Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

The Consumer of Tomorrow Futurist Gerd Leonhard at Google Australia Think Travel Event http://www.mediafuturist.com/2011/07/video-of-my-talk-at-google-think-travel-event- in-sydney-the-consumer-of-tomorrow.html

Video: http://youtu.be/4koEB-9wrlA

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Gerd: All right, thank you. Thanks very much. Wow! Nice intro.

So I've been to Sydney three times. It's a beautiful place. And now it's winter, which was a surprise me to be actually because it's summer in Switzerland. But thanks very much for having us. It's a real pleasure to be here.

So I'm going to try to show you a couple of general things about "the future." That's why I drew up all these different graphs here from the web.

First, I want to make a remark. As we were talking yesterday at some other event here about the future, one thing is quite clear. We used to be very much interested in information, which was the first wave of the Internet being able to get stuff that was important. It turns out today, because of the mobile and social and so on, it's not so much about just information. It's about curation because we're essentially being completely blown away with information. We can download 60 million songs for free or for paid. We're no longer interested in plenty. We're interested in relevant and meaning. We're not interested in connecting with unknown people just because they exist. We're interested in actual value of relevance, meaning, timeliness and so on.

This is very, very important when you think about the future of travel. It's very important to think about that it's not important just to get information about the place but to filter it, to curate it, to create programs.

But first, let me tell you briefly, many of you may be wondering, what in the world is a futurist? I don't predict things. I share foresights. And this is basically what I do -- listening. I listen to things around the world. We have a team of about 20 people in The Futures Agency, and then we sort of look at the larger picture from above the -- this is of course my specialty -- airplanes.

1 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

And clearly, as William Gibson says, "The future is already here. It's just not evenly distributed yet." So in many ways, when you go around the world, you can see the future in different places. And, of course, if you have kids, you can just ask them. The Chinese saying goes, "If you want to know the future, ask a five-year-old." And there's probably lots of value on that.

So what I wanted to ask you today is to take the top of your head off. Take your brain out. Think of a different way. If Henry Ford had asked people what they want, they would have said "faster horses." But he invented the car. If we wanted to think about the future of travel, we can't say, "How will people make a booking in the future?" And those are important questions, of course. But let's think one step beyond the obvious. Let's think about 2020 and the future of travel outside of the current assumptions.

I was a musician and producer for a long time. I made 20 records. I worked in the music business for a long time. And the biggest problem in the music business has been, in the last 10 years, we have a 71% decline of revenues in the music business. And why is this? Because they didn't do this. They didn't actually go inside of other people's heads. They went inside of their own heads.

In other words, we all love music. We're willing to pay for content. They didn't give us an offer that we liked until just recently. So the decline of the music business is not due to the fact that we don't want to pay. It's just the conception that's around the world. So I'll talk about that in a little bit of while, but let's have some food for thought first.

First, of course, the Web is exploding in a lot of capabilities -- processing power, the amount of data. I mean it's absolutely mindboggling. In fact, of course, as you know, there are people thinking about the interface of machines and people called singularity. How do we get to think quicker and faster by connecting ourselves directly to computers? I mean these discussions are raging on right now, and as I'm sure you've seen in the last couple of months, the Web and mobile and social media is being used to start revolution. And this is not you; it's just more pronounced now.

We have around the world the mobile explosion. I mean Indians will go online with mobile phones, not with these boxes, not with computers, not with cables.

We have robots teaching kids in Korea. I mean talk about mindboggling. I'm not sure I want to learn English from a robot, but I guess we should try it sometime.

And this is a plan that apparently has been discussed for a long time to have a high- speed train here. I mean the future of travel clearly is completely connected with

2 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com technology, with habits, with mobile, with what people do, how they interact and how they live in the future. So I will talk a little bit more about that.

But basically, we have this huge shift in the makeup of society. This is not a technical question. This is not because of gadgets. It's basically just because we can.

Now, all of a sudden, the world looks more like this. It's like a lot of small fish are chasing the big fish. So every big company, every big industry, every B2B service provider has to put up with this now.

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Instead, we are all able to compare, to rate, to interact with each other, to go direct. This is a symptom that we're seeing anywhere from music to travel to media to banking. And on that note, I could say that I think what's happening in the music business and in the media business is going to happen in travel. In other words, many of us may be removed as intermediaries. We have to figure out how do we add value to what is actually happening, not to what we want to see happening.

How does the record label add value to the artist? Clearly, there's lots of ways that artists need record labels, but are they providing it? So in travel, if you're in the travel business, how are you going to add value in the future to make up for the shift in society? I mean this is a question of power. As consumers, we're absolutely empowered. If I sit at the gate here, I use my flight tracker app. I will know more about the flight taking off than the woman at the gate. That's called empowerment. I mean it is mindboggling all the stuff that's happening on the global scale.

