The Age of the Microbusiness
A microbusiness is an enterprise that takes so little capital and so little expertise to start that virtually any middle-class person can launch one. The age of the microbusiness will begin when microbusinesses are commonplace.
When will this microbusiness age start, and what will spur its beginning?
I think it could start within ten years, and I think artificial intelligence will spur its beginning. And Moore’s Law will spur improvements in AI. It will happen when the open source and proprietary tools are readily available to create hundreds of virtual workers easily and with little cost. The implications are that someone with a business idea will no longer need to get investors and find a team or bootstrap things themselves with a ton of effort. Instead, they can go on a freelancing site like Upwork and hire someone to start and run their company for them. The person with the idea sends the idea out to a competent freelancer, hires that person and pays them per hour or per day, and the person can manage other real or virtual workers if needed. The freelancer starts and grows the business. The freelancer gets a marketing budget, or perhaps they merely get a certain amount of money for everything, and they can spend it how they wish. Beyond this, the freelancer might get a percent of the profits if that’s how the person with the idea wants to set the business up.
Some freelancers will be so good at launching successful businesses that they will command a premium and may be running many companies at once. At present, regulations, taxes, paperwork, and all of the other hassles of running a business make it very time consuming and expensive to do so. In the future, during the age of the microbusiness, things like regulations, paperwork, and accounting will be so commoditized that it will be much less of a pain to do those things. And things that are still a hassle can be pawned off to one artificial intelligence worker or many, or to one lower-cost worker in a developing nation that can then give any repetitive tasks to an AI after they’ve done the task one to three times because that’s all it will take to train the AI.
Things like manufacturing can mostly be outsourced or commoditized by buying an excellent 3D printer or food synthesizer. Most consumer products, food, and consumer service businesses that we see today will be commodities because anyone with a couple of extra bucks to spare will be able to launch a company to compete if they have a new idea or a new spin on how things should be.
Any worry over patent or copyright claims may disappear because there will be so many new products on the market every day that governments will decide that it’s no longer worth trying to enforce intellectual property rights. And AI’s will be spitting out quadrillions of new words, sentences, and paragraphs every day so that we’ll soon get to a point where a novel sentence will be a rarity or will have a ton of words in it.
Deep tech businesses such as high-end 3D printer companies, aerospace companies, Google, and Facebook will be some of the few companies that will be tricky to commoditize in this way. But they will still see much more competitive pressure from the entrepreneurs who use similar, cost-saving methods as microbusinesses to try to eat away at the big boys’ market share.
These “great” businesses such as Google and Facebook should no longer be called duopolies or monopolies; instead, their activities can be disrupted without us even realizing it as trends shift. Perhaps they will shift to a world where advertising is not acceptable for middle-class people, or where privacy is expected, and anything less than perfect privacy puts a company out of business. There are so many possibilities that we don’t know what will be the next disruptor. The internet as we know it could become passé as virtual reality takes us by storm. We would never think of looking at our newsfeed when we can be in a virtual world with 50% of our Facebook, Snapchat, or real-world friends close by and interacting with us all because they’ve decided to join the Ether Slipstream at that moment in time with the rest of us. Facebook hopes to be there when that becomes commonplace, but given the fact that virtually every massive company lacks the ability to profitably innovate after a while, my guess is that someone else will beat Facebook to the punch. Facebook will become obsolete or buy that disruptive company.
Or ubiquitous virtual worlds might not happen, and something else entirely could be the disruptor. Maybe many of us will move to colonies in space and on other planets, food production and farming will be replaced by food synthesization, the human population will soar into the trillions, and teleportation will be the new norm so that Facebook and virtual reality will both be nonsense when we can all visit whoever we want instantly by cheaply teleporting to them.
I want to buy a spaceship. Actually, I’ve always thought the Millenium Falcon would be a nice first ship.
The next Google or Facebook could be a microbusiness started by a freelancer because of the whim of Joe who lives next door to you.
What are the consequences of a microbusiness driven economy?
One is that more businesses will be small, so there will be less CEO’s commanding exorbitant salaries since they will no longer have hundreds of thousands of employees under them. The largest business in the universe might be one thousand employees.
Human Resources departments will be non-existent at most companies as most employees will be AI or freelancers, and the few that aren’t can have HR-as-a-service from companies like Zenefits and Kronos: no human human resource officer required.
Having many more companies in the world will mean many more products, much more innovation, and lower prices on many products: all because of greater competition. If today there are one million consumer goods companies in the world, during the age of the microbusiness there could be 100 million or 1 billion of them. There’s no rule that says that one person with a thousand great ideas can’t launch them all within a few weeks and come up with 100 new great ideas every day, all started that day on a trial basis by a real or virtual freelance worker with a goal of profitability. I’d like to see some of Elon Musk’s ideas launched into existence in this way. I bet there are quite a few people like Elon with a ton of amazing ideas, they just need the age of the microbusiness so that those ideas can flourish.
