Tag Archives: Technology

What Technology Wants by Kevin Kelly

Summary
  1. Kelly takes the unusual view of describing technology as a natural system, much like biology. Technology, like living organisms, has “wants” and can transform and evolve in ways to help it achieve its goals.
Key Takeaways
  1. Kevin Kelly has long lived a very minimal and simplistic lifestyle, choosing to have very few possessions and as little technology as possible but has become known as one of the biggest proponents of certain technology. He has no cell phone, laptop and mostly bikes rather than drives. He is the founder of Wired magazine and has spent a lot of time living with the Amish
  2. As technology advances, it begins mimicking organism systems and goes through a process of disembodiment and these two are only speeding up as technology is getting more advanced. This leads Kelly to believe that technology is an extension of life and perhaps even culture. However, culture may even be limiting as the inventions of tools spurs new tools, creating a self perpetuating system.
  3. Kelly has invented a new word which is not as limiting – the technium. Technium includes art, social institutions, culture and intellectual creations of all types as well as the self perpetuating and advancing nature of technology. Kelly believes that after thousands of years, technology may be getting to the point of becoming like an autonomous organism that we don’t fully control. Like any deeply interconnected and complex system, it will self organize and self perpetuate, following many of the same rules our minds do
  4. Argues that human evolution was sped up by tools. The better the tools, the more food we could get which made us stronger, healthier, live longer and better self perpetuate. Our genes co-evolve with our inventions and in many ways we have domesticated ourselves. Shelter and technology should be thought of as extensions of the organism. We shape our environment and then our environment shapes us
  5. Technology differs from biology in that it rarely if ever truly goes extinct. Innovations and breakthroughs tend to live on and evolve into new technology. Technology can be thought of as the 7th kingdom of life
  6. Coined “exatropy” to be negative entropy or an increase in order. It resembles information and self organization. Information is a signal which makes a difference to how we think, act or behave
  7. Science and progress require a certain minimal threshold of leisure and a growing population. As more people buy the new technology it provides the funds to push even further
  8. Convergence causes technological innovations to happen simultaneously or at least nearly so. The same is found in biology with animals who have evolved similar functions but have done so independently (echolocation, bipedalism, eyes)
  9. The technium faces many of the same constraints as biological evolution, such as limited matter and energy
  10. Argues against the traditionally believed random path of evolution and for the convergent, directional nature of evolution. The universe seems to be geared towards life and complicated constructs like our minds are “improbable inevitabilities.” Homo sapiens is a tendency, not an entity. Humanity is a process, always was and always will be. Similarly, the technium is a tendency, not an entity and in continuous flux and evolution. Much like biology, the technium converges towards certain innovations and over time becomes self-organizing and gains a certain level of autonomy and even some wants
  11. Technological inevitability is seen in the seemingly endless parallel timing of inventions
  12. Entire new economy is built on technologies which require little energy and scale down well – photons, bits, frequencies. As the technology keeps getting smaller, they get increasingly closer to immaterial. Like Moore’s Law, many of these improve at around 50% per year
  13. The technium is shaped by what technology wants, by historical inventions and by people’s choices and free will
  14. When we reject technology, we reject a part of ourselves. We trust nature but hope in technology. By following what technology wants, we can better anticipate and capture its full potential
  15. Technological choices which begin as optional can slowly over time become mandatory as our reliance on the technology increases
  16. The Amish tend to be about 50 years behind technologically. They don’t want to stop progress, simply slow it down and do so by being very selective when deciding what to adopt. This time lag gives them the ability to carefully weigh the pros and cons of the new tech
  17. Selective poverty, minimalism and as little electricity as possible is an experiment everyone should undertake at least once in their life. It simplifies so much and leaves more time for leisure, building relationships and pursuing endeavors you enjoy
  18. Very few great technologies start out great or have a clear path to greatness. Technology does not know what it wants to be once it has “grown up”
  19. All technology wants to be ubiquitous but total saturation is not healthy or wanted as it leads to excessive traffic, too much pollution, etc
  20. The power of the technium lies in creating new objects which give us new choices and ultimately more freedom
  21. Some estimate that nearly 50% of the world’s organisms are parasitic and Kelly argues that this type of mutualistic relationship is increasingly the case between humans and technology. However, technology doesn’t want to simply be utilitarian, it wants to be beautiful, to become art
  22. Technology’s job is to create billions of “minds” to compute anything and everything we might need from it. Information is the fastest growing portion of the technium
  23. The technium will continue being selfish in its desire for self perpetuation but it also desires to help people understand, compute and compile information to make life easier. There are some games you play to win and some where you play to keep on playing, an infinite game. The best tactic here is to make choices which open up more choices in the future
  24. Technium’s wants are that of life and it helps amplify the thoughts of union and connection and to see reality- an infinite game worth playing. That is what technology wants
What I got out of it
  1. Better understanding what Kelly means by “technium” and how technology is coming to resemble biological, natural systems. The parallel timing of inventions across history and geographies was fascinating to learn more about – perhaps indicating the inevitability of certain technological innovations

