How technology chips away at jobs

Subway token booth

We may still call them token booths, but none of them have tokens anymore.

Many in the technology world are dismissive of notions that technology costs jobs; part of that may be because jobs don’t disappear overnight. We hear on the news about mass layoffs; we rarely hear about steady declines caused by adoption of new technologies.

Just look at the fare technology of the New York subway system.

New York had subway tokens since 1953. (Before that, the turnstiles used coins.) About 50 million tokens were in circulation. Tokens required a lot of manpower. People had to create the tokens; people had to sell the tokens; people collected the tokens; people put them back in to circulation. The last subway token was sold in 2003, at 50 years old.

In an obituary for the subway token, the New York Times wrote:

Handling all those tokens — emptying them from turnstiles, delivering bags of them to token booths, counting them out to riders — is cumbersome and expensive, and transit officials have long looked forward to the day when most of their business with riders would involve exchanges of electrons, not metal and paper.

The token’s demise (and that of many of its handlers) was the result of technology. The MetroCard was introduced in 1994. It allows subway riders to load money on to reusable plastic cards. You can go up to a machine, insert your money and get a card with $40 on it. Instead of carrying a bunch of tokens in your pocket, it’s something small you can put in your pocket. There’s nothing nostalgic about it (at least for now), but it is simple and efficient.

It still requires people to maintain the giant fare machines. People are needed to take out the cash and put in more blank MetroCards. But as credit card usage increases, the machines need to be emptied less often.

Even the MetroCard is already slowly being replaced (with a bigger shift coming). With my EasyPayXpress, my MetroCard renews itself whenever my balance runs low. I no longer need to stop by a machine. Less wear and tear on the machines.


The MetroCard that fills itself.

MetroCards themselves are an endangered species. Increasingly, magnetic stripe cards are becoming a rarity for transit systems around the world. The mag stripe is giving way to contactless payments. Most systems use a proprietary card; some, like Chicago’s, can use any credit card (or phone) that has NFC capabilities.

With contactless payments and mobile phones, the people who print and distribute the blank cards will be in danger.

None of these changes will happen overnight; it took 10 years to phase out the subway token. It’ll be at least 5 more before the MetroCard is phased out. (The MetroCard is expected to die at the age of 30; the token lasted until 50.)

Every step has increased the convenience for most riders. Less time waiting. Fewer things in your pocket.

But your convenience is someone else’s paycheck

Posted in society

How to turn on the innovation light bulb


Expect 80-90% of innovation to fail

This is the goal that VCs target. Building new things is inherently risky. Expecting every idea to succeed is a recipe for failure. The key is to fail fast.

You need a team that has a range of resources

This includes at least 1 product, 1 UX and 1 developer. It’s easy to get tunnel vision. Many developers have a bias toward perfection, which is the enemy of success. It’s also common for developers to focus on current feasibility. Product and UX folks often don’t know what features will make things unimplementable or really really hard to implement. The team should be a three-legged stool. The best teams will have people with overlapping areas of expertise.

Your resources need to be dedicated

They need to be free of all other responsibilities so they can work together on innovation. A dotted-line relationship or having a matrixed organization will fail. Having to borrow resources from UX or product organization will mean that you will likely not have any resources. These people should report to the head of R&D.

Innovation often needs biz dev

Much successful innovation includes reaching out to partners, including hardware vendors, software vendors, content providers, etc. An innovation team has to be able to have those conversations (without setting an expectation that it will lead to something).

This person needs to be empowered to have these conversations without seeking approval from head of bizdev and a 6-month cycle to negotiate a contract. At this stage, you should be able to get by with an NDA.

Understand human behavior

Successful products are as much (if not more) about understanding human psychology than the details of technology, CX, agile, etc. UX and product especially should understand things like behavioral economics. They should also understand that competition is not narrowly defined. E.g. for a social network, the competition is not just Twitter or Facebook. The competition is every possible thing that people could do with their time, whether it is listening to music, watching TV or going to a movie.

Not everyone can innovate – nor wants to

A lot of innovative people (and their managers) believe that an “innovation team” is unfair because everyone wants to innovate. That’s unrealistic. There are plenty of people who are happy changing conversion from 77% to 77.1%. They want predefined tools that they can use on a consistent basis. They are happy to check out at 5, with no work to think about. You need people with a start-up mentality.

