Extrapolating the past Vs Inventing the future.

 

Vinod Khosla –a co-founder of Sun Microsystems and its first Chairman is a highly respected Silicon Valley investor as the general partner of Kleiner Perkins. Over the last few years, he has moved away from technology to Energy and Greentech.

Yesterday he delivered an interesting talk at Caltech on Extrapolating the past Vs Inventing the future. The talk was peppered with some brilliant statements, some philosophical musings and scenarios for the future. I found the talk scintillating The entire talk can be viewed here. (The audio quality at the beginning of the session is poor quality, but when Vinod begins his talk, the audio quality is excellent)

Here are some of the excerpts:

Extrapolating the past is ridden with mistakes starting from forecasts:

On why forecasts go wrong (he talks about a number of forecasts that’s gone completely haywire:

Assumptions get embedded in our system. We don’t question our assumptions. Forecasting is about our embedded assumptions not explicitly stated.

On quantitative modeling:

Chasing the false precision, chasing the 3rd order effects

Input the measurable, ignore the immeasurable

Obscured embedded assumptions.

He concludes the section after giving several instances by saying that “The more rapid the change, the less likely are the assumptions to be right”.

On why inventing the future is absolutely critical:

He starts by explaining the Black Swan effect giving several examples and declares that much of what we assume to be true is retrospective predictability. Some great statements that he makes:

Improbable doesn’t equal unimportant and the only thing that’s important is the improbable.

No matter where you look, there’s room for innovation, however unlikely it looks

Bring me the ideas that has a 90% chance of failure!

If you take enough shots at the goal, failure doesn’t matter; it doesn’t exist.

“Imagine the possible”.

His final words in response to a question from the audience sums it all: “The talk is just to give a perspective; but most importantly is to convey an attitude”.

Well said, Sir !

Fear is to be welcomed because it seeds courage

 

“Fear becomes not just an acceptable but even welcome emotion because it paves the way for courage and heroism. It is fine to be frightened, but not to run away from it.” says Vinita Dawra Nangia – one of the most respected columnist of The Times of India.

I did blog about reframing the fear of failure for success and to Vinita’s credit she makes the point well. She has expanded the thinking from the fear of failure to fear in general to all the so called negative emotions. Her column – The emotional trap is a good read.

She goes further and destroys the myth of negative and positive emotions completely in a very compelling and persuasive style.  Selected extracts from the article:

Fear is as important as courage; sadness as important as happiness; to cry is as critical as it is to laugh, to grieve every bit as needed as to celebrate. If positive emotions help give us confidence and cheer, negative emotions too serve a purpose.

The important thing is to feel. And, to feel with intensity. In the movie, Beyond Borders, based amidst the suffering in Ethiopia, Clive Owen talks to Angelina Jolie about pain, "In the city, we drown it, numb it, kill it — anything not to feel. Here (Ethiopia) they feel….. We have no idea what courage is. It’s the weirdest, purest thing — suffering."

And from that intensity comes mental, emotional and spiritual growth.

I like the way that she puts fear and other so called negative emotions in perspective. She puts it succinctly when she says:

It is critical to be in charge of your emotions, not allow them to control you!

And of course the best thing about emotions is that they don’t stay with you long. Try as you might, you can neither catch happiness by its forelock, nor pain by its tail. They visit us and in time, after having served a purpose, they leave…

I am reminded of the clear definition of courage: Courage is not absence of fear. It is the ability to function despite fear.

The best way to lead life is (as the Bhagawad Geetha says) by having a sense of equanimity or through inculcating the “samathva”. Easier said than one, but every small step in the way is progress.

Will the future search be “social” or “action”?

 

The world of search is clearly at an inflexion point. Google has dominated search for so long that it has become synonymous with search.

Yet the search world will be transformed in a radical way even before we realize it. Social search powered by Facebook will be a reality because of social plug-ins. I have absolutely no doubts on that account and wrote about its impact in my blog post here.

