Happy New Year
Happy New Year!
I saw an interesting speech given by Roger McNamee that I thought I'd share. Given that it is the time of year to make resolutions, his themes seem appropriate.
Roger McNamee, a well-known Silicon Valley investor and author gave this speech at the Software 2005 conference in Santa Clara, CA earlier this year.
I’m here today to talk about life . . . to talk about making the most of your life in a time I call the New Normal.
The New Normal is a time when there are four unshakable issues that each of has to deal with. First, technology is changing just about everything. Second, globalization is changing the nature of economic opportunity. Third, every individual is on his or her own. We have more power than ever before, but no safety nets. And fourth, none of us has enough time to deal with life.
Technology and globalization are the context of the New Normal. The Power of the Individual and Time are the keys to personal success.
Let’s start with the context: technology and globalization. Beginning in 2001, the technology industry entered a new era: the New Normal. Normal because we are back to an environment where growth rates are low. Where everything takes longer than we would like. Where more tech companies fail than succeed. Where getting rich is neither common nor easy. Normal in the sense that the 70s and 80s were normal. Just the opposite of the late 90s, when everything moved at Internet speed.
The 90s weren’t normal, but they altered our expectations. The 90s have made it much harder for us to re-adjust to Normal.
But this is the New Normal. New because the 90s transformed forever the role of technology in our lives. Technology is now pervasive in the economy and in our culture. PCs, cell phones, and the Internet are ubiquitous. Think back to 1990 … PC penetration of households was around 15%. Cell phone penetration was in the low single digits. And the Web was still a gleam in the eye of Tim Berners-Lee. Today, many of us value our cell phones, PCs and Internet connection on par with indoor plumbing.
At the end of the day, though, it’s the New Normal because it’s here to stay. I’m not here to tell you life will be boring. I don’t believe it will be. I believe that great things will happen in the world of technology. I’m not here to tell you that you’re going to be poor all your life. Some of you will eventually be as rich as Croesus
But I am here to tell you that the world has a new set of rules . . . and we are going to be stuck with them for many years. My goal today is to help you be more successful.
The technology industry is mature. Don’t hold your breath waiting for the next upcycle . . . because we’re in it. It won’t be exciting the way the 90s were, but there is no reason it can’t be rewarding for you.
How did we get here? The technology bull market of the 90s didn’t happen by accident. It happened because of two forces: Moore’s Law and the Berlin Wall. You know what Moore’s Law did, but you may not appreciate the importance of the Berlin Wall.
Before the Berlin Wall came down in 1989, American companies could only sell technology products in Western Europe, North America and parts of the Pacific Rim . . . roughly 25% of the world’s population. Every other market was inaccessible. Communist countries for political reasons. Third world countries because they had no money.
After the Wall came down, we saw a transformation in the global economy. Gone was the bilateral competition between the US and USSR. Gone were the old political barriers to trade. Gone was foreign aid.
In the early 90s, every country in the world was forced to implement a market economy. Faced with an imperative to attract foreign capital, emerging countries built airports and nice hotels in their capital cities. They installed phone systems. They bought computers. Lots of them.
When the Berlin Wall came down, the addressable market for US technology expanded more or less overnight to something like 80% or 90% of the world’s population. In combination with the economic upswing of the 90s - the longest economic expansion since the Second World War - this huge growth in addressable market propelled the technology industry to its greatest period of success.
Over a decade, there were three monster waves of technology adopted simultaneously by enterprises everywhere: Windows, client/server applications, and Y2K. The industry grew from about 6% of GDP to more than 9%, during a decade when the economy roughly doubled in size.
Now you understand why the bull market of the 90s was so enormous. Throughout the 90s, technology and globalization worked hand-in-hand to transform the world economy. If you watch Lou Dobbs on CNN, you might think that globalization is the worst thing that ever happened to the US economy. Dobbs would like to see the US government intervene to stop it.
Globalization is many things - some good, some bad - but it’s not a matter of choice.
