Tag Archives: Vivek Wadhwa

The World Doesn’t Need Silicon Valley

Ever since the Chinese government banned Facebook in 2009, Mark Zuckerberg has been making annual trips there attempting to persuade its leaders to let his company back in. He learned Mandarin and jogged through the smog-filled streets of Beijing to show how much he loved the country. Facebook even created new tools to allow China to do something that goes against the social media giant’s founding principles: censor and suppress content.

But the Chinese haven’t obliged. They saw no advantages in letting a foreign company dominate their technology industry. China also blocked Google, Twitter, and Netflix and raised enough obstacles to force Uber out.

Chinese technology companies are now among the most valuable—and innovative—in the world. Facebook’s Chinese competitor Tencent eclipsed it in market capitalization in November, crossing the $500 billion mark. Tencent’s social media platform WeChat enables bill payment, taxi ordering, and hotel booking while chatting with friends; it is so far ahead in innovation that Facebook may be copying its features. Other Chinese companies, such as Alibaba, Baidu, and DJI, are racing ahead in ecommerce and logistics; artificial intelligence and self-driving cars; and drone technologies. These companies are gearing up to challenge Silicon Valley itself.

See also: What India Can Teach Silicon Valley  

The protectionism that economists have long decried—which favors domestic supplies of physical goods and services—supposedly limits competition, creates monopolies, raises costs, and stifles competitiveness and productivity. But this is not a problem in the Internet world.

Over the Internet, knowledge and ideas spread instantaneously. Entrepreneurs in one country can easily learn about the innovations and business models of another country and duplicate them. Technologies are advancing on exponential curves and becoming faster and cheaper—so every country can afford them. Technology companies that don’t innovate risk going out of business because local startups are constantly emerging to challenge them.

Chinese technology protectionism created a fertile ground for local startups by eliminating the fear of foreign predators. Yes, the technology industry is a predator. Silicon Valley’s moguls openly tout the need to build monopolies and gain unfair competitive advantage by dumping capital. They take pride in their position in a global economy in which money is the ultimate weapon and winners take all. If tech companies cannot copy a technology, they buy the competitor.

Amazon, for example, has been losing money or earning razor-thin margins for more than two decades. But because it has gained market share and killed off a lot of its brick-and-mortar competition, investors have rewarded it with a high stock price. With this inflated capitalization, Amazon has raised money at below-market interest rates and used that to increase its market share. Uber has used the same strategy to raise billions of dollars to put potential global competitors out of business. It has also been unscrupulous and unethical in its business practices.

With these predators out of the way, Chinese technology companies started adapting Silicon Valley’s technologies and improving on them. In doing so, they weren’t only copying the technologies, but also copying Silicon Valley’s style—which is also to copy.

Steve Jobs built the Macintosh by copying the windowing interface from the Palo Alto Research Center. As he admitted in 1994, “Picasso had a saying, ‘Good artists copy; great artists steal’; and we have always been shameless about stealing great ideas.”

Apple usually lags in innovations so that it can learn from the successes of others. Indeed, almost every Apple product has elements that are copied. The iPod, for example, was invented by British inventor Kane Kramer; iTunes was built on a technology purchased from Soundjam; and the iPhone frequently copies Samsung’s mobile technologies (Samsung also does the reverse).

Facebook’s origins also hark back to the ideas that Zuckerberg copied from MySpace and Friendster. And nothing has changed since: Facebook Places is a replica of Foursquare; Facebook Messenger video duplicates Skype; Facebook Stories is a clone of Snapchat; and Facebook Live combines the best features of Meerkat and Periscope. Facebook tried mimicking WhatsApp but couldn’t gain market share, so it spent a fortune to buy the company (again acting on the Silicon Valley mantra that if stealing doesn’t work, then buy).

See also: Time to Rethink Silicon Valley?  

America doesn’t realize how much things have changed and how rapidly it is losing its competitive edge. With the Trump administration’s constant anti-immigrant rants, foreign-born people are getting a clear message: Go home; we don’t want you.

This is a gift to the rest of the world, because the immigrant exodus is boosting their innovation capabilities. Let’s hope they don’t try raising their walls, too.

‘Alexa! Give Us Back Our Freedom!’

