Nearly twenty-five years ago I entered the workforce as a financial analyst with TRW, Inc. (now Northrup Grumman). With my freshly minted Bachelors of Arts degree in Finance, I was ready to wow my TR Wonderful colleagues with my financial brilliance. Well, nothing could be further from the truth. As one of their first business hires in nearly a decade they were more interested in fresh thinking… not about financial statements or analysis, but about how to harness the ever growing computing power housed in a brand new Dell desktop computer.
While we did our share of automating data crunching via Excel, it was the advent of this little thing called the Internet that was clearly going to be the most powerful. As an aspiring stock market investor, one of the first actions I took was loading up the Yahoo stock ticker on my desktop… I thought I died and gone to heaven. Putting my personal endeavors aside, the Internet (more so a connected world) began the conversation of changing how we work.
First, the discussion and subsequent action(s) involved a change in weekly schedules. At our location we went to a 9/80 work schedule… work nine hours a day and you take every other Friday off. Other locations inplemented the 4/10 work schedule… work ten hours a day and you take every Friday off. The natural next step… why even travel to the office at all?
Well, in 1996, Prodigy and AOL were not ready to carry the load of replicating a person’s ever increasing computer centric corporate office. Those interfaces plus a modem were great to check personal email, but not to do your job. But, that was 20+ years ago... we have had super reliable connections for at least the past decade. The slow adoption can only be explained by an unwillingness to change corporate behaivor (i.e., we don’t trust our employees to work from home). Then, why now?
Well, the answer resides in this Albert Einstein quote: “In the midst of every crisis, lies great opportunity.” People are forced to adjust when faced with a crisis. In this instance, if companies wanted to continue to be a going concern, they had no choice but to allow their locked up employees to work from home. Fortunately, the tools have been in place to make this a viable solution… maybe too good of a solution.
Comparing the two charts to the right, outside of the top quartile of employees, the current percentage of people working from home has nearly doubled since 2017/2018. Maybe more importantly, most studies/reviews I’ve read/heard clearly suggest this movement is here to stay… and quite frankly, why shouldn’t it?
For investors, with a proper long-term view, the opportunity could be immense. For instance, 1) while many people are working from home, it is still less than half the workforce (i.e., much more adoption to go), 2) Zoom is great, but it is far from perfect… there is tremendous improvements to be made (probably by Microsoft’s Teams), and 3) All these people working from home may need to upgrade their home workspace. These are just a few ideas scratching the surface of the investment opportunity.
This idea is a microcosm of the always improving world we are fortunate to live. Even in the middle of a pandemic (actually because of it), it is clear our lives will be vastly improved by working from home. It’s a wonderful example of why our free capitalist society is unmatched around the world. As people, businesses and leaders are free to innovate, our life continues to improve (and always will). Even if technology acceptance comes later than it could have, we’ll take it. Let’s never forget, it is great to be an American citizen... and in some sense even greater to be an American investor!
Note: Nothing contained herein this letter should be considered to be investment advice, research or an invitation to buy or sell any securities. The charts above are from Brooking Institution.