Finding Genius

by Kunal Mehta

  Waves of automation have reshaped what work is done and how work is done throughout history. Automation in agricultural led to automation in the industrial and manufacturing sectors and today we are seeing it in the service sector. For many workers in the industries that are being automated, it is certainly a concerning time full of unknowns. But for the entrepreneurs who are embracing change and the investors who believe in and support them, the automation economy is one of the most exciting epochs in the history of technology.

  Workforce Development

  The combination of evolving demographics, a widening income and skill gap, and an education system that was not built for today’s digital economy has created an investment opportunity in what is called workforce development. This refers to the human capital services that empower individuals to find work and then succeed in their profession. To recognize where the opportunities lie, one must understand the journey of a worker in the labor force from education or apprenticeship to exiting the workforce with financial stability. There are three areas in particular that are emerging in order to solve the challenges this generation’s workforce is facing: career identification, corporate learning and development, and upskilling and retraining.

  As previously discussed, today’s education system has not been able to keep up with the rapidly evolving digital economy and graduates are forced to discover the appropriate employment for themselves while navigating a challenging job market. Balancing student debt, an uneven fit between their interests, qualifications, and knowledge, and what different prospective employers really want from their employees has culminated in unprecedented employee “job hopping.” A CareerBuilder survey shared that employers expect 45% of their newly hired college graduates will remain with the company for under two years, and the study showed that by age 35, about 25% of young employees would have already worked five jobs.

  So how do we solve this? There are hundreds of job boards such as Indeed and Hired that are enabling workers to find and apply for employment, some with the simplicity of three buttons on a mobile app. However, not everyone knows what opportunities are out there, much less the ones that align with their interests and values. To empower individuals to identify the right career path there has been a rise in education technology companies known as bootcamps like General Assembly and Codecademy that are teaching job seekers everything from product management to coding. These programs are not meant to necessarily replace the traditional education path but instead are a form of vocational schooling to aid people in navigating today’s employment landscape. Some of these programs are focused on helping place workers in specific industries that have a supply gap, while others are exploring unique business models designed for today’s economy.

  Where the current paradigm asks students to make a large upfront investment in their future earnings, under the emerging model of the income share agreement (ISA), a third party will make that investment and only see a return when the student lands a financially profitable job. One of the better-known proponents of the model is Lambda School, founded in 2017. The program provides risk-free education in fields where there are worker shortages like nursing, programming, and cybersecurity. Under the ISA, students are required to pay 17% of their income for two years after graduation, if they find a job that pays $55,000 a year or higher. Lambda caps the ISA payment at $30,000, so a highly-paid student isn’t penalized for success. If they do not find a well-paying job within five years, they owe nothing.

  In today’s labor market, employment is no longer limited to credentials or prestige but instead favors skills. Lambda recognized this and built their program based on the skills that are desired by employers. Designing their curriculum for employment means they are aligned with the outcomes of their students. As Austen Allred, co-founder and chief executive of Lambda School shares, “(Lambda School’s) model meets students where they are. We work to minimize the barriers to entry that exist in other education and training models. That means no down-payments, no credit checks, available entirely online, and a clear cap on repayment. We only get paid when our students do.” Although only a couple of years old, they raised a $30 million Series B in January 2019 that already valued them at $150 million. Investors such as Geoff Lewis, the founder of Bedrock and protégé of billionaire Peter Thiel, Google Ventures, Y Combinator, and actor-turned-venture capitalist Ashton Kutcher all recognize the incredible opportunity this model has to be applied globally. As of April 2019, the company has confirmed this by launching its first cohort in Africa.

  It is not only startups that are building in the workforce development sector. Employers are also expanding their human capital efforts to a rapidly growing segment called corporate learning and development. Arguably the most valuable asset of a company is its people and in an extremely competitive job market, it has become increasingly vital to acquire, engage, and retain one’s employees. The reason engagement, in particular, is so important is because it is a representation of a worker’s deeper emotional and behavioral connection to a job and company. Gallup found that high turnover of Millennials costs the US economy $30.5 billion each year.

  Part of the reason behind this turnover is that only four in ten Millennials are satisfied with their chances of being promoted in their company. If 60% claim that opportunities to learn and grow are “extremely important” to them, according to Gallup, then it is evident that they don’t believe organizations are investing enough in their employees.

  This need for workforce development is a key factor in why the corporate training market has grown to over $200 billion worldwide (Bersin by Deloitte). With the digitalization of the workplace and shifting consumer behavior, a new paradigm has emerged in how workers learn, train, and progress. While corporate training is not a new concept, technology has evolved the delivery from e-learning through online universities and course catalogs to continuous learning through video and MOOC (massive open online courses) providers to today’s digital learning through the personalized and timely-centric micro-learning and learning experience platforms. As the workplace evolves and new workers (both demographically and geographically) enter the labor force, new opportunities will continue to arise within the corporate training industry.

