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Do More.
Do Things That Were Previously Impossible!
Tim O’Reilly
@timoreilly
oreilly.com
wtfeconomy.com
SxSW
March 9, 2018
Will there really be nothing left for people to do?
Is there really
nothing left for
humans to do?
Dealing with climate change
Rebuilding our infrastructure
Feeding the world
Ending disease
Resettling refugees
Caring for each other
Educating the next generation
Enjoying the fruits of shared prosperity
What is keeping us from
working on stuff that matters?
WTF?
Amazement or Dismay?
wtfeconomy.com
Our maps of the world are steering us wrong
In 1625, we thought
California was an island
In 2005, we thought the connected taxicab looked like this
This was science fiction, until it wasn’t
And you thought drones would deliver pizza
1. In 2018, we believe that it is technology
that will put people out of work
What happened when Amazon added 45,000 robots
Jeff Bezos calls this “the flywheel”
Amazon ran this same play
in cloud computing
Radically lower prices
Create demand for something that didn’t really exist yet
Open up Amazon’s platform so others provide more services
Create more demand
Give people new superpowers
Michael Mandel on ecommerce vs retail
 Since 2007, hours worked by production and nonsupervisory employees in the digital
sector have risen by 8.5 percent compared to a 3.4 percent increase in the physical
sector.
 The ecommerce sector is adding jobs much faster than the general retail sector is losing
them.
 The ecommerce sector added 355,000 jobs from 2007 to 2016—more than enough to
compensate for the 51,000 jobs lost in the general retail sector.
 Wage and salary payments to ecommerce workers have increased by almost $18 billion
since 2007, in 2016 dollars. By comparison, real wage and salary payments to workers in
general retail have risen by less than $1 billion over the same period.
http://www.progressivepolicy.org/wp-content/uploads/2017/03/Tech-middle-class-3-9-17b.pdf
“Frontier Firms” are more productive,
and eventually pay everyone more
100 years
Lister’s Mill, Bradford
Why Innovation Takes Time to Show Up in Productivity
James Bessen
It is not just technology innovation, but the diffusion
of knowledge through society about how to use new
technology that makes a difference in making us all
richer.
Eventually, there were dozens of specialized
machines, and complicated workflows.
But that wasn’t all. In addition to inventing new
machines, people had to learn to use them, fix
them, improve them.
Systems were needed for distributing and selling
the wealth of new products.
An educated, prepared workforce is an
ecosystem.
We sent children to school instead of the fields and factories
On Demand Learning
A platform for people to teach each other
“In order to fully reap the benefits of a changing economy—
and sustain growth over the long-term—businesses will need
to increase the earnings potential of the workers who drive
returns, helping the employee who once operated a machine
learn to program it. They must improve their capacity for
internal training and education to compete for talent in
today’s economy and fulfill their responsibilities to their
employees.”
Larry Fink,
CEO, Blackrock
Values Alert: Structural Changes In the Economy
“In the 35 years between
their jobs as janitors,
corporations across
America have flocked to a
new management theory:
Focus on core competence
and outsource the rest.”
It is machines that help us
to feed 7 billion
Our digital systems enhance our capabilities with software
and data the way our physical systems use heavy equipment
 Users post 7 billion pieces of content
to Facebook a day.
 Expecting human fact checkers to
catch fake news is like asking workers
to build a modern city with only picks
and shovels.
 At internet scale, we now rely
increasingly on algorithmic systems to
manage what we see and believe.
“I’ve just invested in an AI startup that will put 30% of call
center workers out of a job.”
(A VC who shall remain nameless)
Don’t replace people. Augment them!
This is what technology wants
“Prosperity in human societies is best
understood as the accumulation of
solutions to human problems. We won’t
run out of work until we run out of
problems.”
Nick Hanauer
The March of Progress
Technology is our superpower
Inequality is our kryptonite
2. In 2018, we still believe that it’s acceptable for
companies to maximize their profits, regardless
of the social, environmental and human
consequences
We’ve heard from the economists and financial writers
What the great technology platforms
teach us about the economy and the
future of work
wtfeconomy.com
Fitness Landscapes
The way in which genes contribute
to the survival of an organism can
be viewed as a landscape of peaks
and valleys.
