In the classic 1979 Steve Martin movie “The Jerk,” his naive character Navin Johnson, upon getting a job for the first time, can’t wait to see his name in print in the new phone book. When it arrives he runs outside screaming, “The new phone book’s here! The new phone book’s here!” For anyone under say around 15 today, they have no clue what a phone book even is.
Many towns and cities have stopped printing phone books in the last few years. Why? Because everyone’s phone number is now easily accessible on the Internet. This dramatic change in American life has happened mostly unnoticed by cultural observers. Many thought that when you started being able to call “information” at 411 the phone book would go away. But folks like my parents forbade us to use 411 because it cost 25 cents. Use the phone book, they would say.
Why in heaven’s name am I writing about this? I was with an old friend last night who has been a paper salesman for almost 30 years. His father before him also was a paper salesman. I talked about the phone books going away, and he said he used to sell lots of paper for phone books, but not anymore. He said he is very worried that the paper industry is going to shrink dramatically over the next 10 years. The “paperless society” that many had written about decades ago is indeed coming closer. I can confirm that in our law practice, we are at the point of using virtually no paper in our corporate transactions and representation of public companies. A young partner of mine had an absolutely clean desk recently. I said, “Looks like you have nothing going on.” He said, “No, I’m swamped.” This is where we are.
So what’s the point for smallcap land? There used to be a huge industry in New York selling buggy whips to whip horses attached to carriages. When cars came along, that industry simply went away. Will paper be the next buggy whips? Maybe. The power of technology, of the Internet, is overwhelming many different things in our society. As investors in burgeoning companies, we need to keep this in mind. Go short on paper, long on tech gang.
