On Moore’s Law, the next wave and accelerated change. An interview with Rich Karlgaard

There are perks to my job and one of them is to be able to have the opportunity to interview “vision rich” people.  This is my third annual interview with Rich Karlgaard, Forbes publisher and it appeared on the Impact Blog a few weeks ago.  I am posting it here as it deals with, you guessed it, change!

Rich Karlgaard is also an avid biker and the author of the weekly column Innovation RulesRich Karlgaard, Forbes Publisher. He writes about technology, entrepreneurship, regional and economical development, and the future of business and work. He frequently lectures on these subjects and is a regular guest on Fox News Channel’s “Forbes on Fox.” In 2005, he began writing a daily blog, which appears on the homepage of Forbes.com. Rich joined Forbes in 1992 to start Forbes ASAP, a technology magazine, along with Forbes CEO and Editor-in-Chief Steve Forbes, and the futurist and writer George Gilder. At Forbes ASAP, he commissioned original works by Tom Wolfe, John Updike and other notable American writers. He co-founded two companies ( Garage Technology Ventures in 1997 and Upside Magazine in 1988) and one civic organization (the 5,500-member Churchill Club in 1985).

Shaku: Rich, it is great to have the Forbes leaders back at Impact 2012 and thank you for taking time for our third annual interview!
Rich: Yes, the Forbes Business Leadership Forum is a great event for business leaders and glad to be back.

Continuing our conversation about change and economic uncertainty, what is the new normal and what are your 2012 predicts?
This trend of this uneven recovery has certainly become even more dramatic. Large publicly traded companies continue to do well. That’s been recognized by the stock market, yet stocks on a price earnings ratio are still cheap. They’re cheap by a historical standard. They’re cheap when you look at the unprecedented low interest rates out there as an alternative investment vehicle.
But the good thing is that the overall economy, not just the large publicly traded companies but smaller companies are beginning to perk up. Bank lending is starting to occur again. There’s a general mood of optimism. The unemployment rate is lower than when we spoke a year ago. And here where I live in Silicon Valley it’s been an absolute boom.
Since I talked to you a year ago residential real estate prices are up 15% to 20%.

Definitely a relief after a long time.
Yes, that’s largely because technology companies are doing so well. But that figure is manifestly not true throughout the state of California or even 50 miles away from here. So it’s a reflection that there are just an incredible number of changes happening in technology right now, and investors and established organizations are jumping on business models built around mobile to cloud computing.
You have the pure startups that are exploiting the technologies, and then you have large companies that are transforming themselves very, very rapidly.
Though for all that’s happened, the changes that we’ve seen so far are about to be dwarfed by changes as the whole Silicon Valley model and the whole Moore’s Law pace of change escapes the traditional IT industries, and starts to transform in fundamental ways to older industries such as manufacturing, energy, transportation and so on.
It’s been predicted for a long time that things like robotics and more recently digital manufacturing are coming up. Sometimes you can make these predictions too far in advance, and by the time they actually begin gaining traction people are kind of bored and they’ve moved on.
That’s often when these technologies really pop up. So I am now fully convinced that over the next several years that 3D printing technologies and robotics are going to start gathering a lot of attention. They will be working from the power that’s available in the cloud.
You can anticipate that if computing power was free and unlimited and bandwidth was free and unlimited, how would you use them in a way that you don’t use them today?
We clearly see that with social networks, new modes of communication that are doing everything from creating companies like Facebook to reorienting the way more traditional businesses communicate with their employees and communicate with their vendors and their whole ecology.
You are beginning to see that the sheer pace of Moore’s Law is now enabling advances in robotics. I think surprises like 3D printing technology to really start making traction where you can have basically grains of plastic or metal or wood together or in combination and then send a 3D model to a printer. 3D printers five years ago cost over $100,000 and now they are in the $1000 to $10,000 range, about where laser printers were when they debuted in the mid-‘80s.
I think that when you look at a business process that’s going to be changed fundamentally, you know, people talk about the gamification of business.
Enterprise software will look more and more like a game as whole new generation of young, talented people may not be, sorry to say, as well read as we are. But their vocabulary or literacy is in images and moving images and manipulating images.

