A Report from Techonomy Media Spring 2013

TECHONOMY MEDIA A Report from Techonomy Media

Presented By:

Techonomy Media, Inc. 670 Broadway, 2nd Floor New York, NY 10012

[email protected] WWW.TECHONOMY.COM SPRING 2013

Spring 2013 N ai Lee Lum D E S I G N

photography Braschler/Fischer: p. 17 Marsha Ericks: p. 14 David Kirkpatrick: p. 3, 44 Jeff Kowalsky: p. 48-50, 53, 56, 57 (top left and top right), 58, 59 Adam Ludwig: p. 8, 9 Asa Mathat: p. 2-6, 20, 22-24, 27, 28, 30-32, 34-40, 42-46, 60 Alana Range: p. 2, 3 (team portraits) Brad Ziegler: p. 1, 54, 55, 57 (bottom)

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The world is being transformed by technology, and quickly. Companies, jobs, institutions, governments, the way we shop, our personal lives—even friendships—are being irrevocably altered by connectedness, software, and the innumerable innovations emerging from the planet's growing creative class. At Techonomy we see a world getting better. Massive challenges remain. But opportunities are emerging to address, even solve, age-old problems like hunger, disease, poverty, and chronic disenfranchisement. We believe business is the best engine for progress in most areas. Meanwhile business itself is being transformed at a startling pace and in every industry. Our mission is to document and celebrate technology’s impact on business and social progress, in hopes of quickening it. It’s also to educate, to help more people understand tech-driven change. Since early 2009 we’ve organized four major conferences—three flagship Techonomy events, most recently in November at the Ritz-Carlton Dove Mountain Resort near Tucson, as well as our U.S.-centric Techonomy Detroit last September; we’ve built a gorgeous website, then completely rebuilt it again to be suitable for publishing as well as conference info; hosted 8 dinners in 6 cities; and published innumerable articles and videos. This book surveys our work in 2012 and points to our plans for 2013. In addition to edited excerpts from sessions in Tucson and Detroit, you’ll find five original articles. We've strengthened our company, our team, and our partnerships. TE13 takes place again at Dove Mountain Novem- ber 11th to 13th, and Techonomy Detroit September 17th. We also plan dinners this year on three continents. We look towards international expansion, especially in Asia. Our publishing and video operations will grow. Thanks to Dell for its support. We don’t think print is dead, despite all. The evidence is in your hands. I hope you enjoy it. With Enthusiasm,

David Kirkpatrick c h I E F T E c h ON OMIST TEchonomy The Team

Simone Ross Co-founder, COO, and Chief Progr am Officer A Techonomist since my days with the Computerworld Smithson- ian Awards, I've long been an inquisitive observer of the companies, individuals, and ideas at the intersection of tech, the economy and society. I’ve worked with IT innovators and leaders to create programs and contexts that meet the exacting intellectual, practical, and inquisitive requirements of leaders across industries, function, and titles. It's not so much the bells and whistles of tech itself that interest me. It’s the application of that tech for productivity and progress that excites me and makes me a Techonomist.

02 Josh Kampel Adam Ludwig Chief Str ategy Content AND Officer Communit y Manager L aunching my first As a techonomist, scrappy Internet and a Brooklynite, I’m business in 1996 from a excited about how dorm room outside of crowdsourcing and social Boston was the first step design can help stimulate on my path to becoming manufacturing, create an official Techono- jobs, and grow a vital DIY mist. Having helped economy. Each morning build technology I listen to the radio and companies that force browse my favorite online conventional industries news channels, hoping, to rethink established maybe even expecting, to business models, I hear or read the word consider myself one of “techonomic” used to those restless entrepre- describe an important neurs who always think development in business there must be a better or public policy. It’s way. Now, as a part of bound to happen soon. Techonomy, I am I believe that more and excited to have a more people will look at front-row seat to study the world through a how the accelerating techonomic lens as change enabled a way to understand the by faster and cheaper trends that increasingly Flying our flag above the Ritz-Carlton technological shape our global future. Dove Mountain development will impact our world. 03 contents TEchonomy Sp r i n g 2 0 1 3

06 Why I Am a Techonomist » marc benioff, jack dorsey, dave morgan, dan schulman, padmasree warrior 08 Content and Community » The View from Broadway and Bond St. by david kirkpatrick » Entrepreneur? No. Street Fighter by josh linkner » What’s Next in the Techonomy? by john hagel & john seely brown » Welcome to Little Big Inc. by tim weber » The Industrial Internet by bill ruh 20 Why I Am a Techonomist » jean case, jeff goodell, david keith, james manyika, richard thompson 22 Techonomy 2012 » When Everybody’s Online » The Internet’s Fantastic Four » Forest, Trees, Data » The Facebook Effect, Continued » Geo-Engineering » Africa: The Final Frontier » EMC’s Joe Tucci » A Changing China » The Madness of Crowds » Shopping: Data and Dollars » Robots, Factories, Jobs, and Life » Ray Kurzweil: Enhancing Humanity 46 Why I Am a Techonomist » gordon bell, eden full, john hagel, stephen hoover, peter vander auwera 48 Techonomy Detroit » The DIY Economy » Entrepreneurship and American Relevance » An Era of Global Competition » How Far Can Innovation Take Our Cities » Jack Dorsey on the City as Inspiration » Entrepreneurship and Tech 60 Moving Forward in 2013 Opening Night Dinner, Techonomy 2012 TEchonomy Why I Am a Techonomist

Marc Benioff Jack Dorsey Dave Morgan Dan Schulman Padmasree CEO, Chairman, CEO, Group Presi- Warrior salesforce.com Twitter, and Simulmedia dent, Enter- Chief Technol- I’m a Techonomist CEO, Square It is virtually prise Growth, ogy and Strategy because we are The best ideas impossible to American Officer, Cisco seeing the most can come from overestimate how Express Technology is profound shift in anywhere, and much technology Whether you’re changing the world the history of our Technonomy has will transform us, running a startup or around us at an industry. But tech proven to be an our lives, and the driving innovation unprecedented is not a silo, and incredible gathering world over the next within a large pace. Today there Techonomy puts place for Techono- 25 years. But, it company, new are roughly 6 billion what’s happening mists to have real won’t happen on its technologies have people connected. into the context meaningful discus- own. I’m a the potential to We have not even of how it will sion that propels Techonomist fundamentally begun to imagine affect business, learning, growth, because I believe better the lives of the economic and economics, and and change. we all have a people, and that’s social implications social progress so responsibility to what inspires and as 50 billion things we can change the help shape our motivates me to get connected by world. We all have future. dream big and 2020. Techonomy an incredible create change. The brings together the opportunity—as path to change people who can not well as a responsi- can be frustrat- only imagine but bility—to transform ing, and it is never make possible the our businesses to be a straight line, but exciting transforma- more competitive, true Techonomists tions at the more innovative, can imagine beyond intersection of and more today, focusing on technology, econ- successful than ever what could be, and omy and society. before possible. not what is. Cheers to Human- ity as we wake up 99% of our world!

06 Content & Community » Techonomy 2012 Techonomy Detroit TEchonomy Content & Community

Techonomic Tables

Throughout the ye ar , Techonomy organizes dinners at stunning venues around the world. But while we eat delicious food we also facilitate wide-ranging conversations about local and global technology progress. These gatherings, typically 20-25 people and often presented in partnership with sponsors, are mini-Techonomy conferences that serve to introduce new people to our community. Insights we gain there help us plan our conference programs and editorial direction. In 2012 we hosted Techonomy dinners in London, Menlo Park, Chicago, and Wash- ington, DC. We convened multidisciplinary groups of business leaders, intellectuals, diplomats, economists, policy experts, entrepreneurs, dreamers and doers. Guests Photos from our included senior executives from a cross section of sectors and companies, including dinner at Washington’s Hay-Adams rooftop Accenture, Alcatel-Lucent, Capital One, the Carlyle Group, Cisco, Electronic Arts, Above Swedish Facebook, Groupon, Intuit, McKinsey, Nielsen, Thomson Reuters, TUI Travel plc, the Ambassador H.E. Jonas Wellcome Trust, the White House and WPP, plus top professors at Oxford and Stan- Hafström (l) talks with ford. Topics included how nation-states use technology and the Internet; the shift in Alec Ross, Senior Advisor on Innovation power from hierarchies to networks of people; and the civic and corporate responsi- to Secretary of State bility of tech leaders to the vast communities they impact. Hillary Clinton In 2013 we plan even more dinners, in additional US cities as well as in China, Right Guests take their places for dinner Israel, and elsewhere. Opposite top KaBOOM! CEO Darell Hammond and Techonomy’s Simone Ross on the Hay-Adams terrace Opposite bottom Marne Levine, Facebook’s Vice President of Global Public Policy

08 Techonomic Talks

In January we organized a standing-room-only “SuperSession” at the Consumer Electronics Show in Las Vegas, hoping to add a little techonomic thinking. David Kirkpatrick moderated “The New Network Effect Changes Everything” with Rethink Robotics founder Rodney Brooks, Ford CTO Paul Mascarenas, and Ericsson CEO Hans Vestberg. The session addressed the business implications of ubiquitous connectivity, but these experts on robotics, transportation, and wireless telecommunications expanded beyond business and manufacturing to social issues like privacy and potential impacts on agriculture and water consumption. At the World Economic Forum 2013 annual meeting in Davos, Techonomy hosted a reception with General Electric and a dinner on climate change with the Environmental Defense Fund (EDF) and the Weather Channel. Weather Channel CEO David Kenny and meteorologist Jim Cantore Above right After the Techonomy panel at joined EDF President Fred Krupp in a dialogue CES 2013: (from left) Ford moderated by David Kirkpatrick. The group dis- CTO Paul Mascarenas, Rethink cussed how melting arctic ice on the atmosphere Robotics founder Rodney Brooks, Ericsson CEO Hans is an underlying factor in extreme weather, how Vestberg, and Techonomy’s data enables better climate modeling, and how David Kirkpatrick public attitudes are changing. 09 TEchonomy Content & Community

Techonomics Online

As Deloitte ’ s John Hagel and John Seely Brown point- ed out in a recent article on Techonomy.com, the di- rect human interaction that happens at live events like Techonomy conferences “strengthens trust, creates serendipity, and fosters community in an irre- placeable way.” We couldn’t agree more. But we also know that more than ever we get our information, form our opinions, and build our social and profes- sional networks via the Internet. Techonomy Media aims to curate discussions about how tech can help us solve our most urgent problems. When we launched our editorial Website in 2012, we invited a new group of Techonomists to join our community. Techonomy.com provides a forum to expand on conversations that begin at our physical events and to initiate new dialogue with a broader virtual audience. Techonomy.com’s Contributors have included conference participants like TIBCO’s Vivek Ranadivé, original articles cover management, Internet, Edward Alden of the Council on Foreign Relations, Harvard’s Perry Hewitt, Stephen genomics, geopolitics, Hoover of PARC, SWIFT’s Peter Vander Auwera, Justin Fox of The Harvard Business and beyond. Review, Kaplan’s David DeHaven, and Hannes van Rensberg of Visa. We’ve also assembled a lively ecosystem of contributing writers, from seasoned journalists like Erick Schonfeld to emerging ones who tackle topics ranging from bioscience and genomics to digital photography, social product development, and the app economy. As we increase our global coverage, we have tapped specialists on Chinese business, North Korean technology, and Russian social media. Longterm, big opportunities lie with video. We have shot and hosted original ones on Occupy Wall Street and Ray Kurzweil's futurism, among other topics. We host a comprehensive archive of conference session videos, plus selected highlights. We'll increasingly augment those with interviews, panels, and other video material gathered year-round. We welcome techonomic story ideas from writers both established and aspiring, and from professionals with stories about how tech is transforming their industry.

