A Blog by Jonathan Low

 

Aug 20, 2014

In the Sharing Economy, Are Workers Employees or Independent Contractors?

Fast, flexible and faultless. That's how we want our service, that's what institutions demand from those who would like their custom. It's another way of saying we want what we want when we want it. And if you won't provide, I'll go online and find someone else who will.

So enterprises are attempting to address these requirements by becoming lean and agile. Which means they are keeping costs to a minimum while seizing any opportunity that looks remotely achievable. Sure, I can do that, being the requisite answer to any query involving the potential exchange of goods and services.

The problem is the one that Henry Ford identified over a century ago: if you dont pay your employees or associates or colleagues enough to buy your product, or otherwise make it worthwhile for them do so, you can assume that there probably arent a lot of others around who can afford it either.

The implication is that all those independent contractors are only embracing the opportunity you proffer because they dont have any better options. And that they'll ditch you as soon as one comes along, understanding that you'll do the same to them in a trice.

To those who claim this is about competitiveness, the question would be, for what? Because the contractor scrambling for some hours is also the consumer who has to make judgments about what he or she can afford. Which is exactly why Walmart and McDonalds now find themselves with declining revenues.

The issue of who is an employee - or not - will be settled in the courts, because that is the way we do business now. But the question of what is best for the economy will be settled in the marketplace and separating the winners from the losers is far from certain. JL

Scott Kirsner reports in the Boston Globe:

If the innovation economy produces companies that have hundreds of thousands of “non-employees” who love the lifestyle, but don’t have unemployment insurance or retirement plans, we’re going to have problems as a state and society.

Reason Versus Retaliation: The Problem With the Growing Contentiousness in Business

Historically, business people have erred on the side of quietly working things out. The theory is that this approach takes less time, requires fewer extraneous resources, assures that a mutually agreeable deal gets done and is therefore likely to be more profitable.

But we have become more of an in-your-face society. There is more limelight to be had and lots of people are drawn to its glare.Politics has become nastier the world over as a reflection of this trend. And there is also a sense that with the relative decline in government and regulatory authority, there is less downside to becoming more emotional and demonstrative because it intimidates opponents and thus assures a greater chance of winning, whatever that means these days.

The problem is that there is little evidence to support this new paradigm. Bringing in the lawyers, bankers and PR specialists is unlikely to produce a greater chance of achieving one's goals, let alone doing so more profitably. The perfect remains the enemy of the good. A deal is generally better than no deal and compromise is more likely to achieve some goals, even if total victory is unachievable.

Whether this attitudinal enmity is a secular trend or passing moment is a function of relative scarcity and cost/benefit analyses. But it does not increase the likelihood that anyone will be richer as a result. JL

Sarah Gordon reports in the Financial Times:

Slinging insults does not just reflect badly on those doing the slinging, but short-changes investors and others who seek a more reasoned conclusion.

From Startup to Scaleup: How Silicon Valley Has Evolved

The argument has long been that you go to Silicon Valley to start a company because that is where the world's deepest concentration of talent and money can be found. The combination of skilled techies and knowledgeable investors means that if your idea is any good, it will find backing and the best people to make it a reality.

But there is an emerging corollary. Which is that the global distribution of skills, knowledge and many which has been fostered by the Valley's success means that you dont necessarily have to travel anymore in order to live that entrepreneurial dream. And in fact, given that the emphasis on substantial returns has only heightened, there is an even greater demand for lower costs in order to help jack those returns.

The problem, then, for anyone considering Silicon Valley, is that there are few less expensive places to start. From rents to equipment to salaries to the financial demands of investors, this may be the most daunting place on earth to make a go of it. The narrative is that you can always start elsewhere, build a record and then move if if you feel you must.

What people in the Valley are very good at, as the following article explains, is identifying those concepts that are scalable, which is to say capable of growing and successfully generating cash equivalents, and then assisting with that process of sustainable and profitable growth. The basic laws of economics dictate that enterprises seek to move up the value chain. And it may well be that Silicon Valley has now done so. JL

Armando Biondi comments in Venture Beat:

Silicon Valley is no longer the best place to start a company. Starting companies is not hard anymore and everybody can do it. You know what’s hard and exciting, instead? Scaling them. that’s what Silicon Valley does best

Aug 19, 2014

Stop Trying to Predict the Future: Leave That to the Robot Who Will Steal Your Job

We'd like to know. Really we would. And we certainly make a brave effort at trying to figure it out. But the reality is that we dont, probably wont and almost certainly cant predict the future with any degree of accuracy let alone certainty.

Which hasn't stopped us from trying. And it sure hasn't reduced the number of candidates more than willing to take a shot at projecting their self-assurance on our collective behalf. But the problem is that they tend to be well, if not wrong, then not exactly effectively targeted to the extent that anyone can actually employ their prognostications and make a buck while doing so.

