Slush 2016 Day 2
Big themes for the second day were empowerment of people and democratization of society and business. Pay attention here, that I am not using the definite article “the”, because “the people” would derive connotation of the people of a single nation or racial group (or however you might like to put people in different categories). It was about people in general.
Numerous stages offered program on universal basic income. Note the term “universal” here. Again, it is not “the people”. It is “people”.
I will start this post with Seth Bannon’s talk to draw the big lines for the rest of the post, as Bannon touched upon quite a few issues of importance.
GREEN STAGE, Seth Bannon: The Biggest Profits in the New Economic Renaissance
Seth Bannon is a Founding Partner at the venture capital fund Fifty Years. Bannon made a claim that most profitable companies of the coming decades are the ones solving the biggest problems we face.
What is the purpose of business? The old Friedman Doctrine states “the businessmen who say that business is not merely profit, but also societal issues, these businessmen are unwitting puppets”.
This is how people have thought about business for the last 50 years. This is starting to change and the change is fueled by the young. The role of the companies should be not merely to make profit and increase the shareholder value, but also to improve the society and the environment. This is the rise of the benefit corporation. Other way to call these sort of companies would be impact company, as they aim at making an impact on the society.
In normal corporation, you MUST focus only on increasing the shareholder value. Only in 2012 few states in the US introduced the benefit corporation in their legislation. Today 30 states have introduced benefit corporation into their legislation. For tax purposed, benefit corporation are treated like any other corporation, but there are some other legal issues special for them, concerning topics such as purpose, accountability, transparency, and right of action.
One reason for the rise of the benefit corporations is that purely profit driven business makes people unhappy. It leads to a situation where everyone plans on leaving the company. This is obviously not good for the business.
Your millennial employees are planning to leave your company – Seth Bannon
Even MBA students, supposedly the most money hungry students out there, are ready to take a pay cut in order to work in a social impact company. In a recent study by MaRS and Bmeaningful 83% of MBA students were ready to take a 15% pay cut in order to work in a company that made social or environmental difference in the world (another, more personal article in Wall Street Journal).
Therefore Bannon argued, that value alignment leads to employee retention.
This global phenomenon is partly based on an upcoming 30 trillion dollar transfer of wealth from the baby boomers to millennials and it is not limited to the young. Global business leaders, such as Marc Benioff and John Mackey also advocate the growth of impact business.
From a business point of view, of course, the best thing about impact companies is that they actually outperform their peers by 10x. Employees identify with their companies 300% more. This creates passion, dedication, and employee retention.
So what are the biggest problems of the world that these impact companies are trying to solve? Bannon put them in 3 categories: 1) climate crisis, 2) feeding the world, and 3) educating everyone. I can’t add anything without going into details.
According to Bannon, there will be a switch from profit driven companies to profit + impact driven companies. Our world needs these companies, because no one else can solve these problems but business.
The people attending the Green Stage got very excited as Bannon closed his speech: it seemed to resonate with them. It damn sure resonated with me. Last time I heard the crowd getting so excited about talk on business was when Jay Z rapped his often quoted lines: “I’m not a businessman, I’m a business, man”. Jay Z was quite probably not talking about impact business, but his point still stands – if impact business is made into a very strong and respected brand, more and more companies would be more than happy to embark on the journey of making the world a better place – while making tons of cash on the side, of course.
BLACK STAGE, Basic Income – Our Next Moonshot
This panel discussion continues the theme of basic income. Chronologically in Slush it was before Bannon’s talk, but I will deal with it here as if it were a follow-up. In the panel were Albert Wenger, Roope Mokka, Matt Krisiloff, and Jason Karaian. Wenger is a Partner at Union Square Ventures, Mokka is Co-founder of Demos Helsinki, Krisiloff is Director at Y Combinator Research, and Karaian is Senior Europe Correspondent for Quartz.
There is a basic income test starting in Finland next year. There is also one starting in Oklahoma, US. Albert Wenger asked the panelists if the welfare state is something to be disrupted.
Roope Mokka noted, that in Finland the basic income has been marketed as a program to promote work. Finnish government is trying to get the Finnish economy growing. The problem is that people are not sure if they should take a job or not. The situation is quite perverse, as you might be better off financially by not accepting a job because by accepting job you might lose your social benefits. Basic income would solve this problem.
