truly one of the best tutors in the area). Beckett’s life also benefits from a ton of robo-worker help None of the farmers in his vertical garden have to really understand soil pH, because they use a system of robots to monitor it and alter it with very little human interaction. Robots also pick the cherry tomatoes from the plants when they’re at peak harvest (also determined by machines). 01 02 03 04 125
  119. 119. MINI-CAREER, MICRO-ENTREPRENEUR A TREND USHERED IN BY OUR NEW ECONOMISTS, THE KARDASHIANS AND THE The rise of the 126
  120. 120. Underemployment is one of the cornerstone issues of our current economic system: According to a recent Accenture study, 51% of 2014-2015 graduates are underemployed—holding jobs that don’t require the college degrees, while nearly half of U.S. workers consider themselves underemployed, according to a survey of more than 960,000 people by PayScale. The only true remedy to underemployment will be a system of Universal Basic Income (to read more, skip to the conclusion), but in the meanwhile, there are certain aspects of a more temporary, ephemeral model of work that could prove valuable to the retail workers and entrepreneurs of the future—forms of mini-careers and temporary-companies that could be quite lucrative. Kylie Jenner could perhaps be considered the next generation of the mini- entrepreneur, as she’s found a way to use the scale and serendipity of Snapchat to fuel occasional forays into the cosmetics and fashion micro- businesses that defy all rules of traditional retail. 127
  121. 121. WHY IS KYLIE SO ATYPICAL? One day her businesses are here, one day they’re gone. She feels no commitment to any particular timeline or longevity. It’s just opportunities as she finds them She produces limited runs of her goods, which, aside from being a good marketing tactic, insulates her from the financial risk of overstocking She forgoes longterm store leases for pop-up leases She spends nothing on traditional marketing She all but encourages the secondhand economy that pops up around her goods— some kids stand in line to buy them only to resell them at a profit Apps like Goat take advantage of these resell communities, creating youth-friendly, hyper-specific versions for certain kinds of goods (Goat is the tool of choice for sneakerheads). 01 03 04 05 02 128
  122. 122. Kylie Jenner, in the words of The New York Times: “Ms. Jenner is part of a growing cohort of both individuals and brands who have embraced the sales strategy known as the “drop.” It works like this: A seller controls the release of exclusive new items outside the traditional fashion cycle, cleverly marketing the impending arrival of the product to build demand. Pioneered almost two decades ago by the American skatewear brand Supreme, which took its cues from the Japanese streetwear scene, the trend has gained particular momentum in recent years thanks to its adoption by some in the booming limited-edition sneaker industry: Kanye West’s Yeezy line with Adidas, for example, and Nike’s Air Jordans. It is also at the heart of the limited edition designer collaborations championed by retailers like HM and Target. Even Snapchat itself tried to jump on the bandwagon last month when it began exclusive sales of its new Spectacles glasses via randomly placed bright yellow vending machines, giving no indication of where they would crop up next. The overwhelming majority of drop customers, whatever the product, are younger than 30.” Source: New York Times December 14, 2016 Kylie Jenner Supreme Year of the Drop 129
  123. 123. Not all of us have a last name like Kardashian or Jenner, but there are many more mini-careers that could fill our bank accounts. SOME MINI-CAREERS We might have TEACHERS SELLING LESSON PLANS Teachers are already creating their own mini- careers in selling their best lesson plans and worksheets. Other teachers can download these sheets/plans for very small costs (around .99- $4.99, depending on the ratings/popularity). 130
  124. 124. As The New York Times reported, “When Laura Randazzo heard about TeachersPayTeachers. com, a virtual marketplace where educators can buy and sell lesson plans, she was curious to find out whether the materials she had created for her own students would appeal to other educators. A couple of years ago, she started posting items, priced at around $1, on the site. Her ‘Whose Cell Phone Is This?’ work sheet has now sold more than 4,000 copies. ‘For a buck, a teacher has a really good tool that she can use with any work of literature,’ Ms. Randazzo said. ‘Kids love it because it’s fun. But it’s also rigorous because they have to support their characterizations with evidence’.” www.TeachersPayTeachers.com 131