Kleiner Perkins who was an investor, and of course on Facebook, they summed it up, which I'll show you in a second. But basically, what we're facing here is a world of disruption. Google, of course -- I don't work for Google so I can say this neutrally -- but Google is a main driver of a lot of these disruptions clearly. But not just Google; I mean all of technology companies are moving in this direction of disrupting something that previously seemed to work but didn't actually. So disruption is a main factor.

So I have listed a few disruptions in travel. First, environment, energy, sustainability. If we all keep flying on cheap flights around the world, if you live in Manchester, you can fly to Málaga, Spain for a party. It will cost you less money to fly there and party in Málaga than to stay in Manchester. And therefore, hundreds and thousands of people are doing it. If we keep on doing this, we're going to be in deep trouble for lots of reasons apart from the cultural reasons in Málaga.

3 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

But then, we also have virtual and augmented reality. I mean this is becoming so good that very soon you can take a deep dive to the bottom of the ocean. It will almost feel like you're actually there. I mean, if you're a fighter pilot, you can already do that. It's very close to reality.

Aging population. Most developing countries are getting older. So what do those people do? They do different things. They may have a bit more money. It changes luxury travel. Fragmentation.

Mobile and social media. I call this a social media operating system because basically "social media" is a useless term. It's a bit like a fig leaf. For many of us, social media is a need. We have a Facebook page. Well, who cares? Right? It's not about that. It's an operating system that's completely different than what we had before.

Peer-to-peer, car sharing, user-made content, going direct. Many hotels are using Twitter as a sales channel to sell their stuff directly, or other social media. So these trends are quite disruptive, so not to scare you too much. I think most of these are opportunities. This clearly is a huge opportunity. It doesn't substitute for real travel, but it's another business. I mean if FarmVille can make $350 million a year selling virtual tractors, how much could you sell of virtual trips? That could be kind of interesting.

This, of course, is a big opportunity. This, as well, but this is not. That's why I put the fire there. We have to think about this. This is a big topic. We can't solve this today unfortunately. If we had a few more days we could maybe solve it, combining brainpower.

But this guy is a local guy from Sydney, David Hunter Tow. I haven't actually met him. I just found him on the Web. But he said something very interesting. I think he's also a futurist. He said a bunch of stuff here.

So he said basically that tourism will become completely fragmented into myriad primarily urban, exotic -- I was going to say erotic, sorry -- exotic experiences. Of course, some of that will be taken there as well. But basically, he is saying that many of those will be transacted in virtual and augmented realities, which is in 2050, quite clearly, we can do that then. I mean I think it's going to be much sooner than that, if you're looking at what's happening on mobile devices.

And he says those scenarios will be indistinguishable from the previous natural realities. I mean that's not too hard to believe. Zoom back to Blade Runner, one of the most interesting movies ever, and disturbing. Clearly, that's going to happen.

4 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

The other thing is that we have currently a dominant eco-exploitative model, which means when we travel, we pollute, we change things, we change the environment. These are big topics. And so that's something to think about.

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He thinks we need to actually discredit and disregard those models of exploitative travel. I leave you with this thought because this is a much larger thought than we can tackle today. But basically what that means is change, tremendous change as far as what we do, why we do it, and I have a few more ideas of this I want to change with you, exchange with you.

So basically, what we're seeing here is an ecosystem, and we're moving into a world of ecosystem. We used to be in the world of ego systems, Universal Music, Disney, Goldman Sachs, car companies, big banks, insurances, and big companies running things. Now, we live in a world of connectivity, a world that's interconnected. Look at the success of the last decade, Google, Facebook, Twitter, YouTube, eBay, Amazon. Those are network companies, connected companies. So that's a very big thing.

I think the super challenge here is how do we create an ecosystem around travel that actually works, that doesn't just exploit? I mean it has to be an ecosystem; otherwise, it will crash sooner or later. That's a super challenge.

So I think the idea of a sustainable way of travelling, of eco concerns, that's a great business also. I mean if you think about the possibility is there, just to put that in your mind, I think would be something very interesting to think about. There's a huge amount of growth in this topic to figure out how this will work in the future.

Any of you have been the Burning Man California? Yeah. Anybody had been to Burning Man? Anyone? Yeah. Okay. It's an amazing thing that happens in the desert in California. It used to be sort of hippie stuff, but it's now actually geeks, which is kind of interesting. Actually, there's thousands of Googlers there as well.

And what they do is they build this huge camp city, and there's like 80,000 people having a one-day marathon of performances and all kinds of weird stuff. Burningman.org I think. And this is one thing they do is they set up huge statues and they burn them.