There is another aspect of vertical search which surprisingly was ushered in by Microsoft’s Bing. However Google seems to be muscling its way here with its recent acquisitions like ITA software. I think this will be a bigger market and it remains to be seen how Google will integrate the vertical search into its current offerings. This will be an interesting development to watch.

“Action” search will perhaps be a new phenomenon. Esther Dyson in a very thought provoking piece describes the need for action search. I was surprised to learn that “action search” was actually an idea that Bill Gates proposed when he said  “The future of search is verbs.” But he said it at a private dinner and it never spread. How did Microsoft miss this profound idea? This as Esther beautifully describes  represents the world more accurately. And that means better, more meaningful responses when we search.

Google wants to find the next winner in search – Maybe Search 2.0!

Over the weekend, the Wall Street Journal published an interesting interview with Eric Schmidt – CEO of Google and a great tech visionary. Disclosure: I am a great admirer of Eric Schmidt.

The interview comes at an interesting juncture when Android seems to be on a roll powering 200,000 devices a daily and slated to be the dominant operating system on the mobile platform. Yet, of late, the media has been critical of Google, probably taking the cue from a weak stock price. Add to that the mindshare belongs now to Facebook.

Notwithstanding the negative media reports on Google, Eric in this interview shares several new insights about where Google is headed. Some of his insights and quotes are interesting:

Asked to comment on Android being given free as compared to the fat margins made by Apple he says:

"You get a billion people doing something, there’s lots of ways to make money. Absolutely, trust me. We’ll get lots of money for it."

"In general in technology," he says, "if you own a platform that’s valuable, you can monetize it." Example: Google is obliged to share with Apple search revenue generated by iPhone users. On Android, Google gets to keep 100%.”

That difference alone, says Mr. Schmidt, is more than enough to foot the bill for Android’s continued development.

Google’s real challenge though it dominates the search business:

The real challenge is one not yet on most investors’ minds: how to preserve Google’s franchise in Web advertising, the source of almost all its profits, when "search" is outmoded.

The day is coming when the Google search box—and the activity known as Googling—no longer will be at the center of our online lives. Then what? "We’re trying to figure out what the future of search is."

Now that’s what being visionary is all about – not reacting to Wall Street but figuring out the future before Wall Street has had the chance to position you. Maybe he’s taking the cue from Andy Grove’s philosophy of Only the paranoid survive.

 Google’s intriguing aspect of Search 2.0 can be summed neatly as he says:

"We know roughly who you are, roughly what you care about, roughly who your friends are." Google also knows, to within a foot, where you are.

Mr. Schmidt leaves it to a listener to imagine the possibilities of this social search and what its implications could be. In fact, Google is acutely aware that we are on the cusp of a new phenomenon called “Social search” which may be powered by the Facebook phenomena.

Google the creator of targeted advertising believes that it will dominate the category raises the bar:

"The power of individual targeting—the technology will be so good it will be very hard for people to watch or consume something that has not in some sense been tailored for them."

Finally, Eric presents the most intriguing and scary possibility of the future when he says:

"I don’t believe society understands what happens when everything is available, knowable and recorded by everyone all the time," he says. He predicts, apparently seriously, that every young person one day will be entitled automatically to change his or her name on reaching adulthood in order to disown youthful hijinks stored on their friends’ social media sites.

"I mean we really have to think about these things as a society," he adds. "I’m not even talking about the really terrible stuff, terrorism and access to evil things."

Commitments precede choices

 

Clayton Christenson’s address to the graduating class of HBS 2010 had pearls of timeless wisdom. I summarized his address with some comments in my blog post here.

All his wisdom is predicated on one simple and basic premise – that we all know our life’s purpose is known to us apriori. Once that life purpose is known, allocating resources and making trade-off decisions should come about systematically. That’s a well planned life.

