New Zealand In My Eyes

I love New Zealand.

I’ve lived here for about half my life. I was born in Washington DC, but moved before I can remember (and I’m not entitled to US citizenship). Since then, I’ve also lived in the Cook Islands, the Philippines, and Spain. I’m lucky in that I’ve seen enough of the world to know what makes New Zealand so great, and also what holds us back.

Whenever I’m overseas, I’ve always felt as though I’m a representative of the entire country. At the schools I’ve been to in other countries, I’ve always been the sole New Zealander (and these have been big schools). Everyone has known me as “the Kiwi”, and I’ve always been proud when called that.

Growing up as a representative of New Zealand – and being lucky enough to know what that means – has given me a truly huge respect for this country. Most of what people say is correct. We are a bloody inventive bunch. We’ve got values and a heart. We are friendly and happy. We have a stable and uncorrupt government, no matter who’s in power and what anyone says. And we’re lucky enough to have an abundance of the colours blue and green – some of the best and most beautiful natural resources in the world.

Going forward, it is of utmost importance to me that New Zealand not only remain relevant in the world, but emerges as a clear leader in the world.

It should be clear to everyone by now that the world is in a rough spot at the moment. Both Europe and America – long the leaders of the world – are clearly on unsustainable courses. Power is shifting. New leaders will emerge over the next decade. China is clearly one, but there is room for others.

I’m writing this post right now because: 1. New Zealand is heading in entirely the wrong direction and will decline in power and wealth over the next decades, and 2. I want New Zealand to be a wealthy world leader.

There are people far more experienced than me talking about these things. Sir Paul Callaghan explains why we’re going to become poorer and more irrelevant on our current course. Derek Handley shows us an alternative path, and inspires us to take action. Andy Hamilton tells us about the role of smart enterprises in a brighter New Zealand future.

New Zealand currently has two key sources of value that give us our place in the world: tourism and dairy. Let’s examine these going forward, drawing on the insights and statistics of Sir Paul Callaghan.

New Zealand has 1.3 million FTE (full-time equivalents, essentially the number of jobs available). We also have a per capita GDP of approximately $40,000. In order to maintain our current GDP of approx. $125billion, we need a GDP of $120,000 per job. Tourism in New Zealand produces around $80,000 per job. That’s two-thirds of the per-job GDP we need to sustain our current GDP, which means the more tourism we export, the poorer we become. We are immediately doomed if we at all try to increase tourism, which is what a large majority of people currently seem intent on doing.

Dairy, in contrast, produces $350,000 per job. Sir Paul Callaghan says it succinctly – “Without dairy, we would be desperately poor”. However, dairy is finite in capacity. We only have so much land to farm on, and we’re not too far off its capacity.

I’ll repeat: the current course that New Zealand is on will not allow us to even sustain our current GDP, let alone grow.

Countries like Singapore and Hong Kong didn’t grow through their natural resources (they don’t have any). And remember, thirty years ago New Zealand was providing aid to Singapore. Now they both have GDPs twice as large as ours. New Zealand will never become relevant in the world, as Singapore and Hong Kong are, if we continue to focus on growth through our natural resources.

Throughout New Zealand’s history, our key weakness has been our physical distance from the rest of the world. It costs huge amounts and takes a long time to export to other countries. It takes ages to travel anywhere. We’ve actually done remarkably well exporting dairy and tourism, considering this.

In the twenty-first century, New Zealand’s physical distance from the rest of the world became a competitive advantage. Well, it would have, if we’d pursued other sources of growth.

The Internet. You’ve heard it before. It breaks down physical barriers. That’s what it does best. No longer do we write physical letters, or need to travel across the world to see people. No longer do books and newspapers need to be printed and sent here. No longer is New Zealand restricted to growth through bringing people to the country or sending goods out.

The Internet is the biggest opportunity New Zealand has ever had, and ever will have. It allows us to achieve growth and sell products at absolutely no additional cost to what it costs other countries to produce. We can reach the rest of the world in milliseconds, compared to the previous days. Furthermore, our physical distance from the rest of the world becomes a competitive advantage to us because the smartest people in the world will want to come and live and work in a beautiful, pristine island.