10 » Some of the exclusive articles on Techonomy.com

MANAGEMENT It’s Time to Find the Women in Tech By Perry Hewitt 98,273 Sheryl Sandberg’s commencement address at Harvard Business School spurred debates about whether women are setting their sights too low. More at Techonomy.com/womenintech + unique MANUFACTURING visitors to Will the Quirky Model Be Replicated Techonomy.com By Adam Ludwig AND Sar ah Evelyn Harvey since its Just as Quirky allows shockingly rapid product development, Aug. 27 companies themselves can be created in short order. relaunch + More at Techonomy.com/quirky (and 278,006 LEARNING pageviews, as of Feb. 22) $97,500 for an Online Degree? 2U Is Worth It, Say Students By Adrienne Burke It offers weekly live online classes and a sophisticated social networking platform that lets students and instructors interact. + More at Techonomy.com/2u THE ARTS Is Curating as Good as Photographing? By Eugene Reznik Doug Rickard’s A New American Picture, published by Aperture, is a collection of “street-photography” gathered exclusively with Google’s Street View. + More at Techonomy.com/photography BUSINESS Why Gangnam Style Marks a Triumph of South Korean Tech By Gabriel Mizr ahi While Korean technology had already penetrated American homes and offices, PSY’s iconic horse trot lassoed U.S. culture closer to the Republic of Korea. + More at Techonomy.com/gangnam MEDIA & MARKETING Real or Rendered? How 3D Imagery Is Changing the Way You Shop By Alex Southern + More at Techonomy.com/realorrendered LIFE SCIENCE Why Drug Development Is Failing and How to Fix It By Catherine Arnst

11 TEchonomy Content & Community

The View from Broadway and Bond St. By David Kirkpatrick

From our location in lower Manhattan’s Noho consideration of technology from the way we talk neighborhood, Techonomy positions itself as a bell- about basic issues of society. At Techonomy we like wether of technological change. These days it’s a role that. It gives us ideas and themes. Here’s a recent ex- both satisfying and daunting. We feel confident we ample: education. It’s routine for us in the United are at the right juncture–where technology and busi- States to wring our hands about our national failures ness intersect. That’s where you must look to under- in education for Science, Technology, Engineering stand where the economy is moving. and Math, the so-called STEM disciplines. But as tech But the headlong transitions that surround us are is getting more deeply integrated into the transfor- truly astonishing. Many feel more and more scary. To mation of every field, even that lament is outdated. really understand it all is probably impossible. Even Now smart leaders are recognizing that we omit lib- Facebook’s Zuckerberg was late to appreciate the cen- eral arts from that equation at our peril. To catalyze trality of mobile tech to the Internet. So how will we technological societal transformation, the leaders of figure out what will happen to jobs? To countries? To tomorrow are going to need an understanding of so- privacy? To our focus, and our patience? ciety. After all, Zuckerberg was not just majoring in Will the global divide between rich and poor di- computer science back at Harvard in 2003-2004. He minish, or simply get reinforced? Those at the bot- also studied psychology. tom may achieve economic, nutritional, and educa- In the early weeks of 2013 we noticed a sudden in- tional improvement even as the richest soar further crease in people talking not about STEM but STEAM-- into the stratosphere. To further complicate that incorporating Arts into the mix. Yes, they always equation, even many of those left behind economi- should have been. We didn’t include Richard Thomp- cally will likely keep pace informationally. And what son and Lyle Lovett into the past two Techonomy con- will that mean for social, political, and international ferences only for entertainment. The perspective of harmony? People who are well-informed about being artists helps us sharpen our own. You’ll see more dis- left out are unlikely to be complacent. cussion of STEAM in upcoming events. Technology is forcing businesspeople, politicians, Here are other things we’re watching for our pro- and ordinary people to confront ever-more-funda- grams and journalism: mental issues. It's becoming difficult to separate the » A proliferation of robots and what it means for 12 Techonomy’s team: (foreground, from left) Seana Quental, Simone Ross, Adam Ludwig, and Josh Kampel on the second floor at 670 Broadway, New York. Techonomy shares a co-working office operated by targeted TV-ad company Simulmedia. work and jobs (continuing a 2012 theme—see p. 44) but including surging players like LinkedIn, Pinter- » The rapid evolution of biotech and the growing est, Snapchat, and Twitter. importance of genomics Few processes, products, or industries are not be- » The global dispersion of entrepreneurship and ing altered by that intertwined quartet of tech forces innovation, as Silicon Valley’s role as a central hub some are starting to refer to with the acronym SMAC: diminishes social (see p. 29), mobile, analytics (also known as big » The near-overnight emergence of concerns about data—see p. 38) and cloud. It means that the shape, drones, both military ones in far-off places and inex- structure, and even mission of many businesses and pensive ones flying over our neighborhoods other institutions central to the modern economy » A ubiquitous unfolding of e-commercialization must be remade. John Hagel and John Seely Brown as more and more selling and dealmaking of all sorts explain this on p. 15. There’s no certainty, they note, moves online across the globe that this transformation will occur. It’s one of many » The growing importance of Chinese Internet uncertainties we’re finding as the pace of change ac- companies, even outside China (especially Tencent celerates. But one thing is certain: a plethora of new and Alibaba) companies and institutions are percolating at the » The continued jockeying for influence on the In- economy’s entrepreneurial margins. Should today’s ternet, not just among the fantastic four (see p. 26), leaders falter, they’re ready to take over. 13 TEchonomy Content & Community

Entrepreneur? No. Street Fighter By Josh Linkner

fitting metaphor is that of a street fighter. It suggests what it actually takes to win. Here are eight lessons company-makers can learn from street fighters: 1. Rely on grit and determination. Be willing to get your hands dirty and do whatever it takes to succeed. 2. Get scrappy. Adapt in real-time and figure out how to do more with less. 3. Ignore tradition. Find fresh new approaches and disregard dogma. 4. Use what you’ve got. Lacking formal training or fancy tools, street fighters use whatever is at their dis- Having built four startups from scratch and posal. Often, these are internal and personal tools now investing full-time, you could say I’m in the busi- (heart, passion, courage) instead of formal ones (fancy ness of “entrepreneurship.” But I don’t think that’s tech, academic degrees, social connections). the right term anymore. At all. 5. Prepare to engage on a moment’s notice. Make The word entrepreneur is borrowed from French sure you’re ready for battle and prepared for competi- and implies an aristocratic polish. It conjures up im- tive attacks from any direction. ages of backroom deals with white men in three- 6. Have a chip on your shoulder. Have a healthy dis piece suits, perhaps even wearing top hats, neatly regard for the status quo and be willing to stick your manicured and coddled, issuing orders from afar to finger in the eye of leaders. sweaty and tattered workers. 7. Learn and grow from adversity. Your most impor- But that just ain’t the way you win today. tant areas of growth are just outside your comfort zone. Successful company-builders today don’t ring a sil- 8. Fight from behind. Have an underdog’s sense of ver bell to have afternoon tea delivered by white- urgency. Outwork your competition ten-to-one. gloved attendants. Instead, they wake at 5am and eat Let's return the word “entrepreneur” to the French nails for breakfast. and apply new language to the adventurous journey of Both the term and the notion of entrepreneur- creating something out of nothing. Ditch the polish ship are outdated. If you believe that your idea to and get scrappy. It’s time to let your inner street fight- conquer Facebook is so good that eager investors er out of the cage. will whisk you away in a limo to riches and stardom, Josh Linkner is The New York Times bestselling author of you may want to consider playing the lottery or buy- Disciplined Dreaming: A Proven System to Drive Breakthrough Creativity. ing a bridge instead. He is CEO and Managing Partner of Detroit Venture Partners, focused on rebuilding urban areas through technology Building a company is hard work. To me, a more and entrepreneurship. More at www.joshlinkner.com 14 TEchonomy Content & Community

We Need Institutions as Good as Our Tech By John Hagel AND John Seely Brown

In the last few decades , we have witnessed a the rationale for institutions. In the 20th centu- steady doubling in the price performance of digi- ry, the rationale was scalable efficiency. But tal technologies. However, we are reaching a tip- what role do they serve in a world driven by ex- ping point of this exponential growth, and it is ponentially improving technology infrastruc- unclear how the cumulative effects of technology tures? Perhaps now it’s time to shift to scalable will reshape our economy, political systems, and learning. The answer matters—it can shape choic- collective future. One thing is clear: in the hands es regarding the architecture of relationships of existing institutions—firms, schools, non-prof- both within and across institutions necessary to its, civic institutions and governments—this awe- support that rationale. The institutional forms some technology will achieve only a fraction of we evolve will likely differ significantly from the its potential. ones surrounding us today. Unfortunately, we haven’t seen the same expo- The rewards of institutional innovation can be nential rate of change in institutions as we have enormous—we may for the first time be able to in technology. (Unlike computer chips, govern- move from a world of diminishing returns to one ment and business structures don’t predictably of increasing returns. The wealth created from in- get faster and less expensive). Managerial fief- stitutional innovation may ultimately trump any doms, rigid hierarchies and tightly scripted proce- rewards from technological innovation. Doubt it? dures remain from the industrial revolution era What single innovation generated the most eco- like vestigial structures; they were important at nomic value over the past 500 years? It was the some point, but it’s unclear what purpose they development of the limited liability corporation. serve now. In fact, mounting evidence suggests Of course the next version of such a landscape- they’re becoming more dysfunctional—witness altering institutional form doesn't yet exist. We the significant erosion in return on assets for U.S. have to collectively want it, and create it. public companies since 1965—a trend document- New technologies allow us to leverage our ed in Deloitte’s Shift Index. individual capabilities so that even small moves, As technological innovation continues to out- smartly made, have the power to set very big things pace institutional innovation, the greatest deter- in motion. To get to the next level of our techonom- minant of our future may be whether we can close ic potential, we must create institutions worthy of the widening gap. We celebrate individuals who the technologies changing our world. rise to the occasion and innovate to solve prob- John Hagel III, a director of Deloitte Consulting lems, but to unlock human potential en masse LLP, is the co-chairman of the Deloitte Center for the Edge, may require innovating our institutions. based in Silicon Valley. John Seely Brown is the independent co-chairman of the Deloitte We should go back to the roots and reassess Center for the Edge. 15 TEchonomy Content & Community

Welcome to Little Big Inc. Small companies now take on global giants , as tech changes the balance of power . By Tim Weber