But what about situations and people when we do not have enough clarity on the life’s purpose. There is an alternative approach as David Brooks seems to write in this wonderful piece. Thanks to Anand Srinivasan who brought this to my attention.

The starting point here is that life cannot be planned and there are too many unknowns. It is an unknowable landscape with all its interesting twists and turns. Sometimes the life purpose eludes many of us. David calls this the Summoned Life approach.

Here commitments precede choices. Commitments to family, nation, faith, cause etc. These defy many of the standard business metrics like returns, cost-benefit analysis and so on. While we are a product of choices, our deep commitments serve as a useful compass to make the choices.

The person leading the Summoned Life starts with a very concrete situation and most times it starts off with a rude wakeup call.

“At this moment in my life, I am confronted with specific job opportunities and specific options. The important questions are: What are these circumstances summoning me to do? What is needed in this place? What is the most useful social role before me?

These are questions answered primarily by sensitive observation and situational awareness, not calculation and long-range planning.”

David puts this eloquently when he says: “For the person leading the Summoned Life, the individual is small and the context is large. Life comes to a point not when the individual project is complete but when the self dissolves into a larger purpose and cause.”

In the lives that I have observed, both the Well Planned life and the Summoned Life can co-exist peacefully but there is bound to be a creative tension between the two. In my own personal life, the Well Planned life helped me to stay on course and avoid distractions. It gave me anchor and rooted me in values and principles. Trade-off decisions came to me naturally and quickly and I rarely felt paralyzed. But occasionally the Summoned Life due to the situational awareness helped me fine tune the choices based on some of the deep commitments that I myself didn’t know that existed in my consciousness.

Google’s App Inventor – philosophically different, pragmatically questionable

 

Like many things that come out of Google’s stable, the Android App Inventor is a radical departure from the conventional. It is philosophically aligned to the Google philosophy of open innovation, crowdsourcing and empowering the user. It is a new SDK for the Android platform where there is no programming involved. It is entirely visual in approach and any user can build any application that he wants. The intent is for the user to write an application without being a software developer of sorts.

Google has perhaps decided that it cannot compete with the iPhone’s App store which currently has over 200,000 applications and a complete new ecosystem. Hence it has taken a radically different approach.

One more step in the paradigm shifts between Google and Apple. The earlier ones are written about here.

Apple has created the perfect user experience and the walled garden approach which has it’s detractors. Google has conceded that it can’t create a better user experience. Hence rather than struggle, it has taken the diametrically opposite approach. Any user who creates his own experience by writing his own application is likely to love his own experience, rather than settle for the user experience created by a software developer seems to be the underlying premise. It is thus enabling people to be creative and hence promises to be a platform for the millions, rather than just a platform for the few software developers. Google this enables creativity at an individual level.

Hence it is a philosophically a compelling value proposition. Will it be pragmatic?

All of us know that while we would like to be creative and eat our own dog food, we are also consumers and want the right application with the best user experience. As a consumer it will be more easy to buy and use and not to create and use. The process of creation also involves a lot of trial and error and more importantly failures. How long would someone persevere with the creation process when they see their friend find the right and cool application and using it is also another big issue.

My current conclusion is that while I am all for Google enabling creativity, it may not be a successful strategy.

It’s not what you think, but how you think that matters!

 

Clayton Christensen the celebrated Harvard Professor and the guru on innovation speaks to the HBS graduating class of 2010 on how to apply management lessons to personal lives. It is not just an inspiring read, but an instructive read for everyone.

After a preliminary introduction where he establishes with amazing conviction the 30 minute conversation that he had with Andy Grove which led to the development of Celeron, he gives 6 key lessons which should be applicable to all of us.

Create a strategy for your life:

“I promise my students that if they take the time to figure out their life purpose, they’ll look back on it as the most important thing they discovered at HBS. If they don’t figure it out, they will just sail off without a rudder and get buffeted in the very rough seas of life. Clarity about their purpose will trump knowledge of activity-based costing, balanced scorecards, core competence, disruptive innovation, the four Ps, and the five forces”. In my view, the pursuit of purpose surpasses all other pursuits. I learnt this quite late in life.

