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Why the Remote Work Revolution Won’t Last
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Welcome to Buy/Sell/Hold, Marker’s weekly newsletter that’s 100% business intelligence and 0% investment advice. Each week, our writers Steve LeVine and Rob Walker make sense of the most important developments in business and why they matter right now.
We know you’re busy, so think of our Buy/Sell/Hold labels as shorthand metaphor: a Buy if we view it as a positive trend or clever move; a Sell if it’s a disastrous mistake or a missed opportunity; or a Hold if it’s noteworthy but too early to call.
Debunking the Remote Work Revolution
The Buy/Sell/Hold Analysis
We are suckers for a cleanly sculpted phrase. In the late 1990s, it was “dot-com”: Just take your noun, add .com to the end, and you had a booming internet business — that is, until the 1999 Nasdaq crash erased all the upside. Over the last decade, the phrase has been “gigwork,” a vaunted “flexible” industry that does things like send people out in their own cars to ferry around people or pizzas for low wages and, for the companies themselves, little to no profit.
The latest bauble is “work-from-home.” If you are young, single, earn enough to live alone, or are a parent who would do anything to cut out commute time (assuming your kid could actually go to school), this is the work-life fad for you. If you are the CEO in an industry that makes no physical product or gains nothing from the energy of a roomful of workers collaborating, remote work will save you oodles of cash in office overhead.
But a lot of businesses require or simply desire to have all hands on deck under the same roof; this includes industries like manufacturing, banking, retail, management, fashion, and engineering. And a lot of employees crave the social contact they get from seeing their co-workers face-to-face.
That is to say: The office is not dead. Though many of us are likely to work part-time from home for the rest of our careers — a couple of days a week, or maybe every other week — we will probably spend most of our working hours in a space shared with our colleagues. That could be your old office, or a co-working space somewhere (dare I say it — a WeWork?). But it will be an office nonetheless.
Timothy Golden, a scholar of remote work at Rensselaer Polytechnic Institute, told me last week that the virus has permanently transformed the “place” element of getting work done. But the balance is at best even and nowhere near entirely shifted to the home. “Of white collar workers, I would estimate that upwards of one-third to one-half will work remotely on a part-time basis after the pandemic has passed,” he said.
Some of this involves the product that your company is selling. But ultimately, a lot of it comes down to the creativity. As I wrote this week for Marker, many of Silicon Valley’s biggest successes are the result of the phenomenon of serendipity — a tight density of creatives, technologists, and venture capitalists who tend to bump into one another, unplanned, at the office or elsewhere, and discover profitable new things. If people are staying home, how will this serendipity take place?
And let’s be real: Although it’s all the rage to say otherwise right now, a lot of people are desperate (or soon will be) to get back to their offices in some capacity. In a June survey of office workers by PwC, only 32% said they’d prefer to go fully remote.
— Steve LeVine
The Big Number of the Week: 8 million square feet
The combined office space of Austin’s 10 biggest tech companies — up 700% from one decade ago.
For years, Austin, Texas, has been hyped by some observers as the “next Silicon Valley.” The city grew like crazy, fueled by a red-hot oil sector, its signature music-movies-interactive affair SXSW, and a tech boom for home-grown startups as well as ancillary facilities of giants like IBM to Dropbox. But of course, that was before the pandemic. This week, Marker takes a deep dive into what’s happening in the city now: from a wave of oil companies that seem headed for bankruptcy to a Covid resurgence, Texas’ boomtown is facing intense challenges that threaten to rewrite the city’s future.
The tech sector may be central to sorting out what happens next. Last year, Austin-based companies raised $1.73 billion in venture funding (the most since the dot-com era), while Apple, Google, Facebook, and Amazon have each doubled down on their presence in the city. But now, with local startups laying off en masse, big tech talent working remotely, and half-empty skyscrapers, Austin is quickly becoming a test case for what happens when a trendy boomtown crashes headlong into a health and economic catastrophe. The one potential silver lining: Austin could prove surprisingly resilient hosting an influx of well-paid workers fleeing the expensive coasts who still have solid jobs — just based somewhere else.
— Rob Walker
⚡Lightning Round ⚡
- Wayfair Emerges as an Early Pandemic Winner. Along with Airstreams and inflatable pools, Wayfair belongs to that fortunate class of company that’s seen business boom during Covid-19 lockdowns. The online furniture retailer reported a 20% increase in revenue in its first quarter and saw its stock hit an all time high of $231 last week — a tenfold increase from March. While many physical furniture retailers have stayed shut, Wayfair has been able to capitalize on the nesting craze. But it’s not without its share of troubles, too: It recently found itself at the center of unfounded human trafficking conspiracy theories spun up from the QAnon movement, a reminder to companies everywhere to always be prepared to expect the absolutely unexpected. Hold.
- Udemy Sees Its Chance to Pounce. Online education unicorn Udemy is reportedly seeking new funding at a $3 billion valuation, according to The Information. As school reopenings have taken center stage in the political, scientific, and personal debates over Covid-19 safety, edtech leaders like Udemy — which saw a 425% spike in weekly course enrollment between February and March — are eager to take advantage of what could be a once-in-a-generation shift in how Americans learn online. With no clear nationwide solution in sight for American kids, their overworked parents, and an understandably reluctant teaching workforce, the company is readying for the ugly ground warfare between tech and education companies unfolding in the months to come. Buy.
- Zoom Unveils Its First Physical Product. Zoom is making the flex from software to hardware — partnering with communication tech company DTEN to sell the Zoom for Home DTEN ME, a $599 touchscreen monitor with three cameras, eight microphones, and built-in Zoom video chat functionality. It’s the kind of big, fancy screen you’d normally find in swanky corporate conference rooms, except this one is specifically intended for Zoom calls made at home. And much like the Facebook Portal — a similar smart-calling video screen product — the Zoom from Home carries the albatross of its parent company’s privacy concerns. A potential data security time bomb, hung on the wall of your office. Sell.
- Oatly Raises $200 Million. Blackstone Growth announced a $200 million investment in the oat milk powerhouse, resulting in a roughly 10% stake that values the company at $2 billion. Oatly — the OG Swedish oat milk brand beloved by the world’s trendiest baristas — is likely eyeing an eventual IPO as consumer and corporate interest in healthier foods continues to trend upward. Consumer demand for foods like organic produce and canned tuna have spiked during the pandemic, animal-free dairy startup Perfect Day just launched a new sustainability-focused umbrella company and ice cream brand, and Chipotle is moving forward with testing cauliflower rice this month. It’s a good time to be crunchy. Buy.
Marker’s New Fixation
Lately, YouTube has become my fitness instructor, my baking school, and now my source of much-needed zen. Kenneth Chin — aka ActionKid — is a Queens resident who livestreams his daily strolls and bike rides through neighborhoods of New York City, from the Upper West Side to the Staten Island Ferry. For tourists who can no longer visit because of travel restrictions — or locals like me who are still a bit skittish about riding the subway — the videos are soothingly familiar while offering a fascinating look at NYC’s reopening after being the first U.S. hotspot for Covid-19. Broadway’s still dark, Times Square’s unusually empty, and very few tourists are gathering for photos with Wall Street’s iconic Charging Bull, but the videos reveal a city springing slowly back to life.
— Bobbie Gossage, Deputy Editor, Marker
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