1 year = 1 year
Does "a decade of change in a year" really mean anything?
The business world’s biggest buzz phrase three months into this pandemic is that a decade of change will happen in a year.
It’s a good line. It has great TED energy. And it’s a statement so broad you basically can’t be wrong no matter how flawed your assumptions.
The contention is that this recession is an accelerant on, well, everything. But we just came through a decade in which accelerationism had become the default politico-business think tank assumption about How Things Are.
That this pandemic, recession, and socioeconomic crisis would magically fulfill all of that worldview’s criteria is surely a coincidence.
And outside of tens of millions of workers finding themselves out of work and tens of millions of workers suddenly becoming remote, it’s not entirely clear what changes have really happened and, by extension, what “ten years worth of changes” are even around to stick.
Did the next decade of work really just mean everyone working from home? Was the future just going to be lots of Zoom calls? Less business travel? Every interesting restaurant closing? More people ordering groceries online?
Perhaps.
Though what it seems we’ve mostly seen so far are many short-term responses to a very acute crisis. This is what you’d expect, of course. Stabilization, liquidity, solvency — these are the names of the current game.
When you look at news like AmEx shifting sales staff to collections for the time being you see a pretty clear cut case of a firm moving staff from one currently-less-important area of the business to a currently-more-important area of the business. At the end of this, AmEx is either going to shift those workers back to sales or fire them.
If firing its sales staff was part of the 10-year plan then so be it. But that seems unlikely.
Instead it seems more likely that AmEx, like many other businesses, has been forced into making changes to get through a period of completely unforeseen disruption not only with its own business but the climate in which its business operates. There is no 10-year business plan that had an “After The Pandemic” section.
And so the assertion that all this change is happening now and that this change can’t be stopped and that this is Just How It Is seems a bit credulous to me.
The most obvious and present change for me and my colleagues and my peers has been the sudden shift to what feels like a permanent work from home world. But I say it only feels permanent because as the drumbeat of, for example, Wall Street banks bringing staff back into the office grows louder it is starting to seem like working from home will indeed be more of a temporary disruption than a complete reinvention of how we form and sustain ties with our work.
And some of the most influential leaders in the tech world — the alleged center of all this disruption — are starting to make noise that they’re not so sure this is really the paradigm shift it might seem from the cheap seats.
Take Google CEO Sundar Pichai.
In a recent interview with Wired, Pichai said (all emphasis mine):
Wired: Mark Zuckerberg just said that he thinks that half of Facebook’s workforce will be working from home by the end of the decade. Will that apply to Google?
Pichai: I don’t think we are going to come out of this and be back where we were before this all started. So I expect us to adapt but it’s still too early to tell how much. Early on, I’m excited that some of this is working well. But it is based on a foundation of all of us knowing each other and having the regular interactions we already had. I’m curious to see what happens as we get into that three-to-six-month window and we get into things where we are doing something for the first time. How productive will we be when different teams who don’t normally work together have to come together for brainstorming, the creative process? We are going to have research, surveys, learn from data, learn what works.
Wired: What about this giant campus you’re building in Mountain View or the building you’re renovating in New York City? Do you have second thoughts about that?
Pichai: In all scenarios I expect us to need physical spaces to get people together, absolutely. We have a lot of growth planned ahead. So even if there is some course correction I don’t think our existing footprint is going to be the issue. I am positive we will put it to good use and I’m anxious to see some of those projects get done.
Two things.
First, Pichai — an operator, not an investor — thinks it’s too early to say how many changes will stick and second, his point that all work being done now are projects already in motion is almost completely absent from the current “new paradigm” conversation.
In the way that some epidemiologists don’t think a summer of lower case counts really helps us understand what the future path of the virus might be, business executives aren’t likely to view a summer of remote work as indicative of how the business should be run forever. We’re all familiar at this point with risks and concerns around a second wave of infections, but the business and investing world should be similarly focused on what a second wave of business interruptions means.
Planning for the year ahead which happens during the fall isn’t going to have the same pop on Zoom. And closing urgent business in Q4 to “make the year” feels like the kind of assumption still implicit in how business gets done that we haven’t yet worked out in a remote world. I’m sure many readers are familiar with the concept of a fourth quarter sprint, but month 8 of working at your dining room table while remote 7th grade language arts happens ten feet away probably isn’t the best backdrop for getting energized to finish the year strong.
Additionally, the WaPo story Wired links to as evidence that Mark Zuckerberg is very excited about Facebook’s remote future just doesn’t seem to really make the point the link in that question suggests.
Here’s the actual WaPo lede:
Facebook is joining the permanent work-from-home trend, saying it will start allowing some employees to apply to work remotely for good.
Facebook could have about 50 percent of its 45,000-person company working remotely in the next five to 10 years, chief executive Mark Zuckerberg said in a public video announcing the policy Thursday. But the social media giant will also lower paychecks to reflect cheaper costs of living in some cases, depending on location.
Facebook will start “aggressively” opening up hiring for remote workers, Zuckerberg said, including for people living in areas a few hours away from its offices and in new hubs it will establish.
