David Rowan: "Non-Bullshit Innovation: Radical Ideas[...]" | Talks at Google
Thank. You for giving. Up some of your time. One. Of the things that wired led. Me to was, an awful lot of corporates. That were having their off-site that we're trying to teach their team to be innovative, and these were, manufacturing. Companies, financial, services, companies, medical, device, companies, and they're, all looking for this mystical, thing called, innovation and often, they thought we'll create somebody with a job title the head of innovation or if we're really creative, chief, disruptive, growth officer, or digital. Sherpa that's gonna do it or we'll have another building, with, a few startups, that's gonna change the culture, and I'd, often ask so, what, have you changed what have you learned how is the culture, become. More innovative and the answer tended to be well it's early nothing, yet, and I, saw a, huge. Amount of resources. Being thrown at something, that, was never going. To work and it made me start thinking we. Kind of get innovation, wrong to, me, real. Innovation, is I, guess using the emergent. Tech tools to, create. Future revenue. Streams for whatever kind of business it's. Not mystical. And, yet the media and you know I'm partly, to blame get. Very. Hung up on the, gimmicky, innovations. The, little. Incremental, change. That is cool but doesn't really have much use every year at the Consumer Electronics, Show in Las Vegas, in January we. Get these amazing, innovations, celebrated. That maybe the world hasn't, been waiting. For this. Year at CES. It. Was the smart bottle opener, that every time you have a new bottle, of beer it informs, your whole social network, and. If. You. Are the sort of person who likes notifications. Every time, your, cat does its business this. Was one of the great innovations and, the, problem is, sometimes. There's, real money going. Into some, of these big, innovations. And I'm not, going to mention TV, as one of the investors, in this company. But. Jusuru. Raised. I think 120. Million dollars and it, was the most innovative juicing, machine in the world the juicer originally cost about seven hundred dollars it had bluetooth it had sensors, that had Internet connectivity and you, had to buy these very expensive sachets. To make the perfect smoothie, which, was brilliant until, some journalist, at Bloomberg realized, you could squeeze the sachets with your hand and get, just as good juice but actually faster, so, sadly, juice arrow is no longer with us having burned through 120, million dollars.
Quirky. Burned through 180, million, dollars and this, was innovation suggested, by the, crowd and they, went and tested it and did Kickstarter's, and these were hardware innovations, I don't, know if you were one of the lucky owners, of the, milk made the smart. Sensing. Milk jug that they. Put to market that every time your milk, starts to go sour they send you an urgent notification. So you cancel your business meetings you don't. Get on their aeroplane, before quirky, went bust having burned through 180 million dollars they. Put out the $50, smart, egg tray which is an amazing innovation for the people among us who are obsessed with how fresh our eggs are at home with, push notifications and, LEDs. The. Problem is every day I'm seeing resources, going into innovations, that nobody's actually thought through, so you know you see a lot happening in drones Pro drone is the first roan with robot arms and I'm, thinking is this now meant to be the way you take your kids to school or because. Tech ways has a dark side is this now the way to abduct kids from school and, it's. Got to the stage where I can't tell the difference between a real. Innovation. That somebody's put to market and a spurious fake one last. Year I saw, the. Combined. Fork, and spoon the spoon that was for people too busy catching, up on their messaging. And their Gmail to, actually. Have lunch and. I thought this can't be true and I. Traced it to a marketing, agency so I think it was pretty furious. But. Then of course we've got to look to China for the real innovation, so, you know those health, insurance, products that give you a discount if you collect. Data, from your accelerometer. They've. Solved this in China. So. I guess the the context, of all this there's some real transition. Happening. And, I don't need to talk to you about the exponential. Curves and the changes, in consumer, behavior, and you, know just look at Mary Micah's internet. Trends report every year just to see how, we. Are spending, more time than ever in front of our digital, screens, so, the. Ten years from 2008. We. Went from, 2.7. Hours a day on our digital screens the blue is, kind. Of all sorts of connected devices the middle layer is the laptops desktop, the green at the top is the mobile so. It's more than doubled almost three, times as much now with 6.3, and if you are in a conventional, profit making quarter, by quarter reporting, business this. Is kind of crept up on how. Your customers are this is time you're not spending, talking. To your colleagues talking to your kids this is time you're spending here, and. Combined. With. Falling. Barriers to entry it's, hitting all sorts of industries in energy in motoring. You, know the electric, car. Battery, that was $1000 at the start of the decade is forecast, to be seventy, dollars by 2030, the falling cost of sequencing and, the. Changing, behavior, patterns this is how couples, have, met the. Black. Line is. Introductions. By the family, since 1940. The. The. Brown line is meeting. Through, school but look at the red line meeting. On line and these. Are kind of fundamental, social changes, led, by. These smart devices it's, changing, the. Way you, can create a multi-billion. Dollar business the youngest billionaire in the world created. A cosmetics, company to take on Chanel. Dior, and. Kylie. Cosmetics has, pretty. Much no staff it outsources. The manufacture, and the. Packaging to a company called seed beauty it outsources. The, sales and fulfillment, to Shopify her mum does the finance she does the marketing, because, she, has a new. Type of influence. And. She's. Now showing. The big companies, that you're moving too slowly so what do you do if you're an existing successful big, company. You. Think you need to innovate so you create a, building. Somewhere with some startups, or yogurt companies doing it an airline, is doing it but.
