What data and fences have in common

We’ve entered the age of the Data Imperialist. New world powers are taking resources before those handing them over have realised what is happening. Once again, it seems that the future is repeating the past.

Most things we value economically in the modern economy are quite far removed from real needs. We invent new asset classes that are things we don’t really need – unlike food, shelter, medicine and education. Where it gets tricky is when something which was once free, fluid and unencumbered gets claimed by a commercial interest. When it does happen though, the pattern is always the same.

  • Those it gets taken from don’t understand the ‘market value’ of what is being taken
  • It gets taken by using tools the others haven’t got.

Into this category we can put land, gold, oil and now we can add data.

Think back to when imperialists sailed to far off lands to plunder the resources from traditional owners. They put fences around things. A fence to someone who’d never seen one would seem like a very strange idea. The mere concept of anyone actually owning land unheard of in many cultures. There’s no value in a fence because no one can own the land! But of course, those who trespassed or tried to access the now fenced off resource were met with gunpowder – a tool the victims didn’t have access to, let alone grasp its power at first.

Online privacy and security are a lot like this. We’ve literally allowed the data imperialists to put a data fence around our lives. While we have known for a long time that knowledge is power, few people in the past 20 years have truly understood how much information we’re really handing over, and the many ways it can be leveraged economically. They, like the conquistadors before them, took it from us before we realised and they too did it with tools we didn’t understand.

Their favourite hack – hiding the truth in 20,000 word long legalese designed to obfuscate. Oh, and they offered us the sugar hit of emotional candy along the way so we could all ‘connect’ on-line – as if that wasn’t already possible with the old school internet. They’ve successfully stooged us out of the most important resource in the emerging economy – data. Henry Ford and his factory friends pulled the same trick on us 100+ years ago when he convinced us to trade in our artisanal skills and independence for highly paid piece labour. Privacy and security are the workplace health and safety of the digital era. The data wars are only just starting and we’ve got to fight back. But how?

Here’s a few ideas to get us started:

  1. Remember everything digital is traceable and on file, forever. There is no anonymity. Never put anything online you wouldn’t want on the front page of a newspaper.
  2. Don’t be platform lazy. Yeah, I know it’s easier to connect on social media platforms… but go direct when possible. Talk on the phone, get your own email client, text – heck, get some analogue FaceTime happening.
  3. Data is labour. We need to socialise the idea that our data should be our personal copyright. Corporations should be renting from us. We created it, we ought own it and it is an own-able resource – if we will it to be.
  4. We have to put our hands up high on what we won’t accept. Data breaches are unacceptable and we should punish platforms with serious consequences – and make sure it’s as unacceptable as pollution and unsafe work practices.
  5. We need to push our Governments to embrace blockchain technology and crypto-economics to enable valued, yet safe, use of data. We need to push them to protect us and our data when they have access to it and protect us from corporations who are data deceivers.

Data like any asset can and should be used for good – where the benefits are shared and protected by those whom create it.  And this is why Blockchain is the most important technology of the past 20 years. It makes the above things possible. And let’s never forget this – our Governments are no different to School yards. It’s a popularity contest. They do what gets them voted back in. What this means is that all we have to do is make these ideas popular.

Steve.

How to invest in technology

One of the most common questions I get asked is, ‘What technology or companies should I invest in? You study technology everyday and spend time large companies, so you must have an opinion’. And you guessed it – I sure do. While I’m not an investment advisor, there are some interesting things which we can be sure of when it comes to investing and technology.

The hot technology of the day will always be overpriced. We can expect that hot tech stocks, and even raw materials that go into technology will attract attention and demand that push their prices up. While this may be justified based on future expectations, it often reduces the potential return on investment. We often see this in P/E ratios. For example, the P/E ratio of the S&P500 is currently 24.37 compared to a long term average of 15, due to the big tech stocks currently making up such a big portion of it. In fact, six stocks (Google, Amazon, Facebook, Microsoft, Netflix and Apple) make up 30% of the S&P500. Sure, some stocks continue to rise like these have – but how many of them did you pick to be as big as they are now back in 2005? When it comes to stocks, I take the Warren Buffett approach and invest in Indexed Funds – that way I get all the winners and none of the cost. You can listen to a podcast I did on this topic that explains it succinctly.

