So far in this week, I have been sharing my thoughts on – how a new economy would look like and the possibilities that are left for the coming enthusiastic generation. I would say we are having a chance of our lifetime, that weren’t possible for the generations that passed before us. Right now, everything around us is undergoing a great restructuring that never happened before. Even if such a restructuring of economy happened(may be after the world war 2), technology wasn’t a crucial basis for that. Knowing the ways in which someone could thrive in the new economy is the best thing you could do right now. That’s the reason, why I decided to share my little bit of understanding about this topic in this week. For the next few posts including this, I will be introducing the three category of people who could thrive in the new economy. So here is the first category, the venture capitalists or simply the owners.
The owners or the new age capitalists
First thing to say about this category of people is they are the clear winners of the new economy.
There is not a single thought about the failure of such people.
Second thing to say about the new age capitalists is, they will be more powerful in the new economy compared to that of their ancestors. Not just powerful, but they are going to reap more from the economy even if they sow less!
A living example of such a person is John Doerr, who helped fund many of the key companies fueling the current technological revolution including the Google, Twitter, Amazon, Netscape and Sun Microsystems. He is the general partner in the famed Silicon Valley venture capital fund Kleiner Perkins Caufield & Byers.
What interests me is, he only funded the tech companies and surprisingly his return of investment has been astronomical!
Three years ago the net worth of John Doerr was more than $3 billion and right now it is more than $7 billion as of February 2018! This is the kind of return I am talking about for the new age capitalists.
The great restructuring and decline of labor
No matter how much you justify for the need of human hands in the new economy, the decline of human labor is evident. This doesn’t mean that technology would overthrow humans. Such a thought is superficial not an absolute necessity and would remain as a common theme for the Hollywood sci-fi movies.
But we have to admit that, the margin of people working for jobs with skills that can replicate will be unemployed. A common scenario would be a software or a bot that could enter data to a computer with zero error causing the decline of freelance data entry jobs.
As long as there is a decline of labor it favors the capitalists.
This restructuring period unlike the post war period is particularly a good time to have access to capital.
As the bargaining theory says,
When money is made through the combination of capital investment and labor, the rewards are returned.
Since the current digital revolution is declining the need of labor, the proportion of rewards returned to those who invested in the intelligent machines are growing.
Anyone who have access to capital are safe in the new economy. They could fund a billion dollar tech company.
A venture capitalist can now fund a company like Instagram which was eventually sold for billions of dollars, while it had only thirteen employees
There wasn’t a single time in our history when a small amount labor could be involved in such a large amount of value!
When the labor declines, the amount of profit that flows back to the machine owners is without precedent.
The point of this article is investment in the future will not be like playing a poker game anymore.
You can play it for granted and you are always a clear winner!
For those crazy minds who think I should share some quick ways to become a venture capitalist, I don’t know any(Even if I do I will not be sharing it here!).
That’s why I am interested in the next two category of people who could thrive, even if they don’t have any capital at all!
Stay tuned for tomorrow’s article!
(Photo by Adil Alimbetov)