The workplace is fundamentally changing from the Industrial Age system of large factories offering many jobs to one where smaller companies, sometimes drastically smaller, sell to a larger, global audience than ever before with far, far fewer employees.
Most of this is being enabled by automation technology that affects design, production, marketing, sales and service (not to mention HR, Finance, Facilities, etc.). Marc Andreessen wrote a now-famous Wall Street Journal article to describe this as software eating the world.
More and more major businesses and industries are being run on software and delivered as online services—from movies to agriculture to national defense. Many of the winners are Silicon Valley-style entrepreneurial technology companies that are invading and overturning established industry structures. Over the next 10 years, I expect many more industries to be disrupted by software, with new world-beating Silicon Valley companies doing the disruption in more cases than not.
Andreessen said this is happening now because the technology required to transform industries through software can now be delivered on a global scale. So what has happened in the intervening five years?
Taking Andreessen a step further
Beyond what Andreessen was describing, today we have an even more important trend in the Data Factory. Writing in TechCrunch yesterday, Josh Constine covered the TechCrunch Disrupt Conference Keynote by Sir Michael Moritz (Sequoia Fund) where the Data Factory was described as follows:
Technology lets big companies distribute tools that turn us into volunteers who contribute our time and data while they profit.
It wasn’t always like this. To earn a profit, companies used to have to do the dirty work themselves. They hired huge staffs in real factories to sew textiles or build cars. People worked for wages and bought products.
What Sir Michael Moritz is describing isn’t the work of evil masterminds. Quite the opposite…these changes to how we produce products and create ecosystems of labor and wages are perfectly in line with what Andreessen meant in his WSJ article five years ago. We’ve gone beyond software replacing jobs, and have instead put software in the role of being the new data factory, where the workers are everyday contributors, amassing wealth for those who manage the software taskmasters.
As Moritz points out, this has led to a personal income stagnation and created a wider gulf between the haves and have nots. On the positive side, it has created a cornucopia of free tools that smaller businesses can use to great effect for most of their infrastructure needs.
The only way out
This cycle won’t stop. It will, in fact, increase. The only way to beat this system is to be the small entrepreneur who can use the benefits of the system to create income from the fringe benefits of free infrastructure. Forget relying on a factory job. The last economic downturn proved that.
Or, even better, be the one who creates the software that runs the data factory that everyone contributes to for free.