Where Do We Go From Here?

The recent win by Google’s AlphaGo computer program in a 5-game Go tournament against the world’s top player for over a decade, Lee Sedol made headlines around the world.

And once you look past some of the more superficial tabloid predictions of imminent robot enslavement, you’ll find a number of intelligent and fascinating accounts detailing exactly why the event represents something of a technology landmark.

It’s worth digging into Google’s blog post for the background. Because this was not just another case of a computer learning how to win a board game. Nor was it a resumption of competition between man and machine following our previous defeats in chess (against Kasparov) and in Jeopardy (by Watson).

Complex Choices

Instead, the choice of game here is significant. Go is an ancient game with more possible legal board positions than there are number of atoms in the universe. In fact, we’ve only managed to calculate that number in 2016 after some 2,500 years. Why is this important? Because it means that a computer cannot possibly find the best options simply by brute-force guessing combinations. Building a system to index all possible moves in the game and then rely on the computer to look up the best move each time is simply not possible.

Instead, a successful Go player needs to use something that we can best understand as intuition. A human has to be able to act on no more than a feeling that one move is better than another – something that it was generally accepted that this was something that computers couldn’t do.

Turns out general opinion was wrong.

Self-Taught

By ‘simply’ learning 30 million possible moves played by human experts, the program showed that it could predict which move a human would make 57% of the time. But this would only go so far. To win, the AlphaGo algorithm needed to learn new strategies – by itself.

And it’s here that the outcome was stunning. During the games (live streamed online to massive audiences), the computer made certain moves that made no sense to Go experts. And yet (for the most part) they worked. As one commentator mentioned, this was, at some level, an alien intelligence learning to play the game by itself. And as another put it:

“..as I watched the game unfold and the realization of what was happening dawned on me, I felt physically unwell.”

When it comes to AI, it’s particularly important to reign in the hyperbole. Playing Go in a way that’s unrecognisable to humans at times is hardly Skynet. But it’s fascinating to think that the program reached a level of expertise that surpassed the best human player in a way that no one really fully understands. You can’t point to where it’s better because the program teaches itself to improve incrementally as a consequence of billions of tiny adjustments made automatically.

Neural Networks: Patience Pays Off

The success of computer over man came from a combination of different, but complementary, forms of AI – not least of which were Neural Networks. After reading a little about the godfather of Deep LearningGeoff Hinton, and listening to an another excellent podcast from Andressen Horowitz, it turns out that the approach of using Neural Networks (at the heart of AlphaGo) was an A.I. method that was ridiculed as a failure for a number of years by fellow scientists, particularly in the 1980’s.

It Turns out that the concept was just been too far ahead of its time. As Chris Dixon points out in ‘What’s Next In Computing?‘, every significant new technology has a gestation period. But that often doesn’t sit easy when the hype cycle is pointing towards success being just around the corner. And as the bubble bursts, the impact of the delays on the progress of innovation are usually negative.

Nowhere has that been seen so clearly as within the field of Artificial Intelligence. Indeed, the promise has exceeded the reality so often that it has its own phrase in the industry – AI Winters – where both funding and interest fall off a cliff. Turns out that some complex things are, well, complex (as well as highly dependent on other pieces of the ecosystem to fall into place). So in the UK, the Lighthill Report in 1974 criticised the utter failure of AI to achieve its grandiose objectives, leading to university funding being slashed and restricting work to a few key centres (including my home city, Edinburgh).

Expert Systems: Data Triumphs

Thankfully, the work did continue with a few believers such as Hinton however. And whilst the evolution of AI research and progress is far outside this blog post, it’s interesting to see how things evolved. At one stage, Expert Systems were seen as the future (check out this talk by Richard Susskind for how this applied in the context of legal systems).

To simplify, this is a method by which you find a highly knowledgeable human in a specific field, ask them as many questions as possible, compile the answers into a decision tree and then hope that the computer is able to generate a similar result to that expert when you ask it a question. Only problem is that it turns out that this doesn’t really work too well in practice.

But thankfully, those other missing pieces of the ecosystem are now falling into place. With massive computation, bandwith and memory available at extremely low cost these days, those barriers have now fallen. Which has led to the evolution of Neural Networks from a theoretical, heavily criticised approach into something altogether far more respected and valuable.

Welcome to self-learning algorithms – algorithms that (in this case) teach themselves how to play Go better – but without asking a Go expert.

Neural Networks aren’t new in any way. They started as a mathematical theory of the brain but didn’t make much progress for 40 years. But with the barriers gone, we’re now seeing neural networks being piled on top of each other. And AI is improving significantly not because the algorithms themselves are getting better. It’s improving because we’re now able to push increasing volumes of data into models which can in turn use this data to build out a better model of what the answer should be.

Learning By Intuition & Iteration

Instead of trying to capture and codify all existing knowledge, deep learning techniques are using data to create better results. It’s an approach that is scary to some people because it’s inherently un-debuggable. If you get the wrong result, you can’t simply check out each entry in a decision tree and fix the one that’s wrong.

But it’s got legs, particularly in the development of self-driving cars. So we don’t need to paint roads with special paint and maintain a huge global database of all roads and cars. Instead self-driving cars are going to use a collection of these machine learning techniques and algorithms in order to make the best guesses about how to drive each and every day.

Learn, iterate and improve. Scary? It shouldn’t be – because that’s exactly what we do as humans.

It’s a huge and fascinating field but the AlphaGo victory feels like an important bridge has been crossed, an inflection point when popular awareness coincided with a genuine step forward in the possibilities that the technology affords.

And of course, Google’s ultimate goal has never been to simply be better at winning games. Unless you define a game as being a challenge that is extremely difficult to beat. If so, then bring on the games – disease analysis, climate change modelling, the list is endless. When it comes to these contests, we might not expect them to be streamed live online. But as they increasingly become games that we have no option but to win, I’m pretty certain that the interest will be there.