So what Burning Man has shown is basically that the cost of repair of what people do in the desert is the highest cost. It's not the cost of the event but the cost of repairing what they do there, the damage that they do. 5 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

So I think what we can see in the future very simply is going to be like this, that there may very well be a surcharge of up to 100% of what we do when we travel. In other words, imagine buying a ticket to New Zealand, and 100% of that money you have to give somewhere else to make up for what you did for the travel. That's not farfetched. I think a lot of these things are going to happen. In Europe, there are already many cities where you can drive in the city without either paying or leaving your car or getting a certain tag, right? All these things are becoming a reality.

What that will do for your business, I don't know. I think there's opportunity here as well. But, of course, it's kind of shocking to think of the financial output of having to make up 100% of your travel.

But I think the future also holds that we're going to have to give back, right? It becomes a real crucial thing that we have to give back for what we want, a down payment on the future as to what people refer to as geotourism, which is very big in Australia.

How that it will check out, I'm not so sure. I think this is obviously not easy because it costs more money. But this is something to think about as far as business model goes for the future.

So there's a great new movie that just came out called Connected the Film. And one of the central theories behind that is that we're moving in a society from the "me" to "we." So we're becoming a society because we're also interconnected now that it's no longer about being independent and in a silo, but about being interdependent. So let me roll the short clip here.

[Movie Clip Playing]

The key message is this. We have to become interdependent. The future of business, the future of growth is to be interdependent, to create a system that works for everyone else as well.

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And that's a huge difference. I mean if you're thinking about the future of travel, if you are just working on a model that gets the maximum profit by exploiting existing relationships, it won't work. If you're looking at all the growth around the world, it's all on interdependent models.

6 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

Marshall McLuhan who was one of the original futurists in the '70s, he said, "The global village…" and this he said before the Internet, "The global village is a village of noise, chaos and discussion." So the future holds that we have to collaborate to create new forms of business, and that's why it's great that you're here and actually discussing this today.

The other thing is this. I do a lot of work in Brazil, but also Indonesia, which unfortunately didn't fit on the map here in terms of the letters. But Indonesia, India, China, Africa, Brazil, that's our future. Of course in Australia, that's a huge discussion about the Asian influence here and the Chinese influence as well. So the discussion about this is basically what that means is that if we're looking in this direction clearly, I mean look at the numbers here in terms of GDP growth. All these countries will overcome all of our problems that we have here and then Europe and then the U.S. The GDP growth is all in those places.

I mean you can guess what that means, but it's quite clear. Luxury travel, biggest growth, Asia Pacific. That's were all the growth will come from. If you're looking at the top gainers in terms of Internet access, China, India, Brazil, Russia, Japan, Nigeria. You don't have to go much further than this to say well, the future of pretty much most things that we'll be talking about are the BRIC countries.

If you look at the GDP growth, look at the huge dent in 2009, that's us, right? The other guys keep on growing. It's amazing what happens there.

And just last night, it was Google and the headline says, "China all set to become King of Tourism." Not news to you I'm sure, but I mean it's pretty mindboggling when you think about what's happening here and also from the BBC a couple of days ago towards an Asian future for Australia. So that's an interesting topic.

I think we can say that together with this trend, the fact that we're going towards the BRIC countries, Brazil, Russia, Indochina, Indonesia and so on, it's clearly the trend of people becoming older because we have less kids and, of course, Asian countries are growing, but also not as they used to. So clearly, the kangaroo says, "Seventy percent are going to be adults in the future." I mean that changes everything how we interact, what they do.

If you look at this number here, world aging population, it's pretty clear that's happening almost everywhere but especially in this country. Travelers, luxury travelers again, biggest peak, 45 to 54. Social networks, you think it's the kids; that's not true. The biggest growth in social networks is between 35 and 55. That's people who are connecting on social networks.

7 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

So basically, along with that comes the idea that you now we can find out anything. I mean it's so easy to just speak into Google and say, "Gerd Leonhard keynote speaker." That will be hard actually because of my first name, thankfully. But you can find any information you want. So we are becoming completely empowered as consumers. We're actually getting freed in some way because, as consumers, we're no longer just consuming; we're also contributing.

That's all not news to you, but what goes with that also is the fact that it's all about mobile, and I won't talk much about that because that's part of the topic for the rest of the day. But the biggest revolution worldwide in the global scale is that most of us will be connected to the Internet on mobile devices.

This is the chart I got from a CISCO guy at the Mobile World Congress who was saying basically the disruption that's happening because of mobile devices is hitting these industries; first, of course, music, news, books, movies and so on, and all the way over the utilities and public sectors. You're here, you in the sector in the middle, transportations, airlines, that sort of thing. So very interesting to see.