And here New Zealand is building a national cycling track to encourage tourism, destroying areas of forestry to turn it into farming land, and then selling great chunks of our land to the Chinese.

The stars are aligned for us. Global power is shifting at the same time that the Internet gives us another path to growth. I refuse to let my country miss the biggest opportunity it will ever have. I refuse to let New Zealand become poor and irrelevant, when it could become a rich world leader.

This post marks my commitment to doing whatever I possibly can to create a rich and powerful New Zealand. This will be a core tenet of my life.

Watch Sir Paul Callaghan and Derek Handley’s talks. Follow Derek’s advice on what you can do right now. Think about the New Zealand that you want and how we might get there.

To finish, I’ll quote Derek, as he says it best:

“As we continue through the twenty-first century, New Zealand can choose to be an idle bystander, or it can choose to be a shaper of this century. The former path is a path to failure and irrelevance as a country – and those failures as a collective will cast a long black shadow over the Land of the Long White Cloud for many, many years to come”.

3D Printing

I’ve been re-reading lots of old Economist issues these holidays – it’s incredible to see how much things can change in a year. One article I read was titled “Print Me a Stradivarius”. It talked about 3D printing technologies, their uses, and their progress. It’s an absolutely incredible technology, and I have no doubt that it will revolutionize a large majority of physical-good industries on the planet.

Whilst reading this article I found myself thinking about the consequences of 3D printing on brands. Currently, I believe that successful brands are created through two things: creating an image and lifestyle that people find desirable, as well as achieving a scale large enough to produce at low cost and reach multiple markets. A truly successful brand (in the global sense) must be in multiple markets and be able to achieve scale that other producers simply cannot achieve.

It’s easier for individuals, or small companies, to create a desirable image and lifestyle than it is to achieve scale and reach multiple markets. This is why we see many local producers with desirable brands, but which simply never achieve success beyond a specific market.

3D printing changes the second half of this equation to create a successful brand. Specifically, it acts in a similar way to the Internet – it outsources the production of goods and services. A large brand no longer needs to create the products itself – it has the ability to sell the designs and perhaps materials, but then let the customer actually create the good in their own house.

Now I don’t see large brands outsourcing their production to consumers any time soon. But many smaller producers, who are held back through their inability to achieve scale, will look to alternative models. I believe they will focus on designing products, and then simply sell the rights to the design to consumers, who will subsequently create the physical good themselves.

All of a sudden, small brands that have never had the ability to reach global markets have the same capacity to reach global markets as large brand corporations. In fact, there are significant advantages – they can focus on what they’re good at (designing great products) and not have to worry about anything else such as manufacturing and shipping. Consumers will be able to create the product minutes after they’ve purchased the design, meaning they don’t have to wait for a company to ship a product across a country or the entire world. It’s also much cheaper since shipping isn’t needed, and manufacturing on a 3D printer will be comparatively cheap.

Large brands may no longer hold the power that they currently do. Consumers worldwide will have access to brands that better suit their image and lifestyles, and will have more options as to the exact product they can purchase and create. Why will consumers continue to be drawn to the multinational brands when they can get goods that are more precisely suited to them?

This is a huge opportunity for small producers wanting to reach global markets. I believe 3D printers with the capacity to create clothing and static goods will be cheap enough for purchase by households within five years, and maybe even sooner than that.

There are also risks. It opens up all types of static goods (meaning non-electrical, without moving parts) to piracy. Just like movies and music, someone purchases the design, sends it to their friends, and they print it for free. Perhaps a subscription model may make more sense – you subscribe to a brand for a year and get to choose a new product each month for the year.

If you think about it, retailing physical goods hasn’t changed much at all in decades. Sure, a greater proportion of goods are purchased through websites and then sent to buyers, but that’s hardly a change in model – just a change in method of delivery. 3D printing will completely change the industry.

There are surprising parallels with the music and movie industry. The big clothing and product retailers will play the role of the music and movie companies. Small brands will play the role of the upstarts. Heck, we’ll even see a version of Napster or Limewire specifically for pirating physical good designs.

