Apologies for being away…wish I had a legitimate excuse.
I read with interest about the purchase of Instagram by Facebook last week for 1 BILLION DOLLARS. Whether or not Facebook overpaid for this property (they did), one cannot deny that this latest Internet fad had a meteoric rise in popularity (and price). As I read the article, while I meditated on the unreality of a billion dollars, my eye was caught by another, slightly smaller, number.
Instagram has 14 employees.
While it is easy to see this as a lottery situation with 14 lucky winners, I see the number in a different business sense. If we take the economy of the world as a limited number, then 1 Billion of the total worth employs 14 people.
Kodak, a more traditional photo company, has hit financial hard times. Though valuation estimates vary, the company is estimated to be worth between 2-3 Billion, and this does not truly reflect what the purchase cost of the company might be. Given its current Chapter 11 bankruptcy status, many suggest that that purchase value might be quite less. The company employes over 17,000. So, even using the most generous valuation figures, in this company 1 Billion employs over 5000…in a failing company.
As I looked at these numbers I was struck again by a concern that has been gnawing at me. If more and more value is attached to companies with fewer and fewer employees, where will everyone work? It would take over 1000 Instagrams to employ Kodak, and even with the explosion of Internet business, there is no way that this area can accommodate the employees of the companies that are currently threatened by new models.
Now, I’m not trying to go “grumpy old man” on this. I’m not nostalgically trying to hold on to old models, and I recognize and encourage schools to embrace new models of distribution and instruction. However, behind this evolutionary movement is a belief that when the music stops, there will still be enough chairs for all of the players.
When I talk about this to others, I’m often reminded of the employment changes of the Industrial Revolution. Though I wasn’t there to watch, my sense over time was that the workforce adapted to these changes and people were by and large able to find work and build lives within new realities. Maybe the same thing will occur and we will find new ways to employ people. However, in a market driven economy, I don’t know how the motivation to create a billon dollars through 5000 can beat creating it through 14.
I don’t think we can (or should) artificially retard the pace of progress, but as I keep running by as chairs are yanked away, I hope that there will be seats for my daughter, and for the sons and daughters of others.
As always, I welcome your comments.