Intellectual curiosity is a must

To truly innovate, you need people who have a wide range of interests. These interests can expose them to a lot of different people, a lot of different ideas and how other things work. That combination can spark inspiration.

Don’t spend too much time on focus groups and user surveys

Most people cannot easily understand new concepts. If you’re Proctor & Gamble and want to test Tide w/rose scent, by all means. It’s very easy for people to understand what they are getting. People don’t understand complex products like Facebook until they actually use them and see the dynamics.

Try ethnographic research

A great way to understand use problems is to spend time with them and watch their behaviors. People often have a hard time expressing their needs; good innovators can discover these unexpressed needs by watching.

Failure can have successful byproducts

Success is not binary. Often when you’re trying to innovate you can discover new things. This can be new use cases that you hadn’t thought of. The Post It note was developed by someone failing to build a strong adhesive at 3M. See more examples here

More recently, Slack (a multibillion dollar company) was originally designed to be a gaming company.

Noticing these “failures” and figuring out how to pivot from them is an uncommon skill. Only the very best product people can do this.

Posted in product management, ui, Uncategorized

Autonomous vehicles are going to change the world in more ways than you know

3692201862_ea517d2565_bAutonomous vehicles will change society in more fundamental ways than most imagine. Yes, there are the obvious ways that everyone talks about: driverless Ubers, automated trucks, cities without private vehicle ownership.

But there is a large ecosystem of occupations that benefit from bad driving.

  • Police officers. Most people probably won’t shed any tears over this. But there are a lot of cops whose role is traffic enforcement. With self-driving cars, they will be programmed to obey the rules.
  • Paramedics, flight nurses, ER doctors. Fewer car crashes mean fewer trips to the emergency room. I have a friend who is a flight nurse. Her job is to get in the helicopter to rescue people by the side of the road. There will be less need for that. In 2010-2011, there were 3.9 million annual visits to the emergency room because of car crashes. 43% of those arrived by ambulance.
  • ER doctors, radiologists, trauma surgeons. Of the people arriving in emergency rooms because of a car accident, 70% had imaging done, including X-rays (59%) and CT scans (30%).
  • Insurance agents, insurance underwriters order, claims examiners, personal injury lawyers. There is an entire ecosystem of people who benefit from the financial aftermath of car crashes. Car insurance in the U.S. is a $100 billion business. There’s a reason you see that gecko everywhere; car insurance companies are perennially among the largest advertisers. That’s just personal insurance. Commercial is billions more.
  • Tow-truck drivers, body shops, mechanics. Someone needs to clean up cars after the crash. Fewer crashes will mean fewer repairs. Body shops alone are a $40 billion business. 180,000 people work at body shops. The median salary is $40,000. That’s a nice lower-middle class job.
  • Parking enforcement officers (meter maid), parking meter collectors, driver license examiners. More of life’s little annoyances. Vehicles will nearly always be in motion; no worries about finding a meter to park at. No meters mean no parking enforcement needed. That also means no coins. (Other aspects of technology will chip away at the collections jobs. More on that later.) In NYC alone, parking tickets generated $565 million in fines. Camera violations were another $100 million.

These are just the second-order effects. There will be plenty more. There a lot of other industries like roadside motels, truck stops, restaurants and more that will feel third-order effects.

It will be one of the biggest changes to the transportation infrastructure since the Eisenhower interstate highway system was built beginning in the late 1950s.

Despite the challenges, autonomous vehicles provide a net societal good. We should minimize human suffering. We should be thrilled that air will be cleaner because fewer accidents mean fewer traffic jams.

But that’s cold comfort to those who lose their middle-class jobs.

Posted in cars, society

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Posted in Uncategorized

So you’re thinking about joining a startup…

15649828248_39f0e56247_oThere are many reasons to join a startup. Camaraderie. Working with a close knit team on a big challenge. Joy (for many) of ups and downs. Being close to the center of the action. Getting to work on things that you wouldn’t be able to work on for years at a big company. Working with a great CEO.

But money shouldn’t be one of them.

Yes, you will get equity. But if you’re junior, it won’t be a lot. Yes, you could be at the next WhatsApp, that sells for $19 billion. But the odds of that are exceedingly slim.

I’m often asked whether someone should join a startup or a big company.

