Imagine a time traveller from the year 1996 appears one day on your front lawn. Although he looks a little silly with his overalls and flattop hairdo, he seems mostly harmless. He demands to know about the latest future technologies but truthfully you really just need to get to work. You decide to drag him along.
After explaining that no, your car still does not fly, you fight through gridlock to get to your office. As you walk through the front door, you look over at your time-travelling companion expecting disappointment. But as he looks out across the sea of iPhones and laptops his eyes light up. He exclaims, “This crib is so dope!”
It’s often easy for us to forget how much work has changed in the past two decades. We talk to and collaborate with coworkers around the world through Skype, Slack, and Trello. Software from Salesforce to Zendesk has automated large parts of many businesses. Even many of the jobs we have now from Data Scientist to Social Media Coordinator didn’t exist in 1996. And I bet that the office you and your overall-wearing friend visited is a coworking space shared by dozens of startups in an open office setting with exposed brick walls and an espresso machine in the corner.
But the truth is, this is just the beginning. It’s impossible to predict what the next twenty years will bring, but with the current pace of technological advancement, we’re on pace for a pretty transformative two decades. Everything from virtual reality to drones to 3D printing will dramatically change the way companies operate.
If you look at these technologies individually, they will each change an aspect of business in a fundamental way. But together, they will lead to an incredible economic transformation: the rise of the microentrepreneur.
The Virtual Office
Ah, Monday morning! The sun is shining, the birds are singing, and you are just about to go to work. You roll out of bed, take a look out your window at a beautiful Wyoming vista, and put on your pair of Mixed Reality iGlasses. Within seconds, the room transforms into an open office setting. Avatars of people from New York to Bangalore begin to pop into existence around you. It’s 8 AM, time for you to lead the daily scrum.
Remote workforces are nothing new. Since the late ’80s, companies have been outsourcing more and more non-critical aspects of their business. Everything from manufacturing to customer service can and is being done by people outside the office. But what if everything — R&D, marketing, finance, accounting, logistics, management, etc. — could be done outside the office? Do we even need a physical building anymore?
Although the digital revolution has allowed for instant global communication, so far the answer is still generally yes. Something about physically being in the same room as your team tends to make companies more effective. Whether it’s due to the camaraderie built through water cooler conversations, the ease of sharing ideas simply by turning one’s head, or the fact that humans are social animals and don’t trust each other until they talk face-to-face, most business still takes place in the office.
But the beauty of new digital technologies like virtual and augmented reality is that they will allow us to have the 3D social environment of an office without the need for a physical structure. Although motion capture and virtual input are not yet capable enough for a fully functioning, realistic virtual office, the tech is on a trajectory that will allow these robust environments in the very near future. And once the physical limitations of an office are eliminated, companies can hire whomever they please no matter where they are in the world.
For most workers, especially those in developed economies, this sounds like it could be a nightmare scenario. Wages would be driven down and hours increased as workers around the world compete for a limited number of jobs. And if it wasn’t for a number of other digital forces, this might just happen. But the truth is, additive manufacturing, drone delivery, AI software, automated legal and accounting software, white collar freelancers, and a host of creative software applications won’t just make it easier for businesses to operate. They will also make it easier than ever to start a business.
And as it becomes easier to start a business, millions will try it. Whether it’s the dream of being your own boss or the desire to create a product that will help others, we’ll see microentrepreneurs starting small businesses in almost every field imaginable.
Digital Means of Production
At the scrum, you hear about the latest difficulties in manufacturing Toucho, a smart glove you designed for remote manipulation of asteroid mining equipment. The 3D printers you normally contract for production in Tallahassee are down and due to an approaching hurricane the drones won’t deliver from an Atlanta plant to Cape Canaveral. You ask Ji Hye, your Korean logistics specialist, to contract an automated trucking company to make the delivery.
As a former student of economics, one of the most fascinating aspects of the digital revolution is the reduction in the price of the means of production. Basically, it’s cheaper and easier than ever to start a company. 100 years ago you needed a factory and a whole team of people from accountants to laborers to get a company off the ground. These days, companies are often started with nothing more than a laptop and an idea.
The crazy thing is that this process is only accelerating. Additive manufacturing, also known as 3D printing, will allow anyone to produce their latest invention. Online banking and loans will provide the necessary capital and financial security. Automated accounting and legal software will ensure compliance and protection. Virtual stores and online marketplaces will be the main way people shop. Online contractors will be hired for everything from marketing campaigns to product design. Drones and automated cars will provide transportation and shipping. And of course virtual reality will allow teams of creatives from around the world to invent and sell the “Next Big Thing”.
The end result is a world in which products can be conceived, sold, and shipped without access to equipment or large teams of people. The best and most important aspect of all the technologies named above is that they’re flexible, allowing for businesses to share in the sharing economy.
Why hire an employee when you can bring on a short term contractor? Why buy a manufacturing center when you can rent 3D printing centers local to your customers? Or drones to deliver the product? Why have a lawyer or accountant on retainer if software can handle day-to-day tasks just fine? Why have a building when all your employees and contractors can work together in a virtual office?
This makes it incredibly easy to start a company as there are few things you need to invest in up front. Bring together a small team of creators — whether it’s software architects, product designers, or artists — and you can create a business. When it’s time to scale, the flexibility of these business solutions makes it easy to grow your company based on demand. It’s the Uber-fication of the entire economy.