The Gorilla Game: Picking Winners in High Technology by Geoffrey Moore, Paul Johnson and Tom Kippola

Summary
  1. Moore, Johnson and Kippola outline what the gorilla game entails and how to go about being a successful investor in the high-tech space
Key Takeaways
  1. The basic framework of the gorilla game includes
    1. Find a hypergrowth market (~100% revenue growth year over year). Hypergrowth begins after the ‘herd’ (general consumers) adopt the tech
    2. Buy a basket of potential gorillas (2-4)
    3. Consolidate these holdings into one stock once it is likely it will become the gorilla
    4. Hold for the long-term
    5. Sell only when a new category, based on an alternative technology, threatens to eradicate the gorilla’s power
  2. High tech markets develop in unique ways and this leads to more gorillas (companies with almost impenetrable moats, think Microsoft, Cisco, Intel)
    1. Chasm – time between early adopters and mass adoption
    2. Bowling alley – earliest signs of potential gorilla game, niche customers adopting tech
    3. Tornado – chaotic period where mass market begins adopting. A handful of companies are battling to become the gorilla. Goal is to identify recognizable milestones in the development of a high-tech market that the private investor can use as signals for buying and selling
    4. Main St. – after 3-5 years of tornado, main st. begins recognizing the power of the gorilla and gorilla gains even more power through variation and assimilation. Gains market share, margin share. Often loses over half its value first time its earnings miss but if a true gorilla, prudent investors use this fall to accumulate more
  3. Criteria for the gorilla game are very strict and limits potential holdings to a small universe. Must have proprietary architecture and high switching costs
  4. Discontinuous innovation is what makes the gorilla game different. These new innovations are not compatible with existing systems and therefore creates a whole new environment around it
    1. Boom because of technology adoptoin life cycle and punctuated equilibrium – change does not happen linearly which leads to hypergrowth
    2. “Hypergrowth markets, in order to scale up quickly, will often spontaneously standardize on the products from a single vendor. This simplifies the issue of creating new standards, building compatible systems, and getting a whole new set of product and service providers up to speed quickly on the new solution set. In short, it makes it much easier for the new value chain to form. The vendor on the receiving end of this spontaneous standardization enjoys an extraordinary burst in demand. Everyone wants its products because they are setting the new standard. Its competitors by contrast, must fight an uphill battle just to get considered. It makes for a huge competitive advantage.
  5. What makes the gorillas so potent and valuable is that they also increase their competitive advantage over time – law of increasing returns
  6. Important to differentiate between the early market, tornado and chasm. Before you invest, the companies have to cross the chasm and be in the tornado phase
  7. Market share tends to get set during the tornado as switching costs become too high after standards have been set
  8. Competitive Advantage Period (CAP) = power = higher returns (get more customers, keep more customers, push prices down while increasing profits)
    1. Gorillas are the ultimate value chain leaders
    2. Gorillas have the influence to outsource low-value, high cost parts of the value chain
  9. Architecture of software very important – proprietary (gorillas) vs. open
  10. Monkeys vs. Chimps – Monkeys are clones of the gorilla and chimps are gorillas without the market share or CAP but can occupy small niches
  11. Kings, princes and serfs – Kings are leaders, princes are challengers and serfs followers of the gorilla but don’t have proprietary architecture
  12. Power of gorilla corresponds to number of purchases it influences, power in own market and industry
    1. Enabling technology (capability to drive radical change in the capabilities of a user or culture) crucial in gorilla game and much more powerful than application technology
  13. Potential gorilla collisions are important to follow
  14. Barriers to entry help short term and scalability helps long-term advantage
  15. Any disruptive tech shifts leads to potential vacuums where new gorillas can emerge
  16. Gorilla stock almost always appears extremely expensive but in fact the market is almost always undervaluing a true gorilla. Therefore, this gorilla game framework is vital to know when a stock is just hot and expensive vs. when you’re dealing with an up and coming gorilla
