⚖️ Work life balance in a changing economy + Eth ETF, Unicorns, Golden robots, Yield curve

In this edition of S3T:

• 📉 Economic updates: GDP vs Job market cooling, manufacturing contracting, and a decline in new home sales. Plus: inverted yield curves.
• 💹 Ethereum ETFs debut with significant inflows, offering traditional investors a new way to diversify.
• 🔄 Tech industry's shift to the right: Noah Smith's analysis on the reasons behind this trend.
• 🦄 Venture capital concerns: Over 1240 unicorns but a sharp drop in billion-dollar exits.
• 🤖 AI and ancient allure: Tesla's robot pivot and reflections on the temptation of creating intelligent robots.
• ⚖️ Work-life balance: A deep dive into personal experiences and adjustments for better health and productivity. The importance of sharing knowledge and resources to support each other's journeys.

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Welcome to S3T, the essential newsletter, podcast, and learning platform for change leaders. Each week we update you on top developments and need to know insights to keep you ahead of the curve, build your ethics & leadership skills, and drive intentional beneficial innovation.

Opinions expressed are those of the individuals and do not reflect the official positions of companies or organizations those individuals may be affiliated with. Not financial, investment or legal advice. Authors or guests may hold assets discussed.

GDP growth amid slumps in Tech stocks, Jobs, Manufacturing and Home Sales

US GDP grew faster than expected in the last quarter. Per the US Bureau of Economic Analysis (BEA) this reflects increases in consumer spending - in other words - not necessarily an increase in the health of the economy. Here's what else to include in the picture:

• Tech stocks dropped sharply as reality settles in for the revenue-sparse AI sector.
• Manufacturing per the PMI flash index dropped below 50 (which means it's contracting).
• New home sales are down, and Meredith Whitney expects a long period of decline in housing prices. This is not something the US market has experienced, and defies conventional wisdom but Whitney has been right before: she predicted the financial crisis of 2007-08.
• All this plus, the Job Market is cooling. (Extra tidbit from the RTO sideshow: this survey suggests a heavy percentage of the return-to-office mandates were done to spur resignations.)

Of course, this being an election year, the economic situation gets turned into a debate about which administration caused the damage. The short answer is, neither side has the right to blame the other. For decades Republican and Democrat administrations have both contributed to the problem of perennial inflation, while permitting the Federal Reserve to engage in a fantasy battle with a narrowly defined version of inflation (aka headline inflation) that doesn't really reflect the affordability challenges that individuals and families in the US economy actually have to live through.

The yield curve is inverted - but it's been that way since 2022

The yield curve is a visual way to show the borrowing cost and risk of debt securities of different maturities (for example 2 years vs 10 years). Normally the curve would show higher returns for the 10 year. An inverted yield curve does the opposite - and has been a semi-reliable indicator of oncoming recessions since at least the 1980s (Detailed explainer here).

Investors and analysts are puzzled about why the yield curve has now been inverted since 2022 yet we've had no recession so far. The TLDR is 1. the economy is definitely evolving, and we're moving into new territory. 2. Many worry that the Fed is waiting too long to cut interest rates.

Traditional investors now have exposure to Ethereum, crypto's global app platform

Ethereum ETFs began active trading this week with inflows of $106M on the first day. That's 1/6 of the day 1 inflows for the Bitcoin ETF launched earlier this year, but that's 300x the day 1 inflows of a BlackRock non-crypto ETF launched last week. Eric Balchunas noted for comparison: BlackRock launched a non-crypto manufacturing ETF last week. Its Day 1 inflows: $300K.

ETFs - Exchange Traded Funds - offer investors a more user friendly approach for diversification and risk management with lower costs, tax advantages. See Fidelity's helpful ETF explainer.

NLW has listed the ways that Ethereum is now being explained to the traditional investors starting to wade into this new asset class. NLWs entire podcast episode is worth a listen but here are a few of the better explanations that caught my attention:

• Ethereum as the "Crypto App Store" ...a "Global Platform for applications that run without a centralized intermediary" (looking at you Apple Sherlocking-is-our-middle-name App Store).
• Bitcoin's value comes from scarcity, Ethereum's from utility

Will additional Crypto ETFs follow?

