Bill Kerr: Welcome to the Managing the Future of Work podcast from Harvard Business School, I’m Bill Kerr. The following is a guest appearance. From time to time, we’ll be presenting podcast episodes produced elsewhere that highlight research and expertise from the Managing the Future of Work Project. Talent platform Braintrust is looking to disrupt the gig business model to improve the standing of freelancers. The user-owned not-for-profit takes a relatively low 10 percent fee and grants governing rights to users in the form of blockchain tokens. To advance the discourse on gig work and related matters, co-founders Adam Jackson and Gabriel Luna-Ostaseski produce a podcast, The Way Work Should Work. Guests include industry experts, investors, business leaders, and academics. My Managing the Future of Work Project co-chair and also podcast co-host, Joe Fuller, helped kick things off as the podcast inaugural guest. We hope you enjoy the conversation, which focused on Covid-19’s impact on work—from recruiting and hiring practices to the future of cities.

Gabe Luna-Ostaseski: Welcome to Braintrust’s new podcast, The Way Work Should Work.

Adam Jackson: I’m Adam Jackson.

Luna-Ostaseski: And I’m Gabe Luna-Ostaseski. We’re two serial entrepreneurs and investors here in Silicon Valley.

Jackson: We’re building a new talent network called Braintrust and have created The Way Work Should Work podcast, where we’ll dive into new business models, incentive systems, and ownership structures that will affect how every single one of us works.

Luna-Ostaseski: We’re joined by top tech investors, business leaders, and academics on the front lines shaping the future of work. So today’s guest is Joseph Fuller, Professor of Management at the Harvard Business School. Professor Fuller is also the leader at the university’s Future of Work initiative and co-host of the podcast on Managing the Future of Work. In 1981, he graduated from HBS, himself. Joe was the founder and CEO of a global consulting firm, Monitor Group, which was then acquired by Deloitte in 2012. He’s currently researching the evolution of the role of CEOs and the C-suite in public companies. So, welcome to the show, Joe. So, happy to have you here.

Joe Fuller: Hey, Adam. I’m excited to join you.

Jackson: Fantastic.

Fuller: Now as somebody who does a podcast, it’s great to be sitting in the other chair for a change.

Luna-Ostaseski: We’re looking forward to coming on with you, what is it, in a month or so? We’re going to be on the HBS podcast.

Fuller: You’ll be joining us on Managing the Future of Work podcast.

Luna-Ostaseski: I’m really looking forward to that. As a starting point, Joe, we’ve got a lot of interesting ground to cover and different layers to peel back here. You have an incredibly interesting vantage point, both in working as an entrepreneur, then also now working with executives at large enterprises and also entrepreneurs that are building companies in the future of work space. One of the things that you’ve talked about frequently is the growing skills gap and the impact that that has on a company’s ability to remain competitive. Can you talk a little bit about the areas where you’ve seen these large enterprises have a growing skills gap, and maybe some of the risks that that poses to enterprises in the coming decades?

Fuller: One of the multiple effects of digitalizing companies in the economy is that, suddenly, it doesn’t matter what industry you’re in, you’re looking for the same talent as everybody else. And that is going to be turbocharged by Covid-19 and all the various systems effects, which I’m sure are obvious to your listeners. That has all sorts of implications for companies. The first is, a lot of companies have had a long history of sourcing talent that have some type of deep domain knowledge. So, if you’re an oil and gas company, you go to the University of Texas, you go to the University of Oklahoma, and hire people who work petroleum engineering graduates. Or if you’re an aerospace company, you go to a Princeton or a University of Washington and hire aerospace engineers. And they’re still going to be needed. But when everybody needs data architects, machine-learning specialists, AI specialists, people who are comfortable in those domains—digital marketers, digital project managers—suddenly you’ve got not competition between Lockheed, Northrop, Boeing, or Raytheon for space engineers, you’ve got Raytheon competing with Goldman Sachs, competing with Capital One, competing with Delta Airlines, competing with jet propulsion groups …

Luna-Ostaseski: … and Google, right?

Fuller: And Facebook and Google. Exactly. And we’ve already seen—through the great work of Professor David Autor at MIT and my colleague Ed Glaeser at Harvard—this emergence of cities that have become outsized catchments, if you will, catchment areas for that type of talent. Now imagine your company in the great Midwest, or even in a terrific city like St. Louis—a great cultural infrastructure, a high quality of life, major sports teams—I don’t know if they meet the standards of wide-body jets landing there regularly, but some corporate clients used to say, “If you’ve got an NFL team and a 747 lands in your city, that’s a real place.” Shows us how dated that is with 747s. In any case, if you’re an employer there, and you’re trying to get world-class talent in those domains, maybe you can attract people who grew up in St. Louis, or they’ve got a spouse or SO with an important job or attractove position in St. Louis, or their folks are there. Whatever. But how do I win if I’m not in one of those cities with these privileged positions that are emerging—the Washingtons, the Bostons, the New Yorks, the San Franciscos, the LAs, the Torontos—and I’m competing against the types of companies we just talked about, who are located there. Companies have historically had the bias, “We’re going to hire the best candidate that applies for the job and is willing to accept it on the terms and conditions we offer.” What if no one will accept the job “on the terms and conditions we offer,” particularly if you’re not in an interesting industry to the beholder, you’re not in an interesting, attractive location to the beholder? If you fall into the trap of hiring the best person that applied, as opposed to a person that actually has the state-of-the-art skills you need, you’re going to find yourself in a very unattractive spiral.

