Could there be a state of Silicon Valley, a dream political unit in which innovation can be represented unhindered by the problems typical of the old industrial era? This is what Tim Draper is proposing in his plan to split California into six states. The proposal cites the reasons of oversized California compared with other states in terms of population, geography and economic power, the lack of proper political representation and poor administrative services. The movement behind this proposal already has a website for marketing and support gathering.
I assume a lot of effort went into the design of the territorial make up of the new states. The logic behind this blueprint must consider the history of California, the demographical distribution and its group interests. It is clear though that beneath this general dry presentation that the high-tech are the key influencers. What they really want is to have one state for themselves, the state of Silicon Valley.
This is fascinating. What an idea! On one hand one could think that this is madness, an exaggeration, one of those crazy ideas that are doomed to failure from the beginning. It could be interpreted as a sign of out-of-touch grandeur of companies that have achieved colossal success at a global scale: the Twitters, the Facebooks, the Apples and the Googles. It almost sounds like a prank. On the other hand maybe the people behind this proposal are onto something. Tech companies are moving much faster than Washington, they have caused a revolution that is changing the economic landscape not only in terms of novel technological products, but in terms of structure of workforce, education, social relationships.
Regulations are slow to adapt. Maybe this is a good thing and a bad thing in the same time. You don’t want to make mistakes that affect future generations because you made a quick bad decision or because you procrastinated for too long. This plan goes for speed. The California six-way split is wanting to accelerate the pace of regulatory change and create a power base for the tech class that can rival those held by the finance, energy, manufacturing and agricultural groups. The Twitters, the Facebooks, the Apples and the Googles are the new dynasties as the Morgans used to be (they still are to some degree). Or perhaps the likes of Kleiner Perkins Caulfield & Byers (Tom Draper is representing one of them) are the real dynasties pushing for this change. If somehow through a miracle this happens, other states will follow. The consequences are incalculable.
Update 3 Jan 2014: I found this map created by professor Andrew Shears who created a fantasy version of US based on past partition proposals.
Mike Nobis saw how the financial crisis led his customers to postpone orders until the last minute, forcing his 100-year-old family printing business to work faster to deliver on time.
Business invests more in software to increase efficiency and reduce the headcount
See on www.bloomberg.com
In a rapid succession in the space of two weeks, two major Australian banks raised a red warning flag signalling their deep concern of what could be their biggest existential threat. The threat comes from not from the Bank of America, or Citibank, HSBC or Bank of China, but from unexpected sources, in form of nimble technology companies from Silicon Valley.
Commonwealth Bank CEO Ian Narev expressed this view at the G100 Congress in Sydney in May this year.
The new competitors are “the Apples, the Googles, the Samsungs, the PayPals, the credit card companies, who can pick particular slivers as a result of the application of technology into financial services and compete. We need to be prepared for that.” he said.
Ian Narev alluded that regulations have to be adapted to reign in a new type of competition. The trouble with this competition is that there is no precedent. Disruptive innovators create solutions that address needs outside the boundaries of traditional models before invading the established markets threatening to displace the incumbents. What to do?
Take for instance the case of Dwolla. Founded by a 28yo young entrepreneur from Des Moines, Iowa, USA, Ben Milne, Dwolla is a 12-person startup that invented an online payment system that bypasses credit cards completely. This startup is onto something because large financial institutions are very interested in this idea. Venture capitalists are backing the company with money. Just last month Dwolla received $16.5m in funding, its biggest investment yet. It is hard to predict the impact of Dwolla and other similar innovators on the banking system in the near future if the momentum continues.
A couple of weeks ago, the ANZ chief executive Mike Smith described the technological innovation wave that is about to hit the financial industry as “terrifying”. Smith made this statement to the board based on information received following a study undertaken by the bank during a tour in California. “Much of it is being driven by small companies that are very active in payments but very well-funded, and they are moving very quickly.” It is interesting how quickly ANZ followed Commonwealth to look at what is happening in the Silicon Valley. Something must make them nervous.
Reputable banks have some of the deepest moats protecting their business from new competition, something that Warren Buffet always liked about banks. But rapid changes can ruin that assumption. The transformation will go beyond improvement of operations. It’s about service, it’s about having a different presence in the peoples’ lives, with new perceptions. If a “normal” bank is still something that brings to mind images of prestigious physical old buildings (you-come-to-us), the new banks need to become virtual, quick, creative and very social (we-come-to-you).
