Heading towards the Singularity?
It is hard to imagine that ten years hence we will be almost in the year 2030. Growing up in the sixties, seventies and early eighties, 2030 seemed like beyond the event horizon. The future back then was an Odyssey in Space at the turn of the millennium. And yet, here we are. Not as expected – space travel for example has taken a thirty year hiatus since the Space Shuttle was introduced and only seems to have reemerged in the past several years – but so much else which we didn’t expect has arrived, not least packed into the smartphone which guides so much of modern day life. The future comes faster than we think, just in the wrong order.
So with this in mind, as our decade draws to a close, I thought it useful to reflect on what has happened in the ten years previous and what this can tell us about the future. First up, I base my own arguments on what Ray Kurzweil called “The Law of Accelerating Returns”. I am convinced that this is true macroscopically. This is the exponential rule that the more we progress as humans, the faster (linearly) the rate of change. Exponential “progress” means that the time taken for each increment decreases as we move along. We should therefore expect to see an equivalent of the “progress” of the last decade in perhaps just eight years. This won’t take us to the Singularity which Kurzweil famously predicted for the year 2045 but be prepared to hold onto your seats!
In this article I will address the following:
1. Taken as a whole, what is the progress that we have made since 2010 and qualitatively what were the trends which were driving this change?
2. Which of these trends will continue into our next decade and which will abate or even reverse? What new trends are emerging which will shape the immediate future?
3. Finally, and somewhat speculatively, what predictions can be made up to the year 2030 based on the above.
2010 to 2019: Viva la Tech!
We humans are very adaptive. So much so that after even a few years, we have forgotten how things used to be. I feel like I have been living with my iPhone for my whole life and seamlessly interacting with everyone and everybody from the palm of my hand, accessing the data I needed from the cloud and generally being “always-on”. But of course I know that this wasn’t always so – it just feels like it was.
A short jaunt down memory lane helps put it all back into context. Yes, the iPhone was launched (on 2G!) in 2007 and Android followed with the first HTC (remember them) in 2008 but the iPad itself wasn’t released until 2010. So at the start of our current decade most internet access was still driven from the PC. Social media was starting to tick up for the early adopters but for most people the last decade was the first time that they registered with Facebook or Twitter (Instagram and Snapchat hadn’t been launched yet at the beginning of 2010).
You were probably still watching satellite TV and using DVDs along with paid-for movies via iTunes but streaming TV was still in its infancy. (Had you been smart enough to have invested in Netflix back in 2010 you could probably think about retirement now!). Dropbox had launched already in 2007 and was followed by Microsoft’s Skydrive shortly after but Google hadn’t even launched its own consumer cloud drive offering until 2012. Yes, Amazon was well in the lead with commercial elastic cloud services but Microsoft Azure PaaS only came out in 2010, Office 365 in 2011 and Apple showed up with iCloud also in 2011.
On 13th January 2010 a certain Tesla had just delivered its 1000th Roadster, a Lotus Elise with a battery pack and no fancy software. The company was the subject of much derision from the likes of Top Gear and the S, 3, X, Y were but a figment of Elon Musk’s imagination. Who would have imagined that 10 years later we would be debating whether the features being delivered in Tesla OS 2019.40.50.1 via over-the-air update would meet the promise of fully featured self driving or not. After all, Siri was only launched in 2011 with Google Now in 2012 and Alexa and Cortana only in 2014!
Artificial Intelligence was still in its second winter sleeping peacefully so how could we have imagined that autonomous driving and flawless natural language processing were literally just around the corner. Oh, and I forgot to mention Bitcoin and the whole blockchain phenomenon. Whilst it is true that a certain Satoshi Nakamoto did surreptitiously publish a paper “Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008, it wasn’t until February of 2010 that the first official bitcoin exchange was launched – and the price for a single coin was of the order of 0.0025 cents.
Or, another way of putting it is that USD 1 invested back at the beginning of 2010 would be worth a cool USD 300 million today!
I could go on but I think you get the point. Just ten years ago was a world away from the way we lead our lives today. Tectonic plates have been shifting which have radically reshaped how we interact with friends, family and co-workers and the world at large, how we consume information and are entertained. The world of business is being disrupted by new entrants that harness the power of machine intelligence and the ability to scale via the cloud. Software and data have become the oil which powers the top companies and the major tech players are back on top and seem invincible. To quote Satya Nadella who took over a beleaguered Microsoft in early 2014 (and subsequently rejuvenated it), we live in a Mobile-first, Cloud-first world. That would prove prescient.
What was driving all of this? I see a few macro trends which made the last ten years so transformational:
1. Mobile-first – not only has a mobile first world opened up new scenarios and driven adoption (imagine Facebook getting to 2.5 billion MAUs without mobile) but it has also allowed developing nations to jump over the consumer PC age completely and catch up and even exceed developed nations in topics such as mobile banking.
2. Cloud-first – the cloud has levelled the playing field for new entrants and facilitated “over-the-top” strategies which together with mobile disrupt established business models. The whole shared economy has been able to “uberize” incumbents using the cloud, reaching its tech savvy consumers via mobile.
3. GPUs – for a long while GPUs were solely the realm of the gaming industry until somebody noticed that the ability to perform massively parallel linear algebra made a GPU ideal for deep learning. Suddenly the ability to solve hitherto incomputable problems with the help of a USD 1000 GPU and multi-layered neural networks became a reality and artificial intelligence was freed from its second winter. Now problems such as natural language processing or image recognition could be tackled affordably using the same approaches that the human mind employs.