Rely on things that won’t change in the future

When successful entrepreneurial business leaders are cornered by journalists, they’re often asked to give predictions. They might be pressed to share a few thoughts on how their particular industry might develop over the next few years, or to provide some further insight into future trends.

Of course, for those that are blazing their own trails, there’s great merit in doing so. After all, these individuals have proved that they can:

  1. accurately identify an area of (often explosive) growth;
  2. come up with a product or service that addresses a pain point for customers that increases as the sector expands; and
  3. executed a strategy over a prolonged period of time which – if not quite flawless – contains very few missteps (the hardest skill of all).

Success ultimately requires a huge collection of variables to align correctly at the right time. Hence the reason that so few are able to pull it off on a grand scale. But for those that do, the cachet of entrepreneurial business leader is bestowed willingly upon them by others. And rightly so – they called it, committed to it and delivered it.

However, asking about the future often comes with a subtext. Most people share a common desire to minimise risk and so they will seek out the certainty of a guarantee if at all possible. Removing even one option from a long list of many possible outcomes within an uncertain world appeals to the natural human tendency to prefer a decision that avoids loss to one that results in gains. It’s a fine line between accelerating your learning by using other’s war stories and simply seeking a ‘how-to’ shortcut.

Anyway, here’s how Jeff Bezos answers those who are seeking to predict the future:-

“I very frequently get the question: ‘What’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time. …

[I]n our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff I love Amazon; I just wish the prices were a little higher,’ [or] ‘I love Amazon; I just wish you’d deliver a little more slowly.’ Impossible.

And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.”

Identify the things that are never going to change and base your business on those fundamentals. Work with a laser-like focus on improving the things that you guarantee will remain relevant to your business over the long run and develop the business from there.

It’s a different way of looking at things – and no doubt goes part of the way towards explaining just why Bezos has enjoyed massive business success to date.

Global Trends in 2015

Like many, I’m a sucker for those “look take a look at what’s on the horizon” type of posts. December’s always the month that these things start to really appear with a vengeance and the presentation from Global Trends is as good a place to start as any.

Here’s a few areas that stood out to me. I’ve partly picked these out of general interest but mainly it’s because I think that they reinforce a few of my own thoughts about key themes that every entrepreneur who’s looking to build a business in a growth area should at least be aware of.

1. Images hold more power than text

Not news in itself but it does reinforce this renewed interest in visual communications technologies (Oculus Rift, anyone?). In some cases, the technologies are developing to help us interact with the real world but in others, virtual reality will continue to gain traction.

2. The data security risk will worsen

Breaches will continue to happen more regularly and with increasingly serious repercussions. The problem will worsen significantly as the rapid advance of the Internet of Things eats up all manner of additional personal data. The battles for privacy, freedom and security will continue online, with the defence being strengthened I have no doubt by the hard work being carried out by my friends at MaidSafe.

At the same time, efforts made to access and index the Deep Web will continue apace. Those parts of the world wide web that are not indexed by conventional search engines contain a vast quantity of data that is several orders of magnitude larger than the surface web and remains untapped. A potential treasure trove of information appeals to many around the world for different reasons. But the potential to use such ‘big data’ to develop new solutions to existing problems is likely to attract people looking for new opportunities.

3. The battle for increasingly scarce resources heats up

As we collectively leave our own individual trails digital exhaust to be exploited by marketers and identity thieves, the demand (and, on the flip side, reward) for reducing waste by combining recycling, green energy and new business models will drive new ideas within what is being called the Circular Economy.

4. The rise of impact capitalism

More people will seek to invest their money in a way that delivers a measurable environmental and social impact, and not simply just a financial return. Crowdfunding and peer-to-peer lending models will continuing to grow apace in order to tackle significant challenges that the market has previously ignored when left to its own devices.

My favourite example here has to be Watsi, the Y Combinator company that’s created a healthcare crowdfunding platform that lets you directly fund medical care for individuals in developing countries.

5. Working life continues to evolve

More people are responding to high unemployment levels with an entrepreneurial mindset, increasingly out of necessity. Self-employment and ‘on-demand’ working patterns will become commonplace with larger businesses becoming more open in general to collaboration with individuals.

6. Healthcare changes

More progress will be made this year in the field of personalised medicine designed for individual use, the tracking of health indicators using data captured by wearable devices that will increase diagnostic efficiency and the continued integration of robots (albeit without the AI of science fiction novels at this stage) into care and treatment cycles. Out of many fascinating areas, early-stage experiments into bioprinting will continue – using 3D printing technology to print body parts.

7. The rise of the city state

With the continued growth in population putting ever-increasing pressure on food and electricity supplies, cities are facing rapidly expanding populations – and therefore growing in importance as they seek to protect and provide for the demands of their residents. With more than 50% of the world’s population living in cities (there are currently 28 megacities with over 10 million people), the mayors who rule these cities will find their roles increase in significance. At the very least, they’ll have a significant role to play in tackling global issues, as cities currently produce 70% of all global harmful CO2 emissions in a world that needs such levels reduced drastically within the next 20 years.

8. Intelligence

And of course the debate will continue over whether robots are going to continue to close the gap on humans – and the existential threat to humanity that this development in AI may cause. Many of the predictions in the deck are likely to come to fruition well beyond 2015 but the meshing of machine intelligence with neuroscience, genomics and biotechnology provide no end of ideas for researchers and computer scientists to continue their collaborations.

Thoughts on the Bitcoin 2014 Conference

So, I’m sitting here early on a sunny Sunday morning in a great little coffee shop in Amsterdam (no, not one of those ones…) and reflecting on the last three days of Bitcoin 2014.

