in the first two parts we covered the history of the entrepreneurs to labor dynamic in the robber baron era and how the pattern is roughly repeating itself in our time i promised a positive vision of the future in this concluding part for the record i suspect i have one foot in the obsolete class and one foot in the lifestyle designer class i lack the drive to join the labor entrepreneur class and the skills to join the new engineers class at more than an amateurish level the major part of the story that is incomplete is the emergence of the new financial order and a class of new bankers what we can safely predict is that the google facebook amazon apple economy will catalyze the emergence of a new financial world both because trust in the old financial world has been completely eroded and also because the wall street dc system of today is institutionally incapable of managing and regulating the new economy the new financial order will comprise members representing the largest new economy companies as well as members of the investor class who survive the ongoing collapse of credibility of their home institutions political participation in the new order will come not from nation states or provincial governments but city urban political systems more on that later there is a vacuum here that will be filled this part of the story played out differently in the 1910s when the old financial order of the day was simply non existent until the creation of the federal reserve in 1913 the differences do not matter what matters is that in both cases there was room and need for a new financial order to emerge also note that the new middle class today represents a tiny fringe population while what i have labeled the obsolete class is actually the bulk of the mainstream economy that both obama and romney are currently fighting to keep alive on life support this is a view of what the economy is becoming rather than what it is so the pattern of emphasis may seem very strange to those of you who dont have much to do with the entrepreneurial fringe of the economy and live in parts of the mainstream economy that are still functioning this becoming may of course falter but if there is a way out for america it is entrepreneurs who will find it i want to offer a positive and honest vision not motivational cheerleading if the diagram above does not materialize in another 20 years we are in much bigger trouble than we think with that visual review of the supporting arguments out of the way lets grab a can of paint and start the visioning sam and frodo archetypes for the new economy to paint this vision we need to rise above convoluted insider debates about vcs versus lps versus entrepreneurs versus angels vs incubators versus ashton kutcher versus shark tank and american idol entrepreneurship we also need to rise above acqui hiring vs real startup debates and the nitty gritty of lean vs non lean models important as those issues are for practicing entrepreneurs they are just fussy details in the model we are building here to do this rising above we need to address two questions first how might the new laborer entrepreneur class moving through the acqui hiring pipeline evolve into a new institution that is recognized as legitimate rather than criticized as a corrupted parody of entrepreneurship second what about real entrepreneurs the ones who hustle for real and have the political skills and maturity to engage investors in a true balance of power relationship these might seem like a very narrow pair of questions but in the stories we imagine for these two archetypes all hope must rest they are sam and frodo marching into mordor if they manage to destroy the one ring that sustains the increasingly toxic late stage industrial economy being run by the surreal dc wall street crime syndicate there is hope for a rebuilding if they fail things will go to hell the occupy hordes at the gates of mordor cannot do much if sam and frodo dont complete their missions the challenge for the first group is crafting and accepting a new and distinct identity based on new labor management archetypes and a narrative that rejects the romantic allure of a frontier age of entrepreneurship in favor of less dramatic plots that offer more income security incidentally this romanticized self perception is also something that weve seen before long after the wild west had been closed off by the railroads and the long cattle drives had ended new middle class americans living in emerging industrial towns continued to delude themselves that they were rugged frontier individualists in some vague philosophical sense it took about 30 years for new non ludicrous social identities to emerge entrepreneur is todays cowboy the challenge for the second group is to find sources of power with which to restore the balance of power with the investor class the specifics of what businesses they build are less important than the rules they are able to enforce around the next big game to constrain the financial class from this class we can expect the second tier innovations of the internet age which will build on foundations already laid down in the 1910s 20s it was entrepreneurs like these who created the automobile and aerospace industries household technologies for the new urban nuclear family middle class and so forth on top of the industrial backbone created during the robber baron era they manufactured a new normal for the masses and while