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Knowledge Economy Episode One: Challenges

The Knowledge Economy.

If you’ve heard that anywhere it’s probably from a politician. It’s supposedly the industry (or industries) of the future. For Australians, it’s what’s gonna save us once the world runs out of interest in our coal and iron. For a developed country with rather high wages and cost of living, albeit with a highly educated workforce, it could be our last dash at a comparative advantage.

For a while now I’ve been wondering about the knowledge economy. Especially the tech part of it. You see, unlike any industry that has come before, tech (web 2.0) is location agnostic. There isn’t necessarily a connection between the user of an app and its creator. For example: the app I’m using to write this blog post, on my phone while sitting on the train in Sydney, was written by a Swiss firm. And I purchased it through an Irish shell company, of a Dutch subsidiary, of an American giant (Apple). It’s globalisation at its finest. Or, as a future source of steady employment and tax revenue for a nation, its worst.

The Australian tech scene is phenomenal. I hadn’t realised how vast and varied it was before I was commissioned to do a series for the Community Radio Network. But it’s also facing a lot of challenges. Number one being that we aren’t Silicon Valley. We don’t have all the advantages of decades of agglomeration: the billionaires, infrastructure and cache. How, then, can we count on this industry to underpin our economy? When an app maker has no direct connection to it’s consumers, what’s stopping them moving to a friendlier locale when the going gets tough?

This is the question I set out to answer in a ten part series on Australia’s knowledge economy. My colleague Ellen Leabeater and I interviewed entrepreneurs, investors, mentors, and politicians. Here is the first episode, the challenges:

As usual, if you can’t see the audio player head over to

(image: OTA Photos)

The Year Without Pants by Scott Berkun

theyearwithoutpantsSpeculating about what the future will look like is generally a waste of time. For every correct prediction, you get innumerable Jetsons fantasies. There is, however, a lot to learn from what’s happening right now. Some of the most interesting possibilities thrown up by the information revolution are distributed teams and location agnostic workplaces. Moore’s law and ubiquitous WiFi has given us the power to work from almost anywhere, and at any time. Yet soul-crushing partitions, dreary commutes, and senseless “business hours” rule supreme. Why haven’t companies leaped upon these opportunities? Automattic, the company behind and it’s various tentacles, has. Scott Berkun spent a year working for Automattic, and in a Year Without Pants he gives us a fascinating look at why and how it works.


“An amazing thing about our digital age is that the person next to you at Starbucks might just be hacking into a Swiss bank or launching multi-warhead nuclear missiles continents away. Or maybe he’s just on Facebook.”


The author, Scott Berkun, was a former Microsoft Employee and has written a great many books that I have been recommended to read (I’m getting there). Hence why he was hired in the first place, hired to help with a mammoth experiment in how Automattic is run, and hired on the condition he could write a book about his experience. So there are a great many excellent points in this book that I could focus on. But there are two that really interest me more than anything else: the possibilities that distributed teams offer, and the culture at Automattic that allows it to work.


“Since location is irrelevant, Automattic, the company that runs, can hire the best talent in the world, wherever they are.”


The Year Without Pants begins with Scott’s team hard at work in the lobby of a hotel in Greece. Two Americans, an Australian and a Brit, meeting in person for only the second time, and yet seamlessly beavering away on an update that would affect millions of people. This one scene illustrates what is possibly the greatest advantage to be found in distributed teams: the talent pool you can draw from is global. If you flick on the news almost anywhere nowadays you are likely to find red-faced businesspeople fuming about a lack of qualified workers, or politicians promising some new scheme to fix the problem (curriculum changes, special visas, incentives, etc.). Automattic get’s to bypass all of this. While Facebook lobbies Congress to keep and hire foreign-born engineers, Automattic hires the best and brightest wherever they happen to be.


“A central element in Automattic culture was results first. Nobody cared when you arrived at work or how long you worked. It didn’t matter if you were pant-less in your living room or bathing in the sun, swinging in a hammock with a martini in your hand. What mattered was your output. Shouldn’t the quality of work be the primary measure of worker performance? Isn’t it good, then, to eliminate traditions that get in the way and add ones that help?”