Luna-Ostaseski: Yeah, it’s really interesting. We have an adviser, James Everingham, who was CTO at Instagram and now is working on other Facebook projects. One of the things he said is, “There’s no city on the face of the planet that has the volume of technical talent that companies need to be able to accomplish their product.” So it’s like this false idea, right? Even in San Francisco, the Mecca of all these tech roles, companies struggle every single day to find the talent that they need. All right, so, if that’s the reality, if every company is struggling with this massive competition for talent, then why have companies been so slow to adopt distributed models or freelance models? Why is this still a small percentage of their total workforce?

Fuller: Well, there are several reasons. The most obvious, and the most difficult to overcome, is that it is alien to the DNA of most companies, particularly large companies, to engage people in important roles that do not work for the company. There’s a myth about most executives, which is that executives like markets, and like competition. They don’t. They like control. That they’re relying on a market mechanism to supply key talent is a scary thing. Even more importantly, all the policies and procedures of companies—whether it has to do with information security, performance reviews and evaluation, the way projects are organized—basically start with the origin of, we all show up at a single site. We have titles and job descriptions that impart to us decision rights and which are known to everyone else. And work is structured and allocated and reviewed and quality controlled through that lens. And anything that moves further away from that lens torques all those processes. I have some new research coming out at the end of the year on the extent to which employers are relying more on contingent labor, gig workers, whatever you want to call them, in higher-skilled positions. And the number of companies that are sampling it have gone up considerably. But when you talk to those companies, what you hear very consistently is, “We can only take this so far, because the workers don’t understand our culture. They don’t understand other processes here. They’re affected by what they’re doing. So we have to really define the work very narrowly for them.” It can be, in some instances, “We haven’t done the hard work to actually tell this person what we need.” One of the greatest things about employing someone is, you can have a meeting with them and say, “Well, gosh, we really haven’t thought about this enough. I’ll get back to you,” as opposed to, “I have to do the hard work of writing a specification that actually anticipates what I need.” And so there are a lot of impediments to this, Gabe, but I think that the talent shortage, which is going to be absolutely turbocharged—I mean, that’s an understatement. There’s going to be a whole new stage to the rocket caused by Covid—is going to force people to rethink this. And I think, like in a lot of competitive challenges, the companies that get smart about doing it faster gain a competitive advantage.

Luna-Ostaseski: I think it’s sometimes helpful to separate here. How much is legacy perception versus reality? How much of this is, just, this is the way we’ve done things? The same way, when the Internet came along and Blockbuster said, “Hey, people want to come to our stores to rent movies. They want the tactile experience of wandering the halls and picking up plastic little boxes.” That was the legacy perception. So help us understand. How much of this current reality around how companies access talent and working with freelancers or contract workers, how much of what’s standing in their way is just legacy perception versus real risk or fear?

Fuller: I think it’s …

Luna-Ostaseski: Sorry, a real risk or a real reality?

Fuller: Yeah. I think it’s actually, there’s a lot of reality to it. Start with the controversy about benefits, and who is a contract worker versus who is a full-time worker—it’s been a controversy in California. You also have multiple instances of contractors—particularly visible ones would be the security intelligence space—of contractors who have stolen massive amounts of information, including, essentially, the CIA’s core hacking tools. Stolen by a contractor! And now, part of that turns out was that their internal security practices were beyond primitive. But also, they basically said, “Once you’re inside the wall and you’ve got the security clearance, then we don’t really need to protect against you.” You have a real question—and this is going to be hard thing for companies to do—you have a real question about, are these skills so critical that they have to be native to your company? That’s a very, very legitimate question.

Jackson: So yeah, I think those are two separate points, right. Sorry for interrupting. It is an important one, though. So on the security side, do you think worker classification is a predictor or increases or decreases likelihood of intellectual property theft?

Fuller: Not really, no. But I do think that, if I’m working in an advanced domain and I don’t have a certain talent, maybe a lot of my current employees don’t have the technical skills to steal anything. But even if they do, my ability to vet someone and understand are they are trustworthy is much higher if I have a long-term employment situation with them. Have they been consistent workers, or have they been erratic in some way? Have there been behavioral or disciplinary problems? And so it’s a consideration. And if you’re human resources in a big company … let’s just do a little bit of role-play. You’re saying, Adam, “We really need these digital natives, we really need these people who can run these complex projects, we really need people who understand AI, we need to hire them.” That’s what the operator or so-called hiring manager says. And HR’s response is, “We can’t figure it out. We don’t know how to do that. And who would want to come work for us, anyhow?” These are no-joy answers, right? And if you’re coming in and saying, “Well, we’ve got this solution. We’re going to hire these people off a gig platform,” there’s a tremendous amount of perceived risk in that. “That’s the best I can do, okay? So we’re going to rely on a gig platform.” And that person then does something untoward? HR worries about everything from cybersecurity to harassment to being sued because they didn’t provide benefits, whatever it is. In so many big companies, the functions in these big companies are compliance-oriented and risk-management-oriented. And that’s the shared DNA that really, really constrains this.

