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8 Leadership Articles from a Whirlwind Year

January 30, 2018by Mike Chalmers Mike Chalmers No Comments

As we race through the year, we look back at ten significant leadership articles. It’s been a whirlwind politically, economically, and socially—locally and internationally. As world events rage on, we’ve tried to keep you informed of how to operate your business with excellence under every scenario.

We’ve also looked at some of the more important leadership issues of our day, like the modern recurrence of antisemitism and the necessary response, in the workplace and in every domain. This week again reminded us of our responsibility as leaders, of the dire consequences of inaction, as International Holocaust Remembrance Day was marked around the world.

1. Take Five and Outlast the Competition

Jazz piano was a key component of the Brubeck sound

A leader’s Work-life balance is something we all know is important, but all too often the busyness of life, making deals and completing projects place family and relationships on hold. We squeeze out even downtime with a book or a stroll through downtown because we think our stress will only be eliminated if we just press on and work harder. But the research shows otherwise. See how you can do better by making time for things that matter.

Read: Take Five and Outlast the Competition

2. The Myth of the Ideal Customer

The fairytale image of a common legend

There have been both helpful and unhelpful trends in every era of market strategies, and sometimes it’s important to step back and ask some basic questions about the validity of how we reach real people and solve actual problems. We’ve all heard people tell us about the great relevance of targeting the all-important idealized customer for our products. Is the approach legitimate?

Read: The Myth of the Ideal Customer

3. Don’t Just Dream Big

SwivelBlog article on Dreaming in Reality

In a year of big promises and big problems, we wrote about the need to do more than just dreaming great big dreams. The world needs more people who can connect their dreams to reality.

Read: Don’t Just Dream Big

4. High Performance Entrepreneurship

Swivel Blog High Performance Entrepreneurship

How to perform at a higher level.

It’s a wonder business schools don’t have required courses to study the musician’s approach to high-pressure performance. Leaders have much to learn from musical artists about how to do excellently, consistently.

Read: High Performance Entrepreneurship

5. How Not to Over-Promise and Under-Deliver

Don’t Over-Promise

It never ceases to amaze how many people are experts at promising the world and amateurs at delivering. It doesn’t have to be that way. And it shouldn’t. Little erodes trust more in a business relationship than the inability to achieve the minimum results agreed to in a deal.

Read: How Not to Over-Promise and Under-Deliver

6. Holocaust Remembrance and the Leadership Dilemma

Auschwitz (Holocaust Remembrance and the Leadership Dilemma)

Auschwitz-Birkenau Memorial and Museum

In 2017, this article was posted for Holocaust Remembrance Day in Israel. Only this past week, with the marking of the international remembrance ceremonies, politicians and celebrities like Israel’s own Gal Gadot took to social media with the #WeRemember hashtag. It’s critical to learn, to remember, and to educate others about the leadership role in such dark events.

Read: Holocaust Remembrance and the Leadership Dilemma

Today is Holocaust Remembrance Day. A day to honor the Holocaust Victims. May we never forget. #WeRemember pic.twitter.com/iinponofd2

— Gal Gadot (@GalGadot) January 27, 2018

7. Tesla’s Value Proposition is a Lesson for the Airlines

Tesla Model S at a Supercharger station

Time will tell the ultimate outcome, but when the United Airlines debacle unfolded last year, CEOs of major companies the world over were trying to determine how to position their own customer service levels and commitments. Even now, this article is one of our more read pieces. Is it because of the challenges airlines face? Is it because of the continued excitement around Tesla? Let us know what you think.

Read: Tesla’s Value Proposition is a Lesson for the Airlines

8. How to Find a Great Domain

What should your domain name be?

While the world faced many challenges in 2017 one thing was steady and strong—since 2014 the number of new founders has increased substantially and going into the last year the Bureau of Labor Statistics put the number of self-employed workers at 8,602,000 in the US alone. That activity is mirrored in Canada and elsewhere around the world, especially with the growth of several new industries (see our piece on 10 Emerging Markets as Big as the Internet). One of the greatest founder challenges is naming a firm or product and choosing a web domain. So we produced this article to help with searching for and finding a gem worthy of your brand.

Read: How to Find a Great Domain

Succeeding in 2018

Take the best lessons of the past year and apply them in 2018 as it unfolds. Remember to be diligent, but take the time to reflect and regroup. Lead with character, insight and wisdom. Avoid the sinkholes of moral and political dilemmas and build a brand your grandchildren would be proud to call their own.

Learn, teach, lead, adapt, and share the road ahead.

Tesla Semi: A Geo-Economic Innovation

November 17, 2017by Mike Chalmers Mike Chalmers No Comments

Economists have long argued that transportation inefficiencies amplify the differences between superpowers and developing nations. While much of the world is focused on eliminating the digital divide,^* geographic barriers remain as towering economic differentiators. That fact is not lost on transportation innovators like Elon Musk, revealing Tesla’s new electric Semi late last night.^[1]

Bigger News Than A Slick Semi

As news media and enthusiasts talk about how bold and exciting the reveal is, don’t miss the more groundbreaking economic earthquake underlying the announcement. Tesla is on a trajectory to alter the balance of geographic dominance, through overland innovations.

Land of the Free-Flowing Rivers

One of the great advantages the US has always had over other markets, is a superior network of rivers and waterways. From the early days of interstate trade in the fledgling democracy, this reality made the country wealthier through more rapid exchange of goods and ideas, culminating ultimately in export efficiencies and dominance globally.

Peter Zeihan and George Friedman have argued that the US is “endowed… with an abundance of navigable waterways—17,600 miles of them—that lubricate the country’s economy. Transporting goods by water costs 1/12 of shipping them overland. Of similar size to the US, China has only 2000 miles of navigable waterways.”^[2]

In other words, using existing modes of transport, under current efficiency models, the costs to move shipments around and within countries like China are significantly more profuse than in America, based solely on geography. But any degree of improvement in alternative modes of transport has the potential to widen the chasm between the US and others—if America embraces technologies like the electric semi. Or, to level the playing field more and more, as other nations in Asia, Europe, and Africa follow suit.

