The Future, This Week 20 Oct 2017: why exponential growth is big, eBay and is Uber changing cities
This. Is the future this week, uncertain. Business insights, I'm Sandra Peter and, I'm Kai Reema. Every. Week we get together and look at the news of the week we discuss technology, the future of business the weird and the wonderful and things that change the world okay, let's roll. Today. In the future this week we're, exponential, growth is big, remember, eBay and the scuba changing cities I'm Sandra, Peter I'm the director of Sydney business insights I'm Karina professor, the Business School and leader of the digital strategy suit. So. Kai what happened in the future this week our first stories from singularity. Hub it's, titled, as our survival, depend on relentless. Exponential. Growth so. The author Thomas hornigold, talks about this idea of, exponential. Growth and the way we're locked into a, system where a global, economy depends. On relentless, growth and the increasing. Consumerism, and one thing and buying more and more things this. Indeed, would increase, our human footprint, and a, depletion, of all the resources that come with all that growth whether that is consumer, product or services, or fossil fuels and so on and he, talks about the role of technology. Being locked, into this race where the technological. Advancements, that we have actually have to outpace, the exponential. Growth that the economy is locked into so, technology, will continue, to improve our standard of living as long as it just grows faster, than our need to consume more goods and services yes and he's quite positive, about this so he looks back and says in the 1790s. People were worried that population. Growth would, result in an. Inability to feed, all the people on the planet but since. Then population. Has grown exponentially. And we have been able to innovate. And with new technologies, with new ways of growing crops we have been able, to feed a growing population and. We would be able to feed 10 billion people today, if it wasn't for the problems, with equal, food distribution. So it's actually quite positive about our ability, to engage in this, innovation. Race even, though he says, that there might be some limits, this exponential, growth on a finite planet and, their own sustainability. On the whole he is fairly positive so, let's unpack a little bit this idea, of what, is exponential. Growth what, is the conversation around it and how do we think about these dynamics, at play this, is actually an argument that is made on singularity. How quite regularly, that. We're. Very bad, at understanding, exponential. Growth but we should be better at it so let's look at what exponential. Growth is now take an example if you're creating an app and you're. Attracting. Customers to, it and say you launched it in the first week of January and you have one user on and which is a friend of yours and they invite a second, user and they grows, to to users in week two and each one brings another one so you grow to four and then you double it every week.
At, What point do, you have the entire population. Of the planet using your app so, it should take me quite a while to reach, the entire promotion. In September. In the same year of the same year so this is the nature of exponential, growth which, underpins. Many. Natural phenomena, like you know this is the way in which viruses. Infect and, then kill. A host for example but. The argument, is that normally. In life we do not encounter these kinds of phenomena, most growths that we encounter, is much more linear and so. We tend. To underestimate, the. Way in which the exponential. Growth blows, out in the later stages of the growth phase so. One of the ways we've actually seen, exponential. Growth in business. And technology has been around, microchips. And Intel. CEOs and the engineers that intellectually. Do this interesting, thought experiment to try to show you just how big. This growth is so if we're looking at the, 1971. Microchip. That Intel invented, and we look at the exponential, growth that microchips, have gone through we're seeing Moore's law at work if you look at Intel's latest chip so this is from 1971. Exponential. Growth until today we, see three and a half thousand. Times more performance, we see ninety thousand, times more energy-efficient. Chips and about. Sixty thousand times lower cost as Intel, was trying to explain this they thought well a better way to think about it, be to, do a rough calculation of, what would happen to a car take a 1971. Poll swaggin people the same year as the first microchip. And tried to figure out what, would the numbers look like today for that car, if the car had the same exponential, growth as the microchip, you would be looking at the car that, runs, at. 300,000. Miles per hour that, is when it's not stuck, in the tunnel or on Sydney Harbour Bridge it would do two million, miles to the gallon and it would cost you I don't know four cents it's actually a good example that shows that very few phenomena, actually follow, this exponential. Growth pattern, over a long a period of time in the tech world this computer chip example, is the, one that is being mentioned, over and over again and despite. The obsession, that has engulfed, Silicon, Valley with exponential. Growth and it's a real big, thing there now most. Phenomena, only, show exponential. Growth for, a very, short period of time and the reason for that is which, you can see with the app example, once, you have every single person on the planet using, your, app growth, is finished, right so you cannot grow exponentially. For, a long period of time because growth, will eventually, plateau out or even. Worse all resources. Are used up and the resource pool is depleted, and you cannot grow any further and even something, as, widely. Known as Moore's law which since, 1965. Has predicted, that the number of transistors per square inch would, double every year, even that's coming to an end because we are getting to the physical, limits of what we can actually do physics, is getting in the way now we're reaching, the atom, level, size, of transistors now, we're putting, more transistors, on a microchip, is just, not going to be possible, anymore so. Let's look at the obsession, with exponential. Growth in the technology. World Ray Kurzweil, makes the argument that today, most innovations, and technology, are on an, exponential. Growth curve and, we really, should understand, exponential, growth if we want to predict, the future and. While. I wholeheartedly disagree, with, that because there's, no evidence. In my view that other, than microchips. So far that technology, is growing X and surely it's not happening, in AI the, singularity.