Now that Bitcoin and Ethereum are both available to traditional investors in ETF form, many are watching to see if additional crypto assets - like say Solana - might also become available in ETFs. Bitcoin and Ethereum together comprise a large portion of the total market cap, so some might argue these two alone offer investors adequate exposure to the crypto space. Personally, I don't think that view greps the full span of experimentation underway in crypto.

📚Financial Literacy

If you or someone you know wants to learn how to get established financially, Lyn Alden has organized an excellent reading list of resources that will help beginners as well as those who are further along their journey to financial health and wealth.

Is the Tech Industry Shifting to the Right?

Azeem Amar has noticed a shift to the right in at least some notable quarters of big tech, and Noah Smith delves into 7 underlying reasons why in a great piece titled Understanding the New Tech Right - except:

"In the new, more challenging business environment, taxes and regulation loom larger, just as they did in the 1970s for many other U.S. industries. "

Noah sees a parallel with the rightward shift of business that occurred back in the late 1970s, but also caveats that this right shift may be still a fairly small segment of the overall tech sector. But even if this ends up being a significant trend, what does it mean for our organizations and teams?

The surprising possible benefits

I suspect that the tech industry always was a little more politically diverse than we might have presumed, but if it is becoming overtly more so, there may be some positives to this:

1. The tech industry's has always been about engineering and problem solving. This skillset happens to be very relevant to the complex problems that are alluded to - superficially - in today's political debates. Unlike non-engineering professions, tech developers and engineers operate in a world of empirical accountability. Your code either compiles or it doesn't. Your firewall either stops the penetration test or it doesn't. You iterate through a series of failures via a test and learn approach, until your product works. Until it works in basic use cases, as well as edge cases. This kind of empirical methodical approach is missing from the ideologically driven tug of war's in our politics today.
2. Throughout my career I've noticed a tendency for many in the tech industry to accept progressive thinking as a given, stay heads down focused on the interesting tech we were building or using, shielded from the woes of the real world by our tech salaries, stock options, and the cosmopolitan cultures we worked in. In this stasis, meaningful cross-conversations between different sides of the political spectrum didn't happen often enough. If this is changing, that's not a bad thing.
3. Also the tech industry has a long history of idealogical conflicts centered on technologies: programming languages, operating systems, tech companies. Think Apple vs Windows, Java vs .NET, Linux vs Unix, SQL vs Oracle vs Postgres etc ...the list of religious wars is long. But a growing set of tech professionals - especially experienced developers and architects - have learned more pragmatic patterns of thinking and decision making: - "my favorite is X, but I think we could get a good outcome even if we used Y" or similarly: "my preference is usually A but I can see in this case A doesn't quite fit some of the unique issues here, so we all agree we're going to go with B." That kind of intelligence - being aware of your default, being aware that your default might not answer every scenario, being able to coordinate a smart approach with a group of people who bring different views and expertise - is forced by the complex time-bound nature of tech projects - especially in highly regulated or security-exposed projects where accountability is sharpened by the team's clear recognition that failure will be visible and will bring severe consequences.

To summarize: If the tech industry is about to become a little less homogenous this may not be a bad thing. Especially if it means that the large issues of our day begin to be processed by people with an engineering mindset who are used to solving complex problems via empirical test-and-learn approaches.

Further learning:

S3T Playbook: 6 Proven Ways to Resolve Conflicts

Leading change at an organizational or macro level will require you to learn how to resolve conflicts. Here is a framework of 6 options that you can use to resolve most conflicts.

S3TRalph Perrine

Too many unicorns, not enough exits

CB Insights says there are now over 1240 Unicorns - companies valued at over $1B. Crunchbase data shows a sharp drop in $Billion exits

In Venture Capital has an exit problem, FTs Richard Waters writes about the aging collection of unsold private tech companies with (most likely) unrealistic valuations.

So many of these have an AI or GenAI label affixed to their names or products. Which has Dan Gray also sounding the alarm: he spotlights how investors put a lot of money into AI companies without a framework for assigning objective valuations to these companies.

AI taps into an ancient temptation

As Tesla pivots to robots amid slowing EV adoption and disappointing earnings reports, Harry Lewis reflects on six decades of relations with computer based intelligence and why we should resist the temptation to create "counterfeit humanity." This may not be easy. The allure of intelligent robots that do our bidding runs deep: 2800 years ago, Homer wrote about golden robots created by Hephaestus.

