The coming changes to your house

It’s easy to forget that the places we live in are a direct reflection of our current technology. We’ve all come a long way since we lived in cave 76 (That was for all the Mel Brookes fans), and we generally are living in houses built on top of the shoulders of giants. Great entrepreneurial, scientific and engineering minds which make the modern world very comfortable indeed. We are currently on the cusp of a quite a few physical changes appearing in our homes. Before we explore what they might be, let’s think about how long some of the currently technologies in our homes have been around:

  • Letter Boxes – mail services started encouraging these to be installed in houses for deliveries in the mid 1800’s
  • Indoor Plumbing – In the 1860’s only 5% of American houses had running water, flush toilets were very uncommon until the mid 1900’s
  • Driveways – much less than 80 years old as a standard inclusion
  • Electricity – uncommon in suburban homes until the 1930’s
  • White goods – (we needed electricity for) rare in modern economies until post WW2
  • Televisions – 1956 in Australia
  • VCR’s – the early 1980s
  • Home Computers – the mid 1980s
  • Internet – the mid 1990’s

There’s many more examples, but you get the picture – where we live changes based on the technological possibilities, and their facilitation requirements of the day. So let’s run a thought experiment on what will begin appearing in homes, based on the technologies about to arrive, and those already here and functioning.

Drone delivery landing pads: With deliveries already happening they need to land somewhere. Apartment buildings are already being designed with them on rooftops, and your house will be no different. Maybe it will have an auto opening lid which closes over after the drop off has been made?

drone landing pads

Smart Toilet: I’ve written about this before – but we can expect it to be our health partner in life, and since Alaphabet had a patent approved on the smart bathroom last year, this is one of those realities which will surprise with its speed of arrival.

Smart shower: One that takes a photo of you everyday… not to invade your privacy, but to ensure it knows you have a dangerous sun spot long before you do.

All glass becomes web enabled screens: If you’ve always wanted a house with a view, well it’s about to come a lot cheaper than anyone expects. All the glass in our homes will become web enabled screens. The resolution of our windows will be indistinguishable from an actual view into the real world. All of a sudden anyone can have a real time, harbour view, which changes perspective on different windows in the house to give perfect perception in real time. Maybe those rich people with actual harbour mansions will make money selling their views via a live feed cam?

Charging stations in all driveways: Our driving future is all electric as is out entire economy. Expect every place cars stop and rest will have a charging facility on hand. If they ever stop – I’ll probably send mine out to work for me when I’m not using it.

Virtual Reality Room: It will be a bit like the home office was, or maybe part of it. We’ll conduct meetings with work that feel so real, we’ll wonder why going to the office is even necessary. We’ll also use our VR rig to shop online for things we want to touch and experience. Our haptic gloves and suits will assist in the purchase process. We’ll also use it to choose hotel rooms, holidays, and even do exercise. In the latter case we’ll have a treadmill which keeps us stationary while we seemingly move around and explore other worlds

Of course the list of ‘new fixtures’ in the home will be longer as many forms of technology will change our habitat. And quite frankly that is the key – not that the technology makes it possible, but that entrepreneurs and emerging startups shine a path on what is possible and make us want it. This is where tomorrows economy will be made up from. Just like Bill Gates promised to put a computer on every desk in every home, and Jobs put one in your pocket, you can put something in our house as well – and you need not invent the thing in question. Exciting times ahead.

Here’s a little radio interview I did on this topic yesterday.

New Book – The Lessons School Forgot coming soon.

How technology can disrupt a Government.