Is Not, near we're. Making incremental progress, very, slow progress in, fact of making these machine, learning, algorithms, useful, they have biases, and the like, smartphone. Innovation, is coming to an end, uber, platforms. Facebook. All of them have shown that yes there's some exponential, growth for quite a while but then things plateau, as you would expect there, is a kind of obsession with exponential, growth that every app that is being launched, every technology. That is being flocked, purports, to bring about exponential, growth and it has shaped, the way in which venture, capitalists, distribute, their funding, if. You give money to a hundred different businesses. Only one of them will have to become, a success, growing exponentially. To make up in what they return, to cover the cost for the remaining, 90 because the exponential, growth in, technology, is said, to be the only solution that we have to the exponential, growth in demand or population. Or consumerism. It is said that we have no other solution, except for this absolutely so there's no a certain belief that technology, will develop, exponentially. And that we are going to be able to solve every problem because. Of the, way in which technology develops, and while, that might be true for certain technical. Aspects, of technology the evidence, for what we actually do with technology in the social, world in my view doesn't point to exponential. Growth, in productivity. Or. Prosperity, or. Efficiency, in fact, progress has been quite slow, in some of those areas despite, the, exponential. Growth in computing, power for example so. Whilst we might all have mobile. Phones whilst. We, might all have access to a lot of the consumer, goods that these innovations. Have spurred on the, real growth in efficiency. The ability, to do completely, new things hasn't. Been growing, at an exponential, rate no but that doesn't mean that we can dismiss, the phenomenon, because, what, has happened, in the meantime is that our, resource. Hunger, and the way in which consumption. Has grown and the way in which we are depleting the, resources of, the planet for. Is on a trajectory that, is unhealthy and that is growing ever more quickly so, exponential, growth is something that we have to understand and especially, the fact that this cannot go on forever we've, traditionally seen, companies and increasingly, seen companies address more and more social and ecological goals. We've seen a concern, with sustainability. So could sustainability. Be an answer to exponential. Growth well, it depends, on what you mean by sustainability. If we mean by sustainability, that we limit growth. To, a certain, percentage then the question remains how do you achieve that at a global, level at a system, at an economy level, when the incentives, for companies are, to, compete, and to exploit, resources which. Will invariably. Lead to more. Growth so. The difficulty. Of achieving, sustainability. At a global level have, led. People like Tim Jackson to argue, that we have to actually rethink. The idea of growth, and to, come to a different understanding of the economy itself, and do, away with the truism. Of what he calls the impossibility. Theorem. That there cannot be a society. Without growth, and to fundamentally, alter our. Thinking, about this so, let's hear from Tim Jackson here, is the story of those. Years, and our, consumer, society it's a story of us being. Encouraged. Persuaded. Perhaps to. Spend money we don't have on things, we don't need to. Create impressions. That won't last on people. We don't care about, or. Worse, still. Who. Don't care about us, so, Tim Jackson is, a British, ecological, economist, and he's a professor at the University, of Surrey and a few years ago wrote a book called prosperity. Without growth, and he challenges, this whole idea that the kind of growth that our global economy is currently predicated. On is the only way for us to go forward and, let's. Not forget this, is not a new conversation, it's not a central conversation. But not a new one the Club of Rome warned. Us back in 1972, of the, limits to growth which.
