Understanding The Now

While 2016 has been an annus horribilis overall (unless you’re a racist, in which case, it’s probably a magical time to be alive), it has a been a great year for books helping us attempt to understand the heady times we live in.

Most people would agree that we live in a state of rapid change. In their book Whiplash, Joi Ito and Jeff Howe call it “exponential times” due to asymmetry (small can now beat big), complexity (interconnectedness at scale) and uncertainty (our existing institutions haven’t evolved to handle current situation). This provokes many questions, but one immediate one is: will this continue?

In his book The Inevitable, Kevin Kelly answers this with a resounding “yes.” The book outlines the twelve technological forces that will keep the rate of change high for the foreseeable future. Kelly, an original Wired editor, is an accomplished writer and technologist, leading to spare sentences full of insight such as:

We are moving away from the world of fixed nouns and toward a world of fluid verbs.

In the intangible digital realm, nothing is static or fixed. Everything is becoming.

Technological life in the future will be a series of endless upgrades.

In this era of “becoming,” everyone becomes a newbie. Worse, we will be newbies forever. That should keep us humble.

Kelly’s thesis is that we are moving into a world called Protopia where there is a constant, steady accumulation of positive changes, but similarly an increase in new problems. The net is positive, so society advances. We all get mobile phones with the internet but have to listen to occasional idiots shout into their Bluetooth headsets while walking down the street.

Kelly’s book dives deep into the twelve forces and backs each up with a wealth of sometimes obscure information. Printing drove the number of word available from 50,000 in Old English to over 1,000,000 today! Dematerialization means that one kilogram of inputs produced $1.64 in GDP in 1977 and $3.58 in 2000!

These stats are neither cocktail party fodder nor petty stats, rather an attempt to demonstrate the inexorable march of technology and illustrate that we are nowhere near the end of the path.

Kelly also gets full points for offering predictions of what the future will look like – and acknowledging both that futurists are almost always comically wrong and he is essentially guaranteed to be incorrect. This leads to paragraphs like the following:

If you’d like to have a vivid picture of someone interacting with a portable device in the year 2050, imagine them using their eyes to visually “select” from a set of rapidly flickering options on the screen, confirming with lazy audible grunts, and speedily fluttering their hands in their laps or at their waist. A person mumbling to herself while her hands dance in front of her will be the signal in the future that she is working on her computer.

If you had to distill what this means for humanity, Kelly attempts to summarize it in a few sentences:

We are marching inexorably toward firmly connecting all humans and all machines into a global matrix. This matrix is not an artifact, but a process. Our new supernetwork is a standing wave of change that steadily spills forward new arrangements of our needs and desires.

A key notion here is that of a “matrix.” This is a reference to networks and Joshua Ramo wrote The Seventh Sense to describe networks and their implications for the K Street crowd.

His thesis is that networks represent a fundamental change in the distribution of power. A small group of terrorists called ISIS can use networks to take on all of Western society in a completely asymmetrical game. ISIS is small and geographically isolated but as they tap into networks like Facebook, Twitter, or Telegram a phase change occurs and a more complex organization with disproportionate reach emerges.

Ramo has one critical insight for policy makers: whoever has the biggest network wins. The reason, is that networks compress time, enabling the biggest network to sustain its advantage as its members save time, creating a virtuous cycle where the big get bigger.

This is a simple sentence but it has profound implications. Like Kelly, Ramo offers a few speculative suggestions, but his are focused on how America can create networks to maintain political advantage. (As a reader I love these; speculative narratives are a great mechanism for reinforcing what the author means)

Examples? Retool the NIH and global affiliates to create a network of learning centers. Membership in the network means you share info and get access to that of others. Or have the State Department create a digital currency (a la Bitcoin) backed by US dollars (not a al Bitcoin). Give the digital currency directly to people in need and simply cancel digital dollars if taken by middlemen/corrupt officials. The network trumps all and no physical dollars need ever leave America.

The book is thought-provoking as it is the first attempt I have ever seen to apply the lessons of the Internet to government policy. We’ve seen the use of the Internet to get politicians elected but I’d argue it hasn’t materially changed their policy. Ramo’s book portends a networked political future.

This networked future isn’t just complicated, it’s complex. Samuel Arbesman’s book Overcomplicated outlines what this means and how to handle it.

A complicated system has a lot of parts but is predictable (a jet engine) whereas a complex system has feedback loops between the components making it unpredictable (the weather). He shows how systems everywhere – the stock market, air traffic control, Toyota’s brake systems – have accumulated so much interrelated cruft that complex systems pop up everywhere.

He cites Danny Hillis (a favored practitioner and philosopher of all the authors) in stating: “Our technology has gotten so complex that we no longer can understand it or fully control it. We have entered the Age of Entanglement. . . . Each expert knows a piece of the puzzle, but the big picture is too big to comprehend.”

