January 27th 2020: It seemed like yesterday when I had reached out to the CEO of a company, a man I will call Sam, to discuss how they could leverage artificial intelligence (AI) and machine learning (ML) solutions to streamline their work, reduce product failure, and improve decision making. I also tried to discuss with them the need to implement cloud solutions to allow for remote work. He was uninterested in these concepts. AI sounded too futuristic and he did not “trust it.” As for remote work, the reality was he preferred to have his employees show up to work and “be seen.”
On March 25th, he was asking me what GPUs he should be buying to implement cloud computing to allow for remote work; he was fully engaged as I discussed augmented reality (AR) and virtual reality (VR) options to create a more personal experience while working remotely. As I write, I am putting together some AI solutions to help him get his business up and running again. So what changed? It should be obvious at this point — the Coronavirus crisis.
In 2020, the Coronavirus, medically known as COVID19, caught the world off guard and resulted in a near shutdown of the global economy. Total unemployment numbers are around 22 million and on April 21st, WTI oil contracts were trading at negative value for the first time in history. There are, as you read this, businesses struggling to survive, and tragically, many will go under. Guys and gals like Sam, who only a few months ago were the biggest naysayers against AI, are suddenly its biggest champions.
AI will accelerate. Make no mistake about it. Major economic shocks will force organizations to seek efficiencies, particularly in the areas of AI and autonomous systems, that are essential to survive and thrive in this new era.
With the urgency of keeping employees safe and implementing social distancing, this virus will only accelerate the development and implementation of Artificial Intelligence (AI), and technologies supporting remote and virtual work, and other technological capabilities. AI systems will reduce the need for people while virtual technologies will reduce the need to spend money on office space and travel. Instead of hiring training teams from outside companies for, say, leadership training, companies will increasingly demand virtual options. Leaders will need to make some key decisions on how to implement these technologies as well as minimizing the unintended consequences, such as unemployment, that these technologies will facilitate.
Unemployment and Technology Disruption
COVID19 is only accelerating the trend toward more robotics and AI. We have long believed that AI is going to impact so many industries simultaneously that we need to think about what we do for people displaced as a result. While we are not suggesting you keep paying a person who no longer serves a purpose, we do think companies should be looking at ways to train employees whose role has disappeared with new skills that make them more relevant, even if that employee has to go elsewhere because the company does not have a role for them. Andrew Yang, a former 2020 Democratic nominee, floated the idea of a universal basic income to take care of those displaced by automation and AI. Is that the right policy? We don’t know. But it is important to get ahead of this potential unemployment crisis, and at minimum, AI will force current jobs to evolve, requiring employees to develop new skills.
Consider the fact that in 37 out of 50 states, the top job employing the most people is truck driver. Looking at the Coronavirus today, our logistics system is still running…for now. We guarantee more than a few CEOs are sitting around thinking, “hmm, if only I had autonomous trucks, I would not have to worry whether or not my employees were healthy.” Restaurants worried about going under during this crisis could use autonomous delivery vehicles and instead of having to shut down, could service customers and the at-risk population. Pizza delivery companies will most certainly jump on this technology. We are already starting to see this trend. In Fairfax Virginia, local restaurants in Fairfax City have partnered with George Mason University to implement robotic delivery.
Robots and autonomous systems are doing everything from kidney transplants, delivery, stocking shelves, providing analysis, monitoring data, picking fruit, and taking soil samples, among many other tasks. Because of this, we do believe that unlike past innovative periods where societies absorbed the destruction of certain jobs with the creation of others, we will have significant unemployment, leading to more anger and outrage.
It is critical now for the government and private sector to have a plan for training the workforce of the future. Everything from internal company retraining to government and non-profit initiatives need to be on the table. We can also consider offering government or company funded scholarships for students studying critical skills such as data engineering, data science, programming, and AI/ML.