  17. Investing is all about understanding a company’s competitive advantage
  18. Great execution which doesn’t raise competitive advantage is relatively useless
  19. P/S is a better metric than P/E for hypergrowth stocks as tracking revenues is a better indicator
  20. Market undervalues true gorillas for two reasons – true returns and the CAP are under appreciated
  21. End of tornado correction – market will over penalize gorilla if it misses earnings expectations because expectations run too high and/or the company didn’t communicate effectively
    1. Use this opportunity to add to position
    2. Protect and lower risk by selling chimps before the end of the tornado
  22. 4 mega sectors in high tech – semiconductors, services, computer systems, vertical market system. Gorilla game focuses on computer systems
  23. Can outperform market by outthinking and out reacting but out thinking is much safer, more consistent and profitable over the long-term
    1. Consistent business model and research practices to spot tornadoes
  24. Tornadoes only form when a new value chain comes into existence
  25. Questions to ask regarding value chain
    1. Can this value chain develop into a tornado mass market?
    2. If so, what conditions are currently holding it back?
    3. Are these constraining conditions likely to be removed, and by whom?
    4. If so, when is the last remaining constraint likely to be removed, and by whom?
  26. Deal with obstacles first and then enablers
  27. Adoption complexity and implementation (producer) complexity are two barriers. Must be able to produce mass quantities to meet demand and help supply hypergrowth
  28. Need killer app to provide consumers continuity and value but discontinuity in supply chain (producer’s end)
  29. 10 Rules
    1. If the category is application software, begin buying in the bowling alley
    2. If the category is enabling hardware or software, begin buying after the tornado has formed
    3. Buy a basket comprising all the gorilla candidates – usually at least two, sometimes three and normally no more than four
    4. Hold gorilla stocks for the long term. Sell only on proven substitution threat
    5. Hold application software chimp stocks as long as they exhibit potential for further market expansion. Do not hold enabling technology chimps
    6. Hold kings and princes lightly, selling individual stocks on a marketplace stumble and the category upon deceleration of hypergrowth
    7. Once it becomes clear to you that a company will never become a gorilla, sell it
    8. Money taken out of non-gorilla stocks should immediately be reinvested in the remaining gorilla candidates
    9. In a gorilla collision, hold your gorilla candidates until there has been a definitive outcome
    10. Most news has nothing to do with the gorilla game. Learn to ignore it
  30. Filters
    1. If it is not about a tornado, you don’t want to know
    2. If it is about a tornado, you want either bad news or facts (see questions above)
    3. New value chain, niche market, killer app, third party partners doing, proprietary architecture, switching costs, new tech to shorten gorilla CAP?
  31. Selling worries – focus on process and whether it was good or bad and the decision if it was good or bad, not the outcome
  32. A lot of press a great sign of gorilla status
  33. Gorilla can leverage high stock price for accretive M&A
  34. Gorilla process = SHARES
    1. Scan for trends, new categories, confirmations, exceptions, irrelevancies
    2. Hypothesize through tech magazines, website
    3. Analyze to gain sense of CAP
      1. “The focus of all these interactions should be on refining the model of the market place, drawing the maps of power, understanding the sources of competitive advantage, and anticipating how competitive dynamics might change, occasionally within categories, but more commonly because of categories colliding.”
    4. Respond – no paralysis by analysis
    5. Evaluate – invest only 4x per year
      1. Spreadsheet – revenue and earnings history going back at least 6 quarters (if available), stock price chart, current market cap, P/S, P/E, estimated market share in category
    6. Strengthen by putting additional funds into potential gorillas
  35. Don’t predict, respond
What I got out of it
  1. Awesome investing framework for investing in “gorillas” in the high-tech space. Argues that by following this framework, you can remove a lot of uncertainty and produce incredible returns by investing in companies that will have the fattest competitive advantage period