no mind boggling fortunes like those of rockefeller and carnegie were created by this second tier the wealth that was created was nothing to sneeze at well talk about frodo in a bit lets talk about sam the laborer entrepreneur and future middle class citizen the new labor narrative i am going to offer you a narrative of the modern young entrepreneur that is going to sound incredibly patronizing but theres a point to telling the story this way this narrative incidentally is not an original one you hear many versions when you talk to the entrepreneurial labor class these days they are a partially self aware bunch entirely willing and able up to a point to recognize their own situation through a mix of collegehumor videos xkcd cartoons and darkly humorous anecdotes shared at online watering holes the partial self awareness is a belief system delicately balanced between hipster levels of ironic disengagement and clueless levels of kool aid belief the extremes exist in part to help the middle define itself the narrative starts with our modern day horatio alger hero straight out of college and inspired by seth godin clay shirky and the rest of the internet inspiration squad he has never looked at a truly ugly balance sheet or declared bankruptcy or navigated a business situation requiring cooperation with a more powerful adversary whose intentions are somewhere between somewhat misaligned to outright hostile or really failed and acquired political skills by being played for a sucker by an older cannier player or learned the value of trust but verify in other words this is the actor who is brilliantly cast by the spinners of the silicon valley grand narrative in a role where inexperience is reframed as an asset our hero the silicon valley bard sings is somebody who does not know x cannot be done and therefore manages to do it in your face jaded cynics this is the one in a million redemption story sold as an expected outcome ironically to an audience that is prized for its statistical sophistication in other domains like a b testing of websites as gordon gekko remarked sardonically in wall street ii our hero is a ninja no income no job or assets if gekko met shirky hed probably quip in response to the latters here comes everybody line so lets take em for a ride our hero works out of a coworking space rooms in a hacker hostel where he desperately seeks a technical co founder everyday goes to hackathons to pitch to increasingly mercenary engineers and designers and stays up nights working on an incubator application sometimes he stands by highway ramps holding up a sign that reads looking for cto he succeeds he finds his technical and ux soul mates gets into a top incubator bonds with classmates develops a deep admiration for the culture around him with its various senior figures available for schoolboy crushes graduates with a few angels knocking at his door and scores a heart warming techcrunch story along the way he has acquired a passing knowledge from the bleachers of the paypal mafia story watched a scene or two in the colorful drama of the ron conways and dave mcclures and learned all about the super angel bubble he has met a few vcs who all insist that the other vcs dont get it he has devoured everything that peter thiel marc andreessen and other wise demigods have to say he imagines himself an initiate into the inner circles of bay area culture he thinks he has seen the dark underbelly of american innovation but is motivated to play the game anyway in many ways he correctly assumes it is the only game in town he is all pumped up to work hard swing for the fences and deliver that 10x return that investors encourage him to lie about well aware that he is aiming for the moon in order to clear a somewhat high fence somewhere in his smart stanford dropout head he buries a more pragmatic hope of a 2x 3x acqui hire exit under layers of denial the prize is access to what used to be the normal middle class script which is now out of reach for most it is enlightened tactical self delusion he achieves exactly that a predictable planned miss that hits a more probable less valuable target the little startup that could gets acquired by a big company somewhere between the seed round and the first vc round midwifed into improbable survival by angelic quick flip artists the preemie struggles for life in the big company neonatal icu mostly it dies but the parents survive some cannot wait for their golden handcuffs to come off so they can ride the roller coaster again some happily accept captivity quietly dropping the anti big company rhetoric of their rent and ramen days if the case has been interesting enough the valley engages in another debate where triumphalist rhetoric competes with gloomy hand wringing for control of the narrative curiously the hand wringing camp usually wins silicon valley optimism is sustained by constant reinforcement of a rarely attained ideal every departure from which reinforces a sense of systemic corruption and crisis this sense that the system is corrupt and broken incidentally serves a purpose that well get to or much more likely our hustler deadpools his technical co founder and ux designer decamp to good jobs to recoup he gamely gets up dusts himself off and takes another shot possibly at a lower rated incubator or as a free agent his chances go down with every crash rather than up in contrast to old school serial entrepreneurs or he joins the lecture