With the inauguration of the new President in the USA today, and what seems like isolationist policies creeping into the western world (Brexit) I thought it would be worth exploring something most people tend to forget. Any government is only all powerful as long as the system it operates under is stable, and the people allow it to continue to control its market.
A Government is just like a business in many ways. It has services, it sells products, it own facilities, it builds infrastructure, manufacturers things, it has employees and managers and an executive team and even a quasi CEO. And of course it has revenue sources, mostly taxes, but some revenue from its non loss leading ventures. It also has customers (the tax payers) who, like all customers like to reduce the cost of dealing with the ‘business off Government’. They will minimise their tax, and avoid non-essential expenditure. And just like all customers they expect a lot in the modern age. While the government is a monopoly in most of its realms, what if technology could assist us to ‘go around it’? Could a Government be disrupted, in a non military, non-coup kind of way? I say yes.  We’ve seen industrial businesses go broke like Kodak and entire industries brought to their knees by emerging technology, such as the music industry, so how could it have a similar effect on the Government?
It is important here we remember knew technology has historically changed the fortunes of entire countires and empires. Empires got raided by countiries with better technology (South America) and shipping put England, France and the Dutch in dominant positions pre industrial mercantile / colonial era.
Gov spotlight
Here’s a few areas smart Governments ought be paying attention to right now. We are on the precipice of exponential change in the systems they have relied upon for centuries, some revenue sources are about to crumble.
Digital Residency – Estonia now allows people to become virtual citizens. A citizen who economically can participate in their economy, without having a physical presence in the market. While this seems super radical, it is in hindsight, inevitable. What we’ve seen on a corporate and industry scale, is very likely to translate into a logical step for nation states.  This residency allows banking, business, trading as if a citizen, all using web based technology. By doing so Estonia will attract money from overseas without human movement. The start of the location independence for humans. This is an important and significant change in the global citizen landscape. For the first time mere humans may be able to shift their income to offshore low taxation markets, just like multinational corporations. By enabling entrepreneurs, freelancers and new web based business people, this could change the fortunes of countries in ways we are unable to yet imagine.
Post Fiat Currency – At a time when it seems that Europe is losing its nerve, and the Euro  is in doubt,  Bitcoin will continue its march to fill the void and become the first sans nation state currency since gold. An untraceable digital currency can circumvent the ability for any government to tax earnings if the owner is invisible. Businesses increasing acceptance of bitcoin, and the benefits it bestows upon emerging economies means it will eventually take hold, a bit like the internet did. What’s amazing about Bitcoin is that  allows low cost international transfer and storage of money independent of any Government. It’s potential for tax base erosion can not be underestimated.
The end of petrol cars – The money many Governments receive through fuel excise is about to evaporate. Now that all electric cars are closing in on petrol car for both price to buy and range of KM’s travelled per charge – people will quickly transition all electric options. This is also inevitable because the cost of the petrol, people currently pay for, will be enough money to make the payments for a new car. The choice consumers will face is spending the same amount of money each week and keep the old car, or, to spend the same amount of money each week and have a new electric car. It’s easy to see this will cause a rapid changeover. Electric cars only cost around $2.50 to charge – and many car companies like Telsa provide charging for free. This means the Australian Government will lose around $20 billion in excise very quickly if they do not move to a per KM tracking model.
Coal has a few short years left – Solar is on the precipice of eclipsing all fossil fuels for power generation. Many solar systems can now generate electricity end to end lower than around 7c per KwH, which is the average cost of coal generated electricity. Some solar facilities are getting as low as 3c per KwH. This means coal will no longer be relevant and go the way of the CD, dumb phone or film camera. On top of this, solar improves efficiency by about 25% every doubling of manufacturing capacity – it’s called Swanson’s Law and our entire world will be run on solar by about 2025 based on the current technology trajectory. The Australian Government will lose billions in yellow cake royalties as well. The Sun is ‘free’ and provides enough energy to earth in 1 hour to power all of humanities needs for a year. Now that we are learning to use it, we are about to enter the post fossil fuel era. Advances in AI, will only accelerate the learning curve. Coal is 4% of NSW state budget and 2% of Qld – A little under $2B in royalties per annum for national Gov. This isn’t an “if”, it’s more a matter of when. Great for humanity, bad for government – let’s hope our incentives aren’t replaced with taxes or we’ll end up with the first real version of daylight robbery!
Education will be free – Few people in my country are aware that education is a top five export for Australia contributing more than $20b a year to our economy .MOOCS courses (Free Uni courses) will upend the Higher Education bubble and save people the need to invest $100-$200K for a degree, which we’ll all be to get free, from Harvard! This means it wont be long before the educational bubble bursts. The overseas students will go on line to ‘more reputable Universities to any in Australia’. Already leading edge employers are taking notice and care less about formal qualifications and more about ‘work completed and informal qualifications’, the MOOCs will expedite this process leaving non ivy league educational institutions wondering what happened.
Antitrust Chicanery – Not since Standard Oil (which controlled 88% of oil flow in the USA in 1890) have we seen such domination of industries. Powerful companies are tricking Governments to maintain inordinate levels industry control. Many Monopolists abusing market power as they literally own the new digital infrastructure or ‘meta structure’ but claim their business is less powerful because their revenue is not related to their core consumer benefit. I call this the related revenue realm. For example Google claims it’s in the advertising business where they have a single digit market share, yet they are really in the search business of which they have around 80% share in most markets. However, because they get revenue from advertising they get away with running a monopoly. They should be split up. The same can be said for Facebook today and possibly Amazon in a near tomorrow.
The future is freelance – As technology reduces the friction of contract work, more companies and workers will move to mutually profitable freelance arrangements. For governments this means their income tax gets collected later. It is also collected at lower rates if people take advantage of the potential company tax structure available as independent workers. This is a 15% revenue loss from conversions (Our highest tax revenue category is PAYE in Australia). It’s foreseeable that a company in the near future will have exactly zero employees with thousands of people working for them as freelancers. Once every individual operates under a company structure, it becomes much harder for a government to differentiate tax rates and give advantage to the so called corporate employment providers. The gig is nearly up on differentiated tax rates if the Government wants to maintain income tax revenue.
While this blog post is already quite a tome, we could add the impact of Facebook not taking responsibility for what it advertises – read here fake news – which only happens when governments let it get away with it, or want it?
We could also add the impact of outdated election voting structures which, lets face it could be entirely re-imagined if an actual ‘leader’ emerged and had the guts try and change it. This makes me wonder why the Australian Gov is about to waste $160m on a plebiscite when we could ask directly using digital tools with an app all voters have access to? Maybe it will take tax revenue erosion before the wastage we see in Government today gets addressed?
But hey, all this is common sense, and the problem that that is it isn’t very common these days.

