Work From Home: An Acceleration of Internet Trends

And no, it’s not just because it’s mostly only people who work with the internet that can work at home.

At the risk of shouting the same things that everyone else is, there’s been some very obvious trends that this extended remote work has promoted. A quick list just to make sure we’re on somewhat similar pages:

  1. Tech companies getting a very real measure of remote employee efficiency (and assuming its the same, better, or even slightly worse)
    • Decrease demand in commercial real estate and office space
    • Increased investment in their non-local workforce
      • Increased diversity due to wider area recruitment
      • Increased competition and talent due to larger labor pool
      • Decreased costs by leaving urban centers
  2. People realizing the feeling of freedom and comfort of being in their own private space for the majority of the day while still being able to work and earn a living… AND be close to the ones they love
    • Re-shifting the priority between work and personal life
    • Paradoxically, a blurring of work hours. Increased length of on-call times but decreased intensity. Instead of 8 hours of high octane focus, it may be 24 hours of varying attention
  3. A further hit to the ecosystem that revolved around corporate complexes (restaurants, shops, and other stores built near corporate offices to serve the workers)

Those feel like pretty standard guesses that we can make at this point. Outside of slight derivatives of those assumptions, the other forays made are often about habit and consumer spending behavior. Which are valid, but another discussion.

Instead what I think is more interesting and less covered is supply part:

The First: Corporate Internal Innovation

If we take the step of #2 further and realize what it means, it paints a potentially grim picture for companies. Not about productivity no, I’m an optimist and believe that people will continue to pull their weight and contribute. Instead, a lot of value that companies capture from their workforce is in the creative drive and interactions between their employees– value that is neither expected nor properly compensated for (and therefore I argue, not their responsibility), but gleefully consumed by the company whenever possible.

With no coffee-meets, water-cooler talks, or just the continuous subconscious humdrum that accompanies physically seeing or hearing someone outside of your world, I am positive that company innovation will be down. Discussions will be down. Spontaneity will be down. Zoom calls are a very explicit and almost aggressive act, proper ones require an agenda, act as a sharp and uncomfortable introduction of formality and work into one’s home, while also shouting for cold efficiency. After all, dead air with a friend is awkward enough– dead air with a co-worker or worse, a manager, is bone-chilling.

For companies who realize this and value it, there might need to be forced physical gatherings. Perhaps employee-only conferences or some form of extended retreats. Unfortunately, until immersive VR, this will only be possible via large company purse strings.

The Second: Company Direction and Investment Culture

If the above ends up being correct about a drastic decrease in company innovation due to people simply being more distant from each other and the company, then it’s very likely that we’ll see a huge drop-off in the crazy and wonderful integrative solutions that arise from bottom-up creation.

Instead, because the responsibility of the brunt of employees is not that– and because the remoteness of work has put in that distinct border between their responsibilities and zone with regards to work and private life, it’s very possible that companies will become more top-down than ever. Only those whose responsibility is in creativity and creation will continue to do so, but their works are often insular and one-directional due to the weights of professional training and unconscious bias.

Thing is, many companies rely on those sort of creations to remain relevant and discover new evolutions. Even before, successful creativity and outside thinking was hard to find. That’s why instead of fostering and spinning off more and more blockbuster products, we see that the trend more often than not for industry titans is M&A.

So outside of slowing down intra-company innovation, what impacts does that have? I argue a lot:

  • Reduced company innovation means reduced competitiveness, I expect a slowing of feature in the truly new and adventurous
  • Lack of new alternative ideas by definition means companies are less likely to expand outside of their current market. Not just slowing their growth but also putting a cap on their potential

And that ties into investing. Our current culture is smitten with VC-funded entrepreneurship. The dream is one original idea, funded with millions, earning billions. Part of that though relies on that one idea continuing to grow and then give birth to more (Amazon into AWS, anyone?). But if growth is stunted (raising the ROI time horizon) and idea mitosis is decreased (returns are lowered), then that era might be coming to an end. Whether this means less money goes into VCs, they become stingier in choosing what to invest in, or the dynamic just shifts as a whole– it’ll be something interesting to keep an eye on.

Companies paying for growth via acquisitions are the same. After all, what are M&As but companies acting as a VC but in a more complete and intimate investment?

The Third: Entrepreneurship

Far be it from me to end it on a negative note, I generally still think this change can be positive. And that’s solely because of what these impacts mean for entrepreneurship. Assuming that consumer spending and the economy doesn’t drive everyone into austerity, a larger talent pool, cheaper business operations run-rate (cheaper talent + no rent), and less VC money might mean that we begin to replicate real world traditional entrepreneurship into the internet world: smaller market sizes, slimmer margins, and more private ownership.

And as technology continues to open up and make things like development much easier, this means a much more varied and competitive landscape. Perhaps we’ll see the internet version of mom & pop stores begin to sprout and flourish. We already see a lot of this in terms of where the physical world bleeds into the digital (dark kitchens, private digital retailers, or even just the online site of a family-owned service), but now a full transition can be made.

A worry however is that these digital “mom & pop” stores will not be created nor owned by the same traditional mom & pop ones we talk about in the news. It’s more likely that those will be the ones who’ll continue to be driven out of business due to digitalization, but are unable to switch and learn to adapt to the new age.

There’s not much we can do in terms of the technological aspect, as we can’t simply expect them to learn coding. Even before that would have to be the understanding and urgency in realizing that the melding between physical and digital economies come in phases, and we’re maybe only just now entering the next one.

After more than a decade of the idolization of negative-run rate companies with billions in investment IPO’ing or permanent VC-funded companies however, this return to traditional business models is a breath of fresh air. It’ll require new businesses to quickly get in the black, be self-sustainable, and generally more resilient to even situations like the pandemic-stricken one we find ourselves in now.

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