Archive | Innovation RSS feed for this section

Technology Advancement: Capital Wins Over Labor?

20 Jun

In a recent post,  Paul Krugman writes about the effect of technology on workers.  He argues that until the year 2000, disruptive technology’s effect on Labor was to displace low-skilled workers.  The beneficiaries were better-educated workers with the skills to design and to use new technology.  A handful of Netflix software engineer benefit, a large number of Blockbuster store clerks lose.  And so on and so forth.

The answer from government and business has traditionally been to emphasize education.  Go back to any presidential election from the last 15 years and you’ll see discussions of “retraining workers in high growth industries” and whatnot.  But Krugman says that the education argument is a mirage.  Highly-skilled workers are also facing displacement.

One current example of this is that many of the new business intelligence software and big data processing tools that are becoming widespread can replace functions that have traditionally been performed by teams of business/data analysts.  These are skilled, college -educated professionals that are being replaced (partially) through software.  And of course it’s not a 1-to-1 trade.  The capabilities of new types of software to analyze data and extract insights is far beyond what teams of humans were capable of performing even  recently.

You are also going to continue to see examples of technology disrupting low-level labor as we’ve traditionally believed to happen.  The implications of self-driving cards and robotics in industrial manufacturing are yet to fully be seen.  It’s not out of the question to imagine a world in 10-15 years where most of the delivery drivers, truck drivers, street sweepers, etc. are replaced through automation.  You’re already seeing it in the industrial world.

Who benefits from this?  Capital and often consumers as well.  I think this story helps to partially explain the rising income equality you’ve seen over the last 40 years.  Recent research shows that 30% of income inequality in the US can be attributed to tax policy.  Perhaps the accrual of technology benefits to capital helps to explain the other 70% of the puzzle.

Technology is great.  The iPhone, Google Maps, Wikipedia, Tableau, Kiva Systems, etc. are incredible.  They are amazingly powerful tools for improving the lives of consumers and raising the efficiency of businesses.  I also think that this “displacement effect” is less pronounced in technology areas outside of pure IT.  My sense is that technology in Energy, Medicine, etc. tends to have a less deleterious effect on Labor, though I’m interested in hearing counterexamples to this.

I would never argue that we shouldn’t pursue technological advancement.  But if workers across the spectrum are suffering short-term displacement, it only exacerbates inequality and all of the attendant problems.  I’m not sure what the solution is, but the first step is to at least to recognize the challenge.

Google Glass: half empty or half full?

12 May

ImageLots of discussion of Google Glass recently.  Overall, I think it’s way too early to try to prognosticate one way or the other whether this new technology is the next iPhone, or it’s more akin to something like the Segway.  I certainly wouldn’t outright dismiss it as stupid or silly – that’s been done before too many times with technologies that ended up being transformational, whether it’s Twitter or the internet and computers themselves.  

To a lot of people who aren’t technophiles, the idea of walking around with computerized eyeglasses is silly.  In the case of Google Glass, the initial aesthetics exacerbate the problem.  Let’s be honest, they look a little ridiculous.  At this point, you do have to be a huge dork to walk around with these things.  Having said that, let’s not be so quick to dismiss this product because of it’s aesthetics.  Anyone remember what early cell phones looked like?  time, Glass’ component parts will get smaller and there’s potential for Google to partner with a design house to make these things look more fashionable.  Image

Another clear barrier to adoption of Glass right now is price.  Taking the cell phone analogy further, the first cell phones were insanely expensive.  Any new technology, especially when it involves hardware, starts out extremely expensive and follows a natural cost reduction curve over time.  PCs, storage, cloud computing, solar panels, digital cameras, etc. are all examples.  Glass will of course follow this curve.  There will come a point in time when price isn’t a factor in people’s purchase decision.  

If the aesthetics and price are fixed, I really think consumer adoption will come down to the applications that are built for Glass and their usability/utility.  Right now, cost and everything else aside, for most people there isn’t a compelling reason to buy this device.  This could change.  Third party developers are starting to build for the Glass platform and there will no doubt be some interesting applications that come out of this.  Look at what developers have done with smartphone applications, and then add in the visual eyeglass element and there’s a lot to play with here.  

It’s too early to tell whether there will be broad consumer adoption of Glass or not.  Having said that, I think there’s a much clearer argument for Glass to get business/workplace adoption.  In areas like medicine, law enforcement, warehouse management, etc. there are countless uses you could see for Glass.  Google at its heart though is a consumer technology company and this is meant to be a consumer device.  I don’t know how far they will continue to push Glass if it ends up not resonating with consumers.  Time will tell.  

