source: CB Insight

I have been discussing technology-driven productivity gains recently (see this, this, or this). And I might speak 1,000 words at a time on this topic.

But not today.

Instead, see the graphic above. This is a shallow and in-depth exploration of the economy: venture capital-funded fintech start-ups.

As the chairman/chief information officer, I am very familiar with this space RWM; I can tell you directly that the technology and tools we use every day in the office make us more efficient and productive than ever before. These entrepreneurs are making the financial world cheaper and more innovative. The pace of improvement is accelerating and is limited by the speed at which we can use the best technology to complete the work for our customers. Moreover, the feeling has just begun.

In 2009, the former chairman of the Federal Reserve Paul Walker laments this lack of innovation On the financial side.he Observed:

“The most important financial innovation I have seen in the past 20 years is the ATM. This really helps people and prevents access to the bank, and is a real convenience. Can you tell me how many other innovations are for individuals and ATMs? As important?”

If this was true in 2009, it no longer applies today.

The current price surge is unlikely to last for more than a few quarters. The reason is not only Because they are driven by temporary phenomena, such as supply chain disruptions or surges in demand for reopening. Rather, it is because they confront all innovators and their companies.

In the past 40 years, technology has been the system changer of inflation. Faster/better/cheaper leads to severe deflationary results.

If you think that current inflation is more than just a flash in the pan, then you are on the other side of all these entrepreneurs and innovators. You believe that the hustle and bustle of shipping, port delays and chip shortages are stronger than all the brains and muscles and hard work of everyone in this group.

I know which side of the transaction I am on…

Before:
Productivity is offsetting wage growth (November 9, 2021)

Inflation reset (June 1, 2021)

Does Covid Lockdown “solve” the productivity mystery? (December 9, 2020)

The productivity mystery becomes more complicated (November 2, 2016)