Tag: future

Choose your own Adventure – COVID-19 series

Posted on by Steve Sammartino

I did lots of post this week – but rather than bombard you with them every day, here they are for you to choose your own adventure:

Option 1: Our next Global Pandemics – yes, they could be worse.

Option 2: 3 Business Strategies for anyone during COVID-19 – which one is right for you?

Option 3: How saving Pennies in January, cost us Trillions in March – The real cost of hesitating.

Option 4: How the Richest Man in the World Behaves – Putting profit before people.

Option 5: Changes to the world post CoronaVirus – radio interview I did this week.

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Stay alert & stay safe,

Steve.

 

Securing the Supply Chain – COVID-19 series

Posted on by Steve Sammartino

If there is one thing we’ve realised it’s how interconnected and physical our world really is. Digital can only substitute so much. With 70 years of unimpeded global growth and globalisation we’ve all become a little complacent. So I’m offering two thought experiments on possible natural and technological disasters. Two aren’t just possible, but probable.

Scenario 1: Floods in China.

Let’s imagine China faces an unprecedented period of rain due to climate change. More rain than any location has ever had in recorded history. The next result is nationwide floods, and damage to ports, which need to be close for repairs that could take 12-18 months to fix. The supply chain gets choked. Nothing can get in our out of China which isn’t on an airplane.

The global economy which has come to rely on China as its low cost factory will be in trouble again. While this wouldn’t be as calamitous as COVID-19 – it would put a bigger dint in the the economy than the GFC did. We are not ready for this. 

Scenario 2: Global Internet Virus.

Now imagine a new form of artificial intelligence develops its own agenda. Not a walking talking terminator style robot – but something more more immediate and plausible. An A.I, driven virus which is manages to take down every desktop, laptop, phone, server farm, terminal, and device connected to the internet across the entire world. And this AI virus is so clever it can work around every safety measure and firewall design into the web. The virus becomes a type of learning organism. No one knows how it started, where it came from, or how to stop it.

All we know is that we can no longer use the internet or any computing device to feed ourselves, keep our houses warm and keep people healthy. This too would impact the developed world in an unimaginably large way. We are not ready for this.

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Both scenarios would require levels of independence and redundancy most developed economies have let lapse in the name of efficiency. A stark reminder that a robust economic system needs design elements which are inefficient on purpose.

Definitions During a Crisis – COVID-19 series

Posted on by Steve Sammartino

(12 min read – long, but worth it) 

Historian and author Yuval Harari says that if something doesn’t feel, then it isn’t real.  While an economy can grow or decline – it’s an abstract concept. Many of the parts that make an economy are real – like people – but much of it is just aggregated concepts for which measurements are possible.

Weirdly, it seems many governments (Australia and the USA come to mind) are more concerned with abstract concepts than real people’s needs. So with that in mind, I’ve decided to bust out some truth bombs and break down what is really happening during this crisis.

The Economy – The word economics can be traced back to mean household management. Of course, if a household has no resources, it can’t participate in the wider economy. This would also flow through to business to business transactions, because the only reason they exist is to facilitate the production of goods and services for other households as well. Ultimately it all starts and ends with the household. How quickly our federal government forgot that if we want the economy to survive, we need to go back to the original meaning of economics and help out households. If that means replacing incomes temporarily, then the government should do this. The best thing our government could do right now is think bottom up, not top down. If people have resources (money), everything else will be OK in the long run. If the government helps businesses first, then they’ve forgotten why businesses actually exist. Go to the source. In times where efficiency of resource allocation is desperately needed, cutting out the middle man is a damn good place to start.

Capitalism – We don’t live in a capitalist economy, but a mixed economy where we have a financial competition backed up with social protections. That’s what our taxes and governments are for. Right now the pendulum needs to swing very far to the side of socialism. We’ve always had publicly provided, healthcare, pensions, disability and unemployment benefits. What we need right now is a strategy or short term government policy that could save lives. Any murmur of dissent from so-called ‘capitalists’ needs to be pushed back hard by all of us.

