The Diffusion of Everything

650 Labs founder Mark Zawacki has a deceptively glib way of summing up the changes he sees ahead of us: “No more $14 avocado toast!” Of course, as the creator of a consultancy helping non-technology multinationals understand Silicon Valley’s disruptions, we should expect a quip like this from Mr. Zawacki. It’s a simple hook, but one capable of surfacing ideas of dazzling complexity. 

In this case, the ideas flow from a theory he calls “the diffusion of everything.” We unpacked this in a recent discussion with Mr. Zawacki, an individual who has consulted more than 300 clients globally about growth and disruption. 

The “avocado toast” bit is, of course, a reference to the outlandish expenses you encounter in urban centres like Silicon Valley. According to Mr. Zawacki, these places will experience profound transformation in the days ahead as assets, power, and resources are diffused, redistributed, and reconfigured. 

The primary trend driving these transformations is the movement towards remote and hybrid working arrangements, which he calls “the new normal”. Clearly, this new normal has implications for where people will choose to live and spend their workdays. 

“Here's an idea: instead of having one office for 200 people in the central business district, maybe you have for office of 50 people and their [schedules] are just spread out. This will shrink the cores of our cities. What if our occupancy levels dropped by 40 or 50%, the way some planners are expecting?” 

Zawacki anticipates that remote workers will increasingly “play at arbitrage”. They will enjoy more affordable lifestyles outside of the urban centre while their companies continue to pay them cosmopolitan wages. While these individuals “game the system”, there will be costs to pay elsewhere. 

“Generally speaking, urban areas tend to have higher educated people that earn higher wages. If those people leave, where's the tax revenue going to come from to provide services? This is a real issue right now in New York and San Francisco. What happens when half of restaurants don't open again in San Francisco, London, and Paris, as was recently estimated?” 

Of course, the remote movement has implications for more than just cities. Zawacki is outspoken in this view that universities, which have been ripe for disruption for years now, are in a tenuous position. 

“Google announced that they're going after universities globally. [The deans I’ve spoken to about this say,] ‘This doesn't touch me. It's beneath me. We still offer an experience that they can't touch.’

“But I have this simple way of looking at disruptions: I say any large industry with giant pools of money that’s slow to change will be relentlessly attacked until that value shifts somewhere else. That happens time and time again. University education is the same way. We have these horrifically expensive universities in America and their educational expenses have outgrown wages by 2-3% per year for the last 30 years in a row. The imbalance between the cost of an MBA and the average starting salary of an MBA graduate is completely out of whack. Now, Google is coming in and they're saying, ‘I can teach you real practical job-related skills that we’ll give you certificates for and, by the way, we are going to accept these in lieu of a university degree.’

“All of these things are going to be fundamentally rethought.” 

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Interested in hearing more? This article was extracted from our discussion with Mark Zawacki, on our podcast Straight Talk in the COVID Economy.

Listen to the full discussion here: https://podcasts.apple.com/au/podcast/straight-talk-in-the-covid-economy/id1523572830?i=1000493323084

or watch the video on YouTube: https://www.youtube.com/watch?v=Pnu1f68qv-Y&t=2s

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This article was written with Resilient Futures writer Kristin van Vloten.