The Weekly: Edition #74 - December 4th, 2020
Remote Work
"Missing from the debate is the fact that it’s not really up to the companies to choose. Employees will ultimately make the decision."
If there's one topic that has generated as much debate as politics in 2020, it's whether or not remote work has been beneficial for businesses since the pandemic began. This week, we found a wonderful piece that explores the potential knock-on effects of remote work and highlights the three camps of opinion:
1. Fully return to in-person teams:
"It’s not just tech employees, either. I have one lawyer friend who just chose one offer over another because its location was going to be more flexible, and another friend in finance who told me that he’s going to look for a new job as soon as his firm asks him to come back to the office."
2. Fully adopt remote working for all teams:
"On average, companies in major cities spend $1-2k per month to keep their employees at a desk in an office because that’s just what companies did. Imagine what they could do with $20k per person per year, a blank slate, and a desire to organize themselves around what they want to achieve."
3. Hybrid approach between in-person and remote:
"Offices exist principally to facilitate people sitting at desks using computers. Whereas they could exist principally to allow for more effective collaboration, which means a bigger variety of spaces more dedicated toward meetings, a smaller number of fixed desks, and the expectation that if you already have this giant list of work, and you just have to plow through it, then stay home. And when it’s time to do the roadmapping session to get together with the team and think about what you want to do next, then come to the office."
Packy McCormick makes the case that employees will ultimately decide the remote vs. in-person status quo since the top talent will demand greater flexibility in their worklives, and the companies who offer the greatest flexibility will retain the top talent. While we don't have a strong stance on how people should run their business, we do believe it is a worthwhile exercise to ask questions about how remote work may impact their business, competitive position, and industry at large.
For example, perhaps your business is a type that requires a physical presence for walk-in customers who will buy physical goods or services, and remote work is not an option at all. But who are your customers and your customers' customers? And will they still be your customers if their business adopts remote work policies?
There have been and will continue to be second and third order effects from remote work, and some are just beginning to materialize as the reality of permanent remote positions set in. It will be imperative for business owners to get ahead of how remote work will impact their businesses from a customer as well as a talent perspective. Other questions that come to mind that every business should be asking include:
- Will you be able to attract the same level of talent if you require personnel to be at the office?
- Likewise, if you adopt a fully remote working policy, does this open up new opportunities to hire from a global talent pool?
- Are there advantages to remaining connected as a team by a physical office space (our sense in M&A is that in-person meetings will end up winning deals far more often than zoom calls)?
- Are your customers at risk of moving elsewhere geographically if their jobs become remote positions?
- Is hybrid a viable option or would it lead to confusion and friction among employees within the various teams in your business?
- Knowledge workers can work remotely, but what about businesses that have both blue collar as well as white collar positions? Will some employees resent others who have the option to work from home?
- How would the culture of your organization be impacted if you elect for a fully remote workforce? A hybrid, flexible approach?
If there's anything we've learned in 2020, it's the importance of being able to pivot when necessary. There's no question that remote work has changed the nature of markets and industries drastically in many ways which have resulted in more subtle knock-on effects as well. How an operator responds to the changing trends and technologies could be the difference between surviving, thriving, or failure.
We'd like to hear from our readers: how is remote work impacting your industry or your business?
The franchise relationship that powers small business is fraying (Wall Street Journal)
+ "Franchises are an American staple. Born out of a network of sellers that peddled the Singer sewing machine in the late 1800s, the modern-day franchise model became popular after World War II. However, according to the Wall Street Journal, the (relatively) happy marriage between franchisees and corporates has frayed during the pandemic."
How tech for show business can automate IKEA warehouses (IKEA)
+ "What are the main benefits of automation of warehouse inventory checks? “Instead of manually checking the pallets using paper and pen, the solution is making the data collection digital through a camera and other sensors. The whole process is done autonomously during the night or between shifts, by the drones. This will increase the inventory accuracy and help us show our customers what’s in stock at a certain IKEA store today,” says Olof."