So you’re saying that the generation is going to be more accustomed to visual learning?
Yes and when they’re integrated inside of a corporation suddenly, the kid who’s a computer game addict today is in charge of managing the company’s supply chain maybe 20 years from now. I don’t have any doubt in the world that enterprise software of the future is going to be a simulation because the sheer processing power and graphics power needed to do that will be there.
The bandwidth needed to transmit it will be there, and it’s a more universally understood language than English for young people in the United States and more critically for people around the world. Everybody kind of gets those visual metaphors and visual icons.

That’s going to fundamentally change also education.
Absolutely. Let me give you two examples. Both are in Silicon Valley, so excuse my Silicon Valley bias. You have the Khan Academy which has opened up essentially free learning for almost anybody with the motivation to do so.
I was just at this program in Hollywood over the weekend. It was at Fox Studios in L.A. and it was brought by Singularity University and co-founded by Ray Kurzweil. The idea was to expose people in business, the arts and entertainment to these exponential technologies. Technologies that are moving along in an exponential rate, which would be processing power, bandwidth, you know, biological systems and even some technologies that are moving rapidly but at less than an exponential pace like solar, and just show people what’s on the cutting edge and then give a timeline of where it’s going.
On robotics, we saw a video of double amputees from the Iraq war being able to, with robotic artificial arms, peel a grape without crushing the grape and that’s an incredibly delicate operation. Or Google now has over 200,000 miles on its driverless car, you know. It’s got this sort of spinning contraption on the roof that’s constantly doing this 3D imaging. AI has gotten to the point where just not long ago, getting out of the parking lot was a challenge and now it goes up and down mountain roads.
And take IBM’s Watson . We saw a clip of Watson understanding the nuance of the language and it was beating the two best players that ever played the game.
I really think we’re on the cusp of some very, very interesting things and here’s a prediction that as soon as people get tired funding social networks and they will…all of a sudden this venture capital juggernaut is going to be on to something else, and some of them already are.
Kleiner Perkins has funded a very interesting company that makes a smart thermostat called NEST and it learns about your habits and patterns and puts it on autopilot for you. NEST is only the beginning of a whole bunch of household devices that will include smart refrigerators that will notice that you’re low on something that you frequently have.

I would love to have advance warning when milk runs low in my family! So you’re saying that we’re on the cusp of another revolution like the industrial?
Yes that’s exactly what I’m saying. Moore’s Law, ubiquitous high bandwidth, artificial intelligence are going to be transforming traditional industries in a more visible way taking away that argument that we haven’t had as much progress than people experienced in the first 50 years of the 20th Century.

What happens to the large enterprise and how will they thrive in a time when being agile is critical for success?
They will be successful if they don’t get wedded to the past and they don’t get wedded to what’s made them successful in the past. If you do that you will suffer the Kodak problem or, you know, or the near death experience that IBM had in the early 1990s.
I think large companies are still going to do well as they still have the brand clout. They still have the ability to integrate very complex problems. If you think about the world is going to go from 7 billion to 9 billion people by 2050 within the larger population there’s also this trend of urbanization. Companies like IBM and others recognize the opportunity in Smarter Cities. When you start talking about Smarter Cities, the scope of those projects cannot be fulfilled by a little company.

What about talent and new ways of working?
The challenge for large companies will be integrating that talent outside of its doors. The founder of Sun Microsystems, Bill Joy, came up with this observation 20 years ago that some people called Joy’s Law, that when everybody’s connected on the Internet at high bandwidth and instant communications etc, no company no matter how big is going to have even a double digit share of the talent within its industry. Any company is going to have to find a mechanism of being able to integrate talented people with great ideas into the organization.
But then the second thing you’re going to need is the entrepreneur matched with the company of scale and together they can change the world and do some good.

