July 19, 2022

Commodity Reporters Guild

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Want to become a digital nomad? Try before you buy

CHARLES MCCORMICK is the CEO of City Bikes, Inc., a couple of bike shops in Washington, one in Adams Morgan and one in Tenleytown, both of which do a healthy trade in e-bikes. He is also a digital nomad who has spent most of his time since 2009 on the road. “You are sitting in front of your computer to get your administration done,” he says, “so why not do it somewhere nice.”

McCormick’s desire to be “somewhere nice” has driven him to ride his motorbike across Europe, South America, Africa, and Central Asia (“it’s a progressive tour that is ongoing”), and involved him in some hair-raising moments, including being expelled from Mali during the 2011 coup. He’s now decided to swap his motorcycle for a camper van re-engineered to accommodate e-bikes.

Our grizzled veteran notes three phases in the nomad movement. The housing crash in 2007-8 forced some people to abandon their houses for the itinerant life. The idea of “going untethered” caught fire with younger people in 2015-17. Then the pandemic took the nomad life mainstream, demonstrating that regular people can work from anywhere (paradoxically, McCormick went back to Washington during the pandemic because the e-bike business was growing so fast). One force has been constant, however: the relentless improvement in enabling technology. When he first started on his odyssey, he wasted a lot of time looking for a signal; today, thanks to satellite internet services such as SpaceX’s Starlink and internet phone systems such as Google Fi, life on the road is a lot easier.

Working-from-home is so well established that it has its own acronym (WFH) and, presumably, its own syndrome. But what happens if you can’t abide the idea of even two days a week in the office?

Nobody knows how many digital nomads there are — the oft-repeated claim of 35 million owes more to evangelism than sober accounting — but a new breed of people is undoubtedly emerging and exploiting modern technology in ways that defy our most basic assumptions about the relationship between work and physical place.

The most conservative members of the new nomadic tribe are digital executives who want to combine high-level jobs with soaking up the sun. Many of them own their own businesses and so can decide where they want to be. Others have “gone plural” — they sit on several boards or offer advice to multiple companies and so can work over Zoom.

The most popular option for digital executives is to buy a permanent place in the sun and live there for several months a year. Ever-sensitive to movements in the luxury property market, Savills Plc. has recently constructed an executive nomad index based on climate, connectivity, both physical and virtual, and general quality of life. The top five destinations are Lisbon, Miami, Dubai, the Algarve (also in Portugal), and Barbados.

Another method is the “workation” of “bleisure” break. Some executives have taken to extending business trips to include some leisure; some return to work virtually while staying on in their holiday resorts; still others work full-time on vacation while their families frolic. Elite resorts are responding to this blurring of boundaries between work and leisure by providing on-call IT support, improving their conference facilities, installing Zoom rooms, and throwing in massages.

Digital nomads proper contain lots of different tribes, from road warriors like McCormack to migratory birds who like to spend half the year in warmer places. “Crypto Bros” want to build communities outside the jurisdiction of the state; hippies want to do much the same thing but with lots of tofu and yoga thrown in; trust fund nomads pretend to work while spending daddy’s money; Californians want to cash in on that state’s exorbitant house prices or escape from its onerous taxes; and some middle-class refugees from rich countries can only afford to live the same comfortable lifestyle as their parents if they move to emerging markets.

Zach Boyette is an acute observer of the nomad scene partly because he is a nomad himself and partly because he recruits the employees of his company, Galactic Fed, from the nomadic community, which he regards as a deep and expanding pool of talent. He argues that the average digital nomad is in their early thirties — the mean age is perhaps 33 — rather than backpackers in their early twenties. It takes a certain level of discipline and experience to preserve the lifestyle, and most people who think that they can go on the road after college and make a living in a cloud of marijuana smoke and beer belches are soon disappointed.

He also points to an emerging paradox: the growth of permanent digital nomad communities in Asia and Eastern and Southern Europe. The most prominent of these are Bali, Indonesia; Chiang Mai, Thailand; Danang, Vietnam; Cape Town, South Africa; Lisbon, Portugal; Barcelona, Spain; and, the scene of a recent digital nomad “unconference,” Nomad Fest, Bansko, Bulgaria. Some digital nomads migrate between these various communities. Others fall in love with one place and create permanent nests.

More than two dozen countries have introduced nomad-friendly visa and work-schemes since 2019, most notably Croatia, Estonia, the Czech Republic, and Portugal in Europe; Bermuda, Barbados, and Mexico near the US; and the UAE and Thailand in the rest of the world. Zoom’s background function lets you disguise where you’re living. Companies are cropping up to take the lifestyle mainstream: Remote Year puts professionals together into groups to live, work, and travel together, organizing everything from co-working spaces to white-water rafting expeditions; Outpost rents out temporary living-working spaces in Indonesia and Sri Lanka. There are nomad-specific insurance schemes, how-to web sites galore, and co-workspace arrangements that will unlock office doors from Madrid to Kuala Lumpur. Airbnb is shifting its focus from short-stay accommodation to long-term rentals, with an emphasis on beach cottages, forest cabins, and other “work-cation” fantasy resorts.

Still, serious problems persist. The world is still built around nation-states, particularly for tax and welfare. Too many nomads think they can get away with “forgetting” to file their taxes while relying on local hospitals if they break their leg. Visa rules in one of the most popular destinations, Indonesia, are still unclear. Particularly at the level of local officials and police, people, even countries that claim to be nomad-friendly can harbor significant hostility to westerners. Working while traveling can mean that you don’t do either properly: When nomads arrive in a new place, all too many are more interested in catching a Wi-Fi signal than contemplating the scenery. As for the beach, it’s impossible to imagine a worse place to work: Sand gets everywhere, the sun prevents you from being able to see your screen and, if you’re unlucky, the sea destroys your laptop.

Digital nomads can flame out, fall sick or get into trouble. Those who start out working for big companies can find themselves downgraded to part-time contractors and then freelancers, making it ever harder to earn enough money to live on. Ukraine was a popular destination for nomads before Vladimir Putin invaded. Now another popular destination, Sri Lanka, is going through agonies of its own. McCormick emphasizes that the lifestyle is “not for everyone.” Boyette argues that it is likely to combine phases of life — a spell in your thirties then perhaps another spell when you’re approaching retirement — rather than a permanent state of affairs.

The current popularity of the nomadic lifestyle raises problems of its own. What is the difference between a digital nomad and a digital expat? Digital nomads can bring rising prices and cultural imperialism in their wake. Bali’s Seminyak district feels more and more like California, with its Starbucks and Mexican restaurants, than an authentic part of Indonesia, sparking local resentment that sometimes flames into theft or violence.

Can companies really operate if their workers are completely detached from their headquarters? Boyette points out that Galactic Fed devotes an enormous amount of effort to “on-boarding” its employees and keeping them engaged. But for most companies managing employees on the other side of the world might prove a challenge too far. And if they can indeed cope with the challenge, why not dispense with all those expensive westerners and simply outsource jobs to educated Thais and Indonesians who will do the same work for a tenth of the pay? Knowledge workers have gained a lot of freedom thanks to the remote working revolution. That deserves to be celebrated. But going one step further and untethering ourselves completely from the mothership might prove to be too good to be true.

BLOOMBERG OPINION