Last year, the 'Big Five Tech' companies netted 22% of the total revenue generated from the S&P 500. Apple alone reached a market capitalization of two trillion dollars in 2020, doubling in value over two years. The speed at which these companies are gaining market share may be unprecedented, but this level of concentrated capital and hyper specialization is as American as apple pie.
The challenges facing the tech industry today — labor and credit shortages, automation, product specialization, regulation, market consolidation — have long since left their mark on American agriculture over the past century. As we here in Austin prepare to seed new rows of crops on the Zoho farm, planting everything from Gala peach trees to okra, I want to understand not only what happened to the millions of American farms producing a dizzying array of crops, but what can we in the technology industry learn from the story of agriculture in this country?
First, some numbers. In 1900, 41% of the American workforce was employed in agriculture, but by 2000, it was less than two percent. Back in the 1930s, the total number of farms in America peaked at 6.8 million, but today, there are only around two million farms in the United States. Despite this precipitous decline in the amount of farms, farm output nearly tripled over the last half century, and now five crops — corn, cotton, wheat, soybeans, and hay — account for 90% of the harvested acreage in the United States, though most farms grow just one commodity.
To a lesser degree, this is happening in tech. In the 90s, there was a proliferation of diverse jobs and companies, but today the industry and its products have evolved to the point that many companies simply don't need a large workforce to conduct business. And the industry, at least in valuation terms, is dominated by a few big players.
So what have been the pitfalls of the farming industry, and what can we in tech try to learn from them?
Hiring specialists leads to specialization, not innovation
Before the latter half of the 20th century, farmers in America were generalists. A farmer needed to be an accountant, an engineer, a botanist, a veterinarian, a salesperson, a mechanic, and so on. Now those jobs are contracted out to specialists. Farmers are no longer allowed to work on their machines, resorting to hacking their own tractors to make repairs. Agriculture has become so optimized, and the margins so thin, specialization has become the norm and crop diversity or new ways of thinking have been outmoded. Likewise, the tech industry is today awash with specialists, whereas 20 or 30 years ago, you had employees wearing different hats, with diverse backgrounds, all trying new things, freed from any one lane to be inventive. That inventiveness led to a blossoming of the industry, but now things appear to be folding back in.
Tip – Some roles require experts, but not nearly as many as the tech industry would have you believe. Tech companies of all sizes would benefit tremendously from hiring young, interested candidates who may not have a defined professional niche but can bring a fresh, broad perspective to the company. Certain certifications, degrees, and proven skillsets may be preferable to a competitor, but instead of fighting for the same hundred or so specialized workers, business leaders might look for people with ranging backgrounds and more generalized skillsets, and specialize them as needed. This can lead to a more diverse portfolio for the company, and diverse revenue streams as well. The ripple effect is good for the industry as a whole, such that more companies can compete by delivering a wider range of products to consumers. It's a return to the family farm model of the 1930s, wherein more people got a seat at the table.
It takes a village
The American farmer has withstood many hits, and today he or she is able to remain narrowly profitable by relying on strong unions, regulated pricing policies, and with the participation of competitors and peers. Farming is part of a larger economic ecosystem, and farmers understand their existential place within that system, which has helped stabilize the industry as a whole. Agriculture is symbiotic. For example, almost 80% of soybeans—the second most grown crop in the US—are used to feed livestock. Similarly, corn, the largest crop by far, is extremely versatile in everything from fuel to feed. Agriculture found its way through cooperation and teamwork.
The tech industry has none of these rainy-day protections, despite also being a symbiotic system. The industry is a patchwork of highly competitive, deregulated, and at times secretive companies. On one hand this Wild West mentality has led to major innovations, the democratization of technology, and ultimately lower costs to consumers. But as we learned in the early 2000s, sometimes crops fail. And what happens then? It will be the employees and the customers who pay when companies choose profits over people in times of trouble.
Tip – The secret of sustainability in tech lies in cooperation. The dog-eat-dog nature of the tech industry has created unnecessary silos. It seems a lot of vendors think transparency and fellowship with other businesses in their category comes off as weak or worse leaves money on the table. But the future sustainability of tech lies in cooperation, just as it did and does in farming. App marketplace manipulation, lock-in contracts, blocked integrations, buying up competition, poaching talent—these habits that have formed within tech only serve to hurt the growth of the industry, and they're entirely driven by profits. A great way for a business to differentiate itself and to innovate is to work with other engineers and vendors and customers to help create a better product.
Sustainability should always be the goal
The reason the production value coming from the American agriculture industry comes from only a handful of massive commercial farms, each growing a single crop at huge operating costs, with a generational talent shortage, is because it has been reactive, not proactive. Innovation has made farming easier, and yet fewer people want to do the work, because those who do can barely scrape by. Comparatively, the technology industry is in its infancy, and it has to its credit, already survived serious disruption. But just as tech can reverse course if the prevailing attitudes within the industry change, so can farming in America, and on the community farm level, it's already happening. Census data shows us small family farms making less than $350,000 a year make up 88% of all farms in the US. These family farms may only produce around 20% of the total farming value, but they're strong in numbers. In fact, as all farms declined in numbers from 2012, small family farms declined the least.
People are embracing urban farming, buying from local farm stands or local growers at farm markets, and as a result these small, family run farms are turning a profit and becoming sustainable. This same grassroots approach is what we're attempting to do at the Zoho farm, but it's also transferable to business and technology—this idea of transnational localism in which companies may forgo the big urban campus for small rural offices, staffing up locally and teaching on the job. Where vendors, customers, business leaders, and employees can avoid the decades-long stagnation and consolidation in American farming is by cooperating with others in the industry, developing fair pricing models across the board, introducing less-specialized thinking into the workforce, and inventively participating in the industry with the intention of growing it long term. Also they should consider starting a farm!