MSP74 [] Your Future: Disrupted

This is a download from BFM 89.9, the Business Station. It's Matt's plane, my name is Jeff Sandu. I've been away from MSP for the past few weeks, because Matt decided that I needed some attitude adjustments. However, while I was away, our inbox was flooded with complaints that the show was starting to sound like the BBC shipping forecast.

So, whose attitude do you think needed adjusting? Of course, we wouldn't want Matt to adjust his attitude or change anything up. Which is why, on this week's show, we're talking about disruption. Hey Matt, are we looking at the effects of disruption on our future?

Hey Jeff, I'm really glad you're back. And actually, I wanted to call today's show the search for a noun, but I knew that was essentially suicide in terms of our search engine optimisation, unless we compensated by filling the introduction full of spam terms, like size, money, crypto, wealthy, enrichment and pharmaceuticals. You mean you'd have to do exactly what you just did? You see, I'm already being disruptive, although mostly to the norms of taste and decency.

You sound as though you're saying disruptive with the capital D. Your ability to orally process grammar is extremely impressive, and that's oral with an AU and not an OR, by the way. So I think I've successfully wasted a 103, no 105, no, that's 107 words since you asked your first question, because I'm disrupting again. And yes, you said disruption with a capital D.

Even when you see the word in a presentation, even if it's in the middle of a sentence, it always seems to have that capital letter. If it's not the capital D, the entire word is capital. Exactly, you know, this is kind of shouting us about the word disruption. It's like the entrepreneurial equivalent of a middle finger.

And you think that's what disruption with a capital D has become? Yeah, absolutely. On the one hand, it's this kind of very arrogant response. And on the other hand, it's like a panic reaction.

It has this rabbit in the headlights quality about it. You know, it's somewhat lacking in specificity. A bit like this show. Enough of that.

No, I mean, it's like someone asks you what your company does or what's unique about your product. And the only thing you can think to say about what you do is that it's disruptive. Well, that's what technology is about coming into an industry and upending it, you know, traversing the norms. Well, there's an episode of How I Met Your Mother, where Barney insists that every night has to be legendary, again, with a capital L.

And after an exhausting week, his friend Ted points out that if every night is legendary, none of the nights are legendary, because the legendary night is the one that stands out. It's the night that's truly memorable. But if every night is legendary, that means every night is just normal and no night is any more memorable than any other. And it's kind of the same thing with disruption.

If everything is constantly being disrupted, then disruption becomes the normal, the status quo. You know, this seems to be turning into an episode of The Illusionist, and it's not for the first time. And I don't see how that's a bad thing. You know, it's one of the best podcasts of all time.

It's a really great podcast about language and words and what those words tell us about society. We would be really lucky to get the entrepreneurial middle finger from the great Helen Salzman. But, you know, that's the kind of thing, though. When you call your company or your product disruptive, what you're really saying is that the rules don't apply to you.

It doesn't matter if those are the rules of grammar, the rules of law or the rules of business, or as we'll get to later, the rules of taxation and employment. But the idea of disruption, the idea of coming in and shaking up industries, it can be beneficial. Yeah, and this is where I switched gears from grammar nut to someone who is desperately trying to remember what he was taught in his first year of undergrad economics. You know, the first thing is we shouldn't confuse disruption with innovation.

Dan Lyons, latest book, Lab Rats, is full of examples of companies that have tried to disrupt themselves with weird and unsuccessful self-help and management prophecies. Well, maybe that's your problem. You read books. And sometimes it feels that way.

You know, we forget the influence that books fiction above all have on innovation. You know, we're living in a world of science fiction geeks who are trying to make the stories they read and saw as kids come true. So if you want an idea of what the future might look like, then books like, by amazing writers and thinkers like you've all know a Harari are going to be an enormous help. But books by writers like Philip K.

Dick, William Gibson, Margaret Atwood, Terry Pratchett, Ian M. Banks, and hundreds of other incredibly complex philosophical fiction writers that are going to give you an impression of what that future might actually look like and how people will behave and interact in those future situations. OK, I get that innovation part, but where's the disruption? Exactly.