If you’re a small retailer, this is your opportunity. If you’re a big brand, you can either hang on to whatever you have but eventually lose, like music and movie companies – or you can revolutionize and be at the forefront of this movement.

PS: I’d like to give credit to a commenter with username “hatterloko”, who commented on my post about the “Motor of the World”, suggesting I think about 3D printing and what it could do. If he had not commented, I may not have read the article in the Economist. A prime example of why I blog, and why I love you guys commenting – I think about things that I otherwise wouldn’t. Thank you!

The Startup Strategy Matrix

I’m currently writing an “extended essay” – a core part of the International Baccalaureate Diploma, which I’m in my last year of. The essay can be on any official subject that the IB offers, and I’m doing mine in business and management. Specifically, I’m writing on scenarios where lean startup methods should and should not be used – trying to discover set cases where it would make more sense to use “fat startup” methods.

The essay requires that I write about “commonly accepted business and management theorists and their theories”. In researching for relevant business theories I came across Ansoff’s Growth Matrix. It’s a simple grid showing the actions that companies should take when trying to grow by entering new or existing markets with new or existing products.

It looks like this:

In terms of startups, the matrix is pretty useless. The vast majority of Internet startups are in the bottom right-hand corner – they are entering new markets with new products. Ansoff’s Matrix tells them that they should “diversify”. Diversification isn’t a term I associate with startups, and it doesn’t actually give us a great deal of information about what precisely the company should be doing.

However, I do think the fundamentals of the matrix (the axes) could be usefully applied to a startup-specific context.

In my research I’ve found out about a lot of startups that have used lean startup strategies (because everyone’s talking about them and they’re meant to be best for startups), only to fail by missing out on an opportunity or spreading themselves too thin. From looking at them more, these startups that failed in such a manner were either entering a new market with an existing product, or entering an existing market with a new product. I don’t believe that lean startup methods are appropriate for startups in these categories.

I believe that only startups in the bottom-right corner should utilize lean startup methods. They know absolutely nothing about their market and therefore should use the strategies to learn about their market (along with Steve Blank’s Customer Development model). Startups that are in the top-right or bottom-left corners should use “fat startup” methods. They will likely need to raise a lot and spend fast, as if they are entering a new market with an existing product they simply need to be there first, and if they are entering an existing market with a new product they need to carry out traditional product development with marketing on top to attract new customers.

Startups entering existing markets with existing products are not startups at all. There is no uncertainty – they can just get a bank loan to fund everything as there is such a high degree of certainty.

I did this up quickly, and think it should be called the Startup Strategy Matrix.

It’s very simple, but if a few startups that I’ve been looking at had taken a look at this before they began, they might have dodged failure and be doing millions in revenues. Think of Groupon clones as an example – a local Groupon clone that I saw here in Wellington began using lean startup methods, even though they were entering a new market with an existing product. They didn’t need to learn a thing about their market – they just needed to get to the market first. Nevertheless, they spent frugally and spent a lot of time testing aspects of the website. Missed opportunity and an epic failure – stupid.

What do you guys think?

Respect for the Motor of the World

I ordered some clothes online on Tuesday from a British retailer. They arrived in the mail this afternoon (Friday). I haven’t thought about mail companies or courier services in the past – they’ve always seemed a bit boring and unimpressive. But for some reason today I started thinking about how it all works and became amazed by it.

For a little parcel to be sent from a warehouse in Maidstone in the UK to my home in Wellington in just three days is just incredible. It was sent by DHL, and I could track it every step of the way. From Maidstone, it was sent to London Heathrow, then to Leipzig, then to Singapore, then to Auckland, then to Wellington where my house is.

Think about it. At each of those places it had to be transported on the ground as well, and scanned so that they could track its progress and update it online for me. It likely passed through at least six ground transport vehicles and was presumably handled by a similar number of individual humans on the way. That’s on top of the five flights it made (two long-haul).