Jackson: That makes sense. I think, to double down on the point you were just making around core tech, so what we’ve learned in our journey here at Braintrust, where we connect these very hard-to-hire, very experienced product managers, designers, developers with the US Fortune 1000—companies that are struggling to hire these folks in-house. What we’ve learned is that core tech companies—companies where their core value prop[osition], their core moneymaker is tech … I’ll use my last company, Doctor on Demand, as an example. They have no interest in these gig platforms, because, to your point, it is so core to what they do. And so our sales team just stops trying to sell to Doctor on Demand and core tech companies that, without that core tech, they’re dead. Right? Alternatively, the rest of the economy is fair game, right? So we’ve made great strides in health care, where tech is important, but their core offering—all the physicians and the providers—are car manufacturers, right? It’s engines and drivetrains and branding. It’s less about software. So we’ve had a lot of progress there. It’s an interesting finding. What do you think, Joe, when did these distributed teams become a strategic imperative? Like, what’s the tipping point, do you think?

Fuller: Skills available, obviously, is one. I think another is, there’s this real recognition, which is a counterweight to some of these impediments to change that we’ve been discussing, which is that the hierarchical, functional structure of companies is just getting to the end of its useful life. It’s been downsized; it’s been outsourced; it’s been rationalized. The typical, big Fortune 500 company or G2000 company, they barely finished their last transformation project before they start the new one. And the cynicism and transformation fatigue that creates among employees is very palpable. And more importantly, the alienation it creates in precisely the type of people you desperately need to keep is high. So a lot of companies have—and they were always reluctant to share those data. I’m not going to name any names, but it’s in lots of the white-collar-oriented companies, whether it’s health care, financial services, professional services—their voluntary turnover rate is inversely related to performance. So their best people turn over at the highest rate.

Jackson: Interesting.

Fuller: And there are a lot of collinearities there. The best people are the people who’ve got the best skills, they’ve got the best network. They’re the ones that a customer or competitor is most likely to poach. Actually, they’re the most confident that they can say, “I can’t take it anymore, I quit,” that they’re going to get another good job. And the bottom-quartile person is really grateful to work for a great outfit like this that pays well and hope no one notices that they’re a slow boat in a convoy. But, nonetheless, there’s this recognition that something’s gotta give. And so you see in a lot of big companies now, “We’re going to go to an agile structure.” And that’s bumping into all the same problems that I was recounting earlier about adopting more reliance on talent platforms, because agility doesn’t match up well with the way they do performance assessment, with the way they allocate rewards, with the way they hire people and assign talent, their title structure, and where people are located. I think, actually, Covid is going to be a big advantage, Adam, in the adoption here, because it’s doing several things. First of all, it’s obliging reluctant companies to work remotely.

Luna-Ostaseski: Yeah.

Fuller: No choice. So they are seeing …

Luna-Ostaseski: All companies are remote.

Fuller: Yeah, exactly. And so, all right. I’m getting more comfortable with this. And even when people start going back to work in a more traditional way, the notion of, “You know, well, that worked fine when we’re in Covid, so maybe we could work with some engineering talent or some project management talent on a remote basis.” And another thing that’s going to happen is, people are going to have all their legacy projects and their digital acceleration projects. So there’s no way on God’s green earth they’ve got enough talent for that. They’re going to say, “We know both these things are priority. We’re not staffed for it. We’re going to have to sample.” And if they have a decent experience, they’ll understand, they can keep coming back. I think there’s one other thing that is going to happen to Covid—and this is just a bald-faced assertion on my part—but it is based on some conversations, at this point, with several dozen C-Suite executives. Historically, companies staff themselves. If you think about a wave sine, their ambition, because they want to own everything, they want to control it, they staff up to clip the top of the wave sine in their forecast. They want to be fully staffed to exploit their margins and their growth opportunities when they can. That’s the intrinsic logic here. And across all markets, when you add up every competitor’s forecasts, you come to twice as much demand growth as there’s actually going to be, inevitably people miss. I think the logic of that is going to change. I think companies are going to staff to the trough. They don’t want to have human beings when they can avoid it. They have no idea. You can plan for this environment, but you can’t forecast for it. They’re going to try to go lean. And as they go lean, they’re going to see opportunities that they’re missing, because they can’t, they don’t have the man-hours to pursue it—I’m not talking about selling more pizzas—and they’re going to have to find an alternative, because they’re not going to want to make a commitment to more headcount, and they’re not going to be willing to do it with a long enough lead time to land the talent. They’re going to have to go to a short, highly credible, short lead-time solution.

Jackson: Almost everywhere, where we got over the last two or three decades on manufacturing, right? We built this just-in-time manufacturing supply chain, which unfortunately just bit us right in the ass here.

Fuller: Did you, too? It got us in Boston.