Will the disruptive innovation brought by super-smart technology companies become a systemic threat to the traditional banking system? Maybe not, not entirely that is. It is more likely that a wave of restructurings, consolidations, and small bankruptcies will re-shape this business. Banks that “read” the market signals will either buy some of the successful fresh innovators, or innovate themselves, or establish alliances to surf this new wave of opportunities and reap the benefits. Others that refuse to see the threat may well as disappear.
It’s not just a smart move, it is a brilliant move. Facebook brings back the glory of making software. While many large IT companies rushes to control both the software and the hardware as a way to dominate the market, Facebook is attempting to succeed by just being best at designing great software. In a way this is similar to what Microsoft has done through their partnership with Nokia, only at a grander scale. Google must be secretly brooding now. For a moment Google seemed to have it all, software and hardware together set in motion in a big wave overwhelming their long time foe, Apple. But here it is, the nightmare called Facebook is back on the front page. All that money poured into Android and Motorola hasn’t yet given any assurance that it will lead to world domination as planned.
The beauty of Facebook Home, as a concept as we don’t know how successful this is going to be, is its simplicity. Facebook created a social software layer on top of an entire ecosystem: Android operating system, hardware manufacturers, telecommunication networks and application developers. They have a phone, without having a phone. If there is someone else affected almost as much as Google is that must be Samsung. They have tried hard to build a services shop on their phone for some time, but with not much success. The media still calls the Samsung branded software applications ‘bloat ware’. And here it is, Facebook just comes along and in one swoop they capture the attention of all those eyeballs. At least what they hope they will do.
The move is brilliant, but it doesn’t guarantee success. Facebook desktop attraction started to lose some of its lustre and consumers have cooled off a bit. It will be interesting to see how the consumer will feel when Facebook is in their face all the time. Mark Zuckerberg describe Facebook Home as “highest quality experience you can have on Android“. If this is true, then the chances of broad adoption are greatly enhanced, but if not, the brand might suffer. The highest risk for Facebook is that although this move is brilliant, it may be too brilliant for their own good. Users may feel Facebook is too much into their lives. Success could irritate because by occupying the space in a dominant way it causes resentment. We have to wait and see.
It Facebook is successful, this may lead to the demise of good old phone number system. Instead of calling your friends using the telephone system, you just talk to your friends using the Facebook voice or video chat. Your Facebook ID could well be your next phone number.
In an interview given to Robert Scoble, John Gotts, the founder of Connect GOP, talks about how social media can politicians communicate with their constituencies they represent. This could be an unappealing story, one of those that you glance over while rushing to the next exciting news, if it wasn’t for the some very interesting remarks John made about how the technology can transform the political process.
First of all the magnitude of this project commands attention, because if it succeeds, it will transform the political process. Connect GOP is building a database of as many voters as possible and help their representatives use that data to get a pulse of what is going on and communicate their political messages. Here is the interesting bit: Connect GOP wants to store the experience of all campaigns and sift through the data to learn from past mistakes and successes informing the new campaigns to do better. But this is not your typical analytical tool. The system will be designed to provide the representatives with a real-time process that takes the simple political message and morphs it based on the past experience in a message communicated through multiple social media platforms and traditional forms of communication such as email. This has some massive repercussions. The big TV ad campaigns will become much less relevant. The true campaign will be almost invisible to the public eye, and become a stealth operation reaching with much better precision the same audience if not larger with targeted and personalised messages.
Secondly, John’s remark about how many intermediate jobs that exist in the current process will disappear thanks to automation and data analysis. Like office operators in the 70s and 80s, the media staff will be threatened by systems such as Connect GOP. Forget about the days where the communiques where custom crafted on each occasion in each district based on the experience of individuals and the local history. Now the big data will inform a few professionals about what are the best models to be used in various circumstances. John calls this “contextual politics”.
Another interesting thing about this is the issue of trust when it comes to supporting competitors. If you support the team A, you cannot pretend you will help team B in an absolutely neutral fashion. John talks about Votizen and National Builder and how they had an issue of trust because the suspicion that data from one party could be made available to the other side. Through extension, this raises the issue of trust large social network enterprises in the context where their leaders take political positions. As soon as this happens, their members have legitimate reasons to ask of whether their trust should be reconsidered. See my previous post When Social Networks are not Social which touches on the issue of trust in the context of Sheryl Sandberg’s Lean In campaign.