You ’ ve got a great idea . sites, and makes money on a Free- You’ve assembled a team of four mium model: personal websites or five people, all enthusiastic, all are free, “pro” and “business” ser- raring to go. That’s it. You’re vices and functionalities cost ex- ready to take on the giants. tra. The website supports 11 lan- This is not the familiar story of guages. online start-ups and one-app won- So far, so obvious, you’ll say. ders, where the business model is a After all, Jimdo is an online ser- quick sell-out to Facebook, Google, Jimdo got its start at this farmhouse vice, that’s what the internet was in Northern Germany Microsoft or Apple. Instead it’s the made for. story of companies like Jimdo, a small German busi- Wrong. For small companies, the internet is more ness that makes it easy to build and run websites— than a platform to run web services and reach custom- whether you want to run a blog, create a personal site ers worldwide. to show off your fly-fishing prowess, or create an on- Here is the real power of online: it allows small com- line presence for your small business. Jimdo started as panies to create a virtual corporate infrastructure that the side project of an online marketing team that allows them to rival global giants. Technology helps didn’t like the software available at the time to build businesses to source and outsource everything—from websites. So they built their own easy-to-use, browser- design to product development to materials to finance based tools. to logistics to customer service. Today Jimdo is a global company, with a webhost- Take On. This small Swiss firm makes high-end run- ing service rivalling established competitors. It used ning shoes, competing with giants like Nike, Adidas the power of the cloud to go global. Launched six and Asics. The shoes’ unique selling point is based on an years ago, run on a shoestring, and driven by passion idea by Olivier Bernhard, a six-times Ironman winner: and weekends of intense coding at a farmhouse in the soles sport circular pieces of a special rubber to com- rural Northern Germany, founders Christian Spring- bine a cushioned landing while running with the bare- ub, Fridtjof Detzner and Matthias Henze are turning foot feeling of a natural push-off. On’s CloudTec shoes Jimdo into an online powerhouse, with offices in are rapidly gaining fans among running enthusiasts, Hamburg, San Francisco, Tokyo and Shanghai. especially triathletes, who are always on the lookout for Jimdo now hosts more than seven million web- innovation that provides that little bit of edge. 16 The three founders of running-shoe maker On: (from left) David Allemann, Caspar Coppetti, and Olivier Bernhard

Technology helped the Swiss team go global quick- Once again, technology allows Bulldog to run a ly. Rapid prototyping was done in China; once the global supply chain that links its outsourced produc- concept was proven to work, and the company want- tion facilities with premium retailers from the Unit- ed to scale (and improve quality), it moved manufac- ed States to Australia and South Korea. turing to Vietnam. Using technology, just 18 months The product ideas come from the Bulldog team, but after launch On had built a virtual global supply are developed under contract in the UK. Ingredients chain covering 18 countries across Europe, Asia-Pacif- and packaging are sourced online and the supply chain ic and North America. The days are over when a com- is virtual and global. Heavy use of social media and viral pany had to reach scale in its domestic market first marketing help to create a strong brand identity. before it could make it big abroad. These three firms prove that digital technology is It’s a similar story for Bulldog, a British firm mak- not just about pretty apps. Rather, it gives small coming “natural” male grooming products. Founded by a panies global power, allows them to enter tough in- group of friends, the company is thriving in a market dustries and challenge giants. They may be little, but dominated by multi-brand giants like L’Oreal, Unile- they can act like Big Inc. ver, Procter & Gamble and Shiseido. Tim Weber is senior vice president at Edelman, a global public How can Bulldog, with less than a dozen staff, relations company, based in London. A content and social media make and distribute its “natural moisturizer,” lemon- specialist, he focuses on technology and energy. Until last year he was business and technology editor for BBC News Interactive. scent shower gel, and “anti-aging” wrinkle cream? On Twitter: @tim_weber 17 TEchonomy Content & Community the Industrial Internet Will Rewrite the Rules of Business By Bill Ruh

The world is on the threshold of the next issues while also escalating as appropriate. frontier of innovation with the rise of the Industrial 2. Machine-based Real-time Data Analysis Internet. Brilliant machines are converging with the Real-time analysis of events and messages can be cou- power of advanced analytics, low-cost sensing and pled and correlated with existing knowledge through new levels of Internet connectivity. The next decade advanced software. This analysis is often done with- will bring a software and services-driven movement out human intervention. that will be nothing short of breathtaking: analytics 3. Simple Presentation of Complex Data as that learn from experience and constantly improve Actionable Knowledge machine intelligence that blends digital output and To handle quick right-brained (creative) thinking, com- human insight to deliver better outcomes. It will help plex data needs to be summarized into actionable eliminate waste across every major industry. knowledge and presented using an innovative user ex- In the U.S. alone, the Industrial Internet could raise perience. Access to the detailed data for left-brained average individual incomes by an impressive 25-40% (analytical) thinking needs to be easily available. over the next 20 years and lift growth back to 1990s 4. Closed-looped Data Sharing with the Right levels. To capture this value, leaders will need to adapt People and Machines to new rules of business in five critical areas: The right people and machines need to collaborate in 1. Intelligent Devices, Systems and Decision-making a closed-loop manner to achieve greater productivity. Increased intelligence in devices and systems is lead- Only through the synthesis of different data from ing to distributed analysis and decision-making clos- normally isolated sources can truly breakthrough in- er to the machine. Machines are brilliantly handling sights be uncovered and automated. 18 1. Instrumented INSTRUMENTED Intelligence ﬂows Industrial MaINDUSTRIALchine MACHINE Intelligenceback into machines Extraction and flows back into storageExtraction of pr andoprietary storage PHYSICAL ANDmachines machineof proprietary data stream machine HUMAN NETWORKS data stream

Data toolsstore now query databases big time mobile terabytes compression Twitter Storage support SQL big data new storagedatabase processing information analysis INDUSTRIAL 5. physical dataexample column-store analyses And Human DATA SYSTEMS SECURE,Secure, CLOUD- 2. Industrial Networks Cloud Based BASED NETWORK Data Data sharing with Network systems the right people Dataand sharing machines Machine-based with the right people Machine-basedalgorithms and 0110100011010001001011010101100 and machine 0010100011001011011010000101101 algorithmsdata analysis and 1010110010001011010001101001101 0110010010110100011010000101100 1011010100001001101100101000110 data analysis 1010010010110000110100011010100 0110100101001010001001100101101 0110010100001001101100101001100 0011010010110100011010000100110 1010010010110000110100011010100 0110100101001010001001100101101 1010010010110100011010000110100 4. RemoREMOTEte and AND 0110110010010100011010000101101 1110110010001011010001101001101 centralized data 0110100011001011011010000101101 CENTRALIZED DATA 1110100011010001001011010101101 visualization VISUALIZATION BIG3. DATABig D ANALYTICSata Source: General Electric Analytics

5. Accelerated Learning System through agnosing and predicting maintenance issues before they Network Effect occur. Analytics and real-time access to critical informa- When the top four are accomplished correctly, we can tion can enable railroads to move freight faster. Utilities create a distributed accelerated learning system using can monitor, manage and control their energy grids the network effect. The insights from this data can lead more intelligently. Hospitals can integrate bed assign- to action and make the entire system intelligent, driving ments, departmental workflow, patient flow, transport, a continuous process of knowledge accumulation and and equipment management in order to reduce wait insight implementation. As more machines are connect- times, better manage available resources, and enable ed within a system, the continuously expanding, self- higher quality care. The Mt. Sinai Hospital in New York learning system grows more intelligent over time. City is already deploying such a solution. By combining on-board control systems along with The promise of the Industrial Internet is that it can software and analytics, technology will be connecting turn every interconnected object into a potential sen- machines to machines, machines to people, and ma- sor for observing the world and its environment, and chines to business operations. This will allow industries for sharing and assimilating the information it such as airlines, railroads, hospitals, manufacturing and gleans. The Industrial Internet will have a profound energy to operate more efficiently and reduce costs – po- impact on business, unleashing a productivity revo- tentially eliminating as much as $150 billion in waste lution to build, power, move and cure the world. across major industries. Airline flight delays costing $40 Bill Ruh is Vice President and Global Technology billion every year could be reduced by using proprietary Director at General Electric, responsible for leading the advanced services and solutions portfolio strategy, development, algorithms to monitor data from aircraft equipment, di- and operations at GE. 19 TEchonomy Why I Am a Techonomist

Jean Case Jeff Goodell David Keith James Manyika Richard CEO, The Case Contributing Professor of Senior Partner, Thompson Foundation Editor, Applied McKinsey & musician I’m a Techonomist Rolling Stone Physics and Company I was invited to per- because I believe Every time I Public Policy, The most exciting form at Techonomy, that technology can attend a Techon- Harvard Ken- innovations and ex- and I wasn’t quite democratize access omy conference, nedy School periences that are sure what to expect. to information, my brain lights up. Techonomy does a likely to transform I use a lot of tech empower people I like bumping into great job balanc- our daily lives and tools in my music, and ignite ideas and people who are ing techno-hype those of the rest but I’m hardly at the movements that doing things that against critical of humanity lie at cutting edge. But can change the I’d never imagined thinking and linking the intersection as much as anyone world. possible, whether both the grand of technology and else, I want to know it's in medicine or policy and econom- the economy. It’s the future, and I social media or ic challenges of this at this intersection thought that this energy. I like the new century. that ideas meet would be the place unpredictability the real world and to find it. Well,I was of the conference have the potential right about that. I —I never know to change quality had a fascinating what I’m going to of life, create op- time, met amazing discover until I get portunities to learn, people, attended there. And I like work, play and every talk and that it's all very prosper. Techono- symposium I could unpretentious, my brings together get to, and glimpsed open, and some of the best the world ahead of un-Davos-like, but scientists, econo- us, and it wasn’t too at the same time, mists, entrepre- scary. I played a little mind-blowingly neurs, technologists music and was made interesting and and innovators and to feel included in alive. those obsessed with this rarified world of making the world a Techonomy. better place.

20 Content & Community Techonomy 2012 » Techonomy Detroit TEchonomy TE12

Herman Miller provided beautiful furniture for Techonomy 2012, inlcuding here, in the lobby outside the main ballroom.

