At a “pitch fest” a few nights ago, while sitting listening to the companies present their stories, and questioning the founders, one particular company struck me as a glaring outcast.
I’ll tell you why they were an outcast, but first…
After just a few pointed questions I discovered that this company was struggling to achieve revenue growth, and they were a long ways off from profitability. Here are a couple of reasons why:
- High staff count all located in the developed world.
- Huge OPEX relative to many of the companies which operate in their space, which was almost entirely driven by point 1 above.
Later the same day I called my insurance company and got through to a call desk. I spoke with “Jacindra”. After prying a bit I find she’s in Manila. The reason the company I mentioned above is struggling to compete and become profitable is because they are providing a service not distinctly different than their competitors, yet they are paying multiples for things like labor. They are shouting from the rooftops that they’re “local”, but you know what, that’s not scalable, and further more I don’t care.
Do I care if Joey, a “local” in some developed world country loses his job to Jacindra in Manila? No. I congratulate Jacindra on dragging herself out of poverty with the aid of technology, and I thank her for the fact that the product I’m receiving is likely cheaper than it would otherwise be.
I hope “Joey” adapts to this change and finds a way to produce more value than he’s currently worth, possibly in a completely different field. Change, especially if you’re on the rough end of it is tough, but remember we’d all be still sitting in caves if it weren’t for innovation and technological change.
General Electric, Caterpillar, Microsoft, Wal-Mart, Chevron, Cisco, Intel, Stanley Works, Merck, United Technologies, and Oracle cut their workforces by 2.9 million people over the last decade while hiring 2.4 million people overseas.
I see it every day… people losing jobs, having to retrain, change strategies and find ways to create value. “Cubicle jobs” are over. Sure there are still large swathes of “cubicle dwellers”, but it’s over, done, finished… I’m telling you.
Every day more and more people realise it. It’s unfortunate for those who refuse to acknowledge it, even though its been staring them in the face for over a decade they’ve somehow managed to remain blind to it.
I’ve had angry people pop out of the woodwork when I’ve written about why education is broken. I suggested that the large educational institutions revenue models are fatally flawed and will see a sea change in the coming years, causing many in the industry to be forced to adjust.
I can understand the anger. Nasty surprises threatening the status-quo always get people angry when they’re benefiting from the setup.
If you’re sitting in a job which can be outsourced your clock is ticking. First cheaper labour, then better technology together with cheap labour, and shortly robots. You will be replaced, it’s just a matter of time. This is a good thing.
Don’t cling to the past, or the present too hard. Things you cling to tend to disappoint. The world is dynamic not linear, yet humans love to think in a linear fashion. This is how bubbles are created. This is how WhatsApp sells for more than the entire market cap of one of the world’s fastest growing economies. Humans love certainty and certainty only exists in a linear framework in textbooks, it never exists in nature and it never exists in economics for long.
You’ve probably read about the massive protests across major EU cities by local taxi drivers. Why are they so angry? Because their ability to charge hapless pedestrians 2 blocks for $10 is coming to an end. GOOD! Once again an inferior product or service is being eroded by technology. Uber is single-handedly destroying them by providing greater efficiency and productivity at a lower cost.
Regulating and legislating who can give me a ride and act as a taxi impresses me as ludicrous, but that’s the way much of the world operates when Government gets involved. It destroys entrepreneurship, it destroys productivity and as a result it does the very opposite of its stated purpose. Ultimately it causes a build up of waste and excess which would not exist without it.
When in Mongolia a couple of years ago I noticed quickly that every vehicle was a taxi. If you stood on the road and held out your hand someone would stop. Why? Because they can make a few bucks by picking up a “fare”. Regular folks, on their way wherever. Why not? All Uber has done is to make that exact premise more efficient and add a little “flare” to it.
This is an illustration from an old newspaper. Those are British weavers destroying textile machines in the early nineteenth century. Like the taxi drivers of today, and the cubicle workers, they were angry at technology. Should government have legislated against textile machines so that today we would still be struggling to find decent clothing? Think of the colossal waste of resources, of all the men and women who would be weaving clothing for the world’s population, of the poor quality fabrics and massive losses in efficiency.
I humbly suggest their time would have been better spent figuring out how to leverage the technology to provide a better service or product. The same people exist today. Humans don’t change. Circumstances change, technology changes but human nature never changes.
Socialists vs Capitalists
I previously wrote an article about these two distinctly different mindsets, in which I said:
The first is a group who believe that the world, its peoples, resources, skills and wealth are one giant pie. They essentially believe that individuals don’t have a right to their own bodies, efforts and thoughts. In their vision the pie does NOT increase or decrease in size, but what happens to the pie is that the slices get shifted around between various groups of people within the world. Their major concern is with how much of the pie they personally get relative to others. The aggregate amount is not as important as the relative amount.
What is preferable for them is getting less pie, provided others are getting twice as little. They will opt for this rather than receiving twice as much, where others are receiving four times as much. They couch this view of the world, and distribution of aforementioned skills, wealth and resources etcetera in platitudes such as “equality”, “fairness” and “justice”.
This group of people will typically support “free healthcare”, “free education” and any other “freebies” that they will not directly have to pay for. They will be ardent supporters of bigger, more intrusive government, as this is the only avenue they see available for the execution of their perfect world. Articulating it as such would be difficult for many of them, as it exposes their view of the world as one completely lacking in freedom of the individual.
The second group of people realizes that there is an existing pie, but are not overly concerned with its size or distribution, since their thoughts typically revolve around building their own pie and adding to the size of the existing pie. They don’t see the pie as a stagnant concept, but rather something that they themselves can participate in forming and shaping.
