Markets & Research
Adam Davidson is an award-winning reporter who covered business and economic issues for National Public Radio, where he co-founded the Planet Money program. He’s currently a staff writer for The New Yorker. In his new book, The Passion Economy, he writes that we’re entering a new economic age in which entrepreneurs must match their passions to their work. Commodities are increasingly falling by the wayside, he says, in favor of specialized, high-value products that are tailored to fervent audiences. His podcast can be found at passioneconomy.com.
One way to look at this is what economists call “matching.” Think of a hunter-gatherer’s needs. They were hungry. How did they match their needs? They hunted or gathered.
Compare that to the Industrial Revolution, where a business made everything someone needed at a remote factory. The business owner had to overcome this matching problem: How could they convince customers to walk into a stranger’s store and buy something without fearing that it would kill them or immediately fall apart? How could manufacturers and buyers be matched when they were never going to meet? Well, we developed branding, supply chains, railways and eventually government regulation. Fundamentally, though, it was solved with bigness, like when Procter & Gamble started making soap. But it also resulted in this sameness everywhere.
Today, matching has been utterly transformed. I don’t particularly care about soap, but I have a huge array I can choose from. I get to consume things that mean a lot to me, but manufacturers can also produce a kind of soap that is tailor-made to some specific group of people. Same with chocolates and pizza, but also business-to-business services and expensive engineering products. Because of the internet, because of computer technology, because of other structures, we’re able to match sellers and buyers at their peak level of interest. That’s the passion economy.
The Wengerd family, an Amish family in Ohio, started with a very pre–Industrial Revolution kind of business. The father, Wayne, was a farmer, like most Amish people at that time. He liked tinkering, so he would fix people’s farm equipment.
By the 1970s, very few manufacturers were making the horse-drawn equipment that the Amish used. Wayne was getting a lot of calls from Amish neighbors saying: “Hey, my plow, my tiller, it isn’t working like it used to. Can you help me out?” Eventually, he realized, “Someone’s got to start making this stuff.”
So he started a factory making equipment for horse-drawn farming. The Amish people don’t like to show off, but it’s an extremely successful company that supports dozens of workers and ships products everywhere.
There’s a lot I love about this story. Wayne so intimately and precisely understood the needs and concerns of an extremely small group of people. Today, there are roughly 400,000 Amish people. Fewer than 10% of them farm, so you’re talking about a market of 40,000 people, and they happen to be poorer than average because they’re horse-drawn farmers.
Who wants a market like that? But Wayne understands this market with a level of precision and depth and intimacy that nobody at John Deere could ever achieve. In any given year, Wayne’s customers are not going to be spending a lot of money, but they will from time to time get a few hundred thousand dollars together to improve their farming supply. You’re talking about hundreds of millions of dollars a year in addition to all the ongoing maintenance and investment.
And while the Amish aren’t tweeting and texting and using the cutting edge, they exist in a world where that happens. The logistics companies they outsource to are able to use modern technology to get these bulky goods from Ohio to Ontario, Canada and Oregon far more cheaply than even a couple of decades earlier. Technology is driving this change, but users don’t have to be tech-savvy to succeed.
It begins with what you’re uniquely good at, but also what you love. I think for older people, as I write about with my grandfather, that feels like self-indulgence. But you have to do something you love now. If there’s not something extra keeping you in it, you’re probably not going to make it through. You’re probably not going to outshine others.
But finding that thing takes a long time. I would argue there has to be a period of discovery, and we may have to make room for that. Just like we invented the word “adolescence” in 1904 to define the idea of a period where you’re figuring out who you are.
There are kids today coming home lost, trying a bunch of jobs that don’t work out and saying, “I don’t want that job because it’s not fun” or “I don’t want that boss because he doesn’t make me feel valued.” That’s not self-indulgence; that’s an inherent understanding of this new economy. They might look like the losers of the previous generation. In some cases, they might be. But I say that if someone is investing in their skills, either by going to school or in a business, that’s a good investment. Even if it fails, maybe especially if it fails, it’s productive.