What Silicon Valley Can’t Tell You
Silicon Valley has a big problem, which is that it can’t tell society what it’s collectively building.
It’s kinda like this: Imagine a huge work crew shows up in some suburb, and they start rapidly digging up the streets and parks and pile-driving huge beams into the ground at 10x speed.
People come out of their houses and wander around asking the workers what the hell they’re doing and what is it, what are they making? One worker tells people he’s reinventing the elevator, it’ll be a “gravity consistent experience” that’ll allow infinite height. Another worker tells the residents he’s reinventing the fuel system using just water and aluminum to make 110% renewable power. A third says he’s putting in the world’s most advanced vivarium for historic species. The residents are confused, because every project sounds cool, but not one worker can begin to explain what the whole contraption is going to be. Most of the work crew doesn’t even know what the next guy is doing.
So finally they find a manager, but he only knows what has to get done this week. He’s going on vacation after Friday and another manager will handle next week’s build, and he has no idea what’s in next week’s work order.
The residents ask him, “From the direction you’re tearing up the ground and building, it kinda looks like, by Friday, whatever you’re building is headed straight for that section of townhouses over there.”
“Oh yeah,” he says. “All those townhouses will be gone by Thursday morning.”
“But where will the people who live in those townhouses go?” they ask.
He has no idea. The townhouses are gone a day early.
Then the residents notice that all the materials arriving are in boxes from a guy named Jeff. So Jeff must know. But they find Jeff and he says no, he just does the deliveries. Then they hear there’s some guy named Bill. They call him, and he says he’s not responsible, he’s got nothing to do with it, he’s in Africa. Then they hear about a guy named Steve. Then they find out Steve’s dead. And it reminds them all of that battle scene in Apocalypse Now at the Do Long Bridge, the last outpost before entering Cambodia. Captain Willard, played by Martin Sheen, asks the gunman firing randomly into the dark, “Who’s the commanding officer, soldier?”
It infuriates the residents that nobody can tell them what this monstrosity is going to be. Then the local factory where many residents work is leveled to make room for the gigaheliscope.
“So if the factory is gone, where will they work? What will they do?”
“I don’t know,” says the manager on duty. “But don’t you love riding the elevator where your ears don’t pop and the floor never seems to fall out beneath you? Don’t you love getting to go into the vivarium for free and petting the new animals we’re creating with directed evolution? Aren’t you excited that it’s powered with 110% renewable energy?”
And they are amazed and they do love the elevator — and the vivarium, and the rocket launcher, and the mysterious glass oracle in the lobby with the black hole that sucks all memory of the last 24 hours out of their brains.
But as the wondrous contraption of a building continues to climb into the sky, and more apartment buildings are razed, and more people disappear … still nobody knows what it will be.
That’s Silicon Valley today.
Everybody knows what they’re working on. Everyone can say they’ve tested their project on customers and they’re confident people will need what they’re making. But nobody can say what we’re building collectively.
Of all the VCs in the world, the only one who came close to painting a grand vision of what we’re making is Softbank’s Masayoshi Son. He talked about everyone being happy and having less depression and more joy. We would have telepathy and live to 200. (And he pronounced this in 2010, long before BMIs and aging science exploded.)
But even Masayoshi Son couldn’t — or didn’t — address what we’re going to do for work, or for money.
And it’s that particular part that’s uniformly missing from the vision.
We talk a lot about how we’re we’re going to cope with the jobless future when the robots do the work. But a lot of people are already living this way.
There are only 4 million “unemployed” in America now, but 95 million other Americans have “left the workforce.” 9 million more have left in this decade. They aren’t retirees (they aren’t that old). They aren’t working part-time. They’re not going to school. 11 million of the LTWs are stay-at-home parents, but it’s natural to wonder: what are these other 84 million people doing?
We know millions upon millions more will be joining them. The manufacturing robots are already in the factories, and the service robots are now fired up to do so many service jobs that people don’t like doing anymore. The window-washing robot is here; it can clean 86,000 square feet of skyscraper windows a day. The autonomous janitor is already mopping floors at SeaTac airport, ready to be the new great co-worker for the six million people doing building and grounds cleaning work. Autonomous security guards are on night patrol at factories, banks, and warehouses.
We were real visionaries. During this era where we knew that command of new technologies would be important for the future workforce, we engineered the system to reduce college enrollment. We raised the price of college so much that students are burdened with record debt. Only 39 percent of Millennials today believe a college degree “leads to a good job and higher lifetime earnings.”
You can interpret this as college students are merely pessimistic, and the 39% statistic reflects their state of mind (but not necessarily their reality). But in fact I’d argue it is indeed their reality. A study by the Georgetown University Center on Education and the Workforce looked at all the jobs filled from 2007. A lot of the jobs that were lost in the recession came back, but of the new jobs created — 11.6 million of them — 99% of those jobs went to people with a graduate degree. In this economy, a bachelor’s degree is not enough to climb out of the underemployment trap. It doesn’t cut it.