Focus on the beneficiaries of the technology. The way to do this is to scrutinise social and economic structures will change due to new technology. Structures which live a layer or two outside of the technology itself, yet stand to benefit significantly from it. One particular area which is both underpriced and about to benefit from a large technology shift is certain forms of real estate. Transport historically has had an big impact on how and where we live. As we enter an era of autonomous transport, it will be easier to live further afield from major cities, and commute either virtually or in your ‘rolling lounge room’ one or two days a week to the office. While Henry Ford facilitated the birth of suburbs through affordable cars, autonomous vehicles and the work from home revolution will invent exurbs – places of great beauty within two hours of a major city. Via technology, these places will have all the benefits of a major city, but the advantage of a tranquil and desirable natural landscape. It’s possible to buy large land tracts in Geelong (1 hour from Melbourne) for a little over the median house price in the suburbs.

Right now this opportunity is wide open a few years out from when new forms of transport will change everything. It’s this type of technology investing few people ever think about.

Steve.

The Blockchain Evolution

New technology often goes through a hype cycle, but few get get hyped more than Blockchain. I imagine most of my readers are across it, if not, I wrote a blockchain 101 article you can read in 2 minutes flat. Now, I’ll put my hand up high, and admit right here and now that I’m a true believer. Before I tell you why, the image below is the reason I decided to write this.

I notice this image on Linkedin – it was posted by someone in an industry poised to benefit significantly from the technology. What astounded me was the absolutism of the statement. Even if a technology doesn’t emerge, it’s a far more useful life and business strategy to have an open mind to new possibilities.

There’s 3 simple reasons I think Blockchain will become a vital layer in our lives.

(1) It solves a real problem: It allows us to transmit things of value (like currency) without making a copy and removes the need for traditional intermediaries. We can finally trade with each other online using cryptography to create trust and transparency/anonymity.

(2) The technology has proven use cases: It has already been proven to ‘work‘ with crypto currencies. While it faces technology hurdles including excessive energy usage, a poor user experience and slow transaction speed – these are problems many similar technologies, like the early internet faced as well. Dial-up internet anyone?

(3) There’s a huge amount of financial and human capital going into it: The sheer investment of intellectual capacity and money flowing into the space almost guarantees that problems with it will be solved and new ways of employing the technology will be found.

In fact, that’s how it always happens. Cars today are very different from cars in 1920. The internet is a very different beast today compared to when we browsed on Netscape. And it’s always the three factors above which are required to keep a new technology from disappearing.

Blockchain isn’t Blockchain, rather, it will become something somewhat different from what we see and experience now. With the prize so big – it has potential to topple some of the worlds biggest industries, and so many people engaged in inventing the desired functionality, we can be certain it won’t go away. Historically, making a technology work smoothly is where the biggest financial wins usually come from.

 

What data doesn’t understand

It’s true data, and our new found ability to sift through large volumes of it, has come with many benefits: fraud detection, genomics, natural language processing to name a few. But, data doesn’t get humanity. It’s just a reflector, not the director. As a tool it has certain biasses built into it. One of which is its ability to take the wide, and make it narrow. It’s also great at finding correlation between the disparate. You know data what it isn’t good at? Detecting boredom.

We humans are weird beings and right at the point when data might tell us something is heading a certain way, we about face, and go in the exact opposite direction, often quicker than anyone expects. Probably because we love variety, nuance and something a little different.

It turns out that computers don’t actually understand – they calculate. The word computer itself used to be a job title of people who literally added things up. The large majority of algorithms we employ calculate the probability of something. That probability calculation will be based on the stack of code it feeds from. And the larger that stack, the deeper and more hidden the bias will be inside it. What this means for us, is that when we change our mind, on a whim, ‘the system’ won’t see it coming.