“Alexa, can you tell me the impact of the wholesale shift to voice search and voice communication over the internet?”

Amazon’s wildly popular personal assistant, Alexa, probably cannot answer that question for you. And even she doesn’t perceive how she is making us dumber and taking our choices away.

The world is surely moving from text to voice as the primary interface on the internet. The rapid rise of Amazon’s Echo (and its smaller version, the Echo Dot) personal assistant device was the biggest story of the 2016 holiday shopping season. As of September 2017, Amazon had sold 15 million Echos, and Google had sold five million of its own personal assistant device, the Google Home. This is impressive, for a category that just a year earlier had not existed.

Even more significantly, we are switching to voice as the means of communicating with our smartphones. More than 20% of mobile searches were conducted via voice in 2016, according to Google: a roughly a 35-fold increase in voice search since 2008. Google also found that about two-thirds of its users conduct voice search via mobile phone several times per day and that roughly half of its users use voice and text search interchangeably.

See also: Could Alexa Testify Against You?  

Such growth has been enabled by dramatic improvements in voice recognition, through use of powerful artificial intelligence systems that use machine learning. We are now in a positive feedback loop for voice: As more people talk to their smartphones or home assistants, more data become available to companies such as Amazon, Google and Apple to feed to their personal assistant systems. As of May 2017, Google’s speech recognition error rate was 4.9%, down from 23% in 2013.

Businesses have recognized the shift in accuracy and customer engagement, and are piling in. Amazon now boasts more than 15,000 Alexa “skills,” which are capabilities that allow customers to make personalized requests. For example, travel search providers let you plan vacations via Alexa using voice commands; Pizza Hut lets you order pizza; Nissan and Hyundai let Alexa owners start their cars’ engines and set their temperatures; Capital One lets customers check their bank balances; and Campbell Soup Company supplies recipe ideas.

The shift to voice search and voice communication will surely make many things more convenient for us but will dramatically reduce our online choices. The reason for this is simple: When results are spoken back to us, we will receive only a few options, because humans cannot absorb 10 results in succession and adequately choose between them. We can’t remember them all. This switch in information density has profound implications, and voice search can subvert our purchasing choices in subtle ways.

Prior to the advent of the internet, when we looked at the Yellow Pages, we had many pages of options. When we searched online, we had even more options but tended to only react to those on the first page. Increasingly, those first-page results are sold to the highest bidder. On mobile phones, the searches mean even fewer options, and the paid ones utterly dominate the screen.

In the results of a voice search, we are usually down to only two or three options. People just can’t remember more information presented to them vocally. So your search for “best hotel in San Francisco” will yield only a few results. The response to “I want to find a pizza place in Palo Alto” might not show the pizza joint that is the best in town, because it has not bought its spot in the search results.

Most worryingly, the shift to voice will further consolidate power in the hands of the big providers, such as Amazon, Google and Apple.

When we ask Alexa to add olive oil to our shopping cart, we are ceding our choice to Amazon. Maybe we prefer Californian olive oil, because we know it is less likely to be adulterated. Or maybe we would rather buy the lower-priced of two favorite brands. With voice, which olive oil goes into the cart becomes Amazon’s decision. Unsurprisingly, research firm L2 found that Amazon is more likely to put its own proprietary products into your shopping cart.

In theory, we could ask for more voice results to get richer searches. Or perhaps voice assistant systems will eventually be improved to include capacities such as following up to ask us whether we want, for example, a particular type of pizza.

See also: ‘Alexa, What Is My Deductible?’  

But even if that happens, the world of voice is taking us back a century in terms of information density. Talking to a voice assistant is a lot like asking a friend for restaurant recommendations, except that friend is a giant technology company that makes its money from the recommendations it provides us. That doesn’t sound very friendly.

This article was written by Vivek Wadhwa and Alex Salkever.

The AI of Science Fiction Creeps Closer

Major websites all over the world use a system called CAPTCHA to verify that someone is indeed a human and not a bot when entering data or signing into an account. CAPTCHA stands for “Completely Automated Public Turing test to tell Computers and Humans Apart.” The squiggly letters and numbers, often posted against photographs or textured backgrounds, have been a good way to foil hackers. These are annoying but effective.

The days of CAPTCHA as a viable line of defense may, however, be numbered.