22 Techonomy 2012: Our Window to the Future

Techonomy started with a splashy conference back in 2010, and Techonomy 2012 continued the tradition in style. Each year we gather a critical mass of global thought leaders and businesspeople to advance our understanding of the many ways technology intersects with the economy, and thus illustrate the rationale behind our name. It’s a retreat from the day to day, where we immerse guests in the complex and exciting transformations underway in business, social life, science, education, health, government, politics, and international relations. The aim is to create interaction and dialogue around themes and thinkers we spend the entire year selecting and refining, so attendees return to work invigo- rated with new ideas for keeping their organizations and themselves relevant and impactful. For us it’s live journalism. Our third annual conference brought together participants from Asia, Africa, Eu- rope, and the U.S. at the Ritz-Carlton Dove Mountain Resort in the Arizona desert, surrounded by soaring Saguaro cactuses. Their ages ranged from 11 to 78. Over two- and-a-half days we talked, argued, listened, learned, and laughed. One evening we dined in the hotel’s great lobby, Hogwarts-style, and afterward gathered in the recon- figured ballroom to listen to one of the world's great guitarists and songwriters, Richard Thompson. He talked of his music and about how tech is changing it, and played a stunning group of songs. Conversations began in sessions and continued at meals, on patios, in hallways and even on morning bike trips we organized through the spectacular surrounding Sonoran Desert. Happily, this year no one flew off, at least that we know of. We re- corded and live streamed the whole conference, and the press was there in force, blogging, tweeting, and writing articles prompted by our amazing speakers and audience. Conference highlights are on the pages following. QR codes lead to session videos. At Techonomy.com you can find video and transcripts of other eye-opening sessions, including with Gordon Bell, ultra-young entrepreneurs Sujay and Sheel Tyle, talks by McKinsey’s James Manyika and MIT’s Erik Brynjolfsson, and more panels on food, media, and 3D printing. We take it all seriously, but not too. Don’t miss Richard Thompson’s rendition of “Oops!... I Did It Again.” We’ll do it again at Dove Mountain this coming November 11th through 13th. 23 TEchonomy TE12

S p e ak e rs Susan Athey Chief Economist, Microsoft Douglas L. Gilstrap Senior Vice President, Ericsson Robert D. Hormats U.S. Under Secretary of State David Sze Partner, Greylock Partners

M o d e rat o r David Kirkpatrick Techonomy

When Everybody’s Online

Gilstrap: In fixed broadband, we have about 650 million subscribers today. Just by 2018, mobile broadband will have 6.5 billion subscribers. Kirkpatrick: What will be the social consequences of all that connectedness? Gilstrap: It’s access to information. Healthcare. Education. Those are the primary drivers. Then you have the economic benefit of trade and transportation in develop- Above (from left) David Kirkpatrick, ing countries. Susan Athey, Douglas Horm ats: It empowers people politically. Even if they can’t vote, they now have the Gilstrap, Robert opportunity to use cell phones and other technologies to put pressure to hold their Hormats, David Sze leaders accountable. Leaders cannot fail to pay attention to what these people do. It's not just tweeting. There are a whole series of interconnections that enable people in

Scan for various countries, not just to communicate with one another, but to constantly send video, or visit large amounts of information to their government and put pressure on them. www.Techonomy.com It’s bringing people in developing countries more and more into the game. We /endofoffline utilize satellites that we put up with India to provide information that's downloaded to individual cell phones that tell farmers what the weather is going to be, when you put your fertilizer on, when you should harvest your crop. Foreign policy almost entirely used to be intermediated by the State Department for foreign offices around the world. Now, every agency of every government has its 24 6 . 4 Billion Global Mobile Subscrip tions Q3 2012 (in millions) own state department, and they are emailing one another on a constant basis.

Athe y: I wouldn’t say I’m pessimistic. I just have some nuances. We can think of mo- csson ri E bile devices and online as just democratizing everything. But there are a few key : bottlenecks that remain and those concern me, especially from a business and indus- ource try structure perspective. S A mobile platform is going to have a lot of control over how you find your information. In mobile search, 97% of searches today in the U.S. come through Google. If only one company, or maybe two companies, have access to that data, then we don’t necessarily expect that the benefits from that data will get shared with the ecosystem. Competition between players is what forces you to provide information in an unbiased way. It’s also what keeps advertising prices down. In some ways mobile

devices have really democratized information. They allow peer-to-peer sharing of enetration)

P information. On the other hand, somebody is choosing. Facebook is ranking your (96% (81%) (128%) news feed. It’s choosing what comes first. It’s demoting some of your friends whose (103%)

(112 %) ( 7 2 %) (101%) (67 %)

posts aren’t popular and promoting other friends based on their algorithms. And 220 913 268 1 ,147 724 676 35 4 1 ,100 how you rank makes an enormous difference. Facebook can decide whether they 1 , t ia na ica as

want to put ads in your news feed. If companies don't have competition, they are ope rica rica nd hi E I fr C acific going to be very tempted to do the thing that will maximize revenue or promote ur A me me E /P dle their own products over what the users want. A A id sia in th M Kirkpatrick: Will the impact of this pervasive infrastructure help us get along A at or L

better, on balance? N Gilstrap: My gut feeling is yes. It gives so many people access to information. From that there’s certainly a chance for misinformation. But I think people are smart enough to look at different sources and understand where the world is and try to understand where they are in that world. Sze: Technology doesn’t have a mind, right? What technology tries to do is to spread, scale, and reduce friction. The interesting thing we’re confronting isn’t whether technology is good or bad. The question we’re asking is, what are human beings like when they can interact at much bigger scale with low friction? In general, a lot of us believe that the conflict, the interaction, the learning, the stress that comes from that engagement at scale actually causes really great things to happen that are important for humans over the long run. And technology is just pushing us there very quickly. I think it will cause stress. It’s already causing stress. Arab Spring is an example of that. But do I believe in the end it’s going to be better? I do. I’m a technology optimist. 25 TEchonomy TE12

S p e ak e rs Alec Ellison The Internet’s Fantastic Four Vice Chairman, Jefferies Steve Hasker Savitz: Four companies are increasingly in each other’s business: Amazon, Apple, President, Global Facebook, and Google. What makes these four unique? Media Products and Ellison: They are all four truly platform companies. To varying degrees they are Advertiser Solutions, playing in commerce, they are playing in media, they are playing in Web services. Nielsen Most of them either have or are rumored to have a hardware product, either a smart- Mark Mahaney phone or tablet to deliver media and commerce capability. And they have in most Managing Director, cases a platform for developing applications. So that gives them a defensibility and RBC Capital Markets also an offensive capability to continue to expand into other areas. M o d e rat o r m Ahane y: At least three of them, probably Apple too, have established very deep Eric Savitz competitive moats around their business. The ability for a new company to start up San Francisco Bureau now and go through multiple years of losing money to establish a distribution and Chief, Forbes retail network like Amazon has, it’s very hard to see today. Facebook is a network effects company. People may start trailing off of Facebook. But it’s very hard to see a social network with a billion people recreated in the next five years.A nd Google, the amount of money they spent developing search, perfecting and improving their search algorithms—yes, a user could jump away from them with a click. But for somebody to come up with those kind of algorithms, it would take in excess of $20 billion. Competing Maybe Microsoft could do it. They haven't had much success to date. for your Time So those three companies have established themselves at least for the next five Facebook years, which is as long as anybody on Wall Street can think. It’s very hard to see them undermined. Hasker: Who will own the consumer? Does it need to be one of the players, or can 6:12:05 all four continue to stake out significant territory against consumer time and attention? At Nielsen we look at video. In digital advertising and digital business models, Google video is almost always the most compelling experience. So whoever ends up owning the video experience will have a very strong position.

3:49:44 The most important video content is what the hardest-to-reach, most valuable au- diences find compelling—like the sort of programming fromH BO and Showtime and

APPLE the broadcast networks and the cable networks. Sports is an example. One of the things we watch is—what kind of access are they getting to that content? m AhAne y: Who’s got the most interesting data? Who’s got the largest set of data? I 1:48:10 think the answer is Google. Facebook may come in second. But then who’s got the most commercially useful data, from a Wall Street perspective? People who know Ama zon what you’ve searched for and what you purchase. Google has always tried to close that loop. They’ve never really been able to do that. Facebook is far, far from closing that loop. Amazon gets you at the top of the funnel, they’re watching you the whole 1:34:37

lsen way down, and then they understand you at the end. They’re going to have the rich- ie Average time spent N est set of commercial data on consumers of the four. : per person in November 2012 on Ellison: If you add the four together, depending on the week, you’re talking 6%, give ource

S Fantastic Four websites or take, of the entire market cap of U.S. companies. 26 S p e ak e rs Lars Björk CEO, QlikTech International Gil Elbaz Founder and CEO, Factual Vivek Ranadivé Founder, Chairman, and CEO, TIBCO Software, Inc. Rick Smolan President and CEO, Against All Odds Productions m o d e rat o r Justin Fox Editorial Director, Harvard Business Review Group

Forests, Trees, and Data

Ranadivé: Math is starting to trump science. You don’t really need to know the why, you just need to know the what. If A and B happen, then C will happen. For years AIDS researchers couldn’t find how the AIDS virus mutated. About a year ago they converted it into a math problem and within one week gamers solved the problem. LESS THAN Elba z: The key opportunity is better decisions, and increasingly these better deci- 1% OF THE sions are automated in real-time. We’re trusting these automated systems with more WORLD’S DATA and more of our lives. And the more data you have, the better the model you will be IS ANALYZED able to build. Whoever has the most data will win. TODAY. Björk: In this big data discussion, most of the information is noise. How do you filter

Source: IDC DIGITAL out the stuff that’s not relevant to the decision you want to make right now? UNIVERSE STUDY SPONSORED BY EMC Fox: There’s a big business opportunity out there for a middleman, basically, between consumers and all of these people who want our data. Björk: Most of the things that we solve in this area have nothing to do with personalized information. Most people don’t even have access to relevant data in their day-today life to make good decisions. Elba z: I think people in the future will make a living just selling their data exhaust. Smolan: Drug companies spend billions of dollars looking for cures for diseases. As they do clinical trials, some drugs have harmful side effects. If .001 percent of the Above (from left) people taking the drugs will die, the drug is never released. Now, because we are able Justin Fox, Lars Björk, Gil Elbaz, Vivek Ranadivé, to do genetic sequencing and affordably decode individual DNA, in five years your Rick Smolan local drugstore will tell you which drugs work for you and which ones don’t. 27 Sam W. Lessin TEchonomy TE12

The Facebook Effect, Continued

Kirkpatrick: Facebook seems to focus more on revenue since the IPO. Is figuring S p e ak e rs out how to make money now part of the product design process? David Fischer VP, Business and Mar- Fischer: We think about the user experience and the monetization opportunities as either side of the same coin. In the world we’re moving into, we have opportuni- keting Partnerships, Facebook ties to bring out new forms of marketing that are really effective. Sam W. Lessin Lessin: You pick up a newspaper in the morning. What if it was perfectly custom- Project Manager (and ized just for you? What would you see? The answer is: the content coming from inventor of Timeline), your friends, the people you have asserted are important in your life, is a huge Facebook percentage of it. But it’s not the whole story. There are plenty of brands and companies I want to interact with that are part of the conversations I want to be hav- I n t e rvi e w e r David Kirkpatrick ing. So how do we take that whole equation of the ideal newspaper and then intro- Author, duce the economic component? People in the world looking at their News Feeds The Facebook Effect want to know what are the most important, exciting things to know. Knowing there’s a great new product for them to buy is a huge deal. Fischer: It’s no secret that mobile is the critical growth area. We’ve certainly in- vested in a heavy way this year in mobile. If you just look at the engagement rates of people, passing a billion is a great milestone. There’s a lot more people to get to. But are those people engaged? What we’re seeing is that people on their mobile devices are more engaged. One of the five values of the company is being able to move fast. We pride ourselves on how quickly we can move to seize opportunities. So over the course of this year, we’ve introduced ads into News Feed and mobile and gone from no mobile revenue to 14% of ad revenue in Q3. Kirkpatrick: Given that almost everything that you’re selling depends on the performance of the News Feed in some fashion, isn’t it going to be necessary to introduce more transparency into how it works? Fischer: You’ve put your finger on a really important challenge for us, which is making sure that people understand the value they are deriving. Our belief is you Scan for should have all that information available to you. video, or visit www.Techonomy.com Kirkpatrick: Over time does the News Feed and what you get from a search engine /facebookeffect in some sense converge? Lessin: Long-term I cannot overemphasize how much it matters what that first lens you bring to the world is. There’s a very big difference in my mind in starting by de- signing around human networks, around people. It’s all about connecting, express- ing things to people, understanding things through people, and using your net- 29 TEchonomy TE12

30 works, the people you trust, to help filter information and live a better life. We’re using machines as intermediates to people, rather than thinking of machines as the terminus in and of themselves. Kirkpatrick: If Facebook gets into the multi-billions globally, does economic behavior at a mac- ro level happen in a different way? Lessin: Eventually we’re going to see a world with completely vari- ablized cost structures. Go back to the three fundamental shifting variables of infinite storage and processing, and instant communi- cation. You could go crazy far out. It’s like, why own anything? Look at examples like Airbnb that’s built on Facebook’s platform. The sharing economy is part of it. More fundamentally, we built over the last several hundred years an entire way of doing business and living, based on certain limitations in how we can communicate with each other. Those limitations have been fundamentally lifted. Over the coming decades, everything is going to change. Fischer: It’s hugely exciting to travel around the world and see these growth markets. We didn’t have a strong base in Brazil, for in- stance, and now we’re far and away the leading player. The experiences of people around the world are going to have a lot more in common.