blogosphere circuit haunting the panels of the eternal calendar of silicon valley events retelling his story until it grows stale if he fails enough times well well see the first instances of that story line playing out in a few years as middle age hits the first generation of entrepreneur laborers living out this story lest you feel inclined to be snarky about this plot consider this at least our hero has some believable script to follow there is some genuine learning and a real shot at a life in the new economy what he is gambling for is not the space trip and big fortune but merely survival your typical mid career layoff by contrast faces a hopeless struggle for relevance in an alien economy he is ill equipped to handle these are tough times there are very few winners instead there is a kind of deep social turmoil you should be happy if you have an opportunity to access any script with some chance of survival even if it involves a massive amount of tactical self delusion from patronizing sarcasm to post industrial schools this narrative works as patronizing sarcasm precisely because there is an unacknowledged paternal maternal dynamic to the story that is easy to make fun of but it is only patronizing if you take words like entrepreneur and investor at face value read this instead as the tale of an average individual dealt an average hand in his her early twenties with words like student and teacher substituted for entrepreneur and angel read that way this is merely a bald narration of coming of age events in an adult world growing up in a tough economy is hard there are no weekend crash courses or summer programs that can magically turn a 22 year old into a functioning economically independent adult in the best case this world recognizes itself for what it is a world of students and middle manager mentors teachers working within a post corporate ecosystem economy built around experience consumerism incubators increasingly act like alternative universities the honest ones admit what they are a tiny but culturally significant minority of young people is abandoning college for these alternatives which are at least somewhat relevant and far cheaper rent ramen and being paid to learn programming beats rent ramen and student loans incurred while learning art history what about the demand side can acqui hiring go from being the trickle it is today to huge broadband labor pipeline comparable to todays traditional university to hr pipeline i think it can so long as you are willing to sacrifice your treasured notion of job in favor of a more flexible idea of work todays landscape is littered with incubators that are basically feeble jokes attempting to mimic the success of y combinator these jokes will learn grow proliferate shed their diploma mill status and become real though facebook and google may employ very few full time employees for their financial size they do induce ecosystems that contain massive amounts of wealth wealth that is accessible to those who attempt to mine it with more agile tools than the rigid ones we know as jobs the standardized term sheets that mark the beginning of the journey will lead on to standardized acqui hiring terms and policies so that the transaction costs gradually fall from m a levels to hr levels large companies will start negotiating set agreements with incubators and angel studios the distinction between angels and headhunters will blur and vanish instead of transcripts and term papers you will have a documentation of student learning in the form of lean startup model collateral or similar educational paper trails from one of the many other emerging experiential learning models instead of being shunned might have been mbas seeking out the path primarily for its credentialing benefits will be welcomed there will be an incubator bubble upstream of the super angel bubble it will burst and leave behind a new education infrastructure i noted earlier that lean startup models viewed as entrepreneurship are somewhat unnatural things real hustlers do not reveal their hands cooperate tamely with investors or work out their strategies via public blogs and transparent easily interpreted pivot announcements but there is a category of people who openly work this way students students are used to turning in homework showing their work getting grades and feedback from more seasoned individuals they are used to their output being judged by a student work standard of quality they are used to deferential and respectful rather than adversarial relationships with their teachers they are used to turning in revisions of their work to thesis supervisors based on ongoing feedback they are used to conforming to the expectations of a thesis committee and this is as it should be the only time powerful adults in their prime do not slaughter young uns in competition is when they are teaching them the last point is important i have heard many who are even more skeptical than i am of the lean startup model make deeply cynical remarks about the lack of evidence of success for the model especially post acqui hiring this is simply the wrong standard to apply it makes no more sense to ask why a lean startup has not returned its investment in a truly spectacular way than to ask why a student term paper or senior thesis in college is not a harry potter level bestseller different standards apply during training and performance already in the valley you will find entrepreneurs