Arbesman cites example after example of modern complexity and then offers an approach for managing it. Essentially, look to biological systems and embrace the fact that you will not know how everything works:

We must work to maintain two opposing states: mystery without wonder and wonder without mystery. The first requires that we strive to eliminate our ignorance, rather than simply reveling in it. And the second means that once we understand something, we do not take it for granted.

If this sounds a little Zen-like, then you will hate the recommendations of Ito and Howe in Whiplash. They offer nine principles – each of which is almost a koan – to navigate the exponential age. Emergence over authority. Pull over push. Compasses over maps. Practice over theory. Resilience over strength. etc.

The lens through which they see the world is the MIT Media Lab; Ito is the director and Howe a visiting scholar. They consider it-not unreasonably-a window into a possible model for the future and have tried to distill what they have learned into a series of principles.

There principles are definitely the most controversial part of any of the four books mentioned in this post. Since they are offering a way to navigate the future they lack the tested empiricism of the other authors. You are left with a sense of “trust me” with some of their recommendations but I see several of them embedded in what has made my employer successful so I am more than willing to give them the benefit of the doubt.

I appreciate the authors’ humility when they closed their book with an admission that they’re not prophets but guides:

We’re not trying to sell you a way to organize your workdays or an exercise regimen, and we’re definitely not trying to make you believe in our vision of the future, because we don’t have one, other than a firm belief it will be very, very different from the world we inhabit right now. We do have an argument to make: Innovation isn’t about learning how to use social media to generate sales leads. And modifying a business for a networked globe will require more than buying fancy teleconferencing gear for your management team. Instead, we think it requires a deeper, more fundamental shift: an entirely new mode of thinking-a cognitive evolution on the scale of a quadruped learning to stand on its hind two feet.

There is an apocryphal Chinese curse that “may you live in interesting times.” We certainly live in interesting times and I’d encourage you to embrace it. These four books will help you do so.

A Lesson from Fortune’s 3 Lessons

I follow Tim O’Reilly on Twitter and, both as an Amazon employee [1] and someone who values his insight, I was intrigued when he tweeted this the other day:

The link is to an article by Jeffrey Pfeffer, a Stanford GSB prof and Fortune columnist, about what we should learn from the recent NY Times’ article on Amazon. I highly recommend you read it before continuing here.

Pfeffer offers us three lessons we can take from the experience:

  1. The leaders we admire aren’t always that admirable
  2. Economic performance and costs trump employee well-being
  3. People participate in and rationalize their own subjugation

I’m not going to comment right now on whether the lessons are correct (I think that largely depends on whether your liked the NY Times article or thought it was a hatchet job), rather I want to explore the first lesson.

In his article, Pfeffer states the following:

Simply put, dimensions of leader and company performance are poorly correlated. For instance, Fortune’s list of most admired companies, which reflects the size, financial performance, and stock appreciation of the enterprises, has only four entries in common with its 100 Best Companies to Work For list. And only one of Fortune’s most admired companies also appears on the 2014 Hay Group’s Best Companies for Leadership list. (Hay also works with Fortune to create the Most Admired Companies list.)

If true, this is a huge story! The thought that you have the most admired companies in the world (presumably 100, right?) and the 100 best American-based companies to work for and only 4 (!) overlap? 4 percent overlap would be terrible and this would be an incredible story: we’ve built a society where we say one thing and do another.

Unfortunately, Pfeffer doesn’t state who these four unicorns happen to be. I desperately wanted to know, so I decided to find out myself. And this is where the story starts to unravel.

First, while Fortune lists the 100 best companies to work for, they only publicly share the 50 most admired. I tried scraping their site to get the top 100, but for technical reasons [2], I had to abandon it.

What’s interesting is that when you compare the 100 best companies to work for with the 50 most admired, the overlap is actually 7, not 4:

Company Name Rank in 50 Most Admired Rank in 100 Best to Work for
Google 2 1
USAA 28 33
Goldman Sachs Group 23 50
American Express 8 51
Marriott International 37 53
Whole Foods Market 18 55
Nordstrom 14 93
Accenture 49 98

Similarly, the Hay Group’s Best Companies for Leadership overlap is also wrong. Their website only lists the Top 20 companies; I assume you have to pay for the rest:

Of these, Procter & Gamble is #17 on the Most Admired List, General Electric is #9, Coca-Cola is #10, IBM is #25, Unilever is #36, Intel is #40, McDonald’s is #46, 3M is #21, Pepsico is #41, Toyota is #24, Accenture is #49 and Johnson & Johnson is #11,.