Since the Occupy movement, “we are the 99%” has become the linguistic shortcut to frame inequality. But the 99% tagline ends up obscuring — and thus ignoring — the critical difference between what I call the Asset Class and the Thrift Class, the two parts of the 99%. People in the Asset Class aren’t increasing their job-related income by much; 2.1% year on year. But they have assets — houses and financial investments — which are constantly appreciating. This gives them a sense of wealth, and makes them confident spending. The Asset Class is propping up the nouveau-luxury economy. They aren’t underemployed — they have good jobs. Right now they’re about 25% of society, but the 40-year trendline has them shrinking to about 19% of society over the next decade.
The Thrift Class don’t have financial assets. 70% of society doesn’t have $500 in savings. Their wages go up only 1.2% year on year. Half of America lives on less than $31,000 a year. Their income is extremely volatile, too — varying 30% to 40% per month — which makes it very hard to plan. The 35 million people who work part-time earn, on average, $261 a week.
Silicon Valley is both the push and the pull. Automation, robots, machines, offshore labor, international plane flights, video conferencing — all of that is the push out the door. The pull is the other side of the equation. At the same time as we made it harder and harder for regular people to earn money, we also used our mastery of technology to create things that made it easier and more enjoyable to live on less money.
Thrift means simply, “careful with money.” Living that way is not new. What’s different today is how many conveniences of modern society have, critically, made it easier to stretch a dollar — which, in turn, has allowed the thrift class to grow.
We now have tons of retailers who compete at Ikea prices. Sharing economy platforms defray the cost of having to buy things only used occasionally. Thrift store shopping is now a $7 billion business. Cheap, unlimited entertainment like Netflix, Spotify, and Fortnite are filling thousands of hours of people’s time. People read so much now, for free on their phones, that we call it an addiction. As one thrifter texted me, “It’s never been so entertaining to be poor.”
Living on the wrong side of inequality, the thrift class has shown incredible imagination and creativity in adapting to the circumstance and making it their own. What’s fascinating is how they’ve turned the tables on their predicament, building a moral philosophy around their lifestyle. There’s a rejection of consumerism. It’s liberating to get out of the trap of always earning more money and buying more things. Spending a lot of money on something — when there are much savvier alternatives — is increasingly seen as gauche or just dumb. In a world where the jobs aren’t offering enough people a sense of self-determinism through work, they’re meeting their need for self-determinism and freedom through a kind of minimalism.
And while the powerplayers and policy makers are trying to figure out how to save the planet from climate change, the thrift class has its own solution that’s already fully up and running. It’s called buying less and sharing more. Rather than gas up the skies, just don’t buy a car at all — and stop going everywhere this way and that. Rather than flush microplastics into the ocean with every wash cycle, don’t buy new apparel at all. Rather than jam more plastic bottles into landfills, just drink tap water. Buy beer in refillable growlers. Don’t buy clothes at department stores — just take the clothes into the dressing room, post a photo of yourself on Instagram wearing them, and leave as the likes start accumulating by the hundreds.
And so, even though the thrift class is surviving on very little money, they’re doing something unprecedented. Only 1/3 of society is working full-time. In the history of world economies, we’ve never seen this phenomenon at this scale. Like Bartleby the Scrivener, they’re saying “I prefer not to.” The US has 6.9 million unfilled jobs available right now — and that doesn’t include farm jobs. 800,000 jobs in retail, 250,000 in warehouses, 900,000 in food service, 1,100,000 in patient care, and 1,200,000 in backoffices. But people simply aren’t desperate enough to take these jobs. When that work makes them feel replaceable, and the sense of being able to say “I’m great at what I do” is not on offer, they’re finding meaning in working less, or not working at all.
In the thrift class way of viewing the world, freedom isn’t something you reach by working for decades to earn a big pile of money. Freedom comes from being master of your own time. Gig-work is a tradeoff most are willing to take, because they can prioritize their personal lives. If they want to hang with friends on Tuesday, just don’t take a gig. They’ve seen their parents run ragged from trying to “have it all,” and they don’t want the stress.
There’s arguably more social capital in informal, unpaid work than in paid work. Help set up a bar’s wifi; your beers will be free for a few days. Do taxes for a friend-of-a-friend; someone else will give you an hour of physical therapy. Fix someone’s water heater — someone else will help watch your kids.
On Abraham Maslow’s pyramid, nobody knows where they are anymore. The thrift class is taking care of lots of its wants before taking care of its needs. It works only until it doesn’t. All it takes is one medical bill to trigger a downward spiral.
