Another obstacle to mobility is the growth of state-level job-licensing requirements, which now cover a range of professions from bartenders and florists to turtle farmers and scrap-metal recyclers. A 2015 White House report found that more than one-quarter of U.S. workers now require a license to do their jobs, with the share licensed at the state level rising fivefold since the 1950s.
Janna E. Johnson and Morris M. Kleiner of the University of Minnesota found in a nationwide study that barbers and cosmetologists—occupations that tend to require people to obtain new state licenses when they relocate—are 22% less likely to move between states than workers whose blue-collar occupations don’t require them.
The second article was about the challenge of building housing in New York in this lengthy discussion in the New York Review of Books. Exclusionary zoning is making it harder to build houses in many neighborhoods in the city, raising prices and driving more and more middle class workers out of the city. Although salaries have had a bit of growth over the decades, that minuscule growth has been dwarfed by the rapidly increasing rents we have seen in the city over the past ten years.
While housing and job protections seem to be quite politically quite different, the reality is that both occupational licensing and exclusionary zoning are really part
Basically, a citizen built stairs in a garden really cheaply (at 0.3% of the cost!), and Toronto took them down.
The story is absurd, but all of it is unfortunately “rational.” You can imagine a bureaucrat at city hall realizing that the stairs don’t meet a number of requirements for safety, reliability, inspectability, and more, so the obvious answer is to tear down the whole thing. Bad stairs are only likely to invite lawsuits, and so the city would prefer stairs not exist (increasing injuries on the hill) than to allow potentially unsafe stairs to exist.
I say potentially, because the more I study the problem of cost disease, the more that safety in a very broad sense is the root of the cause. No one wants to actually fight over the safety of a small staircase. No, a couple of steps shouldn’t be $150,000, but neither does anyone want to do the work to prove that a lower-quality model would be more than sufficient for the needs of its users.
When it comes to safety, no one ever wants to stand up for the issue of cost over the value of human lives. Even though economists have built an entire literature around the concept of the “value of a statistical life,” it actually takes someone to argue in a council meeting that no one is going to be hurt by a small and cheaply-built staircase in a garden.
So we get these absurd cases where we spend 1000x on a staircase, to
I am a big believer in subscription models — both for software and for media. As such, I often bring up the topic with friends to get their take, since more publications are moving from ads to subscription, and more apps are doing so as well (for instance, through in-app purchases in the App Store for iPhone).
The consistent view I have gotten is that people absolutely hate subscriptions. That hate is particularly vituperative when it comes to content, but software is given no mercy either. And listening to some of my friends and their stories, it seems people will go to the ends of the universe to avoid paying some of these fees.
That said, nearly every person I talk to does pay for something, whether it is Netflix, or The New York Times, or something else. And many seem happy to do so.
Where’s the disconnect? While we can talk about perceptions of quality, utility and many other facets of products, I think the simple answer is that most subscriptions are just incredibly overpriced.
Take a couple of popular products as examples. 1Password is $60 annually for a family license, Pocket is $45, and while Evernote has several tiers, Premium comes out to be $69(!). I do pay for these licenses, but they seem shockingly expensive for the real value I get out of them. How many people — probably with less disposable income — saw those prices and just walked away?
It isn’t surprising that most software companies are priced this way. The traditional advice from VCs for years has been to just ignore cheaper users. “Fire your cheapest customers” and “just raise prices” are heard ad nauseam. VCs actively won’t fund startups where the average revenue per user is in the single digits, because past
One of the challenges I feel founders face, yet don’t discuss often enough, is how income inequality is changing product development.
One doesn’t have to read through Thomas Piketty’s behemoth Capital in the Twenty-First Century to understand that our society has become far less equal — just take a good, long look around startup hubs like San Francisco and New York. What used to be a continuum of incomes is now turning into a handful of groupings, and products are increasingly targeting a single bucket rather than the broader consumer market.
The best analogy I have to this is the current configuration of domestic airlines. Today, there are roughly four classes of service on Delta and other legacy carriers: Basic Economy, (Standard) Economy, Premium Economy, and Business/First. What used to be the Economy, Business, First three-class distinction has become a two-class distinction, with one of the classes strongly stratified based on a few dollars difference between consumers.
The trend in startups has been to focus on that elite Business/First demographic, but I think that is a mistake given the history of technology exits over the past few years.
Basic Economy
For those who don’t know, Basic Economy takes away such airline “luxuries” as the ability to select a seat or use overhead bin space. What’s happening is that a large number of Americans want to reduce their costs to the bare minimum, regardless of the quality of the product or experience. Thus, we see the massive rise of dollar stores across the country, which in some cases are outcompeting Walmart.
The Basic Economy demographic is hardly tiny – it’s hard to put a figure on it, but I would put it somewhere at 40-60% of the population.
Recently, I had a debate with a group of friends about the future health of suburbs when autonomous cars arrive (let’s set aside when exactly that might be). The general consensus has been that the suburbs are going to grow rapidly, since commutes into the city (or just going out for a night on the town) will be far safer, efficient, and convenient than today’s status quo of driving a car and having to find a place to park.
I disagree with this view quite strongly.
The decision on where to live isn’t made in a vacuum. In fact, quite the opposite - people spend enormous time choosing where to live and the mix of amenities, convenience, and price they are willing to bear. Apartment searches, along with job searches, are among the canonical examples of search costs in the economics literature, and for good reason.
First, a lot of the analysis I have read on this topic assumes that people will choose suburbs with autonomous cars instead of cities, but they somehow miss the fact that cities will get these vehicles as well. Autonomous cars will usher in incredible conveniences for everyone, regardless of where they live, and I don’t think cities or suburbs are frankly going to beat the other on this point.
Instead, the key factor is going to be economics. There is this assumption that a) traffic will be better with autonomous cars, and therefore b) people will live even further away from cities, because the decay function of convenience with regards to distance is going to degrade much more slowly than it does today.
In the whirlwind of the daily coverage of the tech world, it can be difficult to take a step back and see the major narratives of coverage. There are literally thousands of news articles published daily by hundreds of media sites, but one thing has become clear: we are no longer in “press release rehash world” anymore.
Take just a snapshot of the last few months. We have had breathtaking and deeply researched reports from Reed Albergotti in The Information and Katie Benner in The New York Times on female founders and harassing venture capitalists that led to the downfall of Binary Capital and apology tours by Chris Sacca and Dave McClure. We had John Carreyrou in The Wall Street Journaland his complete takedown of Theranos, as well as Eric Newcomer at Bloomberg (with serious help from Susan Fowler and other journalists) and their complete destruction of Uber’s image and management team. You have William Alden at Buzzfeed and his critical coverage of Palantir and Formation8, and beyond that, dozens of other breathtaking reports of malfeasance in the Valley and in the tech community (thank you Nitasha Tiku).
For better but mostly worse, “tech journalism” has been a mostly incestuous undertaking. Journalists interview founders, who are often friends or social acquaintances, and regurgitate a press release with a few facts and photos. Funding rounds, new hires, product launches. All of it is newsworthy, but none of it is news. But it was cheap to produce, and in an advertising-driven model,
Hi, I'm Danny. I'm Partner, Research at VC firm Lux Capital, where I publish the Riskgaming newsletter, podcast, and game scenarios. I'm also a Fellow at the Manhattan Institute in New York. I analyze science, technology, finance and the human condition.
Formerly, I was managing editor at TechCrunch and a venture capitalist at Charles River Ventures and General Catalyst.