This dramatically changes the story. Pfeffer’s sentences above could be rewritten as:

Simply put, dimensions of leader and company performance are correlated. For instance, Fortune’s list of the 50 most admired companies, which reflects the size, financial performance, and stock appreciation of the enterprises, has seven entries in common with its 100 Best Companies to Work For list. And 12 of Fortune’s most admired companies also appear on the 2014 Hay Group’s Best Companies for Leadership list. (Hay also works with Fortune to create the Most Admired Companies list.)

7 of 50 is 14% – which is much more ambiguous than the implied “only 4 percent overlap” in the original paragraph. Suddenly it looks like CEOs may be creating companies that are both worker-friendly and admirable. The story is much less clear. (And I bet the overlap is more than 14% if you compared the full 100 Most Admired with the full 100 Best to Work for; I doubt it’s a linear relationship).

It’s similar for the Hay numbers: a full 60% of the Top 20 Best Companies for Leadership are also in the Top 50 Most Admired.

These errors make it less clear that Lesson #2 is correct. If economic performance and cost trumps employee well-being, then why are 14% of the most admired companies also wasting money to be known as one of the Top 100 places to work?

All in all, I’m disappointed by the fact-checking here. There is a very important conversation going on around what “work” and “employment” will mean in the 21st century. This article had an opportunity to contribute but the factual inaccuracies make it difficult to separate the real insights from speculative narrative.

Note: feel free to double-check my work. I created a Github repo with the data and Python script I used to Fortune’s rankings.

[1] I didn’t seek anyone at Amazon’s opinion before publishing this and all the opinions on my blog are entirely my own. I am not authorized to speak on Amazon’s behalf; you shouldn’t interpret anything on this blog or my Twitter feed as being Amazon-approved. I also have no vested interest in whether you like or hate Amazon; it’s a free country and you are entitled to your own opinion.

[2] There are 350 companies in the “Most Admired” companies section. Each has a URL and I tried scraping the URL for each to get each company’s individual score. However, the pages render dynamically using JavaScript; I’m doing this in my spare time and ran out of time to figure out how to get the pages to properly render. This has no impact on the analysis discussed above.

SIM As A Service

One of the things that interests me in 2014 is whether or not T-Mobile is going to be sold. I work at a company that, among other things, runs a virtual network on top of TMUS’s network-so I’m definitely interested in what might happen.

I keep thinking though, who else might want to buy T-Mobile’s network?

The one dark horse I keep imagining is Amazon (this might be bias induced by the fact that I both live in Seattle and my wife works there-although she’d know nothing of their telecom plans).

Now, why on earth would AMZN buy TMUS?

First thought: Prime.

You could imagine a world where being a Prime customer means that your Kindle Fire comes with unlimited Prime video anywhere in North America. Ditto for Amazon music served up by the cloud. Partner with Facebook for them to make their messenger app free.

Yet another way to get people to pay $79 a year.

Plus it also facilitates the launch of a Kindle phone (which could also include a free amount of minutes/data as part of a Prime membership).

But what about existing T-Mobile customers?

Simple: make them an MVNO. Rather than converting them all to Amazon, sell the T-Mobile brand and customer base to their management team and let them run it.

But Amazon could take it further: offer SIM as a service via AWS.

Amazon could create a new category for data-driven devices that piggyback off its existing infrastructure.

Want to create a network of sensors that measure air quality across your city? No problem, just buy 500 SIMs from AWS and their pay-as-you-consume data service can be added to each unit.

Cost too much? Just call up the console to shut off a couple of units.

And data is free if you pass it inside the AWS cloud.

Amazon could literally open up an entirely new category of services and end up owning the Internet of Things – even though all they set out to do was let people watch video for free.

Let’s see what happens to TMUS.

Amazon: The Scaling Company

I’m an Amazon fanboy.

Whenever I find something I might want to buy, I park in on one of my many Amazon wish lists. I use their Web services both personally and professionally. And I’ve owned a Kindle for years; it’s the only eReader I’ll use.

But I’m frustrated with Amazon as they’re missing a golden opportunity with the Kindle.

Part of the reason is that Amazon is hard to pin down as a company. Most people think they’re for shopping; more sophisticated pundits think of them as the “platform for buying anything.” But then how does that explain their web services? The tablet?

I like to think of them as a scaling company. They started by scaling retail. Before Amazon, if you wanted to buy most things, you went to a store and bought what was available; some folks skipped the store visit and bought from the limited set of items available in a catalogue.

Post-Amazon, we expect to be able to buy anything across any category and have it fulfilled by Amazon. With the legendary Long Tail, Amazon scaled retail.