Finally, the nature of the politics seems to be in for a big change. In the past political machine has been revolving around a broad ideological framework and big personalities. The memory of a party has been passed from generation to generation in form of stories, books, speeches and long history. Now, a political party is extending this memory with large networks and cloud data in which past events, voters information, economic data, and campaigns are stored for processing with complex algorithms. This machinery will play and increased role in the future in the way political platforms are defined and in the way the representatives communicate with their constituencies. Maybe the accountability will be improved through transparency. Rogue politicians will find it more difficult to hide, but in the same time, political heroes will find it harder to make bold moves by themselves. They need data and the help of professional experts.
I was scanning absent-mindedly the public transport vehicles parading in front of me when I noticed a new bus model. That happened not because it was dramatically different, but because it was red and it stopped in a place usually visited by blue buses. That gets my attention! While my unconscious was busy observing colours, my conscious-self stopped to examine an unusual video-camera. How cute! Protruding from the exterior top-edge of the bus, just above the mid-doors, the device was almost unnoticeable. Just like a little rounded soft bump, the camera had its own electronic eye looking down towards the door and the back of the bus. It reminded me of the chameleon.
At that moment the image of the bus, people waiting and moving slowly through the mid section to take their seats, the cameras and the monitor hanging on the ceiling with its images silently switching at regular intervals from one view to another, the whole picture stroke me as how much our urban environment has changed, almost by stealth. The bus – the symbol of slow pace and simplicity- has become such a sophisticated electronic beast. Video sensors are all over it communicating continuously with a central base. The entire vehicle has become a data collector, not just a record keeper to be used only in case of public disorder. Think about how quickly the quality of the monitors has improved in the past decade. The video frames were a joke. Who could identify anyone that committed a crime from a trail of rough pixels smudged over a screen with dubious colours? We now have HD. Faces are easily identifiable; everyone’s face.
Notice how this is a two-edged sword: it is easier to catch a few trouble makers, but it is also easier to monitor everyone else. This system could be used to track your normal citizens who are blissfully unaware that someone is watching them. We do have the technology now to raise the surveillance bar to dangerous levels, and no one knows for sure how this is going to end-up. Face recognition technology means that someone with access to public data could trace your movements during the day by simply running a process that identifies your face and re-constructs your day. A commercial firm in UK used facial images of people who ‘like’ a retailer’s Facebook page to identify those who visit the shop in person with video cameras installed on the premises. This works great for targeted advertising.
So what? This is better service, isn’t it? It is true, well, at least not dangerous. But what if something or someone wants to get something by influencing the public to agree with an idea, which is not necessarily good for the people, but certainly for the benefit of the few? They could target all those individuals that have similar patterns to inoculate message with deep emotional impact, in a way that doesn’t involve obvious advertising, but personal and ‘natural’ communication. This entity could be anything. Anything that is able to conceive a goal that can be described in broad terms: patterns, data, large scale behaviours. Such a goal has no room for personal considerations of the many of us.
The bus I chose to pick on is chicken feed. You want something scarier? Meet ARGUS: the world’s highest resolution video surveillance platform.
With its 1.8 gigapixel video camera, ARGUS can create contextual movements of individual, vehicles, or anything sizeable that moves, for the duration of any day, in the area in which this device was ordered to scan.
I am not a fan of conspiracy theories at all. I am even sceptical that any individual or group of individual would be able to exploit this vast network of sensors and data in which we are enmeshed and destined to become smaller (even though smart!) nodes stripped of any major significance as individuals. But I wonder if the sheer size of this nervous system isn’t bound to create a consciousness that may set goals beyond our grasp. The internet of things will definitely make this more interesting over the next decade.
I recall the day when I bought a Gateway PC (this was about 17 years ago, I think) that came with a Kodak camera (DC25) equipped with a 256k pixels sensor. A few months ago I got a 36M pixels camera. This is an increase of over 1,000 times in resolution. Imagine what kind of world we will live in twenty years from now, with software that will be able to sift through mountains of data and find you wherever you are no matter what you do. What is the meaning of privacy, security and individual freedom in a world like that?