It’s been an exhilarating few days. I’ve never been to an event like it, where the sense of an impending global revolution sits side-by-side with philanthropy and open entrepreneurial passion for building new businesses. It’s a strange world where all three can sit together within one format and there’s no doubt that this is one of few places.  OK, so the crypto-anarchists were never going to be hugely satisfied with a conference that was ‘industry’ rather than ‘grass roots’ but to me it’s pretty simple.

The fact is that Bitcoin – and other decentralised systems – are coming. There is inevitably going to be a period of significant disruption ahead and it’s important for everyone who has realised this fact to help others to understand more about this train that’s a-coming. For some people, that does involve engaging actively with individuals, local and national businesses and politicians to ensure that they aren’t blinded by the poor level of information that’s currently available. The level of general public awareness is still woefully low and that needs to change fast.

There’s no way that I do the entire conference justice in a single blog post but there were a few things that stand out.

Bitcoin in the Developing World

  • Check out this new film that was premiered at the Conference. I banged on about the global remittance market in my TEDx talk on Bitcoin and this video does a great job in explaining precisely why Bitcoin is so important for the developing world.

Patrick Byrne Keynote

Patrick Byrne, Overstock CEO, keynotes Bitcoin 2014 in Amsteredam
Patrick Byrne, Overstock CEO, keynotes Bitcoin 2014 in Amsteredam

I’m not sure what can be said about Patrick Byrne’s keynote at Bitcoin 2014 that can do it justice. That guy must have a brain the size of a small planet. The Scourge of Wall Street gave a whistle-stop tour through Western philosophy and explained why a society based on cryptographic principles is not only the answer but a necessity. Denounced at one stage as a lunatic, proved right by the subsequent financial collapse in 2008, I challenge anyone to criticise the obvious passion of someone who has gone so doggedly out of his way and against the grain in his mission to expose the corruption within our current financial systems (particularly within the US). And all whilst running a billion dollar company (that of course now accepts Bitcoin and is on course to hit $10-15 billion in Bitcoin revenue in 2014).

Importantly, Byrne divulged that the business is now trying to hold 10% of revenue in Bitcoin (as opposed to cashing out immediately into dollars). And it’s precisely because of this sort of commitment, where businesses such as Overstock are now encouraging their suppliers in turn to accept Bitcoin in payment, that will help usage to spread through the business ecosystem. And that’s before we even get into his plans to dual-list the business on a “blockchain kind of stock exchange” itself….

User-friendly Wallets

  • We’ve been talking about the desperate need for a user-friendly Bitcoin wallet service for a long time now. And on Day 1 of the Conference, with the launch of Circle.com, we’re arguably as close as we’ve ever been. The business has been in stealth for a while despite raising $26 million. It’s invite-only but watching Jeremy Allaire demo Circle in the flesh, I have to say I’m impressed. This isn’t Bitcoin for people who know about it already. This is a mass market play for everyone’s attention. Your wallet connects directly  to your bank account, money transfers instantly between dollars (initially) and Bitcoin at will, with a zero exchange fee  and – crucially – it’s all fully insured. This could very well be the first Bitcoin interface that your mum just *understands*.

Bitcoin ATM’s

  • Amongst the range of ATM’s on display, I finally got the chance to give the Lamassu Bitcoin ATM for the first time. I converted a 10 Euro note into my Bitcoin wallet in under 60 seconds. Faultless experience, no ID required and a highly impressive piece of kit.

Annual State of Bitcoin Address

  • For Chief Scientist Gavin Andresen, 2014 is the year of multi-sig wallets. As for 2015, the prediction is that Bitcoin will be bigger (and better-looking), more secure, more diverse, more mainstream, more regulated and less volatile. Plenty more info in the talk which will be online soon.

Mike Hearn Builds a Lighthouse

Blockchain.info Awards

  • Great to see the Lets Talk Bitcoin podcast win the best podcast category at the first Blockchain Awards. Definitely my go-to listening podcast on anything to do with the subject. And as you’ve probably heard, Andreas refused to accept his award. Although clearly the most popular winner at the event was Satoshi Nakamoto himself who turned up in person before disappearing mysteriously into the Amsterdam night….(it wasn’t Gavin dressed up, honest…)

The Bitcoin Foundation

  • I went along to the Bitcoin Foundation Annual Members’ Meeting straight after the conference. It’s fair to say that the Foundation comes in for a huge amount of criticism from the Bitcoin community and the days leading up to the event were filled with various critical stories in the press. But  I have to say that having been there and looked the guys in the eyes, the picture’s nowhere as simple as is commonly made out.
  • There’s obviously a perception within Bitcoin-land about what the Foundation is and should do. They have fallen short in a number of areas of course but I honestly believe that the majority of that comes down to two things. Firstly, there is a mistaken assumption by the Bitcoin community that the Foundation should be representing the disparate goals and interests of each group that is interested in Bitcoin. Secondly, and no less importantly, the Foundation is an organisation that is under two years old and has been woefully under-resourced in a year in which Bitcoin awareness has both exploded and simultaneously been attacked from all sides.
  • Going from only 3 full-time staff to 10 in the past year, the reality (which hasn’t been communicated effectively) is that they are there to represent their members – not primarily the community itself. 70% of their funding comes from their corporate membership. Let’s be realistic about what they can achieve – but let’s also not be naive about where an organisation like that can be most effective with the limited funding that they have, focusing their time and efforts on the bigger picture by helping businesses, individuals and politicians to properly grasp the concepts of Bitcoin. Let’s hope the international affiliate chapters go some way to dealing with the issue and communication improves.

