A bunch of conversations have come out of my what comes next blog post, nearly all of them unexpected. It’s been fun – and has served as a fantastic endorsement of blogging. (As if another were needed.) Two bigger themes for the evening:
1. What do you think of X
I’ve gotten a few “what do you think of X” emails, where “X” is a new web or mobile service that wants to disrupt work in one way or another. I’m trying to think through these questions in a more systematic way, but in the meanwhile, I’ve found Cherry pretty compelling.
Cherry is an iPhone app that lets you order up an immediate car wash. Tell the service where your car is parked, and Cherry will send a professional washer to clean your car. The service has mostly been derided as a sign of an oncoming apocalypse/bubble/disaster, and maybe it is one. I don’t know, but I don’t find that a very interesting question either.
I do find Cherry compelling for two reasons:
A. “Liberating” workers
Like Opez, Cherry enables car washers to become freelancers. They don’t need to work for a car-washing shop and so can retain more of the profits generated by their work.
Historically, one service provided by a car-washing shop has been finding, staying in touch with, and retaining customers. The internet’s made it relatively easier for anyone – from a solo car washer to a car-wash shop manager – to find and retain customers: Angie’s List, Yelp, Groupon, foursquare .. the list of tools goes on and on. (And will continue to go on and on.) A motivated individual can use these tools by himself or herself or can rely on a lighter-weight solution (like Cherry) for the heavy lifting.
We’ll see more of services supporting newly liberated workers.
B. Shifting car washing from capital-intensive to labor-intensive
Over the past few decades, we’ve largely replaced people with machines in the car-washing process. (We’ve also done this in many other processes in our economy, but that’s mostly irrelevant to this argument.) This is capital-labor substitution: for years, the machines were relatively cheaper than the humans, and so we got relatively more machines (capital) and relatively fewer people (labor.)
Cherry’s reversing this trend: it’s suggesting it may be more efficient to have people and squeegees in the streets than big hoses inside of stone garages.
Why are we seeing a mix shift away from capital? Perhaps because labor is relatively cheaper than it has been. In the US at least, thousands of the people who have been laid off recently have not found productive, full-time work elsewhere. There’s an argument that these workers actually had zero marginal product in their previous occupation, and so the appropriate wage rate is zero; there’s also an argument that wages are sticky – that these workers will not accept wages commensurate with their (non-zero) marginal product – and this reluctance is keeping them under- or unemployed .. Or perhaps Cherry is an aberration, and we’ll soon be back on our capital-growth path.
2. Local real estate
The reputation-based world I started to lay out, taken to its extreme, would mean that real estate is less important today than it has been in the past.
Think about it this way: brick-and-mortar stores are generally located on the first floor of buildings to maximize their access to passers- and drivers-by. It’s been a method of discovery. How did you find your grocery store, your dry cleaner, your shoe repair shop? By “stumbling across” these places in the course of going about your day? That’s offline discovery, and that’s (mostly) how the world works today.
In a wholly reputation-based world, discovery will be wholly online where reputation can be tracked. You’ll use these reputation tools/metrics/systems to “discover” the place, and then you’ll go out and find it. It seems a stretch to imagine grocery stores and fast food restaurants on buildings’ upper floors, rather than ground floors, but I’m pretty convinced that’s what a world of online discovery, rather than local discovery, looks like.