DHL probably has tens, if not hundreds, of thousands of parcels being sent simultaneously across the globe to an almost equal number of individual destinations. And DHL is just one of the courier companies in the world (albeit one of the biggest).

Companies like DHL literally make the world go around. Without them we wouldn’t have economies or really be considered a globe. It’s a huge feat to deliver a product from one building on the top of the world to another building at the bottom of the world in three days. For fifteen pounds. This happens every single day, with millions of items (and people) and I’m embarrassed to say that I’ve never felt in awe of this machine before. In it’s broadest sense, that’s what the collection of global companies is – it’s a machine, or a motor, that makes the world function as we expect it to.

I’ll admit that I take most of the modern world for granted. Computers, mobile phones, skyscrapers, airplanes, supercars, and, yes, the ability to buy things from the other side of the world and receive it within three days. I’ve expected it without thinking about it in the past. Recently, however, I’ve been noticing how complex so many of these systems are and how great a feat they are.

There’s a couple of ways to look at all of these incredible things that the modern world gives us, in my opinion. The first is we can look at it all and say “It’s such an incredible world and individual humans are such a small part of it”. Or, the way I look at it, is we can say “It’s such an incredible world, and all of this incredible stuff was created by human beings”. Yes, it’s a machine that makes the world go around. But the machine was created, and is maintained, by humans. We’re pretty impressive creatures.

I’m gaining a healthy respect for most of the things I’ve previously taken for granted. If you take them for granted too – I hope you’re thinking about them in a slightly different way, like I now am.

Saving Time (Quitting Facebook)

From now on, I am only going to use Facebook for two things: managing Pages, and private messaging people.

It’s been a long time in the making. Facebook has frustrated me and annoyed me more than it’s ever helped me. But at the same time I’ve kept thinking that I’d suffer if I didn’t have it, so I’ve never actually stopped using it.

There are a few reasons why I’ve stopped using Facebook for anything other than these two things. Firstly, in all honesty, and in exactly the same way that I’d say this in real life, I just don’t give a shit about what the majority of my “friends” post. I care about what my close friends and family are saying and doing – and Path has given me a medium that is a million times better for hearing about those things. Hearing about other stuff is just a waste of my time, and Facebook is only getting more and more noisy since they introduced Subscriptions.

I also care about hearing business, technology, and world news from some of my friends on Facebook. But all of these friends on Facebook that share that sort of news, I also follow on Twitter. Facebook is redundant.

The truth is that what I’ve loved about Facebook is having all of my friends in one place. I use Facebook to private message friends who I’m not super close to, but want to catch up with once in a while. I don’t have their email addresses or phone numbers, but I know I can always Facebook them. I also need to manage some Facebook Pages which are very useful professionally. That’s the only other way I’ve found Facebook useful.

So, I’m going to stop wasting my time and give up everything about Facebook that I hate, and I’m going to hold onto what I do find useful about Facebook.

You can no longer post on my wall. You can no longer view my photos (apart from wall photos which Facebook makes it way too hard to make private). You can no longer view my conversations with others on my wall. You’ll no longer see me commenting or liking. And you can be sure that I’m not going to read anything on my News Feed.

You can still private message me. And you can get in touch with me in lots of other ways that I’ll probably pay more attention to.

Just thought I’d let you all know why I’m doing this and why you won’t see me active on Facebook anymore (if you’re my friend). I’m also interested in finding out if anyone else is doing anything similar, or if you’ve quit Facebook entirely. If so, why?

A Plug For Good Design

I was in a Lufthansa Senator lounge at Frankfurt Airport on Christmas Eve when a guy sitting in an armchair nearby pulled his laptop out of his bag. His laptop was a MacBook air, and it was in a dark-colored, textured case with a bit of leather near where you’d hold it. To me it was the most beautiful laptop case I’d seen. I’m not usually one to go asking people where they’ve bought stuff from, but I seriously wanted to know where he’d got this case.

He wasn’t surprised when I asked him where he’d got it from, saying that he got a lot of people asking. He was German, and said a small company from Hamburg, where he lives, made the cases. The company is called Pack & Smooch.

