The great corporate crumbling
An essay on a global trend facing almost every industry, government and job, and what we might be able to do to prepare ourselves for it.
I used to be a journalist, but I never — apart from three months one summer, covering games and interviewing tiny local stars for the sports section of the smaller of two weekly local newspapers in my small town — worked for what anyone might regard as a typical, traditional media organization.
I never got to see the inside of a buzzing newsroom. I was never part of morning editorial meetings where The Big News Item Of The Day might be thrashed around and decided upon by erudite, socially conscious and well-meaning editors and reporters who had made a lifelong vocation of holding the powerful to account. I never got the chance to take off for a month — all expenses covered — and shadow a boxer on a training camp, say, to write a long, colorful piece, taking the reader on a journey inside the life and mind of an athlete preparing for the biggest night of his life and the hundred hangers-on whose job it was to turn that occasion into the most profitable night of the year.
The closest I got to big ‘J’ Journalists — journalists whose by-lines and earnest mugshots were a staple in the pages of the daily national newspapers — came on a handful of occasions when I happened to be in a press-box at sporting events, there to try to spot and tell the story as well as I possibly could for the small but loyal handful of readers I was fortunate enough to serve.
Whenever I picked up the daily newspaper and sought out the by-line, I got to see the sausage in all its glory, got to hear its sizzle, got to smell the allure of the fat as it fried.
But on the few occasions when I got to be the writer not the reader, when I found myself there, in those cramped spaces at the back of the stand in a sports stadium, I saw up close the process that produced the sausage in the first place. Journalists are sometimes called “hacks”, an abbreviation of “hackney”, a term for the horse-drawn London carriages of the 1800s which were readily available for hire and would get you where you wanted to go, and quickly. Over the past two hundred years that word, “hack”, has evolved to attract all manner of connotations. Small-time, small-town, small-minded. Grubby, greasy, grimy. Mercenary. Unclean in body, mind and spirit.
All of those connotations were in evidence on the occasions when I flashed a press pass and took my seat alongside the rest of the hack brigade at a small bench behind a perspex screen overlooking 22 footballers, a lush green field and white lines that dazzled under the floodlights. The general griminess, the sense that something sordid was taking place here, was compounded by a stark realization that presented itself:
All these people beside me in the press-box saw themselves as the most important cog in the machine.
Afflicted by the self-certainty of the perpetually deluded, all had bought into the narrative that their version of the narrative was all-important.
They were much more important than what was taking place in front of them, because without them and their capacity to tell the story in their match reports and hot take columns, the events may as well not have taken place.
If a tree falls in a forest and no one’s there to hear it, does it make a sound?
I had this inescapable sense that all these people were hangers-on, like the parasite gulls that feed off the back of a whale. Worse than that, I had the inescapable sense that I was in danger of becoming one of the parasites.
What I realized only much later, after a decade and more had passed, was that I was a real-time eyewitness to the demise and death of traditional media, followed by the demise and death of traditional corporations across a dozen different industries.
These members of the media, holders of the all-important press pass, had been assimilated into an industry whose customs and practices were a hangover from the days before television, never mind the new age of the Internet universe in your pocket and available at the flick of a finger.
They thought they were crafting and telling an important story to people who were eagerly awaiting that story. They were wrong. The world had moved on. Now, they were crafting and telling a story to people who had already seen the story for themselves, who had watched it live and made their own judgment.
In 2024, weekend newspapers still carry pages of football match reports and pages of horse racing racecards, seemingly oblivious to the fact that almost everyone remotely interested in the game has likely already seen the game and is not remotely interested in the considered thoughts of someone else who saw the game, and oblivious to the fact that everyone who wants to find out which horse is running when and where has instant access to colorful, searchable, sortable, customizable and interactive racecards via a wide range of mobile apps, for free.
All media businesses have seen their 150-year-old business model crumble in the space of a decade: selling editorial to readers and ad space to advertisers worked joyously for generations — it made billionaires of Rupert Murdoch and Michael Bloomberg and tens of millions for countless others — but it only worked when those two incomes streams supported and complimented one another, i.e. when enough readers were paying for the editorial that the ad space became valuable.
That’s no longer the case. Readers don’t buy anymore, at least not in sufficient numbers to prop up the business model of the traditional broad-interest media business. Media businesses and journalists are the dinosaurs who stride the earth with their chests puffed, certain of the power they hold. But now, the meteor of the Internet has landed, and all of them are gasping for air.