Anyway, so much more to say but this post is already way too long and bluntly, it’s not supposed to be about the politics of the Foundation themselves. So – if there’s one takeaway from the conference, it’s this:-

Bitcoin is growing. Adoption will come. The people who are working to bring this new technology to the world and are amongst the most clever and intelligent that I’ve ever had the privilege to speak with and there are increasing numbers flocking to get involved in the area. And where else do you have the chance to get involved with a technology that is going to change the world for the better whilst creating opportunities for so many? If you want to learn more, get in touch. Come along to one of our Bitcoin Meetups in Edinburgh.

Let’s keep the conversation going. See you in Asia for Bitcoin 2015?

Gavin Andresen gives the 'Annual State of Bitcoin Address' at Bitcoin 2014 Amsterdam
Gavin Andresen gives the ‘Annual State of Bitcoin Address’ at Bitcoin 2014 Amsterdam
The fantastic Lamassu Bitcoin ATM
Lamassu Bitcoin ATM at Bitcoin 2014
Bitcoin Investment Panel at Bitcoin 2014, including 'Bitcoin Jesus' Roger Ver
Bitcoin Investment Panel at Bitcoin 2014, including ‘Bitcoin Jesus’ Roger Ver

 

 

 

 

 

 

 

 

 

 

 

 

 

Bitcoin Foundation Board at Bitcoin 2014
Bitcoin Foundation Board at Bitcoin 2014
Bitcoin 2014 Conference Lanyard
Bitcoin 2014 Conference
Exhibitors at Bitcoin 2014 in Amsterdam
Exhibitors at Bitcoin 2014 in Amsterdam

 

 

 

 

 

 

 

 

 

 

 

 

Jeremy Allaire finally launches Circle.com at Bitcoin 2014
Jeremy Allaire finally launches Circle.com at Bitcoin 2014

 

 

 

 

The Mobile Web: Are We Shutting Ourselves In?

I recently made the switch from iPhone to Android. It had been on the cards for a while but Apple’s decision to ban the last Bitcoin wallet from the App Store gave me the final push that I needed. It was a simple decision at the end of the day: my mobile simply couldn’t now do what I needed it to – and I’m delighted to say that the experience has been awesome so far.

Whilst going through the necessary admin to make the switch, I was struck by just how different the factors were that now influenced my choice of mobile. There were few similarities with those that had pushed me towards my original iPhone all those years before. My needs as a consumer have changed of course, but with the passage of time, my views on the technology ecosystem that surrounds us and upon which we increasingly depend in daily life have also matured.

Closed versus open systems

Like many, in the early days I was perfectly content to rely upon companies that built their foundations using the walled garden approach. These companies succeeded precisely because they had total control over all of the applications, content and media that lived within their software ecosystems. And in those days, the reality was that the capabilities offered by the early iPhone when it came to web-browsing were so far in advance of my Blackberry that there really wasn’t even a decision to make.

Yet with time, it’s become increasingly clear that by placing our sole reliance on a single centralised arbiter of quality, a gatekeeper who takes a cut from everyone that wants to participate in that closed platform, we’re often failing to ask ourselves a more important question – are the same barriers that help to maintain such quality actually restricting innovation from taking place?

The inevitable flow of the internet

The internet has an irresistible capacity to surface the things that are valuable to others, regardless of what that content is and whether it is being searched for by individuals or tribes of people united by a sole interest.

By its very nature, the internet allows people, ideas, content and programmes that deliver true value to gain traction online at scale in a way that an attempt carried out within the physical world could never match. With personal recommendations within social media acting as fuel for the mass curation of quality content, in combination with general advances in technology outside the walled gardens, it’s now time more than ever to think carefully about the system that we want to support over the longer term.

Because by choosing companies that ring-fence content on their platforms (whether that is iOS apps, Kindle books or other forms of Facebook-locked content), we are signalling by default that we accept the existence of these barriers to discovery. We trust others to make such decisions on our behalf and in so doing provide them with the power to determine what we consume in both thought and product. It’s almost a return back to the traditional single channel publishing model. And I’m far from convinced that this is the way forward.

Mobile web or mobile apps?

Interestingly, one of the first discussions I read on my new phone (via Twitter) was a debate on a related issue. In January 2014, the US hit a significant milestone as for the first time ever, more people accessed the web via mobile (55%) than on desktop computers (45%). On first glance, this simply reconfirms the projections that Benedict Evans and others have been making for a while about the fact that “mobile is eating the world”:-

But look more closely at that 55%. The stats show that 47% of that time is spent using apps on mobile devices, compared to just 8% of time being spent in mobile browsers. In his post ‘The decline of the mobile web’, Chris Dixon warns of damaging consequences if this trend continues.

So why is this a bad thing? Those figures suggest that people who go online using their mobiles tend to spend most of that time within a small number of popular apps (as opposed to using a mobile browser). And as people congregate in a relatively small number of apps, information tends to become stuck in silos that prevent it from flowing freely. What’s more, businesses are likely to allocate scarce resources to apps rather than mobile web in the future as they tend to view visitors in their app as more valuable than those on their mobile website. As the difference in experience becomes more pronounced over time, this could lead to poorer mobile web experiences overall which will in turn accelerate the move to apps.

Convenience for the customer comes at a cost. With both Apple and Google acting as gatekeepers to their respective app stores and charging a 30% tax, innovative new apps have to factor in that cost of getting through the doors before they can even be in with a chance of forcing their way onto the packed home screens of mobile users. Why would you even let a potential competitor through the gates?

Do apps prevent innovation?

Dixon has received both support and criticism in equal measure for this analysis. To be fair, the statistics do appear to artificially inflate mobile usage by including time spent by individuals playing mobile games online. John Gruber argues that the distinction between mobile webs and apps isn’t that clear in practice. In many cases, a user who relies on an app like Twitter will actually open web pages rendered in a web browser whilst still technically being within the app itself. And of course, Dixon’s criticism of apps ignores the fact that this format has enabled other types of innovation to thrive – think of the creation of a whole range of companies who are not reliant on the web-browser (WhatsApp, Instagram et al).