From left David Kirkpatrick, David Fischer, Sam W. Lessin 31 TEchonomy TE12

S p e ak e rs David Keith Professor of Applied Physics and Public Policy, Harvard University Andrew Parker Research Fellow, Harvard Kennedy School

M O D E RAT O R Jeff Goodell Rolling Stone

Geo-Engineering: Who Decides, and Who Benefits?

Goodell: Hurricane Sandy just hit. In two weeks Hurricane Sandy II comes and everyone says, “Oh, my God, let’s cool this off. We've got to do something now.” What do we do? Keith: So let’s say you wanted to cut in half the rate of warming starting in 2020. What you’d do is start in 2020 with about two or three Gulfstream G650 aircraft, re- engined with a military low-bypass engine. That’s a stock commercial airplane. And Above (from left) you’d put about 20,000 tons of sulfur into the stratosphere, the upper atmosphere, JeffG oodell, David Keith, every year. And 20,000 tons may seem like a meaninglessly big or small number, but Andrew Parker that’s something like two or three hundred times less than the amount of sulfur we

Scan for now pump into the lower atmosphere in pollution, which, by the way, kills some- video, or visit thing like a million people around the world a year. www.Techonomy.com So 10 years out, in 2030, you’d have maybe 10 aircraft running. It would cost you a /geo-engineering couple of hundred million a year, all up. And this is a horrifyingly tiny amount of money. We spent, the year before last, roughly $300 billion globally on clean tech. The kind of numbers people talk about as the cost of climate impacts, or the cost of managing the problem, are trillion numbers, sort of one percent of global GDP class numbers. [In comparison,] numbers at the level of a couple of hundred million 32 are basically zero. So at a cost that’s tiny, that essentially any country in the world could do, certainly any G20 country, you could cut the rate of warming in half. Is it perfect? No. Does it remove all climate problems? No. Does it cause its own risks? Of course, it does. But whether you think this is a completely nutty idea or a perhaps good idea, what’s clear is it is frighteningly doable. 57 If you want to reduce the risks to many of the people who will suffer real climate articles impacts in the next decades, including some of the poorest people in the world, this published is essentially the only thing you could do, because nothing you do to cut emissions about the has any real impact over the next few decades because of long inertia. I don’t think conference, we’re actually quite ready to commit to do it in 2020. I would not advocate that, but in Bloomberg, I’d come pretty close. Bloomberg Goodell: The conventional scenario is something like the United States would do Businessweek, some sort of well-run program. But you were talking about how it’s equally likely or CNET, The Economist, even more likely that the developing world could really push for this. Forbes, : Two large groups might be interested in deployment in 15 years: the elites in Parker Huffington the developed world who don’t want to do anything about mitigation and see this as a Post, The L.A. way of stalling action on our emissions, or people who are feeling the effects most Times, Mash- keenly, and those are the people in the developing world. Take, for example, the Pacific able, and Islands or the African equatorial states that are projected to suffer climate change TechCrunch impacts far more keenly than Europe or the United States. What terrifies me most about this idea is more the political ramifications of that than the physical ones. Unfortunately, when it comes to peaceful uses, i.e., trying to treat climate change, there’s very little international regulation out there to stop us here going out to do it tomorrow. Keith: None of the current treaties, not the climate treaty, not other environmental treaties, even control doing this. So it is in principle legal to engineer the whole planet this way today, under international law, which is crazy. The biggest single fear is that this takes away the incentive to get serious about cutting emissions. That this provides a kind of technical fix, get-out-of-jail-free card, or appears to provide one and perhaps actually does not, that will then lead us further down a pathway where we put more carbon in the atmosphere and increase our risk without actually managing the root problem, which is the buildup of carbon. I think this is, in the grandest sense, a challenge for international institutions and innovation that we are not meeting. This idea actually goes back to the ’60s. This idea is in the report that President Johnson got about climate change in 1965. 33 TEchonomy TE12

34 3D printed body parts, a 13-year-old Techono- mist, Rock n’ Roll, Steve Forbes, and a cardboard Obama

Top row (left) Steve Forbes of Forbes Media and Revolution’s Steve Case, with a cardboard Barack Obama looking on; (middle) guitar leg- end Richard Thompson; (right) International guests: Globant's Guib- ert Englebienne (Ar- gentina), Jenny Dahl of Memoto (Sweden), and Dominique Turcq of the Boostzone Institute (France) Bottom row (left) Ping Fu of Geo- magic with some of her company’s 3D printed wares; (middle) U.S. Under Secretary of State Bob Hormats; (right) Kennedy Shine (13), the conference’s youngest Techonomist 35 TEchonomy TE12

Africa: The Final Frontier

Parti c ipa n ts m Anyika: There now are a billion people living in Africa. It was the second-fastest- Bhaskar Chakravorti growing region in the global economy in the last decade—faster than Western Eu- Sr. Associate Dean, rope, Latin America, or the United States. If you look at the ability to consume, at Tufts University things like internet connections or access to technology, it’s also one of the fastest- 'Tokunboh Ishmael growing regions. Co-founder and Jidenm a: Young people in Africa are passionate about social. Facebook grew there Managing Director, 50% since February of last year. Nigeria, which is where I’m from, has the second Alitheia Capital highest mobile penetration rate for Facebook globally. There are local social plat- Nmachi Jidenma Founder, CP-Africa forms like Mxit, with over 20 million users, and 2go in Nigeria. These platforms Gary Rieschel are helping young people express themselves politically, using platforms like Founder, Qiming blogs as a means of social expression, but also as a means of gaining employ- Venture Partners ment for themselves. Seventy percent of Africans are under the age of 35. Even Hannes van Rensburg if they can’t afford to go to a certain kind of school, they can still take a course CEO, Fundamo, at udacity.com. Visa, Inc. Rieschel: We’ve been watching the capital flows and the investments that China M o d e rat o r has been making in Africa, building out the physical infrastructure for the entire James Manyika continent at a rapid rate. There are now about 1.3 to 1.4 million Chinese nationals Senior Partner, living in Africa. McKinsey & Company Ishm ael: The Chinese are bringing in drivers and construction workers and displac- ing people on the ground, so amongst my peers there’s a debate about whether this is the second colonization of Africa. Have we properly prepared ourselves to engage with the Chinese? Chakravorti: There are different China stories in different parts of the Continent. In Rwanda they take the attitude that the West had its chance: the Chinese are here, and the Chinese don’t bring attitude, like the West did. The Chinese have a purely mercantilist approach: “We want your materials, your commodities, and so on, and we’ll build some roads and highways and we don’t want to impose our culture or Scan for video, or visit values on you.” In other parts of Africa, like Ghana, Africans are developing leverage www.Techonomy.com to negotiate with the Chinese on an equal footing. They have insisted they employ /africa Ghanaians and not bring Chinese workers over. Van Rensburg: If you look at the best-known brand in Africa, it’s Coca-Cola. If you stay in hotels, it’s Hiltons or Holiday Inns. Wal-Mart just bought [South Africa's] Massmart. Visa bought my company, Fundamo, and they’re still investing heavily in Africa. Many, many Africans are employed by U.S. companies. I think the relationship with the U.S. 36 has come of age. Let’s see where there’s the opportunity to make money together. The From left James Chinese are kind of still trying to figure out what the relationship is with us. Manyika, Bhaskar Chakravorti, Hannes Rieschel: Looking out 20 years, I am far more positive about Africa than about In- van Rensburg, dia, from the standpoint of infrastructure, entrepreneurship, and a much more open 'Tokunboh Ishmael, attitude. The West is starting to get the right idea about the investing opportunity. Nmachi Jidenma, Gary Carnegie Mellon setting up a campus in Rwanda—who could have possibly seen that Rieschel 10 or 15 years ago? That type of investment in the people can give Africa a huge advantage if it gets its governance in order. Ishm ael: Our investment firm based in Lagos, Nigeria invests in initiatives that broaden access to finance, for households or for small businesses. People in the diaspora are going back to Africa. You have a lot of entrepreneurship springing up from that. I can live outside of Africa. I’ve chosen to live in Nigeria. And I want to do something meaningful. 37 TEchonomy TE12 An Interview with EMC’s Joseph Tucci

Kirkpatrick: How much will this data analytics thing change the world, from your view leading one of the main companies enabling it? Is any industry exempt from the transformation? Tucci: You used the word will, and I use the word is changing the world. You heard about the decoding of the human genome. That was a big data problem, and it hap- pened several years ago. I absolutely believe that every single industry will be totally Joseph Tucci revolutionized by big data. : You spend a lot of time with the biggest CEOs. Do they get it? sp e ak e r Kirkpatrick Joseph Tucci Tucci: Most CEOs think in terms of What are my key lasting assets? First, your brand CEO, EMC is incredibly valuable and it lasts beyond any CEO, in many cases for well over 100 years. Second, you have your people. Any CEO knows people are their greatest as- i n t e rvi e w e r David Kirkpatrick set. The way you get those people to work together is you have a whole set of Techonomy processes that support your business. And those processes are enabled by applications. So I would say your processes and your application is a lasting asset. And then your information is a lasting asset. So any good CEO knows that they’ve got to make sure they protect all four of those assets and utilize them to the benefit of their business. Kirkpatrick: What was in your mind when you made the decision to buy VMware? That was a fundamental shift for your company, which formerly was focused mostly on hardware. Are there lessons for leaders that you’ve taken away from having made some big gambles that have paid off for EMC, especially with acquisitions? Tucci: We were basically a leader in high-end storage, period. And that’s not a strong enough foundation for a company. Because if you can attack that one thing that we did well, you could really hurt the company. So you want to broaden your base. So we went from high-end storage to mid-tier storage to low-end storage. Basi- cally if you’re storing information, you want to protect that information and make sure it’s always available. You want to make sure that information is secure. That brought us into security. And then, of course, you want to get intelligence from that information, and that brought us into predictive analytics. And then we real- ized there’s going to be a whole new way of processing in the data centers. That’s what led us to virtualization. Kirkpatrick: How do you see the U.S. and global economy right now? Scan for video, or visit Tucci: I’ve never seen a time where the rest of the world was looking more to the U.S. www.Techonomy.com for leadership. They want the U.S. to be successful. They want leadership. We need a /tucci grand compromise [on the budget]. This is not a Democratic or a Republican solution. We need to raise revenues. And we need to balance the budget over time. I am spending my personal time on this, and encourage all of you to as well. This is our country. We’ve got to make sure that it’s, “We the people, by the people, for the people,” and live these words every day. 38 What you learn at Techonomy does not only come from the conference room.