with a very clear sense of how acqui hiring valuation is done in various sectors the numbers are becoming nearly as clear as information about starting salaries in traditional professions angel investors will also recognize what they are the equivalent of mid career middle managers mashed up with thesis supervisors providing stipends to apprentices on probation they will start to see what they do studio startups is the current popular term as playing graduate school to the undergraduate school role played by the seed level incubators so putting it all together what do we have early exit highly standardized angel midwifed lean legible pipelines connecting high schools to hacker hostels and coworking maker spaces to a two layer schooling system that provides a vague mix of lite liberal and vocational education and finally acqui hiring graduation ceremonies after their first blood experiences our young heroes will live out careers shuttling in and out of different corporate ecosystems around financially massive but hr light platform corporations every few years faced with a trough they will retreat to developing countries as economic exiles simultaneously diffusing knowledge globally extending their native platform ecosystems and recouping their own losses instead of a periodically refreshed resume they will maintain a free agent life raft in good working order oscillating between more and less tethered modes of existence collectivist institutions income cooperatives and the like will emerge to smooth out some of the natural income volatility for older individuals the unionization of the new labor has barely begun what about traditional universities they will once again become what they used to be before a century of prosperity allowed large segments of the population to go to college preserves of the children of rentier elites as much of the population retreats to a vocational lifestyle only dimly aware through ted talks paul graham essays and khan academy videos of the human civilizational grand narrative scholarship in the old sense of the world will return as an indulgence for the few rather than an industrial mode of knowledge production art history was never meant to be a major for the masses if you got yourself a university education before the ongoing re elitization count yourself lucky i count myself very lucky i managed to get myself three degrees and ten very rewarding years at no cost to myself todays jury rigged and somewhat disreputable acqui hiring pipeline is going to get legitimized as the new education system it is going to expand to encompass all the new engineering disciplines that i mentioned in part ii it will blur and refactor older distinctions like liberal professional and vocational and that is sams story he will journey to mordor but ultimately settle down as a happy citizen of a new hobbiton lets talk frodo reclaiming the hustle so what about real entrepreneurship the what is becoming clear expectations there seem to center around some mix of green tech clean tech and the maker revolution all swirling around in some sort of mobile device centric high density smart megacity nothing on the radar frankly is as revolutionary as the things produced by the first few decades of moores law the total volume of economic activity will likely be far bigger but individual pie slices will decline but this stuff on the horizon is more than just the raw material for the next big thing the structure of entrepreneurship around this stuff is going to be different the next big game is more interesting to talk about than the next big thing how not what is the interesting question if the traditional entrepreneurial world is turning into a de facto education and labor market of sams where are the frodos and what are they doing the key is to ask where are there still significant unfair advantages to be found for entrepreneurs that investors cannot easily neutralize the answer should not be surprising to those who know their history politics after all real entrepreneurs are ultimately creative scoundrels and patriotism in the form of politics is after all the last refuge of scoundrels our young frodo rather than focusing on a smartphone app is busy cultivating ties to a selected city and learning the ins and outs of a hyperlocal political economy she or he will figure out some obscure unfair advantage in their local environment that has a political angle unlike things like deep knowledge of an industry vertical political advantages are relatively scarce and not easily neutralized once captured she might even run for office with an eye to locking in an opportunity her eye will likely be on a very different kind of prize not a billion dollar ipo but a new institution that transcends the boundaries between market state and civic society when the student loan crisis hits or the healthcare collapse she will be ready and positioned it will be an era for a sort of financial civil war profiteering sponsored by a state that is powerless to fight the metastasized cancer of a national global financial system but capable of providing cohorts of new city level institution builders with the right protections to fight in its stead the result will be a new social economic political order it will be messy and ugly like the decline of the roman empire with local satraps asserting themselves all over the place and a financial praetorian guard turning the dc wall street axis into a