  125. 125. NEIGHBOR-TO-NEIGHBOR FARMING Neighbor-to-neighbor farming is also transforming into a mini-career. In Brooklyn communities, many residents gain access to CSAs by volunteering a certain number of hours in them. It’s a smart idea: much of the cost/carbon footprint of food has to do with distributing it. So why not, in a post- capitalist fashion, decentralize that production? Many entrepreneurs are working to improve vertical farming enough that families, small communities and even small grocery stores can serve dual purposes as farming environments, too. Such supermarkets already exist in Germany. Also in NY, GrowNYC’s new initiative creates farming communities within high-rise buildings in all kinds of neighborhoods, from Brooklyn to the Bronx to Manhattan. Using the ample sunlight available on rooftops plus the many advances in gardening created in recent years, residents create mini-CSAs where some choose to work in the gardens in return for vegetables and fruits, and other residents buy them from those who choose to work. 132
  126. 126. The Berlin grocery store – Inhabit Tech will continue to look for the weakest points in the economy and capitalize on them, the places that are the most bloated and the most broken. Food production is a really good example of such a place because there are so many inefficiencies, and for most people, the end product isn’t actually healthy. A GrowNYC rooftop garden: Some residents work in the garden (in exchange for produces and/or pay) while others purchase the produce 133
  127. 127. Venture capitalists and governments from Japan to Europe are investing heavily in robotic home care aides, as ABI research predicts that the industry will ‘quadruple in value by 2025.’ These aides run the gamut between tools that help seniors better interact with the world around them (e.g. find someone to run an errand for a small fee) to tools that allow humans to act more like nurse practitioners (the computer is doing the diagnostic work, the human adds a layer of real- world logic onto the whole affair). Already, manufacturers sold 4,416 elderly and handicap assistance robots worldwide in 2014 alone. ROBOT-ENABLED HOME HEALTHCARE AIDES Credit: http://thenetwork.cisco.com 134
  128. 128. One very heartening model: a startup called Spot Hero. (Yes, a startup! We’ll say one nice thing about a startup.) Spot Hero chose not to outsource its customer service, and instead used its own employees to field customer calls. When the job became miserable and turnover reached an unacceptable level, the company completely remade the job, calling the customer service reps “Heroes.” They wore capes. Cheered each other on. Calmed down in the company “Zen Den” after a rough call. And became the startup’s greatest asset. True service work and THINGS TECH WON’T TOUCH Talk about an example of turning the worst jobs into the best jobs by way of something utterly un-tech—simple humanity. Many companies leave this customer service to a website FAQ. 135
  129. 129. THE TECHNOLOGICALLY ENHANCED WORKER According to NPR, UPS is one of the world’s most futuristic companies. For years, their data engineers have been using technology to enhance their human employees, not renounce them. Hundreds of tiny sensors work in concert with human beings (and a vast computer network). 136
  130. 130. UPS drivers continually enrich the network’s knowledge, adding information like “There’s a dog at 55 Goldfinch Trail who runs off-leash, look out for him.” And they’re not stopping anytime soon, as reported by the WSJ, “At its hub in Louisville, Ky., United Parcel Service Inc. recently rolled out 100 industrial-grade 3D printers to make everything from iPhone gizmos to air-plane parts. UPS wants to find out if 3-D printing centers could shorten supply chains and cut into its $58 billion-a-year transportation business—or give it a leg up in a potentially emerging market for local production and delivery.” Economists theorize that this is how a lot of our jobs will look in the future—still the basics of what we do, just drastically enhanced by network knowledge. The home heart monitor doesn’t replace the doctor, it simply makes it easier for her to do her job. 137