Jackson: I mean, I couldn’t buy toilet paper for three months in San Francisco. That’s interesting, what you’re saying. I love this point. So we may see this sort of inversion, where we move to more agile and just-in-time human knowledge-worker staffing with companies, but maybe we’ll end up with a more robust and redundant and less-efficient physical good supply chain.

Fuller: Could be. And there’s another completely different question here, which is, I’ve been talking to some companies about repatriation of manufacturing capacity, and the first thing they started talking about is, they couldn’t get the skilled workers. We’re not talking about AI specialists here. We’re talking about industrial engineers and shop floor workers.

Luna-Ostaseski: We talked about something a little bit earlier. You were touching on these different, I’ll say, seniorities, or levels or skill levels of talent and how the balance of power has shifted a little bit there. It’s funny, we actually just did a research study with Tessa [Forshaw], actually, on the future of work. I’ll make sure to send you a copy. And what we named that shift was, we called it “The Talent-led Revolution.” Because in our study, what we found, when we looked at highly skilled technical talents aged 28 to 35, what their outlook of their careers are, there were three interesting things we found. Number one, 75 percent of them chose autonomy over salary. Really interesting, right? For the first time in the last 50 years or so, that balance has shifted. The second thing is that 90 percent of them wanted to control their own schedules. They didn’t want to have to go to an office, didn’t want to have to take a bus for two hours from San Francisco to Mountain View. And then 90 percent of them plan to freelance for the balance of their careers. Really interesting how that balance of power has changed, where these people know that they’re in very, very high demand. And frankly, listen, Google, Facebook, these companies that are tech companies in Silicon Valley can’t even keep them. How’s a company in the Midwest going to attract that person to leave San Francisco and go and move to Omaha or St. Louis or any of those places? It’s just not going to happen. So the model needs to change for them to figure out, “Okay, if I can’t get them to move here, how do I get them to work here?”

Fuller: Right. And if I can’t afford the, what I’ll call “the economic value” of the offer provided by a company with a higher margin, with more structurally profitable industries, to come back to my real roots, how do I take the budget I’ve got and get the output I need, given the fact that I can’t afford someone on a 12-month-a-year basis? I think there are a couple of issues here. Of course, there’s a self-reinforcing cycle; the people you’re polling now understand that that alternative has never been more viable and will only get more viable.

Luna-Ostaseski: Exactly.

Fuller: And you’re getting this response, by the way, in a quite dire economy—not dire for these types of skilled people, but we’re being ... I was talking to another friend earlier this morning about where he’s involved in the behavioral health business, and they’re doing polling about anxiety and depression in the workforce, which is quite high and growing, and by the way, growing in skilled workers. It’s not just people who have been bartenders or waitstaff or hotel hospitality, room cleaners, housekeeping, and are worried about their jobs never coming back. There is, however, a counterpoint here, which is, people between 25 and, actually, 17 and 32 have been saying, “I don’t want to be like my parents,” since Cain and Abel. Right? So there’s a whole different experience about regularity of income if you’ve got a house, a mortgage, two kids, and a third one on the way. And we also know that there’s a big sociological, anthropological part of work. And if people can create counterbalances to what they actually get from work—emotionally and psychologically—then that will enable this phenomenon to move at a faster pace. If not, it may be there will be some reversion, especially for some of those older workers. One other thing I just want to say is, I think this actually comes back to what big employers have to think about. Big employers have got to think about the all-in quality of work/life for people. That’s a phrase that was very au courant in the ’70s, QWL. And I say that because my father was CHRO of General Motors when it was the biggest company in the United States—not by headcount, but in terms of profitability. And so they talked a lot about how they cause the balance in work/life to pay off. And whether it’s the two-hour commute, or the .... Another thing, I think, is an example of this is set vacation levels—or everyone’s expectation is that, Gabe, Adam, and Joe, since they’re all colleagues, will always be here by nine o’clock every morning. All of that happens to fly in the face of life at home, particularly the caregiving obligations that a lot of adults have—whether it’s to watch out for their folks, or a sick or invalid or chronically ill spouse, or kids. All of those considerations are going to influence who is willing to work under what terms. And I think, just as ... innovation at a big company is going to have to take place where you source talent, how you structure processes, so you can get the right talent, at the right place, at the right time, irrespective of employment status. And it’s going to be one of multiple new definitions of work for companies. Historically, the definition has been one of three: work full time, work part time, work for somebody else that I’ve hired who do the work for me. I think there’s going to be white-collar seasonal work. There’s going to be white-collar part-time work. They are going to be white-collar gig workers. They is going to be much more collaboration between suppliers and customers. So they are going to be work teams—not like building a power plant, where you’ve got GE and you’ve got Bechtel and things like, that but completely new types of relationships. It’s the only way you can get the talent deployed, but it’s going to be integral to creating a quality of work/life that balances fulfillment, income, personal choices, and becomes a platform by which you can get the right configuration of people when you need it at economics you can afford.