Without A cultural, shift without, really understanding how. To, experiment. And iterate, and work out what the customers, want, it's. Innovation, theater, and, I. Got very kind. Of bored. Seeing. Nothing come out of all this investment. And I, was, thinking these companies quarter, by quarter the, revenue streams are still steady, but. Long-term they're. Fundamentally, missing out on the. Way the world is moving, is like wily, coyote being, chased by a roadrunner off the cliff still runs for a bit and then realizes, actually, gravity's going to pull you down and which, is why I decided to look. For. Really. Exciting. Examples, of transformation. In successful. Existing, organizations, and, as. A journalist. You. Get used to asking lots of people, for. Leads so, I started asking and, my. Friends who were consultants. Who were working at IDO who, were, investors. And, their. Leads, took. Me to 20, countries from Peru. To, China. And. Always through some of the things I learned, because. It turns out there. Are ways, to innovate that, are not. Type ways that create future, facing value, but. It takes a different, way of looking at things and if, there are ten quick. Takeaways. From the. Book I. Guess. The one. I kept noticing is, the. Companies that were most likely. To, discover, future, facing business models didn't have hierarchies, they. Allowed, talent. To, do what the talent does best. This. Is the most, successful. Games entrepreneur. I think, in Europe Ilkka panin and from supercell, whose. Games you've played and, he's. Obsessed with, what he's cool. Being the world's least powerful CEO it's about, hiring. Really good people, creating. Flexible, structures, so they can decide how they work what they work on so supercell is so called because it's cells, typically. Of 10, to 18 people who. Don't. Have to go to the boss for permission I went, to see a guy. Called Jonathan Downey who led a team of 10 really. Good games developers, and designers for. About a year, on a project, and they, were testing, it in the Canadian App Store and it wasn't getting the engagement, that they want and they kept iterating and, they were getting frustrated and. In Helsinki. When, this happens you go to a sauna a team sauna so they went to the local sauna, island and they. Realized they were getting more excited in the conversation, so they were sweating about other games so he comes back to the office sends. An all-hands. Email, to the whole team says we're killing this project, sorry it's taken a lot of resources and but we're all gonna work on other things and he didn't ask Ilkka for permission because ilka wasn't in the office at that moment.
So. The, idea of the boss at the top. Sometimes. Gets. In the way there was a project, about. Two. Miles kind. Of southeast, of here for. Ten years Claridge's. Wanted. To build five, basement, floors because. They didn't have enough space they couldn't build upwards they couldn't buy neighboring properties, and they, had two conditions, one they. Had to keep the hotel open during this build they didn't want to lose the loyalty of their customers and to, all. Stuff. From the builders, had. To come in and go out from. One window at the back on the muse that was 2 meters by 2 meters and, for. 10 years, consulting. Engineers. Building. Firms said. Well you can't do this whilst, keeping the hotel open structurally, it's impossible, it's too dangerous. It. Was known as the impossible, basement. Project, until, they called in a bunch of consulting, engineers, from a london-based. Global, company called Arup which. Doesn't. Have a hierarchy. It's a collective, every, member of staff owns a share in the company. 15,000. People based in fits Rovia but they take on the Burj Khalifa. Tunnel rail link and, the. Structure. Of Arab Tristram, car-free the deputy chairman said I may. Be called the deputy chairman but I don't have a say in anything and I don't want to I want to get really good 20-somethings, deciding. How to work so. Arab sent. A few people to, go and see this Impossible, Project and. They, got quite intellectually. Excited, and they, said, yeah we can take this project on, we. Think if we can get a few people internally to work with us and they. Came up with a way of solving, this by importing. A bunch of Irish miners, who. Thinking. Laterally they. Asked to hand dig 30, meter deep, vertical. Tunnels, take. All the mud through the 2 meter by 2 meter window. And then. When they had 62, of these tunnels they filled them with concrete and then, suspended, the hotel on top, of them and they. Started digging and in February they completed, the. Five impossible. Underground. Floors because. There was nobody telling them how to do this and, I. See, a lot of organizations, where. There's, fear of coming. Up with an idea that somebody upstairs will disapprove of that's. Hopeless. So. We're in a world where, commodification. Is hitting lots of products. You. Can differentiate by, framing, what you're doing increasingly, as a service there's a, bookshop. That's been in Mayfair. Since. 1936. And. It's. A rented, bookshop it's, competing, with the big online sellers. Heyward. Hill books was not doing well it was losing money and. Then. Nicky Dunn who took over not. Very. Long ago realize. You're not going to compete as experts, in selling books but. What about experts. In curating. Collections. Of books so. They started, offering bespoke. Library, building, services, the first customer, was a wealthy Swiss lady who, wanted 3,000, books on modernist art for her mountain Shelley and they, charged half, a million pounds so, that became increasingly a popular, revenue. Stream and then they thought we've got these very wealthy well, educated international, people coming in off the street they didn't spend much money here but. We have the chance to get to know them, why. Don't we offer them a, personalized. Subscription. Service, so there's about six ladies in the basement, who are reading a couple of hundred books each a year. They. Are now choosing books, for, the subscribers, each month, they get a gift wrap book maybe. It's five hundred six hundred pound for an annual subscription and, they've, now got thousands, of people subscribing. So they're making lots of money and they found a new way to innovate. While, staying pure to what they're doing there's, a hundred-year-old Bank in Finland, it's the biggest retail bank it's called opera and they.
