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Breaking the 2000-Year-Old Principle: The World Beyond the Half-Hour Commute
This article has been inspired by countless conversations with friends, family, and clients around the world who, in one way or the other, have seen their work become remote in the last six months. This year’s proliferation of remote work has been a widespread and sudden phenomenon that seems impossible to ignore. It might prove to be the biggest challenge and opportunity of the decade.
How we communicate, shop, bank, find entertainment, or even meet our future spouse has evolved over the years. There is something about our lives that until recently remained constant, unchanged, almost set in stone for two thousand years – the aspired half-hour commute to work!
Starting my first New York City job over 15 years ago, I remember being surprised seeing men and women all nicely dressed up for work yet wearing comfortable running shoes. The clash of their fashion choices couldn’t be more glaring. I was yet to learn that I had just discovered the daily commuter culture and daily commuter wear. I had no idea that I would soon commit a similar fashion faux-pas daily, all in the name of comfort, and… speed.
A lot has changed in the last three generations, and even more in the last two thousand years. In the last hundred years alone, we got cars, electricity, running water, TV, the Internet, anti-biotics, etc. Many businesses flourished, many vanished. New investment opportunities appeared; others are gone. We walk around with smartphones; we order food online, we bank through an app, we can watch movies and TV shows on countless screens of various sizes in our households and our pockets! The list goes on. What’s more – around 40% of American couples now meet online. My great-grandparents would be at a loss. I think even my grandparents are at a loss sometimes, too.
There is something that hasn’t changed one bit, though. What my life, and that of my parents, grandparents, and all generations before have in common, though, is the aspiration to live within a half-hour from the place of work: on foot, bicycles, trains, in streetcars, and cars. That half-hour has been around for at least 2,000 years, and it has a name; it’s been documented and researched, it’s called Marchetti constant (the author of Anthropological Invariants in Travel Behavior, 1994). Some researchers believe that this daily “travel time budget” has been with humanity a lot longer – since the Neolithic times (about 12,000 years!). Bloomberg dedicated a whole article last year to the history of urban planning and how the half-hour principle shaped our cities from Ancient Rome to medieval Paris, industrial revolution era London, to modern Chicago and New York, among many others. We built cities, lives, economies, services around the same half-hour. It’s quite remarkable.
In stock picking and family investing, I’m always reminded that change is the only constant, yet that half-hour is something that remained unchanged for at least two thousand years.
No matter where you are in the world, if you have an office job, until March this year, you likely woke up early in the morning to shower, get dressed and run to a train, bus, subway or your car, bicycle, or scooter or a combination of all of them. Within half hour (or often likely a lot more!), you would be sitting at your desk in front of your computer screen getting your work started. In the evening, you would repeat the same ritual. Why would you wear running shoes? Well, you are probably not the only one trying to catch that 5.45 or 7.45 train. Droves of fellow commuters are there with you, all hoping to get a seat on the way home. Then they follow you to your grocery store or your restaurant, too. It seems we are all on the same schedule, day in and day out.
That half-hour might sound arbitrary, but if you look at the surveys, an average American commute is 26 minutes – according to the US Census Bureau. That’s 28 full 8-hour workdays (or almost ten full 24 hour days) a year spent commuting; that’s over ten days more than an average American takes in vacation days a year (17 days). We spend more time commuting than vacationing.
This seemingly eternal constant started to erode ever so slightly over the years. In 2018, I had the pleasure of meeting a community of remote workers and digital nomads at a conference in Gran Canaria, Spain. They were the early adopters of a new trend – decoupling the geographic location of work and home. I found their views inspiring and intriguing. I met investment professionals whose teams don’t have a central office, with everyone working remotely. They might have an address, but as they themselves admit: “no one ever goes there.” I also met people who help companies transition to remote work, even government institutions that are usually the late adopters. Back then, in 2018, I shared our experience building a company that could potentially be 100% remote if needed.
We at Sicart had a great opportunity four years ago to build a company that serves our clients the best way we can while tapping into all possible tools and solutions that make our work easier and more productive. From research, trading, compliance, reporting, all the services we chose could be accessed and used from anywhere where we can have an Internet connection. Our frequent business travel required us to be able to conduct business from the road. I credit our partner François Sicart for our cutting-edge thinking. We were Zooming with him already four years ago when few knew what Zoom even was. For us, the overnight March transition to 100% remote work couldn’t have been easier and smoother.
