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implications and opportunities for entrepreneurs
free agency and the new economy

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is that your final answer?

            Here is where the fabulous prizes come in. How did this happen? A quarter of the work force has left traditional organizations. How did this happen? To incentivize you, because I know you are market-oriented people, I have some fabulous prizes. The question before us is, how did this happen? If you give me a good answer, you get the new issue of Fast Company. $4.95. That's for a good answer.

            If you give me a great answer, and I do mean a great answer, you get this T-shirt. As Mary mentioned, I had a book party last week. You would think I’d have my book party at Kay Graham's house maybe, or some other Cleveland park mansion, maybe at Dumbarton Oaks. No, I had my book party at Kinko's. It was called Bookapalooza, and what you get for a great answer is the official, limited edition “Free Agent Nation Bookapalooza” commemorative T-shirt.

            Now, if you give me a terrible answer, one that makes me think, “Who let this person in?” you get this, the audio edition of Free Agent Nation, which means you have to listen to this crap for three more hours.

            Okay, so give me some answers. How did this happen? How did we go from an organization of organization men and, to a certain extent, organization women, to a nation where we have so many free agents and so many people who want to be free agents? Raise your hand and you might get a prize.

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Audience Member: Women coming into the work force and they don't like the corporate environment.

Mr. Pink: That is an excellent answer. You should have saved it, because you might have gotten a T-shirt.

Audience Member: We watched our parents get fired.

Mr. Pink: Give this magazine to your mom. (Pink continues to distribute prizes after each answer.)

Audience Member: The 9-to-5 became 7-to-9.

Audience Member: More affordable technology.

Mr. Pink: Technology. That is an answer that I call not wrong, but not interesting.

Audience Member: People realized that you can make more money being a consultant.

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Audience Member: Freedom. People don't want to have to listen to the boss and don't want to have to toe the company line.

Audience Member: All you do is trade one boss for five or six or however many clients you have.

Audience Member: Email.

Audience Member: Companies downsized too aggressively, laid people off, hired them back and workers found they didn't want to work in that environment.

Audience Member: Women not getting paid enough and going out on their own.

Audience Member: Too many people watch "Thyroids and Jokesters." (Laughter)

Mr. Pink: (Presents the booby prize.) I really don't have any idea what that means, but have a tape. And please never email or call me again.

Audience Member: No job security.

Mr. Pink: Another answer that is not wrong, but not interesting. Come on, give me a good answer.

Audience Member: People want more control over their life.

Audience Member: We've moved to a service economy.

Mr. Pink: Can you share the tape with that guy? (Laughter) We moved to a service economy in the 1950s, not that there is anything wrong with that answer.

Audience Member: Computers made middle management unnecessary.

Audience Member: Corporate America didn't have the jobs to give to 33 million.

Audience Member: People want blending in their life.

Mr. Pink: He said that people wanted balance in their life, but called it “blending.” What he is doing is signaling that he read my book, which is a suck up move that often works. But not tonight.

Audience Member: People built up their 401(k) plans and felt that they had enough money to leave. They left, and now they're in trouble, but don't want to run back to their company.

Audience Member: The bureaucracy in the public sector is getting worse.

Audience Member: Restrictive immigration laws and too few workers.

Audience Member: Workers own the means of production.

Mr. Pink:  Okay. You're all absolutely right about these answers. They're all kind of swirling around the topic. Let me phrase them in slightly different ways.

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the declaration of independents

            Everybody talks about the end of job security. That is totally right. Everybody who said that was smack on. I want to put it in a slightly different way. We had this notion in this country that corporations would treat workers like parents treat children. We can attach this big fancy phrase to it, paternalism, but it was alive for a long time in this country after World War II. What is so interesting about it is that it wasn't only present, it was exquisite. Let me tell you what I mean. My grandfather worked at the phone company. What was the phone company called?

Audience Member: Ma Bell.

Mr. Pink: Anybody here from Rochester, New York?

Audience Member: Kodak.

Mr. Pink: No, this is a yes/no question. Kodak, a big employer in Rochester, New York, called itself “the great yellow father.” Metropolitan Life Insurance called itself “Mother Met.” There is this notion that companies would be like parents and take care of people. Well, that is just not true anymore. It's flatly not true, and the dot.com bubble was the last great burst of corporate paternalism. I really do think a lot of these dot com companies were paternalistic in their own way. They were not like the stern taskmaster parents, they were more like the cool parents down the street. They let the kids come and go whenever they wanted. They said, "Oh, you can have whatever you want in the refrigerator. Hey, we'll even buy you a car." But the same thing happened when times got tough, they booted the kids out.