Researchers at Vicarious, a Californian artificial intelligence firm funded by Amazon founder Jeffrey P. Bezos and Facebook’s Mark Zuckerberg, have just published a paper documenting how they were able to defeat CAPTCHA using new artificial-intelligence techniques. Whereas today’s most advanced AI (artificial intelligence) technologies use neural networks that require massive amounts of data to learn from (sometimes millions of examples), the researchers said their system needed just five training steps to crack Google’s reCAPTCHA technology. With this, they achieved a 67% success rate per character — reasonably close to the human accuracy rate of 87%.  In answering PayPal and Yahoo CAPTCHAs, the system achieved an accuracy rate of greater than 50%.

See also: The Insurer of the Future – Part 3  

The CAPTCHA breakthrough came hard on the heels of another major milestone from Google’s DeepMind team, the people who built the world’s best Go-playing system. DeepMind built a new AI system called AlphaGo Zero that taught itself to play the game at a world-beating level with minimal training data, mainly using trial and error — in a fashion similar to how humans learn.

Both playing Go and deciphering CAPTCHAs are still clear examples of what we call narrow AI, which is different than Artificial General Intelligence (AGI) —  the stuff of science fiction. Remember R2-D2 of “Star Wars,” Ava from “Ex Machina” and Samantha from “Her?” They could do many things and learned everything they needed on their own.

The narrow AI technologies are systems that can only perform one specific type of task. For example, if you asked AlphaGo Zero to learn to play Monopoly, it could not, even though that is a far less sophisticated game than Go; if you asked the CAPTCHA cracker to learn to understand a spoken phrase, it would not even know where to start.

To date, though, even narrow AI has been difficult to build and perfect. To perform very elementary tasks such as determining whether an image is of a cat or a dog, the system requires the development of a model that details exactly what is being analyzed and massive amounts of data with labeled examples of both. The examples are used to train the AI systems, which are modeled on the neural networks in the brain, in which the connections between layers of neurons are adjusted based on what is observed. To put it simply, you tell an AI system exactly what to learn, and the more data you give it, the more accurate it becomes.

The methods that Vicarious and Google used were different; they allowed the systems to learn on their own, albeit in a narrow field. By making their own assumptions about what the training model should be and trying different permutations until they got the right results, they were able to teach themselves how to read the letters in a CAPTCHA or to play a game.

This blurs the line between narrow AI and AGI and has broader implications — in robotics and in virtually any other field in which machine learning in complex environments may be relevant.

See also: Seriously? Artificial Intelligence?  

Beyond visual recognition, the Vicarious breakthrough and AlphaGo Zero success are encouraging scientists to think about how AIs can learn to do things from scratch. And this brings us one step closer to coexisting with classes of AIs and robots that can learn to perform new tasks that are slight variants on their previous tasks — and ultimately the AGI of science fiction.

So R2-D2 may be here surprisingly sooner than we expected.

Time to Rethink Silicon Valley?

The downfall of Travis Kalanick should show the world of would-be tech entrepreneurs that they need better role models, that they need to stop looking up to the spoiled brats who lead some of Silicon Valley’s most hyped companies and the investors who fund their misbehavior.

Travis Kalanick’s ouster from Uber is literally a watershed for the Valley, something that is capable of shaking up its entrepreneurs and venture capitalists alike. For too long, the elite have gotten away with sexism, ageism and, to coin a word, unethicalism. The cult of the entrepreneur idolized arrogant male founders who plundered money and even sank companies; the more money they raised (and often lost), the higher the valuations their companies received and the more respect they gained. Corporate governance and social responsibility were treated as foreign concepts.

Uber was not the worst offender in the tech industry; it was just the most visible and the one that got caught. Its investors have been rightly humiliated for having their heads in the sand. This is because it has for so long been clear that Uber needs management that is more responsible — to its employees, its drivers and its customers.

The trouble first surfaced in 2013, when complaints about male drivers’ assaulting female passengers met with denials of responsibility by the company. Then followed sexist “boober” comments by Kalanick; ads in France that pitched attractive female drivers; suggestions by an Uber executive that he would dig up dirt on a journalist; and the rape of a woman passenger in New Delhi partly caused by a lax screening of drivers.