I mean mobility is the driving factor of lots and lots and lots of things. In fact, I would say, my prediction is, as I said before, I think about 75% of all data traffic will be generated on mobile devices in 2020. That means people will be connecting to the Net mostly on mobile devices, not on computers.

So I tell my clients in Europe a lot, which in Europe we're completely backwards in many ways. We have all this fancy mobile stuff, but most companies don't think of it that way. So I tell them basically, it's mobile or die. That's what it comes on to. So you have to mobilize and move in this direction as quickly as possible.

Then we have this. We have the end of money. I mean not making money hopefully, but the way that we use money and how do we actually transact. This is a scary thing for banks.

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But also, in the future, you'll be able to pay for travel with Facebook Credits that you've earned because you were a good friend. You upload it, you share it, you comment it, you make things work, and you can actually collect money. I used to joke when I was in a band that it would be good if we can pay the landlord with Facebook Credits. Now, it's becoming a reality. This kind of money is becoming true if you're looking at all the changes that we're seeing here. Of course, the Google Wallet, but also Facebook Credits, which is going to become a global currency. It may even outdo the dollar as a currency. I mean that's a scary thought. Maybe the euro first. 8 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

The end of credit cards. We're not going to need credit cards. Why do we need these things? We can use our mobile phone. We don't need plastic. Think about the changes that this will all make. I can pay you right now. You can pay me for my book using mobile devices. This is going to become a reality very soon.

And traditional thinking of money will completely change because now there's alternative money, I think. We're going to pay people not to work because when they don't work they can generate knowledge. They can do things that anybody else can use. So then if you look at it this way, it's going to move away from the idea of having just money to social capital, to money services, reputation, social reach, and complete rethinking of the content industries, which travel, of course, is a content industry. If you have noticed, you're selling something, a piece of content.

So virtual currencies, personal data, time, attention. As has been said many times before, data is the new oil. So data that we generate actually pays for things. So the end of money, as we know, it's a very big trend.

Then this, it goes rather long. If you have kids, you know exactly what I'm talking about. We used to be people of the book or people of the paper. As Kevin Kelly says, "Now we're people of the screen." Screens everywhere, in cars, in airplanes, too many screens. In fact, you get a headache from all those screens. That's why you buy a Kindle because it's not really a screen, and you can just read it with natural light.

But this is completely different because people of the screen don't consume in the same way. They want to connect to others; they want to be interactive; they also want the screen to be whatever form it is available, so whatever best screen is there. And then that goes with this trend that basically says that what used to be just for companies, which was fancy IT stuff, now becomes available to everyone, and vice versa.

For example, if you're looking at these stats here, the amount of traffic that's happening on mobile networks is absolutely astounding. We're going from 300 paltry zettabytes, or petabytes I think this is -- terabytes, sorry -- to 7000 in a short time. I mean the amount of traffic. This is why every single mobile phone company, every operator, every telecom and ISP will get involved with the travel business because it's data. It's about data being used. Every single ISP, mobile operator will come off of media, will get into social networking, will sell music, offer music as a bundle.

Then we have the reverse trend, of course. 95% of people who use devices purchased by business, they use it for themselves. They use it to do business. For example, BlackBerry is the most popular example. So the consumerization of IT is right here. 9 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

And then we have this. This is really, really exciting stuff, 3D things. Being virtually there is not the same than being there. Otherwise, I wouldn't be here. Everybody would be looking at the movie with me. But at the same time, it's different. It's a possibility that people are going to look into because it's possible to go places without actually going. This is going to be a very, very interesting topic in the future, being virtually there.

I mean 3D television is only one. Kinect is the other. If you have looked at Microsoft Kinect Project Natal, allows you to control things by body movement without holding a controller. If you haven't tried the Kinect, you should try it because that's the future of conversation, of communication. This is a woman right here who's trying on clothes using a Kinect device, superimposing herself into the image and moving around to add things to make her look at what she looks like with a different handbag or clothes or so. All these kind of things are becoming possible. So imagine this in the 3D environment. It's going to be absolutely mindboggling.

And, of course, new interfaces. Kids today are already playing with 3D computer screens. That's clearly going to be the future in this direction.

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And, of course, then you have things like this. Controlling devices with your thoughts, right? That's already possible. It's expensive. But that's going to happen. So we'll be able to travel to virtual places with our head connected inside of 3D space would be quite interesting. It's not the same going in there, but it will be some form of travel in the future.