Innovation Debate: Take Two

7 May

Yesterday I posted the video of a recent debate between Marc Andresseen and Peter Thiel regarding the state of “innovation.”  One of Thiel’s contentions is that breakout innovation leads to big ideas which in turn ends up creating huge companies.  To support his thesis that levels of innovation have declined, he points to the fact that the total market cap of tech companies founded in the 1990s is significantly larger than the combined market cap of companies created in the 2000s.

A couple thoughts and questions on this:

  1. There is a time effect here that needs to be adjusted for.  There’s natural market/GDP growth that older companies will have benefited from.  Salesforce has a $25b market cap today, it’s completely plausible it will be 2-4x that in a decade. Ditto for Facebook, Workday, etc. etc.  This effect, however, probably isn’t large enough  to explain the variance on its own.
  2. How much of this effect is one company – Google?   Google’s market cap today stands at around $285b, dwarfing the next largest company in the analysis set (Amazon at $116b).  Google is a special company that’s going to skew any comparison like this.  Google was also incorporated in September 1998.  Move that forward 16 months and suddenly Thiel’s comparison reverses.
  3. While the aggregate public market cap dollars created might have declined between the 1990s and the 2000s, my sense is the the absolute number of tech companies reaching a $1b valuation has definitely increased (anyone have the analysis to back this up?).  It certainly wouldn’t be any surprise given the lowering of startup capital requirements, huge increase in internet users and IT spend, etc.
  4. Fewer companies are going public today, which Andresseen noted in his comments.  A proper analysis would need to adjust for M&A transactions and valuations of well-established private companies like SurveyMonkey.

My point here isn’t to argue that Thiel’s comments are necessarily wrong.  I just don’t know that looking at public company market caps leads to the easy conclusion he’s trying to make.

His overall question still stands though.  Are the big, low hanging opportunities in tech already taken?  Are there still $100, 200, 300 billion opportunities available?

Note: spoke to a friend after this.  He made a great point, which is that it would be interesting to do Thiel’s analysis for other sectors.  Which sectors show the opposite effect?  My guess would be Healthcare, Biomed, and maybe Energy/Commodities?

Video

Marc Andresseen vs. Peter Thiel on Innovation

6 May

This debate between Marc Andresseen and Peter Thiel on the state of innovation globally is worth a watch.

Our view on “innovation” tends to be tech centered since that’s where a lot of the largest and most obvious innovations happen. But a lot of the most impactful advances in the past have been outside of pure technology in medicine (antibiotics, anesthesia, etc.) and transportation (airplanes, automobiles, etc. ) It was nice to see them discuss whether or not we are seeing a deceleration of innovation in not just Tech, but sectors like Energy and Transportation as well.

One question I would like to have seen them touch on is whether we’ve reached a point where the “low hanging fruit” is gone. Are there diminishing returns to innovation? Does future innovation necessarily have to be more incremental in nature?

We aren’t at a “low point” in startup quality

3 May

I watched Chamath Palihapitiya’s talk at TC Disrupt the other day.  His contention essentially is that there are too many startups focused on superfluous problems, many of them “first world problems,” rather than audacious companies focused on solving big problems.  I think he’s misreading the situation.  

The problem today isn’t that the quality of startups has declined.  I don’t have the data, but my sense is that the aggregate number of “high quality startups” – i.e. those focused on innovative solutions to big problems – has not in fact declined.  

Rather, what’s happened is that barriers to starting a company have fallen drastically in the last 5 years and therefore you’ve seen huge increase in the total number of companies being formed.  Many of these are focused on narrower problems and/or iterations of other startups (a new social media aggregator, another mobile messaging app, etc.)  

The fact that there’s more crap in the system doesn’t mean that the volume of quality has declined, it just may be a smaller proportion of the overall pie.  Whether or not this is desirable is a different question that I won’t get into here. 

Gigaom

Technology news, trends and analysis covering mobile, big data, cloud, science, energy and media

You Do The Dishes.

Just remember that the things you put into your head are there forever

Regarding Work

Thoughts on productivity, collaboration and maximizing talent

juggaloforbooks

...readin' books, watchin' movies, and drinkin' Faygo

50 Marathon Quest

Running 50 Marathons By The Time I'm 50

ex post facto

by tom tunguz of redpoint ventures

Taylor Bollman

Just another WordPress.com site

Simpletom

Explorations of simplicity and simple living

Haystack

@semil's blog, building a community around technology

Lightspeed Venture Partners Blog

Lightspeed is a leading global VC firm focused on partnering with exceptional entrepreneurs to build high-growth market-leading companies globally.

Steve Blank

Entrepreneurship and Innovation

VentureBeat

News About Tech, Money and Innovation

%d bloggers like this: