Until Chat-GPT do us part. Rocking the boat of the Degree Bazar

Layoffs by Tech giants - Pump & Dump on Wall Street, Boom & Bust in Silicon Valley

In 2019 Apple became the first company in the history of business to exceed a market cap of 1 Trillion USD.

2 years later that figure jumped to 3 Trillion USD, with Microsoft and Google showing equally impressive gains. And Elon Musk became the world’s first trillionaire.

Today, these valuations have crashed.

And the recent layoffs by Silicon Valley’s Tech giants across their global offices suggest a causality, not a correlation.

The cause may not be the heady optimism of ‘get-rich-quick’ equity traders in the boom phase, but the scrutiny of the fundamentals of these businesses by strategic investors focused on dividends, whose logic could be as follows:

• The boom in revenues of tech giants was triggered by Covid 19 – when WFH became the norm, leading to increased purchases of tech equipment and services that enabled many non-tech businesses, and thereby their employees, to survive. ?
• Naturally, the business of the suppliers of tech hardware and services – the aforementioned tech giants - boomed. Naturally, so did their stock valuations.
• And the return to normalcy after 2 years of Covid lockdowns is one reason for reduced demand, and therefore reduced earnings of Tech Giants.

An added reason could be pessimism of investors, and belt-tightening by consumers, following Russo-Ukraine and China-Taiwan military tensions..

So big investors, sensing a coming recession, may be asking tech giants to tighten their belts too. ?Result – Layoffs. In demographic terms, Cash dividend took precedence over "Youth Dividend”.

Impact on Startups - Cash-Burn orgies end, profitability for survival begins

Investors in startups, meanwhile, are pressurising them to end long-term term cash-burn parties (orgies?) and start delivering profits, instead of click-bait content for eye-balls on digital media.

And talking of eye-balls, human beings have four other senses, which Covid, WFH and long hours on-screen did not feed as much.

And it is this that, first, led to “Revenge Tourism”, and now the touchy-feely experience of good old-fashioned (brick & mortar) retail therapy that online shopping cannot (as yet) match.

And, incidentally, Amazon, too is laying off staff.

(Do read “Call of the Mall” for more on the subject)

Impact on Digital Media and Advertising Industry

Talking of eye-balls, health warnings about eye-strain and ADHD due to excessive on-screen time, may hurt the digital media industry, too. And hurt not just carriers like Google Ads, Meta etc., but also the creators of the content that they carry - be it (digital) advertising, or its new ‘bros’ – influencers.

In fact, friends in the Advertising Industry tell me revenues have been on a downturn for some time now. (There are additional reasons – more in the sequel to this piece).

Pay cuts in these industries today may signal lay-offs tomorrow. And like in the IT industry, the hot topic may well become "Upskilling/Reskilling".

Upskilling/Re-skilling - But to which skill?

Generations of (mostly middle-class) parents mistook a degree for a skill, and invested their lifetime earnings in the former for their offspring.

And if that distinction has not yet been made by current layoffs, then the latest accomplishment of Chat-GPT will - because it recently composed answers to a typical college question paper that college professors rated as a “B”. And soon, it could “UpGrad” to composing theses that could earn it a PhD when peer-reviewed.

Chat-GPT v/s the Degree Bazar

Chat-GPT could pose a threat to the education industry – which after an explosion of coaching academies (offline and online), has morphed into a Degree Bazaar.

The first nation to understand the distinction between a degree and a skill may well be China, which acted quickly by banning private “education” portals last year.

The heavy losses of, and recent layoffs by, “Unicorns” in India’s own Degree Bazar maybe a pointer that China was right.

But since the CCP has not yet published an official paper on its motives, the rest of the world needs to understand why.

Why asking "Why?" is vital sign of human intelligence

Because asking why is a vital sign of curiosity – the “Child State” that is the root of human intelligence. And thereby, discovery.

Because discovery is creativity.

And creativity, b.t.w, is originality, and not the "Cut/Copy and Paste" state that Artificial Intelligence (of which Chat-GPT is just a superior User Interface) is currently at.

And while Artificial Intelligence is replacing humans in "Cut/Copy and Paste" vocations such as the vendors and consumers of the Degree Bazar currently, its difficult to predict the stage it will evolve to, and what more human vocations it could then render redundant.

But it does give us time to pause and reflect on the "Raison-D- Etre" of humanity in the future. And what education ought to be, for human intelligence to evolve faster than AI.

So the question is not "If", but "When", should the discovery of the distinction between a degree and a skill begin?

The IKE principle may help answer this question.

Because it teaches us that leaders, as opposed to followers, are distinguished by their ability, before taking action, to make a critical decision - What is urgent (tactical actions) v/s what is important (strategic actions).

And this ability is critical because, when the important is ignored until it becomes urgent, the result is a crisis.

And a crisis clouds clear thinking. And while the IKE principle originated in warfare, it is applicable in business as well.

E.g., in the case of businesses driven by their brands, crisis is signaled by tactical actions - “Hurry! Offer Open while stocks last”, “2 for the price of 1”, “Early Bird Offer”. Or, when such tactics fail, resorting to equally tactical actions such as a new logo and/or name for the same brand.

And such a crisis could overtake nations with a high birth rate soon – turning their “Demographic Dividend” into a “Demographic Liability”.

Because, unlike pensioners, laid-off youth doesn’t rock its chairs.

It rocks the boat (E.g. the "Agni Veer" riots in parts of India in 2022)

Especially in countries without state-sponsored social security benefits like unemployment 'dole' (e.g. UK's UB40).

So, if unemployed/under-employed youth is a strategic problem confronting a developing nation, what could be its solutions?

Do write in with your ideas, while I think of mine.