Through a series of experiments,
organisms evolve towards fitness
peaks, adapted to a particular
environment, or they die out.
Image source: http://evolution.berkeley.edu/evolibrary/article/side_0_0/complexnovelties_02
Fitness landscapes are dynamic
When conditions are stable, a
population chooses one fitness
peak and stays there.
But when conditions change,
populations must migrate to a
new fitness peak.
Local Maxima
Once you are on a peak, it’s
hard to get to another one,
even if it’s higher. You have
to go back down. It may be
easier to get to the top if you
are already starting from a
valley floor.
Technology also has a fitness landscape
In my career, I’ve watched a
number of migrations to new
peaks, and I’d like to share with
you some observations about
what happened, and why. And
then we’ll talk about some
lessons for companies like
Google, but also for the overall
economy.
Personal
Computer
Big Data
and
AI
Smartphones
Apple
Big Data
and
AI
Tim Berners-Lee, 1990
The World Wide Web
Linus Torvalds, 1991
Linux
This happens in politics as well
Voters are moving away from
the fitness peak of the
neoliberal consensus. We don’t
know yet where that new
fitness peak will be, but the
migration is telling us loud and
clear that the economy needs
some fresh thinking.
Yes, things are changing.
But one thing doesn’t
change.
A successful ecosystem
creates opportunity for
everyone, not just a few.
“Society is demanding that companies, both
public and private, serve a social purpose. To
prosper over time, every company must not
only deliver financial performance, but also
show how it makes a positive contribution to
society. Companies must benefit all of their
stakeholders, including shareholders,
employees, customers, and the communities
in which they operate.”
Larry Fink,
CEO of Blackrock
BCG’s Sustainable Economic Development Assessment
Total Societal Impact as Business Advantage
Climate change has
been a classic driver
for the change in
fitness landscapes,
for organisms and for
civilizations.
3. In 2018, too many people still believe
that technology is a magic bullet
fired from the same old gun
Death Star Thinking
“What’s the lesson too many people take from that first and
most influential episode in the franchise back in 1977? One
incredibly well-placed shot into the thermal exhaust port and
the entire apparatus of our oppression explodes spectacularly.
All we really needed were the plans to the Death Star and a
very talented fighter pilot guided by the truth (“the Force”.)
Never mind that there are countless Death Stars ahead of us
as the Imperial war (and the franchise) continues. That one
glorious victory and the release it provided became the implicit
theory of change.”
Jennifer Pahlka,
Death Star Thinking and Government Reform
Jennifer Pahlka
Why simply adding an app doesn’t change the game for taxis
“A business model is the way that
all of the parts of a business work
together to create competitive
advantage and customer value.”
- Dan and Meredith Beam
A Business Model Map of Southwest Airlines
Low ticket prices
Short-haul,
point to point routes
No seat assignments
No baggage forwarding
Lean gate and ground crews
Highly paid employees
Flexible union contracts
High level of employee
stock ownership
A Business Model Map of Uber
 A magical app that lets drivers
and passengers find each other
in real time
 A networked marketplace of
drivers and passengers
 Augmented workers able to join
the market as and when they
wish
 Managed by algorithm
The Augmented Worker
Neo: “Can you fly that thing?”
Trinity: “Not yet.”
Gradually, then suddenly
1. We are creating new kinds of
partnerships between machines
and humans
2. Artificial Intelligence and
algorithmic systems are
everywhere
3. The world is becoming infused
with the digital
We see the same thing with Uber and Lyft
Oxford Internet Institute study:
 50% more total hours worked
 Higher wages per hour
https://www.oxfordmartin.ox.ac.uk/downloads/academic/Uber_Drivers_of_Disruption.pdf
But…
Platforms are marketplaces. They have
to work for all of their participants.
wtfeconomy.com
Creating a “thick marketplace”
Markets are outcomes. A better designed
marketplace can have better outcomes.