We need to open up the digital black box

Imagine for a moment you bought something at the supermarket, a packaged food you intend to eat and it didn’t have an ingredient list, let alone a nutrition panel. You’d think twice about consuming it wouldn’t you? In the early days of packaged foods this was the way things were. It was exactly as explained – we had no ideas what was in the box. Before the early 20th century food and medicine we consumed was a total crap shoot. There were literally no regulations, or information as to what we were all consuming if it wasn’t in its raw form. Eventually, we collectively decided this wasn’t good enough.

Boxes filled with secret ingredients, sometimes dangerous ones, developed by the manufacturers so they could sell more and keep it shelf stable longer, were marketed as natural and safe. Quite often the labelling on food and medicines was down right dangerous. The changes didn’t come easy though, manufacturers (Coca Cola, Kelloggs, Phillip Morris, Johnson & Johnson, Unilever, Nestle to name a few) not only sought to mislead to sell more, but often claimed the ingredients in the box were some kind of trade secret that, were valid in a capitalist society. A black box of secrets? –  Sounds a little like something that is going on today doesn’t it?

mind control

Everything we consume in digital form today comes with its own secret set of ingredients. We are ingesting information into our minds that might shape our lives as much as food does. Yet, for some reason we don’t question the opacity of the digital black box. We need to also to be smart enough to realise that shaping peoples minds could well be more dangerous than addictive and unhealthy ingredients are. They don’t just shape us, but they can reshape geo-politics as well, maybe even democracy. The lessons of history are easy to forget, especially when others fought the battles for us before we were born. It’s possible to take for granted the toil undertaken for the civility we bask in today.

A new revolution has arrived with a new set of corporations designing our consumption patterns, and just like before, the behaviour is the same – the large companies at the front line, call ‘competitive secret’ in order to profit seek against an unaware public. We instead need to push back and ensure that the society being built, with a meta structure on top of it, is one we want to live in.

It’s time we exposed the ingredients in the algorithms that shape our digital existence. We need this in the same way we know ingredients in packaged food. Algorithmic Nutrition Panels might just be the start of a more informed society. People might finally understand why they’re addicted to Facebook or Buzzfeed and why they see what they do on the screens in in their lives. It might just start a movement, one in which people realise what they’re actually giving away and why it matters.