  131. 131. to help them conduct quality checks on tractors and chemical sprayers. Logging quality checks is up to 20% faster with the use of Google Glass, said Peggy Gulick, director of business-process improvement. About 14.4 million U.S. workers will use “smart glasses,” such as Google Glass and HoloLens, in 2025, up from 400,000 this year, according to ForresterResearchInc.Largecompanieswillspend $3.6 billion on smart glasses in 2025, up from $6 million in 2016, according to Forrester. The global 3-D imaging market, which includes holograms, is expected to grow from $4.9 billion in 2015 to $16.6 billion by 2020, according to Markets and Markets, a research firm in India.” Source: http://www.wsj.com/articles/augmented-reality-hologram-like- images-enter-the-workplace-1481551202 YOU’RE EXPERIENCING MUCH MORE THAN YOU’RE ANALYZING Think about how much time big companies spend analyzing their own data, preparing PowerPoints and cutting the numbers in different ways in querying their own sources, and now think about how inefficient a way that is to interact with what we know: “The future of data visualization is unfolding on the factory floor of AGCO Corp., a manufacturer of agricultural equipment. Factory workers in Jackson, Minn., don augmented-reality glasses that display diagrams and images of instructions 138
  132. 132. 139
  133. 133. THE DEATH OF POWERPOINT Being a CEO means commissioning and then analyzing a lot of presentations from your direct reports. Often times tens (if not hundreds) of people are involved with creating and vetting those reports, both in structuring the information and in accidentally loading it full of human bias. Instead imagine that CEO just walking up to his computer system and asking it to visualize the answers to his questions. No PowerPoint prep needed. Yes, a team of humans is still needed for the spirited debate, yes the consultants can all still file their invoices, but there is a class of jobs that get abandoned in that situation. 140
  134. 134. Lizenzen 10 Rabatt 0% Single Su Group 27,000 Professional 70,000 70 Enterprise 135,000 1.3 Unlimited 270,000 2.7 Open as App 5,00 5 Mixed Professional 20 1.4 Enterprise 20 2.7 Unlimited 5 1.3 45 5.4 Now imagine a CEO walking around with an app that contained all the data in the world about her/his company, so that any query could be answered. “What products are the most profitable among Gen Xers in Europe? What sells the most volume worldwide, by year, for the last 10 years?” Open As App is an application that can instantly turn your boring Excel data into an interactive mobile app. These sorts of data inquiries are still handled the extremely old fashioned way — executives’ opinions are asked. They mine through troves of data and give an opinion on it, which to varying degree may be correct. Such requests can take weeks or even months to complete, review, comprehend, edit. 141
  135. 135. THE EVOLVING FUTURE OF THE COLLEGE EDUCATION Harvard and Stanford and their peers will survive any economy—their well-heeled benefactors will surely see to that fate—but as for the mid-to-lower tier schools, and most certainly the egregious for-profit schools, the future is looking shaky. I got a little preview of a post-college world could look like when talking with a former Facebook employee a couple of weeks ago. This gentleman had taken the courses required to become a Facebook Blueprint Certified Professional when it comes to using their ad exchange tools. The certification’s demands are pretty extensive; Facebook has loaded its advertising tools full of variations and subtleties. As he spent a few hours trying to explain the exchange to me and several others, we were fascinated but soon overwhelmed. I have to hire this kid, I thought to myself, because I’ll never learn how to do this stuff as well as he can. With considerable alacrity, he’d reinvented his entire career, and taught himself a valuable skill. 142
  136. 136. Facebook Blueprint is extremely smart (and ahead of the curve) to encourage the personal development of such experts. More trained professionals circulating out there in the world means Facebook is only bettering the strength of their own user experience and heightening the value of their own advertisements. And all will relatively modest investment on their part. Facebook Certified Professionals are likely only the beginning. How about a Squarespace Pro? Adobe Photoshop World Class Design Guru? What other stratifications could other knowledge software providers grant their uppermost echelons of users? What other badges will soon exist? www.facebook.com/blueprint/certification 143