At breakfast (above); Allen Blue of LinkedIn (left); a morning bike trip in the desert hills 39 TEchonomy TE12

S p e ak e rs Robert D. Hormats U.S. Under Secretary of State Zachary Karabell President, River Twice Research and author of “Superfusion: How China and America Became One Economy” Gary Rieschel Founder, Qiming Venture Partners (based in Shanghai)

Making Sense of a Changing China

K arabell: A deceleration in the rate of China’s growth is not the absence of growth. China growing at 7%, if it even is that low this year, will add more to global output than China growing 11% or 12% did five years ago, because the economy has grown

Above (from left) larger. Its consumer market is chronically underemphasized as an emergent phe- Robert D. Hormats, nomenon. Zachary Karabell, Gary You probably have to go back to Great Britain and the United States prior to World Rieschel War II to find two economic systems that were as intertwined. The relationship between the United States and China has never been asymmetric the way trade figures Scan for video, or visit make it look. Americans tend to focus largely on the trade deficit with China. But as www.Techonomy.com a market for U.S.-produced goods, China is the largest and fastest-growing in the /china world, bar none. And a vast proportion of imports from China are American companies sourcing goods in China and essentially re-exporting them to the United States. The way those things are valued creates an optic of a trade relationship that is nega- tively impacting U.S. GDP, but it doesn’t necessarily represent where value is flowing. This is a complicated system that we have chronically failed to understand. 40 Horm ats: They need a very robust rate of growth, but the big difference is the qual- Consump tion ity of growth. What’s even more interesting is the notion of a harmonious society, will overtake harmonious growth. They are now emphasizing growth in the middle part of China, investment as in Western China. They are emphasizing a Social Security system that lower income China’ s largest people will have opportunity to access and to take advantage of. The regions, the GDP engine provinces, have enormous influence. They have cities springing up with 2, 3, 4, 5, 10 Real GDP Growth million people all over China. And it’s not a government that runs in a central way anymore. A lot of power is in the hands of provincial authorities. You have a lot of pressure for greater participation in the governance process. Now, don’t equate participation with Jeffersonian democracy. But more and more there’s an understand- 27 % ing that provincial leaders, city leaders, and other leaders have to listen to people.

Private Consumption 41% There are numerous protests over environmental issues, over corruption, over poor 51% governance. And they are trying to do these little experiments in different parts of China. They call them experiments, on greater participation in the system and how you emphasize what one might call democracy with Chinese characteristics. Rieschel: Last year Beijing said everyone has to pay this Social Security tax, including all the foreigners. Shanghai said, we don’t really like that. Shanghai just refused 53% to implement it. Interesting, right? You think China has an autocratic government 42% structure, but everything in China is now in negotiation. Investment 34% One of the grand experiments that China did 25 years ago was Shenzhen. When they talk about doing experiments, sometimes they are small and sometimes they actually change the entire economic structure of the country, which Shenzhen and 2 the special economic zones managed to do. This country is a huge teenager. It is 15% incredibly powerful. It is very proud of itself. And sometimes it has absolutely no Others 17 % 16% 1 clue of what to do. And it doesn't like to be lectured to. You need to start to accept 5% that China is going to be a major player on the stage. China is going to have a huge Net Trade 0% -1% 2000-10 2010-20* 2020-30* impact on innovation. 1 nE T Trade is e xp orts The vast majority of the companies we’re investing in now are being commercial- minus imp orts 2 Others includes ized in China. A lot of clean technology, a lot of healthcare technology, is being de- government consumption and inventory veloped here [in the U.S.], but it’s being commercialized in China. And it will wind up *Estim ate Exhibit from “ What’s Next for being the China product that will go around the world. A drug approved for use in China?” McKinsey Insights China, December 2012. Copyright China is accepted by virtually every country. So if you commercialize in China, you © McKinsey & Company. suddenly have a global product. That was not the case five years ago. Horm ats: We want them to be less export dependent, more dependent on domestic demand. They want to do the same thing. We want them to have better environmental policies because they are big polluters. They want to do the same thing. Not easy to do, but quite do-able. 41 TEchonomy TE12 Companies Confront the Madness of Crowds

Sarra zin: How do you see crowdsourcing and the tension between fine-tuned company processes and the chaos we encounter when we open up inside and outside the company? Tarkoff: Deloitte looked at the productivity of knowledge workers and found that by a factor of two to one, the most passionate ones existed outside your organization. They were not identified through the traditional means of hiring and bringing employees on. They were out there in your peer base and your customer base. On the social Web there are entirely new classes of problems that are being invented that only customers can solve. They are at the intersection between different products and different platforms. Warrior: Crowdsourcing and getting ideas, I would argue, is relatively easy. We use different platforms at Cisco. We post a problem globally, across 156 countries, something that we feel needs to be solved. And, no strings attached, we pick the best idea and give the person or people with that idea $250,000 to go commercialize that technology. What are the right mechanisms to screen these ideas? I would argue it’s the back end of the process that’s harder than the sourcing of the processes. But having said that, I think the fundamental model for innovation is changing. It’s becoming much more of a collaborative model. L jung: Our proposition to everybody who comes to SoundCloud is the community and the whole crowd that is there. They are not just our customers and users. They are actually part of our product as well. Thinking about large crowds and how people do things together is at the core of what we do. We don’t create a product and sell that to somebody, so the experience they have is something we made. One of the most powerful things with having large crowds is not that people come up with the solution for things, but that they spark this chaos and this ongoing conversation, which over time leads you to a better solution. Warrior: Regardless of how you define the community, whether it’s within the walls of an enterprise or extending from the walls of the enterprise, how do you har- S p e ak e rs ness the power of that community to being something meaningful versus something Alex Ljung CEO, SoundCloud that’s just creating a lot of noise? Rob Tarkoff Sarra zin: These communities are networks. And there’s a body of knowledge around CEO, Lithium how networks self-regulate and whether they can arbitrage themself and come to an Technologies outcome that is in the greater good. How do you create a value exchange that seems Padmasree Warrior fair with all the participants in this community? CTO, Cisco Tarkoff: This is going to become the really important part of crowdsource value

M o d e rat o r creation—understanding the role and the place that each of these participants play Hugo Sarrazin and how to use that to your advantage. And then we’ve got to build some sort of a McKinsey & Company regulatory and legal structure around that. 42 S p e ak e rs James Barrese CTO, PayPal Dan Schulman Group President, Enterprise Growth, American Express Gibu Thomas Senior Vice President, Mobile and Digital, Walmart

M o d e rat o r Erick Schonfeld Executive Producer, DEMO

Shopping: Data and Dollars

Schonfeld: What technology is changing your business the fastest? Above (from left) Erick Schonfeld, James Thom as: Customers are coming into our stores with smartphones. E-commerce was Barrese, a big disruption in retail, which brought our stores to the Web. But mobile bringing Dan Schulman, the Web to the store is incredibly disruptive. Mobile gives customers in a store the Gibu Thomas same kind of tools that have been available to them online, whether that’s search or Opposite recommendations or personalization. (from top) Padmasree Warrior, Rob Tarkoff, Schulm an: When you walk into the store, what you’re doing with your phone is basi- Alex Ljung cally, on an opt-in basis, exposing your personalized commerce identity, the brands you like, the budget you have, the SKUs that you want. And we can now start to customize deals, offers, digital couponing. That can change every aspect of retailing. Schonfeld: So what’s more valuable, the payments and transactions that go across mobile, or the data? Schulm an: Data enables us to know whether advertising is effective, to track from online to off-line, to create loyalty programs. If I had to make a choice, it would be Scan for data for sure. video, or visit www.Techonomy.com Barrese: There’s a huge willingness within the industry to support these new tech- /shopping nologies. Now we’re going to be able to create fantastic new experiences for the customers. At PayPal we have really adopted the mobile-first view, where for every single product, every single customer experience, we’re looking at it for the consumer with the mobile device or a tablet. 43 TEchonomy TE12

S p e ak e rs Rodney Brooks Robots, Factories, Jobs, and Life Founder, Rethink Robotics Markoff: Rod, you founded both iRobot and Rethink Robotics. What is different Andrew McAfee between the Roomba era and the new Baxter generation of robots? Principal Research Brooks: Well, the Roomba was the first cheap mass market robot. But it’s a special- Scientist, MIT purpose robot. It just cleans the floor.

M o d e rat o r Baxter [from Rethink Robotics] is a robot to go into factories and do simple tasks John Markoff that people do right now but are boring. There are two important things about it. New York Times The software is set up so that a line worker who doesn't even have a high school diploma can learn to program it in less than five minutes and retask it for new things. The other thing is, we’re coming out with an SDK early next year so that other people can take this and program it to do all sorts of other stuff, beyond manufacturing.

Onstage above Mc Afee: It’s a $22,000 robot. That's discretionary budget for any decent-sized manu- (from left) John Markoff, facturing facility. You take it out of the box. You plug it into the electrical socket in Rodney Brooks, the wall. Your hourly worker trains it for half an hour. Andrew McAfee When it comes to the impact of technology on the labor force, we ain’t seen nothing yet. We’re just on the other side of a tipping point where computers and robots Scan for video, or visit and hardware and software are doing things that used to be, honestly, the domain of www.Techonomy.com science fiction. That’s going to have a lot of wonderful consequences for our society /robots and our economy. It’s going to have some very, very challenging consequences for the labor force, and particularly for less-skilled, less-educated workers. I see technology encroaching into human skills and abilities in a way that has never, ever been the case before. When digital technology becomes better, employers hire digital labor, not human labor. 44 Brooks: This is not meant to replace people. It’s meant to make them more produc- tive. That’swhy I made it so that ordinary line workers could program it. m Arkoff: If China follows us and automates, do they have a cost advantage and do jobs stay there? Mc Afee: If you take labor costs out of the equation, it makes a lot more sense to do your manufacturing close to your home market. m Arkoff: What is the equivalent hourly labor cost for Baxter? Brooks: We're saying it’s under $4 an hour. m Arkoff: Should we automate everything we can automate? Brooks: We will have people and machines working closely together. The computer didn’t get rid of the office worker, but it changed the nature of the work. Mc Afee: The great double-edged sword of technology is that it is going to let us improve the quality of our lives. Let older people live more autonomous lives for longer, for example. That’s fantastic. At the same time, what Rod and his entrepreneurial colleagues are doing is looking for expense and inefficiency out there in the economy, and they are throwing all of their intelligence and all their might at it. That’s going to mean the automation of a lot of the workforce.