Was Already recognized, as the elephant in the room and they've been a few people like Naomi, Klein or Bill, McKibben, or Robert. Costanza, Peter Victor all these people who have started, challenging. The idea of, growth. As the only way to achieve prosperity, and. So what Tim Jackson alludes. To is that we are caught up in a. World of consumerism, that, has at its byproduct. An unhealthy, impact, on how. We deplete, the resources of our planet and his, suggestion is that we have to expose. Talk. About and rethink, the assumptions, that our current, economic, system is built on and that we should not take for, granted that, we are caught up in an exponential. Growth spiral. So, what we have here now is two fundamentally. Different positions. Whereas, the singularity, hub article, makes the point that we are in an exponential, arms, race and that we have to become what they call, acceleration. Lists where we have to innovate and, work. With technology to. Win this race. Tim, Jackson says that we have to actually break that trajectory we have to fundamentally. Rethink the. Rules of this game rather. Than become, quicker and faster at, playing this game and this, is a discussion that we think we will have to have in the future because, it's at the heart of problems, like climate. Change and, resource, depletion and. Solving. The, problem of world hunger feeding, a growing population. And our, next, story today actually exposes. How difficult, it is to have. These conversations because. Of the very nature of the public conversations, that we have today, our, second story concerns, eBay. Remember eBay well all of us are using eBay but we have been discussing technology. On this podcast big, brands Amazon, Apple, Microsoft but, we've never mentioned, eBay and the, article that we're discussing is from racket comm and it's entitled nobody. Thinks, about eBay, while, eBay, has a hundred and seventy 1 million users it. Has been growing it is doing, great things it's, a successful, market, platform, it's no longer growing exponentially. And it's, not in the media and it causes problems yes, as the article mentions its grasping. For relevance, and that relevancy, is one of attention. It is one of pressure. That the company faces to innovate, to do new things to become exciting. So let's unpack that because, this is about two, stories one is the real story the story about what actually is happening to, eBay and the, other one is a perception. Story is how the public the community, investors, how they see eBay, so first the actual eBay, story the company with a hundred and seventy-one million users with 1.1. Billion, items listed, at any given time the, company that has added, to its portfolio. PayPal. Craigslist. StubHub. In Australia. Gumtree, Skype. At an earlier stage and, that, has worked relentlessly to, build its portfolio, of, user, to user marketplace. Offerings, and whose revenue, has hovered, around nine billion dollars, which is by all means a significant, figure it's one that's risen slowly, over, the last five years but the criticism that is hurled at eBay is that eBay is no longer exciting.
Because. Supposedly. It has only, continued. To successfully. Build, according. To its main purpose of becoming a successful, consumer. Marketplace, but. It hasn't engaged, in the tech game it hasn't become, an Amazon, engaged. In all kinds of different areas of high, technology. So, the, question, is is it still okay to just, be a company, with a clear purpose and innovate, along, the path of becoming the best possible. Business with that purpose or do. Companies have to become, innovators. For the sake of applying, technology the, article is also making the pointer shouldn't we be concerned because eBay, is being threatened, both by big players like Amazon, who are taking over all marketplaces. But, also by niche, players like, realreal, who are taking over let's say the fashion, marketplace, so, how do they stay relevant how do they stay competitive how do they win this game my, argument would be by doing what they are doing by becoming the best possible, version of who they already are but, it points to the bigger problem, which is companies. Today under. Enormous, pressure especially. Companies with the technology, background, to, grow exponentially. It doesn't seem enough to. Just grow on a sustainable. Growth, path which is the point that we were making earlier the system, puts pressure on individual, players to go for relentless, exponential. Innovation, and the, public narrative also. Puts pressure on companies, to have increasingly. Novel, stories, to tell about themselves this. Is what we're doing now this is the cutting edge innovation, that, we're bringing to the market this is the new, product or service which, you haven't seen before which is completely. Revolutionizing, the, way you used to think this is the new disruptive, innovation, and so for the individual, company, to adopt a, sustainable. Strategy, is, commendable. And we've seen with some companies, that they are doing, this in a very holistic and strategic, fashion but even companies like Patagonia. Who have been at the forefront of sustainable. Growth find, that this can backfire, Patagonia. Is an outdoor gear company, from California, they design. Clothing, another. Gear for climbing, for surfing, for skiing for snowboarding, and they've been around since the 1970s, it's, one of those companies that decided, not, to try to sell as much, as they can what's, more in a very famous campaign, back in 2011. On Black Friday they. Took out a full-page, advertisement. In The New York Times that said don't, buy this jacket, it, featured, their latest, fleece sweater and the company pretty much broke down the environmental. Costs, of their new jacket and asked consumers really try to think twice before buying, it or any other product that they made they said, well recycle, your old one sell it on eBay give it away to people who need it most and only if you really need to buy this new jacket so, not only did they make the point that people shouldn't buy it for fashion reasons they also said that most, people who buy these jackets, don't actually need, them for functional, reasons because they don't go to places where you would need that jacket but, more importantly, Patagonia.
