The SaaS-y cities are just getting SaaS-ier


December 11, 2019

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Happy Hump Day, y’all. ’Tis the season for many things — including, of course, “end of the year” lists. 

Yesterday, LinkedIn came out with its annual report highlighting the 15 fastest-growing jobs of the year. Which job topped the list? The “artificial intelligence specialist,” which grew at a rate 74%. Today:

  • An “innovation gap” causes unease
  • Magic Leap is feeling the squeeze
  • Factory workers now need degrees

Stay curious.

The Hustle Daily Email

Editor’s Note: We have 2 quick corrections/clarifications from yesterday’s email. First, we listed past prices of Tesla upgrades. Some have since been wrapped up into bundles and are no longer accurate for all models. Second, we’d like to clarify that Amazon’s new office plans in New York are different than their original plans — and involve far fewer employees in the short term. Thanks for keeping us honest, y’all.

The gap between the SaaS and the SaaS-nots is growing

The innovation gap between cities with many tech jobs and those with few is increasing, according to a recent report from the Brookings Institution

A small handful of cities have cornered the “innovation sector” (which Brookings defines as jobs in 13 industries ranging from software publishing to chemical manufacturing) widening the gap between coastal tech hubs and other cities.

In fact, 90% of growth in innovation-sector jobs occurred in just 5 cities.

So, who were the winners and losers?

San Francisco, Seattle, San Jose, Boston, and San Diego came out on top in what Brookings described as a “winner-takes-most” race to capture tech talent. 

But while those 5 cities and a few others expanded their slices of the innovation pie, 343 cities saw their slices shrink, including Los Angeles, Chicago, Dallas, Philadelphia, and DC.

In this game, it’s not always great to be a ‘winner,’ either

As the richest cities get richer, they must also contend with a number of growing pains that range from soaring home prices to worsening traffic.

Take the San Francisco Bay Area: Cities throughout the region have struggled to adjust to soaring costs of living and widespread homelessness that have accompanied the influx of wealth and investment.

So, where does all that leave us?

The authors of the study suggest that the federal government should select 8-10 non-coastal cities and pump them with as much as $700m apiece over the next decade to spur research and development. 

But not everyone agrees with this top-down approach, and some states are taking matters into their own hands. 

Take the Buckeye State: Venture capital investment in Ohio has almost tripled since 2013 thanks to state-level initiatives to facilitate growth in the tech sector.

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Sometimes, you should Magic Look before you Magic Leap

Magic Leap has raised a reality-defying $2.6B since the company launched in 2010. 

And, after more than 8 years, the company finally shipped its first products to consumers. But it has still failed to deliver big revenues. 

Magic Leap’s recent numbers were disappointing

According to a report from The Information, the company sold just 6k headsets in its first 6 months — after initially planning to sell at least 1m in its first year and then lowering its forecasts to the more levelheaded goal of selling at least 100k in the first year (the company later disputed The Information’s numbers, but failed to provide an update).

In any case, the company’s recent sales have been sluggish — especially considering its deep pockets and numerous partnerships with companies ranging from AT&T (for 5G-based business applications) to JetBlue (for virtually previewing hotel rooms).

And the company’s problems run deeper than sluggish sales… 

Recently, former Magic Leap adviser (and recently promoted chief of both Google and now Alphabet) Sundar Pichai left the company’s board due to his busy schedule. 

And on top of that, the company’s next version of its headset is reportedly years away from launch. 

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Blue-collar work goes business caj as factory work requires college degrees

US manufacturers have added more than 1m post-recession jobs, but most have not gone to guys in grease-splattered coveralls. 

As the WSJ reports, the manufacturing industry is projected to have more college-educated workers than not within the next 3 years. Those without degrees aren’t faring as well.

It’s all about automation

What used to be manual labor has been reassigned to machines. Machines can boost output while handling the physically strenuous, sometimes dangerous aspects of factory work.

But running the machines requires complex problem-solving skills and technical expertise. Today, more than 40% of factory workers have completed at least an associate degree — up from 22% in 1991 — and demand for jobs like industrial engineers, which require advanced degrees, has increased by 10% between 2012 and 2018. 

A case study:

In Illinois, Pioneer Service Inc. makes components for Tesla and aerospace companies. When overseas competition posed problems for Pioneer, the owner invested over $6m in new technology. 

Now, a widget that once took 45 minutes to produce requires only 6 minutes.

With this boost in production has come a boost in pay. In 2010, workers earned $8.25/hour. Currently, workers earn between $14/hour and $27/hour. That high pay is necessary to attract highly skilled employees. 

But that puts others at a disadvantage. Many employees lacking postsecondary education eventually were edged out. Today, only 10 of the 40 workers employed before the new technology was implemented at Pioneer remain.

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What Else…

The wearables market doubled last year. Thanks to strong sales of smartwatches and smartbuds — thanks, Apple — sales of wearables last quarter increased 96% from the previous year. This has worked out nicely for Apple: Last quarter, Apple sold 29.5m wearables — an increase from 10m in the same quarter last year. 

🐶 Wag’s tail is between its legs. After investing $300m in the American dog-walking startup, SoftBank is bailing and selling back all its shares — leaving the company to fend for itself. SoftBank, which owned nearly 50% of the company, will take a loss. Wag, on the other hand, is laying off a “significant amount” of its remaining employees as it looks for a discount buyer. It’s a dog-walk-dog world out there, folks.

🎵 Why do popular artists become popular? Musicologist Nate Sloan and musician Charlie Harding break this question down in a new book that was reviewed by the WSJ. For Drake: “He is able to say something that sounds utterly familiar — as if you’ve heard it a thousand times — and yet no one has quite put those words together in that way.” 



🎧 From living in a trailer to owning a $100m beverage brand

LifeAid’s Aaron Hinde stopped by to talk “vitamins that you’ll enjoy drinking.” His new beverage brand (valued at over $100m) has something to boost every part of your life — GolfAid, FitAid, TravelAid, PartyAid, FocusAid… and more.

👂 Here’s what you’ll learn in this episode of My First Million:

  • How LifeAid competes with Red Bull and Monster
  • LifeAid’s distribution strategy: think golf clubs & CrossFit gyms
  • What it’s like to live off the grid: chicken, solar & batteries
  • How to test physical product market fit using a Direct Mail strategy
  • Why narrowing product focus can increase in sales

Pick your favorite podcast player below to check it out.

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