Ray Kurzweil: Enhancing Humanity

Kirkpatrick: How optimistic are you about our ability to start solving problems at scale over the next 5 or 10 years? Kurzweil: Very optimistic, because there is a lot of evidence now that not only hardware is progressing exponentially, but software. The big innovation in Homo sapiens is we have this big forehead to allow more neocortex. That was the enabling factor for us to create language and music and art Ray Kurzweil and science and technology. But ultimately, we'll be able to expand it. We'll send Author of The Singularity nanobots. These will be the size of blood cells in 2030. So go inside our brain and is Near, and now Director basically expand our neocortex into the cloud. of Engineering, Google As we get better models for how the brain does things, we'll do a better job of creating artificial intelligence to augment our own intelligence. It gives us greater insight Scan for into ourselves. video, or visit We are creating computers in our own image to basically make ourselves more of what www.Techonomy.com we value in human intelligence. And we're going to be merging with that technology. /kurzweil We are a human-machine civilization. Artificial intelligence does not exist in a few dark government intelligence laboratories. It's very widely distributed. A kid in Afri- ca with a smartphone has access to more intelligently searchable information than the President of the United States did 15 years ago. 45 TEchonomy Why I Am a Techonomist

Gordon Bell Eden Full John Hagel Stephen Peter Vander Principal Founder, Co-Chairman, Hoover Auwera Researcher, Roseicollis Deloitte CEO, PARC, a Innovation Microsoft Technologies Center for Xerox company Leader, Swift Having spent the I love inventing and the Edge The most disrup- I am a Techonomist past 50+ years building technolo- I am a Techono- tive innovations because I am an evangelizing gies, but none of mist because I am come when the optimist and believe scalable systems that matters if the excited by the op- combination of in business and and their impact things I create sit in portunity to unlock breakthrough social progress. We on organizations my basement gath- more of our poten- technologies and don’t need “just” and society, I am ering dust. Having tial as individuals, as business model innovation; we need humbled, honored, the opportunity to institutions and as a innovations encour- progress. I am a Te- and overjoyed to share my passion society. It is in the age social change. I chonomist because be considered a and creations with interaction between am a Techonomist I deeply believe in Techonomist. Being people who can technology and the because tectonic technology as the part of the Techon- benefit from them economy where the shifts which change enabler of a more omy community is is what makes in- real power and po- the world occur at healthy economy. a memorable and venting meaningful. tential resides. My the intersection of Because I believe stimulating learning The intersection of personal passion people, economies, connection creates experience. technology and the involves the explo- and technology. value. Because economy is what ration of institu- companies become makes the shar- tions and platforms movements. Be- ing of innovations that will help us to cause we need to be possible on a global scale potential and united to confront scale. possibility. Rather the Cambrian ex- than thinking of plosion of every- the world as having thing. Because we 7 billion mouths embody change and to feed, I prefer to transformation. think of it as having 7 billion minds to unleash.

46 Content & Community Techonomy 2012 Techonomy Detroit » TEchonomy Detroit

Techonomy Detroit's closing session: (from left) David Kirkpatrick, Jack Dorsey, Dan Gilbert

48 Techonomy Detroit: Competitiveness, Jobs, Growth, and Urban Revival

In 2012 we decided to hoMe in on the U. S . economy. Techonomy Detroit was a departure from our flagship November conference. That one takes a global view and creates a retreat-like setting for 250 invited guests over two days. Detroit was one day long and open to the public. We brought together top thinkers to explore what technology means for U.S. economic recovery and for American cities. Wayne State Uni- versity in midtown Detroit was a perfect venue. Its vitality contradicts the standard narrative of Detroit’s hopelessness. But Detroit does symbolize challenges faced by the U.S. We think technology can help address them. We aimed to impact thinking in Detroit and in the U.S. about how tech can affect economic growth, empower citizens and workers, and create jobs. As speaker Michael Littlejohn of IBM Smarter Cities said, “Detroit is a test case for what we should be and what we can be as Americans.” The audience included local entrepreneurs, senior executives from a cross section of industries, and students from around Detroit. Hosted by the Detroit Economic Club, and held in Wayne State’s stunning McGregor Center, designed by Minoru Yamasaki, the conference welcomed 550. Speakers included national and local business leaders including Revolution’s Steve Case, Square and Twitter’s Jack Dorsey, Quicken Loan’s Dan Gilbert, Detroit Venture Partners’ Josh Linkner, and former U.S. CIO Vivek Kundra, now at salesforce.com. What unfolded was a great day of discussion about the rapid pace of tech-driven change and how it can be harnessed to revive U.S. industries, cities, and communities. We kicked the conference off with a welcome reception on the roof of the slickly renovated Madison Building, overlooking Comerica Park, famed home of the Detroit Tigers in downtown Detroit. The Madison Building is headquarters for Detroit Ven- ture Partners and the epicenter of an energetic and burgeoning local start-up scene. The following pages highlight top sessions. QR codes on each page lead to videos and transcripts at Techonomy.com. We’re already well underway planning the next Techonomy Detroit for September 17, 2013.

49 TEchonomy Detroit

S p e ak e rs Grady Burnett Vice President, Global Sales and Marketing, Facebook Mark Hatch CEO, TechShop Danae Ringelmann Founder, Indiegogo David ten Have CEO, Ponoko

M O D E RAT O R Erick Schonfeld Executive Producer, DEMO

The DIY Economy: Democratizing Finance, Design, Manufacturing, and Distribution

SCHONFELD: Who are the new manufacturers? HATCH: The cost of a computerized numerically controlled milling machine, or CNC tool, has come down about 95%. Software companies like Autodesk are making software easier to use. We’ve had dozens of crowdfunded projects [at TechShop] that From left Erick Schonfeld, Grady spent only $10,000 to $100,000 to get all the way through prototyping to their first Burnett, Mark Hatch, run in manufacturing. That is new. Danae Ringelmann, TEN HAVE: Ponoko enables distributed manufacturing. We help people reach out to David ten Have a global market. People use crowdfunding to determine the appropriateness of the product. Is someone going to buy it? They do early prototypes at TechShop. And then Scan for video, or visit they can use a platform like ours to push their product out into the globe. That eco- www.Techonomy.com system didn’t exist five years ago. /diyeconomy SCHONFELD: Does that create jobs here or abroad? TEN HAVE: We’re finding people are starting to think critically about everything in their supply chain. That includes whether or not they can use local resources. People are bringing jobs back locally. In many cases it’s less complex than sending stuff overseas. HATCH: Because robotic tools are so cheap, you're now able to manufacture things in 50 short and moderate runs, better meet what the customer wants, and move a lot of jobs back to the U.S. RINGELMANN: We’ve had campaigns raise money for 3D printers, or to raise money to make a film. We had a campaign by two young women who wanted to create solar- powered, environmentally-friendly inflatable lights that they could give away to the developing world. They ended up raising $60,000. We had a couple who couldn't afford in-vitro 46 fertilization treatment, so they went on Indiegogo and raised $10,000 to have a baby. A few young entrepreneurs were passionate about keeping bugs away. So they put Articles their creative minds to work and they came up with this awesome contraption to, in published about a very benign fashion, shoo away flies. They used Indiegogo, which leveraged Face- Techonomy book and social media, and ended up raising almost $600,000 by offering their prod- Detroit, uct as a way to raise the money. in The Detroit SCHONFELD: The marketing starts with the core group of early adopters who will be Free Press, your most loyal customers. And they cheer you along. Once you have the product, a Detroit News, lot of people find Facebook is a great distribution mechanism for connecting with Forbes, new customers and getting people to recommend their products. Huffington BURNETT: That distribution is incredibly important. If you think about how we make Post, Tech- decisions, it’s influenced by what our friends, family, and co-workers do. Facebook Crunch, AND allows you to engage that community in a word-of-mouth and scaled way. So you can Venturebeat activate those friendships and have them tell your story in their voice and augment your marketing message. Almost every business story on Facebook starts with a person connecting with friends on their page, talking about a set of interests, and real- izing, wow, maybe I have a business opportunity. TEN HAVE: People are starting to build out the narrative around the product. Know- ing who made the product is an important part of removing the opacity of information around products. It’s about reinvigorating a social contract. RINGELMANN: We have a great example on our site. A young woman started a gluten- free bakery and made gluten-free macaroons literally in the back of her garage. And they started getting a little bit of traction. And then they had the opportunity to expand production, hire people, and get their product into a regional grocery store, which was a huge opportunity. The only thing is, they needed to update their packaging, which was going to cost $15,000. They went back to the bank and said, hey, we have this huge opportunity to grow. It’s not that the bank didn’t want to. Their risk return models just didn’t work. So the company went on Indiegogo and raised $15,000 by preselling macaroons. Within three months, they were distributing their product across 40 states. And now they are hiring people. SCHONFELD: Barriers to entrepreneurship are going away, not just in the digital realm, but in the physical one, too. RINGELMANN: All these ideas have just been repressed and never saw the light of day, because the mechanisms to raise the money, design the products, distribute the products, and market the products were never there. But now they are. I think we’re going to see this rising middle class of entrepreneurs. It’s just a mat- ter of you deciding, “Yes, I’m going to try.” 51 TEchonomy Detroit

Entrepreneurship and American Relevance

S p e ak e rs c Ase: I appreciate the fact that Techonomy is shining a spotlight on Detroit. In many Steve Case ways, Detroit was Silicon Valley 50 years ago. This was the epicenter of innovation. CEO, Revolution LLC It’s had a tough few decades. But it's fighting its way back. Josh Linkner It’s really the story of entrepreneurship in America and how it is spread more CEO, Detroit broadly through the nation than we sometimes realize. Silicon Valley is the epicen- Venture Partners ter of enormous innovation and tremendous companies. It’s something we’re all M O D E RAT O R proud of. But there are also a lot of companies across the nation that don’t get as David Kirkpatrick much attention. If we’re going to get our economy back as a nation and get our un- Techonomy employment down, the place to focus is entrepreneurship. We didn’t become the leading economy by accident. It was the work of entrepreneurs creating companies and industries throughout the nation. That is sort of a secret sauce that built the American economy. We have to double down on entrepreneurship in Detroit and Cleveland and St. Louis and Denver and a lot of other places. Linkner: We have to scream from the mountaintops that Detroit is open for business. This is a great place to build a tech company. We still have a lot of work to do to get that message heard, both locally and certainly on a global basis. Detroit specifically was born on the spirit of disruption. Folks like Henry Ford put us on the map. As a result, our city prospered. And then we stopped doing that. Es- sentially, we built these stifling bureaucracies and became immersed in finger point- ing and blame and our city crumbled. But today we’re in the midst of a new revolution, and once again entrepreneurship is alive and well. The digital age has taught us Opposite (from you don’t need a Silicon Valley zip code to be successful. left) Steve Case We’ve got to stop apologizing for what we’re not and start celebrating what we are. and Josh Linkner We’ve got an incredible university system here in Detroit. We’ve got beautiful tall buildings that are waiting to be filled up. We’ve got terrific roads, wonderful hospitals. We've Scan for video, or visit got water, a world-class airport, a talent base. So there are all these assets. We have to get www.Techonomy.com out of the trap of apologizing for yesterday and complaining about the past. Enough. /entrepreneurship Time to move forward and focus on building great companies here in Detroit. Case: There are huge sectors of the economy—education, healthcare, energy—that haven’t really been disrupted that much in the last 25 years. What I think of as the first Internet revolution—getting everybody to believe it was important and get connected with multiple devices, multiple networks—that’s sort of been accomplished. 52 10 broadcast reports from Techonomy detroit, on CNBC, C-Span, and Detroit Fox, CBS, ABC, and NPR The second Internet revolution is how you use the ubiquity and now the mobility of affiliates the Internet to transform other important aspects of life. In some ways everything is now a technology company. But we don’t want people to think we’re just trying to create another Facebook. A company like Chipotle has tens of thousands of employees. It's worth $10 billion. That’s not only possible because of a good burrito, but also because they use technology. It’s important to recognize that manufacturing, for example, which is important in this region, is being reinvented because of the juxtaposition of technology and design and the ability to do things in nimbler ways with smaller teams. Washington is fighting a battle around immigration to make sure the best and bright- est don’t just come here for education and then get kicked out and forced to start companies in other countries. But the battle for talent also happens at a regional level. How do you get people who did leave Detroit to believe that now is the time to come back? Getting network density around entrepreneurship is when regions really take off. Linkner: The other thing we really need to develop here that Silicon Valley has is the culture of risk-taking. In Detroit, if you fail, that’s like a really negative thing. In Sili- con Valley, it’s a badge of honor. What we need to start doing is celebrating creativity and responsible risk-taking When someone stumbles, that's a learning opportunity. Case: There are many countries that are being very aggressive in trying to make sure it’s easier for people to move there from an immigration standpoint—easier incen- tives around capital, making significant investments in basic research. The good news is we are still the most entrepreneurial nation in the world. The bad news is there’s a rise of the rest globally. If we don’t double down on entrepreneurship as a nation, there is a risk we're going to lose our way. 53 TEchonomy Detroit

