Great Reboot book
One of the best memes I’ve seen recently, making the rounds on social media, goes something like this: ‘can we unplug 2020 and plug it back in?’
The instinct to reset and start over is as understandable as it is recognizable. In many places, too, restarting has been all too real. We really did shut down most economic activity and large chunks of social life for a period of time.
For Arnobio Morelix, this notion of shutting down and restarting is more than metaphor or a basic description of lockdown. To him, we really are going through a “Great Reboot” of the economy.
The contours of the economy we eventually settle into, says Morelix, “will be very different from the one we left. Very much like a new computer with a new operating system, it will operate in fundamentally different ways.”
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Because, he says, even before the COVID-19 pandemic and economic crisis, we had two different economies growing at different rates. One, the digital economy, was growing much faster than the other, the “analog economy,” because of the pace of change in information technology. The shift from analog to digital in terms of economic activity was “dramatically accelerated” by the crisis.
“I didn’t expect it to happen this fast,” he says.
Morelix is well-placed to make these observations. He is currently Chief Innovation Officer at Startup Genome, chief data scientist and contributing editor at Inc., and also performs data analysis for Stanford. (I worked with Morelix at both the Kauffman Foundation and Startup Genome.) Now, he’s telling the world where he thinks economic activity is heading in his new book, Great Reboot. I had the chance to visit with Morelix about the crisis, his book, and what the future might hold.
Most people, he argues, are either over- or underestimating the extent of change that will be coming out of the crisis. Some people look at the rapid increase in remote work—and the extended periods of remote work announced by some companies—and say, ‘this is the future, the office is dead, cities are dead.’ Others, either out of optimism or denial, think we’ll be back to something resembling normal within 12 to 18 months.
What they are missing, Morelix says, is that “fundamental shifts were happening pre-pandemic.” In this sense, the debate over what shape the recovery will trace—V, W, L, swoosh—“misses the point entirely.” Instead, it’s the “composition of the recovery” that will look very different and take us into a new economy. Hence, the “Great Reboot.”
Substitution and Adaptation
So what, exactly, does this mean? It means more e-commerce for one thing; more automation of jobs and occupational tasks. It means entrepreneurs and investors are, or should be, examining the “dynamic between substitutes and complements.” In the first phase of the pandemic, for example, we quickly substituted the virtual for the physical. Couldn’t go to the gym? Check out YouTube videos for home workouts.
In the second phase, says Morelix, activities that were resistant to quick substitution have seen an increase in digital complementarity. As we move out of the pandemic (eventually), whether after a vaccine or herd immunity, entrepreneurs and investors will help develop a new equilibrium, one that is much more digital than pre-COVID. Startups, for example, are already swarming into opportunities presented by office reconfiguration.
Morelix’s book provides an insightful dimension on the deeper transition we may be in the middle of. But, he’s not looking at this through rose-tinted glasses. He recognizes some of the downsides, too.
Fragile and Brittle Systems
Our systems, he says, were “over-optimized” before the crisis. We need to reduce “hidden fragilities.” What this means, Morelix says, is that entrepreneurs need to spend more time thinking about the downstream effects of their technologies and what modifications they might need to make now.
He is also generally pessimistic about how much governments can help citizens navigate the Great Reboot through public policy. The situation “isn’t hopeless,” he allows, but the pace of technological change is just too fast for governments to get a handle on. The book includes a toolkit for investors and entrepreneurs to apply in their work, and Morelix says policymakers will find the toolkit useful for their work as well.
What about implications for individuals—how can we thrive after the Great Reboot? This, Morelix says, is the “most worrisome part.” He reasonably points out that it’s “hard to give actionable advice that doesn’t sound tone deaf.” Some focus on the supply side of the question—the skills and (re)training that individuals need to succeed economically. Others focus on the demand side: the power dynamics of employer-employee relationships and how those shape individual outcomes.
On the policymaking front, I’m not as pessimistic as Morelix. A recent report from the Bipartisan Policy Center on artificial intelligence and the workforce outlines several concrete steps that can be taken. There are challenges for workers and employers and educational institutions, to be sure. But those types of challenges are also entrepreneurial opportunities.
That might be the biggest implication of the Great Reboot—the ‘great reshuffling’ that will come from those opportunities. “Lots of companies are in trouble,” says Morelix, “but founders and investors should be looking at the waves, at substitutes and complements.” That will be the power source for plugging the economy back in.