A Blog by Jonathan Low


Apr 23, 2014

Pushing the Envelope: Startups, Process Innovation - and the Four Day Workweek?

Startups are best known for the cool gadgets and amazing services they have created. But the process innovations they have come up with along the way have had a profound impact on organizational culture as well.

Foosball tables in the office, bleeding edge spaces, Friday afternoon beer blasts, elimination of hierarchies and a host of other concepts have changed the way we think about work, especially how and where it should be conducted.

Much of this is thanks to the impact of technology on our ability to produce and communicate value. And startups, because they are, by definition, looking for the new, are free from convention. Even countercultures have norms and mores, one of the most sacred in the tech world being the disregard for time and the so-called normal workday. Working late or 'odd' hours is considered standard and pulling all-nighters is a badge of honor. So it is noteworthy when a startup flouts that convention and ponders the possibilities of a job with a manageable workload and, heaven forfend, a life.

The theory is that this will lead to greater productivity and reduced burnout. Venture funding does not seem put off and for certain types of enterprises, this may well make sense. The broader implication is that innovation not be limited to the production of physical products but encompasses the way we work with them. JL

Anne Fisher reports in CNN/Money:

What if companies could prevent burnout (and reward their employees) by limiting the number of hours they worked?

The American Middle Class Is No Longer the World's Richest

It was nice while it lasted. The American Middle Class, once the beacon for a world aspiring to single family homes, nice cars, vacations and college educations is no longer the global benchmark for wealth or even success. 

The culprits are familiar but have not previously been linked causally to economic decline on this scale. Refusal to invest public funds in higher education, executive pay far higher than elsewhere in the world combined with a lower minimum wage and weaker unions have all contributed to the loss of competitiveness. 

Some argue that this is actually a positive because it makes the US more competitive with low wage countries like China and Bangladesh. But what that point of you fails to acknowledge is that the US is a consumer driven economy. Without a strong customer base, not enough income is generated to support reinvestment and growth, precisely the quandary in which the US now finds itself. Financial institutions are focused on wealth management, which provides relatively secure returns for minimal effort. The risks of lending have been surrendered to major corporations which see opportunity in a lucrative market abandoned by its previous participants.

Given the bitter political discord in the US and the degree to which those who have benefited are willing to invest in preserving their financial advantages, it is unlikely that this situation will change - until at tipping point is reached at which those negatively affected by current policies become so numerous and those profiting from them become such a shrunken minority that the demand for change becomes overwhelming. The only question is how long that will take. JL

David Leonhardt and Kevin Quealy report in the New York Times:

After-tax middle-class incomes in Canada — substantially behind in 2000 — now appear to be higher than in the United States. The poor in much of Europe earn more than poor Americans.

Apr 22, 2014

Adventures in Aeron Chair Arbitrage

Technology, capital markets and thee. We remain convinced - dare we say besotted? - by the belief that combining creative applications of technology with the dark, overlooked corners of the capital markets should produce a handsome return for the talented, eager and not-infrequently desperate capitalist.

It's worked for lots of others, so why not moi, as such thinking goes.

Well, the reality is that high-powered computing has probably shed blinding lights on virtually every opportunity a highly caffeinated coder might want to consider, rendering the asymmetric threat from undiscovered data-based opportunities rather less robust than they once might have been. Hence the recent fascination with cheating, er algorithmic high speed trading. But we digress.

So, as the following cautionary tale explains, the absence of competition does not necessarily guarantee the presence of financial rewards. JL

Rohin Dhar reports in Price Economics:

We may not have found a killer business model through the experience, but at least we now have $300 in the beer fund.

What's the Matter With Apple's iPad Business?

The thing about being consistently amazing is that people notice when you cease to be amazing.

Apple's iPad was amazing on several levels when first introduced. It was dismissed as a toy - and then took off, effectively serving as the digital nail in the laptop's coffin.

Buyers love the size, the convenience and all that signature Apple fairy dust: design, quality and graphics yada yada yada.

Adults scooped them up like so much candy and, even better, kids love them, too. What better platform on which to watch your favorite cartoons, sketch and play.

But a funny thing happened on the way to immortality: sales have slowed. Competition is partly responsible, though as the following article explains, there may have been some strategic missteps in the initial roll-out. The breadth of the children's market may have been underestimated, upgrades have been few and far between and, for what it is, pricing may have sucked the life out of the market prematurely.

