Franklin D. Roosevelt’s 1st Inaugural Address (https://historymatters.gmu.edu/d/5057/) after being elected President in 1932 started with the following words:
“I am certain that my fellow Americans expect that on my induction into the Presidency I will address them with a candor and a decision which the present situation of our people impel. This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”
The context of the statement was focused on the Great Depression that caused a serve winter in the United States economy that took years to advance to the spring time that resulted in the American economy being the envy of the world for multiple generations and into today.
Revisit the final sentence of the excerpt above “ So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance”, move the reference point to today, and replace the issues of the Great Depression with the evolution that is presently occurring in the United States (World) economy with the incorporation of artificial intelligence (AI). Fear is being mongered by many conveying that “this is the end” painting pictures previously found in movies like The Terminator and of a population without purpose and the ability to earn income.
I contend that if you use history as the lens to evaluate the situation, that rather than AI being a negative for society it will be a gateway to enhanced productivity, opportunities, personal fulfillment, and financial prosperity through entrepreneurs accessing the limitless ladder for success and upward mobility that exists in America’s economy that is built on free market dynamics and not centralized government control.
A foundational pillar for my reaching this conclusion is Jevons Paradox which in summary concludes “improvements in technological efficiency—which make a resource cheaper to use—lead to an increase in overall consumption of that resource rather than a decrease”. Satya Nadella, CEO of Microsoft, recently concurred with me when he wrote the following on social media “Jevons paradox strikes again. As AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can’t get enough of.”
I also believe Scott Wu’s, CEO of Cognition, comments on the subject related to future opportunities for software engineers are worthy of noting (https://youtube.com/shorts/VnmBidDYWhQ?si=rNxBT222TrmhVWXr).
IBA, as the Pacific Northwest’s oldest and largest mergers & acquisitions firm, has during its 51 year history been uniquely positioned with offices in close proximity to the corporate headquarters of Microsoft, Amazon, Intel, and other technology companies and the server farms taking advantage of the region’s cheap hydroelectric power to as a dealmaking company in the technology space see firsthand the impact enhanced efficiency and abundance of tools and products has had on revenue growth and new company creation.
The following are some examples:
I recall in the 1990’s when IBA created its first website. At the time, the cost to create a customized website was very expensive and required engaging people with unique skill sets. The development of standardized tools like WordPress made website development accessible to all businesses. Today, every business has a website and an entire industry that did not exist when America celebrated its bicentennial 50 years ago creates, services, and maintains websites that are user friendly, interactive, and graphically engaging.
Around the turn of the last century, Ecommerce activity was problematic for privately held companies and family businesses. Today, virtually anyone can sell product successfully from anywhere in the world using platforms like Shopify (https://dodropshipping.com/history-of-shopify/) at a cost effective administrative rate. This technology evolution has helped fuel the creation of an Ecommerce industry where entrepreneurs can sell to parties well beyond a traditional retail service area.
Washington has abundant, cheap electrical energy (https://www.electricchoice.com/electricity-prices-by-state/). This abundant resource has created an economy where electric cars are prevalent. Washington & Oregon have the 2nd & 4th highest adoption rates for using electric vehicles in the nation (https://www.recurrentauto.com/research/states-leading-the-ev-revolution). I would contend that this is function of cheap energy and an abundance of charging stations. This fact should lead to more investment and product development in the EV space in the future.
Similar to WordPress and Shopify, helping to facilitate entrepreneurial growth, AI has the potential to do the same thing on steroids. It will allow entrepreneurs to execute ideas in a cost efficient, timely manner like never before in human history. It will allow it to tap into software engineering talent at a level to create custom solutions that was previously impossible for all, but publicly traded companies with significant wealth. The winners historically are the ones that think out of the box and create products and services that were previously unavailable. The “speed of entrepreneurship” greatly exceeds what is possible in a corporate structure. IBM software lost market share to Microsoft. Blackberry handhelds have been replaced by Apple IPhones and Samsung products in the marketplace.
As a nation, and world, we are on the cusp of a new frontier. It is exciting and scary at the same time. There will be winners and losers. However, it is a known fact that those that fail to take action will be left behind. Personally, I am excited to see what is ahead in terms of business models and new industries. IBA as a market leading business brokerage firm in terms of knowledge, experience, and skill welcomes the opportunity to facilitate transactions where by entrepreneurship through acquisition people take a business model 1.0 to 2.0 or monetize their vision and execution through monetizing their hard work in the sale of a privately held company or family business.
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, and real estate communities on subjects relevant to the purchase & sale of privately held companies and family businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.