Beyond The Headlines

Deep Dive: The Biggest Disruption — The Remote Work Revolution

From the First Agricultural Revolution, Socrates’ Lectures, Assembly Lines, the Cubicle Nation to the Future of Work

February 24, 2021 | Bogumil Baranowski
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The first anniversary of the biggest ever experiment in remote work is around the corner. It might be the right time to see what we have learned about this possibly most significant disruption of our lifetimes.

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Megan and I are staying now in a quaint Caribbean fishing town a few hour flight away from our New York office. When it comes to time zones, I’m equidistant from the West Coast and London, which has been very convenient taking calls, and Zooms. In the morning, I’m more likely to see returning happy fishermen than running frantic commuters. I’m definitely outside of the traditional daily commuter radius. I’m working remotely, and our whole team is working remotely. All we need is reliable high-speed internet.  Maybe it would have been feasible years ago, but today, it’s not only feasible; it has become second nature and increasingly common practice. What happened?

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In our role as investment advisors managing family fortunes over generations, we pay careful attention to the world around us. We know well that change is the only constant. We are especially curious about the sudden unexpected disruptions that may have far-reaching consequences creating challenges, and offering opportunities. The remote work revolution of the last 12 months has made it to the top of the list of the new phenomena we are watching.

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Work is what you do, not where you go – that’s what I heard at a remote work conference over two years ago. I met hundreds of remote workers and digital nomads who relied on technology to live wherever they choose and however they choose. They were living the post-daily commuter life. It looked like the ultimate freedom to me. I wondered why aren’t more people following their path? And if they did, wouldn’t it be the biggest disruption of life and work in recent history? Maybe even the biggest lifestyle upgrade? What would it do to how we live, work, invest, how companies do business, where consumers shop, and more? Almost nothing seems to remain the same when the office worker is freed from the desk and chooses never to commute again.

Rory Sutherland, the UK-based Ogilvy executive, commented on remote work in the Spectator last month, saying: “Given that this technology might help solve the housing shortage, geographical inequality, intergenerational wealth inequality, the transport crisis, the pensions crisis, the environmental crisis and almost everything else people worry about, it seems odd that it attracted so little consideration until a pandemic forced our hand.”

We don’t have any control over when we are born, but I happen to have been born in what felt like the last five minutes of a failed ideology, outdated way of storing and transmitting information, and an archaic way of working. The fall of each led to more freedom in the lives of individuals and solved many more problems than we could have imagined. Let me explain.

I got to witness the last decade of a failed experiment of a communist regime in Poland, which deprived people of most of their freedoms from owning a business to sharing their views. So many people spent so much time making sure that nobody does or has anything. The fall of communism was a massive disruption. It unleashed an incredible potential in the former Soviet Bloc in Central and Eastern Europe.

Later as a college student, I felt that I was the last to print, scan, mail, and receive paper. Was I studying or shuffling paper — I wondered at times. My school materials, applications, dossiers were all paper. The fall of paper has changed a lot. I remember taking only a thumb drive with me when I was moving to New York City. Today, it’s all in the cloud, available where I happen to be. From millions of trees saved to a lighter, easier living, the paperless world has been a blessing.

Finally, the fall of the daily commuter culture can prove to be possibly the biggest, the most universal, and the most far-reaching disruption of our lifetimes. Office worker commute is such a bizarre concept. We took the 19th century Industrial Revolution era mindset and kept it with us all the way to the 21st century. Offices are not manufacturing plants; they have no physical assembly lines. It’s just rows of computers with hopefully decent Wi-Fi.

The belief that work is where you go, and our source of income and living is physically attached to a particular location could be much older than two hundred years. What if it all started during the First Agricultural Revolution around 10,000 BC. In a fascinating book, “Sapiens: A Brief History of Humankind,” Noah Yuval Harari writes: “The new agricultural tasks demanded so much time that people were forced to settle permanently next to their wheat fields.” If it’s really been that long, no wonder we have such a hard time shaking it off and dropping outdated assumptions about office work.

With no assembly line to attend or wheat fields to weed, for the first time in history on such a massive scale, we are finally free to decouple work permanently from the physical location.

Over 15 years ago, the renowned psychologist Daniel Kahneman “discovered” that commuting is the number one least enjoyed daily activity. That’s a polite way to put it. Annie Lowrey was much more direct, and on May 26, 2011, in the Slate article called commuting: “a migraine-inducing-life suck.” She quoted various studies and explained how long commutes cause obesity, neck pain, loneliness, divorce, stress, and insomnia. Wow! And why are we doing it?

