Reporter insists tech titans offer a valuable playbook

By Scott Benjamin

Alex Kantrowitz says that although “something is wrong” when the American economy is “so dependent on five tech titans” – Amazon, Facebook, Google, Microsoft and Apple – their competitors should not despise, but, instead, emulate their engineer’s mentality.

“We can learn from how these companies operate,” said Kantrowitz, an on-air contributor for CNBC who in 2020 wrote “Always Day One: How The Tech Titans Plan To Stay On Top Forever” (Portfolio/Penguin, 261 pages).

For example, he explained that at Amazon staff members write memos of six pages or less “set in the future. These memos describe exactly what a potential product will look like before anyone starts working on it.”

“The tech giants may plan to stay on top forever, but as the Engineer’s Mindset and its associated workplace technology spread, these companies’ competitors will be able to mount meaningful challenges,” stated Kantrowitz, who conducted 130 interviews for the book. “As invention flourishes within smaller companies, growth will become more evenly distributed, increasing wealth more broadly and helping people lead better lives.”

Kantrowitz, who produces the Big Technology newsletter and podcast, stated that the leaders of the tech titans are “trained engineers eager to facilitate than dictate. Instead of answers, they have questions. Instead of pitching, they listen and learn.”

In a phone interview with Patch.com, he said that companies and educators should focus on ideas instead of execution.

“Education is not set up today for the current work place,” said Kantrowitz, who is a former senior technology reporter for BuzzFeed News. “It is set up for an industrial economy. Government has a responsibility to ensure that education is geared to help people when they get to the work place. People need to invent things.”

However, ABC News reported in 2017 that, according to a PriceWaterhouse study, 38 percent of the current jobs could be obsolete by 2032, largely from increased automation.

Kantrowitz remarked, “If jobs are eliminated then companies should find more work and add staff by inventing new products or services. Those will be the companies that will thrive. The ones that are cutting their payroll won’t last. The long-term problem isn’t so much a job shortage but a talent shortage.”

He stated that the U.S. Justice Department and many state attorney generals have acted “largely with cause” in filing lawsuits over the monopolistic practices by Google and Facebook.

On October 21 the U.S. Justice Department filed an antitrust action against Google along with 11 state attorney general for “maintaining monopolies” and on December 9 the U.S. Justice Department as well as 48 state attorney generals filed antitrust lawsuits citing “illegal monopolization by Facebook.

Said Kantrowitz, “It is not a foregone conclusion that the economy would be worst off if they were broken up into different platforms.”

New York University Finance Professor Thomas Philippon wrote in his 2019 book, “The Great Reversal: How America Gave Up On Free Markets” (The Belknap Press, 343 pages), that the tech titans’ market share is similar to what AT&T and Exxon/Mobil had a generation ago.

“The tech titans may have the same market share that Exxon/Mobil or AT&T did some time ago, but they have unprecedented power in peoples’ lives,” said Kantrowitz. “They impact your e-mail system, your personal calendar.”

However, when it comes to profits, Philippon wrote, “The stars of today are not making much more than the stars of the past. They just keep more of it.”

Philippon stated that corporate tax rates were at 50 percent in 1980 and are now at 21 percent.

Kantrowitz declared, “There is no question that the tech titans are not paying their fair share. It is not so much about the corporate tax rate but the many avenues that they have to exercises loopholes so that they don’t pay their fair share.”

In his 2012 book, “The New Geography Of Jobs” (Houghton Mifflin Harcourt, 294 pages), University of California at Berkeley Economics Professor Enrico Moretti stated that for every innovation job created in brain hub, five additional non-innovation jobs are developed and those workers have higher salaries than their counterparts in other urban areas.

Said Kantrowitz, “There is no doubt that the tech companies produce a trickle-down effect on the local economy. There are people who provide services in the tech hubs who can charge more for their services and there are more jobs available as a result of each brain hub hire. But you have to also consider the pressure some of the people in those other jobs are living under, because in the tech hubs there is usually a high cost of living.”

Moretti wrote that the San Jose metro area, smack dab in California’s Silicon Valley, is the most expensive region in the United States.

Patch.com has reported that University of Connecticut Finance Professor Fred Carstensen, the director of the Connecticut Council for Economic Analysis, has said that Amazon’s fulfillment and distribution centers have limited economic impact.

"Most of those positions are part time,” he said last summer. “The full-time jobs are estimated to pay about $38,000 a year. Jobs are important, but it comes down to the kind of jobs and what they will pay."

Remarked Kantrowitz, “Amazon is notorious for mistreating its employees. However, on wages the government should catch up with Amazon.”

He said that Amazon pays a $15 minimum wage for its American employees, well above the federal minimum wage of $7.25 an hour, which hasn’t budged since 2009. Connecticut’s minimum wage is $12 an hour.

Additionally, Kantrowitz said that over the last three years, Amazon has about doubled its payroll – going from roughly 600,000 to 1.2 million employees.

On another topic, University of Washington History Professor Margaret O’Mara wrote recently in The New York Times that even though Oracle is moving to Austin and Hewlett Packard Enterprise is going to Houston, Silicon Valley will remain the hotbed for innovation.

“Silicon Valley always roared back, each time greater than the last,” she related. “One secret to its resilience: money. The wealth created by each boom — flowing chiefly to an elite circle of venture investors and lucky founders — outlasted each bust. No other tech region has generated such wealth and industry-specific expertise, which is why it has had such resilience.”

“I think Silicon Valley will continue to thrive,” said Kantrowitz, who lives in San Francisco. “I do think that there are advantages to working here.”

“However, simultaneously, there are other areas that already have information hubs and they will grow because they are becoming more friendly to the tech economy,” he added. “During the pandemic people have seen that they can work from outside Silicon Valley.”

Former Clinton White House aide William Galston wrote recently in a Wall Street Journal column that, “Online businesses have prospered while bricks-and-mortar establishments have disappeared” during the pandemic.

Kantrowitz agreed, saying that the recent increase in online buying “is a habit that people will probably keep.”

On a separate subject, he said that energy reform to combat climate change – one of the apparent priorities for Democratic President-elect Joe Biden - will produce more jobs.

“Long term, if we fight climate change we'll be in a better economic position,” Kantrowitz explained. “Continuing on our current trajectory would be disastrous.”

What did Kantrowitz learn at Cornell University’s School of Industrial and Labor Relations that has helped him in his career?

He said that by taking classes in Conflict Resolution, Collective Bargaining, Mediation, Organizational Behavior and Human Resources he “came out of school as a coach before I was even a player.”

Kantrowitz added, “I think that kind of model to become a coach can be developed in other college majors.”