See also: What to Learn From Uber’s Recent Troubles  

But through all of this, Uber investors supported the company and accepted the ethical lapses as if they hadn’t happened. All that seemed to matter was that valuations were rising; the business, expanding. Who cared that a top Uber executive had secured a copy of the medical report of the Delhi rape victim and shared it with other company executives, including Travis Kalanick, in an attempt to discredit her? The company was growing; investors were valuing it in the billions!

Things finally reached a boiling point with a series of allegations by a woman employee about rampant sexism and sexual assault at Uber headquarters. And, fortuitously, a board member illustrated the root of the problem by making a sexist remark at a meeting about eliminating sexism. The board was finally compelled to do something it should have done years ago: force Kalanick out and clean up its act.

To be fair, there are many technology companies that are, in this regard, exemplary, including Salesforce, Microsoft and Facebook. They are going to extremes to correct problems that they had found in their ranks. I know from discussions with executives such as Microsoft CEO Satya Nadella that they have been working hard and sincerely. But too many Silicon Valley stars are like Uber.

With the help of Arianna Huffington and Eric Holder, the company is at last working on reforming itself. And maybe the downfall of Kalanick will provide not only valuable but lasting lessons for the hotshots of Silicon Valley, and of tech cultures worldwide. If Uber can do it, so can the rest of the Boys Club. They have to realize that press releases won’t suffice, that real change is necessary.

Who are “they”? To begin with, the people who fund the offenders, the venture capitalists. They have not been held accountable, and they need to be.

The Diana Project at Babson College documented that, as of 2014, 85% of all venture capital-funded businesses had no women on the executive team, and only 2.7% had a woman CEO. The proportion of women partners in venture capital firms had also declined to 6% from 10% in 1999. And this is part of the problem for an obvious reason: Women don’t tolerate boys-will-be-boys behavior, because they aren’t boys. Moreover, as any number of studies have documented, diversity in companies yields a broader range of perspectives on the business itself and, often, better bottom-line results. And, as I have pointed out, high-tech women who are measurably better than men have been consistently discriminated against.

Venture capitalists are susceptible to business pressure. The money that they invest is not their own. It is raised from pension funds, universities and state governments. They must require venture capital firms to provide public disclosures about the diversity of the companies they invest in — including the gender and age of the executives. They must have a diverse set of investment partners, without sugarcoating the numbers using inflated titles for junior associates.

Next are the boards. Venture capitalists demand seats on boards as a condition for their investment but don’t usually fulfill their fiduciary duty to all shareholders and employees — they always put the interests of their own funds ahead of those of the company. They must take responsibility for the employees as well as for the success of the company, as board members are supposed to do. And startups must have diverse boards that provide balance and broad perspective, not chummy boys clubs dominated by venture capitalists.

Finally, all tech companies must take heed of the report that was put together by former Attorney General Eric Holder for Uber. There are obvious procedures to employ in making diversity a priority: such things as blind resume reviews; interviewing at least one woman and one minority candidate for each open position; limiting alcohol at work events and in the office and banning employee-manager relationships.

In most industries, discriminating on the basis of gender, race or age would be considered illegal. Yet, in the tech industry, venture capitalists brag about their “pattern recognition” capabilities. They say they can recognize a successful entrepreneur when they see one. The pattern always resembles Mark Zuckerberg, Bill Gates, Jeff Bezos a nerdy male. Women, blacks and Latinos need not apply. Venture capitalists openly admit that they only fund young entrepreneurs because, they claim, older people can’t innovate.

See also: A Trip Through Silicon Valley  

Silicon Valley got a free pass when computers were just for nerds and hobbyists. Few cared about its arrogance and insularity, because its companies were building products for people who looked just like their founders. And these child geniuses inspired so much awe that their frat-boy behavior was a topic of amusement. But now technology is everywhere; it is the underpinning of our economic growth. What is more, the public is investing billions of dollars in tech companies and expects professionalism, maturity and corporate social responsibility.

There is no free pass for the tech industry anymore. It must grow up and clean house.

The Big Lesson From Amazon-Whole Foods

I doubt that Google and Microsoft ever worried about the prospect that a book retailer, Amazon, would come to lead one of their highest-growth markets: cloud services. And I doubt that Apple ever feared that Amazon’s Alexa would eat Apple’s Siri for lunch.