The debate reminds me of Tim Berners-Lee’s call for the defence of the Web a couple of years back. When he actually set this whole thing in motion some twenty-five years ago, the whole purpose of the web was to link interesting content together. The web’s core principles revolve around “a profound concept: that any person could share information with anyone else, anywhere”. Putting up barriers and closing platforms were certainly not concepts that he intended at least. Many of the same arguments were made in the Wired article ‘The Web Is Dead. Long Live The Internet’ which is well worth a read if only to see just how accurate those predictions from 2010 have turned out to be so far.

Will the walls of those gardens fall?

I’m convinced that decentralisation is one of the key themes for all our futures – of the internet and of every possible service that can be provided online. The network is gradually becoming stronger on a daily basis. So I find this reality impossible to reconcile with a picture of the world in which powerful companies continue to own such gateways in the same way as they do today. Even if we can become comfortable that the current system doesn’t in fact inhibit innovation, such convenience continues to impose a high cost – and at the very least, that cost is increasingly shaping up to be the personal data that we are leaving behind us in our wake as a society for powerful organisations to collect.

As we move into a world where the internet of things is increasingly becoming a reality, the same data that is being leaked today is going to be used to directly influence our everyday lives in the future, for all manner of reasons, from good (personalised healthcare) to bad (intrusive personalised marketing). After all, the data analysts of the future will know exactly what you did today and the restorative clean-up work that we need to carry out is becoming a bigger job with each passing day.

Control v The Rich Tapestry of Chaos?

For the most part, we as humans we have a fundamental desire to seek control and possession within society. But it’s worth remembering that this doesn’t have to be the future that we create for ourselves on the web. There will always be a place for order, quality and reliability. But those standards shouldn’t be pursued to the extent that the very pursuit of such ideals sterilises an otherwise fertile landscape in which innovative creations are possible only at the point when such constraints are relaxed.

You’ll forgive me the ramble, perhaps. Of course, the future of the internet is far more important than the simple removal of my Bitcoin wallet from the App Store. Yet the wonder of the internet is that it’s a technology that that facilitates activity at both an individual level and on a monumental scale – simultaneously.

So if something’s not working for you in your daily life, it’s time to change. Don’t just sit back and accept it. Think about the changes you’d like to see and, if necessary, go out and innovate. That’s both the power and responsibility that you hold in a modern digital society.

You don’t just owe it to yourself. You owe it to all of us.

photo credit: Mauer-betlehem via cc

Unleashing the Potential of Information

One blog I make a point of always reading is by John Battelle. I read his book ‘The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture‘ about the early days of Google a number of years ago and found it a fascinating read given his access to some of the internal workings of Google as the business grew.

Like many of my favourite bloggers, he tends
focus on some of the bigger tech trends that are taking place in society and his post earlier this week is no exception.

In a world in which most of the population tend to forget just how much data records our every move (whether we’re leaking it as we access web services via third party authentication log-ins or learning a coue of weeks later that it was stolen, a result of our own blind trust in services and businesses that are amateurish about securing it), he talks about the concept of potential and kinetic data.

It’s particularly interesting to me because he frames the difference as explaining how some of the fastest growing modern tech companies are experiencing explosive growth precisely because of the fact that they’ve worked out how to release that potential. If you can build a business that focuses in unlocking that potential, you’re onto something that’s really valuable.

So for example Airb’nb, Uber and Nest have each discovered ways to release data that existed in what were previously ‘dumb’ environments and brought them into the structure of the internet. By building businesses in this way, they have unlocked potential information about:

  • merchandise (Amazon, eBay)
  • spare bedrooms (Airbnb)
  • transportation systems (Uber)
  • our home environments (Nest)
  • real-world relationships (Facebook)

And of course another great example is Google itself – a business which discovered how to convert potential information (links on the web) into kinetic information (search).

You could argue that it’s a subtle distinction – but I feel that it’s a key one. We’re all guilty of speaking confidently about how Big Data will change everything but for the most part, organisations are still flailing around trying to record everything possible in the hope that this will become somehow useful in the future (hello NSA…).

But if you’re looking for business ideas and want to make a real difference, think about one area and focus in on how you make that leap on converting potential to kinetic information. You might just stumble across a huge idea for a business.

photo credit: jah~ cc

Security, Identity And The Relentless Pursuit Of Data

Listen up...Every single day, technology and our understanding of what might be possible advances a little further. After a slow start (in retrospect), we’re now picking up pace. Soon we’ll be breaking into a jog along the road towards exponential development (see Ray Kurzweil’s ‘The Law Of Accelerating Returns‘). Exciting times indeed. Yet increasingly I’m finding myself questioning how technology will impact on issues of security and identity.

Both topics are going to be of critical importance over the next couple of decades. I can see personal identity driving the rise of individual and surge pricing for example – a move to a world where everyone is charged a different price according to past behaviours. But before we even get to that stage, a number of fundamental questions still need to be answered.

It’s pretty much accepted that advances in technology have brought massive improvements in the quality of life for many. Although not yet for all. The developing world for example is really just getting started, with booming mobile phone adoption rates connecting millions to money and knowledge in a way that was previously impossible.

But while technology creates collective benefits that are often direct (new products and services), indirect (more efficient processes) or a combination of the two, we rarely spend any real time actually debating how to deal with the digital exhaust that each of us is, knowingly or otherwise, leaving in our wake.

Now the question of who should be able to access this trail of information – and for what purpose – is one that’s causing tension between various groups. The battle lines are being drawn today whilst most people remain blissfully unaware.