Also, since there will be less huge businesses, the stock prices of the few huge companies that remain should be even more competitive if they are publicly traded on the stock market, so there should be less opportunity to make outsized returns by investing in or against them. This is because the stock buyers, whether human or automated, will have even less large companies to focus on thereby making their bets on specific large companies even more accurate. It will be an effective market that’s more accurate than today because there will be fewer big companies to bet on. Since more businesses will be small, there will be a smaller opportunity for big investors to buy up a lot shares of a cheap one on the open market, because the lower volume for each small company will bring the prices to the fair value more quickly when a large investor tries to buy up a large block. This explosion of smaller businesses means small investors will be at a more level playing field with big investors because most opportunities will be smaller and easier to understand to the hobbyist researcher compared to big corporations. The best businesses today tend to be very focused on a single goal, and they do one thing very well. I would guess that when the stuff needed to run a business becomes commoditized, it will be hard to compete unless your business is focused on only a single thing. It will be easy to launch a focused business, and the simplicity of those businesses will make them a sure bet for the small investor who happens to understand that niche or know the person running the business personally and have faith in their abilities. The large investor that needs to invest a ton of money to make their billions of dollars grow will struggle to find the millions of businesses needed to invest in for outsized gains. Warren Buffet seems to be struggling right now to find cheap businesses that are large enough to make a dent in his portfolio. That problem will extend to many wealthy investors at a smaller scale than Warren’s but will apply to many more investors. AI could help the big players find many good small business investments, but a similar AI may be available to the little guy as well, so the winning edge may come down to a deep expertise or a personal, human connection.
Investing may be anyone’s game, where the big boys will make an ever smaller return as they invest more money (especially as their old school, non-microbusiness investments lose value: think Hershey, P&G, J&J, Harley Davidson, Ford, Honda, Nestle. They’ll lose value due to the competition of hundreds of new businesses and products entering their markets) and the little guys will have the edge needed to beat the big guys in terms of a greater return on capital. That edge includes their smaller bankroll, their personal, human connections, and their specialized expertise. As their money grows their edge will naturally decrease.
There will be an incentive for the mega-rich to give a huge chunk of money to tons of the poor people (a little bit for each of them) because they will see the impossibility of growing their money and see the likelihood of their money decreasing if they don’t give it away. Giving it away will not only help others, but it may give the rich people something fun to do: it’s fun to try to grow a chunk of money that’s half as big back to the same size again. Also, it will be satisfying for the rich to see their money in other people’s hands growing faster than it could in their own hands. And that fact will mean more and cheaper goods and services for the rich to consume through the additional businesses that given-away capital creates. There may come a time where more money is nothing to the rich, but rather helping others and being able to enjoy a greater assortment of goods and services for themselves and others becomes much more important than the size of their bankroll, especially when money becomes very unimportant in the context of an ultra-competitive environment with many cheap or free goods and services. Maybe a million dollars will pay for you, your wife, and all of your kids and grandkids to live in absolute luxury for the rest of your lives, but you have billions of dollars. What do you do with all of the extra money? There may be an incentive where the rich give the money away with a catch: 10 to 20% of the gains made on the money might be agreed to funnel back to the rich who gave it away.
There may no longer be Warren Buffets, or at least wealth may spread out much more evenly. Also, there will be so many businesses pumping out goods and services that it will be hard for most people to not have everything they need. Universal Basic Income will take care of itself, either through private generosity or through private cryptocurrency funds that pay out to everyone. Need a home? Free or near-free housing will abound because it will be 3D printed.
As far as jobs go, there will be four significant jobs that add value to the economy:
- coming up with new ideas that can be sold or valued in some way,
- launching new ideas as businesses (either yourself or through a freelancer),
- working as a freelancer (to run or support businesses), and
- investing in businesses (whether your own or another’s).
Can you imagine a world where seven billion people are all doing one of those four things? Sounds like a significant improvement on today’s world to me.
The thought of unemployment in this future will be silly, because even if you can’t get a gig freelancing, you could always try your hand at coming up with new ideas for money. Or, if you have a little bit of savings or could find an investor, you could hire a freelancer to launch your own idea or another person’s idea. Finally, you can bootstrap and launch your own idea yourself, no freelancer required.
How do we get there from here?
I mentioned AI, and I think that will play an integral part in this. But there will also be plenty of other technologies that play a role: The food synthesizer. A robot that can 3D print a beautiful house with whatever layout you desire. A robot that can 3D print a factory that can produce almost any consumer good or consumer food. A robot that can 3D print other 3D printing robots (and perhaps replicate itself). These may all be pieces in the puzzle that is coming together to form the image of the new microbusiness age.
The cash, mental, and labor investment to start and run a business will be so small that freelancers will offer to do the whole thing for you: You just give them the ideas to try and pay the hourly rate. Most digital businesses will be up and running in an hour. Most businesses that deal in physical goods and services will be up in less than a day.
The age of the microbusiness is upon us. What will you launch?
