I think there are two major realignments happening in our society today.
The first realignment:
Capital Flywheels is a firm believer in technology and the power of technology to lead to better standards of living over time.
While modern Hollywood dystopias often depcit technology as an unemotional, potentially murderous thing, the truth is that all of human society is technology in one form another. Without technology, humans wouldn’t be that different compared to the Gorillas and monkeys that live trapped in zoos with limited control over their place and trajectory in this world.
Our entertainment is technology. Without cameras, film would not exist.
Our homes are technology. Without electricity, plumbing, or wifi, our homes would be closer to primitive caves than otherwise.
Our transportation is technology. Without combustion and jet engines, traveling more than a few miles away from our homes would be very unlikely within a lifetime. Our city blocks would instantly become our invisible cages in our own invisible zoos.
However, in order for technology to improve our lives, it requires change. And change is often uncomfortable. And because change is often uncomfortable, it is only human nature to resist change even if change is good for the long run.
What’s interesting is that technology often isn’t the creator of new trends. In fact, technology is often more like a lifeboat floating alongside a sinking ship (because all boats sink in the oceans of time) with the potential to help businesses evolve. Imagine yourself running a business from 100 years ago and refusing to adopt electricity and cursing at the light bulb for threatening your business. Most people today standing on sinking ships are cursing at the lifeboats as if it is the source of the sinking they are experiencing.
Take retail for example – The internet has very likely accelerated the demise of the department store. But the concept of the department store has always been about convenience and for the consumer to find all they want in a single place. The department store didn’t invent that desire. And in the same way, the internet didn’t invent that desire either. Humans invented that desire. The internet just serves that desire better. Technology did not create the trend, it just accelerated what we have always wanted.
And by doing so, our living standards have improved. Not equally, but on average. The people that don’t benefit are often the last ones hanging on to the sinking ship.
Recognizing that technology does not create trends but rather accelerates trends (and these trends will happen no matter what) and that technology is potentially a lifeboat is an important dialogue missing in our modern society. In fact, humans are very perceptive and often do not adopt technology that explicitly tries to create trends. For example, Google Glass tried to create a behavior that is unnatural. The technologists tried and just couldn’t get Google Glass on too many faces. Technology adoption almost always happen because it allows us to do things that we have always wanted in a better way.
This is why I believe COVID19 is going to be both a period of incredible opportunity but also a period of incredible pain near-term. COVID19 is accelerating technology adoption, and technology adoption is accelerating the trends that have already been in motion. This will lead to the destruction of many businesses that refuse to progress.
But COVID19 may also a blessing in disguise because it is forcing many businesses that have refused technology to finally adopt it. This may actually end up saving many of them from what would have been certain destruction in the coming years.
It has never been easier to adopt technology without technological expertise. Adopting technology two decades ago was truly inaccessible to most small businesses. The barriers to adoption were too high because it required servers, IT people, software, etc. But today, technology adoption is easier than ever because everything is a platform. From digital storefronts to inventory management to payments to logistics and supply chains. All of it is digital and available to small businesses as a service at generally very low cost.
This is what I think of as the first major realignment. Finally everyone is going to have technology in this country. It is no longer the technological-haves vs the technological-have-nots. It will no longer be an unequal playing field because for the first time, everyone will have technology including small businesses. COVID19 may lead to the death of many small businesses, but many small businesses will also successfully transition and adopt technology. For the first time, everyone will be on more equal footing empowered by technology.
The second realignment:
The vast majority of issues in the US today, in Capital Flywheel’s opinion, is due to a lack of alignment of interests. Our society has become actively unaligned.
What do I mean by this?
I mean it in the way that the vast majority of people earn income through Labor but the vast majority of wealth and political power sit in the hands of people that earn through Capital.
I mean it in the way that the vast majority of healthcare facilities make money by selling you treatments rather than preventing you from getting sick.
I mean it in the way that the vast majority of higher education is less about teaching people but rather keeping people out. Because God knows the value of a Harvard degree is probably less about the quality of education rather than keeping 95% of applicants out.
Our education system is unaligned. Our healthcare system is unaligned. Our Labor and Capital systems are unaligned. Our airlines, cable, and telecoms are unaligned. The people that love their airline, cable, or phone company is probably as rare as a unicorn.
While most things are broken, surprisingly tech is one of the few industries that contain a number of companies that people actually love. Despite on-going concerns about the power of large tech companies, many people love companies like Apple, Amazon, Google, Instagram (though Facebook itself elicits a very different response), AirBnB, Netflix, Venmo/Paypal, Square/Cash App, Spotify, etc.
And the reason is simple – Tech is one of the few industries that still has alignment with their consumers.
This is an important point because all too often the media tries to push the narrative that tech has gotten ahead because of monopolistic practices. There certainly are monopolistic practices going on. But by and large, tech has gotten ahead because it actually cares about the consumers they serve.
Apple cares. Amazon cares. Netflix cares.
The second realignment that seems to be underway is the acceleration of all our activity into tech ecosystems. It will feel uncomfortable and unsettling for many people, but I believe they will discover that the outcome is actually better. They will discover that Amazon is a more delightful experience than going into JC Penney. They will discover that Netflix can be just as, if not more, engaging than broadcast or cable TV. They will discover that using modern collaborative software from Microsoft / Slack / Atlassian / ServiceNow is infinitely more delightful than whatever came before.
If you are young, these statements are all likely obvious to you already, but it will finally be true for older folks, too.
Realignment and Healthcare
Perhaps the most interesting area that may change because of these realignment trends is healthcare. COVID19 has largely exposed the weaknesses of our current healthcare system. And in Capital Flywheels’ opinion, the weaknesses all stem from lack of alignment. Our government and the people are not aligned when it comes to healthcare. And the people and their health are not aligned with the healthcare system.
This is why Capital Flywheels finds it fascinating that the tech companies have been at the forefront of tackling some of the most complex problems related to COVID19. For example, Apple and Google coming together to create a test-and-trace alert system. Or…Amazon exploring distribution of COVID19 testing kits through its vast logistics systems straight to people’s doors.
These companies may be doing it because they should, but they are probably also doing it because they have a vested interest in their consumers’ survival. A long-living customer is much more valuable to Amazon and Apple than a short-lived one. Consumers and the companies are aligned.
I believe COVID19 will push the consumer tech companies, specifically Apple and Amazon, into healthcare faster than they would have otherwise gone. And as an optimist, I think this could be one of the greatest and most important realignments in this country. Because for once, I think the incentives for the whole system will finally move in the right direction.
One last thing to leave you with: Part of the difficulty of fighting COVID19 is that it is invisible. Many people do not know that they are sick until they need help. But there are signs that we can check for to know if someone is infected including fevers and declines in blood oxygen levels. On that note, did you know that the Apple Watch has the potential to measure blood oxygen levels but has not yet been FDA approved?
Apple’s heart rate monitor is actually a plethysmograph—it looks and acts like a pulse oximeter, but Apple isn’t claiming it can measure your blood oxygen level. Why? Beats us.
Our best guesses involve FDA regulations.Source: iFixit
Imagine that. Everyone potentially with a health monitor on their wrist that could potentially be a critical alert system in our fight against COVID19.
All enabled through tech and alignment of interests.
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