But what it really comes down to -- because we're not machines; we're people; we're humans; we're not computers; thankfully, right? -- It's about real, unique, and lasting experiences. People today are much more interested in experiences than in noise because they've had lots of noise. Everything is about experience. I mean if you're looking at cars or food or whatever it is, it's always about that.

So what can you do to generate experiences? I mean, obviously, this kind of thing is an experience of some sort, but it's quite removed from the real experience. I think the question really is it's not either or. It's like the iPad. People read the iPad or the newspaper. It's not either or. I can do both, right?

And we're looking at a market that's completely fragmented. Some people will travel virtually. Others will never do it. It's going like this. So it's not a black or white world that we can look forward to but a more mixed world.

10 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

I was talking about this earlier, the redefinition of work. This is, of course, crucial for business travel. In fact, it's already quite true of what my colleague Glen Hiemstra on futurist.com is saying. He says, "In the future, people will work stints rather than jobs," meaning every 18 months, every two years, you hop on to something else because it's not a job like we used to have 20 years of the job, and it's probably a reality. So what that means also is that we're working in other ways. It will come in more like knowledge workers and basically having interactions with others in real time wherever we are.

That is definitely going to aid into business travel. I mean clearly. That's also going to become a lot of overlap of having to travel because you've always met virtually. It's an interesting thing. We can't quite figure it out now. The first wave of the Internet, we've exchanged lots of information, but we travel more than ever before. Will they change in the future? Yes, because this stuff really didn't work ten years ago. It's not really working now. But five years from now, I think it will be quite interesting to be in the cloud as a person. I mean the cloud computing thing for people, in a way, you could say it should be quite interesting.

So telepresence, you've heard about telepresence. Especially what that means is going inside of an environment right now being rather costly, like this from Cisco, where you can be in a room and the other people are actually somewhere else, but you don't actually notice it. It's like a roundtable in the screen. You can actually put documents into the screen that come out on the other end.

So telepresence will certainly in the next couple of years have a huge impact on business travel. It already has. I mean Skype group calls already have impact on these things. So that's something to think about. What happens in this, I think telepresence will be a huge factor there.

And machine-to-machine communications, which we can see a lot. We're expecting 50 billion devices to be connected to the Internet devices, so cars, suits, wristwatches, food that you buy, airline tickets, connected in a machine-to-machine app. This is sort of an illustration of what we're looking at here. Everything will be connected to the network in one way or the other.

That will have a lot of impact as to what we do in the future, how we do it and how we can be tracked. We have a total convergence of online/offline. If you think that online is a different space than offline, you're deeply mistaken. It's completely the same. In this video; there is no sound, thankfully; it's showing at Reno exhibition where you can go and like a Reno and post it on your website and get a return, get a free ride or discount in buying it and so on.

11 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

This over here is a fun park in Israel where you can wear a wristband that has your Facebook login. And then when you go down the slide in your bikini, you can say like and it will put up a photo of you going down at that moment on your Facebook page.

So this complete conversion of online/offline is already here. So if you're in the travel business, think about how this could work. I mean anything that connects online/offline in some sort of way like this is a huge step forward because people like to do this that actually interconnect those things.

So you heard about cloud computing. This is sort of a hot topic now, lots of these because of Apple's iCloud announcement and many others. We're also becoming people of the cloud. I mean you can expect in the next five years, all of the stuff, our music, our movies, our database, our money, our education to move into the cloud, and this is only some of the examples.

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What that means is basically, anywhere you are, you can study your university courses on a device connected to the cloud. Anywhere you are, you can pull up your health records. And anywhere you are, when you're travelling, you can do all these things and that's going to have a lot of impact on us in the future.

So as Kleiner Perkins says; this is a very good summary sort of in the middle of it; says it's basically about those things social, local, mobile and, of course, video; and there's a huge amount of potential here in the travel business. I mean just video, of course, is huge already as I'm sure you know, but I'll leave that to the other speakers to expand on.

Let's talk about the hairy topic. This, of course, is the slide of Facebook relationships on a global level. We're living in a post privacy world. I mean this is a very, very strange situation. We mentioned this yesterday. We are living in a world of publicity. Not privacy, publicity. Anybody who does anything in business, as an artist, as a blogger, whatever you are, you are somewhat connected to others. And the more you are connected, the more comes back, the more people can find you. So now, it's no longer that important to just get a good ranking on the search engine; it's also important to be recommended by others, to be found by others.

So, all of a sudden, the more public we are, it seems the closer we are to being found and gaining something. It's a bit like Minority Report or The Matrix, like you can be off the grid or on the grid. This is a tough discussion. So we're living in the world that basically feels like we're being very naked, being constantly watched.