If your primary concern is maximizing financial outcome, statistically, the best choice is to join a big company.

Evaluating compensation at a big company is fairly easy. You’ll typically get at a salary, a bonus and possibly some RSUs. These are company shares that you get over time.

It’s harder at a startup. You’ll get a salary and equity. (Possibly a bonus.) Equity typically comes in the form of options. This gives you the right to purchase a certain number of shares at a certain point, once it is vested. The typical vesting schedule is over four years. At one year, 1/4 of your shares will have vested. After that, shares vest proportionately monthly.

I’ll explain a rudimentary method of calculating the value of your equity. The short version is that you should expect your equity to be worth zero.

For the simple math, you’ll need to know the percent of the company you will have if you are fully vested. The company will tell you the number of shares of the initial grant. They should also tell you the number of outstanding shares. (If a startup won’t tell you the number of outstanding shares, that’s a strong signal you shouldn’t work for them.)

Let’s say you have a grant of 10,000 shares and the company has 10,000,000 shares outstanding. That gives you 0.1% of the company.

Now you can model potential outcomes. You can plug in your own numbers to see what it would be like for you.

If the company sells for $10 million, that 0.1% would be worth be worth $10,000. At $100 million, $100,000. At $1 billion (extremely unlikely), $1 million.

“That sounds pretty good.”

Not so fast. That represents a most likely best-case scenario. It assumes that your shares don’t get diluted down. If the startup needs to raise more funding, then your stake would shrink. It could become 0.05% or less. It also assumes that you stay there the full four years. If you leave within the first year, you get nothing.

There are also a lot of other potential complications, if your company (like most) struggles. Future investors may want protection on their investment. They might be guaranteed a certain return on their investment; that happens before any employee sees anything.

And we’re not done yet. Let’s assume that when you joined the company, you were deciding between $125,000 at the startup and $200,000 at the big company. That means that in addition to working longer hours, you are investing $75,000 a year to work at your startup. (The foregone salary.)

So to get your 10,000 shares, you’ve essentially paid $300,000. That’s a lot of money to invest in one company. Would you invest that much in any other company?

“I’m the best developer on the planet. The company has the best management team ever. They’ve got the best VCs. I’ll make it big.”

There are still many factors outside of your control that could break your company. A competitor may come out with a better product. Consumers may not want your product. A regulator could shut you down. The overall macro environment could go to hell and no one will want to buy anything. I can think of many well pedigreed companies that got a lot of buzz that are struggling.

“So you’re saying I shouldn’t join a startup?”

I’m not saying that at all. I’ve done startups and big companies. The startups are a lot more fun. I got to build products, meet potential partners and go on sales call. Moving the needle on a small company is a lot easier than moving the needle on a $100 billion company. It gives you a great sense of accomplishment, even if you don’t ultimately succeed.

“But I want money and my foot in startups.”

It used to be you couldn’t. But with AngelList, you can. You can take the difference in salary and invest it in a portfolio of startups. (To do this, you have to be an accredited investor. I won’t get into details here, but if you’re making $200,000 a year, you probably are.) You can take the difference in salary (or a portion of that) and invest it across a portfolio of companies. Invest $10,000 in each of 5 companies.

The odds of 1 of those 5 companies making it big are greater than the odds of 1 of 1 company making it big. This is what VCs do, they invest their money (really, other people’s money) across a number of companies. They fully expect most of their investments to fail, but to make it big on one or two.

“What should I do?”

That’s a very personal decision. I can’t answer that for you. But I hope that this post will give you a framework to make an informed decision. If you have questions, hit me up at @rakeshlobster and I’ll try to help.


Posted in Uncategorized

Use your client’s product (and your own)

I was having dinner with a friend who works at a large payments company last night.

One of the things that we discussed was the importance of using your client’s (or prospective client’s) products.

If you’re visiting American Express, use an American Express card when paying. If I were picking the restaurant, I’d have my assistant call to make sure that the restaurant takes AmEx. If not, I’d find another restaurant.

