The industries of the future
The coming era of globalization will unleash a wave of technological, economic and sociological change. In business areas as far afield as life sciences, finance, warfare and agriculture, if you can imagine an advance, somebody is already working on how to develop and commercialize it.
The near future will see robot suits that allow paraplegics to walk, designer drugs that melt away certain forms of cancer, and computer code used as both international currency and a weapon to destroy physical infrastructure halfway around the world.
Today coastal China particularly the areas around Shenzhen and Shanghai, has become the world’s factory.
In the 30 years from 1982 to 2012, India’s poverty rate dropped from 60 percent of the population to 22 percent. Life expectancy surged from 49 to 66 years. The changes in China are even bigger. Poverty rate plummeting over the same period from 84 percent to 13. What was bad for industrial America and Europe was very good for India and China.
Here come the robots
Japan’s current life expectancy is 80 years for men and 87 years for women and is expected to rise to 84 and 91 respectively, over the next 45 years. The labor shortage will hit service-industry jobs like eldercare with ferocity.
Enter the robots. Our future caretakers are being developed in a Japanese factory right now. Toyota build a nursing aide named Robina. In response Honda created ASIMO (the Advanced Step in Innovative Mobility robot).
As the population of developed nations continue to age, they create a big market for those Japanese robots. And caretaking robots, alongside robotic limb technology, may simply be the first in a new wave of complex robots entering our everyday lives. Robots will be the rare technology that reaches the mainstream through elderly users first.
About 70 percent of total robot sales take place in Japan, China, USA, South Korea and Germany.
There are more than 100 automation departments in Chinese universities, compared with only 76 in USA. In South Korea, teaching robots are seen in a positive light; in Europe, they are viewed negatively.
Types of jobs that were reserved for people only are now opening to robots. Two key developments have dovetailed to make this possible. Improvements in modeling belief space and the uplink of robots to the cloud. Belief space refers to a mathematical framework that allows us to model a given environment statistically and develop probalistic outcomes. The recent exponential growth of robot data is due largely to the development of cloud robotics. Big data has enabled this quantum leap for the cognitive developments of robots. Another major development in robotics arrives through materials science, which has allowed robots to be constructed of new materials.
The market for consumer robots could hit 300 billion USD by 2017 and industrial robots should hit 40 billion USD in 2020.
General Motors introduced concept of driverless car already in 1939. But before 2000s, the driverless car was more a futuristic concept.
Accidents are caused by the four Ds:
- Distraction
- Drowsiness
- Drunkenness
- Driver error
Driverless cars can reduce all of them.
The term robot was coined in a 1920 play Rossum’s Universal Robots by Karel Čapek. Robots in essence represent the merger of two long-standing trends: the advancement of technology to do our work and the use of servant class that can provide cheap labor for higher classes of society.
Erik Brynjolfsson is talking about the great paradox of our era. Productivity is at the record levels, innovation has never been faster and yet at the same time, we have a falling median income and we have fewer jobs. People are falling behind because technology is advancing so fast and our skills and our organizations aren’t keeping up.
The assumption with robots is that they are all capex, no opex. But the capex you spend on robots doesn’t get rid of the opex that people still require. We need to revise that assumption to account for the ongoing cost of keeping our people more competitive in tomorrow’s economy. We aren’t as easy to upgrade as software.
The future of the human machine
Lukas Wartman is working on the cutting edge of genomic technology. He had cancer. All cancers begin with damaged DNA. The DNA become damaged through time, or inherited genetic makeup, or environmental factors like cigarette smoke – and as a result it mutates.
Genomic research is not a new thing. But breakthrough that launched genomics on a collision course with medicine occurred in 1995, when genome of a living organism – a bacterium – was sequenced for the first time. The first notion of human genome sequencing was done in 2000.
The size of the genomics market was estimated at a little more than 11 billion in 2013 and is going to grow faster than anyone could imagine.
Bert Vogelstein and his partners proved how DNA mutations turn into cancer in 1980s. His key partner was Luis Diaz.