For that matter, the taxi industry couldn’t have imagined that a Silicon Valley startup would be its greatest threat, and AT&T and Verizon surely didn’t imagine that a social media company, Facebook, could become a dominant player in mobile telecommunications.

But this is the new nature of disruption: Disruptive competition comes out of nowhere. The incumbents aren’t ready for this and, as a result, the vast majority of today’s leading companies will likely become what toast—in a decade or less.

Note the march of Amazon. First it was bookstores, publishing and distribution, then cleaning supplies, electronics and assorted home goods. Now, Amazon is set to dominate all forms of retail as well as cloud services, electronic gadgetry and small-business lending. And the proposed acquisition of Whole Foods sees Amazon literally breaking the barriers between the digital and physical realms.

See also: Huge Opportunity in Today’s Uncertainty  

This is the type of disruption we will see in almost every industry over the next decade, as technologies advance and converge and turn the incumbents into toast. We have experienced the advances in our computing devices, with smartphones having greater computing power than yesterday’s supercomputers. Now, every technology with a computing base is advancing on an exponential curve—including sensors, artificial intelligence, robotics, synthetic biology and 3-D printing. And when technologies converge, they allow industries to encroach on one another.

Uber became a threat to the transportation industry by taking advantage of the advances in smartphones, GPS sensors and networks. Airbnb did the same to hotels by using these advancing technologies to connect people with lodging. Netflix’s ability to use internet connections put Blockbuster out of business. Facebook’s  WhatsApp and Microsoft’s Skype helped decimate the costs of texting and roaming, causing an estimated $386 billion loss to telecommunications companies from 2012 to 2018.

Similarly, having proven the viability of electric vehicles, Tesla is building batteries and solar technologies that could shake up the global energy industry.

Now, tech companies are building sensor devices that monitor health. With artificial intelligence, these will be able to provide better analysis of medical data than doctors can. Apple’s ResearchKit is gathering so much clinical-trial data that it could eventually upend the pharmaceutical industry by correlating the effectiveness and side effects of the medications we take.

As well, Google, Facebook, SpaceX and Oneweb are in a race to provide Wi-Fi internet access everywhere through drones, microsatellites and balloons. At first, they will use the telecom companies to provide their services; then they will turn the telecom companies into toast. The motivation of the technology industry is, after all, to have everyone online all the time. The industry’s business models are to monetize data rather than to charge cell, data or access fees. They will also end up disrupting electronic entertainment—and every other industry that deals with information.

The disruptions don’t happen within an industry, as business executives have been taught by gurus such as Clayton Christensen, author of management bible “The Innovator’s Dilemma”; rather, the disruptions come from where you would least expect them to. Christensen postulated that companies tend to ignore the markets most susceptible to disruptive innovations because these markets usually have very tight profit margins or are too small, leading competitors to start by providing lower-end products and then scale them up, or to go for niches in a market that the incumbent is ignoring. But the competition no longer comes from the lower end of a market; it comes from other, completely different industries.

The problem for incumbents, the market leaders, is that they aren’t ready for this disruption and are often in denial.

Because they have succeeded in the past, companies believe that they can succeed in the future, that old business models can support new products. Large companies are usually organized into divisions and functional silos, each with its own product development, sales, marketing, customer support and finance functions. Each division acts from self-interest and focuses on its own success; within a fortress that protects its ideas, it has its own leadership and culture. And employees focus on the problems of their own divisions or departments—not on those of the company. Too often, the divisions of a company consider their competitors to be the company’s other divisions; they can’t envisage new industries or see the threat from other industries.

This is why the majority of today’s leading companies are likely to go the way of Blockbuster, Motorola, Sears and Kodak, which were at the top of their game until their markets were disrupted, sending them toward oblivion.

See also: How to Respond to Industry Disruption  

Companies now have to be on a war footing. They need to learn about technology advances and see themselves as a technology startup in Silicon Valley would: as a juicy target for disruption. They have to realize that the threat may arise in any industry, with any new technology. Companies need all hands on board — with all divisions working together employing bold new thinking to find ways to reinvent themselves and defend themselves from the onslaught of new competition.

The choice that leaders face is to disrupt themselves—or to be disrupted.