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Naval Ravikant, Email, and the Future of Work

In a recent appearance on Joe Rogan’s podcast, Naval Ravikant referenced economist Ronald Coase’s 1937 paper, “The Nature of the Firm,” which later helped Coase win a Nobel prize.

The mathematical details of this paper are dense, but on Rogan’s show, Ravikant summarizes its core idea: firms hire more people instead of contracting out the needed work when the transaction costs associated with setting up external relationships are high, making it easier and cheaper to do the work internally.

As Ravikant notes, the internet is driving down these transaction costs as it reduces the friction required for an entrepreneur to find and hire the right contractor for a specific task. Coase’s theory predicts therefore that businesses will become smaller and more people will migrate from stable positions to a freelance lifestyle.

I was intrigued by this discussion because it overlaps with some concepts that I’ve been developing as I work on a new book about email and the future of work.

The book in question (which is still very much in the early stages) documents how in the 1990s, as digital communication tools like email swept through front offices, many organizations implicitly adopted a workflow I call the hyperactive hive mind.

This workflow has employees coordinate by maintaining an ongoing, unstructured electronic conversation through inboxes and (increasingly) Slack channels — essentially scaling up the way small groups in the same physical location would naturally work together.

The advantage of the hive mind is that it’s flexible and adaptive. (As Henry Ford learned as he developed the assembly line: rigid, complicated work processes are a huge pain.)

The disadvantage, however, is that the constant communication demands of the hive mind conflict with the way human brains function, significantly decreasing productivity and making people miserable.

My prediction is that in the near future we’ll see a movement away from the hyperactive hive mind workflow as more and more firms trade its simplicity and convenience for approaches to work that produce more value — even if they’re more rigid and annoying.

(As Henry Ford also learned, the pain of figuring out the assembly line was worth it, because it produced cars 10x faster than the easier methods it replaced.)

Which brings us back to Naval Ravikant and Ronald Coase.

I increasingly believe that one of the hidden impacts of the hyperactive hive mind is that it inflates external transaction costs. This happens because the hive mind has a way of muddying up internal work into countless informal requests and unstructured conversations, archived haphazardly into ad hoc collections of old messages.

In an age of Gmail and Slack, work has been largely reduced to employees opening up their inboxes and chat channels and then just rock n’ rolling — hoping that the cumulative impact of this back-and-forth busyness moves the needle in the right direction. It’s often not easy to extract clearly defined chunks of effort from this chaotic chatter.

If my prediction is correct, and we seem more firms moving away from the hyperactive hive mind toward more structured approaches to work, then it will suddenly become easier for them to contract with the external market.

This shift would amplify the Coase effect that Ravikant described on Rogan’s podcast, perhaps making the move toward smaller firms and more freelancing even more pronounced than expected.

I’m not sure if this is a good thing or a bad thing, but we should be aware of it. The more I study the future of work, the more I recognize the transience and fragility of the way so many of us currently approach our jobs (c.f., my recent take on the weird state in which academia currently finds itself).

If you’re striding confidently through the doors of your large firm, arriving early to get a jump on your inbox, smugly believing that after just a couple quick decades we’ve already mastered the most efficient ways to produce knowledge work in an age of computer networks, there are likely some big surprises in store for you in the years ahead…


18 thoughts on “Naval Ravikant, Email, and the Future of Work”

  1. A case study in this would seem to be the experience of Amazon API Mandate. This later allowed many of those internal interfaces to easily become commercialized components of AWS, because it turns out that implementing a proper internal API is almost all of the work towards implementing it as an external API.

    • Bingo. I came here to post this same thing. Teams at Amazon work closely internally and communicate with external teams via API. You can generalize this idea and create working agreements and engagement protocols as methods for teams to interact with each other.

  2. Cal,

    thank you for the thought-provoking read.

    I don’t quite see the connection between the hive mind approach and smaller firms with more freelancers.

    I worked in a few software firms, both small and large. All of them made use of freelancers and Slack (or alternative chat client). In my current firm (large firm, heavily depending on Slack), we have lot’s of freelancers but want to move towards hiring more people internally. Slack is very useful for onboarding new freelancers. In order to get information about internal domain knowledge, they can ask around in the Slack channels for help. I don’t think hive mind and freelance work contradict themselves … from my experience it’s the opposite.

    I also think Slack is a useful tool and it’s the users responsibility to use it wisely. I can turn it to “do not disturb” or turn it off completely and get my deep work done if I need to.


  3. The last paragraph is both laugh out loud funny and mildly horrifying — the notion we’ve “already mastered” computer-based knowledge work (the laugh out loud part), which no doubt many people actually believe (the horrifying part).

    The reality is closer to a Winston Churchill quote: “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

  4. “If my prediction is correct, and we seem more firms moving away from the hyperactive hive mind toward more structured approaches to work, then it will suddenly become easier for them to contract with the external market.”

    I did not follow the logical reasoning in this sentence. First of all, if we move toward more structured approaches to work, then I would think that external interface costs would go up. Think of the challenge of developing an API to get two pieces of software to talk to each other. This is likely the reason why companies used to be bigger, and face-to-face meetings still are essential. In contrast, the email-based/”hive mind” approach to work keeps the interface cost low because third-parties are simply another voice in the online chatter.

  5. From this post alone, I’m incredibly excited about your next book. As an entrepreneur for 15 years, who now focuses on Online Business Management (the balance between the hyperactive hive mind and actually being definitively productive), finding ways to be less in email and Slack and more focused on accomplishing what’s vital to success fascinates me. Thank you for always being so curious and driven – we all benefit from it.

  6. Your opinion seems to intersects with some thoughts I’m curently developing. I would love to hear what you have to say about the (to my mind) increasing role of oral/non-tracable communication in “agile” projects (which are, to my mind again, really connected to this hyperconnected hive mind spirit)

  7. Cal, have you seen Svend Brinkman’s new book, The Joy of Missing Out? Seems like it might be up your alley. Just read an interview with the author… can imagine you two agreeing on a lot.

  8. Burned out at work, I took my family to Hawaii for vacation. Left computer and phone at home. Unfortunately, my mind wandered to the “work” in the inbox. Even then it was stressful. I thought, I must have a mental disorder. When I returned to work, I cleared out my inbox before lunch and wondered what I was worried about. Then I thought, if my inbox is “work” and I cleared it out in a few hours, what would I have been doing if I was at work. The inbox has always stressed me out. It’s not a good way to accomplish work in an organization. Managing email and organizing email becomes a job function in and of itself.


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