In 2009 Diaz and his colleagues launched Personal Genome Diagnostic – PGDx. When things go right, the PGDx team can tell you why you have cancer and which medicines might stop these mutations. Diaz is saying that we should find a new way how we develop drugs, since we now develop drugs one at a time. There need to be more drugs than genes.
We will face precision medicine, tailored to a specific person’s genetics and the characteristics of their tumor. Developing drugs targeted to the genetics of an individual. Scientists now want to break the brain’s code and begin to leverage genomics to diagnose and treat neurological and mental illnesses. Problem with mental illnesses is that they are usually caused by many contributing factors, not just a single genetic mutation.
A gene ACP1, that produces a protein that appears in excessive quantities in the brain of people who had attempted suicide. Idea that somebody could take a pill to prevent a suicide is not that crazy in connection with genomics future.
BaseHealth company product is Genophen. It sequences your genome but then uses a “risk engine” – a big data program that applies algorithms across medical, behavioral and environmental information.
Craig Venter has started two companies that aspire to add decades to our life. One is Synthetic Genomics, the other one is Human Longevity.
There are three things necessary to create breakthrough advances in the life sciences: great scientists, lots of capital for academic research and a venture capital market to help turn academic research into commercial products.
In the 15 years since the great race to sequence the human genome, China has emerged as a leader in genomic research. Beijing Genomic Institute is their leading institution. At the core of the Chinese strategy are companies and institutes like BGI that live in the gray space between state and private sector. In 2010 BGI got a line of credit of 1.58 billion USD from the China Development Bank.
The best example of how not to position a country for and industry of the future comes from Russia. Trofim Lysenko, was a person responsible for Russia not to move in the right direction in the field of genomics.
The adoption of new technologies finally occurs when ease of use, economic savings and trust all come together to work toward change. Genomics will become a trillion-dollar industry, extending lives and nearly eliminating diseases that kill hundreds of thousands of people a year today.
The code-ification of money, markets and trust
While our genome is being decoded over the next 20 years, our money will be coded and wrapped within powerful tools for encryption.
The code-ification of money, markets, payments and trust is the next big inflection point in the history of financial services.
Jack Dorsey from Twitter is also cofounder of Square. Square is part of a fierce competition for the future of payments, competing with platforms, companies like Google Wallet and Apple Pay and other start-ups, like Stripe. Square and its competitors are trying to reduce friction in the marketplace.
Innovations like eBay and PayPal have had a significant impact in creating the first wave of coded markets. Coded markets will now reach into the world’s most isolated communities and they will link emerging markets to the global economy even more closely.
In 2002, only 3 percent of Africans used mobile phones. Today that number is over 80 percent and growing at a faster rate than any other region of the world. Mo Ibrahim is a 69-year-old Sudanese entrepreneur. He founded Celtel in 1998. a continent of 1 billion people and almost no phones could be a highly promising market for telecom.
Kenya’s M-Pesa program is a prime example of these new technologies that show the growing power of coded money and markets. It became widely successful. By 2012, 19 million M-Pesa accounts had been created in a country of 43 million people, and approximately 25 percent of Kenya’s GNP flows through the network.
In the rise of digital payments, the issue of trust has always been just beneath the surfaces. When it comes to coded trust, eBay offered the first major break-through.
Sharing economy is interesting concept. Nobody is really sharing anything in the sharing economy. One company that seems to recognize that is Uber.
With coded markets available to even the smallest vendors, a trend has arisen that pushes economic transactions away from physical stores or hotels and toward individual people, as they connect either locally or online.
Trust has become code-fied through user rankings and feedbacks.
Could a currency break the traditional bond with the nation-state? Could digital technology go as far as replacing banks or governments as arbiters of trust and create a new protocol for doing business around the world? A fiat currency fundamentally depends on trust. The word fiat means »it shall be«.
Bitcoin is more easily thought of as a public ledger system than as a physical currency. Bitcoin wallets do not actually house bitcoins; they store the coin’s private keys. Bitcoin’s answer and its method for establishing a genuine breakthrough in digital trust, is a cryptographic invention called blockchain.
The blockchain that Nakamoto invented allows Bitcoin to operate a reliable, constantly updated, and publicly available ledger of verified transactions without relying on any central figure or middleman to maintain order. It’s a network of trust, created with code.
