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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How technology weirdly solves the problems it creates

The erudite Kevin Kelly says that the solution to problems caused by technology is more technology. And I couldn’t agree more. It’s easy to think that regression might be the solution, but once we realise that technology is literally its own organism, with its own agenda, then we can pretty quickly come to the conclusion that the best way to fix things is to work with the world and its natural trajectory. And technology, given it was invented by natural beings, is simply a force of nature.

I was thinking about what something like the Pokemon Go phenomenon could do if such gaming mechanics where put to positive use. Then weirdly I asked the barista in my local cafe what he did on the weekend and he said he did a fair bit of walking – 50km’s to be exact.. I said, oh cool, do you go up to the mountains or along the river. To which he replied just around the suburbs, no where specific. I said that’s interesting…. and then he finally admitted he was chasing Pokemon.

It got me thinking about digital technology being partially blamed for the obesity epidemic, especially in children… and most likely that digital technology is the solution too. Pokemon Go is one way to get kids moving, but maybe the new Lilly Drone (seen below) or some other kind of Dronian Angel could be used to watch over and follow kids as they move around town. Maybe they can walk or ride to school again as it may alleviate some safety concerns? Who knows?

The point is, we need to open our mind to real problems emerging technology can solve. How it can bring back some positive patterns of the past (walking to school) and invent entirely new possibilities. I think it is exciting.

If you want to read the best book in recent years on this topic, then be sure to get onto KK’s latest effort – the Inevitable. I savoured every word.

The future of stealing music and everything else

Before technology allowed for recorded music, it was a pretty difficult thing to steal. You’d listen to the medieval minstral and maybe sing it to yourself after they’d left town. Heck, I’m sure that’s what they wanted. In those days, money only happened when they we’re ‘in the room.’ But then music changed…. it was something you could listen to when the musician wasn’t present.

When we entered the magnetic tape era, it become relatively easy to copy or ‘steal’ music for the first time. When I was a teenager there were a few ways of making copies of music:

Tape it off the radio: Wait patiently during the American Top 40 for your favourite song to come on, and hope like hell the DJ doesn’t talk over the top of it and screw it up. It was annoying to hear their voice each time your re-listened to it.

Tape it off the vinyl record: Have a friend who had the money to buy the record and tape record it onto your tape. We’d often do a swap – buy one record each, and tape each others – it was very give and take. A bit like the web should be – let others access your files while you access theirs. The basic economics of trade – by sharing we both had more.

Tape it off a tape: The old school double decker tape recorder – put the tape in and make another version off it.

Steal it from a music store: Heck, I’m sure some people did this, in those days it was the only way to get a perfect recording. All the other methods above had quality issues as the copies were imperfect, until…

… we entered the digital age. All of a sudden anyone could make a perfect copy, from perfect strangers. Napster…. Limewire…. Kazaar……Pirate Bay…. Youtube. Some got shut down, but the music never stopped, and the battle is still alive. It’s a battle people selling recorded music will never ever win. The technology is an organism with its own agenda. So what happens next when there is no device or host of the music?

“What – no host? What are you talking about Steve?”

20 years from now you’ll have a chip with petabytes of standard holding capacity. It’ll be attached to your body, and most likely inside it permanently. It will be an extension of our brain capacity in much the same way as our notebooks, libraries and computers are today. Except, it will record everything perfectly. It won’t just be what we interpret, it will be an exact copy and it will be inside us. Every sound, every song, every visual, every movie we ever hear or see will be on recall on demand for us to re-listen to and re-watch on demand. We only need to be exposed to it once and we’ll have a perfect copy, forever.

Will that be stealing? 

It will be difficult to police, because the technology will arrive and be implemented into ‘people’ before most industries realise the implications – especially those pertaining to copyright. When our technology merges with our biology, when it becomes part of our permanent memory and experience how can it be stopped? How will corporations even know what we are holding in our organic data banks?

