(2011-12-05) Rao Developernomics

Venkatesh Rao on "the Rise of Developernomics". This almost seems like 2 pieces mashed together

• the first part starts out seeming like it's addressed to individuals, then jumps instead to sound like it's talking about SmallCo-s.
  • Unless you are a professional investor (and probably even then), places to store surplus capital today where it will even be safe and/or not depreciate too fast (let alone generate a return) are getting incredibly hard to find (Collapse). The stock market seems to be a secular, bearish bloodbath. Volatility and unexpected temporary rallies are making short games dangerous. Even staying liquid in dollars seems to have its dangers, due to threats of devaluation and unfamiliar new terms like “quantitative easing” which us average investors are starting to hear for the first time. The Euro isn’t exactly a great alternative at the moment. Investing in gold and similar commodities seems to require a somewhat apocalyptic mindset and decisions about whether or not you want access to the actual metal if things go to hell (which isn’t to say such a mindset isn’t justified at the moment). But there is one safe haven, if you know how to invest in it: Software Developer-s.
  • In Capitalism, every human is either a Capitalist, somebody else’s capital, or economically worthless. Today, this abstract point specifically translates to: people who can invest in developers, developers, and everybody else. This means that if you are in apparently more fundamental professions — perhaps you are a baker with a small business — you are effectively useless, not because bread isn’t important, but because surviving in the bread business is now a matter of having developers on your side who can help you win in a game that YelpCom, GroupOn and other software companies are running to their advantage. If your bakery doesn’t have an iPhone, it will soon be at the mercy of outfits like Yelp. And god forbid, if you don’t have a skill, like baking, which the developer-centric economy can actually use, you are in deep trouble.
• then the rest seems more like it's addressed at Old Economy BigCo execs, since it smells like it's talking about managing a whole EcoSystem of developers.
  • As software eats the world (Software Is Eating The World) and every company turns into a software company, people in other parts of the economy are slowly starting to understand what’s going on and are belatedly trying to get in on the action. They will almost certainly fail unless they learn how to compete with the software industry itself... cash-rich software majors, options-rich startups and relationship-rich industry insiders have been sucking up all available developer talent among them, leaving other industries and economic sectors starved of quality Talent... We are only just beginning to understand how software is now the core function of every company, no matter what it makes or what service it actually provides... To the extent that the growth of the base of software talent cannot keep up with demand, companies and entire industry sectors will start to collapse as they fail to adequately fuel their need for software talent.
  • Can the non-software sector compete at all? It’s hard, but not impossible. The biggest bargaining chip other industries have is Big Data. To fight the consumerization-of-IT force that comes in with your employees, and the Microsoftening of your business model that comes in via the IT department, your one weapon is access to data that is not about software. I’ll write more about that another day. If you don’t know how to use that one weapon you do possess, it will get taken away from you (the cartography, movie, music, news, publishing and restaurant retail industries have already learned this the hard way).
• until he swings back to the "view from the Talent side" at the end
  • The natural reaction that forms once a good developer recognizes his/her own value is to turn to either an individualist-mercenary mindset or a collectivist guild-like mindset... The individualists turn into hard bargainers as they carefully probe their own market value and frequently re-negotiate relationships... The other kind of developer turns to guild-like structures, which serve as centers of balance-of-power politics in the constant wars against the developer-capitalists. Except that instead of taking on the dynamics of class warfare along an upper-lower dimension, the conflict takes the form of exit warfare along an inside-outside dimension. Rather than form a union to negotiate with management, the talented developer will simply exit a situation he/she does not like, and use guild-like resources to move to a better situation. See later 2012-09-04-RaoEntrepreneursAreTheNewLabor.