One of the potential benefits of blockchain or bitcoin as a matter a fact are microcharges.
The real security threat of Bitcoin is not security of the blockchain but the infrastructure around it.
Governments have struggled to adapt their regulatory environments to Bitcoin because of the speed of its emergence. In march 2014, the IRS defined bitcoin as property, not currency, subject to capital gains taxes.
The blockchain may have the technological ingenuity to become the protocol for trusted transactions. The biggest threat to bitcoin is potential central bank electronic ledger.
The Blockchain will be to banking, law and accountancy as the Internet was to media, commerce and advertising. It will lower costs, disintermediate many layers of business and reduce friction.
In 2013, the Bitcoin community had a comparable carbon footprint to Cyprus: 8.25 megatons.
Author thinks that the vast majority of the cryptocurrencies in circulation today will disappear to nothing, but the category will endure.
The weaponization of code
15.8.2012, a shadowy group linked to the Iranian government attacked Saudi Aramco, the world’s largest energy company. Their weapon of choice: a computer virus.
The weaponization of code is the most significant development in warfare since the weaponization of fissile material and has created a domain of conflict with no widely held norms of rules.
The targets of botnet attacks are usually big corporations or governments. Most countries are developing cyberdefense strategies.
Theft of intellectual property from China costs US economy 300 billion USD in 2012. The total value of US IP was 5 trillion, so China is stealing 6 % of it. China now has a stake in majority of financial assets in the world. The have a financial and political stake in things staying calm; they have incentives to steal but not to break.
All of North Korea’s internet connectivity is supplied by a single Chinese company, China Unicorn.
IoT market will grow to 19 billion USD yearly. Growth is motivated by four factors:
- Connected cars
- Wearable technologies
- Smart homes
- Manufacturing
As IoT is rising, cybersecurity has not kept pace. In the future possibility that cyberwar will be fought between country and company is just as possible as between country and country.
In the cybersecurity will have a similar model as IT industry, a lot of acquisitions and big companies consolidating activities under one roof.
Government can and should work extensively with the private sector to make sure that the brightest minds are working to develop cyberdefenses.
Data the raw material of the information age
We have adjusted to a reality where everyone is reachable at all times, even our children, and we expect and demand to be plugged in at all times. I don’t know if this is a good thing or a bad thing, probably a bit of both.
If you have sixty seconds to do something, you have ten seconds to figure out a better way of doing it. You need to reserve a set-aside in your budget to figure out whether the other part of budget is accomplishing what you want.
Big data is inherently contradictory. It is both intimate and expansive. It examines small facts and aggregates these finite facts into information that can be both comprehensive and personalized.
The most interesting innovations in machine translation will come with the human interface. Universal machine translation will accelerate globalization on a massive scale.
The best hope for feeding our more populated world comes from the combination of big data and agriculture – precision agriculture. Sensors and cloud will enable data collection and better agriculture. The early investors are big agribusinesses, including Monsanto, DuPont and John Deere. Monsanto tool is FieldScripts. Those big agribusinesses will probably keep buying the most promising start-ups.
Precision agriculture also offers the promise of a major reduction in pollution.
Wall street has taken advantage of big data as much as any industry. Black-box or algorithmic trading is now the norm in finance. The next impact of big data in the finance world will be in retail banking. The application of big data to enhance operations and product development in retail banking is known as “fintech”.
A bank is a giant ledger that records how much money belongs to people and how much money people owe them. Could you actually operate a bank like a technology company? Probably no. The issue is regulation.
In a coded-money economy, a lender knows a merchant’s true value because it has real-time access to its books.
Palantir specializes in data management, transforming massive and often messy data into visualized maps and charts. Finding patterns that we would otherwise overlook and displaying them in ways that we can’t miss is Palantir’s goal.
The rise of big data has reawakened the world to privacy as a public-policy issue. In a world without privacy everybody will have a scandal. And in that world, the very idea of what is scandalous behavior has to change.
Data is the raw material of the information age. Who owns the data is very important.
When data goes from being unstructured to structured it takes on the values and prejudices baked into its formulation.
The geography of future markets
Every country wants to build their own Silicon Valley.