The Corporation – A corporation is a legal entity set up to reduce the personal risk of people who own it. If corporations are designed to protect people, it might be time ignore the structure and think of the people they are made up of. Save the people and the corporations will be fine. If this sounds ridiculously simple, it actually is.

Yield – Our economy for too long has been based on capital growth instead of yield. We’re about to transition from growth to yield. People and companies have been obsessed with acquiring things in the hope they’ll be worth more tomorrow, simply because there is demand for it rather than the fruit it bears. Growth should be a function of expected future yield, but that seems to have gotten lost somewhere along the line. It’s about to make a serious comeback in the sharemarket, real estate and pretty much anything we invest in. The market will start to ask what’s the yield and base their decisions on that. This is a good thing.

Trickle Down Economics – This is the flawed idea that if we reduce taxes and costs for businesses and the wealthy, it will stimulate business investment in the short term and benefit society at large in the long term. The reality is that it’s called trickle down, because the 99% end up with only a trickle. The clue was in the name, and yet those who divined this strategy managed to sell it to the world. We are about to see it doesn’t work and the truth is that our economy is bottom up – it always has been. Governments around the world will realise very quickly that unless you replace lost incomes at the household level (like Denmark are doing), we are headed for a deep and long depression.

Bailouts – If Australia or any other country bails out an industry, it should be a buyout instead. Bailouts are a hoax where the stockholder get to profit in good times and make tax payers take the downside. It’s a case of private profit and public losses. If a firm is important enough for a government to bailout, then it should be nationalised or at a minimum, the government should take equity positions to the equivalent value of their market cap at the time of the bailout. These equity positions should take the form of preferred convertible stock.

Here’s an example: Qantas has performed share buybacks (when a company buys its own stock to take it off the market and boost the share price, benefiting existing shareholders and often bonus-incentivised executives) of over a billion dollars in the last 2 years. If they hadn’t done the buybacks, they would have a war chest of over a billion dollars in their balance sheet for moments like these. In an industry plagued with Black Swan events like this every decade or so, it would have been a more prudent management strategy. I bet Allan Joyce won’t give back any of his $20 million in non salary benefits he received last financial year.

Unemployment Statistics – For a long time the ‘underemployed’ (people who want more work than they currently have) have not been regarded as unemployed. I’ve even read predictions as recently as this week claiming unemployment might even get to 11-15%. These unemployment predictions are laughable. Get ready for 30-50% unemployment. In times of great change we need to get our heads out of the spreadsheet and into the real world. Most things happen on the street before they can be measured empirically in any meaningful way. Maybe the people coming up with these numbers should go and ask a broad sample of 100 people if they are currently working… then they’d get some real numbers.

De-globalisation – We can also expected a re-consideration of running global supply chains. The true national risk of every country’s supply chain will be exposed during this crisis. You better hope like hell your country is good at making food, generating energy and has a good healthcare system. Post COVID-19, we will see many countries taking steps to secure supply chains on vital industries. We are learning really quickly the difference between essential and optional. Sorry, Team Kardashian.

Economic Shock – It’s important we understand that this isn’t an economic disaster or shock, but a natural disaster. The consequences of which are different. If we thwart the virus quickly, there’s a big chance we will come out of this economic trough more quickly than we would if it were an economic-driven recession. If it lasts more than a couple of seasons it will shift the culture, change how we spend and invest in a longitudinal way. Human culture in every corner of the world is a function of their natural environment. In a highly populated city-based connected economy, this could change social and financial behaviour for a very long time.

Natural Monopolies & Utilities – Countries that still control their utilities and natural monopolies will handle COVID-19 a lot better than those with largely privatised utilities. If Australia still owned and controlled its water, energy and telecoms, it could simply pause all bills for x period of time. What could be a massive financial relief for households is now not possible.