Globalization is a fact of life. It’s not going away. Our country’s only option is to figure how to use globalization to our advantage. The political problem with globalization is that a relatively small number of communities bear most of the burden. Their pain is visible to all. The benefits, on the other hand, are not so visible or politically compelling: low inflation and lots of inexpensive new products. They benefit everyone, but not so much that people are aware of it.
Even today, globalization and technology remain intertwined. Together they give rise to seven really important trends that affect us all. First, and most obvious, is the rise of Asia. The supply side of this one is so obvious, it probably qualifies for a “duh,” but the implications for all of us are real. Hardware manufacturing has been migrating to Asia for fifteen years. For some reason, the migration of technology manufacturing didn’t bother people much. Perhaps that’s because it happened while the economy was really strong. Those who lost jobs quickly found new ones. The migration that has everyone atwitter is in software development. The software migration coincided with a recession that made it hard for people to find new jobs, and for some reason, we felt that software development was an American business.
We shouldn’t be surprised that software jobs are moving to Asia. There is nothing new about the migration of mature - commoditized - job categories to low cost geographies. The key is to spend your career at companies that either benefit from this shift, or drive it.
Another thing worth remembering is that Asia has a demand side component, as well. We are in year five of the Chinese Century. Ten years from now, China’s local demand will radically alter the country’s economic policy. It will be harder for China to export deflation when Chinese consumers demand a larger share of production for their own use. The implications of this are very exciting
The second trend is industry consolidation. Maturity came so quickly to the technology industry that no one was prepared for it. Certain categories - electronic manufacturing services, PCs, and enterprise software - have too many vendors and too much capacity. There is opportunity in consolidation, but also risk. At a professional level, you need to steer clear of the downside of consolidation. Remember also that consolidation is not just an issue among larger companies. The venture industry still suffers from excessive capital, which suggests that some excellent opportunities will be undermined by “me too” competitors. This doesn’t mean you should avoid start-ups. What it means is that you should understand the risks. Far more companies will fail than succeed, so choose wisely.
The third trend is the unending demand for new and better forms of communication. We are nowhere near solving the puzzle in wireless, especially wireless data. The same is true in broadband. As with everything else in the New Normal, the gigantic opportunity in communications brings with it many challenges.
The fourth trend is collaboration. Collaboration has been a holy grail of the enterprise software business since the late 90s. The internet wasn’t ready then and customers weren’t ready either. Even today, the business processes that enable enterprises to collaborate with suppliers and customers are not standard across companies. Until they are, collaboration will depend on custom applications. This situation is likely to last five to ten years.
The fifth trend is the rise of mass customization. The 90s were about one-size-fits-all solutions. The next decade is about solutions that have lots of standard elements, but are tailored to the customer’s specific requirements. This trend has several consequences. Technology companies may actually have to deliver compelling technology to sustain their profit margins . . . and enterprise software vendors may be forced to rethink their product lines . . . and the way they sell.
The sixth trend is the rise of the consumer. Depending on who you ask, consumers account for somewhere between 25% and 40% of technology spending. The number today isn’t so important. Most of the innovation in technology is in consumer categories, so the number will go higher.
The seventh trend is time management. The biggest opportunities will be those that leverage people’s time. iPods allow busy people to take their music library with them. Cell phones and wireless data products enable location independence so that people can always communicate with family and business colleagues. Blackberry lets business travelers get more sleep by enabling them to catch up on email from the moment the plane lands until they get to their hotel. I’ll talk more about time in a moment. These are the big themes.
Technology and globalization are facts of life that ensure that no one will be able to stand still. Not countries. Not companies. Not individuals. Countries can no longer call the shots on their own economies. Companies cannot escape the threat from new competitors that lurk around every corner. And individuals have figure out how to deal with all of this without getting run over. As a result, the New Normal is an environment of great stress.
The great challenge for every individual is to balance family, career and personal finance with no safety nets. It is all too easy to feel isolated . . . to feel that each of us is alone in trying to maintain a balance. Alone in the sense of having no safety nets. Alone because we don’t appreciate that there are millions of other people facing the same challenges that we are. Each of us faces a never-ending stream of decisions . . . life has come to imitate a visit to Starbucks. At Starbucks, life can be as complicated as a half-café mega sweet double extra grande latte . . . or as simple as a cup of coffee
The problem is not lack of data. We’re drowning in data. The problem is not even a lack of tools. Technology has given us an amazing array of tools to help in our decision-making. The problem is lack of time. There doesn’t seem to be enough time in the day to get done all things we have to get done. Worse yet, there doesn’t seem to be enough time to change our personal business processes to get ahead of the curve.