What goes in our mind, is at least as important as what enters our mouths. It’s worth mentioning here that we are only on the precipice of the data deluge. The pending trillion sensor economy made possible the internet of things will mean every human interaction involves an algorithm. Algorithms as trade secrets, will increasingly shape our world and our lives, for as long as we tolerate it.

Our future should be one where we sell our data

In an age where data is money and we have no choice but to give it in order to participate in the modern economy, it’s about time we worked out who owns what. Call me a technology utopian, but here is my starting point:

All data put in a web platform by an end user should be owned and controlled by those who created the data via their content. People should be able to see all information that any digital company, for example GAFA collects and sells about them, at a point in time, on demand.

What we need to do is actually quite simple and it starts with two things people need to know:

  1. Their data has significant commercial value.
  2. If enough people demand it, the laws will change in their favour.

Yep, everything we need to know about modern politics is that the voting machine is a popularity contest not too dissimilar from high school. The most popular idea wins.

If it becomes part of the internet narrative that data about individuals is valuable and they deserve to ‘own’ it and make money from it, the status quo could change very quickly. Now, I don’t think we could motivate enough people to push for this change through the political process, but I do believe that some savvy technology entrepreneurs could do the job. What we need is a reversal of the current process, so here’s a thought experiment:

Current Situation: Based on our internet behaviours in search, social content, pages visited, geolocation and other web based activities, AI predicts the probability that we are in a particular market to purchase something or act a certain way. This information is aggregated and sold to advertisers looking to win that future purchase.

Zuckerberg Modern Big Brother

Proposed Startup: Based on our actual intentions, we register our desire on site X to purchase from category Y. Let’s imagine you’re in the market for home loan. Your data is released to prospects who pay for the right to access your information. The creator and ‘owner’ of the data is paid by companies who want to sell to you – for the opportunity to access your digital truth. But in this instance, it’s not a crapshoot of demographics, or behaviour patterns and metadata which might capture 1 in 100 people who are ‘actually’ in the market. Rather, it’s brands buying the opportunity to sell and competing to sell why they are better than their competitors. They get direct access to real prospects ready to spend their money.

For all I know, this could already exist?

This wouldn’t work in every category and it wouldn’t help brands who rely on impulse purchases or those with low price points. But if we want the internet to be permission-based, remove the scourge that is data pimping and empower the people trying to connect on the web, then we need this reversal. There may be some other solution, but now that the data and tracking genie is out of the bottle, at some point the current asymmetry of the internet needs to be rebalanced or the egalitarian dream might just turn into a nightmare.

It’s been nearly 10 years since I owned a phone

I still have a device which I can use to make calls, but it’s not a phone. I and most other people these days have a globally interconnected super computer. It so happens to have a feature which can make calls. Simple evidence resides in the number of times we interact with it daily, versus the number of calls – they are almost insignificant. We touch our phone hundreds of times a day and we might make a few calls. (Count for the next few hours if you don’t believe me). Here‘s a picture of the last phone I owned below.

Nokia Brick

It’s hard to believe it has nearly been 10 years since the iPhone disrupted the economic time continuum – for a total of 3363 days we have literally have NASA in our pockets. A personal super computer that 20 years ago it would’ve literally cost several millions dollars. And today, it is free. We get the mobile phone for the same price of around $50 a month, but with the super computer as the free prize inside. And while we all know it has impacted some obvious industries like news, media, music, mapping and photography to name a few, it is much more than that. It’s a bit like a new Neo Cortex which is why we feel so uncomfortable leaving home without it. I personally believe it is the start of technology merging with our biology. I’m certain it will enter our body, we can already see the trajectory of the technology getting smaller and smaller and closer and closer to our bodies. We already have wires coming out of it, and directly into us, eventually they’ll be attached permanently, and soon after the tech will aside inside us.

While this phone super computer has numerous life benefits that come with it – it isn’t without it’s own set of externalities.

The Privacy Fallacy

“If you don’t do anything wrong, then you have nothing to worry about with privacy.”

We’ve all heard that before and there are many problems associated with this proposition.