Humans are Underrated by Geoff Colvin

Summary

  1. As technology advances, people shouldn’t focus on beating computers at what they do but rather develop our most essential human abilities and interpersonal experience. The people who can emphasize and foster these skills, especially empathy, will be the most valuable members of our workforce.
Key Takeaways
  1. Many people will lose their jobs due to advancing technology and automation but that frees people up to pursue more “human” jobs and interactions
  2. The changing nature of the economy will shift the valuable sills to those which are more deeply “human” – sensing the thoughts and feelings of others, working productively in groups, building relationships, solving problems together, expressing ourselves with greater power than logic can ever achieve
  3. Computers are getting ever better at certain human abilities such as reading emotions, being creative, and even physical work like driving cars. However, this should not worry people as what we truly desire is a deep interaction with someone. A computer cannot reciprocate emotions, body language, etc. even if it “understands” what you are feeling. Human interaction is an inherent need we have and this holds the key to our value in this changing world
  4. There are certain universal human traits and understanding these will help us figure out how to best serve each other – empathy; people admire generosity and disapprove of stinginess; we all cry and make jokes; we all make music and dance; we all have a concept of fairness and reciprocity; we all have pride; we all tell stories; every society has leaders
  5. People want and need to interact with other people, to look into people’s eyes and read their body language. Interaction jobs are the fastest growing in our economy and having this skill is vital to success in any industry
  6. Rather than ask what computers can’t do, it’s much more useful to ask what people are compelled to do (and they aren’t always rational)
  7. Social networking has shown to make us less happy and satisfied with our lives. The further we get from in-person interactions, the less satisfying and productive it is
  8. Working face-to-face makes people and groups smarter, more productive, efficient and collaborative.
  9. Era of Empathy – Empathy is the foundation of all other abilities that increasingly make people valuable as technology advances. It means discerning what some other person is thinking and feeling and responding in some appropriate way. Computers, even if they “understand” our emotions through facial recognition, cannot reciprocate and empathize with us. Increased use of social media has shown to decrease empathy. Always make building relationships your top priority in any interaction. This mindset will never steer your wrong on any business or social setting
  10. Building relationships can be broken down into three parts – relationship establishment, development and engagement
  11. To build empathy in kids, read aloud to them, let them play on their own and do as much role playing as possible
  12. When somebody comes to talk to you about something difficult, never say “I understand.”
  13. In order to improve performance in any realm, you must measure everything, make the practice as real as possible and immediately review the results. You must often be brutally honest with feedback in order for people to learn as quickly and effectively as possible. The more information we get, the better decisions we can make, we can better understand and remember why something worked well or didn’t work and leads to higher motivation since they are more engaged
    1. The army, navy, air force example is amazing. The After-Action Review (AAR) literally changed the way these people train their soldiers. The margin of improvement was 5x! in an era where 5% improvement was good
  14. Technology is much less influential than the people using it (Navy, Air Force example where their way superior planes weren’t beating the Russians and Vietnamese)
  15. The good news for many people is that interpersonal skills can be learned and empathy is like any other muscle which must be “exercised” to grow
  16. After Action Review
    1. It happens immediately after the event or sometimes even during the event
    2. Everyone is involved
    3. The discussion stays focused on the issue of how well the exercise achieved its objective. What was supposed to happen and did we do it?
    4. Assess performance of everyone involved – soldiers, leaders and the group as a whole
    5. Not to assign a grade but to identify specific strengths and weaknesses that will guide future training
    6. The discussion must be brutally honest – absolute candor
  17. How you deliver a message is just as important as the message itself
  18. Paul Azinger was charged with putting together an American team for the Ryder Cup without Tiger Woods. He took a different approach and decided to group similar personality types together. Social people with social people, aggressive players with aggressive players, etc. Also, he broke the 16 man team into 4 groups which allowed the players to get to know one another more intimately. This had great success as the players were closer-knit and they ended up beating the Europeans even without Tiger
  19. The effectiveness of a group correlates highly with the social sensitivity of that group and also the number of women on it. Women are inherently more empathetic and socially sensitive than men and this will be very valuable moving forward. The number one factor in making a group effective is skill at deep human interaction. Great groups iterate a lot of ideas, interact about equally and offered both their own ideas and responding to others. Two other very important traits for a productive group is cooperativeness and generosity
  20. Generally judge and assess people’s trustworthiness in less than 1/10th of 1 second
  21. Storytelling is incredibly human and will become ever more important. The storyteller and listener’s brains align and they become connected in a very deep way
  22. Seeing stories in random events is much easier for us than not seeing stories
  23. People absolutely love happy endings and the “classic” hero structure – normal guy, issue, defeats issue and goes back to normal but is somehow changed for the better
  24. While computers are getting ever better at being creative (cooking, music, etc.) people need and love having somebody to connect with that creativity
  25. The most creative and productive groups split their time between exploring and engaging. Also, more trust lead to more creative and higher quality ideas. Groups of 2 can trust others the way larger groups often can’t and is why we often see such productivity from two people. more ideas and better judgment is what makes groups better
  26. Proximity of groups is also extremely important. Proximity leads to better communication which leads to more creativity
  27. Intrinsic motivation stimulates creativity much better than does extrinsic motivation
  28. Women are better at Reading the Mind in the Eye (RME) test. Women are empathizing whereas men are systemizing and in this world the women have a big advantage
  29. Eliminate competing for status in any group if you want them to be successful
  30. Speaks about how infotech can be utilized to built empathy and understanding others feelings through virtual reality training and other software programs
What I got out of it
  1. Really interesting read. Although technology will eliminate many jobs, what people innately desire, deep human interaction, will never disappear and will make people with empathy and are good socially ever more valuable