Jackson: Joe, I love that point. Braintrust has been a little bit of a Petri dish for this model. My last company, Doctor on Demand, we had roughly half the people kind of huddled in San Francisco, and the other half spread around the country. And it worked well. And it was one foot on the boat, and one on the dock. They created these kind of other, “Well, if not an HQ, what does that mean?” and that kind of stuff. And so, with Braintrust, we took a totally different tack, where there is no HQ, everyone’s spread out everywhere. It’s sort of like, “If it doesn’t happen on Slack, it didn’t happen,” so let’s keep everyone inclusive. We do the no-vacation tracking, so work whenever you want. We have half the people in Europe. At first, we were, like, “Shoot, how’s that going to work?” And it turns out, like, “Man, now we’ve got a 16-hour or 20-hour efficiency work day.” It was really cool. And because you got to pass the baton back and forth, it increases the fidelity of your communication. Things aren’t lost on Zoom calls or phone calls. So we think we’re on to something here. We’re certainly not like, people don’t come to us for the salary, I’ll tell you that. We’re a scrappy startup paying sub-market rates, as most do. But what we found is this ultimate freedom, where people can work from any city they want. We don’t even know where people are half the time—these days are different, obviously, with the lockdown. The experiment has gone well so far, but one thing I worry about is burnout. Which, burnout, we didn’t invent that. That’s been an American staple for three generations, as the Europeans like to mock us about, rightfully. What we worry about is, okay, well, if you can have unlimited vacation, then end up taking none, what was the point, right? Any thoughts on, I’m creating that balance that you can start alluding to?

Fuller: Yeah, I think it’s one of the fundamental questions for me. I was talking to a very large tech company near you at senior levels. And they said their engineers or software people are roughly 37 percent more productive in Covid than before. That is a massive number! There’s no commute. There’s no cadence to the work day, so all of a sudden you realize it’s 7:45 at night and you are still working on your project. And maybe if you’re single or you’ve got teenage kids who don’t want you to bother them in any case, you didn’t realize that. There’s some disadvantages to massage chairs and sushi. I think I’ll go and get some sushi. The work/life balance thing, it’s a very ... I want to come back to something I talked about—the alienation of risk from institutions to individuals in the United States over the last 100 years. That’s the alienation of a different type of risk, that I don’t have colleagueship in the traditional sense. Is there still going to be the company softball team? Is there still going to be the United Way drive? Is there still going to be Bring my Daughter or Son to Work Day? Okay. Your son or daughter may have been to your workplace multiple times, as they want to use your printer or came to ask you a question or they were deciding to photo bomb you.

Jackson: Mine pop all the time here.

Fuller: I think it’s great, but of course, my youngest kid is 29, so the fact that one of them is here a lot and another one is here almost as much is a blessing. But my dog bombs my Zooms a lot, and I’m getting a second one in a couple weeks. I think, by the way, this is a terrific entrepreneurial opportunity. How do you help people do that? Are there services? Are there ways to make social connections? Are there ways for ... We know that self-affiliating groups are a highly plausible way to affect behaviors that affect health. For example, pre-diabetics. There may be some dynamism there, but a lot of people, if you look at other data about employees in big cities, people say, “I really want to live in New York, because there’s so much to do. There are all these cultural institutions and great shopping and great restaurants.” And they go to their investment banking office, and they’re there 16 hours a day, and they meet some friends at a bar. And they never go to the MET, they never go to New York Public Library, they never go to Ellis Island. So the aspiration, “I’d like to live anywhere to do my work, and maybe I’ll be in four different countries, three months a year,” that’s great, until you get a kid. There are a lot of questions to be asked about this. We’re just in the frontier, where innovators like you guys can allow people to really make those choices. And as the next wave of this type of service, by sharing more of the economics with them and, therefore, being a magnet, I expect, for the best talent, which will get you the best projects—because you’ve got a market-matching logic there that should work—you’ll be right at the edge of seeing how much of this is cheap talk and how much of what works and what do people need. You may have an opportunity to start creating some type of community service capability to help people respond to those challenges that Adam was talking about.

Luna-Ostaseski: So those are great points. Joe, you and I talked a little bit about this. Adam and I have spent our entire careers operating, investing, and advising in marketplace business models here in Silicon Valley, across all different industries—from health care to ride-sharing and everything in between. These business models have become the most dominant business models of the last 20 years. These proprietary network effects. But what we saw on the front lines was that the gig economy is an economic disaster. Essentially, what it did was it transferred risk and it lowered the average minimum wage. And you also had incredible wealth concentration as a result of this. Like, in Uber’s case, you got 10 people that become deca-billionaires, and you have drivers living out of their cars. We’re just in these early stages of seeing what comes next. I guess what I’d love to talk about is, what do you think the impacts are when a new model comes along that basically crushes fees to zero, and also redistributes ownership and control to the users, versus another 10 people in Silicon Valley that were already rich before this?

