I was invited to give a talk to a group of MBA students at USF last week on the topic of Futurism. Yep. No kidding. Anyway, I have been taking opportunities to harvest money from the environment lately and it has distracted me from futurism and caused me to neglect my writing. I appreciated the opportunity to share some ideas with young people who will be going out into the world soon to try to make a go of it. The problem is that I didn’t feel that I had a lot of upbeat and encouraging views to share.
I started out by digging into a recent Smithsonian interview with Jaron Lanier that Rachel Haywire shared last month. Lanier is continuing his bearish stance on web 2.0. Data spies like Facebook and Google are pulling value out of the economy by appropriating content without compensation. He cites Google translate as an example since it utilizes the work of millions of existing translations without compensating the translators. However, those translators presumably already got paid for their services, and there wasn’t previously a very hot market for discontinued stereo manuals translated into 5 languages. So I am not sure that value is really being taken out of the system.
This is actually largely true of a lot of Web 2.0 stuff. Sure, people are generating content that is being monetized by Google and Facebook. (Facebook does make money, right?) But it’s not like there was much of a market for the junky content we all dump onto the internet anyway. And since the only way to make money on the internet is via advertising, a simple ad-blocker steals that value back from the “data spies.” But you have to admire fiery fusillades like this from Lanier:
There’s this idea that whoever has the biggest computer can analyze everyone else to their advantage and concentrate wealth and power. [Meanwhile], it’s shrinking the overall economy. I think it’s the mistake of our age.
He might have a point in regards to high frequency trading. A recent study suggests that it might actually pull out liquidity instead of increase it. Lanier supposedly address this topic as well in his next book, Who Owns the Future?
Next, I pulled out some of Venkatesh Rao’s ideas from the Entrepreneurs are the New Labor. I really like this piece and I think it’s worth talking about more. Rao basically makes the point that as markets develop there are fewer unknowns and the advantage drains away from “hustlers” (startup founders) toward the bankers (or VC’s).
Hustlers lost their main weapon: specialized and indispensable knowledge of murky emerging markets.
In his piece, Rao draws our attentions to the robber barons of the 19th century like Carnegie and Vanderbilt who leveraged unique knowledge of the “emerging market structure and state of play” with regards to the steel and railroad industries. He compares them to Jobs and Gates who scored huge successes in the emerging computer industries but contrasts those giants with the Y Combinator-style startups that just build some modest feature for an existing product or service. It seems obvious that first movers are going to get access to low hanging fruit in any new market, but I do like the way Rao lays it out.
But that makes me feel somewhat sorry for the young people I was talking to. These are MBA students at a private US College, not war orphans in Africa, so I guess I don’t feel so very bad for them. But I can definitely relate to their first world problem: how to build a life for yourself in this tough economy with shrinking prospects. Rao’s piece suggested that the startup incubator path might supersede the MBA path at some point. If you build a modest startup that shows enough promise, you can get aqui-hired by a bigger firm who recognizes your talent. Whatever crumbs of equity the VC’s let you keep can be thought of as a signing bonus. Why pay for an MBA when you can get paid to acquire real world experience to boost to your career? But maybe the kids that already plunked down for USF don’t want to hear that.
I also trotted out my typical bearish position on China. If automation continues it’s ongoing trend then we can arguably expect this to steal away China’s labor arbitrage advantage. And automation does seem to be a brutal and ruthless juggernaut, threatening to buggy whip all of our jobs away. Why just check out this awesome robot from IPI that finds and flings boxes around with ease. I mean how is an MBA student going to compete with that thing?