When we see disruption in these books, we tend to see disaster and suffering. Innovation is presented as leading to peace and prosperity. But disruption rarely seems to lead to these kind of peaceful outcomes. If we look at the world we live in now, we can take the right hailing industry as one example.

Without naming any specific companies? Well, no, I mean, I'm looking at the industry in general, so I'm not so interested in particular companies. And it's actually pretty simple, pretty similar, whether it's cars or electric scooters or bicycles. Most of these cities, these companies are, I guess, apps as we tend to think about them, operating already have taxi, minigab or limo operation.

Which in most places are highly regulated? Exactly. So the first thing these companies do is to declare themselves as outsiders and they're disrupting the industry. They exempt themselves from the rules that govern the industry.

Different companies, of course, have a different relationship to tax and paying tax. So I want to all of them with the same brush. But a lot of the disruptors locate their sales operations in low tax or no tax locations and then lay out a legal argument that they're an agent or an app. So they don't actually owe tax in some of the countries that the service is actually running in.

And at the same time, the people that work for them, they're not their employees, they're classed as partners. And guess what? Partners are self-employed, so they have no labor rights. Even their vehicles, they're leased from other third party companies with no link to the principal company or to the drivers.

So what we have isn't so much disruption as distribution. Yeah, it's about cherry picking the profitable part of the business and getting rid of all those annoying balance sheet liabilities. And then it's about a system of subsidies and price slashing, using money borrowed from investors and pricing the existing players out of the markets that they once dominated. So this isn't disruption as much as its destruction.

And it has the aim of leaving one company in a monopoly situation. And that's not really what innovation is about. It's not something that's good for consumers. I mean, with my economics head on, anytime we see monopoly power in a market, it usually bodes ill for the people like us.

Either we're tied into restrictive terms and conditions, we're forced to pay whatever prices they decide they can get away with. And unless lawmakers are strong and nimble enough to protect our rights from these kind of predatory companies, which, you know, by and large, we know they aren't, then those costs of disruption are ultimately met by us, the customers. We're talking about it as it's a foregone conclusion, almost. Is there any really proof that disruption really works?

Well, that's, you know, a really good question. But because the answer is that by and large, no, we don't know. Because most of these disruptive startups are still in the someone else's money phase. They aren't spending revenue, quite the opposite.

They're spending borrowed and effectively donated money. So we don't know what's going to happen. Most of these companies are yet to demonstrate that their model works in the long run, or that they can repay those investors, or that they can turn a profit. And at the same time, regulators are finally starting to come down on them, forcing them to adhere to the same rules as the existing players that they're trying to replace.

The one thing I haven't asked you is what does disruption means to you? Well, if I'm being really cruel, it means, hey, I've built an app. And that allows me to do things with my phone that I used to do with my feet or my hands or my computer. You know, don't get me wrong, I'm not saying that these things are not worthwhile.

I'm just saying, be honest about what it is that you're doing. Say, hey, you know, I've been looking at the bivalve farm-to-table industry, and I've got some exciting ideas that I think the current players have missed. What was it? I saw in one of the crowdfunding sites recently.

Yeah, it was the world's most advanced travel guitar bag. I mean, seriously, your guitar case does not need a voice-activated Bluetooth chip and a smartphone app. And it certainly doesn't need to cost as much as the guitar inside it. That's not disruption.

It's an app. You know, one thing we do know, though, is that the big successful tech companies by and large aren't disruptors. In what sense? Well, Microsoft didn't disrupt home computing.

It defined it and it connected us to the internet. Apple isn't so much an innovator as a skilled observer. It watches for trends, and then it comes in and does it better and at a much higher price than those first movers. Facebook gained popularity by giving people what they wanted and by being very flexible in the way that it defined its core services.

It's more for incorporation than pivoting. Yeah, and in Facebook's case, it would quietly drop the stuff that didn't work without disrupting that sense of its users being on Facebook. And as for Google, it was simply very, very good at the time that most search engines just weren't. It was reliable.