12 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

The question is, however, what's going to happen here? I think, basically, we have to accept that in a network society almost everything that we do is public. So I wouldn't say it's the end of privacy. I just have to do something to make it private.

The other day I spent 30 hours wiping out my Facebook profile details, stuff I didn't want to remain on Facebook because it turns out everybody is checking my last Facebook entries all the time for some reason or the other. So basically, I really have to think differently about my actions. As this tweet from Kenneth Cole shows about the riots in Egypt that was not about the story; it was about the change for democracy. That caused billions of dollars of damage for Kenneth Cole, just one tweet.

So if you're in business today, if you're looking to do stuff, you're a public person. I looked you up on LinkedIn before we meet. I checked out your tweet schedule. If you don't want that, then either you're not public and you don't need it. So Richard Branson doesn't need to be on LinkedIn obviously, even though he is, but maybe you don't need it. So it's a very difficult topic, I think.

It comes down also to this. This is a hard reality I think for businesses because all of us are used to a little bit of whitewashing of reality. Something that didn't quite pan out and we don't want everyone to talk about it. But now, it's essentially the end of lying. I can't tell you how many of people that I worked with that are saying, "I don't want to get into social media da da da… Fill out that, tick the box." But basically, it turns out if there's something that isn't working or if you're lying about your product, it will come out in four seconds.

So the first thing you have to do is take a look and see what is actually real. I mean 76% of consumers think that advertisers are lying. I mean this is not sustainable. I mean clearly, this kind of ad.

Now we find out that lying is difficult. So now it's essentially transparency becomes absolutely tantamount. So before you consider doing anything like launching a social media campaign or a viral video, you have to become transparent, you have to become honest. Much better to say it went wrong and to apologize than to dress it up and not do anything. So that's a key term.

And there's a new book coming out by Rohit Bhargava. It's called "Likeonomics." And I think it's a very good term. It's basically however much people like you, that's how much money you're going to make. And it's the most bizarre thing because even companies with physical products, cars, televisions, like the CEO of Sony, three years ago at CES, said, "We don't sell stuff, we sell experiences." Of course, Sony sells stuff.

13 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

But where the driving factor of economy is people like your company and your stuff. I mean the cars are basically all the same. Mercedes, BMW, Audi, they all drive fast and they all do all these fancy things. So we buy things because of relationship.

[0:35:00]

Basically, Likeonomics, somebody sits in the audience and gives you this, then it's a sign of something. It's a different thing. And look at the like buttons that are showing up on pages. It's like the Likeonomics is here with us.

So this is a very important point. We used to think of customers as targets and our advertising was a campaign like we move in with the army or something. We just want to conquer people and squelch resistance and so on and so on. So we thought of our customers like this. We want to have them captive.

But guess what? This is a dead idea. Complete systems failure. Because when you do that to customers, they just leave or you have them so locked up like Apple that they can't leave. I love Apple's stuff, but I mean this is their whole paradigm. But in general, controlling customers and using the control button on them results in people just leaving. And this is the harsh reality in the newspaper business, in television and in travel. You have to actually empower people and turn this upside down.

I think trust is essentially the new control. Many of you are parents. You know exactly what I'm talking about. You can't raise your kids with just control, but you can raise them with just trust. You need some sort of leverage of control/trust to make the system work. There has to be some sort of in-between system.

But Steve Rubel who works for Edelman, he says something very important. He says, "However trust requires openness." People will trust you if you're open and if you're transparent. Otherwise, they don't know how to trust you because you don't exist. They can't touch you. So that's one advice I can give you. A business, whatever you're doing, whether you're an airline or hotel, you have to create openness so you can generate trust because that is what's going to make the money.

And this will only increase. The more machine stuff that happens around the world, the more computers, the more mobile phones, the more noise around us, the more important to trust becomes because you don't have time to cut to the noise. You just buy whoever you trust.

And that leads to this point. We're heading into a whole new world as far as what we are buying is concern. We're heading into a sharing economy.

14 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

The fastest form of transportation according to Rachel Botsman, who I think lives here in Sydney, who has written a great book about collaboration, creative consumption. Bike sharing is the biggest form of transportation sharing around the world. This is exploding on a global level. Car sharing, the biggest growth in the car business is car sharing. It's actually not buying it. And my next car will be shared car. Clearly, we're already quite far along with this. I mean if you're looking at all these services, there are like 200 services for car sharing.

So the sharing environment is exploding. For example, if you know these guys, Airbnb, where you can swap places to sleep at through the website, or couchsurfing.com, there are similar websites like this, it's about the sharing economy, not about the owning. It's kind of interesting, collaborative lifestyles all of a sudden, this sort of digital insulation, and now we're much more interested in tribes, as Seth Godin says in the tribal relationship.

