The Future of Work
The implications of a world where (almost) everyone works from home
In the midst of the corona crisis, there’s one thought I’ve been mulling over as I’ve been working from home these last few weeks: could this be the start of a remote working revolution?
Because of the coronavirus, companies all over the world are asking employees to work from home. For white collar workers, primarily producing digitally (writers, lawyers, accountants, designers, developers, analysts, etc), this is eminently doable without any discernible loss in productivity. Sure, the social side suffers and leaders have to learn new methods and tools to lead and motivate their teams. But these aren’t insurmountable problems.
Once this is all over and workforces around the globe go back to the office, many — both management teams and employees — may wonder why they really need to do so. The age-old suspicion that employees “working from home” might actually be doing the laundry or helping their kids with homework can hopefully be put to rest. They might be, but so what? As long as they’re productive, delivering according to schedule and available for video meetings, both scheduled and impromptu, then what exactly is the problem?
When we moved to a distributed operating model three weeks ago at Nordnet, we all needed a few days to readjust, but soon things were humming along just fine. While the OKRs we track are only preliminary at this stage, my impression is that the productivity of our engineering teams is the same or maybe even higher. One of the benefits of being a fully digital platform is a workforce fully onboard with agile working methods and in full command of all the best co-working tools (Slack, Zoom, Confluence, Jira et al).
So at the end of our first week working from home, I innocently asked our CFO if we really needed our modern, mid-town offices? After all, rent is one of our largest cost lines after personnel, systems and market data. What if everybody kept working from home and for the money we save on rent, we could make sure staff have proper screens, ergonomic chairs and raisable desks at home? We could rent a swank meeting space every month or so for a full day of inspirational talks, breakout groups, team activities and then a blow-out party in the evening to cater for the social aspect. Extreme to be sure but even a move in that direction could be life-altering for many.
This notion starts to get really interesting once you ask yourself: what if every firm comes to the same conclusion? Could we be on the precipice of remote working revolution? Could this be the next mega thematic investment theme?
The mind boggles with the implications once you start extrapolating the tangents. With everyone working from home, what will happen with all the office buildings in or near major cities? And the commercial property companies who own them? Sure, some will become hip co-working or meeting spaces available for hire for the firms’ monthly get-together. But the rest?
Yeah, that’s right: re-zoned and repurposed into residential apartments. What does that do? Take away the structural undersupply of residential property in places like Stockholm, New York and London and reduces the need for new-build in ever more remote suburbs. That in itself has at least two implications: residential property prices and rent levels may fall, meaning people can afford to live closer to cities and/or in larger apartments, where they could then fit a home office. And they don’t have to commute to work… Let that last one one sink in.
With people working from home (their old one or their new one nearer or in the city), from their new home office that they now can afford (equipped and furnished by their employer), there is no need to commute. So out goes the need for a car (or at least a second car) or an expensive train/buss pass. With new suburbs no longer being built in faraway places, local governments don’t need to extend light railway or subway lines, saving on fiscal spending and impacting infrastructure investments as well as construction jobs. Emissions will fall markedly as a result of fewer trains, buses and ferries running back and forth and fewer cars stuck in traffic. Flights for business trips become less necessary as clients and partners are only a Zoom-link away. Already a few weeks into this thing, there are definite signs of what the coronavirus could mean for climate change.
Depending on where you live and work, commuters waste anywhere from 195 hours (Brussels) to 254 hours (Rome) a year stuck in traffic. Some 3.6 million Americans have 90 minute one-way commutes and the average rail commute in the UK takes an average of 2 hours and 11 minutes each day. All that waste? Poof! Gone. Think of the productivity gain … or the extra time spent with family.
Who stands to benefit or lose the most from this? If we put aside the social and familial implications for now, there are some obvious winners and losers here, though there are sure to be second- and third-order effects that I haven’t considered yet.
For example, I wouldn’t want to be long commercial property companies, construction, facilities management, transportation firms or car manufacturers. Never mind airlines who’ve already tanked. Residential property companies are uncertain as it depends on how quickly they can repurpose former office buildings and where property prices and rents eventually settle.
There will be an upswing for manufacturers of the tools needed to work from home including web-cams, high-res screens, raisable or standing desks and ergonomic chairs (unless these are just moved from former offices to homes) and, of course, providers of remote team-working software like Slack (WORK), Zoom Video Communications (ZM), Atlassian (TEAM) G-suite by Google (GOOGL) or Workplace by Facebook (FB). Managers will need training in new ways to lead and motivate teams they only meet in person once a month. Look at established or nascent management training companies, including LinkedIn Learning now owned by Microsoft (MSFT) and Pluralsight (PS).
Let’s have more fun with this train of thought: lunch time restaurants, sandwich places and coffee shops serving office workers (both chains and small businesses) may see demand dry up while catering and delivery services may see an upswing. So Uber Eats (UBER), Grubhub (GRUB), Just Eat (TKWY) and Foodora by Rocket Internet (RKET) may be worth a second look. But that could easily go the other way as workers stuck at home would want to socialise with friends and colleagues at nearby restaurants during their lunch hour. Regardless, firm won’t need in-house caterers so maybe avoid facilities management companies providing corporate catering.
Already I hear reports of training equipment running out online as people are buying treadmills, exercise bikes and free weights in order to work out at home. So Peloton (PTON), Nike (NKE) and Lululemon (LULU) could be interesting and, as always, the firms who sell the equipment to you — Amazon (AMZN), Walmart (WMT) — and those who will deliver them — UPS (UPS) and FedEx (FDX). Publishers of popular on-line game franchises like Activision-Blizzard (ATVI), Zynga (ZNGA) and Take-Two Interactive (TTWO) have already taken off.
You can really run this scenario as far out as you’d like — it’s a lot of fun thinking of the possible implications! And regardless of whether or not this current situation will lead to a vastly different operating model for companies, one thing is for certain: things won’t go back to the way they were before.
What do you think? What trends do you see emerging? And where should you invest to tag along for the ride? Let rip in the comments below.
Stay safe!
Note: The stocks mentioned in this article are for information purposes only. It is not intended to be investment advice. The value of any investment might rise or fall. Past performance should not be used as an indication of future performance.
Disclosure: The author owns shares of Slack, Zoom, Google, Nike, Amazon, Activision and Zynga.
