We talk with author and media theorist Douglas Rushkoff, who has published 10 books on media, culture, and technology. He joins us to discuss his most recent work, Present Shock, about living in today's immediate, always-on world.
Douglas joins us for a discussion of today's real-time, always-connected world, and the repercussions it has on individuals, investors, and businesses. He looks at Dell, GE, McDonald's and more to examine what works and what doesn't as Industrial Age corporations learn how to function in the Digital Age.
A full transcript follows the video.
Brendan Byrnes: Hi folks, I'm Brendan Byrnes and I'm joined today Douglas Rushkoff. Douglas is a media theorist, and the author of Present Shock. Thank you for your time, Douglas.
Douglas Rushkoff: Thanks for having me.
Brendan: First of all I wanted to ask you simply, what is "present shock?"
Douglas: Present shock is really just the human response to living in a world where everything's happening now. It's a world without beginnings and endings, without a past or a future, without origins or goals. It's kind of disorienting for people and businesses to be in that constant steady state.
Brendan: I would assume that easy access to information perpetuates this. Is this a good thing? Do you think people getting news immediately when they want it from the Internet, people getting updates on their friends' lives via Facebook, or using Twitter to get all these different perspectives...a lot of people would argue that's a good thing. What do you think?
Douglas: It can be a good thing, if people know how to orient and manage it. Most people and businesses end up in this constant state of crisis management because they don't have a goal, they don't have a sense of momentum.
It's hard to get a sense of momentum when anything can interrupt you at any moment, whether that's a tweet or a call waiting, or a new news report, or a new shareholder complaint.
Brendan: Right. Another thing I want to talk about is productivity, efficiency. Do you think workers today are more efficient, more productive, with this "live in the now" era, or do they get distracted too easily?
I think everyone's familiar with surfing Facebook on work. Is this a good thing or a bad thing when you're talking about efficiency and productivity?
Douglas: You like good things and bad things.
Douglas: In some sense, if we're going to maintain the old models, the old ways of doing business, our efficiency has become a problem. We're more efficient now, really, than we were before, to the point where...
Most people are unnecessary to the jobs they have anyway, so the fact that they're checking eBay or checking Twitter or doing something else doesn't really affect their productivity so much because there are not that many productive assets left -- human productive assets in businesses.
The real challenge now is how we look at our productivity, how we look at employment, really, in a landscape where everything's happening now, where everything's happening all the time.
Brendan: How has this evolved over time? I assume the Internet was a big catalyst in the whole "living now" thing that you talk about in Present Shock.
Douglas: Yeah, although when the Internet first came up in the late '80s, early '90s, we looked at it as a technology that was going to make time. It was going to make us not just more efficient, but allow us to do things -- work from home in your underwear, on your own schedule -- and what we ended up doing was really, we used the Internet as kind of a last-gasp for this, for the NASDAQ stock exchange.
The Internet became the dot-com boom, and then human attention, human time, became the new commodity. We ended up strapping the devices to ourselves and having them tweet us and ping us every time someone is going to send us an update or do a little thing.
We've ended up in this state of perpetual emergency responsiveness, which is not an appropriate state for a human or a business. It's because our markets needed new territories to grow. Colonial conquests were over. There were no new territories. There's nothing left to extract, so we try to extract it from ourselves instead.
Brendan: Do you see this turning around? I would say, looking at it right now, it's only getting more and more toward the other side, which is the present shock, living in the now. Do you see any way that this can change?
Douglas: To use your language, there's good ways it can change and bad ways it could change. The good ways it could change is we realize that we can't use the Internet to amplify the problems of the Industrial Age. The Industrial Age actually is over.
This race toward more efficiency, the "time is money" logic of the Industrial Age, where the way to make more money is to somehow compress more time into each moment, we can't just amplify that through digital technology. Digital technology is fundamentally different.
Either we'll understand that, understand we can't run our businesses at the rate of a debt structure, that we can't -- like GE tried in the '90s -- we can't leave all of our productive industries and just all become banks. That's not going to work.
We can unwind it more, say like Michael Dell is trying to, to go private so that he can liberate himself from his debt structure, from that clock, and become a much more asynchronous business, that expands and contracts.
If we can't do that, if we can't unwind that, then no. Then it will happen in a bad way. Then it will happen because there's just too many people unemployed, too many people out there who can't get jobs and that we can't really then support it anymore, with business as usual.