  Another issue is the need to address those who are seeking career mobility or no longer employed due to job displacement. In the third key area of workforce development, re-skilling and upskilling will become crucial due to its close tie to the loss of jobs expected from automation. As work continues to be digitized, individuals will need to outpace competition from both humans and technology. To close that information gap, companies will need to understand what the skills associated with sustainable employment are and in what industries there are high demands for workers. Although it is hard to predict, looking at sectors such as technology, professional and technical services, hospitality, healthcare, and education, they will all continue to have hiring surges as they grow. Some companies in industries that are already facing automation, such as automobile and telecommunications, are anticipating the necessary human-centric jobs by investing in services to improve the skills of their workforce.

  Startups like Upskill are working to enhance the operational capabilities of these workers in functions such as field service, material handling, and manufacturing by leveraging next-generation technology like augmented reality. Their Skylight smartglasses product is so highly effective that GE technicians who wore them saw a 34% increase in productivity after just their first use. Paul Boris, VP of Manufacturing Industries at GE, was so impressed, he claimed: “In just three to five years, I can’t imagine a person on the plant floor that doesn’t have a wearable device to help them do the job.” While automation will likely have an impact on what jobs are done in many industries, we also have an opportunity to use the new technologies being developed to our advantage and provide workers the tools to succeed.

  Future of Work

  Whether we explore the future of work through the lens of the enterpr
ise or the worker, there is no denying that we are entering both exciting and unprecedented times. When historians look back at what the next few decades bring, the companies that are founded today will set the foundation for the relationship between humans and machines. Access to information and technology is increasingly becoming democratized, putting the power of change into more hands than ever before. We have the unique opportunity to shape how industries, institutions, communities, and humans will metamorphose, operate, and build value for generations to come. Responsibility will be in the hands of the entrepreneurs and their venture capital counterparts to steer us into a future economy that is guided by ethical use of technology, unbiased employment opportunity, and the tools for individuals to prosper.

  The unknown can be daunting and filled with uncertainty. However, as we learned to navigate through the industrial revolution, technical revolution, and most recently the digital revolution, we will soon prosper through the next technological revolution. As Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, says in his book The Fourth Industrial Revolution, “The more we think about how to harness the technology revolution, the more we will examine ourselves and the underlying social models that these technologies embody and enable, and the more we will have an opportunity to shape the revolution in a manner that improves the state of the world.”

  How humans will produce, share, and distribute value will appear different than in the past but will be driven by the factors of today. We might not know what the future will hold but it is the understanding of how we got here and where we are headed that will influence our framework in defining the next revolution. It is up to both society and its entrepreneurs and investors to utilize the most advanced technology in our history to build the future of work.

  WENDY XIAO SCHADECK

  NORTHZONE

  In 2008, the foundation for blockchain technology was established in a whitepaper by a person, or a group of people, anonymously using the name Satoshi Nakamoto. Over the decade that followed, the technology protocol became the foundation on which entrepreneurs began to build a new generation of applications. The protocol, simply stated, decentralizes decision making and authority over digital transactions. In the first generation of the Internet, most of the large technology companies, governments, and financial institutions managed our data and transactions through a centralized authority. With blockchain, decision making shifts to the masses; through complex verification processes, blockchain technology is said to be unhackable and monetary transactions or changes in ownership of property or contractual rights can never be tainted by dishonest practices. This brings an element of trust to an Internet that has been subject to data breaches — in itself a promising premise worth betting on. In fact, many experts have been quick to proclaim blockchain as the ‘new Internet.’

  In the earliest stages, the technology evolved through the hard work of developers and entrepreneurs. They devised applications and use cases where blockchain would be most suitable. Cryptocurrencies, made commonplace through Bitcoin, were built using blockchain technology, and promised a future of global financial inclusion and access. But this currency had little use in the real world. Governments were slow to accept it and the regulatory bodies failed to control speculation and swings in value. Similarly, many blockchain-based applications were built with grand plans but worked less efficiently than existing solutions. This is common for a new protocol when it is first introduced and over time, these protocols become the standard.

  This is what venture capitalists are betting on. Between 2008-2014, a few million dollars were invested by venture capitalists in blockchain startups and applications. In 2018, however, investments ballooned closer to $4 billion in that year alone. In 2019, organizations including Facebook, MasterCard, Goldman Sachs, and IBM began innovating using blockchain technology, making applications built on this protocol mainstream.