The good news is that many countries will rightly reconsider the re-nationalisation of vital infrastructure. This would not only allow flexibility in times like these, but allow build-outs of leading edge technology as most of these assets are going through a technological upheaval. It would also provide secure forms of employment and training which matches market needs.  I’ve written about this extensively before.

Power of Big Tech – Ironically, the companies benefiting the most from this crisis are those who need it least: Big Tech businesses like Google, Facebook, Amazon, Microsoft and Apple. They already too powerful will only become even more powerful after this event. Just yesterday, the Australian Government announced a new app specifically to communicate with constituents about the crisis. It’s a nice idea – but even our Government had to abide by the rules of Big Tech and rely on Apple and Google to make it available on their app store. They also created a WhatsApp tool to extend their reach, relying on Facebook. Post COVID-19, many countries will realise they do not have and desperately need digital sovereignty

Discrimination –  This disease doesn’t discriminate. From princes to Prime Ministers, no one is immune. We’ve also realised the difference between essential services and optional indulgences. Health, housing, food, energy and humble logistics. It’s worth sparing a moment of thought for people working in supermarkets and hospitals, and putting themselves at risk for us.

It’s moments like this we realise that we are all in this together.

Privacy as a Luxury

Posted on by Steve Sammartino

Here’s some light entertainment to end the week. Our latest Future Sandwich Now-Soon-Later episode. In this episode we take a look at in big tech’s move to infiltrate our homes (ironically when we are spending more time in them)  Smart speakers, sorry, microphones, smart homes and surveillance capitalism. You’ll learn about the one thing we all used to have, that we’ll have to pay for to get back.

I’d love it if you could subscribe to our Future Sandwich Youtube channel, make a comment (feel free to disagree) and share with someone who has let Big Tech spy on them inside their house! There’s a free Google Nest Mini for the best comment. Oh, before I forget, this was recorded pre Social-Distancing.

I hope you’re all keeping safe, healthy and minimising contact. Just like business, if we do more than we’re asked, we might get a better result, and out of this situation sooner.

Steve.

P.S. Due to many requests I’m currently writing up how I see the world changing forever post Corona – which I’ll share here at a later date. 

How to make the Gig Economy ‘Work’

Posted on by Steve Sammartino

Over 100 million workers around the world are hoping even harder than their peers that they don’t come down with coronavirus COVID-19. Who are they? Those working in the gig economy, where benefits like sick leave are something they can’t rely on. The worst part? If they do get sick, they might just have to keep on working, which puts everyone else’s health at risk. It’s about time we got innovative to improve the gig economy for everyone.

Let’s be clear on one thing – the gig economy isn’t going away. It is not a short-term aberration, but a long-term shift. Currently, the number of gig workers is growing more than 30% every year.

In the past, the reason we became employees was because the place of work was centralised – all the tools to do our jobs resided only in factories and offices. It was also difficult to find, train, ratify the skills and organise the work of people who weren’t under a company’s direct control. But the trajectory of technology today tells us that this is no longer the case. The traditional employee is no longer required and lower paid gig work is just the start of a freelance future for all. Sure, companies will still need to get things done, but they don’t need employees. The latest ABS data shows that 30% of adults participated in freelance work this month. Additionally, it is predicted that by 2027 there will be more independent workers than PAYG wage earners in Australia.

At the dawn of the industrial revolution, the major tools of production (think factory), became centralised. Before this, the large majority of labour was undertaken independently, either on the farm or as a craftsman. When we industrialised, people came to the cities en masse to partake in higher-paid work for large firms. To remove the friction of finding and training every week, workers became employees of the firm. This quasi-permanent engagement between the parties extended into office work as we entered the information phase of industrialised economies.