So the collaborative consumption, this is a huge shift in mindset. I think this is also a really great opportunity for travel. Finding ways that you can connect people with each other in creating a sharing economy, I think, basically sharing is the new owning. That goes for airplanes just like it goes for cars, like it goes for hotels or places to stay. So if you can facilitate sharing, all of a sudden, I think you're going to see a huge boost in what you're doing. This is an essential thing that we're seeing around the world.

So the shift, according to Rachel, is this whole idea of the 21st century being about shared access, about collaborative consumption. I think all of us are realizing this is quite true, renewed belief in their community, the social connecting, the environmental concerns. So the sharing thing is big. This is one of my main messages today. Figure out how people that you work with can share what you're offering or get into a sharing environment. I think that alone is worth a lot.

So the key question is in a fragmented society, how do you reach people? I mean, clearly, as you know, the fragmentation is everywhere. People are travelling to more remote places than ever before. People listen to more and more TV shows, and now the Web is on the television and vice versa. So how do you reach those people? I think the entire way that we market and that we sell stuff is going to turn upside down. The future of reaching people is not going to be the watering can, watering can being television, radio, newspapers. That won't go away because we do need a watering can sometimes, but the future is going to be about the sprinkler systems.

[0:40:10]

Reaching the right person at the right time in the right place at the right moment requires a lot of pretty smart use of data. But when you reach them, you have 100% 15 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com buy through. I mean this kind of idea of a smart connectivity is going to take over in advertising. And we're talking about a trillion dollars worth of stuff. I mean global advertising budget is $560 billion and data mining, public relations and marketing is another $400 billion. So we're talking about a trillion dollar industry shifting from the watering can to the sprinkling system.

So I mean that alone, if you're an agency, a marketing agency, this is of course your turf to lead this change. I hope you guys don't play Farmville, but if you do, you've noticed it's actually nothing new in the sense that it's happening everywhere is what I call the gamification of society. If you can make your ad or your content a game, you're right there. People love games.

So car manufacturers now say, "Download the driving app of the Audi." Because they know once you get involved with the app, you have a much higher chance of actually going for a real test drive. So gamification of things is huge especially in travel, lots and lots of games. I'm sure you've seen the game. Essentially it's a game. Foursquare is a game where you can get badges and those kinds of things. Facebook in a way is a game. So Lady Gaga has a new thing on Farmville called GagaVille. This is pretty amazing. It's just a whole thing where it comes as a game. So gamification is crucial.

This is not news to you, but it's also very important. This is going through absolutely become a standard games and social, of course, going together way. Toyota now has a social media club for the owners, creating their social network. And you can actually talk from one car to the other. It's pretty bizarre. You have to take a look at it, but it's pretty interesting stuff.

I think we're going to see stuff in 2020 like this. Group funded resorts, like Groupon getting together and saying, "You know what? We want this resort to be in Acapulco over here and we're going to fund it to build it or run it because we want this certain kind of resort." We're going to see social rating based pricing. So if you're cloud or PeerIndex or whatever, Google Score is about 50, you can upgrade. That's already in place.

Tribal travel, organizing stuff and trips together, that involves group. I mean that's going to be quite interesting.

The other thing that we see in this turf that relates to this is the going direct. Everybody that can go direct will do so. So if you're an intermediary, the key challenge is you have to add so much value that people can't just easily bypass you. Going back to the record labels and music business, artists can go direct. But still, there are hundred things that they would like to do that a label could do for them if they were actually doing it. 16 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

So Naked Wines allows you to become part of their wine growing club where you invest in a wine maker and then you get a discount on the actual wine before it was made. This is not just a club to drink wine but to generate it.

Joie de Vivre Hotels in the U.S. is using Twitter as a primary sales channel. Going direct, very interesting stuff. My conversation with them. Starwood, of course, is quite known with this.

And then Seth Godin says, "What people really want is the ability to connect with each other not just, I would say, the companies." This is the crucial part. I mean he is now going direct and selling his books direct to his fans.

So going direct is a huge development. Each would either support it with your partners or find a way to add so much more value that you can't be bypassed. Otherwise, you can bet, in five years, everybody that can, every hotel, every airline, every resort, everybody everywhere is going to try to go direct to their customers. That is a trend that we're seeing in a global scale.

The final point that's really important, if I got a dollar for every time this question comes up, I would have my own private jet. That question about what should be free and what should be paid. Because a travel business is a content business, essentially you have to ask this question. What is free and what's paid?

The key answer is basically as Fred Wilson, a VC, has said basically free gets you to the place where you can get paid. This is not new. But on the Internet, in the network society, this becomes a huge selling factor called freemium. If you can give away something for free, that then allows people to buy something else on top. You found a winning strategy as soon that what you give away for free is not expensive.

