Silicon Valley futurist Paul Saffo has been thinking, talking, and writing about the future of technology for more than two decades.
Among other jobs, he serves a managing director at investment research firm Discern Investments, teaches at Stanford, and is on the board of the Long Now Foundation, which challenges society to think of its actions in the context of the next 10,000 years.
He's also a regular at Valley events. Last week, we saw him talk on a panel about future trends at the Churchill Club. We caught up with him a few days later and got some great insights into where things are going right now.
Among his insights:
- The next huge opportunity in technology is robots -- but not necessarily in the traditional sense of slaves on wheels. Rather, the company that figures out how to create something truly useful with the masses of data being collected by personal sensors (like cellphone cameras and RFID tags) will be bigger and richer than Google.
- Google is like the underground fungus that creates those "fairy rings" of mushrooms -- it expands by creating "dead profit zones" where nobody else can compete, then gradually moves outward.
- Facebook's big challenge now is creating social context, so your weird high school friend is kept separate from your boss and that professional contact you really need. If Facebook doesn't do this right, Google or another competitor will, and Facebook will become like MySpace.
- He refuses to join Quora because he thinks it encourages people to compromise the privacy of their friends.
- The death of interactive TV led to the rise of the first big Web businesses.
- Silicon Valley is driven as much by idealism as greed, but the culture now really discourages flashy displays of wealth.
Here's an edited transcript of the interview.
Business Insider: I saw you speak at the Churchill Club panel on future trends last week and I really liked your idea about Google's robot cars. The idea you’re gathering information for Google (StreetView images) and in exchange you’re getting a real world physical service (a ride in a robot car) for free or for a discount. We’ve seen a lot of that online. Do you think we’re going to start to see more of that kind of approach in real-world goods?
Paul Saffo: Yes. It’s no coincidence that Google would be a place that could do it. You pay and you pay with the data you give and so it’s only a natural extension that as we carry ever more sensors on our persons, that we’re going to end up having an economic bargain with the people who provide the sensors....
The essence of Google’s business model is it monetizes externalties. The old fashioned monopoly was a Microsoft style monopoly, a John D. Rockefeller style monopoly where you stare the other company down and you kill them. Google’s model of competition is to create profit deserts. That it moves into an area and by monetizing externalties, completely destroys any competing business models. So have you used MapQuest lately?
BI: No.
PS: Google bought Keyhole, turned it into Google Maps, and made it impossible for anybody else to compete as a mapping company in the mapping space.
You’ve seen fairy rings in the forest, a ring of mushrooms? The real living organism’s underground, the mycelium. It absorbs all the nutrients from that spot, completely absorbs all the nutrients and nothing else can grow there and then it grows in the next margin out, so you get this expanding circle and nothing can compete with the mushroom.
I have no idea whether Google will do the car thing or not. Larry and Sergey don’t tell me their secrets at night, but it would be a logical part of the model.
MR: Google just rolled out an NFC payment system. I was just in a small coffee shop this morning and they had one of those Square readers there. What do you think is going on with payments?
PS: We’re definitely moving towards cashless payment. As a forecaster, a rule of thumb that I follow is if you want a short term success, look for something that’s been failing for about twenty years. I've got a drawer full of failed attempts at cashless alternatives, Mondex cards, Visa Stored Value cards.
We’ve been trying to get rid of cash for a long time and I think part of what kicks us across towards cashless alternatives will be offering spiffs to consumers. [Ed: like Google is doing tying Google Offers, its Groupon-like discount program, to its Wallet payments system.]
You have the first hints of it. A supermarket frequent buyer program is an economic bargain. You’re getting a discount on products in exchange for sacrificing the privacy of what you purchased. So it’s already happening and that basically consumers in this country already, long ago, decided they were perfectly happy giving up privacy in exchange for a 5% discount.
BI: Yes. It seems like a few loud Americans complain about privacy but it seems like a lot of people don’t really care when it comes to day to day.
PS: Well, it’s life experience. In Europe there’s still the memory of what happens if your name gets on the list. You could end up in a gas chamber.
First it used to be Americans gave up their own privacy. Now with things like Quora and others, they sell their friends out for their own benefit. I refuse to join Quora. I refuse to join. I’ve had email address on my business card since 1983. I’ve been around and I'm not a Luddite. I will not join Quora and I just won’t link all of my accounts together.
BI: One of the predictions of the night that got the most support at the Churchill Club event was the idea that social networks are going to turn into places for real and respectful relationships. I'm not sure I agree with that -- look at all the teens on Facebook trashing each other. How do you figure?
PS: Facebook has succeeded so well at making it easy for people to connect. It has done a very bad job of is making it easy for people to replicate the social groups they have in real life.
So you just don’t want that wacky friend from high school whom you’ve known forever and you see once a year at a reunion, you just don’t want them talking to a professional friend. Close professional friend, close high school friend. Love them both dearly. Don’t want them to talk to each other.