It was accurate. And I don't know where this idea that companies have to disrupt to be successful has actually come from, because the companies I've just listed succeeded, at least in part, because they're excellent at what they do. Oh, when we come back, Mr. Angry has a look at the disrupted world of tomorrow.

We'll be right back with MSB, the FM 89.9. Begin free Malaysia, BFM 89.9, the Business Station. Before the break, we were talking about the role that disruption has, or maybe hasn't played in our shaping our present. This is MSB, my name is Jasmine together with CulturePop's Man Amortage.

Now we get to the part of the show where we jump into Matt's vision of the living hell that is our future. So Matt, what happens when the disruptors win? It's the same as anything that comes out of the left field and replaces the mainstream. That thing becomes the mainstream.

That's why I made the point about those big tech companies. They were and are innovators who joined the mainstream. And in some cases, defined the mainstream. Even companies like Amazon, yes, it's Amazon.com side is disrupting retail.

But when you look at its cloud storage division, it's competing very successfully with Google and dozens of other competitors. And that field, cloud computing, is very, very competitive. And that's something that benefits all of the people who use those services. So we all get to live happily ever after?

Well, theoretically, at least, with competition and innovation, we are supposed to be the winners. We get a better world to live in, we get better medicine, we get better education, we get cheaper food, better nutrition and health outcomes. We get good incomes, job stability. But does that sound like the world we live in?

You know, it really doesn't. And that's because it's our lives that are being disrupted. It seems as though we're already living in a disruptive era. You know, this is normally where I'd ask you to insert an evil laugh sound clip, because, you know, A, I'm cheesy and B, there is no B.

But because you're jet-lagged and I don't want to make you do extra work, I'm just going to ask the listeners to imagine the evil laugh with their choice, and then we'll carry on. Ah, that was a great laugh. You know, we're at the start of that disruptive era. And that's good, because that means we still have time to choose.

We're not on that path to damnation yet. No matter what it might look like when you look at your newsfeed. But you're here to tell us what that path to damnation might look like. Well, it's pretty much the only thing I'm good for.

You know, if I didn't have this chosen outlet, I'd be the bug-eyed guy standing on the street corner wearing a sandwich board and shouting, the end is now for light as for a pound. So that's why I saw us. Yeah, exactly. Yeah, that's where I was.

So yes, I'm going to go full of buccaliptic this week, and I'm going to add the proviso saying that I don't think this is how we will end up. All right, let's disrupt us then. OK, where to begin? OK, we know that quite a few of these disruptive companies like to employ as few people as possible and automation and AI advances are making that ever easier.

So organizations like the World Economic Forum point out that while technology may make some of us redundant, new technologies should arise to soak up those unemployment levels. What it doesn't take into consideration is that today's new tech employs far fewer people than the old versions of new tech. And that means eventually we need a greater number of emerging industries to soak up every industry that we lose. Does it really matter as long as we have jobs?

And that's really why the nature of those jobs is so important. So the gig economy was a media hot topic a couple of years ago. There were plenty of dire predictions about what would happen in a world of uncertain employment. And now, of course, we're too busy talking about algorithms and fake news, but that gig economy threat hasn't gone away.

You know, you have a bunch of companies committed to keeping the people that work for them off their employment rolls. So all the gains that we saw workers make in the 20th century, things like unions paid holidays, sick pay over time, that measure of job security and, of course, redundancy and severance packages. We're seeing a lot of those gains being eroded in the digital age. Uncertainty isn't new in employment.

No, it certainly isn't. But it's usually more present at the bottom end of the market where workers tend to be more vulnerable. But now we're seeing that uncertainty rising and creeping up the ladder. So we see people higher up that employment curve, people in jobs and professions that were previously protected, who are now taking on second jobs, because they want a new kitchen or because the kids are going off to university or because they're behind with the mortgage payments.

You know, this is a financial position for the middle classes that was probably unthinkable of just a few years ago. Then there are people whose only work is in the gig economy. Yeah, you know, if you hail a ride share with someone under the age of 25, actually ask them what their educational background is. It might surprise you.