As companies embrace more virtual work, many will reconsider the need to rent office space. Retail is already collapsing, leaving malls and other commercial buildings with increased vacancies. Once companies decide to stop paying for office space, we believe the country could face a significant commercial real estate bubble burst. We live in the northern Virginia area with towering office buildings everywhere. These are all leveraged investments. With stores disappearing and businesses moving to more remote options, the owners of these properties will not have anyone paying rent.
However, as this demand for remote workers increases, we will see substantively more traffic on the internet in places that may or may not have the capacity required. This will increase the need for enhanced cyber security and digital infrastructure. This will be particularly important as workers who no longer feel constrained by geography choose to move out of higher priced locations into parts of the country where the cost of living is cheaper, but lacks the robust infrastructure of coastal cities.
Increased globalization
You would think Coronavirus would decrease globalization, but that would be wrong. Sure, companies will rethink their supply chains, especially companies making products in China, so supply chains will change. No doubt about that. But creative ideas will come from anywhere, which means the competition for ideas and talent will only increase. Skype, for example, was invented in Estonia. For a period of time, it was the only consumer video messaging platform around. If somebody said that we could not use Skype and that we should only “buy American,” we would have hurt companies, particularly small businesses, who quickly used such a system for their video conferencing needs.
When one of our mutual friends started his business, he hired website designers and video editors using the outsourcing service upwork.com. Instead of paying an American expert thousands of dollars, he paid a foreign producer a few hundred dollars. Obviously, some readers might be upset that he is not hiring Americans and is guilty of “exporting jobs.” However, as he did not have the money to pay an American to do the work he needed, he would have never been able to start his business had he been forced to hire only Americans. Today, his business now employs Americans around the country through remote work.
As new companies emerge and current companies struggle to adapt, competition for human talent will continue to increase. Let’s say you are a fortune 500 company looking to adapt advanced AI for your company. In this age of remote work, if the best person for the job is somebody based in Singapore, you could hire that person without having to worry about his ability to travel or do any work. He or she simply needs to have connectivity and the right skills. Companies, in order to stay relevant, will need to recruit the best talent across the globe and will not worry about geography. Therefore, Americans who do not have the right skills face a danger of being further left behind in this new economy. Indeed, this trend will have significant impact on employment across the industrialized world.
Collaboration is also increasing across occupations and industries. Ford has retooled to make medical ventilators, while entrepreneurs in garages are doing the same. Small business using crowdsource based innovations are on the rise, which allows a better collaboration between large companies with capital and smaller businesses who are more agile. We are starting to see more groups emerging using the model of cross functional teams and entities that match experts from across industries. Video conferencing has allowed for better telemedicine. In fact, telemedicine, which was once impeded by old policy, is now being extensive used, and medical experts are looking at ways to increase this capability. We foresee a new business model that will emerge whether in retail, healthcare, education and transportation, with every crisis presenting an opportunity that will shape the way be live, work and play.
But the real fundamental expansion of globalization will be in the area of human talent. Augmented reality technologies are getting so advanced that once you put on the glasses, you cannot tell you are in a virtual world. You can conduct meetings that make you feel like you are all in the same room. With cloud infrastructure in place and most white-collar work done on computers, tablets, and phones, companies no longer have to have employees collocated. We have already seen instances where startups have a CEO in NY, a CFO in San Francisco, and a COO in Singapore as we accelerate the momentum towards global workforce enabled by technologies. But if people are no longer collocated, that minimizes the need for commercial office buildings. We will explore how technological advancement will impact commercial real estate in another paper, but suffice to say, companies will soon decide they no longer need to rent expensive office space. With commercial real estate already suffering in the age of Amazon, the reduced need for employees to show up at an office building will further hurt the commercial real estate world.
Conclusion
While the pain of the Coronavirus will be with us for a while, eventually, the dust is going to settle, and companies will be ready to spend money. The investments in autonomous systems, AI, and remote work will be at the top of every company’s list. Because of this Coronavirus, these technology trends are not just about being more competitive; they are about survival. This is the time to lay the ground-work and embrace the technology.