Brendan: I wanted to ask you about a few examples in the book. One thing you cite is a Deloitte study that says asset profitability for U.S. firms over the past 40 years has steadily fallen by 75%. In the book you say corporations have successfully accumulated most of the financial resources out there. They don't know how to reinvest it to make more.
Why is this, and what do you think has happened over those 40 years, considering it's still been a pretty good 40 years for the stock market -- S&P going from around 100 to over 1600 now -- where does this go in the future, and how has that happened over the past 40 years?
Douglas: Really what we're saying is that corporate profitability, as a portion of net worth, has been going down. Even if they're still making money, their ability to make money with their assets has been going down, really 60-70 years. This was even before the Internet.
They're good at collecting money. They've been very good at sponging money, but then once they have that cash it's very hard for them to figure out, "How do we spend this cash in a way to make money?"
The reason why this is true, and this is the thing that...it's interesting, Alan Greenspan was just starting to hint at this at the very end of his career, in his last couple of congressional testimonies. The reason why this is true is because of the bias of central currency.
The operating system underneath all of this is finally a central currency, and it's a very specific kind of currency with a very specific bias. There used to be currencies...some of them were biased toward transaction, and other ones were biased toward storage.
The problem with that was we ended up with a rising middle class. This was way back -- 11th, 12th century -- all the transaction-based currencies that promoted the velocity of money and the creation of value didn't really favor the wealthy. They didn't favor the monarchy, and it led to an imbalance of power, at least as far as the monarchs were concerned, so they put in place central currency, which is lent into existence and has to be paid back at interest.
It's really a kind of currency that favors investment, but doesn't favor transaction. It doesn't favor the momentum and velocity of money. That's what's happened, so when you have that tool as the only tool for the job, you end up collecting all this money. You end up becoming more and more like a bank, but less and less value can be created just doing stuff.
Brendan: You can definitely see it with an Apple (NASDAQ:AAPL) sitting on, what, something around $150 billion in cash. They don't know what to do with it.
Douglas: Right, and that's really a problem of the operating system, which is why then when you look at these first Digital Age companies, whether it's Apple or Google or Facebook, they're not genuinely Digital Age companies, at least as far as I see it.
They're sort of the last Industrial Age companies, doing digital things, in the industrial model. When we start to see businesses go private, when they start to buy themselves back from their shareholders because they no longer want to be just so subjected to the weight of money, you'll start to see some interesting things happening.
Brendan: Another example from the book, you cite Disney (NYSE:DIS), how they ran into trouble in the mid-1990s in their theme parks especially. Michael Eisner asked the CFO to come in and try to turn that around, and it's something you called "living in RAM" is how they went about it. Could you talk about that, and what that means for Disney?
Douglas: There's one way for Disney to make money, and the way they were looking to do it in the late '80s and early '90s was by selling off their historical assets on a certain level, or selling them out. "Oh, here's Mickey again." "Here's Cinderella." "Here's Sleeping Beauty," and throwing their old products out there as much as possible.
They were, in some sense, emptying the vault and spreading thin their old stuff, their legacy, all that. The parks started to suffer, actually, as a result of that. The parks started to decay, and they just weren't as interesting to people.
What they decided to do was to reverse what they were doing. Instead of looking at their value as being their vault of mythology, they started looking at their value as their front-line employees. They reversed, really, the dynamic of the company.
They saw management as, management's only job is to serve the front-line employees, and the front-line employees are the ones who are going to understand what the customers actually want, what's actually happening here. All the innovation really came from there, back.
It was an interesting model to use, because rather than being a historically based company, they became a real-time based company, that was based in what we now call customer experience, or brand experience, but is the lived, real-time experience of the customers.
Brendan: Another example of living in the now, you talked about it in the book, is social media and a social media strategy. Pretty much every big company has to have some.
In the book, you talk about how GM (NYSE:GM) made an error with their SUV. They had people come in and make commercials for them they could upload to the Internet. What happened was the big gas guzzler ones got voted to the top of the favorites list.
You've seen McDonald's have some social media problems when they had the hashtag problem. They got mostly complaints via their promoted hashtag thing on Twitter. Is that just something companies have to accept with social media, or is there a way that they can have it both ways, in the sense that it could be a good thing as well?
Douglas: It can be a good thing. The problem most companies are still making is they don't understand that social media is a nonfiction media. Whether the things you socially tweet are true or not, they're still truth-based. They're rumors. They're facts.