Firstly, it has attached to it a basic assumption that only illegal or immoral activities can be used against us. Secondly, many people are forgetting that our phone super computer tracks many activities without us inputting or extracting any data at all. It has a number of sensors which (Ironically like a human senses never stop working) – they are constantly listening in the background to our environment and sending back information to big brother. Accelerometers, Gyrometers, GPS locators, Altimeters, Light sensors, Cameras, Sound receptors. The GPS even works when the phone is off the grid. And here is my personal favourite; Siri records everything we’re saying, all the time, if we agreed to its terms, and most of us do without even reading them. Some of the stuff it knows outside of our web surfing, data input and info requested can be of the most value to governments and corporations.

The problem with the privacy issue, is that data can be converted into discrimination. For example, an innocent person could be put on a watch list because unbekowns to them they associate with say a hacktavist. Just by their phones super computers being in close proximity to each other frequently, a person could be falsely targeted. It’s also easy to see how various forms of insurance could be refused based on private data collected. But we won’t know what the limits of these discriminations until they have already happened. No one has read the back of the cereal box…. (The Terms & Conditions). We are literally playing a game we don’t know the rules to, and this is a very dangerous proposition indeed.

We can’t stop it, but we need to civilise it

We can never stop data tracking. No technology in history, regardless of its externalities has been able to be stopped once released. Especially if short term benefits are greater than long term complications. So we need to civilise the internet – like we civilised cities and factories in the industrial era. We need the equivalent of workplace health & safety, car design road rules and environmental protections, but for peoples data. And we cannot leave that up to the corporate owners of the platforms we use – like all companies their basic incentive is to maximise short term shareholder wealth. What we have now, is each company setting its own laws of usage which is as crazy as it sounds. Especially when participating in the modern economy requires us to use the platforms.

We need a macro generic set of Terms & Conditions for all digital services – where companies only report exceptions. They need to be written in language everyone can understand with consequences laid out. it needs to be taught in schools and in society. If we as the collective users of the internet have the wisdom to force this, then the utopian dream of the web can recommence.

Cars, phones and drones – where disruption comes from

There’s a lot of talk about young adults having far less desire to drive. Car purchasing has declined by 30% with 18-34 year olds in the past 10 years. While the number of teens with a drivers licence is nearly in free fall. The number of 16 year olds with a drivers license is down 47 percent in past 20 years, while 19 year olds with a drivers license declined by 21 percent in the same period. Today it’s just over half of them who can get in a car and literally drive themselves around.

And that’s the point, unless you’re really into cars, the driving part is not the core benefit the vehicle provides, it’s the connection to people. When I was growing up, we’d use our cars as a tool to hang out, meet each other, go the beach, the mall, the main street and to parties. It was our only way to connect with each other en masse. It’s clear that we can now do that with our smart phones. If we look deep into the emotional benefit the car provided, then it is fair to say that the smart phone is quite a good substitute for it. It can take us anywhere – live video feeds, chatting in groups, it creates a quasi virtual-physical existence for its users at a fraction of the price of a car. I’m also starting to wonder if many kids prefer public transport these days just so they can stay connected on the phone for the entire journey.

While it’s clear being ‘connected‘ to friends via the phone could be a virtual substitute for the car, what about when they want to get real, be physically and in the same space? Well, the smart phone does that too. If they need to get somewhere off the transportation grid they can summon private transport to wherever they happen to be, they don’t even need to be at a physical address. A smart phone does many of the things a car can do, many more, and it comes at a fraction of the cost at around $50 a month. It turns out that the smart phone is one of the disruptive forces for the automobile. While cars will still be needed into the foreseeable future, this does present a financial problem for auto the manufacturers. Let’s take the following thought experiment.

If we all start ‘sharing cars’ instead of buying them, the volume of cars needed will be far fewer. In Australia 75% of the fleet are private, non commercial vehicles. It turns out that these cars are idle 90% of their available life. Which means that the fleet of cars needed could shrink significantly where car sharing is the norm. Sure, we’ll need more than 10% of the cars we have today; Yes, they are only being driven 10% of the time, but there is a large overlap of the time of day in which we need our cars. But even considering this, the number of cars required will be significantly less. Now let’s add to this the potential convergence of private and public transport. Cars as mini-auto buses with unspecified routes, picking up a number of independent passengers on route. Algorithmic car pooling for profit.  The number of cars needed will fall. Maybe we’ll only need half as many cars as we have now.