The next point ties right in with the first: a distributed team means a team that crosses ethnicities, languages and timezones. In a globalising world and with an already globalised internet this is a comparative advantage beyond compare. (My own website is run on WordPress but is not hosted by Automattic. So whenever I have a problem I have to wait for someone to be awake and working in Salt Lake City. If you don’t think switching to a service where someone is always on is enticing, well, you’ve got another thing coming). The last great advantage is quality of life for the workers themselves. Automattic employees get to work from home, a Co-Working Space, a coffee shop or pretty much anywhere they feel comfortable and are productive. There are no dress codes, set hours or people looking over their shoulder. And with a relatively flat hierarchy and leadership spread across timezones, the only metric they can really be judged on is their output. For many that mind sound scary, but personally I can’t imagine a more enticing work environment. Let alone one more flexible and conducive to changing lifestyles.


“…how loaded workplaces are with cultural baggage. We faithfully follow practices we can’t explain rationally. Why is it that work has to start at 9:00am and end at 5:00pm? Why are you required to wear a tie if you’re a man and a skirt if you’re a woman? Why are meetings sixty minutes long by default, and not thirty? We have little evidence these habits produce better work.”


All of this, of course, comes down to culture and the nature of the work. They are what make it possible. Automattic is blessed with their product and employees: many Automatticians started out contributing to WordPress as a hobby, and most if not all believe in it’s ideals of democratising publishing.They are also all creative: building and fixing a platform that powers twenty percent of the internet. The same can’t be said of most businesses. But the leadership of Automattic also seem to go to extraordinary lengths to be transparent, empower their team (read: treat them like adults), foster a community, find the right people, and act like people not robots. The stories Berkun relates of their hiring practices (such as project based rather than interview based evaluations) and parties and getaways gives you the impression of a company that realises culture is important, and tries very hard to get it right. Really, the numerous tangents Berkun goes on about culture are worth the sticker price on their own. And the fact that Automattic endorses a book that includes anecdotes of company drinking parties and senior employees taking part in evaluations while hung over, just drives it all home.


“…remote work, and many other perks Automattic used, will work or fail because of company culture, not because of the perk itself…Every benefit granted can be used to perform better work, or it can be abused. The benefit itself rarely has much to do with it.”


I came to this book while researching a radio series I am doing on the opportunities facing Australia’s nascent tech sector (Matt Mullenweg, the CEO of Automattic, very politely declined my interview request). I feel I have learned so much more from this book, and from Automattic, than I ever imagined at the outset. I’m not going to say their model is the future of work. As with any human endeavour, the workplaces of the future will be so myriad and diverse as to escape encapulsation. But there is so much here for the rest of us to learn from, and even implement, that we cannot ignore it. The Year Without Pants is more than a well written account of a unique working experience. It is a guide for how to create and manage a company that rides the biggest workplace innovation in generations, as well as a taste of what’s to come.


“The most dangerous tradition we hold about work is that it must be serious and meaningless. We believe that we’re paid money to compensate us for work not worthwhile on its own.”


Title: The Year Without Pants

Author: Scott Berkun

Pages: 258 (Hardcover)

Josh’s Rating: 4/5

Amazon Link: The Year Without Pants

Entrepreneurs: Visiting a Co Working space

As I’ve mentioned previously, I have recently been investigating Australia’s nascent Knowledge Economy. This new industry is one unlike anything we have ever seen before; not only are marginal costs effectively zero, but there is very little connecting producers and consumers. You can be an app maker anywhere in the world and sell it to an Australian, and an Australian app maker can likewise count on a global marketplace.

It’s in this vein that I decided to visit a co-working space. Multiple companies and sole traders all congregating in a single workspace is a concept that is rapidly gaining ground. Especially amongst tech startups, who often start up lean, never need much of a work force, or rely on “distributed” teams – hiring people to work by themselves all around the world.