If Facebook is smart, it will finally evolve in a way to make this easy. Frankly, this is Google’s opportunity. Eric Schmidt was recently lamenting that he screwed up on appreciating the social phenomenon. This would be Google or somebody else’s opportunity. It’s also where Facebook either has to go or it’s going to run the risk of being the next My Space.
Another social trend that is going to happen -- when it’s really easy to connect to everybody, the status will be to be disconnected, and so all sorts of people are going to lie through their teeth about not being on social networks.
I suspect that what’s going to happen is that business cards will come back in the fashion in the same way ties came back in fashion in Silicon Valley at its downturn. Someone will do a business card in the right way like you do a smart phone exchange – if it’s Apple, a card will appear on your iPhone, kind of come out of an envelope and flip around a couple of times and settle on the screen and it’ll have nice pseudo engraving and all that.
BI: Another topic that came up is that more innovation is being generated elsewhere in the world and coming back to Silicon Valley. Do you think Silicon Valley is losing its edge?
PS: Silicon Valley was unique once upon a time. That would’ve been until about the mid-80s, and then Silicon Valley became primus inter pares where it was the first among many growing innovation centers. Now we have innovation centers everywhere and each one seems to have a slightly different competency that some are selling into the global market.
Innovation comes out of something deep in cultures. It’s as much local as it is global and each innovation center is different than the others. What goes on in Taiwan is nothing like Silicon Valley and Korea is nothing like Taiwan and each one does contribute in different ways.
We will start having some sort of Chinese software ideas make it out here in the same way that what happened with social gaming in 2004 in Korea. I remember coming back to Silicon Valley and saying to all who’d listen, “You better pay attention to this because… trust me, cartoon like characters on smart phones is going to be a big deal in the United States in about five years.” They looked at me like I had two heads. I said, “I guarantee it. It’s going to happen. You see it in Korea. Virtual money in cartoon characters.”
What’s really is different about Silicon Valley is how long a run it’s had. Michael Murphy famously said, “Silicon Valley is the only place that eats its old,” and he’s absolutely right. To put it very bluntly, Silicon Valley is not built on the spires of earlier success. It’s built on the rubble of earlier failures. That we let industries have wipeouts here and we recycle the people sometimes quite literally.
Think about the World Wide Web. The web was invented on the Swiss-French border by an English boffin and took off in Silicon Valley because right before then we had a whole industry, interactive TV, crater. After billions of dollars of Hollywood money, and what it left was a whole generation of C++ programmers who understood rich media and they were literally standing around thinking, “Well, what do we do next?”
Our buildings are two stories high and surrounded by grass, so when people jump they just sprain their ankles and there they are at home on the couch with an ice pack on their ankle and they realize, “I’ve got a half finished business plan on my computer,” and off they go and start a new company.
BI: A couple weeks ago, I was talking to Steve Blank and he credited the VC community here. He credited a group of crazy people here who want to make "obscene" amounts of money, and the system that lets them do that.
PS: But right now [the financing business] going through profound change because of the rise of the super angels. I can remember back in the 1980’s if you were really successful entrepreneur you cashed out, you dabbled a little bit or you started another company or you dabbled a little bit but mostly you gave your wealth to the VCs to invest for you. Then what happened in the 90’s/late 90’s everybody said, “Well wait a second, I can invest this myself,” and all of a sudden the people who in the past who would’ve been limited partners in venture funds are the venture fund’s competition.
I also don’t think this is about obscene wealth. My experience in Silicon Valley is it’s a combination of two desires by entrepreneurs. Of course people want to get rich, but people also want to change the world. It’s almost like we have an angel on one shoulder saying, “Change the world. Change the world,” and a devil on the other shoulder saying, “Get rich. Get rich.”
The entrepreneurs who succeed keep the angel and the devil in balance and they say, “I am going to change the world but also my just reward is I’m going to get rich,” and so successes in entrepreneur means listening both to the angel and to the devil.
Silicon Valley’s culture encourages that. If all you’re doing is you’re trying to get rich, your social capital is not going to rise. You see it with how the latest round of entrepreneurs are spending their money. Sure, they’re building their mansion but it’s the greenest mansion on the planet and instead of Ferraris they’re buying Teslas. There’s a real culture here at the moment of "show no chrome."
BI: Although I did see a Maserati in the parking lot outside SSE Labs the other night.
PS: But I’ll bet you it was an old guy.
BI: I don’t know. I didn’t see the person driving it. I just saw the car.
PS: Yes. The one qualification, there are people who are just serious car heads here. But it's not the flash that you saw during the dot com bubble and it’s certainly nothing like – the flashiest guys in the Valley’s history was the wave of semiconductor guys in the 1980’s. That was the period when everybody was quoting Nolan Bushnell’s famous quip, “He who dies with the most toys wins."