The great opportunity of the 21st century is to use our
newfound cognitive tools to build better marketplaces
4. In 2018, we believe that human-hostile AI
is a future risk
We are all living and working inside a machine
The coming robots are not autonomous
Symbiogenesis and the origin of eukaryotic cells:
“species form new composite entities by fusion and merger”
“Nearly all extranuclear genes are derived from
bacteria or other sorts of microbes. In the search for
what genes outside the nucleus really are, I became
more and more aware that they're cohabiting entities,
live beings. Live small cells reside inside the larger
cells…. different bacteria form consortia that, under
ecological pressures, associate and undergo
metabolic and genetic change such that their tightly
integrated communities result in individuality at a more
complex level of organization. The case in point is the
origin of nucleated (protoctist, animal, fungal, and
plant) cells from bacteria…. species form new
composite entities by fusion and merger.”
Lynn Margulis
Biological symbiosis doesn’t stop there
“All zoology is really ecology. We cannot fully
understand the lives of animals without understanding
our microbes and our symbiosis with them…. When we
look at beetles and elephants, sea urchins and
earthworms, parents and friends, we see individuals,
working their way through life as a bunch of cells in a
single body, driven by a single brain, and operating with
a single genome. This is a pleasant fiction. In fact, we
are legion, each and every one of us. Always a ‘we’
and never a ‘me’.... Heed Walt Whitman: “I am large, I
contain multitudes.”
Ed Yong
From genes to memes
“Language doesn’t emerge de novo in each person; it is passed, with little
modification, from generation to generation. We speak the language of our
parents, they spoke the language of their parents, and so on, further and
further back in the past.”
– John Skoyles
And you can think of the Internet as the next evolutionary step
AI is “the most serious
threat to the survival of
the human race”
Elon Musk
The runaway objective function
“Even robots with a seemingly benign
task could indifferently harm us. ‘Let’s
say you create a self-improving A.I. to
pick strawberries,’ Musk said, ‘and it
gets better and better at picking
strawberries and picks more and more
and it is self-improving, so all it really
wants to do is pick strawberries. So
then it would have all the world be
strawberry fields. Strawberry fields
forever.’ No room for human beings.”
Elon Musk, quoted in Vanity Fair
https://www.vanityfair.com/news/2017/03/elon-musk-
billion-dollar-crusade-to-stop-ai-space-x
Algorithmic systems have an “objective function”
Uber and Lyft: Passenger pick up time
Google: Relevance
Facebook: Engagement
What is the objective function of our
financial markets?
The Equinix NY4 data center,
where trillions of dollars change hands
We didn’t mean to increase inequality and gut our economy
“The Social Responsibility of Business Is to
Increase Its Profits”
Milton Friedman, 1970
Zeynep Tufekci
Author of Twitter and Teargas
“The art of debugging is
figuring out what you really told
your program to do rather than
what you thought you told it to
do.”
Andrew Singer
Andrew Singer
5. In 2018, we are still trying to revive the old
economy, rather than inventing the future that is
possible now
“Economic Possibilities for Our Grandchildren”
The world of his grandchildren—the
world of those of us living today—
would, “for the first time . . . be faced
with [mankind’s] real, his permanent
problem—how to use his freedom
from pressing economic cares, how
to occupy the leisure, which science
and compound interest will have won
for him, to live wisely and agreeably
and well.”
John Maynard Keynes
John Maynard Keynes
Divergence of productivity
and real median family income in the US
There’s plenty to go around.
It’s just not going around!
“If total US household income of $8.495
trillion were shared by America’s 116
million households, each would earn
$73,000, enough for a decent middle-
class life.”
Brian Arthur
The fundamental economic question
is no longer how to incentivize production
but how to incentivize fair distribution
of the fruits of increased productivity
Brian Arthur
So what are we going to do about this?
It is the job of the entrepreneur to redraw the map
We Need the “Human Colossus” to Work on Stuff that Matters
What’s the Future?
It’s Up To us
wtfeconomy.com
Tim O’Reilly
 Founder & CEO, O’Reilly Media
 Partner, O’Reilly AlphaTech Ventures
 Board member, Code for America
 Co-founder, Maker Media
@timoreilly
• O’Reilly AI Conference
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Do More. Do things that were previously impossible!

