It's A Major Trend & We're Totally Missing the Point

The arguments from large corporations, a growing segment of venture capitalists, and some startup execs are clear: many of them want society to get back to working from an office. But their arguments are just so… intellectually boring.

They fundamentally miss out on how remote work is a cornerstone of many of the other major trends currently underway. They fail to understand that Pandora’s Box has been opened and you can’t put the genie back in the bottle.

Let me be clear: remote work is likely one of the most important trends of the current generation. It combines the entire digitally connected workforce together into one marketplace of labor supply and demand. The creation of that global marketplace has extremely important consequences.

It means that everyone that does “digital work” is now in competition with digitally connected workers from all over the world. The significance - it creates a price war between companies seeking skilled workers and between workers seeking high paying digital jobs.

Given enough time, it creates a race towards a new price equilibrium for "high quality white collar work”. ie: what white collar/digital work is worth is adjusting to a new normal.

If you watch the short video above, it shows that remote work increasingly includes highly skilled physical labor jobs as well.

Remote operators are now able to control heavy equipment from great distances. (A lesson we learned from the US use of Predator drones in combat?) The ability to operate machinery from far away creates an interesting dynamic for construction firms that don’t need to worry about sourcing local operators or paying operators significant sums of money to go to locations they don’t want to go. ←this is a key aspect of remote work.

The point is that when you see someone talk about the downsides of remote work and they emphasize lost productivity because remote work eliminates the “serendipity” of “hallway conversations” - you should understand that they’ve likely missed the entire macro trend underway.

This line of thinking is an important signal.

It's a signal that organizations are having trouble adapting to the digital transformation. It’s a signal that they’re still trying to apply conventional management wisdom from the days of in person work to remote work teams. It’s a signal that they don't understand or outright refuse to properly adapt to a remote work system that requires new levels of delegation and coordination with new types of digital systems. It's signal of a failure to relinquish control and a rejection of the new ways of work.

And most importantly, it's a signal that many organizations are in the process of capitulating. ie: they’re going back to the old ways. But failure to adapt is rarely a trait associated with longevity.

This is an important fact because it signals that we can expect a clear and painful downstream effect - a majority of these companies going back to the office will miss out on the massive cost and productivity benefits that a global workforce marketplace create. It means they aren’t competing in the new ways of the world and that will cause many of them to fail.

The economics of remote work are fundamentally more competitive when you correct for the challenges of asynchronous work.

As an example, say you have 2 companies hiring for the same role. One company is based in New York and the other is remote. 2 workers apply with functionally the same skill levels and experience but one lives in New York and the other lives in Bangalore.

Their costs of living are so different that the worker in Bangalore would gladly accept 50% of the compensation required by the New York worker. The New York company is an in-person company - so it rejects the person from Bangalore and opts to pay full price for the New York person. Residency permits and visas are a pain, and those hallway conversations are just so valuable, etc.

The remote company on the other hand has no issue and selects the Bangalore worker, realizing a 50% savings. Interestingly, the Bangalore worker is beyond happy, works hard, and is productive because that salary is more than he would otherwise make locally.

The point: productivity doesn’t always fall when you hire from a global and highly motivated talent pool. But it does when you’re forced to cut the New York worker’s salary to remain competitive with the rival company hiring workers at Bangalore salary rates. That’s an entirely different story.

Remote work creates the ability to pay someone from across the world less money and creates significant consequences to the shape and structure of governments, communities, and individual lifestyles around the world. Moving forward, it's the trend that defines and dictates so many other trends of the digital age.

These trends have been the themes of this newsletter’s focus for some time.

As an example, think about bitcoin and web3 asset trends in this remote work world.

If you’re pro bitcoin you’re probably also pro remote work as a global trend. At least you should be. Why? The ability to work from anywhere is a major catalyst for the adoption of non-nation state and outside forms of money. Remote work incentivizes and drives the demand for a way to transact globally across national boundaries, regulatory hurdles, and geopolitical points of friction. When you look at pro or anti bitcoin/web3 policy camps, you can usually tie their decisions back to their views on remote work and how it influences community structures from local, state, national, and international levels.

Think about how remote work creates location arbitrage, and how that trend impacts community formation. I’ve talked at length about the impact on cities in terms of corporate real estate vacancies, tax revenue shortfalls, and city budget contractions. The only way for these communities to survive is to adapt to the new remote work world.

Then think about the addition of AI trends at scale in the near future and how they impact this digital work “price war”. Not only is the New York worker now competing with the worker from Bangalore but he’s also competing with a growing number of AI tools that may be able to cut down on the number of total employees a company needs in the first place. That just means more price pressure for the worker, more reduced costs for the companies that adapt to the digital trend, and an increase in productivity at reduced cost that comes from increased competition.

The bottom line is that anyone that complains about the need to get people back into an office for increased productivity is missing the forest for the trees.

They’ve failed to see how remote work is the beginning of a digitally transformative snowball and how this snowball is fed by self reinforcing secondary trends.

The question we ask shouldn’t be how we get people back into an office.

The questions we should be asking are what percentage of the population will feel compelled to seek out remote work? Location arbitrage? Leverage crypto and location agnostic digital age tools like AI? And once we understand those percentages, we should focus on the downstream impacts to society. The questions we should be asking: How will adoption of these trends at those “percentages” reshape society? And how quickly will the changes take place?

Remote work is inevitable in a world that is as connected as ours is.

We shouldn’t resist that unwavering force. Instead, we should attempt to anticipate the consequences of it and adapt our society as painlessly to that future as possible. By resisting it, we ultimately just create more pain for individuals, communities, and governments.

Rapid Fire

• Baby Boomers Are Moving To Vegas And Tampa, Millennials Prefer Austin: America's Great Migration In Real-Time - This is a of a Bank of America brief on how “great migration trends” are still active. An interesting read because of how it specifically breaks down the trend by generational divides. If you want to read the full report from Bank of America, here you go.

• a16z opening UK office as prime minister plans to make country web3 hub - Ordinarily, I wouldn’t think too much about this. But I was fascinated to see what the British PM had to say about it, "We must embrace new innovations like Web3, powered by blockchain technology, which will enable start-ups to flourish here and grow the economy,". This is competitive governance in action. In an age of digital connectivity, remote work, and ease of travel - a government policy blunder will create opportunities for many governments around the world to take advantage of. In this instance, the lack of regulatory clarity for the crypto industry in the US combined with a hostile SEC is is chasing capital to the UK that is happy to receive it.

• "It's Really Unprecedented": Solar Power Generation Cut In Half Due To Canada Smoke - Those crazy images of the smoke covered New York were a sight to see. Hidden from the mainstream narrative? The fact that solar power was overwhelmingly ineffective during this period of smoke cover. Imagine wanting to address global warming and not being pro nuclear energy at this point.

• Crypto’s Quiet Gains: Ownership Climbs Despite Crash in Prices - “Data on who owns the asset class suggest it has staying power”

• Ranked: America’s Largest Semiconductor Companies - If you buy into multipolarism as a trend, then you’ll also understand that American Dynamism, investing in American manufacturing and the on-shoring of key industries are also key trends to follow. In this case, it’s interesting to see the list of American Semiconductor companies. I’d expect them to get special treatment from the US government and “the West” moving forward.

Extras

The Age 30 Crisis and Seasons of a Man's Life