BI: You mentioned interactive TV. That's one of those ideas that come up again and again and never takes off. Now I see Google and Apple and maybe Microsoft trying yet again.
PS: Sure. Well of course TV itself, somebody said “Television. Half Greek, half Latin. Nothing good can possibly come from it.”
We do have interactive television. Call of Duty in its first 24 hours sold $360 million in product. That is more than Avatar sold on its first day of release. So yes, we have interactive TV.
The first wave of folks got interactive TV wrong because back then cathode ray tubes were scarce and expensive resources and you had to use them for multiple purposes, so it’s the image of people playing their Atari players or playing Pong on their old Sony vacuum tube television set.
So if you pull out interactive TV from the notion of interactivity, we've gone through this vast shift from an old age of mass media to an age of personal media. If you don’t participate, you don’t have the experience. For example, you can’t watch Google. You've got to put something in to get something out. We just call it something different. It’s not that we’re watching an interactive version of I Love Lucy.
BI: Any other things that you see get predicted all the time and just kind of make you roll your eyes? What about robots?
PS: I’ve been on record: it’s not a new forecast, but the next big thing is without a doubt robots.
Here’s the logic. The 1980s were shaped by cheap microprocessors. The arrival of cheap microprocessors in the late 1970s made it possible to build cheap desktop computers.
The 90’s were shaped by the arrival of cheap communications lasers in the late 1980s. That gave us an access decade where our devices were defined not by what they processed for us, but what they connected us to. The poster child of the decade was the World Wide Web.
The most important hardware technology this decade is cheap sensors – RFID tags, video cameras so cheap that you can put them on every phone or on top of every light bulb.
We built the computers in the 80’s. We networked them together in the 90’s and now we’re giving them eyes, ears, and sensory organs. Well, all you need to do is put wheels on the things and you’ve got robots.
We have robots flying all over Iraq and Afghanistan. We have robotic cars – Google’s robotic cars have driven over 200,000 miles on California highways. We have little kids building robots out of Legos and so the only thing missing is the business idea that makes this take off. All the hardware is there. We’re just waiting for the Steve Jobs or Bill Gates of robots to light the fuse and blow people’s minds.
BI: There's also a resurgence in home automation. That, to me, is one of those ideas that geeks are fascinated by but the rest of the world doesn’t seem to think it’s that interesting.
PS: Well, home automation so far has just been too much trouble. It’s a lot of work for not a lot of result and to me the industry.
If I was going to pick one industry just ripe for reinvention, it’s home security. Home security systems are still stuck in the 1980’s. It is shocking how primitive the system is with these crappy little motion detectors and little door traps that look like something you would’ve hooked to a dry cell battery and then the controller technology recently – it’s embarrassing.
I think the way it’s going to happen at the moment is going to be a combination of people's security anxieties and energy. We’re going to go eventually to paying differential prices for power at different parts of the day. The moment you do that, then you have an incentive to get a washing machine that when you push start it says, “If you wait until 6:00 it’ll cost you this much less. Do you mind if I wait?” and then it talks to the meter.
The other surprise will be going to LED lights. We just did a kitchen remodel and I put LED lighting in the kitchen and it’s really amazing. All the LED lights in the kitchen consume less power than a single 40 watt bulb of an old incandescent light.
So there will come a point where you say, “Gee, my washing machine’s talking to the meter. I’m putting in those lights and I got to change the switch for the LED light anyway so I’ll put in the IP feature and then I can control my lights when I’m away.” So it happens as a slowly rising tide of putting more and more intelligence.
BI: So of all the stuff that you’re hearing about these days, what do you think is overhyped or overvalued?
PS: There is huge froth around social media. It’s not that it’s overhyped. Hype is an essential part of the innovation process of everybody fooling each other into thinking this is a big deal. But what I’m seeing is everybody is dragging their ugly mutt out of the kennel parading it before investment bankers to try and sell it.
It was Picasso’s observation was the first man to compare his lover’s lips to a rose was quite possibly a genius but every man thereafter, to make a comparison, was most certainly an idiot. I would be very skeptical about social media at this point.
BI: And what are the trends that people are ignoring or undervaluing?
PS: We already talked about it. The whole sensor side of just what happens from ubiquitous sensors is almost never talked about and it is literally all around us. Google got rich by harnessing our search strings. Somewhere out there there’s a company that will be larger than Google who will monetize all the data streams coming off all the sensors that we unwittingly carry on our persons and in our cars and have around our house.
So maybe the teens is the decade of, “Have your robot call my robot.”
For the latest tech news, visit SAI: Silicon Alley Insider. Follow us on Twitter and Facebook.
Join the conversation about this story »
See Also:
Source: http://feedproxy.google.com/~r/typepad/alleyinsider/silicon_alley_insider/~3/u82KJW-8Eo8/paul-saffo-qa-2011-6
Rush Limbaugh Denzel Washington Tom Cruise Rolling Stones
,