4. China – in 2010 the developed world was still reeling from the effects of the Great Financial Crisis (GFC). As the central banks of the developed world started to coordinate policy and increase liquidity, governments around the world sought to restore trade. China emerged as a new economic leader. Previously, China was seen as the factory of the world but after the GFC China started to pivot to a more consumption based economy. Over the decade Chinese Tech companies to rival the giants of Silicon Valley would emerge and China would start to lead in many areas of digitization for example facial recognition.
5. Cost of Capital – probably more than anything, the reduction of the cost of capital and the search for yield has provided a fillip for startups and those seeking to disrupt the established business order. The upshot of this has been an incredible 80% of companies going public in 2018-19 not turning a profit at the time of the IPO. This even eclipses 2000 at the height of the dotcom boom and simply reflects the willingness of capital to chase any dream for however long it takes. Startups are now firmly part of the business landscape and a new normal.
Trends for a New Decade
The question is, which of these trends will continue, which will expire and which new trends may we see in the decade ahead driving change?
Firstly, I think that the cloud and mobile revolutions will have essentially done their work and will no longer be the drivers of change but rather part of the status quo going forward.
Like the personal computer, they will not go away but will of course morph and evolve as part of our technology driven world.
Equally, the parallel hardware targeted at neural networks will start to commoditise. We know this is happening because Google already has its own neural network processor, the Tensor Processing Unit or TPU at version 3, and Tesla replaced the Nvidia AGX hardware with its in-house AI chip in HW3.0. Expect to see others follow and chips optimised for training and processing neural networks will become as commonplace as the ARM based chips which have powered the smartphone revolution over the last ten years.
Finally, I think that pending an explosion and reset of the world’s financial system (which I wouldn’t rule out but think unlikely – rather I see the world’s authorities migrating us to a cryptocurrency based system), we will continue to see loose money and lots of liquidity. There will be some bumps on the road and the recent lesson of WeWork is that unlimited liquidity doesn’t make a loss making company profitable, but the wall of money that has driven tech is also going to be a new normal. So no change there.
So what will be driving the change in the ten years ahead (relative to the decade we are just closing):
1. Artificial Intelligence Everywhere – it is fair to say that artificial intelligence has been hyped to no end over the past five or six years but I would assert that its true power has still not been felt. This will change in the years ahead as we see AI in all its guises revolutionise and disrupt whole sectors. The important thing is that machine intelligence is starting to exceed human intelligence in areas hitherto considered the realm of the highly educated: medicine and diagnosis, the legal profession, even art. I believe that AI will be the defining technology of the next ten years and beyond that. Indeed, it is AI which, ultimately, will propel us to the Singularity;
2. Ageing Society – by the end 2029 those born up to and including 1962 will have reached 67 years of age, the statutory retirement threshold in most countries. Amongst the most economically developed nations of the world ageing will be a major challenge: 30% of Europe will at this point be 60 years or older and North America and China will not be far behind. This is not just a question of the dependency ratio and how to deal with health and care of the elderly. It also poses a challenge on education. Once upon a time it was possible to learn up to the mid-twenties and then work forty years on the back of that. Times have changed and if we are to sustain employment up to the age of 67 and perhaps beyond, there will be a huge need for lifelong learning;
3. Global Warming – like AI, global warming and the need to move to a sustainable future has been a hype but not a trend that has actually changed much – so far. That is not to play down the enormous efforts of activists and those who have raised awareness of the dangers of global warming and who do so much to protect our planet and wildlife already. It is just that despite the brave words by governments around the world, CO2 levels continue to rise. Between 2010 and 2019 we have been able to have our cake and eat it, indulging in the advantages of a fossil fuel driven economy (including plastics) whilst simultaneously virtue signalling about what little we have done / will do to address the damage to our environment. This will change in the decade ahead as we stare oblivion in the face. I expect us to blink first and see radical action coming our way. It may still take a few years more and a new wave of green minded politicians to come in but by 2025 I see this as inevitable. Thereafter expect there to be breathtakingly radical changes in the way the world works and lives. Long distance air travel could all but be replaced by video conferencing, non recyclable plastics will likely be banned, carbon capture plants will start to be erected around the world, and tree planting on a biblical scale will be undertaken. The technology already exists – we just have to do it and start acting as One World;
4. Market Regulations – if the resurgence of Big Tech has been one of the stories of the last decade, then market regulations and the reassertion of the state may be its echo in the ten years ahead. Already we are seeing debate about the power of the big technology players emerge and a desire to restore competition to the natural monopolies that the tech world throws up from time to time. I don’t believe that a breakup of the big tech players will happen but as we saw with Microsoft nearly twenty years ago, action will be taken to attempt to open up competition. Now, how effective regulation really is, is open for debate. In the case of Microsoft, antitrust action took hold just as the market was already starting to fight back. Come that as may, expect there to be a wave of regulation which will attempt to reassert control over Big Tech going forward;
5. Software-first, Data-first – of course software has been the medium for disruption since the inception of the computing industry in the 1950’s, but what we are seeing now is a fundamental shift in value which will require all companies to become software businesses in the future. We already are witnessing this in the automotive industry, where the value has shifted over the past decades from mechanical engineering to electrical engineering and now finally to software engineering. The software is ultimately needed to harness the power of data (which in turn feeds AI) and this is the recipe for success for every company in the future. Once a company becomes software and data driven it can disrupt any industry. Whole disciplines may disappear or become subsumed by others e.g. insurance may suddenly become a feature rather than a business in its own right. The transformation of a business into a software and data business will not be easy and most companies will not succeed. The culture needed to succeed in this space and attract the right talent will be beyond the power of most organisations. Those who do make the change, though, will find themselves in an ocean of opportunity.
What does this all add up to? Continue reading part 2 for my predictions.