The Costs of Trade

The way around a lack of natural geographic transportation routes has always been to build infrastructural efficiencies—roads, tracks, bridges, train stations, airports—and all the fueling, ticketing, tracking, and maintenance ecosystems that contribute to transport continuity.

But infrastructure which overcomes geographic inefficiencies is most often achieved at a high cost throughout each phase of development, from design to construction to maintenance, over the long-term.

In modern times, waterways, railways, roads, and airways—all forms of conveyance—are maximized by the efficiency of the transport vehicles operated in any given domain. Arguably, there have been limited changes to most of these freight modes in recent times. This is not to ignore or downplay huge safety improvements, speed improvements, and other linear advancements. But it is to say, much of this has been predictable along a curve.

Tesla Semi as a Transformative Product

Tesla’s Semi reveal demonstrates that innovations in some industries are set to leapfrog incumbent players and tech as they push for non-linear progress, sidestepping more entrenched industries with their own problems of inertia and old ways of thinking.

Basic Stats for Tesla Semi

The numbers disclosed at the event should be impressive to anyone, even if you aren’t well versed in trucking and domestic freighting.

0-60 mph in 5 seconds (15 seconds for diesel is standard)
0-60 mph with 80,000 lbs gross vehicle weight in 20 seconds
65 mph up 5% grade “continuous at max gross” (45 mph for diesel is standard). Musk notes, “You’re earning 50% more per mile than you are in a diesel truck.”
500-mile range at GVW and highway speed (80% of routes are less than 250 miles)
Drag coefficient 0.36 (better than a supercar). Musk: “Bottom of the truck is completely flat, so air can flow straight through.”
4 independent motors (one for each of the rear wheels)

Tesla will not be the only all-electric truck targeting a 2019-2020 delivery date. Volvo and others have announced that they too have seen the direction all this is heading, and are not about to give up their own turf in the transport wars without a fight.

Tesla’s Edge

But Tesla has created a phenomenon. And there’s enough secrecy concerning details along the way that when they do large public reveals—like last night’s—it’s the first time competitors gain even a high-level view into what they’re up against.

It seems that Musk has taken a page out of Steve Jobs’ playbook, and he’s managed to create a similar kind of enthusiasm during live presentations, unlike Jobs’ own stage successors, who haven’t quite learned that it’s not just about tone of voice, pace of delivery, and a few well-timed pauses for effect.

Musk’s rough-around-the-edges presentation style is proof positive that timing and oratory weren’t ever the main thing in the tech world or any other business domain when it comes to engaging fans and early adopters. What clearly resonates is the wonder of discovery and the enthusiasm of the inventor.

Closing the Gap

Will the US be the primary market for Tesla Semi? Or will other nations seek to shift their own geographic imbalances through a universally more efficient trucking network? Time will tell who has bought in (as of today, Walmart has already pre-ordered 15). But one thing is certain. This is more than a new gadget or toy. If Tesla Semi delivers even the basic statistics Musk promises, it will alter the trucking industry for good, and may just change the trade balance of a few states (or even nations) in the process.

*The digital divide describes the gap between those with access to computing power and the web, and those without.

References:

1. Tesla Semi Event, 8 p.m. PT, November 16, 2017: https://livestream.tesla.com/

2. Hobbs, J. J., & Missouri, U. O. (2016). Fundamentals of World Regional Geography. Brooks Cole, 520.

Take Five and Outlast the Competition

November 6, 2017by Mike Chalmers Mike Chalmers No Comments

Take Five is one of the great jazz hits of the 20th century. It’s also a good phrase to remember for project-consumed managers, geniuses, and entrepreneurs.

Work Beyond Work

Leaders often face problems others don’t understand—especially related to evenings, Fridays, holidays, and days off in general.

Most people look forward to finishing up their workday or workweek and taking the evening or weekend off to spend time with friends and family. But innovators typically enjoy some of their most productive hours after others go home. It’s when they can think and process the day. And work more.

The problem is that this leads to a lack of any real time out—any break to be spent with real people outside the corporate enclave, any respite, or even personal growth in other areas. It results in work from early morning to late at night with no letup. Such individuals even dream about the tasks at hand, or don’t dream at all because of a lack of adequate sleep (you know who you are).

The Model Leader

There are some intuitive reasons for this pattern. Leaders can’t always plan when those they lead need direction and accountability. The best leaders don’t micro-manage their workers, but if they’re good at what they do, key players want access to them during critical workflows. Their knowledge and insights concerning important decisions, or during crises is often seen as critical.

Innovators lead by example, demonstrate excellent habits and routines, and show what it means to contribute. So they can’t be seen slacking or dropping the ball. The perception is that if a leader pauses, the result is a loss of productivity.

Self-Adapting Teams

The truth, however, is that leaders who can’t pull back from the action, haven’t trained their teams to self-manage, self-regulate, anticipate and adapt. They haven’t modeled good leadership. They’ve taught people that they are indispensable, rather than a guide along the way.

Sometimes leaders do this intentionally because they want to feel valued, but teams have the greatest respect for leaders who develop the entire group’s capacity. Such groups are far more capable even if left alone.

The best leaders plan and determine direction a few steps ahead of their teams. They do this so they can delegate responsibility and back off. They work to show their teams the big picture, and give them the space to find a way to achieve a shared vision.

Great leaders also don’t overvalue themselves or care if they receive the proper praise. Organizational researcher Jim Collins has ably demonstrated that what he calls “level 5 leaders” are less concerned about public accolades than they are that the companies they build thrive. They’re concerned more with fact than perception and outperform their competitors.

The 24/7 Entrepreneur

Recently making the rounds again on social media is a reputed quote from Bill Gates, which goes something like this: “I never took a day off in my twenties. Not one.” I’ve also seen it attributed to Richard Branson.

Perhaps some billionaire tycoon out there said it. While you can find it in tabloids and quote sites, the factuality of it is in many ways irrelevant, because it’s crazy.

If you teach your people to never take a break—never have a day off—you are teaching insanity and paving the way to burnout. You’re advising people to throw away the very friendships and family ties that make success worth achieving.