Gold rush for a new era?

There are many parallels today with the way that society has developed in the past. Whereas the majority simply watched as explorers and innovators rushed to acquire newly-discovered natural resources such as oil or gold in days gone by with little or no thought for the environmental consequences, we now see the same fervour from large businesses, governments and criminals, as access to personal data increasingly becomes their lifeblood.

Yet, unlike oil, this treasure is far less transient and limited. Once data is recorded, it does not tend to simply disappear, somehow self-destructing in a James Bond style. It doesn’t matter how effective we believe current laws are. The reality is that there can be no certainty about how our personal data will be used in the future by businesses and organisations that may not yet even exist in a society whose cultural norms continue to evolve.

And whilst there could be a real benefit from our historic data being used to more accurately diagnose our medical problems in the future, for example, few people would be overjoyed about mobile phone location data being used in the same way to justify an increase in health insurance premiums because the data shows that someone was a regular visitor to a fast food outlet ten years before.

Let Battle Commence…

One of the best articles that I read last year – full stop – was by security guru Bruce Schneier. He frames the battle that’s shaping up in the digital world brilliantly and I thoroughly recommend that you make the time to go and spend ten minutes reading it in full.

Despite becoming increasingly high-tech, Schneier sees modern society reverting to the feudal system that used to be common in the past. Skirmishes are becoming more frequent between two distinct camps:

  • The Nimble: small tech-savvy groups of individuals
  • The Powerful: governments or large businesses

The nimble respond quickly to advances in technology by adopting platforms that spread their messages efficiently. Yet, whilst it might take them longer to get started, the established government or large businesses will usually end up in a far stronger position of power over the masses – simply because networks tend to amplify existing power, of which they had plenty from Day One. As Schneier writes:

“So while the Syrian dissidents used Facebook to organise, the Syrian government used Facebook to identify dissidents to arrest”

The vast majority of the world are vassals who fall into neither camp. We believe that our safest option is to ally ourselves to our feudal lords in order to gain their protection. Yet, the reality is that our so-called free choice of ruler is increasingly an illusion. Most of us are becoming increasingly reliant on platforms and devices already owned by these powerful organisations who successfully attract the average user with the lure for convenient storage of all of our personal information in one single location. Just think of Facebook and its quarter of a trillion photographs.

Decentralisation and Transparency

History shows that a true feudal relationship involves rights and obligations that run both ways. Yet events of recent years (including Wikileaks, Snowden and PRISM) have shown that it is going to be exceptionally difficult for those in power to strike a balance between such rights and responsibilities.

In fact, it’s probably an impossible task for them to gain that necessary perspective by themselves. Technology amplifies the potential damage that could be caused by one individual and therefore centralised organisations in power feel compelled to seek increasingly draconian powers to prevent such risks, however remote.

It’s a concerning trend because as society moves increasingly towards a technology-driven distributed networks of individuals, this clash of interests can only become more frequent. Whether it is covert surveillance by governments or data collection by large organisations matters little.

Will society be content to let personal data be controlled by third parties in this way? One of the reasons that Bitcoin is so powerful is precisely because of the fact that it is decentralised, with no central point that can be attacked or influenced – whereas the accumulation of data (for which read: power) in centralised organisations looks to be hugely problematic over time.

A tipping point for public interest?

But we’re in the early stages of this cycle. Over the coming years, I think that the real backlash may come when the average ‘vassal’ starts to see more everyday items that are plugged into the Internet of Things that know precisely who you are and what you’ve done in the past. Will a line be crossed when a bus shelter reminds you of that TV program you watched on your mobile a couple of weeks before, for example?

Whether it will be too late at that stage to protect personal data is up for debate. Whether the nimble or the powerful end up ruling the world is still to be decided. But wherever we’re heading, the cost of starting to work on a solution now has to be significantly cheaper than simply waiting to fix the issue in the future once the data’s been released into the wild.

photo credit: communitiesuk via cc

Three Key Megatrends In Technology (And Society)

Binoculars
It’s not always that easy to see what’s ahead…

If you’re interested in technology, it’s very easy to be seduced by the hype that surrounds the new, shiny product or service that everyone’s talking about that month. And whilst that’s mostly harmless for the consumer, it can be fatal for a VC. Not only are the companies that you invest in risky but by paying above the odds, you now need your winners to succeed on an even greater scale to have a chance of repaying the people who trusted you with their cash.

So I always find it interesting to hear VC’s explain how they make the decisions about what to invest in given that they focus only on sectors that they believe have tremendous growth potential. Fred Wilson is both a top VC and daily blogger who’s particularly insightful and his recent talk at Le Web on three key megatrends in technology is no exception. You can check out the full talk in the video below.

 

You See Better From Further Out

Fred’s approach is to move one step back from focusing on so-called hot areas in general (such as machine learning and big data) to try to understand the bigger picture. Don’t attempt to guess which technology will be the most important. Look instead at how society is developing and the gaps that are being created. And it’s on this basis that he sees three ‘mega-trends’ driving business over the next few years.

1. Transition from bureaucratic hierarchies to technology-driven networks

Business traditionally functioned from the top down. Management orders filtered down the levels whilst customer feedback would usually go directly to front-line (and often junior) staff. When the system worked, that feedback would have to travel back up through the various layers until management made the decision about whether or not to make changes. Inefficient yes but justified by the high costs of communication.

But now these costs have plummeted, traditional hierarchies are being replaced by technology-driven networks. Think about the disruption to the newspaper industry: vast newsrooms with armies of reporters directed by a publisher with stories being edited to meet deadlines before the publication of a physical daily newspaper. Cue the entry of technology-driven networks (and the advent of Twitter and blogs in particular) and now everyone can be a reporter.