If we accept that work is what you do and not where you go, everything changes. We save an incredible amount of time, energy, and resources. Statistically, an average commuter spends twice as much time commuting as vacationing.

Rory Sutherland adds in his article in the Spectator: “Digital networks, unlike hub-and-spoke road, rail and airline networks, deliver their benefits equally to everyone connected to them, regardless of their location.”

With remote work, we can live almost anywhere we want, however we want. We can hire talent from almost anywhere. We can find new business almost anywhere. I say almost because there is still a lot of red tape in the way of what Derek Thompson from The Atlantic called “the nowhere-everywhere future of work.”

That’s not all; the end of commute means a healthier, cleaner planet. Quartz wrote in late 2020: “No single activity contributes more greenhouse gas emissions than driving to and from work.” In 2020 we also saw the most reports of smog-free days in major cities and a comeback of wildlife to urban areas, including New York City’s Central Park. That’s where the rare snowy owl decided to return for the first time in 130 years. As a species and civilization, we might have done more for the planet in a single year than ever before, all by doing one thing: ending the office worker’s daily commute.

I’m reading how there are 18 countries in the world that already offer remote work visas. That number doubled in the last 12 months alone. I’d imagine it will keep doubling until everyone is on board. Most of those countries happen to be in pleasant climates, although somehow the island nation of Iceland made the list, too! There is something for every taste: from warm to cold. You bring the job with you; they let you live there. It’s not only countries that are jumping on board; some US states are even willing to pay remote workers to move there.

The way we think of taxation is evolving, too. Several states, including New York’s neighbors, are looking into ways to tax remote workers who no longer commute but rather live in the state and work from home. New York City was worried about the three hundred thousand taxpayers who permanently skipped town, but maybe another worry is the neighboring states’ appetite for a piece of the tax revenue pie. New York is not alone; other major hubs are going through a similar challenge. If employees no longer have to report to a particular zip code and can live wherever their heart desires, the cities face a real challenge.

I’d hope the tax authorities will be smart working with remote workers and attracting them rather than scaring them away. The one thing this newly freed from office crowd can do is vote with their feet and walk.

More companies are switching to all-remote work already without waiting for the pandemic to pass. Some even offer a stipend to set up a home office. The office-free, office-optional world makes doing business much easier. Many startups used to spend a fortune securing prime office space to impress investors; now, they can use this money in more productive ways. For many businesses, office rent is the biggest single-line expense. With smaller needs and footprint, it could lead to significant savings and lower the cost of launching and running a business. I agree with the opinion that a hybrid model could prove to be a complete failure. If employees are expected to be in the office a day or two a week, they are still tied to the office location and cannot enjoy the freedom of working from anywhere. Sid Sijbrandij, CEO of code-collaboration firm GitLab, explains how the old work model rewards attendance rather than output, but it’s the latter that really matters.

It’s fascinating that the same companies that enable remote work with cloud services, communication tools, and computing devices are also the ones that seem to have completely missed the memo! Some of the big tech companies only recently completed or started building colossal campuses; many of them are the size of multiple Vatican Cities. Who will be commuting to them to get free potato chips, use sleeping pods or play some ping pong? It’s as if someone was trying to lure new employees with fancy staplers in a paperless world. Some Silicon Valley executives notice the change themselves. Salesforce president and chief operating officer recently said: “An immersive workspace is no longer limited to a desk in our Towers; the 9-to-5 workday is dead, and the employee experience is about more than ping-pong tables and snacks.”

I also don’t think that the gray rows of dark cubicles with fluorescent lights high above them will be of much use in this post-daily commuter world. I’m somehow still not convinced that this is the place where creativity and productivity blossom. As a matter of fact, Inc. magazine’s article “Is the Office Dead Forever” explains how 80% of US workers said they’re just as productive or more productive working from home.”

In the book “Remote: Office Not Required” by Jason Fried and David Heinemeier Hansson, they write how remote work used to be rebuffed in the name of no special privileges for anyone. They jokingly write: “It simply wouldn’t be fair! We all need to be equally, miserably unproductive at the office and suffer in unity.” That’s the kind of tone I’m hearing from the faint return to office (RTO) voices these days. These voices come mostly from landlords whose empty office buildings might need to find a new purpose in the future instead of hoping for armies of suit-clad commuters (like me) to report back. The reality is very different. Only 1 in 10 companies expect all their employees to be back in the office once it’s safe.

