Not just as someone who works in tech (as a computer games programmer, and previously, an IT support guy), but also as someone who has invested in the stock market for 20 years, I’ve definitely got used to the idea that the ‘tech titans’ are the lords and masters of the modern world. It certainly has seemed so from a financial point of view, with companies like Apple and Microsoft achieving insanely high market caps, and mind-boggling revenues. When people talk about making big money, they often talk about working for fat salaries at a tech company, or cashing in super-lucrative stock options, or even just being sassy enough to have bought Apple, Microsoft, Facebook stock really early.
Especially in the US, ‘tech-worker’ has been synonymous with money. People with non tech jobs in the San Francisco bay area have long bemonaed the super-wealthy tech workers impact on the cost of housing. Tech workers were so elite, that they got bussed past the remaining poor people directly to their super-high-tech and luxurious offices. At work, thet would be pampered with free food, expert chefs, sushi-on-demand, massages at your desk, huge bonuses (obviously), yoga retreats, amazing health care coverage, and premium coffee. It was like living and working in some star trek future paradise…
But it might, just might be coming to an end, in all sorts of ways.
One of the most interesting developments in tech recently was elon musks buyout of twitter. I have no time for, or patience with the various angry rants about the man, but what I want to talk about is the immediate and dramatic firing of so many employees at twitter. To the mainstream tech media, this was indeed, ‘nasty and brutal and dangerous’, and obviously there was a huge swathe of recently fired twitter employees who were happy to predict the imminent explosion of the western world because they lost their jobs. This is predictable, and not very enlightening. Last time I checked, the world still exists, and twitter is still up and running.
What I find interesting is the divide between many mainstream media reports of the potential catastrophe around firing 50% of the staff….and both the reality, and the barely-heard discourse from some experienced developers who took a different view. Those views are often shared in private, between friends, because sharing any opinion other than ‘firing people is awful’ online is an invitation to horrendous abuse…
Nevertheless, I count myself among those people who shared musks view that it was clear that a LOT of developers working at that company were clearly adding little to no value. In fact, if you have ever worked on a large project with a large number of programmers, you will be aware of a point where adding extra coders actually makes things slower, and worse. With twitter it felt like this had happened years ago, but the hiring kept going. As a long term twitter user, I would struggle to find ANYTHING that was added to the platform in the last decade. There was rumours of longer tweets, which was apparently something akin to the manhattan project and all 7,500 twitter staff could not collectively implement this, let alone an edit button…
The very short time since the twitter takeover has given rise to a huge number of new features. Subscriptions are now a thing (and I subscribed), monetization of content, and premium-paywalled content is now a thing. Super long tweets are now a thing, as is some simple formatting. It turns out that you dont need 7,500 developers to implement a few basic features to an app. Who knew?
Whats interesting to me, apart from twitter as a case study, is that so many companies almost IMMEDIATELY followed suit, and laid off a huge chunk of staff. All over the world of tech, those big companies started firing thousands of developers. Its like Elon has been used as a human shield, absorbing all the hate for layoffs, which have allowed senior management to actually do what they knew needed doing, and firing the least productive staff.
In itself, thats interesting, but just maybe a phase in the continual growth of the power of big tech companies. Firing developers whose productivity is close to zero will cut costs, boost profits but not change the relative power of these companies. However, I suspect there may be bigger, more structural changes coming that will reduce the power of the tech sector in general, and not just the FAANG crowd. AI may shake-up the market and re-arrange which companies are on top, but I think the whole tech market may be heading for a correction. Maybe those tech companies have seen it coming, and is why they were so happy to slim down. Maybe their internal predictions for the future of tech growth are a lot lower than they let on?
There was an interesting story recently about photobooths in south korea. We even saw some when we were there recently. Its a craze, which looks like it may stick around, where groups of friends cram into a photobooth (like passport photos) and take actual old-school real photographs in silly poses wearing hats and with props. Its something people do with a group of friends. Why is this a big threat to big tech? Its because its prioritixing something that is anathema to the tech companies: actual physical activity in the real world, and its taking off in famously tech-friendly south korea.