            You can think of this as the end of America's adolescence. No one is going to take care of you, and that is why people are saying, "Well, if no one is going to take care of me, I might as well take care of myself." What is the lesson in that for fledgling entrepreneurs? Well, if you run a company, you have to treat people like adults. There are a lot of companies out there that are trying to have it both ways. They're saying, “You get all of the responsibilities of adulthood, but none of the privileges.” That is why a lot of people leave.

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            That is one factor. Another factor is the means of production. Anybody ever heard of Karl Marx? Anybody a Marxist? Karl Marx talked about the means of production. What did he mean by that? He basically meant the tools necessary to create wealth. In the industrial economy you needed large organizations to buy the means of production. Why? They were very big and difficult to house, like a factory. They were very expensive and difficult for one person to purchase. They were very cumbersome and complex and difficult for one person to operate. You needed large organizations to provide the real estate, the organizing mechanisms and the financial capital to purchase the means of production, then give workers a sliver of the profits those tools created.

            What happened? The means of production changed. Can everybody see this laptop computer? This, my friends, is a means of production. Let's talk about the attributes of this means of production. Is it too expensive for one person to purchase? No. Is it too large for one person to house? No. Is it too cumbersome and complex for one person to operate? Pretend it's a Mac. (Laughter) So what is happening? Workers can now own the means of production and they're saying, “Why should I share a slice of the profits with the organization?” That is a big factor.

            The lesson for fledgling entrepreneurs and people building companies is that you have to give people a piece of the action. That means not just money, but giving people a real say in the operation because, today, talented people need organizations a lot less than organizations need talented people. In part, that’s because of this means of production point.

            Another point is prosperity. Somebody mentioned 401(k)s. Spot on. We're in a remarkably prosperous country, but it's not the kind of Fortune magazine, Bill Gates, Internet millionaire kind of prosperity. Deep into the middle class there is a kind of prosperity that is unheard of in human history and unparalleled in the rest of the world. In this country, right now, two out of three people own the homes that they live in. That is remarkable. What if I told that to my grandfather who lived through the Great Depression? It is a remarkable thing. More than half of American households own stock. Here’s another startling factoid: seven out of eight Americans today were not alive during the Great Depression. That means that they have no conscious recollection of any period of sustained widespread economic privation. Some people who are immigrants, depending on where they emigrated from, will have had that experience, but the vast majority of Americans don’t. People have this sense of, “Oh, it will work out,” so they're seeking from their work more than money and more than security. They're seeking a sense of meaning. The lesson is that you can't bribe people today. You can certainly bribe some people, but you're not going to seal the deal with new employees with money alone, especially the most talented people.

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            The final reason, and this is a curious fact, does anybody remember a company called Netscape? Let me tell you the story of Netscape. It was started in 1994, went public in 1995 and disappeared into AOL in 1999--a life span of a little over four years. Question: Was Netscape a company or just a really cool project? More important question: Does it matter?

            What did Netscape do? It put a good product on the market that eventually got clobbered by Microsoft. They changed the face of competition and made some people enormously wealthy. More important than anything else, it equipped a lot of people with skills and connections and experience that they could take to other ventures. Now you have all these “Netscapees” starting all kinds of new companies and doing amazing work. The point is that in my grandfather's day, if I asked, "Do you think the phone company will be around in 40 years?" it would have been like asking whether the sun would come up in 40 years. The half lives of companies, the life spans of companies, are shrinking and shrinking and shrinking.

            Let's do a test. How many of you think General Motors will be here in 10 years? Raise your hands. How many of you think Ford will be here in 10 years? How many of you think Firestone will be here in four years? (Laughter) How many of you think Apple Computer will be here in 10 years? The Mac Users Group will meet after this. (Laughter) How many of you think Amazon.com will be here in 10 years?

            Now, this is a serious question: How many of you think that you will be here in 10 years? Not here at the Capital Hilton, but how many of you think you will be alive on God's green earth in 10 years? This is a remarkable change. Today, all of us can expect to outlive any organization for which we work. Think about that. It is sort of like David Carradine in the old Kung Fu television show: "Explain to me, Grasshopper, how you have lifetime job security." When you outlive the company, how do you have lifetime job security?

          The nature of companies is changing, so people inevitably are going to migrate from place to place. Is Netscape a project or is Netscape a company? It doesn't matter. It exists for a certain period of time, then we go on. The lesson for entrepreneurs is that you have to make people real promises. You can't say, "Oh, we'll be around. We're built to last. We're here forever. Your grandchildren will be proud of us." No way.

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