The crowd on each network determines what is popular (by retweets, follower count and the like) and the news that is relevant is delivered to us instantly via our mobiles. The same disruption can be seen in film/television (YouTube) and the music industry (Soundcloud).

Consumers now have the power to clearly signal what they want and find useful. But Fred believes we’re still in the early stages of this process which is only now starting to ripple through other industries like hotels (Airbnb, OneFineStay), creative industries (Kickstarter) and learning (Codecademy). Most industries will be affected by networks over the medium term.

2. Everything is being unbundled

It used to be expensive to get products and services to market. That cost meant that businesses tended to bundle things together that the customers had to pay for, even if they didn’t necessarily want the full selection (think of the Sunday papers with News, Holidays, Finance, Fashion, Classified Ads & Sports sections). Yet technology makes it cheap for new companies to be built to deliver single parts of these products, with the result often being that the bit you actually want is now both cheaper and of a higher quality.

Banking is a great example of an industry that’s being unbundled. It used to be very expensive to open and run a physical branch so the banks offered all types of products, including mortgages, credit cards, small business loans and working capital finance. Yet new businesses are now able to use networks of individuals to provide more efficient, specialised and more effective products – through peer to peer lending for example (Lending Club).

University education is another area where the high costs of traditional delivery – sourcing a building, lecturers, expensive academic books in libraries, face-to-face lectures – are being disrupted by MOOCs and mobile online learning platforms. The network model is also changing the face of research, both with the growth of Open Access publications and by enabling people to collaborate across different locations to enable researchers to share expensive, scarce research resources (such as expensive medical equipment).

3. We are all now a node on the network

The mobile phone has changed the game forever. Whilst those in the developed world still have the option of choosing to use a laptop or desktop rather than our phone, in the developing world, mobile has already won that race for dominance. With the cost of a desk computer too high in such countries for general adoption, people just moved straight to cheap (predominantly Android) smart phones. But regardless of the location, the result is that we are all now connected to each other all the time. Cue a wave of opportunities for businesses who are able to build upon that knowledge of people, locations and photographs across the network – in transport/logistics (Uber), payments (Dwolla, Square) and dating (Tinder).

Where The Three Collide

Fred goes on to identify four key sectors in which each of these three mega-trends are making their presence felt in particular:-

BITCOIN

It’s obvious that we’re heading for major change in the world of money. I agree with Fred’s view that Bitcoin (or similar) is going to be responsible for so much more than just innovation in payments. It has the potential to become the financial and transactional protocol for the internet that has always been missing. As the standard way in which financial value is exchanged across the web and one that is entirely free from the control of any one party, money will be able to flow as freely and easily as content does today. As a protocol, it will also act as a foundation upon which entrepreneurs can build a whole variety of products and services.

HEALTH & WELLNESS

Think of the growth of wearable technology with individuals wearing devices that can report back with details of their vital signs (Fitbit, Fuelband etc). In the future, some of this data will remain personal and private, some will be shared across networks and some will be exchanged solely between you and your doctor, caregiver or family member. Throw gamification into the mix (Fitocracy) and suddenly you’ve got a profound force for good with individuals making positive decisions about how to keep themselves fit and healthy.

DATA LEAKAGE 

When the industrial revolution arrived, the side-effect of such rapid development was the pollution that poured into our environment. By the time we realised and started the clean-up started, almost a century had passed and we faced a far harder task than it could have been had we dealt with it at the time.

Arguably we’re now facing exactly the same problem in the information age – only this time the pollution is data. Every digital activity we carry out leaves data exhaust which is, like it or not, letting other parties observe our activities. Fred’s view is similar to most people that I speak to: most of the time, he’s happy to let the government, Google, Facebook and others spy on him. However, sometimes the services that we’ve used end up recording our activities when we don’t want them to. Therefore, getting some control over this data leakage, both at an individual and a societal level is important.

TRUST & IDENTITY

Currently, many of us sign into services using our identities from other platforms (e.g. Facebook, Google, Twitter etc). Whilst it is extremely handy to use their authentication services, we are essentially giving these companies knowledge about everything that we do. Fred predicts the emergence of a standard protocol that will provide individuals with control over their own identity, trust and data which will be distributed (like Bitcoin, across many thousands of computers), free from any one party’s control and global.

Tick The Boxes

No matter whether you’re a VC, entrepreneur or just a citizen in the modern digital era, Fred’s talk provides plenty of food for thought. Using this framework provides a useful lens through which to watch just how the world will change in the next few years as a result of developments in the tech world.

We’re only just at the starting line: the pace of technological advancement can only accelerate from here on in as networks strengthen and the remaining friction that slows down the voluntary exchange of information between people anywhere across the world disappears completely. So if you’re looking to start up a new business or simply to future-proof the one you have, you could do far worse than take start to consider how to take account of all three.

photo credit: C.P.Storm via cc

A Deluge of Opinions On Uber’s Surge Pricing

Surging ocean waves
The storm continues online around Uber’s surge pricing model

As the weather starts to worsen for us Northern Hemisphere types, it’s been interesting to watch the debate develop around Uber‘s use of surge pricing during a particularly wintery snowy December weekend in New York.

Cards on the table, Uber fascinates me. Whilst I’m not quite as bullish in my assessment of their future as some who are confidently predicting that it’ll grow into a more significant company than Facebook, I’m convinced they’re on the cusp on something huge and far more important than simply providing high-end transport through a slick app that handles payment directly (see my previous post on the two-way feedback mechanism they employ for both drivers and riders). The moment they start to use that data to morph into more than simply transporting customers with high levels of disposable income, things could really start motoring (excuse the pun). To quote Shervin Pishever:

“Uber is building a digital mesh – a grid that goes over the cities. Once you have that grid running in everyone’s pockets, there is a lot of potential for what you can build as a platform”  

Like all modern businesses, there’s a potential goldmine of user data being generated. But it’s the current use of that data that’s the current hot topic. By using surge pricing, Uber relies on an algorithm that temporarily increases the price of a journey when the supply of cars gets tight. Relying on basic economics, a sharp increase in demand for rides (due to weather or infrequent events, such as New Years’ Eve) causes prices to spike upwards in order to entice more drivers out onto the roads to satisfy that demand.