What will be important with the industries of the future is domain expertise. This will tend to concentrate in specific cities or regions.
In current landscape, the most important work in the commercialization of genomics is clustered around universities – Harvard, MIT, Stanford and around Baltimore due to John Hopkins.
Cybersecurity is all close to government – Washington D.C., Tel Aviv, London, Moscow.
Robotics is around manufacturing locations – Germany, Japan, South Korea.
Banking, fintech – London, New York and Silicon Valley.
Countries with high education and low wages will export IQ. That will be the Baltics, India and China.
But there are also views, that with the expansion of big data, domain expertise can be globally spread. Author view is that the geographic spread of domain expertise in the industries of the future will ensure that the next stage of globalization produces centers of innovation and commercialization that are more geographically diverse than the last stage, when Silicon Valley enjoyed 20 years of domination.
Today alpha cities are Shanghai, London, New York and Tokyo. Second and third-tier are small regions like Berlin, Frankfurt and Munich. The important element of cities is infrastructure, along with programs that allow people to use that infrastructure more efficiently. Infrastructure is important, but cities should also foster culture of openness.
Estonia and Belarus are both in the same geographical space, but their trajectory is very different. Estonia is a little country that could. In 1992 lead by 32-year-old historian Mart Laar they started the road to development. They choose to bypass analog telephony and went straight to digital. Every school in Estonia was online in 1998. In 2000 internet access was put in constitution as a human right. They introduce tax reform – flat rate of income tax.
In 2014 Estonia offered e-residency to any person in the world. Now they spend more on primary education than any other country. School enrollment and literacy is 100 percent.
The principal political binary of the last half of the 20th century was communism versus capitalism. In the 21st century is open versus closed.
The Chinese government’s strategy is to jump-start development in seven key industries:
- Energy saving and environmental protection
- New-generation information technology
- Biotechnology
- High-end equipment
- New energy
- New materials
- New-energy vehicles
Currently those industries represent 4 percent of GDP, goal is 15 % by 2020.
India on the other hand is very diverse, it has 29 states with constitutionally protected powers. It is 142nd hardest place to do business out of 189 countries according to World Bank. Because of their lack of infrastructure, manufacturing and export was problematic. But they do train 1.5 million engineers every year, which is more than the United States and China combined.
Singapore is able to compete with China because it delivers some of the best primary education in the world.
The future of the global economy depends hugely on what happens in China and India. Latin America is a patchwork. Argentina was by 1914 ranked among top 10 richest countries in the world. Their growth from 1870-1914 was the highest in the world (6 percent).
Strong tension between open and closed model scan be seen in Muslim-majority countries.
Going forward, a crucial factor in countries’ success will be their abilities to empower their own citizens – and this means all of their citizens. To be prosperous and competitive country requires access to the best-educated pool of workers.
In 2013 China led the world in the percentage of woman in senior management position – 51 %. Among full-time workers on fifth of Japanese 20 to 40 years old work more than 60 hours a week. China’s rise and Japan’s stagnation have been embarrassment to the Japan. Abe declared that Japan must become a place where women shine.
Another conditions for success in the industries of the future is access to power for young people with new ideas. Digital natives are often less wedded to existing ways of doing business, and they are far more willing to take the kinds of risks that produce breakthrough innovations.
Can Africa pull of what India and China did in the last wave of globalization and innovation? Jeremy Johnson is one of America’s brightest young entrepreneurs. He now founded Andela, a company to help connect Africa rising technology geniuses to top employers.
One of the countries that use technology for quick development was Rwanda. The idea is for Rwanda to move straight from an agricultural economy to a knowledge-based economy, bypassing the industrial phase altogether.
The 21st century is a terrible time to be a control freak; future growth depends on empowering people.
The most important job you will ever have
The fellowship, set up by PayPal Mafia alum Peter Thiel, gives young college students 100.000 USD to drop out of college and focus on entrepreneurship.
Former eBay CEO John Donahoe would major computer science and learn Mandarin if he would be eighteen again.
Future belongs to the mobile ones, digital native and with open mind. It is a role of power and politics, to create a framework where opportunities for industries of the future will be taken.