  137. 137. Companies that weather the changes of the next 10 years will be able to make money with far less employees. That’s a given. One of the more interesting considerations is to think about how different industries might profit off of all those burgeoning mini-careers to be had in the world. For example: CONCLUSIONS, THE NEW CAREERS WHAT DOES THIS MEAN FOR ME? 144
  138. 138. Think about the Facebook Certified Professional example—is there a certification that your own company can offer? If you’re The Home Depot, is there a badge that your best, most honest contractors could earn? How can you be a coveted badge or seal of approval on a best-in- class professionals resume? WHY BE A FOOD COMPANY When you can be a gardening company? WHY SELL SOMEONE A DRESS When you can lease them one? WHY SELL A DEVICE ONCE When you can sell a permanent subscription to that device, the next device and the next device? C B A 145
  139. 139. CONCLUSIONS, BUSINESS MODELS OF THE FUTURE In the conclusions of the company and career sections, we talked about the implications for your place of employment and your personal progression. Let’s get into the broader models that we’ll see represented in the new economy: 146
  140. 140. POST-CAPITALIST BUSINESS MODELS The “freemium” model works extremely well in a knowledge economy. Evernote is famous for pioneering freemium software. They make a basic (very good) product and give it away for free. Then there’s a better product for a subscription cost. They continually update both products. The New York Times has been very successful with freemium, too. Everyone gets their 10 free articles a month. Some pay for more. www.evernote.com 147
  141. 141. WHY FREEMIUM WORKS FOR POST-CAPITALISM “Information wants to be free.” If your product is so good, you can give some of it away for free as its own form of advertising, go for it. All products improve from having more users. Take Evernote: let’s say it has 10,000 paying clients (mostly organizations) and 1,000,000 non-paying clients. The paying clients benefit, because the tool’s widely adopted. All Microsoft and Apple software has grown in profitability only when widely adopted. Machine learning means that more people using a tool, querying a tool, offering suggestions for a tool only serve to make it better. (In a way, all those free users can work for you if you know how to properly utilize them/set them up to succeed and help you.) Subscription works well, too. One flat, reasonable cost for a whole bevy of access. Netflix is the godfather here. (Far more so than Spotify, because Netflix has created profitability while being a friend to artists, vs. Spotify, who robs them blind.) Adobe Creative Cloud has done gang-buster. And once you create something valuable enough that I pay to buy the new Photoshop updates as they happen via a flat monthly fee, you can see add-ons, too. That’s why Adobe bought Behance. They bought the community for the graphic designer because they already made the tool for the graphic designer. They want 01 148
  142. 142. that same person to be able to make their art in Adobe and then find their buyer/client in Adobe. Genius. WHY SUBSCRIPTION WORKS FOR POST-CAPITALISM There’s a sincerity to subscription that’s hard to top. It naturally wants to be expansive, networked, and benefiting from the hive mind. The important thing is to make sure it’s judicious. The subscriptions of the future will struggle with maintaining little fiefdoms (e.g. HBO) and will thrive when tending towards openness (e.g. Netflix licensing the best from everyone). Lifetime guarantees are another way that the more industrial-style goods are standing out in a marketplace socioculturally/ philosophically designed to dislike them. L.L. Bean was light years ahead of its time when they created the lifetime guarantee. Every L.L. Bean fan (like my mom) has their favorite story of the time the company replaced something even though it was a thousand years old. 02 149