This is where the financial complexity lies. The economies of scale afforded by 24/7 production of automobiles will be under pressure. Prices of cars will potentially rise for the first time since world war two. The net result: lower volume manufacturers develop a competitive advantage because they are small and have an infrastructure more suited to an economy driven by software. Companies like Tesla or those with an outsourced manufacturing model like Apple and Google enter the fore. They could very well become the dominant auto players in the tech era. It feels like industry consolidation is inevitable and some auto players may even go bankrupt. We will see new players emerge, with new business models as usage patterns change and we move to the era of the self drive car, or should we say the rolling computer.

Self driving technology is evolving at a such rapid pace because the Law of Accelerating Returns applies given that they depend more on software and electric power trains than industrial era technology. But, the shift to self drive is not without it’s challenges, or even potential alternatives. Seeds of disruption are constantly being sewn, even the disrupters are being disrupted, and sometimes this happens before a new technology achieves mass adoption. I constantly try to remind myself than our brains work in a linear fashion. That exponential change isn’t something we’ve evolved to comprehend. Let’s take this example of exponential growth:

  • 30 linear steps would take me around 30 meters. But 30 steps doubling the distance each step will, wait for it, take me around the world 26 times.

The technology behind the entire transport industry is evolving exponentially. It’s with this that strange unexpected things can happen. While we all expect car sharing, and autonomous vehicles to disrupt the transportation field, maybe we’ll curve jump that altogether and finally get flying cars instead. You read that right – I’m talking about drones. The cost/performance ratio of drone technology has improved by 142 times within the past 6 years. If this trajectory continues then Self Flying Drones – and yes, they already exist, could usurp the self drive car altogether. The literal fork in the road could be the sky.

Ehang-184 personal flying drone

The technology itself isn’t the only thing we need to consider when it comes to disruption.

We need to take into account the cost of switching, ethics, infrastructure and legal framework. In this sense self drive cars have social and legislative complexity. Cars currently have a 7 year replacement cycle and during the period of transition to self drive cars, drones exponential improvement will continue unabated. If we do get safe human transport drones, and I believe we will, then we don’t need to build anything – the sky becomes the road. We could have ‘layered traffic’ above existing roads, stacked 5 drones high and then code will equal road. In this case we won’t need to build new physical road infrastructure to cope with autonomous cars. Instead we can just set up new laws for Autonomous Flying Vehicles.  If this happens maybe cars will become something our children laugh at.

There’s a rare opportunity to attend Singularity University in the Southern Hemisphere to learn more about accelerating technology. An SU summit is being held in New Zealand in November. I’ll be there absorbing everything I can – Why not join me? More details are here – I imagine it will sell out quick given the 2 year plus waiting in the Silicon Valley Campus.

You’ll never believe what these guys are really selling!

The other day I was in the airport where a new startup was sampling itself. It’s an app to jump the coffee queue. I’m always stoked to see people having a go at a new business and got them to give me their pitch. It’s always good for entrepreneurs to practice unprepared. Then I realised I got a coffee but didn’t use their service. And here’s why:

Part of what I’m buying is the wait.

Yep, some of the people getting their morning java actually enjoy the wait. The wait is what is being sold. Sometimes it’s the conversation with the Barrista, and sometimes it’s the walk to the cafe. I guess we can throw the coffee on that list too.

Morning coffee

This is why you’ve seen a hundred other apps for people to jump coffee queue and they never quite work. I’m also wondering what happens if the app is successful?  Wont all those who used it end up ‘in a queue again’ via a digital deli ticketing system? The problem probably isn’t the arrival time, but the output bottleneck in peak demand times.

It;s another reminder that an effective business model isn’t just about demand – it’s very often about why we buy, and the model and the friction… and how money can be made through the transaction process, not just with the transaction itself.  As for the entrepreneurs, they did the right thing by having a crack. They could prove me wrong and I hope they do. Their worse case scenario is that they learn plenty and pivot closer to the success they deserve.

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