THE INFORMATION AGE IS REVERSING THE INDUSTRIAL AGE
A rich and famous silicon valley entrepreneur who is known for his wisdom-Naval Ravikant said something very interesting in an interview I recently watched.
“If u go back to hunter-gatherer times, we basically worked for ourselves: we communicated and cooperated within tribes but each person stood on their own. There was no boss and no hierarchy where you’re like the third manager down.
In the farming age, we become a little more hierarchical.
But its industrial work with factories that sort of created this model with thousands of people working together on one thing and having bosses and times to show up and pay.
The reality is if somebody can tell u when to be at work, when to work, how to behave, what to wear, you are not a free person and you are not actually rich.
Employment and jobs and the notion that I have to work for somebody else are intrinsic in today’s society model.
But the information age is breaking that down.
So a famous economist has a famous theorem that talks about why is a company the size that it is? Why is it 1 person instead of 10,1000, or 100? It has something to do with internal transaction costs vs external transaction costs.
Let’s say my company needs lumber/wood provision.
Do I want that to be part of my company or do I want it to be part of another company?
A lot of it depends on how hard it is to do that transaction with someone externally vs internally. If it’s too hard to do that contract again and again with an external person, I will bring that in-house. And vice versa
Well, information tech is making it easier and easier to do these transactions externally. It is now much easier to communicate with people. We have a gig economy. I can send u a small amount of money, I can hire you through an app and rate u afterward.
We are seeing atomization of firms, and we are seeing the optimal size of company sinking, it is most visible in silicon valley.
Tons and tons of startups coming up and shaving off little pieces of business from large companies and turning them into huge businesses. Like what was a small rental home business called Craigslist is now turned into Airbnb, a worldwide company.
What I think we r going to see is whether 10,20,50,100 years from now, high quality of work will be available in a gig fashion. You wake up and you have 5 different jobs. You get rated. When u r done working you go to Tahiti and go to wherever u want to spend the next three months.
Smart people figured out that the internet enables this, and are starting to work more remotely on their own schedule on their own time, place, with friends in their own way.
The IT revolution, by making it easier to communicate and cooperate is allowing us to go back to ‘working for ourselves’ and that is my ultimate dream.I tell my employees -hey I’m gonna help u start ur company because that’s the highest calling. It would be fine even if they work in a small 10 person company. Working in a 10 person company is way better than working in a 1000 person company. Because automatically while working in a 10 person company you are treated as more human, you have more value, more freedom. It is closer to working for yourself.
The idea that we are machines supposed to do rote work is going to go away and we are going to become small groups of creative bands of individuals seeking out to do missions.”
This was my favorite part of the 2-hour interview Naval with Joe Rogan because I resonated with this a lot. I had even written about it in my previous blogs. Anyway, I am not a social economist and I cannot tell if society is really going to work this way in the future. This interview was great because it assured me that the way I feel uncomfortable about today's society, my hesitant feelings about the “industrial” model are legit. I felt approved. What’s even better, I found someone else who put my raw, crude feelings into so much of a wiser, intelligent dialogue with great reasoning.