Fuller: You covered a lot of territory there. I think, Gabe, I want to make one retrospective point and then talk about your question. My retrospective point is, I think there’s been a big difference between platforms that had an asset arbitrage element to those that had a labor-rate arbitrage element. Actually, some of the secrets of some of the bigger ones, like an Airbnb and Uber, is that, to my mind, they really have as much to do with putting other people’s assets to work for you in ways that weren’t immediately apparent to them. The second thing—and this is something I sometimes get in a bit of an argument with my labor economist friends—but my belief is that models like that came into account, came into being, and did not create a low-skilled, low-paid underclass, they came about because there’s a very large number of people with very limited skills. And the business model recognizes that there are people, who, being basically a property manager, basically a driver, there’s a large population of those people, and, therefore, they are available at very low prices. Since the whole business model relies on that essential barbell-ization—the economics that you’re describing—it’s highly vulnerable to what you’re seeing now in jurisdictions like California suddenly saying, “We don’t like the socio-economic impact of this, so we’re going to raise that unit cost of labor, which will drive the demand function back down the curve.” Now, in terms of the effects of the next generation of that, as you’re trying to build, I think the first is that it creates immense pressure on the existing capacity. And what we’ve seen regularly, when you have new business models that have structurally advantaged economics, is not that the incumbents say, “Oh gosh. Too bad. I guess we’ll go out of business.” So there’s a death struggle that goes on for a long period of time. And clever incumbents will figure out ways to introduce new features, change the value proposition, to try to keep the carousel spinning. The second thing that happens is that there is a history of cooperatives. And in some ways, one could analogize between what you’re doing at Braintrust and, historically, cooperatives. The history of cooperatives is not very encouraging. And why is that?

Luna-Ostaseski: Yeah, poor incentives, right, Joe?

Fuller: Yeah, exactly, it’s incentives. There’s a certain tragedy of the commons lurking in there. Also, a cooperative—where everybody has essentially look-alike economics, not in terms of rewards, but more or less, the rate of demand for them, the rates they get paid, the volatility of the demand is very similar. But as soon as you have a very diverse population, all of a sudden you’ve got problems reconciling people’s interests. And frankly, it’s an unusual person—you guys are in that category—that have this type of vision. Most people that take advantage of your platform—by that I mean, become professionals on your platform—they haven’t thought deeply about how this all works at a structural level, but they can get aggravated by something that happens, or worse yet, can have some really bad ideas that they start sharing with a bunch of other people on the platform. It’s not a bad idea that’s evil or sinister or cynical, it’s just that they don’t really understand how this works. And when the leadership starts saying, “You don’t really understand how this works, we need to ... let me explain it to you,” in this day and age, that’s more of a view of cynicism and as a confirmation that there’s something not credit-worthy going on than not. The answer becomes one of participation and access to the economic value created, but a very, very clear set of governance mechanisms. I’m just saying that you that want to have—this is going to be a slightly awkward phrase—but a cooperative with corporate governance, not a cooperative with democratic governance.

Jackson: So corporate governance, meaning there’s a clear visionary leader centrally leading the network in the effort?

Fuller: It means that there is an allocation of decision rights that’s very clear. I’m going to use a rather bizarre analogy here, but as far as I’m concerned, the single most obvious variable that explains the success countries have had responding to Covid is the degree to which technocrats were in charge of the response.

Jackson: Sure.

Fuller: And there are some other mechanisms, like they had modeled things like this, or they experienced things like this. So the Taiwanese were great at this, because they have a technocratic government, but democratic. A fiercely contested electorate there. So it’s not China, but democratic. But it’s technocrats in government. They had dealt with SARS, they dealt with a couple of massive earthquakes, they had war- gamed the hell out of this, and the various institutions already had lots of familiarity with each other, and they already knew what they needed to do to respond. Success, as opposed to the US, with greatly distended decision rights, local, state, national, lots of ... very few technocrats in policy-making decisions. Such a big government that there are multiple different technocratic institutions that you have to align, all of which feed themselves …

Jackson: This is where you’re seeing the sort of corporate-led green zones, right? You’re better off being a citizen of Amazon than you are a citizen of California, right?

Fuller: Yes. Exactly. And so you have decision rights about information. You distinguish the information rights, consultative rights, decision rights. If there is going to be some representation of the commons, their rights and privileges and the mechanism for doing that is known. And the only thing you know about this type of structure is, whenever a right or privilege is conceded to the members of the cooperative, it is permanently conceded; it can never be withdrawn. So you have to proceed with extreme caution. You want to have ... on one shoulder, you’ve got your idealistic, we’re-changing-the-world-for-the-better angel, and on the other, you’ve got your steely-eyed, this-has-to-work-for-everybody-and-someone’s-got-to-run-it angel. And I’m calling them both angels, because if that second one isn’t there, the vision fails.

Jackson: Yeah, I appreciate the analogy. I think it may, I mean, that’s a government versus business analogy, and I think business is far simpler than government. The stakeholders are simpler, the motives … you can almost boil it down to mercenary. I love talking with someone who thinks about governance on this. We’re running a lot of experiments here with Braintrust, but one of the more interesting ones is around governance. And so we are a tokenized network, meaning we have the tokens secured by blockchain instead of shares of stock. It’s not a company, it’s a global organization. And one token equals one vote. The only way to get the tokens is to help build the network. And for us, that means invite talent, curate talent, invite clients, code—actually physically build the network for us. We have now almost 1,000 people doing all of the above. And you can’t buy the tokens. We’ve sold a small number to some VCs just to help us bootstrap the thing off the ground. But in general, we’re not in the token-selling business. We’re in the network … So then fast-forward, we’re on what’s called the progressive path to decentralization, where everything starts very centrally controlled today, but we will eventually ... Gabe and I aren’t going to go away completely, most likely, but we certainly won’t control it after a while. So what then happens is one token, one vote; you can delegate if you like. But we think that’s interesting, because what if the Uber drivers—instead of just being utility … people who execute a function on a network—actually had a vote? Or what if the Door Dashers actually had a vote? Do you think when DoorDash decided to start pocketing all the tips that the Dashers would have voted for that? Or when Uber decided to pocket all the surge pricing? Our theory here is that, when the network can vote on things that matter, it will continue to vote in favor of its constituents, instead of this disproportionate fee-extracting middleman. That’s what we’re here to do, is kill that middleman and turn him into software.