Enter their Web services. Having built an incredible set of online services for internal use – and enabling themselves to scale quickly – Amazon realized that they could sell these same services externally and help others scale. Now there’s not a single startup that doesn’t use Amazon’s web services for elastic storage and computing; why would you waste time building your own cloud when you can use Amazon’s? You would be wasting time that could otherwise be focused on growing your business; Amazon helps your company scale.

Which brings is to the Kindle. How does the Kindle reader and the Fire tablet fit in?

A cursory analysis would suggest that they don’t: they’re just trying to fight the iPad and maybe scale the number of books you can read. But that doesn’t sound like a compelling narrative.

What I hope that Amazon will do is use the Kindle to scale me.

Huh?

One of the biggest problems of this age is information overload. Imagine if the Kindle became the platform to manage this and therefore to help you basically scale your brain.

Here’s how it might work.

Every time you read an ebook you highlight the passages you like and see those others like. You can do this today.

Now imagine that this all lives in a website matched to your profile.

From this website (or an associated app) you can upload a PDF and its converted into an ebook-style form that you can highlight; popular passages by others are automatically highlighted as well.

Now Amazon builds a web browser that lets you bookmark web pages and clip/highlight sections and store them in this new “Kindle Brain” (they’ve already built a browser…).

Throw in the ability to add notes and make everything searchable (notes, clippings and files) and you’ve got something interesting. You’re starting to scale my brain.

But to really scale my brain, Amazon would use their awesome recommendation technology on top of all this. Every item in my Kindle Brain would contain related items that I’d saved, that others had saved and related products from Amazon’s database. I can now start to see the web that connects everything I ever learned; patterns I would otherwise miss become obvious.

Now take it even further. Amazon has built an incredible database of my interests. Every day it goes out and summarizes everything I should read, all the time suggesting related products. And then they write their own search engine so that every time I search for something, it searches both the web and my Kindle Brain.

Far-fetched? A bit. Completely unreasonable? No.

Come on Amazon, blow my mind.

Car Sharing

A few days ago I noticed a tweet by Tim O’Reilly about car sharing. Turns out that GM’s going to use OnStar to let car owners rent out their cars when they’re not being used and Ford is going to contribute cars to ZipCar.

Interesting to see two of the Big 3 getting into car sharing, but both of these pale in comparison with what Daimler is doing with its Car2Go service. The word “disruption” gets thrown around these days like it’s the new “hero”, but Car2Go is genuinely disruptive.

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Before explaining why it’s disruptive, a quick primer on how it works. If you live in a Car2Go city (San Diego, Austin and Vancouver in North America), you pull out your iPhone and find a nearby car. You go to the car and start your rental by tapping a car against the window. You then pay by the minute, hour or daily maximum – whichever is cheapest for you.

The system is disruptive for three reasons:

1) You get incredible peace of mind: you don’t pay for gas or insurance so you never have to think about the car itself.

2) You can park the car anywhere (technically anywhere with permit parking or select reserved spots). This is incredible: point-to-point driving; no more returning the car somewhere (GM & Ford – pay attention to this).

3) The price is about a third of a taxi and comparable to the bus.

The price of the car starts at $0.33 per minute, which sounds high until you actually look at your bill.

I frequently get a car to drive to/from work. It takes as little as six minutes and is never more than about eleven. The bus costs $2.50 and a taxi is $12.00 plus tip. If I meet my wife downtown for dinner it’s cheaper to drive home than to take the bus. Even though a ride may cost a bit more than the bus, after I price in my time, the scale tips to Car2Go (even if I have to walk a few blocks to pick up a car).

Here are my rides from last month (your riding history is available online):

Screen Shot 2011-11-02 at 8.51.36 PM.png

I used a car 16 times last month and it cost me $129.32. That’s an average ride price of just over $8.00.

To put that in perspective, to lease a Smart Car (the same ones used by Car2Go) would cost at least $159/month. My car-owning friends tell me that insurance in BC is about $60/month. And don’t get me started on gas or parking.

I’m saving over 50% versus what I’d otherwise pay, easily a couple of grand a year.

The system isn’t perfect. My driving is being tracked and who knows what that could lead to. Also, as more people discover the service I’m realizing that if I work past 7 pm I’m in a Car2Go dead zone:

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But these are small prices to pay.

As a business, it sounds like the service is taking off. Within 100 days of launching in Vancouver, they’d signed up 5,000 people doing more than 4,000 rentals a week at an average rental period of 30-50 minutes. That’s not a great business yet – maybe $3M a year in revenue – but the growth is meteoric: usage is up 4X since launch. This could be a serious business soon.

Car2Go doesn’t release any profit info for Vancouver, but given that every car is identical (and that parent Daimler is also the manufacturer), they’ve easily got the lowest fleet costs of any ride sharing service.

If you’re lucky it’ll be coming to your city soon; it’s definitely changed how I live in mine.