But don’t despair. We may be buried with stuff to do and have too little time to get it done, but the New Normal is a time when individuals are empowered as never before.
I know what you’re thinking. Downsizing has been the national pastime for five years. Companies have been firing individuals left and right. How can I say that individuals are empowered as never before?
Here’s the reality. Everyone who is working today is doing more than one job. Every time the guy in the next cubicle gets laid off, everyone who is left has more work to do. For the past five years, it has meant longer hours for no more pay. It seems like a lousy deal, but it’s not.
Downsizing has been very painful for those who lost their jobs, but those who remain employed have been empowered big time. They have more skills. They are more indispensable . . . and as the economy improves they will have increasing leverage with their employers.
A generation ago, working in a corporation was like Charlie Chaplin on the production line. We spent the whole day doing the same thing over and over. Now practically everyone does a dozen things. Few enterprises realize it, but their business processes are more dependent on individuals than ever. We’re all being trained to be entrepreneurs. So if we don’t like the deal our employer offers us, eventually we will have the option of doing our own thing.
Technology and globalization are as much a part of the solution as they are of the problem. Thanks to the web, we have access to information as never before. We also have tools that enable us to expand our reach and leverage our time. Email, cell phones and the web have enabled us all to work - and play - in any location. eBay has made it possible for entrepreneurs to have a global footprint with no employees.
But if you want to leverage the power of the Individual, you have to manage your time effectively. Most of us are faced with a huge pile of things to do and decisions to make. More often than not, we start at the top of the pile and try to work our way through. Wrong answer. The pile never gets smaller. Here’s the key insight: Most of the stuff in our inbox is just not that important. The challenge is to figure out which two or three things really matter . . . and focus your energy on them.
At the highest level, the most important stuff is family, career and personal finance. The challenge is to maintain a balance among the three.
Success in the New Normal is ALL about time management. Time is the currency of this age. It is the key to personal happiness, professional success, and financial returns. If you get nothing else out of our time together, I hope you gain a greater appreciation for the strategic nature of time. Outlook and a PDA can tell you what’s on your scheduleBut they don’t help you decide what belongs on your schedule. For that you need to be strategic.
Given the choice, many people optimize their lives around money. I don’t want to discourage you from trying to make more money, but I do want to persuade you that optimizing for time a better strategy. If you get time management right, everything else will follow, and you will make more money.
People generally do not place enough value on their time. It drives me crazy every time I hear about someone spending four or five hours on the web to save $25 or $50. Our culture places huge value on financial bargains. I’m all for bargains, but I denominate them in terms of time as well as price.
Being strategic about time takes time, but the trade-off is incredibly favorable. The rewards include more time, more money, and more happiness.
How do you do this? Focus on the three Ps: Prioritize, Plan, Participate.
Let’s start with the first P: priorities. What REALLY matters to you? We live in a world without safety nets. You cannot expect others to look out for you, so you have to know what you want. Whether consciously or not, you are always making trade-offs; doing one thing instead of another. Since you are going to be making the trade-offs anyway, you might as well do so with a plan.
First, be explicit about your long-term priorities. Think in terms of three primary categories: family, career, and personal finance. Look forward ten years or more. Over the long term, what do you have to accomplish in your career to feel you have been successful? How about with your family? Personal finance? Be realistic, but also be careful not to aim too low. The only way you will get the career or family you want is to go for it.
Second, be explicit about your priorities for the next five years. Now think in terms of how you would prioritize among the three. When you are faced with trade-offs among family, career and personal finance, which comes first? Long term, it’s important to meet your objectives in all three, but near term trade-offs are not only reasonable, they may be necessary. There are NO wrong answers here, but there are consequences.