I know, I know — not all jobs can be done remotely, but let’s look around and appreciate how many jobs can and have been done remotely in the last twelve months. The University of Chicago reports that “37 percent of all jobs in America can be done entirely remotely,” and they account for almost half of all income earned! If it’s not a game-changer, I don’t know what is. That’s a staggering number on the move, free to roam, decoupled from the office location. For tax collectors, it’s a fleeing tax base; for businesses, it’s an office-free or office-light cost structure, and more mobile consumers that still need services and goods but might want them somewhere else; for employees, it’s a whole new world of opportunities.

I do not doubt that we will have in-person social interactions in the future beyond COVID and apart from video calls. I think we’ll value them more highly than ever before. Humanity has been worried about missing out on in-person experiences for at least 2,500 years. It predates the water cooler talk and goes as far back as the village water well tête-à-tête. It was then when Socrates discussed the challenges of the written word, which he believed can’t possibly be as good as the spoken word. Lane Wilkinson explains that according to Socrates, the “written word stands as a mute testament, incapable of explaining itself beyond the text presented.” I don’t disagree, but it’s so much better than nothing! I have never had a chance to attend any of Socrates’ live lectures, but I’m grateful someone wrote them down since he didn’t author any texts at all.

Fortunately, the written word has traveled through time, and now it travels in no time across the globe. I think even Socrates would have been impressed with what Zoom calls have meant and done for us on the family, friends, and business fronts the last 12 months. The same as writing hasn’t completely replaced the spoken word, Zoom won’t replace all in-person social interactions, but something tells me that both the written word and video calls are here to stay.

Long before the pandemic, I read a few books about remote work. One of them was the earlier mentioned “Remote: Office Not Required”, the other “Remote Revolution: How the Location-Independent Workforce Changes the Way We Hire, Connect, and Succeed” by John Elston.  I read them both when I was writing “Money, Life, Family: My Handbook: My complete collection of principles on investing, finding work & life balance, and preserving family wealth.” Both made a very convincing case in favor of remote work not long before the 2020 work from home days. In the former, the authors write: “The next luxury is the luxury of freedom and time. Once you’ve had a taste of that life, no corner office or fancy chef will be able to drag you back.” In the latter, I read: “The Remote Revolution allows employees to choose both their best life experience and their best work experience, not one or the other. It’s a game-changer.” When I read it, I couldn’t argue with either, and I definitely can’t today.

The biggest difference between now and the pre-COVID world is the adoption rate. There were remote workers before, and there were tools to work remotely available. Still, it was hard to convince others when 20 people are ready to start a meeting in a stuffy conference room, and you ask if you can call or video in from where you happen to be living these days. Now, in many case, everyone is calling in, and that’s the only way to join the meeting, and the best part is – no one cares anymore that you are not at your desk or where you really are.

Our 2020/2021 work from anywhere experience was probably the most rushed way to get acquainted with this new world of possibilities. Rushed or not, it is what it is. Many have tried it; some loved it, some needed time to warm up to it, some will likely fight it and try to reject it.

Once we leave the pandemic inconveniences behind and embrace what remote work means beyond it, we might wake up to a very different world. Someone told me that if you liked the COVID era remote work, you’ll love it in the post-COVID times. I agree.

We have yet to rethink the legal, tax, immigration, business, social, and other frameworks for this new remote work revolution. We learned how to hunt animals many times our size; we discovered flight, we put men on the moon, I have no doubt, we’ll figure this out, too. Some already call it potentially the biggest lifestyle upgrade in a century. Many tell me they can finally see their kids grow up. Others have “Sunday scaries” at the thought of being called back to the office. I think we are witnessing possibly the biggest, the most universal, and the most far-reaching disruption of our lifetimes. We can fear it and resist it or embrace it and benefit from it.

I think the proverbial cat is out of the bag. We can’t pretend that 2020/2021 remote work revolution has never happened.

The ideology I grew up with is almost gone, the paper culture is disappearing, and finally, the commuter life is fading, too. I’m very curious to see how many new investment opportunities this remote work revolution will create. It’s already shaking up structures, assumptions, and routines that have been stagnant way too long.

 

Happy Investing!

Bogumil Baranowski

Published: 2/24/2021

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