Medical Risks

It’s no secret that beyond damaging relationships and missing out on real life, there are physiological and psychological effects from overworking.

Is it true that some people work 24/7 and make millions—billions even? I don’t care. And you shouldn’t either.

Success achieved by being unethical, habitually unsafe, or self-destructive (as in leading to your or others’ untimely death), is not success.

The underlings in this equation have little control; overwork cascades from the top of the organizational pyramid to the bottom. —S.G. Carmichael

Sarah Green Carmichael in her Harvard Business Review article outlines they cyclical nature of bad managerial habits: “Managers want employees to put in long days, respond to their emails at all hours, and willingly donate their off-hours — nights, weekends, vacation — without complaining. The underlings in this equation have little control; overwork cascades from the top of the organizational pyramid to the bottom.”

In other words, leaders not only mess up their own lives but impose the cycle on everyone around and under them.

Is Hard Work and Balance a Paradox?

Too many managers believe that it’s impossible to get ahead unless you work yourself and your teams into the ground perpetually. But research continues to show that this, just like the idea of the ideal customer, is a myth. As reported by Yale School of Medicine, a study in the Journal of Occupational and Environmental Medicine in June 2016 demonstrates that “working long-hour schedules over many years increases the risk of heart disease, non-skin cancer, arthritis, and diabetes.”

Beyond 50 hours per week, men and women both suffer negative effects over time.

In a study of more than half a million participants in the US, Europe, and Australia, researchers “found that those who work more than 55 hours a week have a 33% increased risk of stroke compared with those who work a 35- to 40-hour week. They also have a 13% increased risk of coronary heart disease.”

Long hours has also been linked to depression.

Don’t Replicate Reckless Abandon

Carmichael points to several issues including a “mix of inner drivers, like ambition, machismo, greed, anxiety, guilt, enjoyment, pride, the pull of short-term rewards, a desire to prove we’re important, or an overdeveloped sense of duty.”

A sense of purpose is important but an overinflated arrogance leads people to prove to themselves and others that no one can do what they do. They are “essential” to everything in their care.

But great leaders develop other thinkers and doers and help them to see their own purpose within the organization. They often do this by being intentionally absent for one or more days, and leaving a project in what they trust to be capable, if imperfect hands.

Over time, the greatest managers can be gone for longer periods of time, or be focused on completely different efforts, even while present. When their leadership teams fail at something, they don’t immediately castigate them for poor performance. They debrief, regroup, and induce the kind of critical thinking and ingenuity of others that fosters real personal growth and trust.

As a consequence, the individuals they mentor don’t need to be told where they went wrong. They accept their own failures and own the path to reinvention and success.

Go Where the Data Lead

The corporate world is beginning to realize that as the general public learns how unhealthy it is to work incessantly, promotion of a new work-life-balance is actually an incentive to attract and retain new hires. In 2010, Netflix was among the first to offer unlimited vacation time to its workforce, and the trend has continued.

Virgin more recently followed suit saying, “Flexible working has revolutionised how, where and when we all do our jobs. So, if working nine to five no longer applies, then why should strict annual leave (vacation) policies?”

This is not to say you need to have unlimited vacation time for your employees. Some now rather have mandated vacation time, where the company removes the stigma of a “break”, and people are required to take time off. Others incentivize vacation time—One company provided $1,000 to workers to seize the opportunity and take a break.

As a leader, it starts with you. You could implement any plan you want for your employees, but if you don’t model it, they won’t believe that they really have the latitude to rest.

Plan to Reboot

It’s less about your particular strategy than it is about having a strategy, and a way to recharge, and nurture your people—even protect them from physical or mental health issues.

The research is clear: the human frame will break down when abused. Don’t destroy the body you have, and don’t permit those around you to suffer either.

Like a car without engine oil or coolant, so are people without the reinvigoration of fresh air, downtime, and social interaction.

So reboot every now and again. Take five throughout the day, take a day or two each week, and take a week or two every so often to recalibrate and resume your work with increased energy, focus, and purpose.

*Inspired by the song “Take Five” by the Dave Brubeck Quartet, recorded in 1959. A jazz masterpiece, the track is eponymously named for its unusual 5/4 time signature.

The Myth of the Ideal Customer

October 5, 2017by Mike Chalmers Mike Chalmers No Comments

“Target your ideal customer, and you’re more likely to succeed.” So say many marketing experts. But is that really good advice? Should you only seek to acquire the perfect buyer? And what would that mysterious creature look like anyway? Let’s talk about the myth of the ideal customer.

In theory, it makes sense. You need to have a target audience in mind or your lack of focus will result in poor sales and unenviable revenues. And, a customer with easy-to-solve problems and a Walt Disney-like enthusiasm about working with you sounds like a great idea.

Unrealistic Targeting

The problem is that too many people target customers based on superficial metrics. We tend to say thinks like, “Our ideal customer persona is an individual or company with a lot of expendable income, who will recommend us to others, and is not easily upset or disappointed.”

In other words, we want to have minimal troubles for maximum revenues. Who wouldn’t jump at such an opportunity? This, however, is more like a get-rich-quick scheme than a realistic formula for success.

Real ventures require diligence, experimentation, occasional failure, disaster recovery, team building, social graces and communications savvy. In short, hard work on repeat, day in and day out. Companies must adapt and reinvent themselves, and not only during the startup phase.

Don’t Target Your Ideal Customer—Target Your Ideal Challenge

A better phrase might be to target your ideal challenge. Your company has strengths and weaknesses that are compatible with a host of industry problems. Discovering which problems you can solve is part of the process of discovering the customers you can serve.

What do you do if the problems you solve are connected to difficult or demanding customers? As in every question related to your business model, you need to be sure the numbers make good financial sense. However, in many cases you will discover that there is much revenue to be gained by solving problems for demanding—even difficult—customers. And the reward is in the challenge.

Businesses Targeting Sub-Optimal Customers

Arguably, some of the most radically innovative companies over the past decade or more have targeted ideal challenges, irrespective of the ideality of the customer. Just as often, those companies have had extremely difficult customers but have served them so much better than other companies that they gained massive market share over time—over a period of prolonged hard work, problem-solving, and stellar customer service.