These are the new business models that we are seeing with unlikely partnerships across the world. How do you see them adapting to what is necessary for the next wave?
I think IBM, not to flatter the host excessively, has done a very good job because it’s really in many respects only a 20-year-old company, because it had to really face some huge problems that could’ve spelled the end of it. That was only two decades ago and that experience is forever imprinted on the brains of the people who are in leadership now. IBM understands the networked, distributed and cloud world. It gets that. So when you go to the IBM Impact conference you see a lot of space for companies outside of IBM.
The old “not invented here” was thrown overboard when it was seen that it didn’t do any good. Hollywood’s another example. In the ‘30s and ‘40s Hollywood had the actors under exclusive contract. The studios had the actors under exclusive contract. Now the actors are all free agents represented by agents, and the studios are vessels basically for raising money and producing the films. So the great studios have still survived and are thriving, but if you didn’t get rid of the fixed idea of control the actors then the studios would have suffered. It takes certain humility.

In the networked, distributed world, it’s not outsourcing talent anymore.
Yes, I think this stuff arbitrages out over time because of the speed with which talent can move across networks. Nobody talks about outsourcing anymore. They talk about building and manufacturing and designing where it’s most appropriate. That’s not outsourcing. That’s different. That’s following the talent rather than following the lowest cost, following the talent and the customers as opposed to, you know, a pure arithmetic of low cost. Plus the low cost equation is changing rather rapidly as rising nations are seeing their wage base go up. So whereas China might’ve been 10% of the cost of the U.S. in manufacturing, it’s now 20% and moving up. You have rising fuel costs, geopolitical tensions that may cause some companies to rethink where they were manufacturing before.
So you’re seeing some manufacturing actually moving back to the United States because of rising shipping costs and so forth. But in the end, companies will look for hot spots of talent and go after manufacturing talent over here, design talent over there, customer service talent over there.
It is a great time to be in enterprise software. You are going to see the whole supply chain concept being rethought once again to be more flexible to accommodate fluctuating fuel costs, movements in talent and something I mentioned earlier that it’s going to become more visually depicted.

Let’s talk mobile. There’ll be ten billion mobile devices in use by 2020. How do you see this changing business models? It has already. What is your prediction around mobile?
Two things. I think 4G bandwidth will become ubiquitous and very rapidly. And, I mean, the newest iPad accommodates 4G. Of course, in the developing world just the sheer low cost of the devices is a game changer that you’ll see. Africa had single digit cell phone penetration ten years ago. Now it’s got about 20% cell phone penetration and in another ten it’ll be 60%.

Thank you, Rich! I look forward to these annual interviews because the scope of the discussion always leaves me with more questions.

Future Flux at SXSW 2012

Southby Interactive kicked off last Friday with unprecedented rain, traffic and long queues that took a couple of hours for attendees just to pick up their badges.  What do you do when you are in a long queue?  Two things, you can either pick up your smart phone or ipad and check emails, make calls and occasionally mumble about wondering if you were ever going to find the holy grail or you could start a conversation with the person next to you.

So I ended up talking to Katie in front of me who was a creative director of a boutique agency from New York and Pavan who hailed from the West Coast working for Cisco.  We spoke about why she co founded her own company and how business was booming for certain industries, why talent is always valued.  Suddenly the queue didn’t matter so much.  You also realize that while social channels enable faster communications and provide the ability to stay in touch, connections are essentially made by people reaching out.

I call SXSWi the woodstock for social geeks.  There were sessions on emerging technology,  Lean American and start ups were the domain of the Hilton, the keynotes and yoga were owned by the Austin Convention Center, Sheraton covered Journalism/Media, Hilton Garden covered New Business, Mariott provided food for thought on the Future of Work. I am sure I have missed out a few.  Book signings by known and unknown authors with business booming at the Barnes and Noble bookstore.  In addition, Screenburn at the Palmer Event Center was dedicated to gaming and a Tradeshow that opened on Monday where one could load up on some great swag.  There were sponsors with networking lounges.  Breakfast, lunch and evening parties.  No dearth of the good liquid and I am not talking water here.

SXSW depends on its volunteers who keep the this 9 day show combining Film, Music and Interactive and this year there were over 2000 volunteers at SXSWi.