I know that transition might have been challenging for many companies and teams, especially large companies. We realized we had a secret advantage. Not only we had the tools ready to use, but also our tightly knit small, but mighty team has had prior experience working, executing projects with some of us tuning in remotely. We also have worked together for most of our respective careers. We feel like we often know what the other members of the team think before they say it. It’s not rare that I get an email from one of my colleagues about something that I’m actually already working on. I’m often pleasantly surprised when one of my colleagues steps in and gets something done before I have a chance to ask. Similarly, with clients, I notice how often we are already solving a problem before our clients had an opportunity to ask for it. This hidden ability has proven extremely useful in our remote work experience.
One of many fun aspects of investing is keeping abreast of what’s new, what’s changing. Investing allows us to stay tuned in to what’s happening in the world, and we believe it always pays to notice a new trend. Already a while ago, remote work started to seem to us like the biggest potential disruption of the world as we know it. I dedicated to it a good part of my second book – Money, Life, Family. I described it as a “desk-free, more world bound life,” and I further explained how it could make you a better investor.
This gradual process of inviting remote work to the workplace was turned into an overnight shift in March 2020. The so-called non-essential workers were asked to stay home and work from home. In the last six months, remote work went from nice to have to a must-have. What seemed physically impossible for 2000-years became technologically possible overnight. Various studies quote a range of numbers, but many argue that as many as 66% of US employees worked remotely at least part-time in the early months of the COVID pandemic. It wouldn’t be too hard to guess that about half of them quote no commute as the number one benefit of remote work and flexible schedule as the close second.
Video call statistics are a great way to appreciate this new phenomenon. Among the most popular video calling apps, Zoom had only 10 million daily meeting participants in December 2019, but 300 million more recently. Then you’d need to add Microsoft Team with 200 million and Google Meet with over 100 million. Cisco Webex claims 300 million users as well. That’s 800 million people communicating over various video platforms. That’s a staggering number.
The 2020 remote work transformation has an interesting and beneficial side effect. Studies show that the dreaded corporate meetings have been getting shorter and shorter. 2017 Harvard Business Review found that senior managers consider meetings unproductive and inefficient. They also said that meetings come at the expense of deep thinking and keep them from completing their own work. Since the pandemic, the average work meeting has gotten 20% shorter!
The eternal challenge of urban planners has been a simple fact that congestion slows down the commute. No New Yorker has to be reminded of that. The solution might not be linear – more roads, faster trains, bigger parking lots, ever smaller apartments in ever-higher high-rises, all in the name of getting down to that half-hour commute. This problem reminds me of the 1894 crisis, also known as the Great Horse Manure Crisis. Another challenge that urban planners had to face was the growing prevalence of horse carriages in cities. The 1898 first international urban-planning conference was cut short when it failed to offer a solution to the urban horses and their output. Some commentators predicted that London would be buried under nine feet of manure in 50 years. The world didn’t come to an end. We all know that horse-drawn vehicles were soon replaced by cars, and the problem solved itself.
Whoever saw the first car speed through a major city and thought it’s just a fad would sound a lot like anyone today, thinking that remote work is a passing phenomenon. By the way, the New York Times in 1902 called cars impractical, and added further: their cost “will never be sufficiently low to make them as widely popular as were bicycles.” New York Times took on laptops in 1985 as heavy, pricey, and with poor batteries, prematurely announcing their alleged tragic demise. The author concluded: “On the whole, people don’t want to lug a computer with them to the beach or on a train to while away hours they would rather spend reading the sports or business section of the newspaper.” Further, speaking of other supposed fads, only in December 2019, Forbes ran an article titled: “Is Remote Working Just Another Fad or Actually Good For Your Business?”.
Barron’s still in July 2020 posted an equally provocative article titled: “Remote Work Can’t Last Forever.” As skeptical as the title may sound, the author quotes a very favorable recent Harvard-Illinois study, which found that the majority of large businesses experienced no loss in productivity by going remote. His biggest concern is insufficient access to broadband Internet in rural areas. As much I understand his point of view, I have to share my own experience. For the last six months, I have lived at the end of two dirt roads in the deep woods in two cabins in the Appalachian Mountains. For Megan and I, two die-hard New Yorkers, buying, driving, and owning a car after being car-less (or car-free?) for almost 15 years was a bigger leap and challenge than finding good Internet.