Examples of Innovative Firms with Sub-“Optimal” Customers

Company	Challenge	Sub-“Optimal” Customer	What Happened
Amazon (AMZN)	Initially, to establish itself as the go-to online book retailer; eventually as the predominant online retailer bar none	Initially, an erudite group of readers, eager to search for and acquire books more easily; eventually the average consumer—discontent, cynical, hard-to-please	Amazon targeted challenging customer segments and delivered greater satisfaction than incumbent retailers could. And it turns out those challenging customers rave when satisfied and multiply
Netflix (NFLX)	Take on big box video rental companies with an entirely new model	Individuals spending under $10/monthly with high expectations of audio/visual quality	Netflix began to beat big Blockbuster et al. before its Internet features took off (remember DVDs by mail?). It was the new subscription business model and relaxed policies that ultimately won the day
PayPal (PYPL)	Work within (and around) the financial services sector to create a new way to transfer money, with or without incumbent banks	Individuals transacting small amounts of money and banks with old ways of doing things	PayPal made the offline equivalent of handing cash to a friend an online reality. It took a piece of the pie and the banks had to participate
Tesla (TSLA)	Create and market the world’s first minimum viable product (MVP) electric car for mass distribution	Educated, environmentally conscious consumers, futurists, and high-tech users	Tesla was arguably first to a true MVP. The company created its own market, selling direct to customers to keep costs down, iterating with each model, ultimately launching the affordable Model 3
Wired (parent: Condé Nast)	Serve a new, burgeoning audience largely unreached by old world publishers	Futurist thinkers and dreamers with vociferous appetites for geek-level content and global news	Wired was the most popular offline and online content in its category among the small but growing segment of “techies.” Today, tech consumers are more rapidly expanding than ever and Wired is among the more significant publishers to have helped to fuel that drive

As you tweak (or destroy) your own business model, consider these examples and add your own to the mix. You can easily see that the most exciting stories in entrepreneurship, innovation, and leadership have been in industries with very, very difficult customers.

Give An Old Idea the Boot

So forget about targeting your “ideal customer”. Target instead your ideal challenge. What problems are your teams most suited to tackling, regardless of customer difficulty?

It’s not that you should ignore opportunities to serve customers who are easier to please. But remember the adage “no pain, no gain.” Apply that to customer acquisition and satisfaction also.

Sometimes the greatest gains come through higher risk endeavors. Don’t pursue risk for risk’s sake. Rather pursue those projects and opportunities that you are well suited to tackle, and find ways to mitigate the risks posed by challenging customer segments.

Plan, architect solutions that change the game, and deliver on your promises.

AI and HI: Why Human Intelligence Will Remain Invaluable

August 29, 2017by Mike Chalmers Mike Chalmers No Comments

There’s a lot of fear surrounding artificial intelligence these days and that fear is warranted—in part. Jobs will increasingly be replaced by highly capable robots. But human intelligence—the thoughtfulness and creativity of a personal mind—will always remain invaluable and sought after.

Ancient Technologies and Their Impact

Don’t simply look to the industrial revolution for analogical precedent. Humanity has always maintained a certain tension between technologically aided activities and those performed by humans alone. Consider the simplest kinds of assistance humans enjoyed even thousands of years ago.

In the ancient world, animals and ingenious contraptions assisted in the pressing of olives for oil, the transportation of individuals and even groups of people, and the building of massive architectural structures.

The Fears of Hard-Working People

One can imagine even then, that hard-working people feared that the machines, and the introduction of organized labor and machinery threatened past ways of life.

Certainly things changed. But no one ceased to walk because of horsepower innovation. Ordinary human bipedal transportation has continued to be an enjoyable, and productive form of mobility. Handcrafted works have continued to be valued despite machine-enabled productivity. And mechanical innovations—in ancient or industrial times—did not remain in the hands of a few wealthy individuals or corporations.

The Upside of Innovation

The same innovations that generated wealth for governments and organizations of all kinds, made their way into homes and privately owned operations for greater ease and increased wealth. Farms were expanded through mechanical devices and horsepower or ox-power, and households were run more efficiently.

The difference between then and now, is that we aren’t talking merely about about magnifying human braun—increasing the speed of productivity and improving the quality of products on massive scales. We’re talking about human aided intelligence, and even independent intelligence, able to operate autonomously. Machines are being taught to think and learn. Eventually machines will make decisions independently of humans.

While job displacement is the first major concern on the horizon, this latter point on autonomy is a further issue that requires much debate. But the fear factor related to machine assistance, improving the lives of people everywhere, should be distinguished from machine autonomy which threatens the same.

From Simple to Complex Advances

Today we are looking at the value of human intelligence in contrast to what has already arisen in machine intelligence, and what’s on the way.

For decades in some measure, machines have aided human intelligence. More primitively, calculators improved the accuracy of computational work. More recently, desktop computers have made it possible for individuals to run entire multimillion dollar firms from very small offices. Today, businesspeople around the globe travel and maintain frenetic schedules using smartphones, often as their primary device.

The Musician’s Model

Machines have long aided in music production. Music is particularly illustrative here because, as an art form it has been dominated by human composition and development. Consider the case of MIDI (musical instrument digital interface) and drum machines, popularized in the 1980s.

The mechanical sounding timbres and rhythms of electronic music even became part of its charm and contributed greatly to emerging urban sounds and chart-breaking hits. Rap and hiphop, and virtually every major pop genre seized on the opportunity to introduce the innovations of machines to albums and live performances. That is a positive example of how forward-thinking innovators have risen above the threats of obsolescence.

And none of it made old-fashioned instruments outdated. If anything, machine-aided music provided enough of a competitive platform for new music genres that the very addition of acoustic guitars or drums to tracks made such contributions seem fresh and vital.

Freedom from Old Structures

Even independent record labels emerged as a result of new media and technology. Rather than continuing to sell-out to major labels who earned a lion’s share of the artist’s revenues, musical entrepreneurs increasingly broke free of that cycle, spreading the wealth around.

It was human intelligence behind the application of new technologies that was the difference maker. As much as it is true that nefarious purposes have been contrived to oppress individuals with technology, it has often been the case that technologies have aided people in freeing themselves from that same fate. This is why competition on all levels is important.