Y Combinator is experimenting with basic income in Oklahoma. In the US jobs are not secure, but on the other hand things have become more affordable. There has been interesting auxiliary effect with the basic income experiment. Poor people often don’t have bank accounts. With the basic income experiment they have needed to get bank accounts in order to receive cash. So now they have bank accounts.
Wenger noted, that one reason to give people a walkaway option from cheap labor jobs is that some jobs would be better automated (e.g. flipping burgers, driving a truck). On the other hand, we don’t want to automate childcare and other human interaction jobs, even if we could. This relates to what Seth Bannon said on impacting the society rather than just selling your time for money.
Mokka said work is a way for people to participate in the society. Basic income is one tool for us to redesign our relation to society. Basic could be a moonshot as it reveals huge possibilities. There was nothing in moon, but the project brought people from different areas together and helped create the USA as a superpower.
Social safety net can be established centrally, but not how people organize their lives after basic income happens. There has been nothing universal in our generation and basic income could be that. Social welfare and healthcare are the biggest part of any state budget. That is why this is so huge.
It is dangerous to look at basic income as a panacea. – Albert Wenger
Work is a tricky concept. We have spent such a long time weaving work deeply into our societies. The switch won’t happen overnight. Is it a branding issue? Or a narrative problem? “Money for nothing” sounds bad (even if it’s not a Dire Straits song). Giving free money to people actually sounds like a populist policy, as Wenger noted.
But isn’t basic income as a concept all about freedom? Land used to be the thing that gave people freedom (Wenger spoke about this in his own talk in Slush the day before, I also blogged on that). In societies built around agriculture land used to be the commodity that gave people freedom. The problem is naturally that there is very limited amount of land. What gives freedom in post-work society?
Mokka pointed out that Finns have been surprisingly little worried about this. It is because we have been doing social welfare for 50 years already. It has more to do with how we frame the issue: When you have freedom, what are you going to do with it?
Government is a bad allocator or people’s time. It is dangerous to look at basic income as panacea; it won’t solve all our problems by itself. There has been lot of changes in history. Let’s look at education. That is going through a big change right now. Enhanced education along with basic income could go a long way.
Basic income, as noted earlier, won’t happen overnight. Mokka estimated that in Finland 3-5 experiments might be needed before it actually happens. That will take about 50 years. During that time policies and especially better allocations for people’s time should be figured out.
BLACK STAGE, What Are the Driving Forces Behind Brexit and Trump’s Ascendancy
Let’s continue on a social theme here. Once again it must be noted, Slush 2016 provided great stage program for societal issues, considering it is a tech conference. At this panel discussion were present Berger Clarkson, Colette Ballou, and Albert Wenger. Clarkson is Managing Director at Sapphire Ventures, Ballou is Founder of Ballou PR, and Wenger we have already gotten acquainted with.
This panel discussion was so lively, I have to admit I lost track of the individual speakers. Therefore I will go through the topics, but I won’t always be able to provide details of who said what. My apologies.
Technology has brought us into a pressing situation: We can do things we don’t yet know how we should facilitate. Anger speech is a clear sign of this problem. We haven’t formed a dialogue on what kind of speech should be tolerated and what kind policed away. We shouldn’t let the platforms off the hook as digital technology represents a huge amplification. What you say on the Internet can travel all around the world. More on the platforms later in Juha Leppänen’s talk.
Ballou marked there needs to be self-regulation tools for platforms. Wenger continued that there should be background information that links articles back to source material. Only machines can do this.
The most visible and successful strategy of populist politicians has been focusing on fear. I covered Wenger’s talk in the previous post on Slush 2016 Day 1, where I already linked an article in Rolling Stone, but it doesn’t hurt to do it again here. In the case of Brexit, fear was played in a way that set technology as a proxy of globalization.
But technology is not proxy for anything. As Ballou noted, technology is a tool. It ought to be used to promote empathy and integrity. As Seth Bannon pointed out in is his talk earlier, this can actually help companies.
In analog, physical world we have been dealing with normal distribution of outcome. E.g. a great shoemaker could make maybe twice the amount of shoes compared to a regular shoemaker. Today we have zero marginal cost (e.g. writing this blog costs me only time as I already have the laptop and an internet connection). Because of this, in scalable businesses there are a few giants and then a lot of dwarfs (explained quite nicely in Nassim Taleb’s Black Swan. We need to deal with these “power law” implications.