The same goes for that barista or checkout assistant. What's none too slowly happening is that people are being disrupted out of good jobs with a future and prospects. And it's also true, you know, commercial companies don't owe us those things. But governments that crave prosperity and stability do.

And if there are no jobs or only low paying jobs, then governments have to step in, as much as they're able to, to make sure that their citizens can afford to live. Well, I think we've covered the universal basic income on the shore a bunch of times already. Which is true. And fortunately, we're not going to cover it today, because in that disruptive world, that UBI won't exist.

Countries can only pay out a basic income if their citizens and the companies that operate in them pay taxes. And we know that disruptors don't like taxes. So sure, they'll send out press releases saying they pay all the applicable taxes in the jurisdictions in which they operate. And that is true.

But the largest story is the lengths that they go to to structure those companies disruptively so as to minimize those taxes, which leaves us with countries with no workers and no tax base. So no to UBI, yes to Funderdome and the last V8 interceptor. This is usually the part of the show where we have some kind of silver lining. Yeah, you've been away too long, you're getting your shows mixed up.

No, the disruptors are building a world for themselves. The irony is that the super rich don't spend much of what they make. So they're not even going to support each other. When you look at the lowest socioeconomic groups, they spend 100% of their income, often a lot more.

And as your income levels increase, you tend to save more. Yeah, but by the time you have billions, you're generally spending a very small percentage of your wealth. And it grows much faster than you can spend what a cruise. So as wealth is disrupted away from the poor and towards the rich, the more of it is actually removed from circulation.

So you create all this incredible wealth and economies can actually contract at the same time. I'm sure some actual economists might disagree with your analysis here. And it's probably a mistake to call what I'm doing analysis. You know, economics is not a science and I'm not an economist.

Economics is not hard and fast. And I'm compacting all this horrible, terrible stuff into a broadcast slot. And the fact that this is horrible and terrible is what gets me so angry about the concept of disruption, because it's very nihilistic. It's nearly always negative.

When someone says you've been disrupted, it sounds like you've been hit by a death rate and that all that's left are the smoking ashes. All right, let's be clear though. This is just your vision of a disrupted future. I mean, it is, but I wish it was only me.

Our more techie influence listeners probably know the name Douglas Brushkoff. He's a writer and academic. He's actually a graphic novelist as well as an open source advocate. I think I mentioned this on one of us shows earlier this year or late last year.

There was an article he posted to Medium called Survival of the Richest, which then got picked up on various new sites. Now, he recounts the story of a talk he was invited to give at a private resort. That's nothing unusual. That's part of the way he earns a living.

But when he got there, it was actually just a group of five super wealthy guys and they didn't want him to present. They just wanted him to answer their question. Is that unusual? It is a little bit.

I mean, you know from the talks that you're booked to do. Usually you're asked to speak on a subject and you present to the room. This was way more intimate and questions were strange and extremely precise. Things like where would be the best places to hide out after the collapse of society?

What could these people do to control their guards if money became worthless? How could they prevent those guards from killing them instead of keeping them alive and secure? But what seemed to strike Rushkoff the most was their certainty that this collapse was going to happen, that it was inevitable. And of course, these men are the disruptors.

So even in their minds, they know that disruption can only lead to one place. And it's a place where the super rich act out their own version of the Walking Dead and where people like us are cast as the zombies. So that's your upside. A future where we starve to death or we wear each other's faces as masks.

Look, I know I'm laying it on a little bit thick. You know, this show is one I've been thinking about for a few months. But I kept putting it off because I knew I'd go really grim. So I mentioned the illusionist earlier.

It was the podcast's most recent episode called The Future Is Now that made me decide to press ahead with this. So if you want a more optimistic take on where disruption might lead us, look for the illusionist with Helen Zoltzmann in your favourite podcatcher. You see, I'm even ending on a disruptive note. I've asked you all to go and search an app.

I will listen to that podcast. That actually sounds really interesting. Alright, Matt, that was MSB talking about the future of disruption. And why innovation is the entrepreneurial equivalent of a middle finger.

Also talking about podcasts, you can download this on the BFM's podcast app. And we'll be right back with GeeksBox after this, BFM 89.9.