Focus on Productivity and Quality

There’s a well worn adage that the ends don’t justify the means. This is often said to prevent people from doing something unethical in order to accomplish something good, resulting in a continuing moral dilemma. As long as we realize that improved productivity is often good and not unethical, we can embrace new means—new ways of getting more done, and achieving greater levels of excellence.

From a jobs perspective it’s true that many jobs will be displaced by AI. However, welcoming innovations will only mean that newer jobs with greater capacity will emerge. If my goal is simply to use a mechanical plow in a field, then I will be threatened by automated machinery that replaces the old plow. But if my goal is to plow more fields in one day, and with greater efficiency provide better products for my customers, the new way will become my preferred way.

This doesn’t answer the question of whether artificial intelligence will one day take over the world and rule humanity. That’s a question for another article. On the question of jobs however, it seems evident that those willing to embrace new technologies will have a greater hope of contributing to the new economy.

See also the article, Market Highlight: Artificial Intelligence, for broad details about the emerging horizontal market and where the opportunities are arising.

Market Highlight: Artificial Intelligence

August 10, 2017by Mike Chalmers Mike Chalmers No Comments

As artificial intelligence becomes less the stuff of science fiction novels and more a part of daily life, questions of its impact arise more and more. Investments in the technology are increasing rapidly and the trajectory for innovation and profitability is huge.

We’re no longer talking about first phase public AI like Siri and Alexa, where getting directions to the mall or adjusting your music playlists seemed cute and inventive. And we’re certainly not talking of the more egregious voice-navigated phone reception services of the past decade.

False Starts

Remember those early exchanges when you’d call a service provider like roadside assistance needing immediate help, and the interactive voice response (IVR) agent blocked you from speaking with a far more capable human?

IVR: Hello. What would you like to do today? You can visit our website at—

Customer: —I’d like to speak with a real person.

IVR: I’m sorry, I didn’t understand. Would you like sales or billing? Or would you like to learn more about our—

Customer: —Op-er-at-or! RE-AL PER-SON!

That kind of technology was hopeful in a most limited sense. It taught us what AI should not look like. It showed what intelligence wasn’t. And yet, it was only after “more than 40 years of research” that companies like AT&T could manage voice recognition of a handful of words.^[1] It was highly sophisticated, but no match for humanity.

Pipe Dream or Reality?

As in several of the industries in our Ten Emerging Markets series, including virtual reality and robots, it’s important to evaluate whether AI in particular (and in conjunction, machine learning and big data) is big enough and advanced enough to sustain the kind of market growth that will fuel innovation and entrepreneurship.

While the answer may seem obvious, diligent investors should look to more objective evidence to determine where we’re at. Ever since the Jetsons, Star Trek, and just about every future-casting show presented autonomous computers and talking devices, pop culture has at least thought about what the world would eventually be like. (Readers of science fiction thought about these things even earlier).

The AI on the horizon may just be the hoped for convergence of technology and affordability. It will reduce—rather than increase—frustration.

Hardware and software over the past 20 years have improved by orders of magnitude. Machines under development no longer need to follow only very specific instruction sets. They learn and they grow. They interpret and not only respond but execute on complex tasks. We are in a different world.

Background

The dream of intelligent machines has resurfaced publicly now and again through the decades. AI enthusiasts were revived in their aspirations in 1994, when Fritz3 beat Kasparov in a single game. Wired Magazine wrote a piece in response called The Last Human Chess Master, in which experts claimed things that could have been pulled from this year’s headlines.

Software creator Larry Kaufman predicted, “We’re going through a period where one activity after another is going be transferred from the domain where humans are superior to the domain where computers are superior…. After 50 years, there’s not going to be much left in the intellectual area that computers can’t do better than people.”^[2]

“Man is in the middle of a revolution,” said Monty Newborn (ibid).

But when IBM’s Big Blue beat world champion chess master Gary Kasparov in 1997 in a six-game match, the world took note.

After the defeat of Kasparov under tournament rules in ’97, sights were set higher still. In 2011, IBM’s Watson supercomputer handily beat two Jeopardy champions simultaneously.

And, in 2014, what was seen by many as the ultimate test of artificial intelligence—the Turing Test—was passed for the first time by a computer posing as a teenage boy. Named after World War II code-breaker Alan Turing, the test would determine if a computer could be said to “think.”

Originally thought to be beyond the limits of AI, Complex strategy game Go has been played in China for some 2,500 years.

In May of 2017, Google’s AlphaGo defeated champion Go player Lee Sedol of Korea. AlphaGo was originally developed by DeepMind because Go is a “googol” (1.0 × 10¹⁰⁰) more complex than chess.^[3] As such, machine mastery of Go represents a formidable step forward for artificial intelligence.

In addition to all of these specific lines of evidence for the increasing viability of artificial “thinking” and “reasoning”, there is a general sense now publicly and among experts in related industries that we are on the cusp of something significant. Something much bigger than mere games.

But one of the strongest proofs that the new AI is here to stay is a bit of an awkward fact. The reality is that the example given above of someone completely frustrated at very old voice technology demonstrates the corporate world’s obsession with cost-cutting and other efficiencies.

Companies were willing to suffer major setbacks in customer engagement in order to save on salaries and benefits of frontline phone operators, for about a decade. Is there any chance they will ignore these newer, far more capable instances of machine intelligence? Not likely.

Maturity and Opportunity

While there is plenty of speculation as to how big this emerging horizontal market will be, Reuters reported stunning news in April. “The Global Artificial Intelligence market is poised to grow at a CAGR of above 35% during the forecast period 2015 to 2022.”^[4]

The biggest players the report lists include Apple, Bloomberg, Coursera, Facebook, Fingenius, General Vision, Google, IBM, Inbenta, Intel, Microsoft, Numenta, Nvidia, Qualcomm, Sentient, and Tesla.

Accenture claims it “analyzed 12 developed economies and found that AI has the potential to double their annual economic growth rates by 2035.”^[5]

Big data and other fields will only be more important as time goes on because intelligent analysis of stores of information will always be a significant business (and life) problem.