This second group believes they have the right to their own bodies, efforts and thoughts. They accept that there are others in the world that will have a greater slice of pie than they do, but since they obtain their value and self-worth from building the pie, this concerns them little. They understand that the journey and not the destination are what matters.
Since they have courage and a belief in their own abilities they find the idea of relying on others to support them through “free” anything to be immoral, and although not all will articulate it, they are distrustful of anyone purporting to “help” them, especially when it comes at no cost. They choose to slog their way through the world on their own merits, and give back by creating wealth and opportunity for themselves and others.
The robots are coming… invest in what’s coming tomorrow, because it’s likely better than any of us can imagine.
“Do what you can do best and outsource the rest.” – Tom Peters
“…Do I care if Joey, a “local” in some developed world country loses his job to Jacindra in Manila? No. …”
Fuck you. Piece of shit globalist.
@ Roark. You suffer from the misguided view that by sheer accident of birth you’re somehow entitled to a better life than some other human being on the other side of the world who is prepared to work harder, longer and for less money than you in order to feed his/her family.
I treat all people with equal respect and dignity and it is the transfer of resources, capital and know how that has made the world a far wealthier place not the hindrance of such. You are one of those unfortunate people believing that stifling this process somehow makes for a good case. It can only be based on a privileged position under threat. As I said..I’m not giving advice I’m simply stating the facts. You can choose to do with them what you will.
@ Roark. Interesting. fuck you too. why should he care? did joey win a competition to be entitiled to that job, or did jacindra lose a competition to not derserve it? Since you sounded so elegant saying it, fuck you once more.
You overlook the role of gov’t tax policy and regulations in forcing jobs off shore. Geez, the cost of complying with taxes alone with the required army of accountants and lawyers is off the charts, forget about the taxes themselves. Many believe this was a deliberate policy to hollow out the US economy. In many cases, automation would not be more economically efficient. It’s efficient only because of the huge gov’t costs burdening us.
You’re dead on Cathy. Thanks for highlighting that fact
A tad simplistic, don’t you think? Sure, that lady in the Philippines costs less than Joe, but many companies have found that they get what they pay for, and have in turn begun re-importing certain types of jobs back into the US.
There is also the comment above about laws and taxes having been structured to promote the export of jobs.
But here’s what all you Randian types keep forgetting about your very own zany ideology – it is supposed to be couched in a backbone both moral and ethical. How is exporting jobs to China, where most blue-collar labor is all but slave labor, or replacing properly-paid American workers with pennies-per-hour American inmates (a.k.a. Forced labor. In America. In 2014) in any way moral or ethical?
How far down Rue de Laissez-Faire shall we travel?
Funny thing is, I actually agree with your premise. But you, like everyone else who has written about this topic, fail to take it to the next level. I blame our equally pathetic college-twisted educations (but I benefit from a few loose screws). The end result of this inexorable drive towards increased productivity is infinity. In the real world, this mean everything will be done by robots and computers, and there will be a job market of zero. Sure, there will be creative sorts furthering technology, the arts, etc. But all the jobs people do because they HAVE to do them will disappear – clerks, cubicle dwellers, fast food employees – all the jobs that are flavored by misery and brain death.
This endgame – isn’t that The Dream? Of course, we have that minor problem of our economy, which, since the dawn of time, has been structured using a formula whose inputs included labor. How do you assign purchasing power to people when their input is no longer required? Does everyone get a Rolls Royce?
I’ve been trying to have this conversation with someone, ANYONE, ever since I saw the IBM RFID supermarket ad nearly 10 years ago. I’m still waiting for all of you to catch up. Take your time. I’m patient. (but if you want to practice what you preach, this is the future – your article is about the past and the present)
I humbly disagree with your premise. Your premise is that what exists today is all that will ever exist. You suggest that those people occupying jobs which will be replaced by machines will be out of work. I disagree. This is the same argument made in the 1800’s when those toiling in agriculture and animal husbandry believed mistakenly that their would be nothing for them to do once those jobs had be replaced by technological advances. Nobody at the time could even envisage a telecommunications sector. A market in excess of $5 Trilion dollars today.
Let me refine a bit. Any job that is considered menial or repetitive will inevitably be done away with. Any new form of labor that falls within this category will never be assigned to human labor, it will simply be automated from Day 1. Jobs that require innovation, creativity or any kind of imagination that cannot be captured by automation scripts will still exist. Alas, those jobs, even today, are a very small percentage of the total. We can assume that even the production and repair of existing automation will be assigned to said automation.
What does that leave us? 20 million employable? 50 million? The eons-old formula – he who works, eats – breaks down. Even if the elimination of all repetitive, non-creative jobs liberates hitherto repressed creative folk and gives them the freedom to contribute to the common weal (no small benefit, that), we are still left with 7 billion who will not earn.
Perhaps, lacking the misery-inducing struggle to make ends meet, the soul-killing and brain-damaging dead-end jobs, and all the effects of living life one day at a time with little hope, many will experience a personal renaissance, and whole new forms of labor will be created. Yet, my argument remains unchanged – not one person will be required to work any longer, people will work because they want to work. Labor is intrinsically a coercive concept. Hunt or starve. Run or be devoured. Farm or become your neighbor’s serf.
Therefore, the input of labor into the production/consumption formula is removed. The bottleneck then becomes one of resources.
The Agricultural and Industrial Revolutions liberated peasants to become factory workers. This was a substitution of one form of repetitive, menial job for another. The further move from industrial to post-industrial economies did much the same – the widget welder became the CSR with the headset. What I am describing will not liberate labor for new repetitive, programmable tasks, it will eliminate the very idea of menial labor.
And it will happen much sooner than you think.