“Certainly being able to recruit more broadly, especially across the U.S. and Canada to start, is going to open up a lot of new talent that previously wouldn't have considered moving to a big city,” he said.
This is what an executive very excited about lowering costs says. Conflating this with an executive excited about remote work is quite a leap.
WaPo notes that Facebook is being more measured than other tech companies like Twitter, which has already said workers can be remote permanently if they so choose. And there’s a quote from a Silicon Valley recruiter who thinks Facebook will still need to keep executive salaries high. So, yeah.
And while Facebook’s stock price is currently just below a record high, the company has seen costs balloon (and rise faster than revenue) in recent years. In 2017, Facebook’s revenue grew 47% while costs rose 34%. In 2019, revenues grew 27% while costs rose 51%. In 2017, Facebook’s costs were 50% of revenues; by the end of 2019, costs and expenses were two-thirds of revenues. At the end of 2017, the company employed 25,105 people; by the end of last year, 44,942 people worked at Facebook.
Someone on Finance Twitter once quipped after a recent Facebook earnings report that the company spends money like a railroad. And so wouldn’t it be great if some of its new employees could start working from home and take geographically-adjusted salaries to boot!
So, again, perhaps the trend that you thought would prevail over the next 10 years is “Facebook cuts pay for employees” and we’re just getting there quicker.
But it seems unlikely that the thesis statement of this pandemic accelerating business culture changes is actually about the world’s biggest social media company controlling costs.
For the next (or current?) generation of founders, it does seem that looking elsewhere — as in looking at literal new geographies — is an easy way to diversify your approach. And one that does seem likely to have institutional support from venture capital.
Smaller competitors trying to stay lean and nimble likely see WFH as not only a cost-control measure but also a way to change up their efforts to compete with the monoliths of the tech industry’s current hierarchies. If you recruit in the Valley right now you will be confident in the mix of talent you’re going to get. It’s a very high quality (though expensive), mostly commoditized product. This is very good if you’re Google, it’s harder if you’re not.
Not having to compete on labor costs — and really, housing — is a simple way for would-be Facebook/Google/Salesforce/Amazon challengers to give themselves more runway to figure out what their plan of attack looks like. It might also help if your team is from Purdue and Rice and Georgia Tech.
But this is quite a rosy interpretation of a positive distributed workforce strategy. A more straightforward and cynical take on all this enthusiasm for remote work is of the Zuckerbergian variety.
Writing at The Margins earlier this month, Can Duruk reached similar conclusions on the future of work as a trojan horse for companies taking back leverage from their workforces.
I believe one of the more subtle impacts of this new way of working will be the tech workers losing some of the leverage they have over their employers. This will result in the further commodification of tech work, potentially less collective action by employees, and probably lower the salaries in the long run. Put another way, the technology industry will soon get a taste of what has been going on in other industries.
I disagree only with the word “subtle.” Can notes that some estimates have 40% of all venture funding going to Bay Area landlords, an estimate he finds too conservative.
And so maybe this is all the “decade in a year” really means: you’re now allowed — as an investor, a founder, an employee — to compete in the tech space without adhering to the Bay Area’s terms of use. I can see the pitch decks coming together now.
We’re also only about three full months into Pandemic America. Perhaps I should be more patient in arguing that “10 years of change happening in 1 year” is a pithy or debunkable concept. Maybe we can circle back at Christmas and check in on the idea.
But if we take the metaphor to a literal extreme, we are 2.5 years into this decade of change, a timeline landmark that should at least be worth something. Maybe the autonomous driving networks, a micropayments infrastructure supported by blockchain, and Amazon/Domino’s drone deliveries are coming soon. Libra may yet fulfill its promise by March 2021.
And while many things have indeed changed in America — to use Dave Chang’s framework for the restaurant business, February 2020 is never coming back — the biggest challenges many businesses that aren’t restaurants or airlines seem to be dealing with right now appear temporary. At least to a large extent.
And this temporary state of affairs comes back to the primary idea critiqued in this essay, which is that “WFH forever” isn’t really forever. As Charlie Warzel wrote in the NYT this week, none of us are really working from home, we’re just surviving through work while at home. These are different things, as anyone who was WFH pre-pandemic will tell you.
Under this framework, then, not only is WFH forever not being set in motion yet, but hardly anyone has really started WFH. It’s not a trend, it’s a band-aid.
And, yes, using Facebook and Google as avatars for the tech industry at large has many problems. These companies control the online advertising market and split the spoils between them. If we think about “online advertising” as a game or puzzle, Google and Facebook have both solved the market.
The companies are so dominant in their core business that Google has an entire area of its business that loses hundreds of millions of dollars each quarter just for fun and Facebook is spending time creating its own currency.
But even companies directing some of their nearly unlimited resources at inventing The Next Big Thing aren’t sure our initial reaction to the pandemic is as full of paradigm shifts as your friendly neighborhood thought leader.
And that’s worth more than a cute turn of phrase.
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