I went on the website straight away, spent a minute deciding what color I wanted, and then ordered myself a case for my MacBook Air. It arrived in the mail at my house in Wellington today.

In case you haven’t worked it out by now, this post is just a complete pitch for a beautiful product that I am very impressed by. I love good design, but I feel that it’s so hard to come by.

The case is made out of merino wool (unfortunately from Australia), with a patch of leather as a carrying grip. They make cases both light and dark colors for iPad, laptops, and iPhones. I bought the light-colored laptop case, but will be ordering cases for my iPad and iPhone too. 

If you want a case for your iPad, iPhone, or laptop, get one of these cases. It’ll last longer than the technology it’s carrying, and you’ll enjoy using it every day.

Okay, pitch over. You won’t find many plugs for products on this blog, but when I see something that I totally love I’ll be posting it. Thank you for the opportunity.

Chronic Unemployment

Structural unemployment is a form of unemployment that occurs because worker’s skills are outdated, or not desired by employers. Technological unemployment is in some ways a type of structural unemployment caused specifically by advances in technology – as technology automates jobs, workers become unemployed with no skills to gain other employment.

Both of these types of unemployment are traditionally fixed through supply-side policies such as training and educating workers so that they have skills desired by employers. This fix is costly to taxpayers as it is not cheap to provide education. However, in most cases, it is a fix – workers will be able to find employment after being trained and educated. Structural and technological unemployment are in most cases temporary because of the government’s supply-side efforts.

But what if technology advances so much that employers simply don’t need as many workers, no matter what their skills?

I’m not just talking about manual labour here. Obviously manual jobs are being replaced by robots and others forms of technology. But again, these people can be up-skilled and subsequently find re-employment. I’m talking about when technology becomes so advanced that people cannot up-skill to a point above the capacity of the technology so as to become desirable to an employer.

Technology is starting to cause people with university degrees to become unemployed. Law firms don’t need as many lawyers because much of the research can be done in one-hundredth the time it previously took. R&D departments need less engineers and managers because the processes have been automated. Teachers are becoming irrelevant as we learn online. I’m talking to friends of mine who have masters degrees and cannot find a job. It’s a global problem that most people are blaming on the economic downturn. I don’t fully believe that. It may be a part of it, yes – but I believe the main cause of this unemployment is simply advances in technology.

It’s only going to get worse because technology will never stop advancing. We’re going to see technology continue to progress at faster rates every single year than it ever has previously. And the technology is going to become (already is becoming) so advanced that it will render people with masters degrees “unskilled”. No company will hire an individual whose skills can be done by a form of technology at a tenth of the cost. Technology also doesn’t require healthcare and stock options.

Where is this going to lead? If people simply are not needed and therefore cannot gain a form of income, what happens? How do they live?

In the short-term, governments won’t realize that the problem is advances in technology. They’ll keep paying benefits to more and more people, while funding supply-side efforts to train workers. They will subsidize university. They’ll focus on education to begin with. They also might try demand-side policies – by increasing government spending, they can fund more jobs. So we’ll see governments employing more people. But none of these solutions are long-term. They’ll simply lead to a waste of resources in every country.

And when governments do realize that the problem is advances in technology? Well, stopping advances in technology to save jobs is ludicrous. I hope that no government ever considers that.

I think this is a massive problem that will start to show just how serious it is in a couple of decades. This will be one of the major problems facing economies (excluding, ironically, developing economies) in this century. And I don’t have an answer to the problem.

Personally, I want to be at the forefront of developing these technologies. I guess it’s a kind of “If you can’t beat ‘em, join ‘em” mentality. I also think that entrepreneurship is going to explode in societies as a result of this problem. People who can’t find jobs will simply create one for themselves. In this sense, this may be a blessing to modern societies.

After I began thinking about this issue, I tried to find more writing on the topic. I couldn’t find much, other than a book by one Martin Ford, called The Lights in the Tunnel. I’m reading it now, and will likely write another post once I’ve finished it. If you know of any other writing done on this topic, please share it with me – I want to find out as much as I can.