Fast forward to today and the friction of labour is being removed rapidly. The technology in our homes is as good as any office. Most forms of information work can be done anywhere, with NASA-powered computers in our pockets. Disparate labour can be organised around the world too, in real time. In the future, I believe that most people won’t be employees, but ‘digital craftspeople’ who hire their time to one, or many organisations. I’ll go as far to predict that within 50 years we’ll see global multi-billion dollar corporations with exactly zero employees. All their work will be performed by independent contractors – Uber on steroids. This will happen not only because it’s logistically possible, but far more profitable.

Problem: The current situation for gig workers is sub-optimal. Workers fought hard over decades for access to safe workplaces and fair remuneration, but these rights are now being eviscerated. Benefits like annual leave, sick leave, training, OH&S standards and superannuation have conveniently become the responsibility of the worker. This is a problem when we have economic shocks like the coronavirus. We don’t need to ban gig work, or make gig workers employees. We can be smarter than that. All we need is structural innovation and we only need look as far as superannuation to find an answer.

Gig Worker 2.0

It wasn’t until 1983 that employee superannuation contributions started with The Accord and became mandatory in Australia in 1992. Prior to that, superannuation was a benefit bestowed on only the fortunate few and workers with strong unions. What we need now is a new kind of gig worker benefit scheme akin to superannuation. This benefit scheme would provide a form of security for gig economy workers. For example, a simple percentage loading on labour fees could go into a fund to create employee-style benefits (annual leave, sick leave, superannuation etc) for gig workers, paid for by the firms hiring gig labour. Gig workers currently forego these benefits many of us take for granted. This way, gig workers can maintain their living standards and dignity while they are making their economic contribution . Governments the world over would do well to implement such a policy.

While the numbers would need to be verified, I would estimate the gig worker loading should be around 20%. While that might sound quite high, studies show that employee on-costs are anywhere up to 50% of their wages. If firms employing flexible labour say it won’t work – then I’d argue they don’t have a sustainable business model in the first instance.

The fund would need be in the worker’s name and ported wherever they perform gig labour. If we managed to pass such a law, our economy would be better placed to cope with the long-term shift to independent labour gigs, remain flexible, but also be able to cope with periodic shocks to the economy. It could also invent an entire industry for Australia – one whose model could actually become an export.

A New Industry

At some point in the near future, a smart government somewhere will implement such a policy (which is better than forcing gig workers to become employees), and lead the world in inventing an entirely new industry. In Australia alone, our Superannuation industry (which was spawned by the union movement) is now a $2.7 trillion industry and the 4th largest pension fund asset holder in the world. We’ve led the way. If we are first to set up this kind of a policy structure, we could export the financial management model of gig support the world over. However, this takes foresight, courage and political will.

Unions & The Gig Economy

Union memberships are in steep decline – it’s now less than 15% of workforce. In 1960, it was 60%.  It is difficult to see a future for unions. unless they reinvent themselves and pivot to offering non-union workers something they need in the future. Fighting for gig economy workers is the perfect innovation staring the union movement in the face. Unions should start focusing on representing new types of labour, who have powerful forces (like Big Tech) exploiting them. Enter, gig workers. Fuelling the erosion of the union member base is a myopic view of the type of labour that fits their model. They have an opportunity right now to go beyond traditional blue collar work, start a movement and become relevant again. Instead of using standover tactics to create profit share and inordinate wage rises, they can focus on what gave them relevance over 100 years ago, and that is fighting for fairness and a sustainable workforce.

If there’s anything we need in our economy, it is regulatory innovation to match the rapidly changing technology driven labour market. Yes – governments need to innovate too.

I spoke about this topic on ABC radio yesterday – click here to listen.

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Robot Love

Posted on by Steve Sammartino

We don’t just have a relationship with technology, we use technology to find relationships. Newspapers, video dating, website matching services and apps – and to the most direct of all – Tinder.