Made The decision not to publicly, list the company because, the, owners, didn't want to lose control over, the pace at which the company grows and tried, to limit that growth to around. 3% now how, did that work out Sandra well not too great because, the campaign. In 2011. Around. Not buying the jacket actually was a huge, success so customers, liked it and they started buying the jacket their sales, grew significantly because. People, really liked the philosophy, of the company this, was a company, that for the first time wasn't saying that sustainability, is going to be only around, sourcing, organic, cotton, or paying. Workers the right wages, or making. Sure there's clean water involved, in the production processes. But it's a company that took issue with consumerism. Itself, the problem wasn't that we weren't sourcing, organic, cotton was that we were using cotton, to make things that people shouldn't be buying necessarily, in the first place so. The. Philosophy was a success, the campaign, was a success, and Patagonia saw, its sales grow significantly and. I think it's about 13, 14 percent that they ended up with instead of the three to four percent so while. Some might argue that this was just a clever marketing ploy. To sell more product, we, would argue that it. Actually shows that it's genuinely, hard, to be a sustainable business, in a society that is predicated on growth, and consumerism, and so, it just adds to the discussion, we had in the first story so maybe there is such a thing as good. Growth so a sustainable. Overall, future, where people do, buy much, fewer things maybe at higher prices, and technology. Comes in to offset some of the impact, that those products, have on the, world and we end up living richer, lives but, it also suggests, that companies, should be allowed to be a bit boring yes, not all important. Or good innovation is sex and there is a real danger in glorifying, only grand narratives, and big companies and sexy platforms, it, skews, what we talk, about what, we perceive, as important, or desirable. What we consume, we're, government, so indeed, we invest, our money or choose to devote our energy which, brings us to our third story, which is also related it's, about platform. Businesses, that grow exponentially, it's about uber it's about right share but it's about the. Sustainability. Aspect the argument, that has been made that right sharing, the lead to a reduction in, the number of cars in the reduction of number of kilometers. Travel, and therefore, in changes, to the way in which we commute to work and ultimately in changes, to cities itself, so, the article that we're looking at is. From city lab and it's titled, when should commuters, didja transit, for uber and it uses data from, Washington. DC that, makes, comparisons. Between, commuting. Via. The. Local metro, or taking. Uber rides, so. Much like in Australia, the, Metro, in Washington, DC can, be a source of frustration. There's, track work there are unexpected delays. For a number, of things from whether it passengers. Getting sick to just random, delays, which. Makes it tempting for people to start using other, types of transports such as uber or lyft however. That, doesn't come without its costs, we have notorious.
Traffic Jams in Australia, so does Washington there, are road closures there's, roadworks, all, sorts of accidents, and other things so it is pretty unclear, where, the commuters. Are better off trying to take an uber or better off trying to brave, the public transport system so. The authors showed, that in many instances it. Is actually, both cheaper and quicker to, take an uber instead. Of the public, transport, which on the one hand points. To problems. With the public transport system but. On the other hand we think makes, a bit of a false argument so, the story coming out of the District, of Columbia's, office of revenue, analysis, really, says that uber, might be a more attractive option, in a lot of the cases during the rush hour it's, a quicker option for, trips, around the city and so, on it's a cheaper option it, comes out almost as good as the Metrorail but. This is always a valid argument it is a valid argument at the individual, level if it's just me who ditches, public, transport, and goes, for an uber ride the, data is valid and it works out for me because I might be quicker and it might be cheaper but, what if everyone on this commute, were to switch from the train to the uber what, would happen is surge, pricing would kick in it would be way, more expensive than, the study shows and you would probably be stuck in traffic because everyone. Is now sitting, in an uber car which brings us to the. More systemic, effects, of what, happens when uber, takes, hold in a city that's, right sharing, actually, result, in less. Cars less. Kilometers. Traveled, by car and, a, decrease, in emissions as has always been argued, by the rideshare, companies, such as lyft and uber so, a lot of the confusion that we, see around the, effects, of companies, like uber and whether or not cities are changing in the wake of this stems. From analyzing, their effects at the individual level and then aggregating. To a population, or aggregating, PO Society, a new, working paper by a couple of UC Davis transportation. Researchers, actually shows, that if you look at the aggregate the likes of uber and lyft instead, of removing. Cars, and trips from the city they are actually, adding more and more trips, to city and suburban, streets and in, many cases their effect on things like public transport, is to actually cannibalize. The systems so what happens is not. So much that people get. Rid of their cars but the people are switching from public transports, to uber, so that they are in fact ditching, public, transport, and that as a result, the number of kilometers traveled, by car is actually increasing, and the. Reduction, in car ownership is marginal. At best now. If, we look at the phenomenon we. Wouldn't actually expect, a reduction, in the number of kilometers traveled, because everyone, has to get to work anyway.