Fuller: Yeah. Well, I completely get the vision. To the extent I am capable of understanding crypto networks and tokens, I applaud the vision. What I would say is, having a structure of governance is not anti-democratic and doesn’t in any way work against the model you’re describing. The question becomes, vote on what? So, in a conventional public company, you get to vote for or against the slate of director nominees. And if there’s an activist—there may be some who were put on the ballot by the activists that’s not recommended by management. Or you get to vote on the auditor. You get an advisory vote on the compensation package, and things like that. If you vote in the presidential election, well, you will have the choices available. But we don’t ask people to vote on, should there be 10 or 11 carrier battle groups in the Navy, or should we add to the ... There was actually once a national mohair stockpile. It doesn’t exist anymore, but back in the day, we didn’t ask people if we should add to the national mohair stockpile. So there’s something between mohair and should we do something that would fundamentally affect the legitimate expectations of people who own tokens.

Jackson: Yeah, I mean, it’s the California proposition system, right? Which is what …

Fuller: Yeah. Right. Exactly. And one of the best things that ever happened to Massachusetts is, there was a fierce fight on the proposition system—this is in 1920, I believe—and it was barely defeated. And thank God.

Jackson: Living in the Republic here, many, many good arguments against our direct ballot proposition system. But again, I would push back though. Business is easier than government. Here in California, the proposition system has gotten this thing where anyone who bought their house before 1980 doesn’t pay property taxes anymore. Well, congratulations. Now we have a 13.5 percent income tax to subsidize people who live in their homes for free on the ocean. That’s bad governance. But it’s government, right? It’s not business.

Fuller: It wasn’t the design intent, either, but it’s a good lesson, because, right? With a very specific design intent, very idealistic, progressive era, gold star initiative suddenly gets perverted. And that’s what happened with green mailers. You guys are probably too young to remember green mailers, but they were the original activists who would buy a bunch of stock and basically browbeat a company into buying their stock back at a price above market to just go away. No one who was at the original, in the early days in the New York Stock Exchange ever envisioned that perversion of the system of spreading risk.

Luna-Ostaseski: Joe, we’d love to transition to something we call the “Lightning Round.”

Fuller: Okay.

Luna-Ostaseski: So the idea here is like a stream of consciousness, one- or two-sentence answer of the first thing that comes to mind. There’s no right or wrong answer.

Fuller: This is risky. I’m not good at short answers, as I’ve proven to your listeners.

Jackson: Well, as long as you don’t have a hard stop, we’ll keep going. I’m throwing you into the conversation.

Fuller: Actually, I do have something coming up, but let’s do a quick lightning round, and then we can live to fight another day if that’s …

Luna-Ostaseski: Then you get to poke and prod us on your podcast.

Fuller: Right. There you go, and my revenge will be sweet.

Luna-Ostaseski: All right, so first one is, what have you learned about yourself during shelter-in-place?

Fuller: I have learned that I am singularly bad at being bored. And it’s very hard to resist the temptation during an endless number of Zooms not to have an inventory, let’s say, of articles I want to read open on one side of my screen and to zone out, and then somebody says, “Oh god, I really don’t know what the last five people said.” So I have to battle that.

Jackson: That’s fair. Joe, what’s one old way of working, pre-Covid, that you hope never comes back?

Fuller: That’s an interesting question. I think it would be elements of lots of jobs that require hugely inefficient and unnecessary travel. As a former CEO, the wear and tear on me, the wear and tear on my colleagues, the green effects. I mean there are all sorts of things which are going to get revisited, and I have a lot of sympathy for the people in the hospitality and travel industry that could be affected. But this crisis, I think, will lead to, on a pro-rata basis, 30 to 40 percent reduction in business travel is just historically anomalous.

Jackson: I hope you’re right.

Luna-Ostaseski: All right, Joe. So Silicon Valley, traditionally, has been the Mecca of technical talent and one of innovation for the past few decades. Do you believe, post-Covid and into the next decade, Silicon Valley on the way up or on the way down?

