22 July 2010

The changing of the guard -- Music for the Masses ?

Old problem, but worth analyzing in the context of today's business climate.

Remember when people used to work for IBM for 30 years and get a pension and stability for life. Even before that, during the days of henry ford and standard oil, sons and fathers worked side by side providing sanctuary for multiple generations. But that's all changed now. 401(k)s aren't even matched at most companies now. The US is not even the undisputed economic powerhouse anymore.

Google IPO'd about 5 years ago, and wasn't even around 10 years ago. Now they are the biggest name on the planet. Just as everyone's darling Apple surpassed Microsoft as the world's most valuable tech company, they are falling behind in the mobile and tv content markets. E-books passed hardback sales last quarter for the first time. There are no safe havens anymore. No time clocks.

As a free market technologist - I love it. Big companies must stay on their toes. Thanks to technology, barriers of entry are dissipating. Fledgling startups can transform markets, give consumers what they actually want, and create meaningful jobs in their own right. There are so many david vs. goliath stories that it makes you feel warm inside and it feels like a tribute to what this country was built on. Hard work, entrepreneurism, and a true meritocracy.

The game has changed though. The level of sophistication required to play is so high, that most are kept out. These startups provide good jobs and have great cultures - but have you seen the profiles of who they hire ? High-level, educated engineers, marketeers, and product development guys (i think everyone has heard about google's grueling interview process).

So what about the folks in Detroit that lost their jobs ? Or even the lower to middle class folks that get a decent education, but not a top-notch one? You see this trend highlighted now in an era of ~10% unemployment. There are jobs to be had right now -- its just that most people don't qualify. And companies (rightly so) will not hire suboptimal candidates. They'd rather wait for the perfect one. Unfortunately - this creates a larger divide between the people that have access to education and techonology and those that don't. I believe this trend helps the wealthy and privileged at the expense of the poor and those without access to opportunities.

Also, the uber-Technology and automation today's society demands creates the kind of operating leverage for corporations that require less jobs. The assembly lines are obviously disappearing, but even more so, much of the heavy lifting is done by software/hardware platforms. Especially back office functions like processing, payroll, even picking and delivery in some cases. Just by sheer numbers, the Googles and Facebooks of the world will require less employees than IBM or Standard Oil back in the days. Sure, the US can compete for foreign business - but its just a first mover advantage. Other countries will surely follow suit and look for business here in the US.

So the trend is that the US requires less jobs and are now raising the bar on quality jobs to the elite or those with access. Who's going to fill the void? Obamacare? I want to see the middle class thrive not divide. From a jobs standpoint, isn't technology creating more "have-nots" versus "haves"?

So what's the solution? I want to see upstarts thrive. I hate beauracracy and inefficiency more than most people. But how can these upstarts create the breadth of jobs that fit the demographics of the US population? How will they help the millions that are having difficulty transitioning from the old guard to the new guard?


  1. This is a topic that really interests me. I agree with much of what you've posted, but I think the problem isn't that we'll see a disappearing middle class but maybe what we think of as middle class will change (changes takes time and can be a bit painful while it's happening).

    Americans seem to have (or had) this dream of their children growing up, wearing a white collared shirt and red tie, sitting in an air-conditioned office punching keys on a computer (or typewriter if you're old enough).

    Oddly enough we had a conversation just yesterday at work (which is a high tech start-up) about the disappearance of the trade school / apprenticeship culture that was once very important in the US. There are lots of people who make a fine living (and I personally know a few examples that are beyond middle class) that own their own blue collar business (plumbers, cabinet makers, A/C repair, and so on) but started as apprentices.

    The other item that I believe actually helps the middle class and poor is that education is now more accessible than ever. I'm not just talking about free tuition to state schools or grants but online education. I'd argue that you can get all the knowledge I currently have with an EE degree without paying a dime thanks to some university sites like http://webcast.berkeley.edu (a personal favorite) or MIT's open courseware (personally prefer Berkeley as more often than not there are actual lecture videos there). I've found the key to online education is effort (not talent or intelligence), and I think others would agree. I'm hoping that this will open the doors to more start-up opportunities, more innovation, and hopefully jobs to fill that void you're talking about.

    Mu point here is that maybe what we used to think is middle class is changing and opportunities to education (and perhaps the chance to move beyond middle class) is now more accessible than ever.

    Of course, I'm definitely biased and see technology as an enabler, bringing a better life to those who choose to pursue it. My bias comes from a few items: gf is doing an online MS degree studying educational technology, my own MSEE was done online, worked through problem sets with Priya when she was doing her online MS degree, currently work at a high tech start-up which is essentially enabled thanks to advances in technologym which couldn't be done 10 years ago and maybe not even 10 months ago, and learned my freshman year in college that if you really want to learn something today that you can find some inexpensive resource that you can leverage to learn it.

  2. Good point. Education is definitely more accessible than before, which will definitely help. It begs the question: Will these online colleges and booming community college be relevant enough to help large numbers of people migrate into the new economy. I agree in the long run technology is an enabler and the impact is more positive than negative, but as you point out, the transition will be tough. And i think with the aging of the US population, unfortunately, a large number of people will be in this boat.