The thrift class is not powerless, but it’s a power in numbers. When the #hashmob flares up, it’s a superpower. But the vast majority of the time, the thrift class’s power is diffused across so many problems, and also split ideologically within.
Millennials are spending $20 less per day than their counterparts 10 years ago. College enrollment is down 5% this decade. The birth rate is down 15%. This is perhaps one of the most wincing details of our times. People with tons of time available to parent kids, but too little money to feel safe having them.
Silicon Valley is creating a future faster than it can understand the ramifications. To me, it feels like driving in the rain on a windy road in the dark with the headlights off. Around the country, even the avid fans of Silicon Valley — riding in our backseat — are getting confused where we are going. In the previous 20 years, it felt like we were driving them towards something. Now, to them, it feels like we’re driving away from something. Maybe away from the scene of a crime — to some it feels that way. To most, it feels more like driving away from a future we actually understood, and into a future we don’t.
People who work on climate change can tell you what needs to happen in the next ten years, and what will entail if it doesn’t get done. People who work in A.I. can tell you about the super-abilities they’re coding into the next-gen systems. People who fight cyberterrorism and cyberfraud can tell you what their next ten years looks like. People who work in biotech can tell you how biological engineering will rebuild the world.
But nobody seems to be able to tell us what’s going to happen to the thrift class.
It’s not like Silicon Valley has cooked up a secret plan that they just haven’t revealed. There is no cogent plan. There is no commanding officer.
There are stabs at answers. We get vague around the question society wants the most clarity on. It’s a combination of 1) the government will resort to paying people a little, 2) people will get a little kickback from companies who sell their data, and 3) blockchain’s infinite ability to track everything will somehow make sure it doesn’t feel like a welfare state, and will feel more like a video game.
We need to recognize our answer is not satisfying society’s concern — simply because the problem we’re creating is happening much faster than the solutions we’re still brainstorming. People are calling bullshit. We need to hold our socioeconomic-solutions to the same standards as our other construction projects. If it was a pitch-deck, we’d laugh at how unclear it is. We’d shoot holes in the business model. We need to think of inequality as an economic externality the same way greenhouse gasses are an externality.
So what I’d suggest is that, as we develop and fund the next wave of technology, and as we disrupt the next ten industries, we keep the thrift class in mind.
We’re in the middle of reinventing the energy industry; solar power will only go down in price. Let’s make sure utility bills actually go down too. Let’s take care of their water supply (which has nearly doubled in cost per household this decade) — let’s get it free of contaminants, and make it as cheap per person as Netflix. Surely, we can make water as affordable as movies. If we can go to Mars, then we can find a way to make apartment buildings safe and sound. I don’t know if the thrift class will be living in glorified college dorm rooms in twenty years, but if they are, let’s make those the most fun places to be.
We’re already reinventing the food system, nutrient by nutrient. But let’s not make the mistake of recreating the mistake of the old food system, where only people with money could afford nutrition. We won’t change anything if we just feed the hipsters.
If we made good health actually affordable, then in Washington D.C. they wouldn’t be trying to avoid paying for health care. All the pieces for Healthcare 2.0 exist — early detection, digital monitoring, radical new therapies. Arguably, great affordable health care is biotech’s equivalent of Universal Basic Income.
We have to get education right. It’s never been easier to learn things, for free, and yet more expensive to earn the degrees.
It’s a design failure that there are so many unwanted jobs. Maybe we shouldn’t design jobs, then, for maximum efficiency. Maybe if we want people to work, we should maximize community. Create a place where people actually want to go spend their day. And let’s raise the minimum wage. We could get millions back to work right away. In December, Amazon announced a raise in its minimum wage to $15 an hour. They got 840,000 job applications. That’s an astounding number. It suggests that while the LTWs report “making a difference” is what they really want in a job, “more money” is what gets them to drop the video game controller. The economy would perk up, and then some.
We built a system of amazing wealth creation, called “venture capital,” to profit on future technologies like robotics and biotech. But we forgot to make sure that everyone, no matter how poor or rich they were, had equal access to it. Anyone can become an entrepreneur, but you need a million dollars in the bank to qualify as an accredited investor.
Actually, all of this isn’t something we should do. It’s something we’ll have to do. 70% of consumers will be in the thrift class. Around the world, the middle class is converging. On one side of the world, we describe it as booming. On our side of the world, we say it’s cratering. But everyone’s ending up in the same place.
About IndieBio: At IndieBio, we built an open-access system for biosciences. We scout the world for great scientists to start companies. We’ve launched 105 startups. 43% of them have a female founder or co-founder. Our founders have come from 35 different countries. IndieBio is one of seven accelerators run around the world by the multi-stage venture firm SOSV.