The reason Tinder works is simple. It replicates human behaviour in the real world. The moment someone walks into a night club they look around at the faces of people and say to themselves, Yes, No, No ,Yes, No, No, No, No Yes, Yes. And the people they are looking at are doing the same thing back at them – assuming of course they are both looking to meet someone. But in the actual nightclub there is that awkward discovery process of trying to work out if the other party feels the same way. Which then becomes the business model of the nightclub – Sell people drinks for that few hours of the discovery process.

One of the core functions of the alcoholic drinks was to make people look better, and feel more confident. Well, technology has managed to do replace this as well – let’s just say that instagram filters are the new beer goggles!

Technology has a way of replicating what we do in the real world, and in doing so, it creates competition in business which are non traditional, even hard to align. Beer volumes may decline due digital photo filters. Insights like this are very difficult to report in a corporate market share update.

In the not too distant future – things could get even weirder. People developing serious relationships with humanoid robots – Robots which look, feel and act, just like humans. The vote 50 years from now might make gay marriage seem so minor as we vote on whether or not humans and robots can get married!

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Happy Valentines Day.

The Decade in Tech

Posted on by Steve Sammartino

It’s pretty easy to forget how much a new technology changes our lives once it’s adopted. Sure, some new technologies are like shooting stars, but some change everything forever. So, for posterity’s sake, I’ve laid out a list of new technologies that changed how we do things, and maybe even the direction of our species. Enjoy!

2010

What happened: Google leaves China + Uber launches in App Store

Why it mattered: Google leaving China was the start of a New Cold War. China pushed hard to create clones of Western online services and even made better ones – see WeChat. This time the Cold War isn’t an arms race, but a race for quantum and data supremacy. The weird part is that USA and China both surveil their citizens, though the Chinese government isn’t making a secret of tracking their citizens, while the USA is pretending it’s about security when clearly it’s not.

Uber hitting the App Store was about much more than putting taxis on notice for terrible service. It was the start of the immediacy economy – anything and everything on demand, delivered to wherever we happen to be. The start of a massive GPS-driven logistics and mobility revolution.

2011

What happened: Twitch is launched + Steve Jobs dies

Why it mattered: For the uninitiated, Twitch is an online streaming service to watch people play video games. If it sounds ridiculous to you, then just remember that in many cultures we gather in giant stadiums to watch teams of adult humans dressed in co-ordinated attire kick dead animal skins through white sticks (football). It really was the start of the meta-economy where online activities are starting to gather layers and blur with the ‘real world’.

The death of Steve Jobs cemented his legacy as a quasi-Jesus figure for tech fans the world over. The problem was this created a dangerous idolatry of any innovation big tech companies launched at us. From this, the negative externalities have been ignored for far too long – including the massive issues we are now facing with Big Tech’s monopoly powers on par with nation states.

2012

What happened: Facebook buys Instagram for $US 1 billion + Tinder launches

Why it mattered: An open and fair internet took a massive hit when Facebook bought Instagram. This was the start of a serious economic consolidation of power while regulators were asleep at the wheel. The fact that we have a single ‘media’ organisation – and yes they are a media company – with massive influence over 2.4 billion constituents should make all of us lose sleep at night.

We’ve been finding mates online and in personal columns for decades, but Tinder normalised digital as a preamble to the physical meetup process. Meeting online went from weird to just plain ordinary.

2013

What happened: Edward Snowden’s NSA revelations + Facebook goes public with IPO.

Why it mattered: Snowden’s revelations of a mass surveillance programme targeting US citizens was the first time the wider population saw the downside of digital. While most people still don’t care, or at least act like they don’t, it did signal that privacy and security will eventually become the workplace health and safety of the modern era. If we are fortunate, it might spawn a new industry to protect our civil rights, while society and lawmakers catch up with the the reality of the risks.

Facebook goes public. Interestingly, its founder and CEO Mark Zuckerberg sends a letter to shareholders claiming that its mission of connecting (controlling) the world is more important than profit – but he fails to mention in said letter that he can never be removed from office or voted out. Just think of this: Mark Zuckerberg is in control of more people than anyone, ever, in history. To date, its market capitalisation has now increased fourfold since the IPO. Welcome to the Zuckerberg Dynasty.