Realized, They were being commodified by the startups so all the ways. They were making money. Startups. Were doing. More efficiently, foreign. Currency transactions, business insurance, lending. Money for buying cars, so. They decided they were gonna go for a radical transformation, they. Were gonna go back to first principles what. Service, could the bank offer that. The startups, couldn't, and over. A hundred years opera, was. Known in Finland, for helping people get through tough bits of life, starting. A business, going. To, Bill. Buy your first house, they. Thought okay what do people need well. They want to stay healthy why don't we start. Opening hospitals, and, performing. Surgery, so they've now got five private. Hospitals, in Finland very, very efficient, if you need. A scan an MRI you can get it that afternoon if you need an operation you can get it the next morning and. Because. They're starting from zero they have no assumptions, about how to create an efficient Hospital, they. Keep the costs, really. Quite, low and they've created a health insurance product, alongside it, that, is, cheap. And is, growing like anything, because, the costs are low, and, they've kind of found a new purpose. Innovation. Is. Increasingly. About, realizing, you can't do it alone can. You find useful ways to partner where. There's mutual benefit. So. In. China. They, Jordan set, up a company, called show me which. Makes high-end, smartphones, but there's, no profit margin on them because it's so ruthlessly, competitive and. He's. Often been mocked for saying. He wants to be a bit like Steve Jobs he, once did, a keynote, where he wore a black turtleneck and, unfortunately, used the phrase one more thing and I'm, not gonna comment on what the Xiaomi stores look like, but. They have a really clever business model they don't make money on the devices but. They have invent invested. In. About, 400, hardware companies. Small investments, typically $100,000, that. Make devices and, they. Say to the hardware companies. We. Will give you access to our supply chain are 300 million customers, in, exchange. We want our logo on your product plus a chunk of your profits. So. The best selling air purifier, in China the best selling battery, pack in China have. The Xiaomi logo and it's. Brilliant in that it keeps customers coming back to see what's new and they've. Pushed, the risk to, the startups, so, I talked to the guy leading the team of engineers not finance people deciding, where to invest and. I said why don't you make these gadgets. These, accessories. Yourself, he said well first, of all we'd become a bureaucracy we'd, have twice the headcount we'd never get decisions, made plus, we'd also rather, have these companies, survive on the streets every day by knowing what the customer wants today not.
Last Week we want to have an ecosystem where, we can feed off each other, so. We put him on the cover of Wired saying it's time to copy China and it's not just companies. That, can build an ecosystem. Estonia. Has rethought, what a nation-state, is in a, world where we're all online, connected. So. This is the. Capital of Estonia where, I went, to see this man Casper, gorgeous, who, was running a project called a residency. That allows anybody, who's, not physically, in estou, yeah to, go online you. Can do it now it's, been 20 minutes filling in a form I think it's a hundred euros and then a couple of weeks later you get your digital identity card and it. Allows you without. Going to Estonia to set up a business, in Estonia, to be a virtual, resident, of Estonia, and, that. Means you, are benefiting. The local economy and. You. Have. A stake in this. Little country of 1.3, million people that's never gonna be super, rich through its own natural, resources, and. I, was in, Dubai, yesterday. And I just saw they're copying this they've created the. Ability for people who don't live in the UAE to create what they call a virtual company, so, they've realized both of these countries that. The. Physical, constraints, of nation-states, are, less, relevant when we're, all living, a borderless, life through our networks. And if. You create an ecosystem where, you tap into the value Kasper talks. About wanting a, residency. To be like an app store he wants other governments, to sell services, to their residents. He even thinks it will be a subscription, service eventually. Which, means they won't have to charge income tax in Estonia, it's kind of a radical way to, think. So. Every, business clearly, needs, to work out, what. People need that, other companies. Aren't. Providing. But, it gets very interesting, when, you find real unmet. Needs I. Went. To Peru to, meet. This, gentleman Carlos, Rodriguez. Past daughter whose. Dad. Used, to run the Central Bank in Mexico, and then the military came in and they had to flee they. Went to the US they lost everything. There and, he came back in the 90s with his dad and they, bought a bank and that bank, became, a big conglomerate, called, inter court with, supermarkets. And pharmacies and. Hotels and now. It's four, percent of the GDP, of Peru eighty thousand people I think. Eight billion dollar turnover, but, he has a problem in that Peru. Is an MS I think. Of the last five presidents. All of them have either been jailed or waiting to go to jail or have taken their own life, there. Were decades, of terrorism. There, was hyperinflation, even, now if you go to Lima. Houses. And shops all have bars on the window and it's really kind of a threatening place, in parts of the city an, intercourse. Problem, was. They couldn't hire talent, because. The education, system was broken 15, education, ministers in 15 years and also. The. Lower middle class customers, were, not entering, that middle class so they would buy more of intercourse products, because they weren't getting educated. So. He thought this. Is a real need that the government is failing to meet we're gonna have to step in we're. Gonna have to create a school system. Now. Because they're a commercial, company, it. Has to be a for-profit school, system but, it's. Got to be suitable, for the, local, lower middle class so. They went to see the best educationist, in the world they went to Oxford, and Harvard and Berkeley they. Went to idea and they, decided. If you were starting from scratch now for, age three to eighteen, designing. Blended. Online plus offline courses, where.