Whether By uber, or with their own cars at the same time many. People do not get rid of their cars because she cannot do everything, with. But especially not, in the suburbs so people still keep their cars so, in fact we might be adding more cars because, people are now buying uber, cars to, engage in that line of work and, we, might also contribute, to more emissions because the. Uber, cars. That, are not currently in use they might be cruising, idly, around suburbs, or inner-city areas looking, for that's right looking, for rides but this is not to say that the idea of having ride-sharing, is, bad to begin with no but we have to actually implement, a genuine, version of ride-sharing, just. The fact that someone else drives the car you know take an uber is like taking a taxi, doesn't. Actually get rid of kilometers. Driven, as a whole and at a system, level however, things like uber pulling for instance do solve, some of these issues so if we're willing to share that right let's say I go to work and on my way I pick up three or four other people who, forego their own cars and share the ride with me that would remove the cars on the road would remove emissions, and the number of kilometers that people on the take my. Argument would be that this. Is the first time booba is actually, implementing. The idea of ride-sharing so. Far they've just competed. With taxis, they've just created a version of a taxi, which is not a rideshare, ride-sharing, happens, when multiple. People, share. The uber on their way to work and then you have less kilometers, traveled and we also know that there are versions of ride-sharing that actually, do work on these principles so for instance in Europe, blaah blaah car allows you to share a ride with someone who is undertaking. A longer trip on a certain, route, and they say well I'm traveling this way anyway would you like to share the costs would you like to share the ride with me bla bla car, yes bla bla car if you're travelling between let's. Say Amsterdam. And Paris if. You're, a one-block person, you want to share a quiet ride between these two cities if you're, a blah blah blah person, and talk a lot of you, might want to travel with someone's mother-in-law, and spend all that time chatting, away so not only can you share a ride you can be matched to someone, who's blah, blah matches, you blah blah and yes, of course you want to travel in the same direction and, on the same data I wanted. But that is true right sharing so what we're saying is that the. Real effects, from ride-sharing will, come when these, platforms, are actually, implementing, ride-sharing and, when the idea of pooling, your ride with other passengers catches, on and then, we have a true innovation in terms of ride sharing that goes, beyond, what traditional, taxis, are offering and that might actually reduce, the number of cars on the street the number of kilometers traveled and the number of parking spots we need in our cities. And then gradually, we might see changes, in the built environment that, matches those changes, and now. After. Two years of waiting for the world's first giant. Robot, dual we actually. Have a winner, American. Megabots, went up against, Japanese, sudo. Bashi and, the. Americans. Surprised. The Japanese by sporting. Not one but two giant, robots so in the first round, iron glory, faced, up against, the Japanese caritas, robot, it, only lasted, a few seconds, and the Americans, were beat but then came of the second round. Age. Of, Giant. Has, arrived. Two teams, a world, apart are, about to do battle, it's. Time, for, the giant, robot. Duel. That. Chainsaw, is, now. Activated. And. We have a winner, cheap, megabytes, ego, fry if. You want to see the whole video of drones flying shots, being fired and, punches, being dropped will include that in the show notes but, congratulations. To. The megabots, team members for, eagle Prime's decisive. Victory and that is all we have time for today. Thanks, for listening thanks for listening this. Was the future this week made possible by the Sydney business insights team and members of the digital disruption research, group and every, week right here with us our sound editor Megan wedge who makes a sound good and keeps us honest, party music is composed and, played life of a set of garden hoses by Lindsey Paula you can subscribe to this podcast on iTunes, SoundCloud stitcher. Or wherever you get your podcasts. You can follow us online on, Flipboard Twitter, or SPI that's it Peter edu delay you if you have any news that you want us to discuss please send them to SBI. At Sidney, dot edu.