They say that young people no longer desire possession, but desire experiences. I think thats true. The one exception has been the phone, which has become many peoples most important and valuable possessions, but as more and more revisions come to the latest mobile phone, the feature gap between this year and last years model shrinks even more. I have a samsung galaxy S8. It is absolutely amazing, and does everything I can imagine ever needing. I’d like a longer lasting battery, but not enough to upgrade…
I have a friend who refuses to own a smart phone of any kind. I can send him a text, and thats it. He is happier that way. He is about 12 years younger than me. I have another friend who refuses to be on social media of any kind, even asks people not to post pictures of him. I doubt these people are total outliers. The shine of social media has worn off. Stuff like cambridge analytica, the widespread problem of cyber stalking and online abuse has meant that people are very aware of the downsides to always being on social media.
Because I am old (53 I think?) I can remember before any of this was a thing. My life has taken me from a big chunky (rented) TV with 3 channels, and an expensive home land-line rotary-dial phone, to an age of VR, AI and smartphones. The technological transformation has been absolutely mind blowing. However, taken over a much shorter timescale, I’m not sure whats got better lately. In fact, it feels amost like tech is degrading and getting worse. My new laptop (the old one self-bricked itself due to software after under 2 years) has a one terrabyte SSD (insane), but has software bugs meaning sound is muffled and stuck at 50% volume. Thats brand new out of the box. Utter trash, coded by idiots, probably spending more time at the yoga retreat than learning to write audio drivers…
Tech is losing its sheen. I recently bought this new laptop (about £800) and a new pair of sneakers (£93). I am way more pleased with, and excited by the sneakers than the laptop, and I am a fucking computer programmer. This is weird, this is a change. I can totally see how happiness with ‘real-world’ stuff somehow feels more ‘real’ and ‘wholesome’ than any advance in tech Advances in tech just feel like meaningless numbers. Oh look, a 16MP camera, and a 2TB hard disk. 64 GB RAM Whoop-do. Who fucking cares? a 4K TV… why? whats next? a 32K TV? really?
Why does this matter?
As a stock-market investor, I take this stuff seriously. I spend a lot of time looking at trends, and data and considering what the future brings. Recently I was hunting for stocks and found two companies (Dicks Sporting Goods and Academy Sports and Outdoors) that had insanely low price-to-earnings ratios. This basically means that investors dont think much of the future for those companies. A P/E thats super high implies you expect earnings to climb dramatically, and is appropriate for a fast-growing tech startup. A low P/E implies stagnation, and boredom.
There is a whole host of tech companies with insane high P/Es and a slew of real-world companies with insane low P/Es. This is an opportunity. If I’m right, and people are falling out of love with tech and re-allocating their furure spending towards the real world, then there is a massive opportunity to buy those low P/E companies now and watch the stock climb. I’ve already done this with those 2 companies, and I’m now doing it with the toy company ‘Jakks’. I’ve also got my eye on the company that makes ‘crocs’ footwear. Make no mistake, these companies look boring, but that may be where the value is. I sold some nvidia to buy Jakks.
I have no idea whether my own experiences and views can be generalized, which is why I find the South Korea photobooth phenomena so interesting. Its also why I find the healthy market for live music so fascinating. Crowding together with tens of thousands of people to witness a live event is the complete antithesis of tech. We should all be at home, alone, sending skypes and whatsapp messages to our friends ffs! not actually in the real world with people!
On a related note, I found a recent book interesting. It was about people losing the ability to focus due to social media, but one specific section in there was especially interesting. The author mentioned that it would be trivial for social media apps to have a feature to make it easy to tell us when our friends were nearby, maybe in town the same time as us, so we could arrange an impromptu meetup. If I’m in a coffee shop and it turns out a buddy is in the shop 3 doors down, wouldn’t it be cool to let us know so we can say hi? (optionally!). The thing is… social media companies do not WANT us to do this. All the time we are separate and alone, we use social media, and see ads, and generate data and content, for free. They simply have no way to monetize real world friendship.
For a long time, we have been so dazzled by the shiny features of technology that we have thought of nothing else, but in the same way that electricity or cars were at one point amazing new things to obsess over, maybe ‘tech’ will just become another part of life, such as plumbing, or heating, or home appliances like washing machines. Maybe we will relegate a mobile phone to the same status as a microwave. Why get a microwave 14.0? it still just cooks food right? If we DO this, then the currentl market valuations for a bunch of tech companies are going to collapse. Dont be caught holding speculative tech stocks when the music stops.