As long as you are comfortable with the consequences of your choices, all is good. Don’t forget to make an explicit analysis of the value of your time. How much of your time is available for things you really care about? For years, people have asked how I find the time to play in a rock ‘n’ roll band, The Flying Other Brothers. The answer is that I make time for all the things that are important to me.
So let’s move on the second P: plan. Once you set your priorities, you need a plan to ensure that you get where you want to go. The New Normal is all about balancing family, career and personal finance to make the most of your life. Most of us focus on short-term issues. We live day-to-day, month-to-month, and year-to-year. We put out fires at work, scramble to pay bills at home, and promise ourselves we’ll deal with the future when it comes. Most of us tell ourselves that we are too busy to live any other way. If you are that busy, friends, the time has come to consider an alternative.
I am convinced that the person with the longest time horizon generally wins. Bill Gates. Warren Buffett. Bono. Steve Jobs - I’m thinking about the current Steve Jobs Era, the one that produced Pixar and the new Apple. Each had a time horizon far longer than his competitors. The longer time horizon helped them make superior trade-offs.
There are a million reasons not to plan today and only one reason to drop everything and start planning now. It will make you more successful, not just at work. It will make you more successful at home and in personal finance. The key is to consider work, family, and personal finance as a single system.
Planning at work starts with recognizing the difference between your job and your career. Your job generates a W-2. Your career defines who you are. It includes your job, plus all manner of professional activities, including continuing education. Career development activities are generally extra-curricular. Don’t let that stop you.
Career activities are an investment in you. Once in a blue moon, career activities will deliver a pop equivalent to a late-90s IPO, but more often they have no immediate payback. Again: Don’t let that stop you.
Career development activities broaden your skill base. They enhance your network. They make you more valuable. They make your professional life more interesting. When it comes to career planning, I find that the best strategy is to reverse engineer the careers of people who have been successful in your chosen field. Thanks to the internet, it is very straightforward to learn how the leading people in any field got there. No matter what the field, there is likely to be a path of least resistance. Doctors go to medical school. Professional athletes and musicians achieve prominence at a young age. Venture capitalists have engineering degrees, MBAs and career experience in successful technology companies with venture backing. While it’s possible to find your own way into a career, it is obviously much harder than the past of least resistance.
The next major requirement in career planning is patience. More careers are wrecked by impatience than anything else. Careers take many years to develop, yet zillions of people get stuck in a revolving door. Hopping from job to job without making career progress. If you don’t have the patience to let your career develop on something that approximates a normal schedule, you should consider the possibility that a different career might suit you better. There is nothing wrong with a sense of urgency . . . but impatience is destructive. While I think job-hopping is suboptimal, it works for lots of people. It’s a choice. As long as you are willing to live with the consequences, you are free to make any choice you like.
This brings me to the third and final P: participation. Get in the game. Too often, we go from day-to-day, just letting things happen. Wrong. Being passive in the New Normal is a very risky strategy. Setting priorities and making plans is essential, but only a start. In the New Normal you still need to play the game of life. Don’t let others make your choices for you. After all, you are the one who has to live with the consequences. Beware of peer pressure and family pressure. Just because everyone around you has a certain car or lives in a certain neighborhood doesn’t mean you have to follow suit. Make your own choices. Pick your own spots.
The three Ps - priorities, plans, and participation - can help you make the most of the New Normal. Let me offer a little more advice about how to succeed in the New Normal.
First, move on from the 90s. No matter what anyone tells you, the 90s are gone. If you got rich from them, more power to you. If you didn’t, I’m sorry. But the 90s aren’t coming back. Not in tech. At least not on a time frame that will work for any of us.
Second, work at a company you believe in. You can build transportable skills almost anywhere. Finding something to believe in is much harder.
Third, establish a balance between your professional and personal lives that you can sustain for five or ten years. In the New Normal, the guy with the longer time horizon will win most of the time.
Fourth, remember the three Ps: priorities, planning, and participation. They apply to every aspect of your life: family, career, and personal finance. Lastly, remember that life is a constant battle between fear and greed.
But there is good news . . . which I will share with you in the form of McNamee’s third law: Fear is transitory. Greed is permanent.