As an ethical note, companies such as Google, Amazon, and Facebook must face their algorithms have huge impact on society. They are also destroying jobs. Airbnb does it to hotels and Uber to truck driving, etc. How can we create an ability to respond to this responsibility, or should it just be regulated by government?
As noted in Seth Bannon’s talk, we are already seeing the emergence of benefit corporations. But, according to Wenger, single companies can’t solve the biggest problems, we need general discussion for that. Because of network effects we see dramatically large companies ruling the whole business (Google, facebook). This takes out competition and competition has historically been very good for innovation. In the opening days of Twitter it had an open API, not anymore. Open API would make competition possible. If we have monocultures, bad things will happen and they won’t be recognizable.
E.g. in the US Presidential election this year, 150 million dollars were spent in Facebook advertising and it is very hard to measure what kind of impact it had. Facebook has this information but we don’t. There should be some external control, Wenger noted on this. But it is hard to say if governments or some other form of power should police this external control. And what would these other form of powers be?
We are at a time where we can do things with technology we don’t know yet how we should facilitate. – Albert Wenger
Technologies can bring us a lot of good. But they also make it easier for us to perform sub-optimally. As Wired wrote already in July: “The public has developed a Twitter-sized attention span, in which the latest outrage always seems to supersede the one before it”. Power laws and network effects emphasize whatever we do, be they good or bad – not to mention we also need to define what good and bad are. This is an ethical question, and ethics has been made too boring by the philosophers (as I noted in the previous post).
There will always be interplay between regulation and what companies do. Regulatory solutions will be different now in the age of Internet. When cars came to the market, they were treated, from regulatory point of view, as horse-driven buggies. That did not work and there was need for new legislation. Same will happen with Internet.
Wenger noted he has been investing in blockchain, because he believes it will gradually take us away from centralized governance. We need to have principles and more discussion on values. Empathy is good, but we also need to talk about values. In collective level we should decide whether full employment is a value of not. Wenger thought it is a remnant of the industrial era. I agree with him.
Mentioning blockchain gives us a good transition to… blockchain!
BLACK STAGE, Blockchain – The Decentralized Future
In this panel discussion we had Jutta Steiner, Thomas Conté, Paul Puey, Elizabeth Stark, and Brian Behlendorf. Steiner is COO and Co-founder at Ethcore, Conté is Cloud Architect, Puey is CEO at Airbitz, Stark (in addition to belonging to the “King in the North” -family) is CEO and Co-Founder at Lightning, and Behlendorf is Executive Director of Hyperledger.
Blockchain is a difficult technology to understand so I won’t go into technical details here (as I don’t understand them). But let’s look what the technology can do.
Blockchain started with Satoshi Nakamoto’s paper on Bitcoin in 2008. The idea is simply that there should be a common log file that everyone has. New entries to the ledgers are then written only if all the ledgers agree on that. This is in a way getting back to distributed Internet, as for now with e.g. Google the Internet has become centralized.
Interesting controversy surrounds the Nakamoto paper. It is widely believed that such a person does not exist, but the paper is written by number of cryptography and computer science experts, who are not even of Japanese origin. Only one person, Australian programmer Graig Steven Wright, has claimed to be Nakamoto, but his claim is widely challenged by the community. It would seem quite suitable, if blockchain was started by a group, rather than an individual.
Bitcoin is the first technology to prove that blockchain works, but it is just one application. It is a technology that can make identifications in all decentralized networks. Think of diamond industry. With blockchain it would be possible to know where the diamond you hold in your hand came from. This would eliminate blood diamonds.
Transfers of any data have to rely on trust. Trusted ledgers can store data and prove the correctness of a transaction. Blockchain will turn this around, as no one needs to be trusted anymore. The transactions will be based on “mutual distrust” rather than trust. This might sound counterintuitive, but trust is tricky issue and we know what one rotten apple does.
Blockchain has the potential to empower via decentralization and democratization. Digital signatures can secure all things happening in the Internet.
Cryptocurrency is only one application of blockchain. It is a technology that can make identifications in all decentralized networks.
It needs to be kept in mind, that nothing – blockchain included, is a panacea. But it is important to work in cases where it can solve problems.