Brand mythologies don't function in a social media space, so what they're trying to do too often is communicate their brand values, rather than their product values; their mythological ideas, rather than what's going on in the company.
People are not going to want to tweet about the Keebler Elves, that they're baking these cookies in a hollow tree. They are going to want to tweet, "Where do these Keebler cookies actually come from? Who makes them? Are they organic ingredients? Are they high cholesterol or low? Are there slaves being used to make them, or are the workers being treated well?"
Where branding and brand mythologies used to exist to really distance consumers from what was going on at the factory, social media reconnects them to what's going on in your production chain. The way to have a successful social media campaign, so to speak, is not to think of it as a brand campaign, but as a company campaign.
Brendan: One of the things you cite in the book about the stock market is derivatives as having a negative impact. Berkshire Hathaway CEO Warren Buffett of course called them "financial weapons of mass destruction." How do you feel about derivatives overall, and how are they so harmful for the stock market?
Douglas: Derivatives are a great example of this real-time, presentist, present shock trading. People don't buy a stock in order to invest in the future. Certainly, traders don't. They want to make money on the trade.
Facebook has its IPO, people buy it at 10:00 in the morning, and at 10:05 it's like, "Wait a minute. It hasn't gone up. Sell!" and they send the stock down. If you no longer want to buy a stock and hold it into the future, then you buy a derivative. You buy a future.
I'm not going to buy the stock today. I'm going to buy the stock 30 days from now. Then if that's not enough temporal compression for you, "Well, I'm going to buy the derivative in the future." I'm buying a derivative of a derivative, or a derivative of a derivative of a derivative, and each time compressing more time into that little thing.
It got so big, the derivatives market is so much bigger -- about 300 times bigger than the regular market -- that as we all know the New York Stock Exchange was purchased by a derivatives exchange. The New York Stock Exchange was actually consumed by its own temporal abstraction.
That's what happens when we end up pushing so much time into it, but it makes it increasingly distant and abstracted from whatever the enterprise is, whatever's actually going on. That's why it ends up so destructive.
Brendan: How about present shock for a company's strategy? We've seen two of the most successful companies in the past couple of years as far as stock price -- you look at Google, Amazon (NASDAQ:AMZN) -- very long-term focused, but we have so many companies that are focused on just getting the short-term results, getting that bump up in stock price.
How does the present shock theory impact when you look at a company's strategy and how they should prepare? Should they be more long-term focused?
Douglas: Well, I wouldn't tell them what they "should" do. They have a choice. Here in New York, where you have a start-up culture -- that's the big thing -- there's two kinds of start-up people.
There's the kids who start up a company and want to sell it in 18 months. They're creating a company in order to sell it, and some of them do very well. They get rich.
Then there's kids who start up companies because that's what they like to do. They want to start a game company because they like making games. I do think the landscape is going to begin favoring people who are doing the thing...in some sense it sounds like it's long-term thinking -- they're doing it because they like doing it and they want to keep doing it -- but it's actually presentist.
What I'm looking at, and what I think investors should be looking for, are people who are playing the game in order to keep the game going. It's more like a fantasy role playing game or a video game. You're not playing the game in order to win, declare victory and get out; those are the ones that are going to start failing.
It's the ones who are playing the game because they love what they're doing. You can tell a company like that. You can feel the difference between a Ritz-Carlton, say, and one of these hotels that they're just trying to please shareholders right now.
It's the kind of places where they are truly geeks for the thing they do. If they're geeks for the thing they do, then they're more in the moment. They're more presentist, but it's not short-term. They're presentist, they're in the moment, for the long term.
I would argue that's a better long-term strategy than this highly reactive, responsive, "Oh, my gosh, what are we going to do in order to make this number? In order to do this quarter over quarter? In order to make the shareholders happy tomorrow because next year, whatever. I might be retired."
Brendan: You said recently that you quit Facebook a few weeks ago. Why did you decide to do that?
Douglas: Facebook is weird. At first I didn't enjoy Facebook. For me it was a business thing. I don't like the fact that my friends from second grade, who I've spent 20 years getting away from, now show up in my present.
My future is being cast back to me in the form of ads generated by big data engines that know what I'm going to do before I even know I want to do it. There's this sense of temporal compression on my now. That's present shock.
In addition, I don't trust Zuckerberg and his company. I've seen the way sponsored stories work. I don't like the idea that my face and name might be used to promote something that I liked, or that something that I liked, liked.