  143. 143. WHY LIFETIME GUARANTEES WORK FOR POST-CAPITALISM Hey, we’re still going to buy goods (no one’s ever learning how to sew a Chanel jacket or construct a durable axe), so why not believe in what you make enough to guarantee it for life? Think of it like a ‘subscription’ to your good. You can charge a premium here, too. Nodal, or local/glocal production models (I’m slightly making up these terms, there’s just not enough words to describe the things post-capitalism requires yet) are another great option. As previously detailed, take food production. The worst aspects of its industrial production come from the fact that the food has to travel immense distances. GrowNYC has sponsored with all levels of New York real estate developers to use spare building space to create gardens. Residents can either work in the gardens (and earn money/get free food) or buy from the gardens (and support their neighbors/eat hyper locally/ support the earth). Vertical farms ARE the future. There’s a reason why Amazon’s new headquarters is a greenhouse. WHY LOCAL/GLOCAL MODELS WORK FOR POST-CAPITALISM They chop out the costly, polluting middle of antiquated business practices (like shipping strawberries 2,000 miles) and offer 03 04 150
  144. 144. a much more healthy, minimalist solution. They can also seize the latest technological advancements, like seniors and software that monitor soil. Hyper-transparency is another technique, and one that’s especially good for industries plagued by obfuscated business practices, like finance and energy. Industrialization/ capitalism relied heavily on obfuscation. Google Ventures is behind a startup called Digit. It knows that people are terrible with money. So it manages their money for them, without asking. Its goal is to stuff away as much savings as your financial life can bear, before you have the chance to spend it on frivolity. The kids LOVE it. WHY HYPER-TRANSPARENCY WORKS FOR POST-CAPITALISM Tech works best when it isn’t used to confuse people/work against the individual or broader interest. Tech is meant to make things better. Use it to do so! 05 151
  145. 145. DEATH THE OF THE STARTUP
  146. 146. Only 4% of software developers in the burgeoning app economy have made over $1M. 75% HAVE MADE LESS THAN $30,000 Source: The Second Machine Age, p151 154
  147. 147. Their culture glorifies sexist, racist and elitist work environments; their “gurus” and “heroes,” the venture capitalists, use hyper-leveraged, secretive financial practices to take companies public that are utterly unfit for trading (like Groupon, Twitter, and I strongly suspect Snap Inc.) because they have no sustainable means of delivering a return on investment. Startups are also a bad distraction because at a certain juncture they *almost seemed* like they were building an economic future for America. They’ve surely been able influence psyches of the corporate executive—nowadays even people at big companies talk about how they need to “Fail fast!” “Move fast and break things!” or “disrupt, innovate or die!” We need ping pong and video games and IT’S FUN TO HAVE SOMETHING TO HATE, AND I REALLY HATE STARTUPS 155
  148. 148. bring-your-pets to work Wednesday! Beer pong and game rooms and video!! Take your cat to work week! Ride a donkey to work year! Meanwhile, 90% of America is still out there coping with the hell of flat wages, while Waltons don’t pay taxes and VCs fund ways to deliver on-demand grilled cheese sandwiches to San Franciscans’ doors. The startup was supposed to be the creator of the new economy. Startups, for a while, were our most aspirational employers. The startup came along in an era replete with technical advantage and economic instability. In other words, many people had things disproportionately harder than other people, and for once it seemed like we finally had the kind of tools that could fix their problems. 156
  149. 149. Around the end of 2016, the startup backlash began not only in the tech blogosphere, but in the mainstream pages of Fortune and Wall Street Journal business press: FUCK YOU STARTUP WORLD That’s right, I said it. Fuck your startup scene with your 30 minute morning routines of reading TechCrunch, TNW, Wired, Gizmodo, Mashable, The Verge and ProductHunt- all so you don’t feel ‘left out’. Fuck your weird fucking conversations, things like “OMG did you see Snapchat’s new feature? OMG Instagram is totally copying Snapchat? Did you see Zuck’s live townhall? OMG did you see what Elon Musk tweeted? OMG Uber raised another round!” Fuck that. Nobody cares. -Shem, self-published on Medium, republished by Hacker News, October 2016 FRAUD IN SILICON VALLEY: “As the list of startup scandals grows, it’s time to ask whether entrepreneurs are taking “fake it till you make it” too far.” -Fortune Magazine, January 2017 THIS TECH BUBBLE IS BURSTING -WSJ, May 2, 2016 157