You Could put the lessons in the cloud and rethink the role of the teacher what. Could it be. They've. Now got 55. Of. What they call in over schools, in Peru. Getting. Twice, the national attainment. Levels and they're. Exporting them to Panama and Mexico, and. After. Seeing. This work as they make a tiny margin it's about 120. $125, a month, they. Started a Technical University in, Peru they, don't have an MIT there and they're. Now thinking okay. What else is broken that the government's not fixing, healthcare, we've. Got 2,000 pharmacies, why not create a national, chain, of health clinics, in. The villages in the neighborhoods, where people don't. Have access and. So they're stepping in where governments failing but for-profit, and they've actually put on the homepage, the. Mission statement now, they have four inter core it's not about banks it's not about supermarkets, about making Peru the best place to raise. A family in Latin America and, it means they're attracting, talent from around the world who want to work there and the profits are, booming. Innovation. From. What I discovered. Tends. To happen when you get different types of people putting their heads together to solve a problem and I. Got. To spend some time where. Jack works in, X. Where. They've. Come up with some pretty interesting, businesses. You know the. Autonomous. Cars the, stratosphere. Level balloons, the. Delivery. Drones. Each of which is being. Spun off into a very big business and, the obsessions. They have in X, are. All about how you optimize. Talented. People with diverse ways of thinking and seeing, with. Diverse backgrounds to, come together to ignore. The rules to do bold things that could affect maybe. A billion people and I, talked. To Cathy Hannon who was working in marketing at, X but she was, a bit obsessed with sustainable, fuels and. She'd. Seen a paper written, by a professor at Xerox PARC that. Suggested, in theory, it, should be possible to take seawater. Extract. The carbon and hydrogen and, turn them into a, carbon, neutral fuel and, so, she went to the boss and said, I'd. Like to look into this and, X. Everything, is kind of metric, based, when you start, a project you get a little, bit of resources in, one person to work with you and as you make targets, you get more and you also have to come up with a kill criterion, something.
At Which, if you don't make this target, you will kill the project and the. Kill criterion, for this project, was if. You can make this. Fuel it has to be no more expensive, than the per gallon equivalent of, petrol. At the American petrol, station and. They. Spent two years on the project first. Of all they proved the science they hide the guy from Xerox PARC they, created, their little ethanol. Equivalent. It. Was $1,000 per, gallon equivalent that was too much they. Took it down to a hundred. 50, to $15. To maybe $10, and then, she goes to the bus after two years and says I think. We're gonna have to kill the project it's going to take longer and cost more to get to four, or five gallons four, or five dollars a gallon and, the. Boss was surprised but they all got a cash bonus because that's, the culture you want to create these incentives. And. Getting. Diverse people, not just the theoretical. Physicist, and the engineer, but, the origami, expert, together to solve these problems and. Also giving them what they call psychological safety, a culture where nobody's laughed at where you're. Given space to propose, something unreasonable. You. Know it's led to some things that initially. On a consumer, level didn't, necessarily, work. But, I, don't. Know what's this business going to be worth 100 billion. So. One of the things that startups, can do that big organizations. Tend not to be able to do is move quickly and change directions. What. If you are a three. Million person, bureaucracy. With, the biggest office building in the world and Isis. Who. You're up against, is a start-up, that can take a DJI, drone put a grenade on it send, it over, the line to kill your people and, yet the Pentagon when it does a procurement, process. It. Usually comes back really. Late hugely. Over-budget and not, really what the soldiers on the ground need and they, realized they had a problem and so. Three, years ago they. Hired a guy. From startups, Chris Lynch who. Curses. A lot he. Wears hoodies. That say things like hack the Pentagon he does not respect. Authority. And they, said to him bring. In some startup people. For. Short terms for six months for a year and come. And help us solve. These. Technical, challenges, that we're failing to solve and. The. Unit's called defense digital, service although they've created a kind of. Counterculture, where Star, Wars iconography, throughout the office, and, they call themselves the Rebel Alliance it even says that on their door and the first thing that the, team did, was. Propose of bounty competition, because, all the public facing defense stop golf type websites, were vulnerable to, beheading. Videos being uploaded and. They, were told it's illegal you can't do this. They. Found a legal way they, use lawyers which. They, kind. Of Sears bureaucracy, hackers and they. Did it and ten. Minutes into the first bug bounty competition, and they found relevant vulnerabilities. It became a huge, thing and now. It's mandatory across US government, to, have bug bounty competitions, then they went to the front line in the middle east to. Help solve the problem of the DJI drones being sent over with grenades and they hack together a radio signal jammer with some soldiers, and after. A few weeks they've managed to block those. Radio signals and gradually. They're. Earning the respect of, the military and. Eventually. They're put on stage with the Secretary, of Defense as the, little team of agile. Rebels who can solve the problems I'm. Thinking every big organization. Needs a team like this. Some. Organizations. Put. Aside quite. A large part of their budget to. Look for things that. They're not really looking for. R&D. Where there's no immediate. Expectation. Of financial, return. So. Autodesk. Became. A success, 30 years ago by. Coming up with a software that product, designers, architects, use. AutoCAD. But. That was at the beginning of the desktop, era. What. Happens when software. Is in the cloud what, happens when. AI. Determines. How people work so one of the things that Autodesk. Does. Is. Allow. People to. Play with, no necessary. Hope of creating, products they have a pier in San, Francisco, full of 3d.