  The merits of blockchain technology and the use cases are still being contested in public forums, but this technology should not be overlooked, for reasons that Wendy Xiao Schadeck, an investor with Northzone, will share in this thesis on Web Infrastructures 3.0. I had the privilege of meeting Wendy when I first became interested in better understanding blockchain. When new technologies emerge, there are always venture capitalists who develop a surface-level understanding and can speak in broad strokes, but Wendy is not that; rather, she is a representation of a quality I spoke about often throughout this book — an individual who goes deep within a sector to better understand the nuances and landscape prior to making decisions. In order to become proficient on the technology, I signed up for a blockchain class hosted at Columbia Business School, for which Wendy had created the curriculum. She specializes in blockchain investments with Northzone and has become prominent within the venture ecosystem for her understanding of this important technology. While blockchain is still in its early days and the use cases and future of it are being publicly debated in real time, Wendy provides a deep foundational knowledge of why this technology is important and how it can radically change the Internet as we know it.

  WEB 3.0 INFRASTRUCTURES: BLOCKCHAIN

  Wendy Xiao Schadeck, Northzone

  The Evolution of the Web

  “The Web as I envisaged it, we have not seen it yet. The future is still so much bigger than the past.”

  Tim Berners-Lee, Inventor of the World Wide Web

  Since the beginnings of the Internet, people have been replicating real-world behaviors more efficiently in the digital realm — this is the initial driver of web adoption. For example, email was a more efficient way to send a message, and many of the early web pages were essentially more accessible digital newspapers. As more people began interacting in more ways online, we began to discover new internet-enabled use cases that could only and uniquely exist in the digital realm. Describing Snapchat streaks or Tiktok trends to someone in 1998 would simply not compute as it would require language portraying concepts that didn’t exist back then. There is a layering effect between behavior change and technology that drives the evolution of the web, and the constant expansion of the Internet is a function of trust and technology working in tandem to define the new rules of engagement in this digital realm.

  Starting with the first iteration of the web, the adoption of Internet protocols such as TCP/IP provided a trusted basis for transmitting information, which powered the web’s formation. However, these protocols didn’t define much else. Web 1.0, or the “read-only web” according to Tim Berners-Lee, was an anonymous place, where you could trust that information will get from point A to B, but there was very little trust in the information itself. The only business transactions were one-to-many, a few large trusted content producers selling static information to everyone else. AOL’s homepage c. 1995 gave you various links to online resources such as “Today’s News,” “Sports,” and “Finance,” like pages of a newspaper. Like most of the Web 1.0, it had limited rules of engagement and offered users only two options — search and consume. As more publishers came online and eventually earned the trust of its consumers, information became more and more commoditized as it became more widely available. Web 1.0 didn’t create huge Internet companies because there was only so much you could do to monetize commoditized information; but it did give us the information age.

  Starting in Web 2.0, the “read-write web,” companies built tech platforms to create trustworthy environments online, forming new markets where many-to-many business transactions could take place. These companies defined the Internet rules of engagement even further, but largely within their own controlled ecosystems. This allowed participants to interact in more ways online because they trusted the platforms to dictate and enforce the rules. As a result, these Web 2.0 intermediaries took a large cut of the value and defended their positions using network effects and data monopolies. This was the era that spawned the large technology companies of today. Facebook began by successfully building a trustworthy environme
nt for chatting with your college buddies by tying online profiles to real-world identities in the form of a .edu email address. This allowed the company to outcompete Myspace and other more pseudonymous social platforms, where the trust was lacking, and ultimately allowed Facebook to leverage their user data moat to build a huge advertising business. Similarly, Uber created a trusted ecosystem for ride hailing by enforcing its own rules of engagement between rider and driver, and as a result, it keeps a large percentage out of every transaction. Although we are now in an era where there is growing distrust towards these tech giants of the Web 2.0 era, these companies gave us unique and huge digital economies and greatly expanded our vocabulary of behaviors online.

  We are now at the beginning of Web 3.0, and technology standards are being developed to establish the trusted basis for transmitting value as well as information, creating automatic dependencies between the two — money tied to data. This is important because we aren’t reliant on a company to establish the rules of engagement online; they are written directly into the fabric of the web. Millions of devices globally can contribute to an infinitely elastic supply of compute power while earning a financial reward directly — without any company taking a cut. Fully digital economies can exist, where digital assets can be unique and valued without reliance on a central provider. Financial systems can be truly inclusive, and payments transferred directly and cheaply, at the marginal cost of doing the digital accounting. Securities can be transparently linked to their underlying assets, and risk traced directly and transparently as to encourage wider adoption. The digital commons can be governed collectively, where creators can profit directly from their work. The full implications of Web 3.0 are still not fully clear as we are still early (it would have been hard to foresee Snapchat streaks from 1998, as per the earlier example), but the initial clues are promising.