Software might eat the world, but algorithms will digest it
When Marc Andreessen wrote his famous “Software is eating the world” memo a few years ago, people might not have understood how fast the technology industry would progress. Of course, Nobel Prize winner Niels Bohr (Physics, 1922) had it right when he said, tongue in cheek, “It’s hard to make predictions, especially about the future.” Predictions are indeed a tricky business. Every December, we read the essays of wannabe predictors who have studied the patterns of the past to predict the future. Most of them end up being wrong, either because their vision is too narrow in time or because, as science has shown, human overconfidence gets in the way.
2014 has seen a lot, from the introduction of wireless electricity to TED’s focus on the “Next Chapter”, it seems Marc Andreessen’s vision is coming to life. In my opinion, two innovations have reached clear “tipping points” in 2014 and herald the beginning of new times in the field of money and personal transportation. Software companies are taking leadership positions in established economies and will transform them in a durable manner. In less than a century, money will have gone from physical to plastic to digital. Driving will evolve from an art, mechanically operated by humans, to a science programmed by machine learning algorithms.
Digital currency is pushing our economy squarely into the influence of the algorithm. In the case of driving, a new era is emerging — the era of machine learning. It’s now become quite realistic that machines are able to execute functions at similar, if not higher, levels than humans. I’d like to propose we append Andreessen memo: “Software might eat the world, Marc, but, algorithms will end up digesting it.” And since “money fuels our economy”, I couldn’t resist lumping both predictions in the same piece and proposing an appendix to Marc’s memo. I’ll probably end up being wrong. Nonetheless, let me know what you think.
The End of Money
For years now, I’ve been “at odds” with my family on the subject of money. I have stopped carrying any change. This has created tension when my kids needed a little money to buy candy or when we had to give small tips. I’ve justified my attitude by explaining that physical money was inefficient, dirty and difficult to count. By contrast, non-physical payment options have been vastly superior. They provide better traceability, speed and convenience.
This past year, I felt vindicated by what some call “the biggest money innovation of the century”: Apple Pay. But the truth is that everyone, from Starbucks to Target to Walmart, has been building solutions designed to dominate consumer’s buying habits. It has become abundantly clear that one of these giants will transform our economy in the years to come. The stock market has already rewarded public companies handsomely for their attempt. Since Apple introduced its pay solution, the company’s stock has grown by 16%. Its main partners, American Express, MasterCard and Visa have jumped by 12%, 19% and 28% respectively (while NYSE grew by less than 6%).bere
The private market hasn’t been quiet either: 180-employee payment processing startup Stripe was valued at $3.5 billion in December. Affirm, the 32-employee tech venture founded by Max Lechvin, one of PayPal’s cofounders, raised $45 million last June to reinvent micro-payments, a space that now both Facebook and Twitter are dabbling into.
Trust me. It’s the end of money as we know it. Ditch the coins while they are still worth something.
The End of Driving
2014 was an incredible year for personal transportation. Our perception of what is possible in this field has been altered in at least 3 ways. First, we witnessed the domination of new business models like Lyft and Uber. Uber, whose incredible financial forecast was leaked last November commands a $40B valuation. Sure, the company experienced bad publicity in 2014, but there is no doubt about the market opportunity it’s going after. Uber, or at least the market it has created, is far from being #Over.
Second, it’s never been trendier to talk electric cars. The Prius might have been cute in 2013 but it’s gotten ugly in 2014, when Elon Musk showed how fast and furiously efficient, electric cars could be. Last November, Tesla announced “Model D”, a car so incredible, it should have its own category. This 100% electric vehicle gets more efficient as it uses more engine, ships with an autopilot program, and can do 0 to 60 in 3.2 seconds…and it will be available sometime in 2015…
And, as if this wasn’t enough, our third shift this year came from the government. Last September, the great state of California issued new rules for testing autonomous cars. It granted 29 permits for autonomous cars testing and…wait for it…25 went to Google. Not Volkswagen. Not Chrysler…Google!
The future of transportation is coming faster than we think and humans won’t be behind the wheels. Neither will traditional automotive companies, apparently.
Software might eat the world, but algorithms will digest it
Not everyone might be ready for this future. But, if you aren’t, turn to Hollywood; two movies exploring this theme made a sensation last year: “Her” — a movie where major protagonist Theodore falls in love with ‘Samantha’, a computer system that has developed the ability to love. And finally, catch the “Imitation Game”, a flick which recounts the life of Alan Turing, a British mathematician, whose 1950 paper explored the subject of Machine Intelligence.
If money disappears and transportation gets away from us, you might ask: what will humans be uniquely suited for in the future? Well, algorithms might be faster and more efficient at executing routines. Software might very well be able to decode and emulate feelings. But it seems, that critical thinking and the ability to apply judgment will remain a unique human trait for a while.
It might, in fact, be the one capability we can use to dream and invent. And that will certainly be a necessity if we are to create a better future. As Ray Kurzweil, founder of the Singularity University, once said: “The only way to predict the future is to invent it.”