The connected augmented human

The reality is that all biology and technology is built upon the concept of ‘copying’. Everything from single cell organisms, to our DNA, to manufacturing, to emergent technologies. Copying is ‘the’ feature, not a bug. Any business model built on this idea that all copies are controlled by the originator is flawed. It’s a business model that worked for a blip of time for humanity during the 20th century – it was the anomaly. If any business wants to survive in the future, it should be built around the idea where things getting copied is what you actually want.

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What your garage & spare room can teach you about the future

There’s a pretty good chance your spare room and garage is full of yesterday. The equipment, events, life stages, projects and stuff, but mostly ideas of what mattered then. Unless you clean it out (and I know you’ve been planing too for some time) it will be pretty hard to fit anything else in there. In fact, you might have been planning to clean it out to make space for that new project…. some clean floor space to get that idea underway…. some space to let the new come into.

Garage full of junk

Our brains are like that too. They need a spring clean. I’ll go even further and say we need to unlearn some of our outdated ideas from our past. Make room for the new truths of the world we are about to enter. The future will arrive regardless, best we make room for it mentally.

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The tradeoff Startup founders must never forget

Them:

So, we’ve just nailed our MVP and we are getting some real traction.  Next we’re going to raise capital, get some funding. We’ll probably go to the Valley as it’s easier to raise there. The valuations are more generous. We’re super pumped, finally getting our startup off the ground.

Me:

I thought you were an entrepreneur? 

Them:

What are you talking about? Of course I am – didn’t you hear what I just said?

Me:

Yes, but here is what I heard….  That you’ve finally got something people want, you’re probably solving a real problem and you’re on your path creating value for others, and eventually yourself. But in this process, you’ve got caught up in pop culture. You’ve forgotten that a big part entrepreneurship is independence – creating your own path. So, you’re off to raise money and get caught up in someone else’s objective – that of the venture capitalist. The same group of people who’d rather see you fail trying to build a billion dollar company,  than help you build a $10 million company. Their business model you see, is based on the former, not the latter. 

Venture Capital - the downside

If there is anything startup founders should remember it is why it’s worth doing at all. Startups are hard, and rarely a path to riches. Entrepreneurship is more about exploration and freedom than money. If you want to be rich, there’s more chance of that happening being an employee of a company that already has a billion dollar valuation.

In both cases: a funded startup or being employee – you’ll compromise control. In that case you may as well have the certainty of money that goes with stock options and employment. If you want to be answerable to anyone other than your customers that is.

It’s a rare event indeed when the deal terms favour the founder. Real entrepreneurs find ways to make money independently with that anti-modern thing called a profit. For every example of an entrepreneur succeeding with funding, there are 99+ that do not. It’s a bet I’d never take unless the VC came knocking on my door and / or I could maintain total control and independence.

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What do Google and George have in common?

Famed venture capitalist Marc Andreessen is known for doing lots of things; he invented the first graphical web interface, he said software is eating the world, and his motto is that he has ‘strong opinions loosely held’ – which I dig. We all ought to be able to change our mind when new information arrives.

And let’s face it, new information is arriving daily with new possibilities to match. Take this recent quote from Andreessen:

“One guy can now build a self driving car. We recently backed a founder who had built his own self driving car. Literally, one guy can now build a self driving car. Ten years ago this was like a DARPA Funded Grand Challenge Research Project. Five years ago this was a team of a thousand at Google. And now, it’s George. It’s one of those things (AI & machine learning) that looks like it’s about to tip, there is one George today, and a thousand Georges tomorrow.”

George & his self driving car

He was referring to George Hotz above.

The insight for entrepreneurs is that the pace of change is faster than a linear human mind can cope with. That idea or technology that you think is just a little too early probably isn’t. The most important thing in society, economics, business and Government today is the law of accelerating returns. And this is just one example of it in action.

If you you’d like to learn more, there is a rare opportunity to attend Singularity University in the Souther Hemisphere. An SU summit is being held in Christchurch this 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.