  • 1. Do More. Do Things That Were Previously Impossible! Tim O’Reilly @timoreilly oreilly.com wtfeconomy.com SxSW March 9, 2018
  • 2. Will there really be nothing left for people to do? Is there really nothing left for humans to do?
  • 3.
  • 4. Dealing with climate change Rebuilding our infrastructure Feeding the world Ending disease Resettling refugees Caring for each other Educating the next generation Enjoying the fruits of shared prosperity
  • 5. What is keeping us from working on stuff that matters?
  • 7. Our maps of the world are steering us wrong In 1625, we thought California was an island
  • 8. In 2005, we thought the connected taxicab looked like this
  • 9.
  • 10. This was science fiction, until it wasn’t
  • 11. And you thought drones would deliver pizza
  • 12. 1. In 2018, we believe that it is technology that will put people out of work
  • 13. What happened when Amazon added 45,000 robots
  • 14. Jeff Bezos calls this “the flywheel”
  • 15. Amazon ran this same play in cloud computing Radically lower prices Create demand for something that didn’t really exist yet Open up Amazon’s platform so others provide more services Create more demand
  • 16. Give people new superpowers
  • 17. Michael Mandel on ecommerce vs retail  Since 2007, hours worked by production and nonsupervisory employees in the digital sector have risen by 8.5 percent compared to a 3.4 percent increase in the physical sector.  The ecommerce sector is adding jobs much faster than the general retail sector is losing them.  The ecommerce sector added 355,000 jobs from 2007 to 2016—more than enough to compensate for the 51,000 jobs lost in the general retail sector.  Wage and salary payments to ecommerce workers have increased by almost $18 billion since 2007, in 2016 dollars. By comparison, real wage and salary payments to workers in general retail have risen by less than $1 billion over the same period. http://www.progressivepolicy.org/wp-content/uploads/2017/03/Tech-middle-class-3-9-17b.pdf
  • 18. “Frontier Firms” are more productive, and eventually pay everyone more
  • 20. Why Innovation Takes Time to Show Up in Productivity James Bessen
  • 21. It is not just technology innovation, but the diffusion of knowledge through society about how to use new technology that makes a difference in making us all richer.
  • 22. Eventually, there were dozens of specialized machines, and complicated workflows. But that wasn’t all. In addition to inventing new machines, people had to learn to use them, fix them, improve them. Systems were needed for distributing and selling the wealth of new products. An educated, prepared workforce is an ecosystem.
  • 23. We sent children to school instead of the fields and factories
  • 25. A platform for people to teach each other
  • 26. “In order to fully reap the benefits of a changing economy— and sustain growth over the long-term—businesses will need to increase the earnings potential of the workers who drive returns, helping the employee who once operated a machine learn to program it. They must improve their capacity for internal training and education to compete for talent in today’s economy and fulfill their responsibilities to their employees.” Larry Fink, CEO, Blackrock
  • 27. Values Alert: Structural Changes In the Economy “In the 35 years between their jobs as janitors, corporations across America have flocked to a new management theory: Focus on core competence and outsource the rest.”
  • 28. It is machines that help us to feed 7 billion
  • 29. Our digital systems enhance our capabilities with software and data the way our physical systems use heavy equipment  Users post 7 billion pieces of content to Facebook a day.  Expecting human fact checkers to catch fake news is like asking workers to build a modern city with only picks and shovels.  At internet scale, we now rely increasingly on algorithmic systems to manage what we see and believe.
  • 30. “I’ve just invested in an AI startup that will put 30% of call center workers out of a job.” (A VC who shall remain nameless)
  • 31. Don’t replace people. Augment them!
  • 32. This is what technology wants “Prosperity in human societies is best understood as the accumulation of solutions to human problems. We won’t run out of work until we run out of problems.” Nick Hanauer
  • 33. The March of Progress
  • 34. Technology is our superpower
  • 35. Inequality is our kryptonite
  • 36. 2. In 2018, we still believe that it’s acceptable for companies to maximize their profits, regardless of the social, environmental and human consequences
  • 37. We’ve heard from the economists and financial writers
  • 38. What the great technology platforms teach us about the economy and the future of work wtfeconomy.com
  • 39. Fitness Landscapes The way in which genes contribute to the survival of an organism can be viewed as a landscape of peaks and valleys. Through a series of experiments, organisms evolve towards fitness peaks, adapted to a particular environment, or they die out. Image source: http://evolution.berkeley.edu/evolibrary/article/side_0_0/complexnovelties_02
  • 40. Fitness landscapes are dynamic When conditions are stable, a population chooses one fitness peak and stays there. But when conditions change, populations must migrate to a new fitness peak.