The stimulus we get as humans comes from the real and messy world we we live in. So much of which still sits outside of the data economy, even with all the tracking we do these days. So what does this mean for us? It means that unexpected change is inevitable, and the data wont tells us it’s coming. We need to look for it ourselves and measure it from personal human experience. Variety is one of the great human desires, and just when something is peaking in popularity, we decide to leave the building for no real reason other than the fact we are human.

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How to predict the future

Predicting the future seems like an impossible task, but there is a trick to it. It’s less about guessing what’s next, and more about piecing together what’s already here. A veritable mash up of tools, behaviour and incentives.  Sure, there will always be unexpected turns in events – economic externalities, social backlash and political events which we’ll never predict. But, the vast majority of the time, what is about to occur in business or an industry is there to be seen, and acted upon a long time before it happens at scale. The way I do it is by observing three things in particular.

Anthropology: This is what doesn’t change. Or that which changes very slowly – human behaviour. We are running a very old piece of software as humans – a 400,000 year old code, otherwise known as our DNA. By studying our human proclivities we can observe patterns which demonstrate what we value and how we’re likely to behave in a given set of circumstances. We need to study behaviour, everywhere we go. Paying attention pays dividends.

Technology: This is what does change. The tools we use to get things done, and they are in a constant state of flux. If the barriers to entry are lower enough to switch to a better, more efficient and enjoyable method of getting anything done – we will. The trick, is that very often the tool is available a long time before it is widely distributed. It first must be affordable and available geographically before we can embrace it. When we study what’s next in technology it’s easy to see where shifts are likely to occur because most emerging technologies follow price/ performance ratios which are very predictable. This happens both at the industrial and consumer level. Importantly, the eventual adoption of a new technology can’t be based on utility alone, it must also be socially acceptable to our species. Google Glass comes to mind as an example of something we simply didn’t like. Likewise, large corporations often find it difficult to embrace new technology for weirdly social reasons. Because new technology ignores both the financial and emotional investment a company may have made in now outdated infrastructure. Legacy firms often get disrupted because they fall in love with their tools and systems, instead of the problem they are meant to be solving for people. Read here – successful humans don’t like change.

Economics: This is what ties to the above two elements together. A simple way to define economics is the study of incentives. Wider incentives are what shapes our behaviour, and in turn influences the way money flows around people and the systems we live inside. The question we need to ask here, is will this technology facilitate the way people behave and provide a big enough incentive for them (Corporations and Consumers) to move to this new way of getting things done. If so, how will it change the way money, things and people move around.

So, when it comes to thinking about tomorrow, start by thinking about what’s already here today.

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Why E-Sports might just help your career

“Hey kids, get out inside out of that fresh air, stop exercising and start playing some video games why don’t you!” – Said no parent ever, maybe they should?

On my weekly radio spot this week I spoke about video games, or E-sports as it’s known. I proposed that gaming is a valid use of kids spare time, and could even help them in later life and their careers. My mum, with good intentions hated my going to the ‘dodgy’ video arcade, and later despised the time I spent gaming on my TRS-80 (yes my dude was a block, but I have a good imagination). But, it did lead me to a lifetime of interest in technology, and now that’s become a career. Occasionally we need to open our minds enough so that we can reframe an outdated perception. And maybe even back it up with some facts, so here’s a few about the E-Sports industry worth considering:

Economics: Video game sales (think hardware and software) is more than twice the size of the movie industry world wide. it will near $130 billion in 2018. The Pro E-Sports industry is estimated to be $1.5 billion this year with over $100 million in prize money, and has over 385 million annual viewers. Yes – people watching people play video games – both on line and live. In fact, the biggest ever crowd at a video game tournament was 52,000 people in a stadium in Germany.

Careers: There is currently 13,000+ professional E-Sports players. While the average annual pay packet is relatively small at $4500 a year, the top player earnings are right up there with with more traditional sports. Kuro Takhasomi took home a handy $3.5m last year and more than 200 players earned more the $100,000 for playing ‘games’.