What I learnt:

Big change is here.  It was a concurrent theme.  Use the technology to be the change.  Adapt or die.  I know, pretty drastic.  But like Kat Mandelstein’s presentation, Small is the new Big and Big is the new small.  Your business, whether you are a small business owner or a large enterprise, how well you leverage the tools that are there is going to make the difference on whether you are around for the next decade.  I had the opportunity to listen to Matt Barrie, CEO of Freelancer.com and talk to him later about business models changing with companies and independents bidding for work done and delivered from any corner of the world.  The day of the agile worker is here. Fast company’s panel featuring Pete Cashmore, Baratunde Thurston, DJ Patil, Raina Kumra, Beth Comstock, Danah Boyd and Bob Greenberg on Generation Flux sums it up as chaos so be nimble, adaptable and unafraid.  Get ready for the four year career, with job tenure getting shorter and constantly updating your skill set, becoming the new normal.

Digital Engagement: For those who think the social layer is about Facebook and Twitter or even Pinterest, think again.  The social layer is affecting every part of business.  From the way products are being developed for consumers, to distribution, to pricing to promotion.  The end user is collaborating internally and externally in defining how industries adapt.  Companies, like Amazon which is now giving Walmart a run for its money, who understand the integrated ecosystem and digital experience will bring in the dollars.

Social Voice Opening keynote Baratunde Thurston talked about comedy and satire to bring about social change.  From Eygpt to Iran to America.  Comedy is not a laughing matter anymore.  There is a growing concern to shine the spotlight on corruption and greed.  The power of the internet and social media channels are allowing for individuals to come together to affect change on policies that even five years ago would not have been contemplated.  Think Susan B Komen.  Think Kony.  Think SOPA/PIPA.

Citizens not consumers. “We are the ones we have been waiting for” Stop complaining about the problem and be part of the solution.  Code for America founder, Jennifer Pahlka’s rallied passionately about American cities needing its people to step up and help.  Pahlka worked with Tim O’Reilly and Web 2.0 before starting this program which is helping cities across America by working with developers.  Pahlka showcased some good examples of the cities stepping up and stated that government does not equal politics and we should enable collective action through technology.  Her 7 ways that you can help included going into public service, joining the brigade, leveraging open data, living like citizens not consumers by helping the government and taking part in rewiring society.  Her speech ended up inspiring one person to actually tweet “Pahlka for President” 🙂

The Future is Magnificent if you prepare for it. I had heard Ray Kurzweil keynote at IBM’s Impact Conference two years ago and was looking forward to the keynote at SXSWi and he didn’t disappoint.  On Monday, Ray spoke to the audience first and was then interviewed by Lev Grossman, Time magazine and author of The Magician, Codex and others.  Ray spoke about technological singularity which is about a time when human beings and artificial intelligence will combine to accelerate innovation at unprecedented speed.  Calling out IBM’s Watson which could understand the subtlety of language, he predicted that search engines would be able to search conversations to predict human requirements.   These technologies will be at 1000 times more powerful in 1o years.  He also spoke about the promise vs the peril of biotechnology about the greater good vs its use for bio terrorism.  Every other aspect of biology is scaling exponentially.  We are walking around with updated software in our body.  Health and medicine is now information technology.  In twenty years, nanobots in your bloodstream will make you live longer.  Ray Kurzweil is essentially an optimist who believes that “we truly are what we think”.

Beam me up, Scotty.  Who knows what the future holds.

Pin this Many of us are into pinning and it was a treat to listen to Pinterest co founder Ben Silbermann talk to Chris Dixon. What I enjoyed was the honest, down to earth conversation where Ben speaks about the importance of relationships, getting thick skinned about your dream, seeing failure as one more option that is off the table, the importance of the team, staying in touch with the initial users whose feedback helped modify the platform and of course not taking too much advice.  Every company must cut its own path.  Chris Dixon did an excellent job asking the right questions.  We often underestimate the importance of the interviewer and that a good interview becomes a great conversation.