It all sounds fine in principle, although there are plenty of suggestions about alternative models that Uber could be using. But the current problem is that every time they use surge pricing, Uber walks headlong into a customer backlash, fanned by the social media platforms that are so integral to the daily routines of their target customers. Many are now asking the question: is it worth making extra money out of your loyal customers during peak times if it means risking customer dissatisfaction over the longer term?

Of course, variable pricing as a concept is not new. Every time you fly, the chances are that you’ll end up sitting next to someone on the plane who paid a different price. Yet there are still a huge number of companies who leave their prices unchanged whilst supply and demand vary on a daily basis. Is it just the case that we as consumers need to catch up with dynamic pricing models as they become more common? To my mind, it’s not too far-fetched to imagine society moving towards an individual ‘e-bay on steroids’ style of commerce as we become increasingly connected and systems get better at accurately identifying demand.

But for that to happen, customers need to be comfortable about how the prices are being set. In Uber’s case, the app displays a clear message about the temporary price hike before any journey takes place. But it’s prompted a debate about how those prices are set – in this case, how transparent an algorithm can ever be that is used to identify high demand and power the price spikes. Once a company starts to build up significant data about you, it goes without saying trust becomes critical. What happens, for example, if a price rises simply because the data shows that the customer is a regular has always been happy to pay higher prices in the past?

Remember when Amazon tried charging a higher price to regular shoppers who hadn’t cleared their cookies back in 2000? Not their most popular move. Of course, there’s no evidence that this will be Uber’s chosen path. But in the wider scheme of things, it’s possible to see this question being asked more frequently as the market becomes increasingly frictionless, search more powerful and transactions faster to conclude digitally.

One thing that is certain is that Uber is a young business that is making enviable sums of cash. It’s clearly doing something very right by focusing on monetisation (as opposed to traction) far earlier than many other tech giants did at a similar stage. It’ll be interesting to see how it pans out over the longer term however as Uber becomes more ubiquitous.

photo credit: AGrinberg via cc

Why Google Glass Is Only The First Step

 

Ready For Take Off
Ready For Take Off

The Start of Something Big?

On the week that the first Explorer editions are being shipped to developers, I’m hardly alone in my excitement about just how important  Google Glass could turn out to be. Not only for the applications that we can imagine here today, in April 2013. But more importantly for the potential that this type of technology brings for advancements across areas that we haven’t yet considered.

If you view it as a building block for the re-imagining of almost every daily activity, from work, sport  or just basic methods of human communication, we can have no idea at this stage of how significant this next move into mobile computing/augmented reality will prove. However, I’m betting on it being a huge jump forwards.

I’m sure there will be issues with version 1 but we’ve got to be careful not to have unreasonable expectations. Bleeding edge products always lack the initial crucial customer feedback that can only come once you’ve let third parties loose on your product. And it’s precisely in that area, where people start to see how the technology could be used in their every day lives and make the necessary adaptions, that will drive a steep growth in its popularity.

…Or The Green Light For Conflict?

But putting the optimism to one side for a minute, it’s obvious that the path towards widespread adoption is not going to be straightforward. Moving past the geek-attraction phase (ooh, it’s shiny, I want one of those…), the technology unearths a whole raft of issues that will inevitably cause tension between different groups.

By far the best article that I’ve read recently about the impact of Glass is by Jan Chipchase, Executive Creative Director of Global Insights at Frog. It’s well worth taking the time to read through this, particularly given the calibre of the author. For a product that’s both “on your face and in your face”, he argues that Google is the right company to bring this technology to market as:-

[a business with] a recent record of genuine innovation that stretches/defines social and behavioural norms with a strong revenue stream and deep enough pockets to have a fighting chance of medium to long-term success.

Privacy And The Invisible Impact

Positions are starting to be taken on either side of the privacy debate around Glass. Yet amongst such high profile posturing, few hold solid research about how the human condition will be affected, consciously or otherwise, when we become acutely aware of someone wearing technology which can record our every move. How many of us would think twice before making a statement in the future if we knew that it was to be recorded and retrievable by a company whose goal was to index that data for the purposes of serving ever-more relevant advertising to you? As Chipcase writes:

Any idiot can collect data. The real issue is how to collect data in such a way that meets both moral and legal obligations and still delivers some form of value.

An Argument For The Wider Public Good?

One way to ease the widespread adoption of Glass is to enable anyone to access on demand the video feed being recorded by others around them. Transparency of information will no doubt help ease a few concerns whilst crowd-sourcing views to make them collectively useful is likely to convince people of the wider public good in certain situations, with emergency situations or entertainment events being the most obvious.

Regardless, It’s Happening

The issues surrounding the introduction of Glass – whether in terms of privacy, the ownership of data, legislation or the evolution of basic body language in a social setting – are only just now starting to be considered. But I for one can’t wait to see how things move forwards. There are bound to be mistakes but progress demands failures along the road.

You may not agree with Ray Kurzweil et al about his predictions about the approaching singularity – the point when technology and humanity are will no longer be separate (current predictions point to 2040). But this looks very much to me like a significant jump forwards along that path. And, one way or another, whether in Google’s hands or elsewhere, it’s going to happen. And it’s going to be a helluva ride.

photo credit: vyxle via cc