Around noon you get a call from the guys at Space X. Due to the late shipment, they decided to go with Zonga, one of your many competitors as they were able to get their smart gloves over to them in a half hour. Losing this contract means that you’ll have to let some contractors go and cancel your contract with the Tallahassee manufacturing center. You send Juan Pablo, your Argentine sales guy, to a virtual sales meeting with Blue Origin so that hopefully you can scale back up next month.
An economy with low barriers to entry and extreme flexibility results in every economist’s dream: perfect competition. Basically, if any company is making better than average returns on investment, more people will start businesses in their industry. If the returns for an industry are worse than average, companies will exit the market until it returns to an equilibrium.
If it all sounds very academic that’s because for decades that’s all it was: an easy but unrealistic model for explaining the economy. But when companies really can scale operations up or down incredibly easily, the economy does begin to resemble these academic exercises. And that means a few things.
First, prices stay low. With few barriers to entry, any time a company raises prices to capture increased demand, a host of new competitors will enter the market at a lower price. Second, companies try to compete on things other than price. Since price will continually be forced down, companies will focus on customer service, quality of goods, and good branding to try to stand out. Third, most companies stay relatively small. Large companies tend to have a number of inefficiencies and layers of management that add to overhead costs. In a perfectly competitive economy, these producers will be forced out by lean operations that can produce at a smaller scale and lower cost.
Of course, there will still be one type of company where size is everything: companies built around networks. We’re seeing this now with companies like Uber, Facebook, and Amazon, but these type of companies have been around for decades in the form of utilities. Energy, water, gas, telephone, and Internet companies all increase in value with more people connected to their network. Every additional person amortizes the fixed costs of building the network over more and more people. In the future this will also apply to virtual reality networks as more users make each virtual network more valuable.
The end result is an economy dominated by a few extremely large companies that own the networks on which the whole system runs and hundreds of thousands of small companies creating the products we consume. These will be everything from clothing to virtual experiences, music and films to furniture. And all of these companies will be competing to give you the best products at the lowest prices.
Jobs in the Virtual Economy
Ji Hye is furious with your decision to cut her team of logistics contractors and threatens to leave and start her own company. You can’t lose her experience and connections to the drone and automated car companies so you offer to provide a year-end bonus and keep one of the contractors on. Juan Pablo returns with good news: Blue Origin wants 500 custom smart gloves by next month. You reward him with a new high-end virtual office space before searching through Upwork to find two new smart glove engineers.
A highly competitive economy is great for skilled workers. Having the expertise or connections to help a company compete more effectively becomes incredibly valuable when those companies can’t compete on price. We already see this in the insane salaries and benefits for tech workers but this is going to pervade the entire economy.
However, most workers will not be full-time employees of any particular company. Already we’re seeing the growth of white collar contractors and freelancers. In a highly competitive economy, having a flexible workforce allows companies to manage constant changes in the market. With the ability to hire from anywhere, competition will be fierce among workers for good short term contracts. Still, the sheer number of small firms competing with each other around the world should mean that jobs will constantly be available.
Of course, there’s always an outlet for when the job market gets tough: starting your own company. As all of the technologies mentioned above make it easy to start a company, we’ll see an explosion in entrepreneurship. We’re already seeing this in the tech industry, but once again this will quickly take over everything from manufacturing to the music industry. If you have an idea for a business, starting one could be as easy as setting up a virtual office, finding the right contractors, and landing your first customer. If it doesn’t work out, no sweat, just work as a contractor for a few more months before trying again.
Lessons for the Future
It’s been another long day, but the success with Blue Origin has you excited about the possibilities for future growth. You say your goodbyes as your employees and contractors begin to wink out of the office. You close up your virtual consoles for the day and begin to think about tomorrow’s challenges. Even though the work is hard, there is no greater satisfaction than making and selling your own product.
This world may sound like science fiction, but the technologies to make it happen all already exist. With additional refinement along an exponential growth curve, the work world is going to look incredibly different in twenty years. Virtual reality eliminates distance as a factor in business, whether it’s in finding clients or hiring employees. When you combine that with software that makes running a company easier and machines that help bridge actual distances, it becomes easy to start a company and run it from anywhere.
Of course, this radical restructuring of the economy doesn’t come without costs. The biggest losers are anyone with a non-social, non-creative job. Even basic service jobs can and will be replaced by automation, let alone manual labor. The highly competitive job market will reward those with education and experience but could make it hard for people without such skills.
The most important way to deal with this situation will be widespread virtual education that makes it easy for people to get the skills necessary to compete. We will also need social services to take over benefits traditionally provided by companies as contract workers begin to dominate the economy.
In the end, I think the transition will be a positive one. More competition among companies will bring more benefits to consumers and hopefully increased wages. The ease of starting a company will bring more ideas into the marketplace. Virtual reality will allow us to communicate seamlessly from anywhere in the world, allowing us to live anywhere we want. We will need to make some major societal adjustments, but we’ve done it before during the industrial revolution and we can do it again.
The truth is, we are talking about a societal change on that level. The industrial revolution took us from many small households creating products to a few large factories doing the same. The virtual revolution will take us in the opposite direction but with increased automation and communication technology giving those small households global reach. And by the year 2036, if a time traveller shows up on your lawn, there won’t be an office for them to visit.
Matthias McCoy-Thompson is a co-founder and COO of AgoraVR. We create tools for companies, organizations, and individuals to present and share their ideas in virtual reality.