And the reality is that the media industry is just the canary in a global coal-mine.
The full weight of the Internet has come down on almost every business in almost every industry.
Massive enterprise corporations — in everything from pharmaceuticals to management consulting to finance to manufacturing — needed to become massive. For the body corporate, growth is an imperative. Q3 had better be better than Q2, or someone somewhere has something to answer for. Stitch three or four bad quarters back to back and the guillotine is sure to fall, with new people, new ideas and new initiatives introduced to correct course and return the whole to the natural, desirable state of growth.
In order to make all this growth happen, headcount was essential. The best businesses always had the best systems, of course, but the pre-Internet, pre-automation, pre-remote work corporation required people on the floor — often thousands of people or even tens of thousands of people — to execute.
That stipulation no longer applies.
The great businesses of the future will be built on tiny teams and technology that looks and works like magic. Unprecedentedly great outcomes will be delivered by five people working on two-thousand-dollar laptops from desks on five different continents.
Widen the lens, and the trajectory is inescapable. The more technology speeds up, the more automation is possible, the more artificial intelligence develops — from what it is now (ChatGPT is, in effect, no more than fancy software) to what it will become ten or twenty years from now, real intelligence making real decisions and executing on them without any oversight or implementation from us hamfisted humans — the less need there will be for major corporations.
In the summer of 2020, as the world dealt with the shock of the first wave of the Covid-19 pandemic and generalized lockdowns, the S&P 500, the primary US stock market index, bounced back from its March low to almost match its all-time high of February (just before the pandemic hit). This was staggering. The economy is shut down but the economy is booming?!? Staggering, until you understand that of those 500 biggest publicly traded companies in America, almost a quarter of its total stock market value was made up by just six companies: Facebook, Apple, Amazon, Netflix, Google and Microsoft, the Internet behemoths who benefited most from everyone being locked down at home with nothing to do but go online. As of June 2024, if you hold a Vanguard S&P 500 ETF — an index-linked investment in the market — you might be holding up to 7% of it in Nvidia, the company that has rode the wave of the AI revolution due to its chips being used to power ChatGPT and other tools.
Nor do public sector, government jobs seem safe from this volatility. Right now, a high percentage of everything seems to flow from government coffers. People with skin in the economics game, people much brighter than me, have argued forcefully that the pandemic response by governments all over the world — a response characterized mostly by money-printing in the form of government-issued continuity loans to businesses, stimulus cheques for individuals and general inflation for everyone — was the greatest and fastest transfer of wealth from the poor to the rich in history.
And so all of this is about exposure to volatility.
If you’re investing in stocks, even at the supposedly safe index-linked mutual funds, you’re exposed to the performance of a tiny number of massive corporations. If you’re working a job — almost any job, in almost any sector — you’re exposed to the other extreme of corporate or institutional frailty. When a corporation crumbles, you’ll be out the door faster than you can clear your desk.
The big question, then, for you and for me, is: how do we navigate the volatility of this emerging reality?
One of my recurring maxims is: Advice is worthless.
Advice is worthless because the person giving the advice and the person receiving it are operating at two fundamentally different times, with fundamentally different sets of skills, personal values, opportunities and risks.
So this is not advice.
It’s just to say this. Right now, every path seems to be fraught.
There are pitfalls everywhere. In the past, you might have faced the choice between a stable, secure job versus the risk, reward and danger of trying to build something on your own. Now, with corporations and even governments exposed to the volatility that has been built into the system, the risks inherent in each of your decisions about how you work and where you put your money seem obvious — all you have to do is look at your choices over a long enough timeframe.
As of this month, my thinking is as follows: first, do the work necessary to spread income streams as widely as I can, while second, reducing as much as possible all the outlays and commitments that chip into that income — debt repayment costs, living expenses and other outgoings.
You might say this is a too pessimistic view. You might argue that my approach here seems to be grounded in a way of thinking that needs to change. And you might be right.
But all the available information, to me at least, seems to point to the fragility of corporations, governments and other major centralized bodies. When technology decentralizes power and agency to you and me and billions of other people, it is natural that all centralized power might be fragilized.
The antidote to that is sturdiness, robustness or — in the word coined by Nassim Nicholas Taleb — “antifragility”. To pursue the path away from fragility, we need to build for ourselves as much flexibility as we can.
In a very real way, we are now Neo in The Matrix and bullets are coming from all directions straight for our head. How might we slow down time so that we can dodge a few and repel the rest?
Till next time.