How Realistic is Work Life Balance?

A deeper dive into a conversation that started on LinkedIn this week.

It's Mid-Year and a good time to talk about worklife balance and burnout. The topic of burnout and work-life balance is complicated for many, especially for those striving to establish their careers. It certainly was for me in my younger years when I was starting my career.

Many people underestimate the effort required to move from one economic level to another. Coming from a rural, low-income background, I had no concept of anything beyond manual labor. When I moved to DC, I was fortunate to land an office job, an amazing step for me. To earn more, I took a side job delivering newspapers to all the DC metro stations every night. Each Sun-Fri night I spent 11 PM to 6:30 AM driving around DC, putting papers in the newspaper machines. I'd drive back across the Potomac, changing clothes in restaurant in Springfield, VA, then catch a ride back into DC to start my office job by 8 AM. I worked until 5 PM, went home to rest for a few hours, and then started the cycle again. This lasted for three months. It gave me extra income (I was saving for my wedding) and gave me a fearless confidence in my capacity for work.

A few months later I stumbled into a job that placed me at the center of emerging tech, and gave me a sustained opportunity to grow tech skills at an accelerated pace. Over the next 7 years, I worked 100+ hours a week, with frequent all-nighters and occasional 36hr or longer stretches.

The punchline: My economic situation improved, but one afternoon, I drove myself to the ER, thinking I was having a heart attack. It wasn't, but the doctors advised immediate lifestyle changes.

Here are the adjustments I made:

• Reconnecting with Art: I made time to draw and paint, rekindling a passion I had set aside due to its perceived low earning potential.
• Financial Literacy: I started learning about capital and investing rather than continuing to focus on raw earning power. Remember, my background sent me into adulthood with zero financial literacy. I started learning what everyone should learn at a young age: Even small amounts saved and invested make a significant difference over time.
• Health: I began running and working out regularly. I learned that if you are short on time, then you really must have the energy and mental alertness that only exercise can give you. "I have so much to do I can't exercise." is misleading. The accurate statement is: "I have so much to do, that if I don't exercise, I'll lack the energy and mental alertness that I need to get it all done."
• Being more selective: I started being more selective about what projects, ventures, and employers I engaged with. I learned how to recognize (and opt out of) situations that would force me to spend valuable time waiting for unteachable people to play through their mistakes.

Key Takeaways

• Economic Inequity: Our highly inequitable economic environment means that those in lower economic strata often have to be either extremely lucky or work extremely hard, as I did, to achieve any degree of financial stability. My experience happened back in the 1990s, but today I continuously hear from younger people and recent grads facing the same challenge. It seems to be getting harder and harder for younger people and younger families to get financially established.
• Emerging Technology: Entering the emerging technology sector was a game-changer for me. It's one part of the economy that consistently offers expanding opportunities. Investors and corporate financial stewards are generally more willing to invest in emerging technology due to its potential for increased capability and empowerment, unlike many other professions, whose work is often seen as costs to be downsized.
• Life has chapters. You most likely have the capacity to work insane amounts of hours for some period of time. And maybe you will need to in a specific chapter of your life. If there's a clear opportunity with reasonable assurance of advancing to the next level, it can be worth considering. However, it's crucial to balance this with your overall life and health and a consideration of what chapter of life you are in: I was young and healthy, with no kids or pets. My spouse was also a go getter. Not every chapter of life offers that kind of setting. And...there were other chapters of my life where I did have kids and was spending significantly more time taking them camping, taking them to the doctor, etc.
• Help and Share. Knowing all this should make us want to help each other and share knowledge as much as we can. I had many people who shared knowledge and resources, made introductions, or took time to talk me through things that I didn’t understand. Without them, I would probably be in a very different place today. They didn’t know it, but they were giving me crucial stepping stones that helped me learn and move forward in my life. If you take a few minutes to stop and help someone or point them in the right direction, you never know how crucial that is for their journey.

So worklife balance: it’s super important but it’s not as cut and dried as we might think. But, you can take the points that I‘be just shared here and use them to help you make good decisions about what’s right for you this current chapter of your life, and in turn you’ll be able to help others in their journey.

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