A smartphone today has more computational power than Apollo 13. The computerised devices around us are increasingly smarter and they multiply at high speed changing the ecosystem in which we live. Some of us may feel suffocated by this change and with all the software code we use every day it seems human emotion is valued less and less.
One of the changes becoming more visible by the passing of each day is the invasion of data in the way we think. The digital replaces the analogue. Every move is broken down into small components and expressed into a binary form. Time is digital, distance is digital, the images are digital and the sounds are digital. The last two frontiers resisting to conversion are the tactile and the smell sense, but it is just a matter of time before they capitulate.
Has the technology made us less human?
It all started with “let’s improve our lives”. The cars have better controls, the phones are more convenient and helpful and the digital cameras are so good in capturing personal memories. At a personal level, this is a welcome upgrade. We like that.
But then, gradually, as these devices kept crunching numbers and generating more data than ever, a new development has grown out of the science labs into the daily life of the average person. This new wave of change is incessant and unforgiving. We were comfortable with the introduction of computing units at the beginning because the adoption process was so familiar: it was industrial, it was large and remote. The Univac, the IBM mainframes and the likes fit our industrial model of the world. There was a kind of order we were used to and we liked: punching cards required scheduling and approval from authority; the computer rooms had managers who made decisions after careful and lengthy considerations. In the old James Bond movies the computer labs are static, inflexible and secretive.
Digital change comes in waves
The first wave was about the macro-economy. Large data bits helped the modelling (through accidental and implicit development or by design) national economies and world trade in new ways leading to globalisation. The abundance of data changes the way nations trade among themselves, how populations live and how big infrastructure projects are built. One example in which this change had an impact on the human expression is tourism. Kevin Kelly (in “Pre-Globalization”) remarked how we lost in one swoop access to great historical and human treasures hidden in distant corners of the world. “Now every village gets visitors every now and then. Just as you get electricity, you get visitors. Multiplied by millions every year, the exchange produces a subtle leavening, a quiet education; a silent bridging that may in the end be as powerful as electricity and roads”.
The second wave brought change at home, at school, at work at individual level. You could call this the BYOD wave. It’s all about personal stuff. Maybe this started in the 90s when the PC started slowly to make its way into our lives with CD-ROMs, games and word processors. It is still happening at much accelerated pace: smartphones, tablets, heart monitors, digital cameras, etc.
The third wave, which started about 10 years ago, is about big data. Amazon was probably the first to recognise the value of customer data and monetise it successfully. Large networks received bits of information generated by our interaction with the electronic medium and make sense of what happens by reading behavioural patterns. All these innocent and cute devices that we love to have are in fact little Trojan horses opening the doors to a scary guy called Big Data. This guy is demanding now that we do things differently, forget about our old ‘human’ ways and learn new rational tricks.
Take this as an example: Progressive Insurance offers an insurance plan 30% less expensive if you agree to install a black box called Snapshot on your car. This device counts how often your slam you breaks, how many miles you drive and how often you drive between midnight and 4am. This a classic behavioural learning scheme based on stimuli and response. We are like lab rats.
Skills from out-of-body experience
The most unsettling aspect of the way big data influences our lives is that it diminished the value of knowledge accumulated through direct personal experience. As an individual we need to get good skills at learning about global knowledge and understand the large patterns. Intuition and emotion are very important, but it is essential to get better at bypassing emotional impulses based on individual experience in favour of “emotional” data patterns based on the experience of large groups. We need to develop antennas that capture large social digital signals.
So, are we less human?
In the grand scheme of things, the answer is no. We will be just different. If you take a hard look at our past, we were not that human as we want us to believe. Let’s not forget that there was a time when we thought children are little monsters and their evil needed to be eliminated through pain. Beating was OK. Jonathan Swift even proposed poor parents eat their children to reduce their burden and for the benefit of the public.
To survive, the human race needed to adopt behaviours that while cruel from a modern perspective it made sense at the time. We are readier to understand this when we observe other species. We watch on TV how lions kill the cubs bestowed with the ‘wrong’ DNA and we listen thoughtfully the voice of the narrator that explains that this is just natural selection. If we were an alien sitting on a distant couch and watch us changing family values, adopt new social norms and promotion systems would we be surprised at all about our new adopted behaviours? Not likely.