As employees around the world bide their time working from home, Facebook CEO Mark Zuckerberg confirmed that ‘normal’ may no longer be on the cards
For years now we have all known Silicon Valley to be the home of some of the largest tech companies in the world: Facebook (NASDAQ: FB), Google (NASDAQ: GOOG), Apple (NASDAQ: AAPL). The list goes on.
This era of Silicon dominance appears to be coming to an end though, with Facebook CEO Mark Zuckerberg showing the world that geographic diversification in hiring will become the new norm at the world’s largest social network. The billionaire said that Facebook would start “aggressively opening up remote hiring” in July, expecting that about half its workforce would eventually do their jobs outside Facebook’s offices over the next five to 10 years.
As if that wasn’t enough, earlier that very same day, Shopify (NYSE: SHOP) CEO Tobias Lütke declared the ‘era of office centricity’ to be over via his private Twitter (NYSE: TWTR) account.
As of today, Shopify is a digital by default company. We will keep our offices closed until 2021 so that we can rework them for this new reality. And after that, most will permanently work remotely. Office centricity is over.— Tobi Lutke 🌳🌲🛒🕹 (@tobi) May 21, 2020
And earlier this week, Twitter and Square (NYSE: SQ) both announced that employees were free to work from home ‘forever’.
While many outlets have discussed the benefits and pitfalls of remote working, we are in uncharted waters really as modern society has never faced a situation quite like the COVID-19 pandemic. Here are the good, the bad, and the possibly ugly implications of business permanently moving to our living room.
‘The Good’ implications of remote working
This is an easy one as we can see the positive effects every day. Slack (NYSE: WORK), Zoom (NASDAQ: ZM), Microsoft Teams (NASDAQ: MSFT) and other such stocks are all going to continue riding the positive wave of increased usage. Zoom stock alone has jumped more than 150% in 2020 due to heightened use, and that’s despite experiencing a litany of privacy issues.
Another business that will continue to thrive is e-commerce. Though this may not be strictly remote working-related, Amazon (NASDAQ: AMZN), Shopify, Mercado Libre (NASDAQ: MELI), and the rest are having a moment right now. With people working from home, it might accelerate the so-called death of retail as people swap the inconvenience of traveling (whether to work or the store) in return for the convenience of home delivery. Physical retail shopping could become nothing more than just a novelty to get out of the house at the weekend.
Cybersecurity is going to be a big player in maintaining the balance of safety as more and more businesses go remote. Companies who are part of ETFs such as ETF MANAGERS TR/ETFMG PRIME CYBER S (NYSEARCA: HACK) are going to be needed more than ever as companies are forced to beef up security in response to privacy threats related to remote working.
Potentially the biggest winner though will be cloud computing businesses, who are in high demand right now as companies adjust to new at-home technology. While Amazon and Microsoft are the outliers in that field, Google is fast catching up, with smaller players like Wix (NASDAQ: WIX) and Twilio (NYSE: TWLO) also reaping the benefits and hitting new all-time highs.
‘The Bad’ implications of remote working
I touched on one of the biggest implications in the last paragraph, in that bigger cities will suffer from increased ‘work from home’ policies.
Remote work reality will bankrupt many cities.— Shervin Pishevar (@shervin) May 21, 2020
During the average workday in Manhattan, it is estimated that workers increase the city’s population by roughly 2 million. That’s 2 million potential customers for shops, bars, restaurants, cabs, Uber’s (NYSE: UBER), and so many more businesses. Not only will strong black coffees from Starbucks (NASDAQ: SBUX) no longer be required for burly businesspeople in gray suits or ‘Patabronias’, but massive office spaces will become unnecessary.
And what about the auto industry? With less people commuting, demand will falter. Ford (NYSE: F) and General Motors (NYSE: GM) have already experienced years of adversity, seeing their stocks plummet to record lows, while Tesla (NASDAQ: TSLA) is still in its infancy as a business in comparison. According to a 2019 ‘CITYLAB’ study, more than 76% percent of U.S. workers drive to work alone. With 1.88 vehicles per average U.S. household, will there be any need for that second car if one or both occupants are working from home?
Let’s not even get started on the implications to the airline industry. I’ll let my colleague Mike deal with that one:
‘The Possibly Ugly’ implications of remote working
Not everyone wants to move to remote working full time. In fact, in a recent survey by ‘getAbstract’, 43% of full-time American employees said they wanted to work from home more often once business normality resumed. Best case, this means that enforced remote working from companies like Facebook or Shopify means that 57% of workers will be unhappy with their at-home situation.
Who is to say that the ‘honeymoon’ phase of remote working won’t wear off quickly either? I know it has for me personally. Productivity could become a problem. Coming off the back of the longest bull market in history, which brought the world some of its greatest ever innovations, how many great ideas could be lost because someone who thrives in an office environment has been siloed off from the rest of the team. It can be hard to bounce ideas off of one another, isolation could lead to mental health issues such as anxiety, and enthusiasm for the businesses mission could diminish.
And lastly, not everyone has the privilege to work from home. What about the recent college graduate sharing a rundown flat with 5 roommates, or the parent of 5 who can’t possibly hope to get any work done in their hectic home.
The world is changing
There is no denying that the world is changing, and the remote worker will certainly become less of a social pariah than before. However, businesses that seek to move remote will need to consider all angles, and I personally don’t believe that we will ever become completely remote. Apart from the obvious jobs that are not possible remotely, such as manufacturing and medicine, remote working is not completely sustainable, and the office space will make a return and evolve as it always has.
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