So some weird stuff has been going on in the States lately. Not that things were all that normal before… but there seems to have been an inflection point for Americans and perhaps mankind sometime since the great
depressionV2 recession that I can’t pin down. I have some theories about it (which I won’t get into publically until I can convey them articulately) but I think it’s worth opening up a side argument about complexity and entrepreneurship.
So I have previously challenged capitalism for its inherent conflict with human progress- a seemingly obvious concept if you believe progress to be a linear affair and that we are all players into the greater contribution (which I don’t believe now). But lately, I have a new question for capitalism: how does entrepreneurship work when the only non-intrinsic-value markets are becoming progressively more complex?
In pre-information age entrepreneurship was simple. You as a human identify a problem, come up with a solution, then serve this solution to the market. Women need a better petticoat? Find an example petticoat, go home and physically sew a petticoat, then go try to sell it (door2door, inexpensive retail location, etc). Easy as apple pie. After you sell a couple, you can figure out how to scale the operation.
Fast forward to 2017+ … Women need a better petticoat. You find an example petticoat online for $4. Awesome! Now you go buy some fabric. The fabric for the better petticoat costs $20… hmmm. Okay No problem, these will be artisan petticoats. You build the petticoat. It’s a really good petticoat. Now time to sell it. You try door to door… people aren’t home because the average work week is now 47 hours for both men and women. Okay, no problem, you try retail. Well the average rent for a retail location is $20 a square ft. hmmm… that would be like 20 petticoats a day every day @ $50, just to make rent. Okay, No problem… we’ll go online! You jump on Shopify, and set up your store. Fantastic! except wait… no one is coming to the site. hmmm… okay, no problem… we’ll run some ads! So you jump on adwords and accidentally use broad match for everything blowing through your budget in under a week. You learn what broad match is. Okay, this is starting to get a little frustrating. To help answer this problem you search around to see if anyone knows how to get “organic traffic for your site”. You talk to 10 people that are all SEO experts, they all charge you $100 for an hour of work. You get 0 people looking to buy until the very last SEO expert- your conversions spike! Great news… until you find out that it was a click farm in India. WTF??? Okay… this is too complicated, you have the best petticoat on the market. Let’s just put it up on Amazon and see what happens, they only have cheap petticoats on their site. Amazingly after all of this you start to finally sell a fair number of petticoats on Amazon! Hooray, time to scale operations… so you get to the hard work of sourcing, and manufacturing and you start to finally see a real profit… Which is the exact moment that Amazon releases an exact copy of your petticoat except they sell theirs at $45 instead of $50. Fuck.
Sorry for the elaborate story. Here’s what I’m getting at though… if its easy to think of or easy to do, the people that are really making money off of it are making their money through supply-chain, distribution, or services. Thus, the “easy” entrepreneurship has gone bye-bye. There are tons of huge opportunities in Bio-Engineering, Tech, Data Science, etc… but you don’t wander out of your house one day learn how to do those things and have a product out by Friday. Building products, businesses, and services that scale now takes years to train yourself how to do it, as opposed to a long weekend like it used to.
So I’m wondering how capitalism is supposed to work now… a slightly above average 2017 7th grader knows more mathematics than a PHD did 100 years ago, and thats the kind of kid that will someday get rejected by google because they aren’t smart enough to be working on “Google” level projects.
You want to build an app that has a chance to be a success? That will take 3 years of learning how to code if you’re smart. Want to start a data science business? 7 years of school, followed by 5 years of enterprise level engineering. Want to build a pharma compnay? Better start with 1 Billion dollars for R&D (no joke). Of course, none of these things will teach you the complex world of entrepreneurship… they are just the foot in the door to be able to even try to build a company. Sure you can compete in a space that’s all based on intrinsic value (I.E. a t-shirt company) but that’s like trying to beat 100 people to death with a large hot dog- even if you win, you never really win.
My money says… the entrepreneurship game has changed. The real question is: what happens when “normal” people can’t build businesses anymore? What happens to our society when 99% of people are fighting the intrinsic value game and 1% have to be super smart and have access to a lot of money? I don’t have an answer but my gut tells me that we’re starting to see the beginning of it right now. Middle-class erosion looks real, unavoidable, and pretty scary. Right now might be the last chance to get on the life raft… and just remember when they filled up the liferafts for the Titanic, they left most of the seats empty so the wealthy people could have room.