defensive bastion i dont know who first said it but mayors are the new entrepreneurs is exactly the right idea the global city state economy i dont quite agree with the statement in its literal form but the political angle is the right one to bet on the failure of nation state and region based geopolitics will be remedied not by some miraculous reformation sweeping across the world but a shift of power in the political sphere to cities while the labor entrepreneurs are going to flow in larger numbers through increasingly reliable and effective acqui hiring pipelines into large company ecosystems real entrepreneurship is going to shift to newly politicized arenas where nations and provinces have failed in the case of the 19th century as the first wave industrial landscape around commodities stabilized into a regulated equilibrium a second wave relying on the first took off during this second wave politics and institution building dominated the proceedings while the first generation of robber baron entrepreneurs created new ungoverned landscapes of wealth with little government presence the second wave helped build the new political institutions required to frame normalize and legitimize the new world order viewed purely as a governance mechanism in a new territory corruption had become too inefficient a regulation mechanism for the increasingly complex new world how did this happen unlike technologies like oil steel and railroads which matured far from population centers the rise of the paradigmatic second wave technology the automobile was inextricably linked with urbanization and suburbanization similarly the aerospace industry grew along with its political sibling the american military the second wave happened where people lived and politics naturally happened where early robber barons effectively ran their own wars and relied heavily on private actors like the pinkertons to maintain militarized relationships with the new labor the later waves relied increasingly on equivalent state infrastructure the corruption patterns of the frontier days were transformed into the legitimate institutions of the later days as a general rule in history patterns of widespread corruption in an early part of an epoch represent the cowpaths that are eventually paved to form new institutions in the later path the corruption of entrepreneurship through acqui hiring today is actually a great example internetization and post modernity will arrive the same way the first layer of infrastructure has been laid down the first robber barons of our age are retiring into philanthrophy intent on earning their halos and saint hoods the second wave is starting for promising sectors like green clean maker and biotech to actually work the actors in those sectors have to build on the affordances of the internet and within the inevitable vision of high density megacity futures that much is obvious by now but they also have to recognize that they must get involved in institution building and politics and they must do so by joining the winning side rather than the losing side which means cities over nations and regions they have to play on the landscape created by google facebook amazon and apple but they also have to work the creative tension between these behemoths and the cities they inhabit to create autonomous maneuvering room for themselves it is in their interest to help decouple these local economies from the wall street dc governed national economy as much as possible in a world where both america and china are headed for at least partial failure as nation states it is going to be every city for itself what form will the city dominated government role in the new economy take weve been through some of the early painful episodes skirmishes over software patents anti trust lawsuits sopa and pipa the first challenges to and defenses of net neutrality wrangling over startup visas and the creation of basic new identity systems these debates may have been misframed and mishandled at the federal level in the first round but i believe they will ultimately get resolved at the local level creating a polycentric landscape of governance in other words cities will sort out these issues in locally optimal ways by using the past failures to argue for greater local autonomy time is on the side of cities with every passing year more internet activity moves to its wireless mobile edge taking over every physical device the internet is naturally entering the jurisdiction of cities mechanisms are already being talked about for instance the leap zone model proposed by mark klugmann who has supplanted richard florida as the most interesting urbanist in my book national and global political models will change too of course to reflect their new roles in absolute terms they will likely remain more powerful than the city state political order but the weakening will be sufficient to hand the the initiative to cities politicians with national ambitions will increasingly come from the ranks of city governance rather than state province towards a new normal and thats where we stand today between two great waves on the cusp between old and new institutional orders between the waning of national global power and the waxing of urban power between the old big game and the next big game between the last big thing and the next big thing between an old collapsing middle class and a new emerging middle class we live in interesting times 