9343380736_b216caaabd_k.jpgIt sounds like something that shouldn’t need to be said, but I run into people who don’t do it all the time. Customizing for clients is a must. A few examples from my career:

  • I was visiting a travel client. Their primary business at the time was selling hotel rooms in Las Vegas. Our admin had booked us a hotel in Vegas using our travel agency. Corporate policy was that we had to use our travel agent. I escalated to use our client’s product. We got a better price at a nicer place. In this case, it would be easy for our client to know that we weren’t using their product.
  • I did business development with car companies. I’d often have to fly to their offices. When I visited Ford, I made sure we rented a Ford. If one wasn’t available at our preferred agency, I was happy to find another one. Another time, I was visiting BMW. Those are a bit harder to find; I managed to find a Mini (part of the BMW family) from Zipcar and drove that. It was not the best ride in a NJ snowstorm, but I made it. It’s possible that the client would never know. On the other hand, you might be driving to lunch or they might see your car keys on your way out.
  • I sold into a large telco in Canada. Our standard pitch deck referenced TV shows and had other U.S.-centric content. I went through the deck and changed the references to things that were more Canadian.

I haven’t had a clothing company as a client, but if I were selling into Gap, I’d wear Banana Republic or Gap clothing.

Not only is this the polite thing to do, you can also pick up nuggets that you can bring up in your conversation. e.g., I loved the smooth acceleration on the car when we drove in; I’ve never seen that feature before, that greatly enhances the experience, etc. Great for relationship building.

Of course, it’s also important to use your own products, whether you’re in business development or product development. (Or, frankly, any role in the company.) You need to be able to sell your product. You can learn the nuances of your own product and bring them into conversation.

David Marcus, former president of PayPal, famously criticized employees for not using PayPal’s payment app even in the company cafeteria. He suggested that those who didn’t want to use the product consider other career options.

My next step would be to remove that option altogether.

There are cases where it doesn’t make sense or isn’t possible. It’d be hard to rent a Tesla to visit Tesla headquarters. (Though I’m sure you’d get a lot of bonus points if you did!) Likewise, management can’t expect the assembly line worker to be driving a Tesla.

In product development roles, you also want some people using the competition. You don’t want all Google employees using only Android phones. A significant number of them should be using iPhones. This would be true even if Google didn’t do cross-platform development.



Posted in biz dev, strategy

How technology created Trump

I was at Great America amusement park yesterday, getting my annual dose of being dropped from towers and jolted on roller coasters. When we stopped to eat, we saw a bank of food-ordering kiosks.

As unlikely as it may seem, it is a symbol of income inequality. That kiosk allows the park to reduce staffing. Instead of having someone wait while a customer makes a decision, push the ordering buttons on the machine and then take payment, the customer can do all that work. The staff just prepares the food and presents it at the pick up window.

Those kiosks are taking away people’s jobs. A much smaller group of people at Nextep Systems has much higher paying jobs.

Those jobs are at the low-end of the pay scale. But we’ve seen it happen up-and-down pay scales as technology gets better and better.

I’ve been saying for a couple of years now that the rise in economic inequality will cause an uprising among disaffected voters. We’re starting to see that come to pass.

Faced with diminished prospects, voters are turning to an outsider who they think will address their concerns. Never mind that the person they’re looking to is a hateful, deceitful billionaire who has left a trail of bankruptcies.

I’ve been trying to put myself in the shoes of Trump voters; to understand why they support him.

I can see a lot of reasons to be bitter about the status quo, especially if you’re living in the middle of the country.

I grew up in Michigan, the son of an autoworker. My dad came to the United States at 29. His college degree from India didn’t count here, so he worked on automotive assembly lines. It was a decent wage that allowed him to bring me and my family over. While working that job, he went on to get an associate’s degree at the community college. He turned that into a job as a computer programmer.

We lucked out.

But today, people aren’t as lucky. In my lifetime, the minimum educational requirement for a middle-class job has gone from no schooling, to high school to a college degree.

What people don’t like to talk about (not politicians and certainly not tech folks) is that a lot of those jobs have been lost to technology. Walk through a car factory today; most of the work is done by machines. Jobs like what my dad did weren’t exported. They just don’t exist. Trump harps on Ford building a plant in Mexico. He ignores the fact that BMW, Toyota, Mercedes, Hyundai, Kia, Nissan, Honda and others all operate plants in the U.S. It just takes fewer people to build each car.

You used to be able to make $30 an hour without having graduated high school. In the Midwest especially, manufacturing jobs were plentiful. If you could turn a wrench on an assembly line, you could make a middle-class living.