This highlights the fact that several enabling technologies have created the environment necessary for AI to thrive. Accenture highlights big data and unlimited access to computing power as significant factors.

Conclusion

Experts in Artificial Intelligence and in enterprise markets have validated this phenomenon as a growth market. There are still concerns about a general business case for the technology in daily use. However, as investments ensue and the world watches autonomous vehicles and other real-world applications take hold, few doubt that AI on a level previously only dreamed about may be just around the corner.

This article is Part 3 of a series called Ten Emerging Markets as Big as the Internet. Part 1 looked at Virtual and Augmented Reality (VR & AR). Part 2 was about Robots and Robotics. Our next market highlight will take a look at Financial and Security Technologies. Stay tuned.

Resources

WIRED—Happy Birthday, Hal: https://www.wired.com/1997/01/ffhal/
WIRED—The Last Human Chess Master: https://www.wired.com/1995/02/chess/
DeepMind—AlphaGo: https://deepmind.com/research/alphago/
Reuters—Global Artificial Intelligence Market Analysis and Forecast 2022 by Size, Share and Growth Rate: http://www.reuters.com/brandfeatures/venture-capital/article?id=4999
Accenture—Why Artificial Intelligence is the Future of Growth: https://www.accenture.com/lv-en/_acnmedia/PDF-33/Accenture-Why-AI-is-the-Future-of-Growth.pdf
UofT—Alan Turing and the Imitation Game: http://www.psych.utoronto.ca/users/reingold/courses/ai/turing.html
TED—How did supercomputer Watson beat Jeopardy champion Ken Jennings?: http://blog.ted.com/how-did-supercomputer-watson-beat-jeopardy-champion-ken-jennings-experts-discuss/
The Guardian—What is the Turing test? And are we all doomed now?: https://www.theguardian.com/technology/2014/jun/09/what-is-the-alan-turing-test (includes transcript portion from the winning attempt)
Washington Post—Artificial intelligence is all around us and it’s here to stay (VIDEO): https://www.washingtonpost.com/video/business/technology/artificial-intelligence-is-all-around-us-and-its-here-to-stay/2016/06/22/ca8d32b0-37eb-11e6-af02-1df55f0c77ff_video.html

Market Highlight: Robots and Robotics

July 31, 2017by Mike Chalmers Mike Chalmers No Comments

Robots are rising. No, a dystopian future has not arrived (where terminator-type metallic despots begin ruling the world). Rather, a newly emboldened industry is racing to create a true helper class of intelligent technology, designed to make our lives easier and better. The opportunities available are varied and vast.

In this second highlight of our series of Ten Emerging Markets as Big as the Internet, we’re looking at (a) robots, as creature-like helpers; and (b) robotics, as the industry of hardware and software running everything from auto manufacturing to prosthetic (bionic) limbs and assistive devices.

Robotic Boom

There is great excitement these days over robots, from autonomous lawnmowers to drones that follow you and document your adventures. There are myriad important advances in all areas of robotics, including better, more cost-effective machinery for manufacturing and new components making possible superhero-like exosuits designed to—among other uses—help stroke victims walk again.

Intelligence and Automation

There’s plenty of overlap in robotics and artificial intelligence, but the latter is so enormous in its own right that we’ll focus our next post in this series entirely on the subject of the state of AI, concerns, and opportunities. For the purpose of this article, it’s important to affirm that a big part of the enthusiasm around robotics is precisely because AI has come so far.

Background

Omnibot 2000 by Tomy of Japan. Image: theoldrobots.com

If you were a kid in the 1980s, you likely saw ads for household robots. I personally saw the Omnibot in a popular consumer electronics magazine and can still remember imagining life with my very own droid.

But as PC Magazine wrote, there were good reasons robots for your home did not become a sustainable phenomenon at that time (even though every kid begged their parents for one). Technology was too limited. They promised the ability to pour a drink or lift 1-pound objects, but not much more. And cost to purchase was prohibitive for what they really were—toys.

The main limitations in the 70s and 80s were numerous and gargantuan. Practically speaking, even high-end workstation CPUs were little more than overweight number counters. The first 4-bit 4004 microprocessor by Intel was used to that end.

Voice processing was limited. Actual multitasking was still a pipe dream. Computers weren’t portable—the earliest “laptops” were beasts weighing 25 pounds or more. Robot vision was mostly feigned with eyes that lit up but didn’t “see.” Battery technology was abysmal. Disk and storage devices were pitifully slow and capacities infinitesimally small. And so on.

Today, there is no debating that several factors have combined to make robots of every kind plausible.

Maturity and Opportunity

Groundbreaking engineering feats in countless STEM disciplines have changed the landscape. The following list is a small subset of the advances that have completely changed the picture and lands us where we are today.

Real-time processing today is so fast that devices that cost less than $1,000 enable interactions and activities for users that were only previously imagined in science fiction. The emergence of multi-core processing, uniting fast processor clock rate with “more complex design but a higher instructions-per-cycle rate” continues to make even the most process-heavy applications possible.
More robust wireless connectivity means that remote devices can offload processing (and storage) to the cloud, taking advantage of near infinite parallel computing and analytic capacities. If there were still limitations for onboard computing, connected computing has caused this challenge to nearly evaporate.
Rechargeable batteries are now portable power plants, capable of supplying the needs for even large motor vehicles. GM, Nissan, Tesla, and virtually every carmaker has now validated this reality. If a new $44,000 Tesla Model 3 can do 310 miles on a single charge (at an estimated 3,800 lbs), the new generation of robots will have to nap less than you, to do significantly more than you do.
Advances in machine learning and artificial intelligence mean that robots are able to “learn” from their mistakes—even collectively—so that autonomous projects can improve outcomes. In the last decade we have seen the introduction of vastly intelligent search, voice assistants like Apple’s Siri and Amazon’s Alexa, natural language processing and translation, and countless other advances. All of these have combined to offer promise for even more substantive innovation.
Machine vision via cameras, LiDAR (light detection and ranging), and other technologies has meant that robots are no longer blind to environments. Facial recognition and other systems will allow them to even recognize and distinguish between individuals.