All of which is to say that this business of keeping the world amazed is hard work. JL

Jay Yarow reports in Slate:

The iPad is the best tablet for surfing the Web, using apps, and getting stuff done. Except for, you know, working and creating content.

Our Cubicles, Ourselves: How the Modern Office Shapes Contemporary Life

Be careful what you wish for. How many times have we heard that phrase and how many times have we ignored it?

The cubicle has fallen into disfavor, just as its predecessor, the 1950s style office characterized by regimented rows of desks did before it.

The open plan office has been annointed the new workplace design of choice. It is supposed to encourage and symbolize the free flow of ideas, foster the transparency of collaborative efforts and otherwise stimulate productivity, serendipity and the attendant success that flows from all good things.

But just as people changing jobs often find they are trading one set of malevolent personalities for another, so office workers may find that placing one's lap top on a super-desk fails to exorcise the demons that bedeviled cubicle life.

The reality is that the culture of an organization resides in its people. Its leaders set the tone and others either buy in, sublimate their own desires due to the necessities of survival, or work resentfully until they can make an attractive change, meanwhile subverting the dominant ethos whenever they can. Office design may exacerbate existing problems and occasionally enhance extant strengths, but it is unlikely to change one for the other. As the Hawthorne experiments demonstrated, there are benefits to change in and of itself, but as that famous free-lance contractor William Shakespeare wrote, 'the fault...is in ourselves.' JL

Rebecca Rosen reports in The Atlantic:

The cubicle became a symbol of an oppressive workplace because the years that the cubicle rose to dominance were also years that the workplace, in many ways, became more oppressive.

Apr 21, 2014

Mobility Magnified: How Earbuds Have Changed the Sound - and the Business - of Music

Influence is a curious phenomenon. The factors that drive our likes, dislikes and, in the world of decision-making, our purchases or votes, are often determined by intangibles whose presence, let alone impact, we may barely register.

Much has been written about the changes that technology has wrought in the business of music: how we listen to it, how we access it, how we buy it - and who profits. But, as the following article explains, influence of mobility and the technological platforms through which we access music, the way we listen to it, is changing not just the business, but the nature of music itself.

Those changes have shaped our notions about quality and value that are having a ripple effect on how music is presented not just online, but in big and small arenas, in the nature of the way it is marketed and in the degree to which we are willing or not to make purchase decisions based on all of those factors.

In other words, the confluence of mobility and quality are reshaping the fundamental nature of the experience. That is all well and good for music, which is a major cultural touchpoint for most humans. But then imagine what this is doing to other businesses and processes and experiences. And that should provide you with a sense of this evolution's scope and scale. JL

Nick Messitte reports in Forbes:

As the music we buy becomes more and more influenced by the headphones we listen through, songs which do not sound good in headphones have a harder time succeeding in pop arenas.

What Is Alibaba Really Worth?

The conservative estimates start at $100 billion. The optimists put it in the $150-175 billion range. One guy is claiming it's closer to $245 billion.

All of this for a Chinese internet company many Americans and Europeans have never heard of.

The calculations are based on a range of methodologies that sound reasonable in theory. But then when has reasonable ever mattered when the traders and jobbers are in full throat and sensing a payday? It is as Tom Wolfe wrote in Bonfire of the Vanities about an earlier iteration of this mania, 'the sound of young white men baying for money.'

Alibaba will probably be the largest IPO in history, supplanting Facebook's brief and troubled hold on that dubious title. There are plenty of sensible metrics to be applied, for anyone who wants to try. But the larger story is really about the conflation of two memes bearing almost insupportable expectations: the internet and China.

The 'net has ruled this economy for almost a generation. Untold fortunes have been made from its power to transform. At the same time, China's emergence as a global economic force, along with the size of its domestic market which has for centuries lured the ambitious and foolhardy, has now combined to create a financial allure of surpassing excitement. Imagine melding the largest internet company in the world with the largest market in the world - and throw in several tens or hundreds of billions to optimize the opportunity. That is where the value lies. Whether the company will ever realize that potential is almost beside the point. JL

Jennifer Hughes and colleagues report in the Financial Times