Speakers gave tips on how to start a company utilizing blockchain technology. The technology is readily available and there is plenty of information on it. Again we come to a point noted by Seth Bannon: zero marginal cost. You can even enter banking industry a lot easier than before. There is some heavy mathematics involved with blockchain, so top-bottom approach might be a good idea.
After listening and reading about blockchain it seems to be a very important technology in the future. Secure transactions over the Internet and decentralization are great steps forward in overall security and democratization of the Internet.
Next I will go through two more talks and then a little bit of the party.
GREEN STAGE, Jufo Peltomaa: Usability of Augmented Reality Headsets During Sexual Intercourse
The boasting title of Jufo Peltomaa’s talk had lured a large crowd around the Green Stage. Peltomaa is a former pop artist and now Co-Founder of Immersal and ZenRobotics.
He really didn’t have much to say, but he was very funny. Here is clip where Peltomaa invited a “random” member of the audience (who happened to be his wife) to the stage to test AR headset in a “sexual” situation.
Peltomaa made two good points, though. First, VR is a special case of AR. Even eyeglasses are AR. Therefore we are already cyborgs. Second, the business opportunities are interesting. As AR would know everything about its client, companies could e.g. auction the airspace of NY individually to everyone.
I’m not sure if I felt very reassured by Peltomaa’s presentation, but he was by far the funniest speaker of Slush 2016.
GREEN STAGE, Juha Leppänen: Bubbles, Monopolies and How to Save Platforms From Themselves
This is the last talk I am going to cover in this post. This is also one of the best ones I saw at Slush 2016. Juha Leppänen is the CEO of Demos Effect.
Platforms are not like other companies. Their model is to become monopolies. We could argue, that is the model of all companies. The difference is platforms can actually achieve this.
Why are bubbles important? It is the same as asking: What was surprising about Brexit and Trump? How did we not see them coming? It is because we are all immersed in bubbles created by the platforms. We don’t know what is happening in the bubbles of others. That is the backslash of Facebook becoming a dominant platform.
Leppänen asked the same question that the panelists on Black Stage asked before: How should we regulate Facebook? What is the role of Facebook in demoracy?
Facebook is just a phase one. It gets really interesting when bubble-forming platforms start to change how we see physical space. What happens when it is not just social media, but everything? This will include food, cars, apartments, public space, etc.
We are all immersed in bubbles, we have no idea what is happening in other bubbles. – Juha Leppänen
There is a lot of promise in digital platform economy. Accenture claims that digital platforms could make 25% of world’s economy by 2020. The way people come together and create value is changing. This, in turn, changes how define ourselves as human beings.
This won’t happen, Leppänen claimed, if we don’t save the platforms from themselves. Platforms are different than companies. Platforms are more holistic, more societal and more challenged by the society. Platforms also have a power to transform society, as cases of Brexit and Trump have shown.
Leppänen gave a 10-point list of what platforms need to get right in order to succeed. It is shown on the picture below. Getting these 10 points would make it possible for platforms to work. Right now e.g. Uber has been banned or is otherwise in legally troubling situation in many countries.
We need to answer the question, “What is the role of digital platforms in our democracy?” In the tech sector there are a lot of people who want to make world a better place. So it is not a question of will but how. Uber seems to be learning this, as they opened API in Estonia for taxation.
Platforms are different animals. They should be treated as such. I agree with Leppänen.
My Personal Moment
I had one amazing personal moment at Slush 2016. A really cool Finnish company, Futurice, had large area on one of the second floor platforms. They had a questionnaire on the topics of the future.
Me with the Futurice questionnaire that got inspiration from my book!
I published a science fiction novel, Kova, in 2014. One Futurice employee had read the book and she used it as an inspiration for creating the questionnaire. That was huge for me and really gave me a pump of energy. Thank you Futurice!
The mystical Slush 206 Afterparty can be pretty much summarized in one video clip I took. Childhood hero of mine, Darude, played at the Green Stage. For some unknown reason, my iPhone failed to catch any sound, which is even better, for now you can truly focus on the ridiculous energy that people had.
I end my Slush 2016 blog posts with a big thank you to the organizers, especially the 2300 volunteers that made it possible. Thank you for the first Slush I went to.
Your most humble servant,