Vertical Markets

Many are anticipating that Jetsons-like personal robot helpers are not far off. Whatever area of the robot revolution intrigues you most, in order to take advantage of market expansion, it’s important to have less abstract conceptions of what it’s all about, and more firm figures as to growth and significance.

FT reports that with compound growth already at 17 percent annually, “the robot market will be worth $135bn by 2019.”

Remember also that robots and robotics are part of a giant horizontal market, meaning that, like other markets in our list, there are several vertical markets where disruption is occurring in tandem. Some of these include:

Retail and public venues. Seoul is already preparing to deploy robots in advance of its winter olympics to assist tourists as they arrive for the games. Robots that guide and assist visitors in various ways are being created by numerous companies.
Voice services. Assistants like those by Apple and Amazon, as well as call center assistants with vastly improved skills, are all improving at rapid rates and will continue to displace roles currently filled by humans.
Law Enforcement and Security. Robots standing in for humans in dangerous and after-hours occupations has long been in the sights of risk and insurance firms globally. Despite some comical scenarios now emerging, like the recent drowning of robo-guard “Steve,” the opportunities in the industry remain significant.
Home automation. While the personal robot remains an obvious and sustained dream for much of humanity, more automated features throughout the home are possible. Much creativity will lead to leaps forward, first in luxury conveniences and subsequently in “must haves” for the rest of the population. Our upcoming article on the Internet of Things (IoT) will add detail to this trend.
Laborforce replacement. With debates over minimum wage increases and constant pursuits of higher quality services, countless companies are looking at robotic complements or even replacements for low-paid jobs. Even flipping burgers will soon be a robot-only occupation. With Elon Musk’s pronouncement that robots will be capable of “everything, bar nothing” that we do, it’s at least conceivable that in the near future numerous roles will be threatened.
Manufacturing. For decades, assembly lines have utilized robotic arms and processes in the production of automotive vehicles and parts. Companies such as Dell revolutionized the way that assembly plants not only built sophisticated products but even custom configured machines on a massive scale (mass customization). Robotic advancements will only continue as the technology lunges forward.
Robotic (bionic) limbs and human-machine interfaces. New progress in prosthetics and even nerve control of robotic extensions is advancing in promising ways. This yields hope for altruistic reasons as well as business opportunities.

Conclusion

It’s an exciting time to be an innovator. The greater robotics market is showing significant opportunities for investment and growth. Even the threats posed to other markets is an education in what to prepare for, to ensure you’re well positioned to take advantage and mitigate against surprises.

There are certainly very real concerns about the emergence of robots, as Musk and others have noted. There is also much hope for what they will allow us to do. Conceivably, robots as assistants is a hopeful enterprise. Theoretically however, robots which learn and are greatly enhanced through artificial intelligence pose concerns as well. We’ll look at this in more detail in our article on AI.

Enough people believe that robots are finally headed for viability in several sectors that VC investments are increasing at an enormous pace. With so much effort underway there is little doubt that marvels of science and discovery are still ahead.

This article is Part 2 of a series called Ten Emerging Markets as Big as the Internet. Part 1 looked at Virtual and Augmented Reality (VR & AR). Our next market highlight will take a look at robots and robotics. Stay tuned.

Market Highlight: VR and AR

July 25, 2017by Mike Chalmers Mike Chalmers No Comments

Real and unreal worlds are colliding. The lines are beginning to blur, and alternate realities will only come together more in the coming months and years. Is VR finally heading for economic viability? What about AR?

How Real is the Market?

For those who have watched emerging tech for long enough, engineered experiences are not a new concept. The most important advances in both VR and AR were made several decades ago. That’s because it was in the imaginations of inventors and futurists that virtual worlds were ultimately conceived.

In fact, the first virtual experiences were more than a century ago, leading some to suggest that the present market for VR is just an extension of an old fad. But there is a difference, and for leaders today the market is worth following, if not contributing to.

Background

Sir Charles Wheatstone invented the earliest predecessor to modern VR—the stereoscope—in the 19th century. Two photos presented in stereo transformed a 2D picture into a 3D immersive experience.

Stereocard Used in a Stereoscope - SwivelBlog

Image: Underwood & Underwood (Library of Congress). A woman uses a stereograph at home.

Queen Victoria was so enamored by the device that its popularity surged:

By 1856, more than half a million viewers had been sold and the vogue spread to America. A new type of device known as the Holmes stereopticon or the American stereoscope was promptly invented by Oliver Wendell Holmes, an open viewer utilising natural light, which would go on to dominate the market between around 1880-1940.”^[1]

The Economist notes that VR concepts have fueled “science fiction’s novels and movies since the 1950s.” In the 1960s M. L. Heilig patented devices including a head-mounted stereophonic (audio) unit and a multisensory VR system for a more immersive cinematic experience.^[2]

More recently in the 1990s VR had a sort of false coming of age that never fully culminated in the revolution it promised. In 1996 at the fifth World Wide Web Conference in Paris, VRML (virtual reality markup/modeling language) was among the “hot new technologies,” promising 3D worlds online.^[3] It became an ISO standard by 1998 when “Both major browsers, Netscape Navigator and Microsoft Internet Explorer” boasted support for the technology.^[4]

Shortly afterward the protocol died.

From this brief look back, it might appear that VR is a fad, albeit persistent. And such skepticism would be warranted only if investors ignore the major differences between the past and the present state of (a) the technology, (b) the experience, and (c) the commercial opportunities now available.

Then and Now

What we learned in the 90s was that the technology was not nearly as impressive as the hype. Gaming consoles like Sega’s VR system induced motion sickness. Poor graphics combined with process latency to cause what one scientist labeled the “barfogenic zone.”^[5]

Effectively, you would turn your head, but the lag between your vision and multi-sensory perception created dizziness and nausea. Disorientation turns out to be a bad thing when exploring new worlds.

Today, the gear and platforms available have answered just about every challenge previously faced. In March 2014, the BBC announced that “Oculus has made great strides in reducing – perhaps even eliminating – the motion-sickness problem.” That’s right when Facebook paid $2 billion for the company (in fact, $3 billion with compensation packages).