Printers, And robots. And artists. On paid fellowships, and one. Of the goals of this pier is to, observe, how people are using design. Tools and maybe, we'll learn a bit that. We'll. Help us find products that we're not looking for. About. Three years ago they started playing. With. Something, they called generative, design, which, is if, the product designer has, put some constraints into, the software I want. To build an airplane, seat no. More than this wait no. More than this dimension, with these kinds of materials, the. Generative design. Will. Use AI to. Come up with thousands, of iterations. In real time to suggest things to the human designer, and it's, generative, because it's like nature it generates, alternatives. As conditions. Change. This. Wasn't designed to be turned, into a product they, bought a company actually, a London company called within that, allowed them to do this but, very quickly they realized this changes the whole nature of design and this, gives you an unfair advantage as, a designer and they've. Started shipping it in products. This, thing that they weren't looking for and now. I think it's likely to be a bit. Of a moat around, Autodesk. For the next few years. Couple. More quick, thoughts. Physical. Workplace, design, can. Contribute to. Fresh. Thinking that is innovation, so. Right next door to where we are now is the Crick Institute the biggest biomedical, research center in Europe if you haven't been there go for a tour, what's. Really interesting is they're trying to solve cancer in genomic illness by having no walls on the inside it's. Designed. With. Lots. Of collaboration, spaces the staircase, is extra wide and the, lift is hard to find because they want you to have conversations. On the staircase. If. We're, going to crack. Some, of these big illnesses, it's not going to be by the scientist. In the lab it's going to be the bioinformatics, specialists. Meeting then a genomics, expert, meeting. The organisation. Design and meeting the visualization, person they all come together and. Pull. Nurse. Who. Is. Leading, it at, the Crick, when. They, were applying for planning permission. He wanted a very big canteen, for everybody to come together and Camden council preferred. They didn't have a big canteen so people used the local restaurants, and a. Comparison. Was made. With. Crick, and Watson who. Used to gather at lunchtime in the Eagle pub in Cambridge, and over beer and sandwiches every, day colleagues. Would come and drop by and make suggestions on their research and. Pool. Nurse could say that if, you. Don't allow, us our canteen. You, know the Crick and Watson. Ability. To find that double helix may, be impeded, and may be or slow down the progress towards discovering. A way to treat cancer, or even prevent cancer so they got their canteen, in the end I, guess. It's why so many Bay. Area people go to. This temporary, city in the Nevada, desert called, Burning Man every year which is a way. Of bringing different. Types of thinking together creative, expression, is why co-working. Spaces, are. Growing, in demand. Because people don't want to be isolated. So. This one's pretty obvious, there. Are emerging, technologies, if, you, don't use them somebody, else will but it's interesting to see how. They. Can be used em so in the book I went to a field. In Napa Valley, where. There was a barn converted, barn, that's. Home to a bunch of michelin-starred, chefs and. They're. Paid for by. A company. In Hong Kong that. Makes sauce pants, so. Mayor is not, a well-known brand because. It's sauce pans are made. For department, stores secondary. Brands and it's one of the world's biggest producers, of pots and pans started. In the 60s by, Stanley. Cheng billionaire. From, knocking aluminium, around and then. Stanley's son Vincent who's, in his 30s says, dad you know the Internet's coming for the kitchen too this. Thing called connected, cooking. Is gonna. Use. The oven to download, recipes, what are we going to do. Stanley. Says I don't really understand all this I'll give you a bit of money to do an internal startup. They. Hired the mission chefs. Who. Cooked. And videoed. As they were cooking and put, their. Recipe, making, into an app that. Now connects, to a new kind of saucepan, that they've designed which has a. Very. Sensitive temperature. Sensor in the middle of the metal and it. Sits on top of a conductive, heater that is connected, via bluetooth to the app so. That when you're following the recipes on the iPad. It. Cooks exactly. To the right temperature for exactly the right number of seconds alongside you and the goal is it will become a subscription, service a, bit like Netflix, like a, music service you, will subscribe to 50.