(To be sure, there are jobs lost to China. But those jobs aren’t coming back. They’re more likely to be automated away in China as well. There are also jobs being lost to resource depletion. There’s only so much coal you can mine. Those jobs aren’t coming back either.)

We are seeing this in every aspect of society. Service jobs, once though immune from disappearance, are also being automated away.

Some tollways have implemented all-electronic tolling. You used to have to give your $6 to a few people standing in a booth on your way into the city. Those jobs used to pay $40,000-$50,000 a year. If your skill set is making change, where are you going to go to earn that kind of money?

It would be absurd to argue that we should still have toll collectors. It’s clearly better for society that we can zoom through the toll gates. We reduce our commute times. We reduce our carbon footprint. (Less time spent in traffic.) That’s a net good. Unless you’re the person who lost your job.

True, there aren’t that many toll collectors. Multiply this by hundreds of industries and you begin to see the scope of the problem.

I remember waiting in line for more than an hour to deposit my paper route money in the bank, along with all the autoworkers who’d just gotten their paychecks. Now, ACH makes that happen instantly. I don’t have to go to the bank; I almost never do. All of those tellers required to take deposits? No longer needed.

Technology like Smart Meters connect our power meters to the grid. I can log into PG&E’s Web site and see minute-by-minute usage details. By shifting some energy-intensive tasks (like dishwashing and laundry) to the evening, I can reduce stress on the energy grid and save some money. But PG&E no longer has to pay someone $40,000 a year to drive by and read my meter.

Airlines used to employ tens of thousands of people to check in travelers. You’d wait in line to speak with someone who would look at your ticket, print out a boarding pass and and staple your ticket coupon to the boarding pass. Someone would collect your ticket at boarding. Those paper tickets would be sent for reconciliation and settlement. Now, I pull up an app, click on my flight and I have my boarding pass. Reconciliation and settlement are done electronically. I no longer have to wait to accomplish a menial task.

Some of these jobs get chipped away slowly, in ways you don’t even think about. For residential deliveries, UPS will try three times before they will return the package to the sender. With technology, UPS now allows you to delay a delivery, send the package to a neighbor or have it held for pickup. No more missed deliveries. But those deliveries are fractions of someone’s job.

These examples could go on an on. In most of these examples, technology has greatly improved consumer convenience. It has also dramatically increased the efficiency of society. But, your inefficiency is someone else’s paycheck.

YouTube and Google also have an impact. In my condo building, the garage door codes had to be reset. We were all supposed to gather to have our remote codes programmed into the opener. If we weren’t there, the garage guy would have to come back again for $250. I couldn’t make it. But I Googled how to program the opener and was done 3 minutes later. I always Google first when I need to fix something.

The Jetsonian promise of technology was that it would improve everyone’s lives. We’d all have more leisure time as we enjoyed the fruits of technology. Instead, the wealth created by technology has largely flowed to those at the top of wealth distribution.

There are also attitude issues that I can see causing frustration among those have become Trump’s base. Tech elites expound on the values of 10x engineers who come from a dozen elite schools. The message to many — sometimes explicit, sometimes implicit — is that those without such qualifications aren’t meaningful contributors to society.

“Universal basic income,” the idea that everyone should be guaranteed a certain income has become popular in tech circles. A less charitable interpretation would be, “Let us have all the money and we’ll give you some crumbs.”

Neither party has presented a credible way to address these issues.

The biggest thing that has been missing from the current discussion is how to address worker training. Given that many of these jobs are never coming back, how do we train the workforce for those jobs that do exist?

One way not to do is it to rely on for-profit institutions like the University of Phoenix. To a large extent, their role is to rip off the desperate, with the federal government as a co-conspirator.

Even if you solve re-training, you have the issue of geographic concentration of jobs. Clinton suggested that coal miners could get jobs in green energy. Yes, there is a need for workers in green energy. But those jobs are in California, not Coal Country. If you were born and raised in Coal Country and all your family is there, it would be hard to pull up roots.

There aren’t easy answers to these problems. But I fear that we aren’t even talking about realistic solutions. Trump wants to blame immigrants and China. For the most part, unskilled immigrants take the jobs Americans don’t want to do.

Clinton’s proposal — increasing the minimum wage — makes things like the Great America kiosks more compelling to Cedar Fair.


Posted in Uncategorized