2014

What happened: Facebook buys WhatsApp + Amazon Echo is launched

Why it mattered: It’s strange to me that Facebook was able to make an acquisition valued at $US 16 billion and still not capture the attention of antitrust regulation. They also said it was ‘impossible’ to integrate FB and WhatsApp services and data. Then, just like magic, they were able to do it a couple of years later, lolz… see 2012 above.

The launch of the voice services with Amazon Echo will be remembered in the future as the time when we truly started to communicate with AI. This was that moment. This will be when it got real.

2015

What happened: Google driverless vehicle hits the road + SpaceX lands first rocket

Why it mattered: When Google (now Waymo) put its driverless car out for all to see on a real road, industrialists sat up and took notice. We realised that cars were very quickly becoming rolling computers, that the digital world now shaped the physical world too. That was the moment that every business knew it too was now in the technology business.

The Space Race was once the exclusive domain of Big Gov. After a few decades of neglect, it has been miraculously revived as a private industry. If anything – this should signify the era of the bodacious billionaire where they have as much (or more?) power than elected governments.

2016

What happened: Donald Trump elected President + Theranos implodes

Why it mattered: In my view Trump is an inevitable symptom of crazy times and a radical pace of change. But it was the moment the wider world realised that news isn’t news anymore. We all live in echo chambers of existing belief systems and our minds can be hacked by the power of algorithms.

When blood diagnosis health startup Theranos was exposed as a scam – everyone started to understand that not all unicorns would live up to their hype, valuations or even their product promises. It was time to be very aware that in the real physical world beyond photo sharing apps, it’s very important that products actually work.

2017

What happened: Cambridge Analytica scandal + Bitcoin bubble

Why it mattered: The Cambridge Analytica scandal particularly annoyed me because it wasn’t the Cambridge Analytica scandal – it was actually a Facebook scandal. I don’t know how The Zuck pulled it off, but it was a stunning exercise showcasing the dark arts of blame deflection.

The bursting of the Bitcoin and crypto bubble was one we had to have. I liken it to the dot-com bubble of 1999. Cryptocurrency too will come back and change our lives, and this new financial system might change the world even more than the internet has.

Here’s the history of Bitcoin price:

2018

What happened: GDPR + Deep Fakes arrive

Why it mattered: The EU’s General Data Protection Regulation (GDPR) put surveillance capitalism on notice. While the opening gambit was small and probably affected the competitors of Big Tech more than those it was aimed at, it was the start of a movement to give power back to the people.

The first flurry of deepfakes hit the world and blew minds. But just wait until they are free and anyone can do it. It might just spell the end of audio visual truth. A few years from now, we’ll be asking people if they were actually there to prove it happened. This could put a massive schism into the entire web and anything news-related.

2019

What happened: Antitrust actions commence on Big Tech + Greta Thunberg named Time Magazine’s Person of the Year

Why it mattered: Antitrust actions taking place this year are a classic turning of the tide and the realisation we are in the middle of a gilded technopoly. The next decade will be one of regulation versus innovation – with the former taking precedence over the latter. It won’t be about stopping or slowing down technology, rather about civilising it so we can have progress for all humanity, not just the fortunate few.

Greta showed the world than even a child can command attention on issues vital for humanity. It’s amazing what can be said when words are not guided by vested interests. Here’s what I know for sure: we have all the technology we need today to have a low carbon emission economy. The kicker is that such a shift to a new energy model is probably the only way to maintain the economic growth the grownups seem to love so much.

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For me this is an era where the development of technology won’t slow – but its implementation might and it will certainly be more considered, competitive and wide-reaching for whom it benefits. I can’t wait to push deeper into the next decade and help build a future we all deserve.