S p e ak e rs Edward Alden Director, Renewing America Program, Council on Foreign Relations Vivek Kundra EVP, Emerging Markets, salesforce.com Paul Mascarenas CTO, Ford Motor Company Michael S. Teitelbaum Senior Advisor, Alfred P. Sloan Foundation

M O D E RAT O R James P. Dougherty Council on Foreign Relations An Era of Global Competition

Doughert y: Immigration, education, and infrastructure—is the United States competitive on those issues? Kundra: My view is that it is still the best country on the planet for starting up a business. But immigration is broken. It makes no sense to educate people with advanced degrees and then ask them to leave and start up companies elsewhere. Why aren’t we stapling a green card to their graduate diploma? Mascarenas: We face a crisis in recruiting critical skills into the auto industry in the STEM disciplines, particularly controls engineers and software engineers. Teitelbaum: At the university level, the U.S. is still the predominant science and engi- From left James P. Dougherty, Edward neering producer in the world, though other countries are catching up. In K-12, things Alden, Vivek Kundra, Paul are quite different. The U.S. has huge inequalities in its K-12 system. So its average per- Mascarenas, Michael S. formance on all the indicators is medium among developed countries. Some would say Teitelbaum mediocre. We’re leaving behind the bottom quartile. That’s an equity issue. Alden: For innovation, entrepreneurship, start-ups, the U.S. continues to be unparal- Scan for video, or visit leled. But in spreading economic benefits broadly throughout the economy, we have www.Techonomy.com not done well the last 30 years. We have to think strategically about how we do better /competition for more of our people in this next era of disruptive change. Kundra: Talent and capital is going to flow where it's most welcome. We need to make sure we’re advancing a public policy agenda that welcomes both. The big problem at the base of this pyramid is fundamentally education. Across the country, there are 3.6 million job openings today. We haven’t done enough in retooling the workforce. 54 Our first-ever Detroit conference attracted a bright array of Techono- mists

Top row (left to right) Tim Dingman of Venture for America; Indiegogo founder Danae Ringelmann; Stefan Ahee of Brys & Edgewood; Beth Chap- pell, CEO of our host, the Detroit Economic Club Second row Wefunder co-founder and President Mike Norman; Nathan Labenz and Jay Gierak of Stik; Sharon Shebib of Detroit Venture Partners; Mike Finney of the Michigan Eco- nomic Development Corporation Third rowNextEnergy’s Aniela Kuzon; Ramon Taylor of Quicken Loans; Tim and Marcia Dorsey, parents of Jack Last row Skidmore Studio CEO Tim Smith; Dominik Scholz (l) and David Woessner of P3 Group; Bedrock Real Estate Relocation Ambassador Bruce Schwartz; TechShop CEO Mark Hatch 55 TEchonomy Detroit

How Far Can Innovation Take Cities?

KATZ: Technology and innovation drive cities, and cities drive national economies. If cities don’t perform, the nation doesn't perform. The United States isn’t at the van- guard. LITTLE JOHN: There is tremendous progress across the country, but it’s relatively siloed. We can point to smarter water implementations and smarter transportation and smarter public safety and smarter health care and smarter grid and smarter building Michael Littlejohn energy management, but that’s not necessarily a smarter city. A smarter city is really

S p e ak e rs taking advantage of the fact that a city is a complex system of systems. Why are we lag- Janet Anderson ging other countries? It’s the way we make decisions that gets in our way. Policy Analyst, FELLER: Chattanooga decided to make the investment in building out broadband to City of Detroit every building in the city, and they are now seeing the economic benefits. A few cit- Gordon Feller ies have actually created an office of innovation attached to the mayor. Urban Innovation, Cisco KATZ: What are the possibilities as Detroit wrestles with hard fiscal and economic Michael Littlejohn challenges? IBM Smarter Cities ANDERSON: The many tax districts we have in Detroit create separate financial and Carlo Ratti governance structures, so that as much as downtown looks better than I’ve ever seen MIT SENSEable City Lab it, the benefits of that are not integrated into the old neighborhoods. One positive M o d e rat o r thing is that we are in such a weakened position, it’s forced us to open ourselves to Bruce Katz any methods, be it outsourcing, be it complete privatization. Metropolitan Policy Program, Brookings RATTI: Berlin 10 or 15 years ago had a lot of the issues Detroit has. But today it is one Institution of the magnets in Europe. People from the creative classes moved there. The city is booming. One reason is it has been very cheap to live in Berlin. But the other point is that the city became like an open platform. If you think about almost allowing people to hack the city in a tech sense, so people use the city for experiments. That top- down way of creating an office next to the mayor to promote innovation you can do, Scan for video, or visit but it requires a lot of investment. www.Techonomy.com GORDON FELLER: The city and key institutions have to get together and say we want /cities transparency around things like energy consumption in our buildings. What’s it going to take to have a dashboard that parents can access on their smartphones to see which schools are cleaner and greener and smarter? Most city leaders don’t understand that there has to be a way of engaging around the supercomputer we’re carry- ing around in our pocket, that is a tool for transparency. 56 The Venue at Wayne State U. Showed off Detroit's Potential From Left Post-conference reception in the McGregor Center, designed by architect Minoru Yamasaki Bottom Venture capitalist Tim Draper speaks at a breakout session

57 TEchonomy Detroit

Jack Dorsey Chairman, Twitter, and CEO, Square

Jack Dorsey on Twitter, Square, and the City as Inspiration

Dorse y: My parents grew up in St. Louis and they love the city, and I naturally grew a love for the city when I grew up there. I became obsessed with maps and taught myself how to program so I could draw them on my computer. I eventually got into the dispatch industry so I could actually see life in the city. Kirkpatrick: Dispatch being systems that communicate with taxis and police cars and ambulances. So Twitter aims to give individuals that same ability to broadcast their location and whereabouts and ideas? Dorse y: Twitter was just an extension of that idea, giving those tools to citizens. With Twitter, I can see the entire world, what the entire world is doing and also what the entire world is caring about in real time. Square is this tiny device that you plug into your phone, and it allows you to swipe anyone's credit card, and that money goes into your bank account the next day. This is important because the world has moved away from cash and checks, and it's pay- Scan for video, or visit ing with plastic everywhere. www.Techonomy.com Normally the small merchant, the independent contractor, was locked out of ac- /dorsey cepting credit cards. So we made it simple. If you have a garage sale or you are a personal trainer, golf instructor, tutor, or mowing grass, now you can accept credit cards. A critical aspect of improving the U.S. economy is making it easier to start and grow a small business. So now they can start something that they want to see in the world immediately and get payments for it. 58 Kirkpatrick: You told me a year or so ago that you wanted to be mayor of New York some day. Dorse y: I have to move to New York first, but it is a goal. I think mayors are the ones to watch in the U.S. in terms of government innovation. Kirkpatrick: What should Detroit do? Dorse y: What I find compelling about cities is the question of velocity. One way to speed up the change is to overcommunicate and to make more available and more transparent the data of how the government is running, what needs to change, why it needs to change. Kirkpatrick: You recently gave a speech in which you talked about being a revolu- tionary. Dorse y: It was at a technology conference called TechCrunch Disrupt. The key word is disrupt. I questioned this word because disruption to me is actually just moving things around. It actually causes a lot of confusion. I don’t want to disrupt things. What does have purpose, what does have strong beliefs and leadership and usually recognizes a disruption happening or about to happen, are revolutions. My plea to the audience was to rethink the concept of disruption and be more thoughtful about how we approach technology and what we're trying to do in the world. There is risk. You’re going to take big risk to move things forward.

Entrepreneurship and Tech

Kirkpatrick: You’ve said Quicken Loans is a technology company that just happens to do loans. Gilbert: Technology has completely transformed our company. It has become our company. We process and close loans in 3,000 counties and in 50 states out of a centralized environment. Everything moves with technology and by technology. Kirkpatrick: Why have you made such a commitment to downtown Detroit? Dan Gilbert Gilbert: The good news is there was a skyscraper sale going on. They were beautiful, Chairman, older buildings, built by some great architects that just needed a little bit of love. Every Rock Ventures and day we’re just trying to improve things, trying to take advantage of opportunities. Quicken Loans There is a lot of capital around this area that really should be put to use for the city’s good. It’s going to be a great return. You are going to make a lot of money by an Scan for investment in the city. You can feel the energy. The companies are here now, and video, or visit there are more coming and jobs are coming. There are huge ingrained challenges— www.Techonomy.com /gilbert education and the crime that comes from not having as good of an education system as we need to. But these are being addressed. Without getting the city’s finances in order first, none of that other stuff can start to happen and be addressed. Our mission is downtown, the heartbeat of the city. I don’t think neighborhoods can flourish in any big city without a strong downtown. 59 TEchonomy Moving Forward in 2013

upcoming We’re Just Getting Started

events The world needs more op timism and understanding about how to embrace

Techonomy tech to benefit society and economies. While Techonomy is best known for our an- Detroit nual event, the addition of Techonomy Detroit, the launch of our editorial site, and September 17 the book you are reading right now mark our transformation into a more integrated, purpose-driven media company. Additionally, in partnership with organizations like Wayne Dell, Ericsson, the Environmental Defense Fund, and General Electric, we continue State University to increase our reach through participation at events including the Consumer Elec- Detroit, Mich. tronics Show and the World Economic Forum. This year we plan to expand our audience both in the U.S. and internationally. Techonomy We’re eager to stimulate dialogue and thinking among a broader group who share 2013 our interests and concerns about tech’s impact. To that end, we plan smaller events November 11-13 in countries including Israel and China where we believe our message will reso- The nate. Our work with more diverse global thinkers should help us bring our U.S. com- Ritz- Carlton munity further insight. Techonomy.com will develop more original editorial content Dove Mountain and video, with new ways for visitors to engage and collaborate. Tucson, Ariz. With an ambitious year ahead, we are grateful for the support of our extended team, our partners, our sponsors, and our community. 60 N ai Lee Lum D E S I G N

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[email protected] www.techonomy.com S p r in g g 2013 Spring 2013

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