  • 41. Local Maxima Once you are on a peak, it’s hard to get to another one, even if it’s higher. You have to go back down. It may be easier to get to the top if you are already starting from a valley floor.
  • 42. Technology also has a fitness landscape In my career, I’ve watched a number of migrations to new peaks, and I’d like to share with you some observations about what happened, and why. And then we’ll talk about some lessons for companies like Google, but also for the overall economy. Personal Computer Big Data and AI Smartphones Apple
  • 43. Big Data and AI Tim Berners-Lee, 1990 The World Wide Web Linus Torvalds, 1991 Linux
  • 44. This happens in politics as well Voters are moving away from the fitness peak of the neoliberal consensus. We don’t know yet where that new fitness peak will be, but the migration is telling us loud and clear that the economy needs some fresh thinking.
  • 45.
  • 46. Yes, things are changing. But one thing doesn’t change. A successful ecosystem creates opportunity for everyone, not just a few.
  • 47. “Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.” Larry Fink, CEO of Blackrock
  • 48. BCG’s Sustainable Economic Development Assessment
  • 49. Total Societal Impact as Business Advantage
  • 50. Climate change has been a classic driver for the change in fitness landscapes, for organisms and for civilizations.
  • 51. 3. In 2018, too many people still believe that technology is a magic bullet fired from the same old gun
  • 52. Death Star Thinking “What’s the lesson too many people take from that first and most influential episode in the franchise back in 1977? One incredibly well-placed shot into the thermal exhaust port and the entire apparatus of our oppression explodes spectacularly. All we really needed were the plans to the Death Star and a very talented fighter pilot guided by the truth (“the Force”.) Never mind that there are countless Death Stars ahead of us as the Imperial war (and the franchise) continues. That one glorious victory and the release it provided became the implicit theory of change.” Jennifer Pahlka, Death Star Thinking and Government Reform Jennifer Pahlka
  • 53. Why simply adding an app doesn’t change the game for taxis
  • 54. “A business model is the way that all of the parts of a business work together to create competitive advantage and customer value.” - Dan and Meredith Beam
  • 55. A Business Model Map of Southwest Airlines Low ticket prices Short-haul, point to point routes No seat assignments No baggage forwarding Lean gate and ground crews Highly paid employees Flexible union contracts High level of employee stock ownership
  • 56. A Business Model Map of Uber  A magical app that lets drivers and passengers find each other in real time  A networked marketplace of drivers and passengers  Augmented workers able to join the market as and when they wish  Managed by algorithm
  • 57. The Augmented Worker Neo: “Can you fly that thing?” Trinity: “Not yet.”
  • 58.
  • 59. Gradually, then suddenly 1. We are creating new kinds of partnerships between machines and humans 2. Artificial Intelligence and algorithmic systems are everywhere 3. The world is becoming infused with the digital
  • 60. We see the same thing with Uber and Lyft Oxford Internet Institute study:  50% more total hours worked  Higher wages per hour https://www.oxfordmartin.ox.ac.uk/downloads/academic/Uber_Drivers_of_Disruption.pdf
  • 62. Platforms are marketplaces. They have to work for all of their participants. wtfeconomy.com
  • 63. Creating a “thick marketplace” Markets are outcomes. A better designed marketplace can have better outcomes.