The Co-Working space that opened their doors to me is one on the Gold Coast called Co Spaces. Here is an interview I had with their spectacular community manager Edrienne, about co working and the future of offices:



And here is audio from the tour she took me on:



Can’t see the audio player? You can take a listen at Soundcloud


(images:Co Spaces)

Entrepreneurs: James Cooda from Savage Interactive

Why do entrepreneurs stay in Australia? This question is more important than ever, as technology severs the tie between producers and consumers, and makes capital ever more mobile. And it’s something that I’ve been investigating for the past couple of months; interviewing entrepreneurs, mentors, financiers and academics.

This is one of the first interviews I did, with James Cooda from Savage Interactive. His company created one of my favourite apps – Procreate. It’s a drawing/painting app, and one that I’ve used for almost all of my artwork. And funnily enough, he’s based in Hobart. I talked to him about the challenges he faced while building his company, and why he hasn’t moved to Berlin or San Francisco, where his entrepreneurial life might be easier. It isn’t a reassuring answer:



Can’t see the audio player? You can take a listen at Soundcloud


(image:Carolyn Hall Young on Flickr)


The Ascent of Money by Niall Ferguson

ascentofmoneyA couple of hours ago I did something amazing: bought lunch. I walked about a kilometre down the road, straight into my favourite Thai restaurant, and got myself some fried rice. Now, you’re probably questioning my sanity, or at the very least pondering how amazing my story is. But it is amazing. In exchange for a colourful piece of paper, the wonderful lady behind the counter put down her newspaper, and through a mixture of skill and fresh ingredients made me a tasty meal. How did it get that way? Why does a piece of paper imbue sufficient power to drive human action? This, my friend, is the story of money. It’s the story of innovation. And it’s an incredibly fascinating story.


“Credit and debt, in short, are among the essential building blocks of economic development, as vital to creating the wealth of nations as mining, manufacturing or mobile telephony.”


Where to begin? Written on the cusp of the Global Financial Crisis, Niall Ferguson starts his tale with a rumination on what exactly money is — silver, paper, pixels on a screen. The root of all evil, the cause of our discontent, and the key to our success. Money is and has been all of these things. But these are not what make money, well, money. Money is a unit of exchange, a unit of account and a store of value. These are the real essences of money, not the whiff of Gold or the declaration of a sovereign. And it’s the story of money’s transformation through all of these stages, to hit all these targets, that makes up the bulk of the pages.


“From ancient Mesopotamia to present-day China, in short, the ascent of money has been one of the driving forces behind human progress: a complex process of innovation, intermediation and integration that has been as vital as the advance of science or the spread of law in mankind’s escape from the drudgery of subsistence agriculture and the misery of the Malthusian trap.”


The most interesting component of the book, however, are the ancillary tales of these great leaps. The clay tablets from 2000BC Mesopotamia, which turn out to be a form tradable debt — thousands of years before the first bond markets. The Spanish looting of an Incan civilisation thoroughly unaware silver’s status in the West, and the long term affects on Spanish Competitiveness. The rise of the Stockmarket in Amsterdam, which fuelled the long arm of the East India Companies. The spread of the “Cotton Bond” allowing the American South to stick around in a war with the North. The Scottish Clergymen who started an Insurance fund that invested the proceeds and paid the widowers and children of clergy out of the profits. And, finally, collateralised debt obligations, sub prime mortgages and the Global Financial Crisis.


“When we withdraw banknotes from automated telling machines, or invest portions of our monthly salaries in bonds and stocks, or insure our cars, or remortgage our homes, or renounce home bias in favour of emerging markets, we are entering into transactions with many historical antecedents.”


It’s with that last point that Ferguson really strikes home. The final parts of the book deal with the complexity of the modern financial system, and how it unravelled in the period leading up to publication. For while all these great innovations have built the world we now inhabit, they have also created one so complex that many simply give up. But we can’t. Giving up is what allows the likes of sub-prime loans to promulgate, and myriad mistakes be remade. Ferguson’s book is a partial answer to that. It’s nowhere near the silver bullet — for more sophisticated readers, there is much to be desired (Adam Smith seems to be particularly glossed over, for example), but it’s a great overview. And Ferguson’s passion for anecdote makes it particularly enjoyable. Three out of five.


Title: The Ascent of Money

Author: Niall Ferguson

Pages: 366 (Paperback)

Josh’s Rating: 3/5

Amazon Link: The Ascent of Money