New Recipes, every month and you'll, be as good as the Michelin star chefs and I said to Stanley. It's. Kind of bold, how. Do you know this is gonna work and he said well it's either going to be a, billion. Dollar business or zero, but. If we, don't do it our rivals, are looking, at this space so we'll be zero so, we have to use. It and. Finally. Even. When stuff goes wrong that's. An opportunity to innovate because it forces you to solve a real problem, so. I went to Mumbai to. See another extraordinary. Successful. Big. Industrial, manufacturing, company that makes, one. In five towels, and bedsheets sold, in the, West it's called well spun and it's. A family business. Three. Years ago on a, Friday evening in, August, target. The American retailer puts out a statement saying the high, quality luxury, 100%. Egyptian, cotton towels, we've, been selling from this Indian company called well spun we, checked in it's not Egyptian cotton it's. Cheap cotton, claiming. To be Egyptian cotton so. The share price of well spun collapses. The. Viability of the company is in question Walmart, Bed Bath and Beyond, they're all questioning, whether they deal with this company anymore. Well. Spun spend a weekend kind, of sweating, offering. To underwrite the cost as these companies give refunds, to the. But also thinking the only way we're going to survive this is by owning the, problem, accepting. That there's no transparency, in the supply chain for cotton it's like 17, stages, from the, field to. The final item and, let's. Come up with a tech solution, so they spent six months putting. RFID. Tags, in coffin cotton bales creating, a scanner network finding. A way to create, complete. Transparency and, in fact now on the final items. Many. Of the items have a QR code that the customer, can scan and see exactly where their. Cotton came. From and. They. Announced this just a year ago, and. Suddenly lots of big luxury, brands, call them up and say hey our, younger consumers, are demanding supply chain transparency, - can, we pay you to use your well. Track supply. Network, so. It's turning into what could potentially be, really. Quite a useful, future, facing business line. So. I will leave you um before. We talk. With Jack and take some questions. With. I guess the human bias that gets. In the way of looking. For stuff you're not looking for of trying. To find business models that don't exist. Because. We're all quite flawed. Irrational. People. Somebody. Posted on reddit a couple, of years ago a question. If somebody from the 1950s, suddenly came back what would be the hardest thing to explain to them about modern, life, my. Favorite answer was I have, a device in my pocket, capable, of accessing the entirety of information, known to men and I use it to look at pictures of cats and to get into arguments with strangers, so I, celebrate. Your irrationality. May, we innovate, collectively. Thank, you. Thank. You thank. You David that was a wonderful talk and, your. Ten points, I think are. Well-deserved. In terms of highlighting for this audience and for. Innovators. Both. True and vaporware, in the future I want.
To Jump in first to, the opah case. Study that you have in the book you mentioned it briefly in the talk but I think it deserves a. Deeper, dive and, there's. Really a lot to unpack there I, want. To first read a quote that you have from one of the heads of OPA and. He. Says we've chosen the other path we. Want to stay with the customer, they, don't need mortgages, they, need accommodation. They need housing they, don't want to borrow money to buy a car they need mobility. We. Sold health insurance, when people don't need health insurance they need health. So. I think, that's really telling in terms of their philosophy, of, how. To think, of themselves not just as a bank as, a financial institution but. An organization, that it's within scope. To. Offer hospitals. As you pointed out in your talk but. Then in the, book you go in to describe how they partner, with the mw2 then launch drive now which is a mobility, as a service offering. So maybe talk about that what allowed OPA to see. That as all within scope when all. The banks I know don't, see that within scope. First. Of all it. Started, with, a couple of bad years where, there's financial pressure. Then. It started with the enlightened, Board saying. We're going to give a couple of billion, euros, to invest, in real, transformation, and. Then. They started, creating. Semi. Independent, units, there, was a, design. Unit there. Was an AI, unit they. Hired a, woman. Who'd just done her PhD, on, mobility as a service and, they, said come. Work and rethink, mobility, with us and these, units, all. Based in head office had. Freedom. To, explore, through. The whole company, to, rethink, product, lines and then. They started, looking. At the startups so the bank is a, very, regular, presence at slush the big tech conference. In November. For. The Nordics and. They. Were listening to. People. To. Movements. That banks don't usually listen to and they were trying to absorb. These. Foreign languages, these. Foreign approaches, to what a bank product, is and. It. Came together I, think. Since I wrote, the book the guy who was leading the project has, left and I'm. Not sure if it's slowed, down so. It does need, a backer. Those. Guys in the Pentagon, that were causing, the fence among the military types had, what they called a letter of marque from, the Secretary, of Defense which. Was literally a letter if anybody. Was obstructing, them they could get the letter out and saying we've got backing, from the very top yeah. So. One. Of the things that OPA I think, understood, is that if, they jumped, over, the initial product, they have to the ultimate, goal of the consumer, they can get there they're also quite mindful I assume of Nokia a fellow Finnish company that did not fare as well do, you have a sense of where Nokia went wrong one. Of the things about Nokia. Is. When. It. Kind. Of almost died, it. Released enormous. Talent, highly educated talent, on the market and it, was one of the dominant employers. In that part of Finland, and. That's. Given a massive advantage to, unrelated, companies, like games companies, like. Banks, to tap that talent. Nokia's. Problem. Was. It was too, successful so. It started in the 1860s and, it was a leading. Rubber, manufacturer. So it made car tires it made Wellington boots it was a paper company. It, evolved. In the 20th, century the middle of the 20th century it made big household.