Allocate your resources:

“People who are driven to excel have this unconscious propensity to under invest in their families and overinvest in their careers—even though intimate and loving relationships with their families are the most powerful and enduring source of happiness.

If you study the root causes of business disasters, over and over you’ll find this predisposition toward endeavors that offer immediate gratification. If you look at personal lives through that lens, you’ll see the same stunning and sobering pattern: people allocating fewer and fewer resources to the things they would have once said mattered most”.

Create a culture:

Knowing what tools to wield to elicit the needed cooperation is a critical managerial skill.

Families have cultures, just as companies do. Those cultures can be built consciously or evolve inadvertently.

If you want your kids to have strong self-esteem and confidence that they can solve hard problems, those qualities won’t magically materialize in high school. You have to design them into your family’s culture—and you have to think about this very early on. Like employees, children build self-esteem by doing things that are hard and learning what works.

Avoid the “marginal costs mistake:

It’s easier to hold to your principles 100% of the time than it is to hold to them 98% of the time. If you give in to “just this once,” based on a marginal cost analysis, as some of my former classmates have done, you’ll regret where you end up. You’ve got to define for yourself what you stand for and draw the line in a safe place.

Remember the importance of humility:

If your attitude is that only smarter people have something to teach you, your learning opportunities will be very limited. But if you have a humble eagerness to learn something from everybody, your learning opportunities will be unlimited. Generally, you can be humble only if you feel really good about yourself—and you want to help those around you feel really good about themselves, too.

Choose the right yardstick:

Think about the metric by which your life will be judged, and make a resolution to live every day so that in the end, your life will be judged a success.

My own mid life realizations and some of the life lessons have been written here.

Well, I would strongly recommend that you read his entire lecture as he backs up the brilliant instructions with observations and decisions that he made in his personal life. The entire lecture can be found here.

Facebook addiction

The 76-year-old woman walked down the hallway of Clearview Addictions
Clinic, searching for the right department. She passed signs for the
"Heroin Addiction Department (HAD)," the "Smoking Addiction Department
(SAD)" and the "Bingo Addiction Department (BAD)." Then she spotted
the department she was looking for: "Facebook Addiction Department
(FAD)."

It was the busiest department in the clinic, with about three dozen
people filling the waiting room, most of them staring blankly into
their Blackberries and iPhones. A middle-aged man with unkempt hair
was pacing the room, muttering, "I need to milk my cows. I need to
milk my cows."

A twenty-something man was prone on the floor, his face buried in his
hands, while a curly-haired woman comforted him.
"Don’t worry. It’ll be all right."
"I just don’t understand it. I thought my update was LOL-worthy, but
none of my friends even clicked the ‘like’
button."
"How long has it been?"
"Almost five minutes. That’s like five months in the real world."

The 76-year-old woman waited until her name was called, then followed
the receptionist into the office of Alfred Zulu, Facebook Addiction
Counselor.

"Please have a seat, Edna," he said with a warm smile. "And tell me
how it all started."
"Well, it’s all my grandson’s fault. He sent me an invitation to join
Facebook. I had never heard of Facebook before, but I thought it was
something for me, because I usually have my face in a book."
"How soon were you hooked?"
"Faster than you can say ‘create a profile.’ I found myself on
Facebook at least eight times each day — and more times at night.
Sometimes I’d wake up in the middle of the night to check it, just in
case there was an update from one of my new friends in India. My
husband didn’t like that. He said that friendship is a precious thing
and should never be outsourced."