I don't like being there -- as an author, arguing for people to have media literacy and digital literacy -- I don't like being there asking for likes from people that are going to make them vulnerable to be the flow-through for sponsorships that I may or may not even know what they are.
Brendan: I wanted to ask you about 3D printing, because when I was reading through your book it struck me that, in a lot of ways, 3D printing is kind of the tangible way of living in the present.
How do you view 3D printing, going forward? Do you think this is going to take off? A lot of people are saying this could be bigger than the Internet. What do you think about 3D printing?
Douglas: 3D printing is a taste of things to come. It may be a baby, baby taste. It may be to local decentralized manufacturing what the typewriter is to the Internet because right now we're talking mostly about plastic and metal, and where do you get the plastic, and how does it work? But it helps people envision decentralized manufacturing and production.
It will end up going one of two ways. Either people are going to get a free 3D printer from Jeff Bezos -- he's going to stick it in your garage and you're going to be able to use it as long as you're buying your plans and printouts from Amazon -- or it's going to be some kind of MakerBot, open source thing that will really flip stuff open.
The real question, though, is what ends up going in the printer? It's the cartridges. What are we using? If it's some high-cost, bizarre polymer that requires Africans to dig it out of a slave cave and then ship it over here, then you don't really change anything.
Brendan: Yeah. It's definitely going to be interesting to watch. You see Stratasys and 3D Systems (NYSE:DDD) stock just going straight up.
Douglas: It is. It's interesting, but there are people that are buying 3D because it's the only stock they can buy.
Douglas: Nothing against NASDAQ, of course, but once something's on the public exchange it's kind of over. It's kind of already happened. They're already done their exit. They've already left.
If you really want to invest, and this is what's interesting -- I talk about this in the book too -- is how to begin to think about local investing, about real-time local investing. How to see what's going on in your community, how to set up...you don't need alternative currencies to do that.
The people I want to talk to, if they're listening, I want to talk to banks about looking at how do you do two-tiered loans, where you lend half the money to a business, and you help the business raise the other half of the money from their community in real time? How do you mitigate your risk, mitigate that sense that the community has, that you're just extracting value from their town, and at the same time make money, being in the money business?
I think it's these hybrid strategies that are going to be successful in the future.
Brendan: Do you think individual investors can do that?
Douglas: I do. I really do think individual investors can do that. It's no different form of educating yourself about a local business or the likelihood of your friend to do well with his restaurant, as it is to see what some mining company is doing 5000 miles away.
Brendan: The book talks about how we're too focused, right now, what's happening in the present, but you also say there's a way to reclaim what you call that home field advantage. How do you do that?
Douglas: I don't think people are focused on the now. I think they're focused on the fake now. The now in the phone -- that smartphone "now" -- isn't really what's happening now. It might be sort of now, but it's somewhere far away. What's happening now is what's happening between you and other people.
I think the home field advantage for humans is the local reality; this return to local, whether it's community supported agriculture and local sourcing and local employment, isn't just a style. It's not just some northeast cultural creative, San Francisco, Birkenstock trend.
There's a deeper social need being filled here, and part of that is the sense that we can't depend on banks to lend money to factories and corporations to hire people to give you a job. This long supply chain of employment is not stable, and it doesn't create security.
But people in communities are beginning to recognize that there's a whole lot of economics that they can do with one another, and maintain what I'm calling the home field advantage of a local economy.
It's what Adam Smith was really talking about when he believed that local economies would always have the advantage over long-distance economies. He didn't really envision us going where we've gone. I think that we're finally at that place where we can begin to exploit that.
As people look around, what can we source locally? What can we do locally? How can we make that more efficient?
Brendan: Douglas Rushkoff, author of the fascinating book, Present Shock. Thank you for your time.
Douglas: Thanks. Thanks for having me.
Brendan Byrnes owns shares of Berkshire Hathaway, Apple, and General Motors. The Motley Fool recommends 3D Systems, Amazon.com, Apple, Berkshire Hathaway, eBay, Facebook, General Motors, Google, McDonald's, Stratasys, and Walt Disney. The Motley Fool owns shares of 3D Systems, Amazon.com, Apple, Berkshire Hathaway, eBay, Facebook, General Electric Company, Google, McDonald's, Stratasys, and Walt Disney and has the following options: Short Jan 2014 $36 Calls on 3D Systems and Short Jan 2014 $20 Puts on 3D Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.