Products. Fridge. Type products, then it made smaller electronic. Products then it became a feature, phone maker and then became the world's best feature phone maker and was on the top of the world and. Started. Thinking nothing will ever change and, that's, where things, get a bit dangerous we've. Seen the same with. The blockbusters, and the codecs and. Comfort. Is the. Enemy, of business. Once you think you deserve that position, you're gonna get overtaken. So. Let's now jump from the late, stage mature companies, back, to the startups now. Venture. Capital, seed capital growth, capital all, this is going through major transformation. Now you, yourself have been a very active and are an active seed investor, now after, leaving wired, UK. But. What is the future right now a venture capital people keep predicting, the demise of, venture capital yet we keep seeing headlines of, andreessen. Horowitz just raised a billion dollars and this fund raised a billion dollars and so and so forth so is our, the super, angels taking the role of the early stage is. That supplanting. The role that the VCS, had are they moving upstream, now what, kind. Of trends you see there now in VC land there's, a really interesting debate at the moment about how we innovate. Liquidity. For, early-stage tech, companies, so, the. VC model, has, benefited. From, a lot of cash looking for a home, the. Financial, markets, have not been paying, returns a lot of family offices, are, suddenly excited, by tech they wanted part of this, Softbank. Has. Taken. A large amount of Saudi. Money to. Redistribute. To. Big. Ego Israeli, entrepreneurs. The. Incentive, system. The. Incentive, system the. VC is, increasingly. Misaligned. With. The needs. Of the talent so, typically. The. VC will charge quite, high management. Fees two or three percent to manage the money and then, quite. A lot of the, upside. And, you. Hold your money in a VC fund for maybe a decade maybe more you. Don't know at the beginning how. Good they are and the. Kauffman. Studies. Show. That most, VC underperforms. You'd be better off keeping the money under, your pillow there's only a few really. Effective, funds, that outperform, and those are usually because of just a handful of investments, they made yeah so if you were in those few investments, that, took off and. You were want some of those VCS, and you're an LP in that VC then, you're okay but, everyone else is, below par, and. When. You're a VC, you. Start raising your second, fund a year, or two after you launch your first fund before you've got any results anyway.
Smart. Entrepreneurs, I know are. Increasingly, wary, of taking, VC money because, they see a. Misalignment. Of incentives the. VC wants. Growth growth growth and, then an exit and sometimes. The entrepreneur, wants to build something which the market wants and maybe even makes unfashionable. Word profit, and. So they keep control. Of the direction a. Lot. Of London. Entrepreneurs. Who. I'm talking to are much, more invit much more interested, when, they can raise VC, in, having. What. They call value, add super. Angels people, who can help them with specific skill. Sets hiring, talent. Designing. Products that the market wants, growth, hacking these sorts of skills and. We. Made a mistake in media of celebrating, fundraising. It's. Like a pornography, of how much money these people have raised and. We're. Gonna see more and more, very. Highly. Funded, companies, collapse, because. That's. Not the goal the, goal is to build a sustainable business where. Your, income every month will be slightly, more than your outgoings, mmm, we, learn at the VC question question, of the. Inability of most species it seems to actually invest in deeper, technology, they seem to be completely. Obsessed with these shallow, ideas, that, they run with be at the fork possible. Idea or other, you, know less, than deep technologies. And so deeper. Ideas even. Deeper AI, often. Go unnoticed by, most VCS as a handful V sees that have taken the plunge invested. In Tesla invested, in SpaceX, invested, in kind, of a deeper, sense that is a 10, to 20 year time horizon and when. A cane crunch time when Tess was about to go under and you, looked at the likes of ira aaron price for example who was, an early investor in the company stuck, with the company doubled down with, elan at the, moment where they're about to go under, and then, said i'm not here for the short term I'm here for the long term why, is it so difficult for most both, VC's but also corporate, venture and corporate, internal.
Decision. Making to go for that deeper technology. Because. The. People in the corporate making. Those investment, decisions have, a career to, worry about and they want to show they're, having results they want exits, as, their. Metric, and. Deep. Tech is. Quite. Long-term, so, I demis. Hassabis, and the team. Not. Long after they'd become part, of, alphabet. And you. Know when he was talking about building, the artificial, general intelligence that. Was not going to come in ten years if. Technically. It was feasible this, was going to be a multi decade project. And. You. Know talking to Dennis one of the reasons he. Became part of this organization, was. He. Didn't want to be scrambling to raise funds for his amazing research, lab for decades, because. Product, market fit comes. After, designing. The. Product that, has, been impossible until, now, cool. Let's, talk about universities. University traditionally, were supposed to be the cauldrons. Of innovation, and tremendous, things coming out of that and many things have obviously come out of the university setting, but, what, is your current assessment of the ability for the university, to translate, those, innovations to the market. Again. There's. A. Series. Of poor. Financial, incentives, for universities, they many, of them are. Optimizing. For attracting. Students. Who will pay fees, and, if. You're a parent, are. You going to encourage your child to study. A course where, there's an obvious, consultancy. Goldman sachs type output, at the end or. Deep. Tech which, may, not have, you. Know. Success. But also the revenue to invest further. China. Is fascinating, at the moment because in china, decision. Making is centralized, and the, state has, decided china, is going to be the world's leading AI power, within, a decade or so and, so, they are not just, pushing. Investment, into a select, group of companies, where there isn't going to be competition diluting, the impact they're, also. Keeping. The universities. Focused. On the emerging. Skill, set so that the engineers, coming out of the universities, in two, three years or what. The market, is forecast to, need i. Spend. Quite a lot of time going to technical, universities. Like, ETH, in Zurich. Where. They're. Much more geared to. Creating. Applied. Use, of the, hardcore tech. And I, think you're, gonna get more startup. Clusters, around those technical, universities, you know the Technion in, Israel. Imperial. In. London. If. I was. In. Government. Trying. To protect my economy, for the next couple. Of decades I. Would. Invest. Heavily, but, also. Create. Collaborations. Between those, technical. Universities, and the, emerging businesses, so, the skill set was, being prepared just to build on that universities, themselves are, being out innovated, in many cases, by for example these boot camps these coding boot camps yeah where the universities, were not quick, enough on the uptake to realize that they needed to offer skills. In Python Python based, ml the kind of skill that we in this company are looking for and. Google. Apple, many others have announced publicly we're. No longer looking at specific. Pedigrees, in the CV specific. Imprimatur, z-- of certain brands we're looking for skillsets, portfolios. Github. Repos things, like that enter. General Assembly enter, Flatiron. School enter, these various, boot. Camps that said you know what we're gonna fulfill that particular, need universities, are too slow so kind, of put that in context, of what you see as the innovators. Game. And challenge for the universities. The. Beautiful thing about education is, it's, no longer, centralized. Under. The umbrella of the state you, have entrepreneurs. Zbl. In France, who, were self funding a coding, school that, has become a franchise model and the, last time I looked I think there were twenty versions, of echo, calendar. In Fremont. In Amsterdam. And, these. Are merit based online application. They, don't care who. Your family was which part of Paris. If you're in the bond Lea, where. There, are barriers to entry to the traditional schools if you have a skill, the online test will, validate you then you're called in to, do a week, maybe longer testing, and then they give free, courses. To. Those typically. A hundred at a time and. It's peer. Learning there's no teachers, it's online learning, and they've gamified, it so if I mark your work I will get points that I can use against. My. Marks and. What. I think is exciting at the moment is. Those. Experiments. Are proving, valuable, big.