Skills: Like any sport, there’s a natural hierarchy and not all hopefuls will make it to the elite level. Though, there is something different about E-Sports – they prepare us for the emerging world in ways few traditional sports can. Studies show they are good for rapid problem solving, brain speed, memory, algorithm awareness and management and even fine motor skills. They’ve been used to train soldiers, pilots, surgeons and it’s fair to assume their use in pre-career simulations, will continue and even extend through the use of VR and AR.

In any case, it does seem that the correlation between gamers and a desire to learn the underpinning technology is high. Surely this gives gamers an advantage in future proof technological career paths.

Social: When I mention to people I regard E-Sports as a ‘real sport’ it is often met with scepticism, and even ridicule. At which time I often remind people how ridiculous grown ups chasing dead animals filled with air to kick them through big white sticks is. All games are silly by definition, and they often take generations on the fringe before they enter mainstream culture. But after a couple of generations of computer games, I feel we are on the precipice of that shift right now. The spectator side of the industry is real, and will have wider career and industry opportunities than many people imagine.

So is it a sport? Well that depends on how you view things. Here’s one definition of Sport: “An activity involving physical exertion or skill in which an individual or team compete against one another or for others entertainment.” It fits as far as I can tell. And if you’re worried it will make society more obese than it already is, don’t fret too much. It’s only a matter of time before these games involve players in haptic suits running around on fields shooting up people somewhere on the other side of the globe.

Click here to here me discuss Gaming on 3Aw with Tom Elliot. And be sure to tune in at 4.30pm every Monday for your Future Fix.

Go play, Steve. 

Why we need to rebuild the internet

In life and in business I believe in a few guiding principles. Two I like in particular are very common across cultures:

  1. Create more value than you extract.
  2. Treat people the way you’d like to be treated.

I imagine everyone reading this would agree. Now let’s consider this juxtaposition:

What a CEO says: “We want to build a more open and connected society”

What a CEO does: Buy the 4 houses surrounding his in order to protect his own privacy.

Someone who sells privacy for a living, often without permission and tricks his customers into giving up more than they understand, wants to protect his own. The fact that I don’t need to mention the person’s name is telling. Well, you might say it’s not a fair comparison between how someone behaves in their digital and offline lives. Fair call, but consider the fact that up until last week the person in question could delete private messages from another person’s private inbox, after the messages had been sent to and received by the other party. A privacy feature he wasn’t generous enough to give to his users. Oh, by the way, I can think of another industry where ‘dealers’ call their customers ‘users’. We both get our minds messed with in ways we can’t understand and end up addicted and worse off.

It’s a well known technological trope that data is the new gold, an entirely new class of asset. And that’s where the problem lies. This asset class is so new, few people understand it. We could liken this to the age of discovery when imperialists took control of abundant natural resources, resources which were viewed by the conquered as something no one could really own or control.

The net result is that the greatest wealth creation event in the history of humanity. The Internet has resulted in a massive centralisation and control, and spawned the era of the data imperialist. Even those who understood the power of data have far less chance of leveraging it on their own, because of the dramatic impact of network effects, and zero cost digital transfers both have in creating a winner takes all economy. To quantify: the net worth of the 4 founders of the top 3 technology companies since the dot com era have a collective net worth of $281 billion dollars as of today.

The internet needs saving.

What started out in all probability as altruism – the dream of a free web funded by advertising, has become a nightmare panopticon and it’s time we pushed back. Hard.

Technology stalwart and all round good guy Jaron Lanier says we can no longer call these companies Social Networks, but ‘Behaviour Modification Empires’. Services which use algorithms to make us stay longer by giving us sugar hits of fear, jealously and other powerful negative emotions. Lanier also says that we can’t have a society where if two people want to communicate, it can only happen if it is financed by a 3rd party or corporation selling advertising. It’s worth investing 15 minutes of your time to hear him talk about it here.

But I will add a little more to his talk… the missing piece.  Personally, I hope Facebook isn’t fixed. It’s only when something stays broken that we get a chance to put something better in its place. For me that would be a social network that no one owns or controls – something funded by the people using it, without a financial corporate imperative shaping our most valued human asset – our interactions.

We need each other, Steve.