  150. 150. According to Fortune, January 2017, 174 private companies are each worth $1 BILLIONOR MORE. YEAH. 158
  151. 151. I am not saying that venture funding is disappearing. I am, however, saying that startup culture will not play the dominant, all-knowing role in the future economy that it played in our recent past. No longer will the hoodie-wearing, inexperienced twenty-something be our business guru. After Theranos, Lending Club, Zenefits, and Hampton Creek blatantly scammed investors, the questions will get tougher. Investors will be forced to downgrade or write off a number of formerly valuable, privately held “unicorns.” And when people get burned, they learn. 159
  152. 152. A LAST NOTE ON THE INEVITABILITY OF THE UNIVERSAL BASIC INCOME 160
  153. 153. “The curse of poverty has no justification in our age. It is socially as cruel and blind as the practice of cannibalism at the dawn of civilization, when men ate each other because they had not yet learned to take food from the soil or to consume the abundant animal life around them. The time has come for us to civilize ourselves by the total, direct and immediate abolition of poverty. The solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” – Martin Luther King Jr., 1968 161
  154. 154. Not everyone knows that Dr. King’s last book was largely an argument for his idea for a Guaranteed Minimum Income, or an assurance that citizens who met certain expectations (such as a willingness to volunteer) would have income sufficient to live on. Prior to Dr. King, Thomas Paine had proposed a similar idea called the “Citizen’s Dividend,” which was about a citizen’s right to some portion of profits made from natural resources. Both of these models differ a bit in their details: some are payments simply for being a citizen, whereas others come attached to some expectation of service. In a sense, Social Security was something of a precursor. The system began functioning in 1935, after being drafted during FDR’s first term as president. It took the Depression to get us there, but perhaps historians will look back on our present day inequality (and the present day President) and see little difference between the two epochs. 162
  155. 155. Many members of Congress see some form of basic income as such an inevitability, it’s a concept that enjoys substantial bipartisan support. As PBS put it in 2014, “There aren’t a lot of policy issues that unite Sarah Palin and Clinton labor secretary Robert Reich. But in Palin’s home state of Alaska, both agree that oil tax revenue should be used to pay equal dividends to all state residents, as it has been since 1982.” There is a future out there for us, our kids and our grandkids that involves a reinvention of the career and a new expectation for the company. Just as we were able to do away with massive coal pollution and widespread child labor when the Industrial Revolution gave way to the technological one, we can abandon extreme inequality as an unintended economic reality, too. A RARE MATTER OF BIPARTISAN SUPPORT 163
  156. 156. “Capitalism had been dominant for over a century when Karl Marx in the first volume of Das Kapital identified it (in 1867), as a distinct social order. The term “Capitalism” was not coined until thirty years later, well after Marx’s death. It would therefore not only be presumptuous in the extreme to attempt to write The Knowledge today; it would be ludicrously premature. All that can be attempted—all this book attempts—is to describe society and polity as we begin the transition from the Age of Capitalism (also, of course, the Age of Socialism). But we can hope that a hundred years hence a book of this kind, if not one entitled The Knowledge, can be written. That would mean that we have successfully weathered the transition upon which we have only just embarked. It would be as foolish to predict the knowledge society as it would have been foolish to predict in 1776—the year of the American Revolution, of Adam Smith’s Wealth of Nations, and of James Watt’s steam engine— the society of which Marx wrote a hundred years later. And it was as foolish of Marx to predict in mid-Victorian Capitalism—and with “Scientific infallibility”—the society in which we live now. But one thing we can predict: the greatest change will be the change in knowledge—in its form and content; in its meaning; in its responsibility; and in what it means to be an educated person.” -Peter F. Drucker, 1993 164
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