Businesses, In France, are hiring, those. Graduates. There's. A london-based. Team, I'm personally, involved with called faculty that. Runs a fellowship, for data. Science. Post grads it, trains, them in, some. Market skills and it makes them available to. Companies as kind. Of three-month. Project people. Many of them get hired by those companies. Like. A a massively, high proportion, of all data science, students are applying for that because, they can go from the academic, way of thinking to the market way of thinking and of course the clients at the end the. Big, supermarkets. The big banks, have access, to real talent, and talent. Is the. Scarce commodity, yeah, but it's cool 42 I think merits even further study maybe a further book on your part one. Is in statistic I was just there last week visiting, with the team there 40%, of the, students at school 42 do. Not have no will ever have a secondary, high school degree and so. It's. Really fascinating taking, individuals. Who quote. Are not part of the system and bringing, them in in a very excited, way so with, that let me open it up for questions, to the audience sitting I, was curious if, what. Your take is on, innovation. In kind, of the, climate. Change space I've seen, this not, very well, represented in, in, your, samples. And I wonder if you think that like. There is hope or like. That we move away from this consumerism, and like, tackle, that properly do, you see. Icing. Happening there I, looked. At what some of the big energy companies, are doing and. At. The time I was researching I thought quite a lot of it was the side of, innovation, they weren't serious. About. Investing real. Amounts of money and changing how their companies, are, thinking what's, happening, now is really getting, quite interesting, so climate. Tech is becoming. A, an. Investment. Goal, for, a lot of investors, now in itself, because. You. Get purpose-driven, entrepreneurs. Who have come from, building, businesses. In other sectors, who, see, it as a, mission. And, they. Are bringing together the, hybrid, skill set the people from. The, technical universities, with. The. Regulators, and with the NGOs, and. I'm starting, to get quite excited about where this is going to take. The real world, and. If. I was launching a fund at the moment, I would, think very carefully about whether you, can create both impact. And financial. Value from, investing. In new. Kinds of, biofuels. In. Variations. Of what is generically, called geoengineering, in. Ways to create. Alternatives. To. Plastics. Because. Each of these is a huge market opportunity, and. Government. Regulators, tend. To come in quite, late and quite heavily and I, think you have to be. Prepared for those sorts of behavior changes if you think about. The. Way plastic, bags became. Something. That you don't, use if you think about the way a, 16. Year old, Swedish. Girl called Greta has. Helped. Popularize, a new word which. Means flight, shaming, and I'm. Not gonna tell you now how many flights I've taken this month whereas, you know last year it would have been a badge of look at me I've been on so many flights and. These attitudes. Lead. To. Market. Impact you, are going to get, increasing. Government. Sanctioned. Taxes, on. That. Sort of behavior on flying the frequent, flyer programs, will be made illegal. So. If you can get entrepreneurs, with, the technical, background, who. Are. Devising. Solutions. Even. Before the market is ready this is a really interesting time David let, me ask you a final question many. Of the people watching this video will, be not necessarily CEOs, of companies not, necessarily on the boards of companies but in, or leading teams, of 10 to 50 people in.
Tech Companies and other kinds of companies what. Do you have. For those individuals. As they want to think about the kind of innovations, you talked about in the book and the kind of strategies, specifically, you talked about in the book they're not at the board level they're not at the CEO level they can't say the whole company is moving in this direction so, what, is your message for those folks, so. Astro, teller who. Runs X. Was. Talking to me about this and I quote him in the, book and. Essentially. He says if you feel constrained, because your leadership, is not supporting, you make the transformation, that the business needs why. Are you still there, why. Aren't you getting, together with other people you see where the future lies and, building. The business for, that future well. On that note let's. Thank David Rowan for coming and please check out my important. Information thank you David. You.