What a Biden presidency means for your finances (Of Dollars and Data)
+ "If you have spent any time studying Biden’s tax plan, you already know that it raises taxes on those with high incomes in a big way. Some of its key features include:
A new 12.4% social security tax on incomes above $400,000 (split between employers and employees)
Corporate income tax increase from 21% to 28%
Repeal of the Trump tax cuts (currently set to expire in 2025)
Long-term capital gains rate increase from 23.8% to 39.6% on incomes above $1,000,000
Elimination of the stepped-up basis rule"
A deep dive on Airbnb's business model and financials (The Generalist)
+ "Airbnb is still here, heading to IPO nearly a year later than Chesky and Gebbia had hoped. Short-term, investor interest may inversely correlate with a fear index — if positive vaccine trials are a mirage and borders remain closed, Airbnb's 2021 may look bleak. But those either with a rosier view of the next twelve months or a longer time horizon may wish to ask different questions. Namely, how can Airbnb stay one step ahead? The company will need to outfox competition, as hospitality incumbents shoulder into the sharing economy, and regulators, content to gum up the gears in specific geographies. Moreover, they'll need to do so while navigating towards profitability, a prize that has mostly eluded them thus far."
Black Friday was a bust for many stores but not for online shopping (Wall Street Journal)
+ "Roughly half as many people visited stores on Black Friday as they did last year, according to research firms that track foot traffic. Meanwhile, online spending jumped 22% from a year ago, making it the second-best online shopping day ever measured by Adobe Analytics. It is unclear whether an early start to the holiday shopping season, the online Black Friday surge and an expected record day on Cyber Monday will be enough to offset the money lost from in-person shopping for many chains."
2020 Deloitte pre-Thanksgiving pulse survey (Deloitte)
+ "In Deloitte’s Global State of the Consumer Tracker, only 25% of shoppers say they feel comfortable attending in-person events,¹ and consumers across the country have made it clear they plan to avoid crowds this Thanksgiving shopping weekend. To adjust for these health and safety concerns and to jumpstart the holiday shopping season, retailers added new promotions during the third week of October, around Amazon’s Prime Day. Deloitte’s InSightIQ data found these new promotions were effective in attracting shoppers, boosting sales during the week by 6% YoY."
Homebuyers brace for pain in a post-pandemic market (Yahoo! Finance)
+ "Recent housing data show how tight inventories already are. The supply of existing homes fell to 2.5 months in October, a record low for a period when normal inventory levels are four to five months of supply. For new homes, the months’ supply of inventory fell to 3.3 in October, also a record low. Real-time inventory data from Altos Research show that the supply of homes on the market continues to be down more than 40% year-over-year. "
How to think for yourself (Paul Graham)
+ "Independent-mindedness seems to be more a matter of nature than nurture. Which means if you pick the wrong type of work, you're going to be unhappy. If you're naturally independent-minded, you're going to find it frustrating to be a middle manager. And if you're naturally conventional-minded, you're going to be sailing into a headwind if you try to do original research."
We're never going back to the office (Not Boring)
+ "Now, a debate rages among three camps:
Return. In this camp are the old school businesses and new school businesses led by more conservative leaders who want their teams to get back to the office so they can get back to real work.
Remote. The organizationally bleeding-edge companies were remote-first or remote-friendly even before COVID, and many tech companies have announced that they plan to let their employees work from anywhere even after a vaccine.
Hybrid. This camp agrees that things won’t be exactly the same, and their solutions range from “Maybe we’ll let people work from home on Fridays!” to much more creative combinations. “Hybrid” gets a bad rap because to date, it’s meant “most of us are in the office but some of you can be remote and Zoom in for meetings,” but I’ll be referring to a more intentional type of Hybrid that treats everyone as a combination of Remote and in-person.
Missing from the debate is the fact that it’s not really up to the companies to choose. Employees will ultimately make the decision."
What is the “protein folding problem”? A brief explanation (The Roots of Progress)
+ "Today Google DeepMind announced that their deep learning system AlphaFold has achieved unprecedented levels of accuracy on the “protein folding problem”, a grand challenge problem in computational biochemistry. What is this problem, and why is it hard?"
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