Even those reporting small latency issues declare that the capabilities are “so close we can taste it.” Legit VR is emerging.

Virtual Reality and Augmented Reality

There are two branches of the technology—VR and AR. But in reality there is too much overlapping R&D and investment to completely bifurcate them.

VR

That said, it’s helpful to think of the differences according to use cases. For example, pure VR is popular for total immersion, where the user [typically] remains in one place. Gaming, entertainment, and fully immersive tours and conferencing are examples. Before leaving office, Barack and Michelle Obama gave a virtual tour of the White House via multiple VR technologies.

Commercial and Air Force pilots have been trained on flight simulators for decades, and other industries with high barriers to entry have similarly utilized VR. So we know the technology can be applied in ways that provide measurable benefits. While much of the focus recently has been about fun and games, the potential for VR to be useful in business is real. With technological advances, cost reductions, and economies of scale, the outlook is promising.

AR

For AR, the user can interact out in the real world with technological assistance. Something as simple as heads-up displays for vehicle navigation are an example of AR. So too glasses that augment human capabilities with facial recognition and translation services. Soon, user guides will be overlaid onto complex DIY projects.

Imagine wearing Google Glass and assembling an IKEA kitchen step-by-step, as the company directs your every action. Or arriving on the scene of an accident, calling 9-1-1 and having the operator guide you through CPR visually. The possibilities are extensive.

Maturity and Opportunity

To quote The Street, VR is “still in the nascent stage,” yet Facebook, Samsung, Sony, HTC and others are heavily invested. With revenues of over $2 billion in 2016, some expect that number to scale more than 10 times by 2020.

Last year, Recode pointed out that Facebook’s acquisition of Oculus transformed the investor landscape, as as “the number of venture capital deals and total dollars invested” in VR and AR technology had tripled.

Vertical Markets

The markets being disrupted by this technology are already numerous, but there are almost limitless ways in which innovations may be introduced. For now, expect to see continued changes in the following:

Gaming
Real Estate
Tourism
Medtech (#5 on our list of Ten Emerging Horizontal Markets)
Education
Film and Entertainment
Business Conferencing
Engineering
Fitness and Athletics
Corporate Training
…many more

Conclusion

Virtual worlds and augmented landscapes appear to be here to stay. Prudent investors may look at a potential 10 times growth target over the next few years and reduce it somewhat in predictive modeling. But even a significantly more modest assessment remains promising.

Could the phenomenon go away? It’s possible. Could it be unprofitable for many? Yes. It’s more likely however that just as the video phone was a failure for nearly a century before becoming part of our everyday arsenal of tools (thanks to Skype, FaceTime, Zoom, etc.), at some point, a sufficient form of the technology emerges. At that point, after enough optimism over its perceived benefits, ordinary people are ready to give it a try.

This article is Part 1 of a series called Ten Emerging Markets as Big as the Internet. Our next market highlight will take a look at robots and robotics. Stay tuned.

References

[1] Victoria and Albert Museum – Stereographs: http://www.vam.ac.uk/blog/factory-presents/stereographs
[2] MIT Timeline of Wearable Devices: https://www.media.mit.edu/wearables/lizzy/timeline.html
[3] Wired: Fifth International World Wide Web Conference – Paris https://www.wired.com/1996/04/junkets-41/
[4] Wired: VRML Becomes ISO Standard: https://www.wired.com/1998/01/vrml-becomes-iso-standard/
[5] BBC: How Virtual Reality Overcame Its ‘Puke Problem’: http://www.bbc.com/future/story/20140327-virtual-realitys-puke-problem
[6] Université du Québec en Outaouais – Definition of Cybersickness: http://w3.uqo.ca/cyberpsy/en/cyberma_en.htm.
“Cybersickness is believed to occur primarily as a result of conflicts between three sensory systems: visual, vestibular and proprioceptive. Accordingly, the eyes perceive a movement that is out of sync by a few milliseconds with what is perceived by the vestibular system, whereas the remainder of the body remains almost motionless (Stanney, Kennedy, & Kingdon, 2002). Cybersickness can also be caused by factors related to the use of virtual reality equipment (e.g. heaviness of the helmet, closeness of screen to the eyes). Lawson, Graeber, Mead and Muth (2002) note the added possibility that these side effects are also connected to Sopite Syndrome (fatigue due to the movements).”

Regulating AI

July 23, 2017by Mike Chalmers Mike Chalmers No Comments

On Friday, two tweets from prominent sources (Fortune and TechCrunch) highlighted opposing views arising in the debate over artificial intelligence. The question is whether it should be regulated.

Musk and Amazon’s CTO have very different perspectives on AI.

I’ll just share a quick word today, as soon on SwivelBlog we’ll be releasing a longer treatment on AI. It’s part of our list of the Ten Emerging Markets as Big as the Internet.

Existential Concern

Elon Musk’s view, which has gained much attention after he shared it in a meeting of governors, is that AI poses an existential threat and caution is required. Regulation is warranted and strongly advised.

Alarmism

Rodney Brooks thinks Musk does not fully apprehend the present nature of AI. Tye Brady of Amazon Robotics says AI should not be regulated. Experts responding to Musk have painted his view as alarmist.

The Jury’s Out

I won’t render an opinion here without first presenting fuller summaries of the arguments point-by-point. Suffice to say for now, that very heavily invested leaders are saying starkly contrasting things. You will want to understand this issue further, especially if you intend to participate in the emerging market.

Exercising Caution

Some are saying not to worry; artificial intelligence is going to serve us. Others like Musk caution that the threat is real, and more so now that we are beginning to see it at work. It’s no longer science fiction.

Before you render judgment, consider also that Musk is one of a group of scientists who also see threats in the landscape ahead. Consider, as the Telegraph reported, that physicist Steven Hawking has said, “The rise of powerful AI will be either the best or the worst thing ever to happen to humanity. We do not know which.”

Stay tuned as we post our 10-part series on Ten Emerging Markets as Big as the Internet. Article #1 will focus on VR and AR; Article #2 will cover Robots and Robotics; Article #3 will focus on Artificial Intelligence and its interrelated topics.