Choosing a home location, we may soon swap the age-old question: can I get to work from there in half-hour to can I get a high-speed internet connection there? It’s been the number one question Megan and I, and many of our friends, have been asking lately, choosing places to stay this year. Finding a home based on a good internet connection offers a lot more options than the half-hour commute radius, though. It opens up a whole world of opportunities.
Remote work might have been a familiar concept to a relatively small group of businesses only six months ago, but today, anyone that could have worked from home has done it. That made me wonder how long it takes to develop a new behavior. James Clear, author and expert in the new habit formation shares that: “on average, it takes more than two months before a new behavior becomes automatic — 66 days to be exact”. Well, we are almost 200 days into this experiment. It’s quickly becoming second nature to many of us. Slack’s (team communication tools provider) CEO Stewart Butterfield recently asked about the potential undoing of the remote work transformation of the last six months during a Bloomberg conference said: “I don’t know if it’s impossible, but it’s going to be very, very hard to walk back.” He further added that employees started to see this new flexibility as a benefit, and if more employers are offering it, it will be difficult to take it back. Ping pong tables and free lunches might have been permanently replaced with the freedom to live and work from anywhere. He concluded that once employees relocate, they “can’t call them, and say come back to the Bay Area and buy a house.” It’s no surprise that Slack allows remote work indefinitely.
Not long ago, we heard about Amazon wanting to open a new big headquarters in New York, now we are hearing about Twitter allowing employees to work from home forever… that’s a massive change in thinking. Slack, Square, Shopify, Box, and many others followed with similar announcements. Pinterest made headlines paying almost $90 million to get out of a lease of their new headquarters, covering almost half a million square feet office space. The company quoted the permanent shift to remote work as the reason for such a dramatic move. Microsoft, Facebook, Apple, Amazon, and Google have all embraced remote work sending their employees home, and not expecting to have them back in the office until mid-2021, and likely later or maybe indefinitely. It’s not just a handful of US tech companies that feel that way. The largest French car manufacturer, PSA Groupe, whose brands date back to the earlier mentioned Great Horse Manure Crisis (the late 1800s), announced a “new era of agility,” in which its non-production staff will work remotely from now on.
We believe this world beyond the half-hour commute will have lasting ripple effects across industries, businesses, economies, and the labor market. It will go far beyond the handful of currently publicly listed companies that happen to offer tools that enable remote work. There is hardly anything that remains the same once we break away from this two-thousand-year-old principle.
If we are changing where and how we work, shop, eat, spend time – we believe the businesses that serve us will evolve and change, so will investment opportunities and challenges. I’m thinking of retail, office space, commercial, and residential real estate, municipal budgets, all the services built around the half-hour commuter. We’ll see new consumption patterns, new living arrangements, and new ways of doing business emerge. It’s an accelerated change that we might have been aware of for a while, but now it’s faster and more spread out. This new experience with remote work made many of us realize now how much can be done and can be done quicker when we are not all tied to a geographic location.
We have been focusing on office work, but we haven’t even touched on education or healthcare – with the proliferation of online courses and telemedicine. Speaking of education, if remote work is to become a big part of how many of us work, maybe getting comfortable working with fellow students remotely early on is not a bad place to start. It may prove to be good preparation for embracing remote work in the workplace. Maybe soon enough, we will drop the “remote” and just call it work. No one would call their Tesla a horseless carriage. It’s become just a car.
With remote work, school, healthcare, it doesn’t have to be all or nothing, and everyone or no one. Each business, each industry, each institution will choose the pace and path that works for them. We will choose ours. It’s impossible to ignore, though, that a new path became available. More employers and employees have tried it all at once than ever before.
For now, I traded my city commuter running shoes for trail running shoes, my New York MetroCard for car keys, and my Manhattan office for our porch and upstairs “Zoom den.” We are all carefully watching this new phenomenon and its impact on our business, investments, and lives. Cars changed how we live and where we live. The Internet has changed how we communicate, get entertainment, shop, bank, find life partners, and more. Remote work seems to be just a natural phenomenon that follows all the innovations that have been available to us for a while. With ever-faster, more widely available good Internet, ever better tools, and new skills and habits, we might finally be able to break the 2000-year-old principle. We are very curious to see where this new path takes us all.
Happy Investing!
Bogumil Baranowski
Published: 9/24/2020
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The information provided in this article represents the opinions of Sicart Associates, LLC (“Sicart”) and is expressed as of the date hereof and is subject to change. Sicart assumes no obligation to update or otherwise revise our opinions or this article. The observations and views expressed herein may be changed by Sicart at any time without notice.
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