Part of the problem is social: those actively proclaiming their visions tend to be from London, Washington DC, New York or maybe the San Francisco Bay area. They also tend to be middle aged, white and male. Overwhelmingly.

Not that that makes them any more or less prescient, it's just that when most of the world is not any of those things, it's probable that the degree of digression from the mean is likely to increase. Exponentially.

The reality is that few, if any, have predicted the amazing changes that have rocked our world in the last decade or two. And those who might have done so were not the sort to whom anyone we trust would have paid attention anyway.

We could suggest that everybody just chill and let it happen. But that is not the human way, especially in the 24-7-365 environment. For most, a guess feels better and more in control than an hour in the lotus position. But soon it's not going to matter because we'll all be replaced by robots who will take care of everything. Then, all we'll have to worry about is whether they are going to break down and leave us hanging. JL

Jess Zimmerman reports in The Guardian:

We can now say definitively that, in the next 11 years, robots will take all our jobs. Or that robots will create tons of new jobs, or that nothing will change, or what even is a “job” anyway?

What Could Go Wrong? Apple Permits China Telecom to Host Chinese Users' Data

China has been engaged in a not-so-subtle campaign to pressure western companies doing business on the Mainland. From charges of fraud, to investigations of faulty products or produce, to allegations that obscure laws have been violated, few, if any, foreign enterprises have escaped scrutiny.

The companies, while privately seething about the expensive and seemingly trumped up charges, are loathe to complain too loudly because the size of the market is still so beguiling that it will not be until they have surrendered all their profit potential that they will begin to consider the trade-offs involved in a different light.

Apple is engaged in a particularly sensitive dance with the authorities. Not only is China a vast growth market, but most of their products are made there. What they have going for them is that iPhones, iPads and the associated add-ons are wildly popular, even, or should we say especially, by the bureaucracy.

Given the distrust with which authoritarian regimes regard freedom of information and the ability to communicate openly, the cacheing of personal user data in Apple-controlled equipment, sometimes outside of the host country, has long been an issue. Apple has now conceded that point to a 'private' company, China Telecom, and claims that the data are encrypted so the new host can not violate it. Trust based on protecting the sanctity of users' personal information is one of the most important competitive advantages that western technology companies possess, especially with regard to brand and reputation. Surrendering that reduces the competition to one of price and easily copied ancillary features.

One suspects that the Chinese authorities are mollified but far from satisfied by this capitulation. We can only imagine how the Chinese consumers whose data are now in China Telecom's possession are feeling. JL

Jing Cao reports in Bloomberg:

The data is encrypted, so state-controlled China Telecom, the country’s third-largest wireless carrier, won’t be able to access it, Apple said in an e-mailed statement.

Will Half of the Workforce Be Working Remotely by 2020?

Pssst! We'll let you in on a little secret: half of the workforce is already working remotely. They just dont think of it that way.

For a civilization as submerged in the subtlety and ambiguity of socio-economic interactions as this one, we remain remarkably absolutist in our outlook about certain factors in our lives.

When it comes to work location, we still tend to think of either clocking time in a cubicle (and its various equivalents) surrounded by equally bored, cynical colleagues or phoning/emailing it in from a cluttered office suffused in screaming babies, barking dogs and roaring vacuum cleaners.

The reality is that working remotely is becoming - and will become to a greater extent - just another feature of work life. Like checking email, writing up orders and connecting with the home office when on the road now. Except that whether one is at home, at Starbucks, at a client's, or in cubicle-land will no longer matter all that much. The rising generation of managers grew up with this sort of semi-independence and flexibility. They get its advantages - and understand how to manage the potential downside. Everyone else just assumes this is how work is, not that it's something special.

Besides, in a world as interconnected as this one, where people email or text each other rather than walking 50 feet across the office, what's remote? JL

Laura Vanderkam report in Fast Company:

"50% of the workforce will be working remotely half the time. I don’t think that 50% of the workforce will be working 100% remotely by 2020, or even 2030.”

Aug 18, 2014

More Americans Are Now Paying Cable Companies for Internet Connectivity Than for TV Service

Convergence conquers. More Americans are now buying internet services from cable companies than they are the cable tv channels those companies were originally created to provide.

Telecoms and satellite providers have been cutting into the cable cos' market share for years now, but the intersecting trend lines confirm a strategic tipping point that may signify as much about costs as viewing habits.

Marketers and content providers have long tried to discern how consumers will make sense of the options they have when it comes to viewing, interacting and purchasing the array of available services.

The significance of this milestone may say less about the relative popularity of cable versus internet or cable versus telecom than it does about the declining difference between internet and television. At some point, this infers, they will become indistinguishable, a future in anticipation of which providers are already jockeying. JL

Zachary Seward reports in Quartz:

As more television watching moves to the internet, the distinction between the two will matter less