[0:44:58]

I mean this is, of course, the idea behind easyJet or Ryanair or Southwest Airlines, very similar idea of upselling. So there have been various examples on these including, of course, this. I think this was actually right here in Australia. You can test a resort, this idea of giving away stuff for free in return for attention.

So I'll give you a bit of a summary and then we'll have some questions. Okay, here's a summary. First of all, we have to get used to new interfaces: 3D environments, virtual connectivity, brain-to-computer connectivity. All that stuff that sounds like science fiction will become very real in the next couple of years. Augmented reality in mobile phones, you've heard about all this stuff. It's coming. New interfaces. 17 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

So get involved with this stuff when you can. I mean think of this goes along with the gamification. If you can make a game about your hotel or your airline using this sort of thing, it could be very, very interesting in terms of marketing.

The end of money as we know it. So ETA here is about three to seven years depending on where you live. People pay with mobile devices, paying with radio frequency chips. You've seen that technology and so on. This becomes a huge game changer.

The shift towards sustainability. This is absolutely inevitable. And whether we like it or not, there's going to be some sort of mechanism of paying back what we've gone there to do in the first place. So if you are actually part of that process of paying back for and making it work in the future, I think that's much better than actually waiting for it.

Brazil, Russia, India, China, Indonesia, that's our future. So that's, of course, a very much a top-level topic, but definitely is food for thought.

The shift towards the older demographic, also inevitable obviously, something we have to think about.

Cloud computing. Anything that you can put in the cloud, you should. Any way to find out how to connect the cloud and the crowds, that's a very good business to be in. Travel is going to move entirely to the cloud. All of the admin, all of the booking, all of the resources, all of the stuff that we're connecting with, all move into the cloud.

Sharing is the new owning. Of course, there will be plenty of us owning stuff like cars and so on; but in general, this is the trend that we're seeing on a global scale, something we should support in our business.

The renewed belief in the community and so on, we've discussed these issues already a little bit earlier.

The likeonomics. Like it or not, we're subject to being liked or not, and that's why people buy us. People buy our stuff because they like us and what we stand for, not because the car is faster or the ticket is cheaper. I mean tickets being cheaper is a factor, of course; but in general, people buy stuff they like and for a reason that's much less below the head but more down here, for other reasons, likeonomics.

Being virtually there will be a trend that we can't avoid, and this in fact is a huge business on its own. It goes with the gaming and this whole idea. So I would definitely investigate this. How can you virtually go there? So maybe then you actually go for real. This is obviously an interesting topic. 18 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

Social everything. Forget social media. That's just a tagline. That's just so that social media experts can tell you that you need them. Social everything has to do with the operating system, how we connect, how we actually are networked with our suppliers, our partners and our customers.

Lastly, Tim O'Reilly, who is a publisher in California says, "The key for survival and for success in the future is to create more value than you capture." And I can guarantee you, if the value that you use to offer is being disintermediated, you have to hurry up and find some new values and generate them because that is the only reason that people will keep coming back, when they trust you, when you generate value, and when you serve them in the future.

So I want to thank you very much for listening. You can download my app, if you wish, for various -- also Android, of course. And you can Twitter me all day -- Gleonhard is my Twitter ID -- to ask questions anytime you want. Thanks very much.

Male Speaker: So we've got a lot of travel agencies here today and you talked a little bit about, I guess, consumers going direct to suppliers and so on, and how travel agencies and other intermediaries might have to add value. What sort of ways can they do that?

Gerd: Well, let's put it this way. I think that intermediaries add lots of value when they are able to actually show and position it correctly. I mean if you compare it with the music business, clearly most artists don't want to spend half their day on doing their Facebook page or communicating with people on Twitter or doing whatever because they're writing songs, right? They're actually doing some other stuff. So what you have to do is to get people who'll supply it to you to generate more value through you than without you.

[0:50:05]

So you become indispensable rather than forcing them to say, "If you do this, then we'll do X, Y, Z. I'll cut you out or whatever." Like the music business has been doing for the last 10 years, which is to say, that if we do X, Y, Z without paying, we have to go to jail or whatever. They could have said to us "If this value is good for you, then you can buy it" and this is what's happening now.

So basically, the question is what kind of values can you offer people on both ends?

Male Speaker: So I think we're out of time, but if we can give Gerd another round of applause, I'm sure he'll stay around to answer questions later. 19 Futurist Speaker Gerd Leonhard Keynote Transcript: The Consumer of Tomorrow (June 2011, Sydney) www.futuristgerd.com

Gerd: Thank you.

[0:50:44] End of Audio

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