Gaming is not child’s play.  There were many sessions on gaming and SoLoMo.  The one I enjoyed most was designer of alternate reality games, Jane McGonigal’s talk about her game SuperBetter.  In 2009 after she suffered a mild traumatic brain injury that almost made her suicidal, Jane used gaming to bring her back from the edge. According to Jane, “SuperBetter helps you achieve your health goals — or recover from an illness or injury — by increasing your personal resilience. Resilience means staying curious, optimistic and motivated even in the face of the toughest challenges.” Jane keynotes at IBM Impact this May as well so I am looking forward to hearing her again.

Technology matters.  But art makes the merger magic.  Of course you can’t go to SXSW and not be touched by the immense creativity of its artists.  I had to listen to Joss Whedon as I am a huge Buffy fan.  The Slayer was created at a time when vampires weren’t fashionable.  The series covered groundbreaking topics in its story arc over 7 seasons.  Despite being shunted out of Fox and then landing at UPN, Whedon continued to blaze a trail.

Heard film maker Kirby Ferguson discuss with author Austin Kleon on how everything is a remix.  We constantly are influenced by others and derivative work and mashups are the new norm.

Lisa Kudrow joined a panel to discuss the success of web originals.  She jokes, very Phoebe like, about how people looked down on her when she started making Web Therapy which is in its fourth season.  The success of Web Therapy , Felicia Day’s Dragon Age and others, with the crossover of the web and TV, we are seeing shifts in entertainment, advertising and studio funding.

Daniel Burwen, Cognito Comics talked about taking comic book content on a game layer with interactive features to readers through the iPad.  Like Kindle disrupted the book, Cognito takes the digital pen to comics

Social Spirit

Heard Rainn “Dwight Shrute” Wilson go from extremely funny to spiritual with his Soul Pancake philosophy.  It was actually humanizing in many ways to see someone who is known for being thick skinned and boorish on TV talk to a huge audience about what really mattered to him.  “Soul pancake because spirit taco and metaphysical milkshake was taken”

Post Secret was started by Frank Warren as a blogspot project encouraging people to share their secrets about pain, fear, joy and ease their burden via anonymous postcards.  Based on the number of postcards they received about people with suicidal thoughts, the site put up a suicide watch on Facebook.  The site has more than a million fans.  At SXSW, the entire presentation was put to music by Blue Brain Music which released its location based music testing app.

Starting Up with Lean America I try to make time to see the start up accelerator which is a little like American Idol only the company gets about 15 mins to pitch in front of a panel of  judges and the audience gets to ask questions too.  These were the ones I heard.  If I had the time, I would have stayed the entire day to listen to these great ideas.  Last year, I heard Hipmunk and Storify present.  Both award winners.

Vox.io : Slovenian startup that provides an easy way to make free calls to other vox.io users from a landline, iphone or through the web.  Provides profile urls and disposable urls.

Hoot.me : Austin based Facebook app that allows students to collaborate with classmates and teachers for study requirements and tutoring.

SceneTap: Another Austin based start up that utilizes facial recognition technology to track customer analytics in a venue or particular space.  Provides an admin tool for venue operators and a social network for consumers.  Politicians should worry about this app 🙂

Votifi : A mobile polling and analytics company that helps people explore issues.  Could be useful for governments to ascertain voter pulse.

Thirst: Mobile app that aggregates updates from Twitter, Facebook etc by topic so the user doesn’t miss key conversations.

Word! At the Bookstore

If you can say it, we’ll draw it. By ogilvynotes.  I still have their keynote infographics from last year and true to form, they commissioned artists to capture the essence of core sessions and provided copies for the attendees.  For those interested, go to http://www.ogilvynotes.com to download these.

The company I keptThe highlight of any conference was, yes, you guessed it, the people I got to meet.  I got to match the voices to the faces of the many cool IBMers I work with mainly on our conference calls.  The IBM Social Lounge had a stream of visitors and marquee interviews.

I also enjoyed my own company.  When you head out on your own, there are places you will go and people you will meet whom you never thought you would meet.  Umm, yes that is me with a Glomper.

Shaku and the Glomper. Picture by Ryan Boyles