Fuller: I think on the way down. I think the quality of work/life issues will have this magnificent topology, and all those things that I talked about earlier—that people don’t use but cling to—are a counterweight to this. But it’s everything from the housing costs, commute costs. And if you look at the unemployment rate for engineers by date of birth, in California it goes up consistently. And it doesn’t turn out to be rooted in that you’re 50, you’re incapable of learning a new language. It’s, you’re 50, you’re unwilling to work 75 hours a week, whether it’s what’s expected in what jobs are available, or you don’t want three hours in your car every day, or whatever. And then things like, we know that people move relative to marginal tax aversion. You want to see a community that’s booming right now: Boulder, Colorado, courtesy of Sacramento, California; Salt Lake City, courtesy of Sacramento, California. And we know this in Massachusetts. Because of tax and other policies in Massachusetts in the ’70s and ’80s, we created Southern New Hampshire as a place where actual businesses entered, as opposed to nothing, which is what it had in the ’50s and ’60s. So I do think that all adds up. Also, you’re just not … yeah, for venture capitalists and whatnot, they’ll still be that allure, because if I’m on 12 boards, they all have to be within a 45-minute drive of my office. But now the type of work practices, types of things you were doing at Braintrust, are going to allow more geographic dispersion.

Jackson: That’s a good segue actually. What do you think are the attributes of the companies that will be winners and losers in the future of work?

Fuller: Winners are going to have a sharp focus on quality of work/life for mission-critical workers, and they’re going to get off the ridiculous association of mission-critical workers are senior and have big titles. One thing Covid has done is show us who really the essential worker is. I don’t have to go to Harvard Business School, but the security guards do. And so there’s really thinking about who drives value-added in your strategy and how the whole package works for them. I think that, by the way, will include that substantial care-related benefits are going to, over a long period of time, 10 to 15 years, asymptotically approach health benefits as a—and this is assuming you don’t end up in the single-payer model—as important in job selection. I think companies that are going to be successful are going to be those that understand that they cannot graft change into their organization. A good example would be in AI domains. Companies have traditionally looked at AI through the lens of “How do I use AI to improve my current process?” I mean, I can’t think of a dumber way to frame the question. “What can this do when I have to arrange a process?” is the right question. So companies who are going to fail continue to bring that mentality, bring a risk-averse mentality. And companies that do not find ways to have a dynamic access to talent—and I’m not trying to play to the audience here, this is very consistent with my published work—one of the things that is going to accelerate the decline of major European companies as being powerful in the global stages, they have hopelessly illiquid labor markets. A lot of European friends used to have 11 offices there when I was a CEO, but sorry, you cannot ... If you’re hamstrung about how you can access talent and where they have to be, you’re just not going to keep pace.

Jackson: Joe, it’s ironic. Two of our biggest clients on Braintrust are Nestlé and Porsche.

Fuller: Actually, I’m not surprised. Nestlé’s a truly global company and, as you know, has got very strong managerial control at the country level. Porsche is a sophisticated company that always wants top talent. I just wish I could afford their products.

Luna-Ostaseski: I think we’re wrapping up here. Maybe one last question and we’ll do a wrap here. So this one comes from, or is inspired by, a famous contrarian, Peter Thiel. What is something that you believe in strongly that’s an unpopular view today about the future of work?

Fuller: Well, I can think of two, but I’m only going to say one out loud. I do not believe that the vast majority of people want to have two-dimensional relationships with colleagues. I think the vast majority of people ... that this is intrinsically social, that it is an expression of humankind, working together—whether you’re building pyramids or writing code—that creativity is enhanced by interaction of different types. There’s a lot of literature on that. We’re going to have to get to some next normal which allows for that, while learning from the many insights—like we don’t have to travel so much, like you can make more accommodations for people’s quality of work/life, things like that, that we’re learning through this. But I don’t ... The future is all really great Acer screens and 5G that suppresses things that’s a lot of what’s actually important about work is to human beings.

Jackson: Joe, I could go two more hours with you, this was such a fascinating and an enjoyable conversation.

Fuller: I’m gonna have to think about stealing the lightning round for our podcast. I think it’s a great idea.

Jackson: Thank you. Yeah, it’s fun. So, Joe, tell me where people can read more about you, find you, get in touch with you?

Fuller: Well, Harvard Business School is a very easy place to access. So if you’re interested in some of the things we’ve done, our podcast series, our writing, our newsletter, you just Google, “Managing the Future of Work, Harvard Business School, Joe Fuller,” and it’s going to usually be the second site, because our Managing the Future of Work executive education ad will appear at the first site. But also, you can email me through actually my biography card at Harvard Business School—there’s a click to email, but it’s a pretty easy protocol, jfuller@hbs.edu, like education. And we’re going to continue to turn out a lot of research. We got some new things coming that I’m pretty excited about, particularly some things that are going to talk about economic opportunity and equality, which I wish I was smart ... Well, I’m delighted I didn’t have the ability to anticipate the situation we have on our hands now, but I’m also pleased that we understood this barbell-ization of incomes is a deeply pervasive and threatening thing, and we’ve been researching it. And more on that this fall.

Luna-Ostaseski: Thanks so much for joining us today on The Way Work Should Work. To be sure to tune in every Monday for new episodes. It’s available on iTunes, Spotify, Stitcher, or wherever you listen.

Kerr: We hope you enjoy the Managing the Future of Work podcasts. If you haven’t already, please subscribe and rate the show wherever you get your podcasts. You can find out more about the Managing the Future of Work Project at our website, hbs.edu/managingthefutureofwork. While you’re there, sign up for our newsletter.