  • 64. The great opportunity of the 21st century is to use our newfound cognitive tools to build better marketplaces
  • 65. 4. In 2018, we believe that human-hostile AI is a future risk
  • 66. We are all living and working inside a machine
  • 67. The coming robots are not autonomous
  • 68. Symbiogenesis and the origin of eukaryotic cells: “species form new composite entities by fusion and merger” “Nearly all extranuclear genes are derived from bacteria or other sorts of microbes. In the search for what genes outside the nucleus really are, I became more and more aware that they're cohabiting entities, live beings. Live small cells reside inside the larger cells…. different bacteria form consortia that, under ecological pressures, associate and undergo metabolic and genetic change such that their tightly integrated communities result in individuality at a more complex level of organization. The case in point is the origin of nucleated (protoctist, animal, fungal, and plant) cells from bacteria…. species form new composite entities by fusion and merger.” Lynn Margulis
  • 69. Biological symbiosis doesn’t stop there “All zoology is really ecology. We cannot fully understand the lives of animals without understanding our microbes and our symbiosis with them…. When we look at beetles and elephants, sea urchins and earthworms, parents and friends, we see individuals, working their way through life as a bunch of cells in a single body, driven by a single brain, and operating with a single genome. This is a pleasant fiction. In fact, we are legion, each and every one of us. Always a ‘we’ and never a ‘me’.... Heed Walt Whitman: “I am large, I contain multitudes.” Ed Yong
  • 70. From genes to memes “Language doesn’t emerge de novo in each person; it is passed, with little modification, from generation to generation. We speak the language of our parents, they spoke the language of their parents, and so on, further and further back in the past.” – John Skoyles
  • 71. And you can think of the Internet as the next evolutionary step
  • 72. AI is “the most serious threat to the survival of the human race” Elon Musk
  • 73. The runaway objective function “Even robots with a seemingly benign task could indifferently harm us. ‘Let’s say you create a self-improving A.I. to pick strawberries,’ Musk said, ‘and it gets better and better at picking strawberries and picks more and more and it is self-improving, so all it really wants to do is pick strawberries. So then it would have all the world be strawberry fields. Strawberry fields forever.’ No room for human beings.” Elon Musk, quoted in Vanity Fair https://www.vanityfair.com/news/2017/03/elon-musk- billion-dollar-crusade-to-stop-ai-space-x
  • 74.
  • 75.
  • 76. Algorithmic systems have an “objective function” Uber and Lyft: Passenger pick up time Google: Relevance Facebook: Engagement What is the objective function of our financial markets?
  • 77. The Equinix NY4 data center, where trillions of dollars change hands
  • 78. We didn’t mean to increase inequality and gut our economy “The Social Responsibility of Business Is to Increase Its Profits” Milton Friedman, 1970
  • 79. Zeynep Tufekci Author of Twitter and Teargas
  • 80. “The art of debugging is figuring out what you really told your program to do rather than what you thought you told it to do.” Andrew Singer Andrew Singer
  • 81. 5. In 2018, we are still trying to revive the old economy, rather than inventing the future that is possible now
  • 82. “Economic Possibilities for Our Grandchildren” The world of his grandchildren—the world of those of us living today— would, “for the first time . . . be faced with [mankind’s] real, his permanent problem—how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.” John Maynard Keynes John Maynard Keynes
  • 83. Divergence of productivity and real median family income in the US
  • 84. There’s plenty to go around. It’s just not going around!
  • 85. “If total US household income of $8.495 trillion were shared by America’s 116 million households, each would earn $73,000, enough for a decent middle- class life.” Brian Arthur
  • 86. The fundamental economic question is no longer how to incentivize production but how to incentivize fair distribution of the fruits of increased productivity Brian Arthur
  • 87. So what are we going to do about this?
  • 88. It is the job of the entrepreneur to redraw the map
  • 89. We Need the “Human Colossus” to Work on Stuff that Matters
  • 90. What’s the Future? It’s Up To us wtfeconomy.com
  • 91. Tim O’Reilly  Founder & CEO, O’Reilly Media  Partner, O’Reilly AlphaTech Ventures  Board member, Code for America  Co-founder, Maker Media @timoreilly • O’Reilly AI Conference • Strata: The Business of Data • JupyterCon • O’Reilly Open Source Summit • Maker Faire • Foo Camp • … • 40,000+ ebooks • Tens of thousands of hours of video training • Live training • Millions of customers • A platform for knowledge exchange • Commercial internet • Open source software • Web 2.0 • Maker movement • Government as a platform • AI and The Next Economy