"What do you like most about Facebook?"
"It makes me feel like I have a life. In the real world, I have only
five or six friends, but on Facebook, I have 674.
I’m even friends with Juan Carlos Montoya."
"Who’s he?"
"I don’t know, but he’s got 4,000 friends, so he must be famous."
"Facebook has helped you make some connections, I see."
"Oh yes. I’ve even connected with some of the gals from high school —
I still call them ‘gals.’ I hadn’t heard from some of them in ages, so
it was exciting to look at their profiles and figure out who’s
retired, who’s still working, and who’s had some work done. I love
browsing their photos and reading their updates. I know where they’ve
been on vacation, which movies they’ve watched, and whether they hang
their toilet paper over or under. I’ve also been playing a game with
some of them."
"Let me guess. Farmville?"
"No, Mafia Wars. I’m a Hitman. No one messes with Edna."
"Wouldn’t you rather meet some of your friends in person?"
"No, not really. It’s so much easier on Facebook. We don’t need to
gussy ourselves up. We don’t need to take baths or wear perfume or use
mouthwash. That’s the best thing about Facebook — you can’t smell
anyone. Everyone is attractive, because everyone has picked a good
profile pic. One of the gals is using a profile pic that was taken,
I’m pretty certain, during the Eisenhower Administration. "

"What pic are you using?"
"Well, I spent five hours searching for a profile pic, but couldn’t
find one I really liked. So I decided to visit the local beauty
salon."
"To make yourself look prettier?"
"No, to take a pic of one of the young ladies there. That’s what I’m using."
"Didn’t your friends notice that you look different?"
"Some of them did, but I just told them I’ve been doing lots of yoga."
"When did you realize that your Facebooking might be a problem?"
"I realized it last Sunday night, when I was on Facebook and saw a
message on my wall from my husband: ‘I moved out of the house five
days ago. Just thought you should know.’"
"What did you do?"
"What else? I unfriended him of course!"

We are a product of our choices!

 

Jeff Bezos of Amazon (someone whom I have admired deeply) puts this simple truth amazingly well in his 2010 Baccalaureate remarks at Princeton University. The complete address can be read here.

Jeff brings out the distinction between gifts and choices. He says: “Cleverness is a gift, kindness is a choice. Gifts are easy — they’re given after all. Choices can be hard. You can seduce yourself with your gifts if you’re not careful, and if you do, it’ll probably be to the detriment of your choices.” How true!

The tragedy for most people in the world is that they are blissfully unaware of the choices that they have! It becomes far more tragic when they ignore or dismiss the choices presented to them. Clearly the choose to wallow in their misery. The defining argument they give is what if the choice was wrong! Jeff handles this possible question again very well.

To me, maturity is not a function of age or even intelligence. It is the element when they become aware of their choices and making the right choice.

Google goes vertical to thwart Bing

 

In a very typical low key move Google acquired ITA Software, a 14-year-old company that makes software that organizes flight and pricing information, for $700 million in cash.

The significance of this acquisition is far reaching. With this, Google now becomes the critical intermediary between the provider of flight and pricing information and all their users including all the travel websites, airline websites and travel search engines. With this acquisition, Google now does not want to just send the search to another website, but also want to process the information for you in a meaningful and relevant way by organizing results (by giving flight options, price options etc.) As it goes into the “deeper search” and organizing information, it inevitably marginalizes the value being created by other travel web sites and travel search engines.

From here, Google could pursue 2 clear directions:

1. It could become a travel portal itself, which is unlikely since it could attract regulatory action because ITA Software is being used by airlines and travel portals. It may not want to be seen as a “Big Bully”.
2. It could add a new revenue stream to its well known advertising business – moving from cost per click (CPC) to cost per action (CPA) which definitely will be premium priced.

One thing is certain though: Bing (Microsoft’s search engine) which was headed in the area of vertical search will face more competition.

I believe that this acquisition is merely the beginning. Google can easily replicate the vertical search model in many areas including real estate, automobiles and other areas where the current Google search doesn’t give relevant results and where the potential for CPA exists.