Checking your “likes” is the new smoking

18

October

2019

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Today, it is estimated that more than 5 billion people have mobile devices, and over half of these connections are smartphones, and these smartphones are becoming smarter every day (pew research, 2019). Being able to download a variety of apps that each serve a different purpose, people use their phone for almost anything and, therefore, the smartphone has been (and still is) a big contributor in the transition to a digitalized world, from offline to online.

Although it sounds like there is an app for just about everything available on our smartphones, there are downsides caused by excessive use of them. A research conducted by Deloitte (2017) in which more than 4000 British adults have been surveyed shows that 38% admitted to making excessive use of smartphones, while this percentage rose to more than 50% among 16-to-24-year-olds.

People seem to have made it a habit to constantly check their phones. Quite recently, when I entered a train, I was amazed by seeing everyone in the cabin having his or her face glued to a smartphone. Not only is it anti-social, but excessive use is also bad for your mental health and can lead to anxiety and depression. Several studies even show that high-frequency smartphone users tend to have a lower GPA, and lower satisfaction with life happiness relative to people who use their smartphone less often. Humans are just not wired to be constantly wired.

Being bored sometimes can actually be a good thing, these are the moments that you truly start thinking and when you can get creative. These are the moments when great ideas come. Spending time alone with your thoughts is really important, but for most people, something hard to accomplish regularly. In order to decrease the usage of specific apps or your smartphone in general, ask yourself: does it serve something I deeply value? And is this the best way to serve that value?

Imagine that Facebook starts charging you for its services per minute, how much time would you spend using it? Probably surprisingly little. That would already save you 20 minutes every time you would have visited Facebook, as this is the average time spent per Facebook visit (Zephoria, 2019). You don’t need to check your phone as often as you think, so devote your time wisely and spend it on valuable things.

In general, the apps themselves aren’t helping you, as they’re often precision-engineered to create and feed interaction neediness. The reason: critical use is a critical problem for the digital attention economy. The bottom-line of companies in this economy depends on the eyeball minutes on their service, which is why they try to make you use their services as often as possible. It is reported that mobile ad revenue was 88% of Facebook’s earnings in 2017; imagine how dependent they are on you spending time on their service.

While we all realize that smoking is bad for our physical health, why don’t we stop harming our mental health by wasting our valuable time checking our likes? New technologies should be regarded as tools that can be used to support things we deeply value rather than sources of value themselves.

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Today, it’s never been easier to be a billionaire, or harder to be a millionaire

2

October

2019

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Since the turn of the millennium, the love for new technology, which allows for massive innovation and enables rapid growth, was born. Back then, love for these new exciting tech companies and new technologies (like the internet!) was mostly the result of the rise of the stock prices of related companies: the Nasdaq had risen five-fold between 1995 and 2000, before it tumbled from a peak of 5,048.62 on March 10, 2000, to 1,139.90 on Oct 4, 2002, which equals a 76.81% fall (Investopedia, 2019). This massive decline in valuation is now better known as the “dot-com bubble.”

It would take 15 years for the Nasdaq to regain its dot-com peak, which it did on April 23, 2015. Along the way, one pattern became clearly visible: the rise of the winner-takes-all economy. New tech-markets are often intensely competitive, amplified by the volatile nature of the technology themselves. However, once a tech company achieves clear market leadership, it soon attains complete dominance and then is almost impossible to displace (Barwise, 2018).

As a result, this market dominance enables rapid growth and outsize profit margins. Those huge profits and growth potential attract cheap capital and render the rest of the sector flaccid. Firms from the “old-economy” have no chance of competing. Venture capitalists and private equity investors are able to receive a 20x ROI by investing in one great idea, while the majority of people (average and below-average) have to do much more to save for retirement if saving at all. It’s become clear that the invisible hand has been screwing the “fair” distribution of wealth. An example of this is that rent, home prices, and college tuition have all increased way faster than incomes in the US over the last 50 years, according to a research conducted by Student Loan Hero (Barwise, 2018). You might think, will this pattern eventually reverse and become fair again? It, most likely, won’t.

Direct- and indirect network effects, big data, machine learning, switching costs, and lock-in effects among other things will increasingly drive tech companies’ market dominance. These companies are able to operate on increasingly lower margins than their competitors and, thereby, destroying competition. Their massive size and unchecked power throttle competitive markets and keep the economy from doing its job — namely, to promote a vibrant middle class (Galloway, 2017). The global economy is consciously shifting from producing millions of millionaires to producing one trillionaire. Hence, today, it’s never been easier to be a billionaire, or harder to be a millionaire. Alexa, is this a good thing?

References:

Galloway, S. (2017). The four. New York: Portfolio.

Barwise, P. (2018, 7 October). Nine reasons why tech markets are winner-take-all. Accessed at 2 October 2019, at https://www.london.edu/lbsr/nine-reasons-why-tech-markets-are-winner-take-all

Hayes, A. (2019, 25 June). What Ever Happened to the Dotcom Bubble? Accessed at 2 October 2019, at https://www.investopedia.com/terms/d/dotcom-bubble.asp

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Why innovation is different this time

17

September

2019

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Since the nineteenth century and still today, humankind has feared that automation will create massive unemployment. So far, this has never materialized. Since the Industrial Revolution, for every job lost to a machine at least one new job was created. From this perspective, it doesn’t seem very worrying that it will be different this time. Yet, I think we will see some significant differences this time.
Humans can be identified as having two main abilities, a physical one and a cognitive one. Until now, innovation has mainly competed with the physical ability a human possesses. For example, innovations in industrial and agricultural sectors often involved the replacement of humans by a machine and then required the machine to be controlled by a human. In other words, new service jobs emerged through innovation and hence required cognitive skills humans possess, such as communication, analyzing, and learning. This has happened in a variety of settings.
Innovation today is different. Artificial intelligence (AI) is starting to outperform humans on both physical and cognitive abilities. Take for example the taxi-industry: taxi-drivers used to drive around looking for people whom they can bring to their destination in exchange for cash. Innovation made it possible for people to order a taxi by calling to a taxi-service and meet a driver at a predefined location. This worked perfectly fine. Today, we can all download an app called ‘Uber’ or ‘Lyft’ on our mobile phone which enables us to order a ride with a click of a button. Once we arrive at our destination, payment has happened automatically. This works even more convenient and takes away almost all friction. Although this makes the drivers work for an algorithm rather than a taxi company, it is still mainly an innovation that both creates and destroys jobs, because we’ll always need a driver, right?
In 2017, Statista reported that the USA has about 200k taxi drivers and CNN (2017) says the USA has about 750k Uber drivers. In the “access-economy” we live in today, Uber believes that transportation will become increasingly shared, and eventually driverless to increase safety (Uber, 2019). With systems and machines, such as cars, getting smarter and smarter through AI and machine learning, people start to lose on both physical and cognitive front. Referring to the taxi-industry example: up to almost a million jobs could be lost, but how many new jobs will be created?
AI and machine learning are likely to cause a huge net loss of jobs in the long-run. The thing a lot of people tend to forget when they talk about this is to ask why. It is so ingrained in our culture that we must have jobs, that we forget to ask why. We don’t actually want the jobs, but we want the self-fulfillment, the social interaction, the achievements, or the income it brings us. So, don’t forget why you’re doing what you do.
The transition will be slow. Drivers aren’t going to show up for work one morning only to be told that they have been replaced by autonomous cars. A slow transition means that opportunities are there along the way. You’re not stuck in what you’re currently doing. Just think about why you do what you do and whether it’s still relevant a decade from now. Don’t fight the wave but learn how to surf.

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