Welcoming In 2014
What does the future look like – Welcoming in 2014
People often ask me how we can be so positive about the future when the headlines are full of depressing news.
You only have to look at the front page of the Bloomberg News website on any given day to get a good dose of depression. More often than not the top story involves the latest mess involving central banks or governments. Most of the time it’s a story about how they’re trying to head off the next disaster.
What a sad state of affairs. And yet if you strip away the gloomy headlines and look at what’s really going on in the world, you’ll find that today is perhaps the most exciting and potentially rewarding period in the history of the Earth.
You’ve probably heard of compounding returns in the context of investing.
If you put money in the bank it will earn interest. When the bank credits that interest to your account it also begins to earn interest. When the bank credits that interest to your account, that interest earns interest too. And so on.
That’s compounding your investment returns. Your initial investment helps you earn a return. That return then ‘works’ with your initial investment to produce an even bigger return.
What you may not realises is that you can apply the same compounding principle to technology.
Progress Hundreds of Thousands of Years in the Making
Compound interest is one of the investing world’s under-appreciated investment tricks. It’s investing for the super-patient. It’s not a get-rich-quick scheme. The fact is that making money from compound interest takes time…a long time.
It can take 20 or 30 years before the earned interest reaches a level that makes the returns truly spectacular.
But if that seems like a long time, it’s nothing compared to the time taken to reap the rewards from technological compounding. We’re not talking about two or three decades. We’re talking hundreds of thousands of years.
Through most of history technology didn’t change. And when it did change the improvement from one technology to the next was hardly noticeable.
That was fine for the people living through those times. They didn’t expect things to change. So they weren’t disappointed when things didn’t change for the better. The way of doing things was the same throughout their entire life. It had been the same throughout their parents’ entire lives too, and their grandparents’.
Any yet, that’s not to say that things weren’t changing. It’s just that the changes were so small that those at the time couldn’t see the change happening.
That’s the way things went for tens and hundreds of thousands of years. That was until big changes started to happen around the time of the Industrial Revolution.
Change and advances in technology became more noticeable. But still, these changes were tiny compared to the advances in technology we’ve seen in recent years. And if the trend continues, the advances will only become more spectacular.
That’s where we’ll show you pictorial proof of how the advance of technology is happening at a rate that surpasses all innovations in the history of mankind.
The Trigger Point for Technological Advance
The chart below shows how technology has taken off over the past century. The chart only goes back to 1400. But in reality you could extend that almost flat line to the left and keep going until it went back to the dawn of humanity.
Click to enlarge
As we mentioned above, things really began to change after the Industrial Revolution. That was when technological advances really began to ‘compound’. It was the trigger point, the ‘bend in the knee’ as the world began an exponential rise in technological advancement unseen in history.
The compounding of technology occurred as ‘new’ technology could help develop an even ‘newer’ and more sophisticated technology. From here the advance of technology would continue at an ever increasing rate of knots.
A Limitless Opportunity in Technology
Now, a mathematician or physicist may look at that chart and point out that an exponential gain can’t go on forever. They’ll say that in a world of finite resources there is a limit to how much anyone can produce of anything.
They’ll use the example of the rice and the chessboard. If you start by putting one grain of rice on the first square of a chessboard and then double the amount on each subsequent square (eg. 1, 2, 4, 8, 16, etc…) the total amount of rice on the chessboard would rise to the height of Mt Everest and equal more than 1,000 times the world’s annual rice production! (Do the maths if you don’t believe us.)
That’s exponential growth. You don’t notice the change early on, and it seems incomprehensible that the number could grow so big. But it does. And the same thing is playing out in technology.
Of course, we’re not about to fly in the face of maths. But what if there was a circumstance where the resource was infinite? What if there was no limitation to what technology and humanity could achieve?
This is something technology analyst Sam Volkering and your editor have followed in Revolutionary Tech Investor, the premium technology investing advisory service.
We call it the ‘Sixth Revolution’ where future advancement in technology (where the exponential growth rate really takes off) happens at the molecular level. Part of this shift involves the development of ‘immersive’ technology.
We won’t go into the details here as it’s a subject we’re still exploring for Revolutionary Tech Investor subscribers. But we will say that the potential growth in this sector and in technology are limitless.
Of course finding and recognising this change is one thing. Getting into a position to profit from it financially is another. That’s exactly what we’re doing now as we take investing down to the molecular level and look for the potentially infinite opportunities.
The Revolution That Sets Wealth Free
Chris Anderson, Contributing Editor, Money Morning
The great inventors/businessmen of the First Industrial Revolution, such as James Watt and Matthew Boulton of steam-engine fame, were not just smart but privileged. Most were either born into the ruling class or lucky enough to be apprenticed to one of the elite. For most of history since then, entrepreneurship has meant either setting up a corner grocery shop or some other sort of modest local business or, more rarely, a total pie-in-the-sky crapshoot around an idea that is more likely to bring ruination than riches.
Today we are spoiled by the easy pickings of the Web. Any kid with an idea and a laptop can create the seeds of a world-changing company – just look at Mark Zuckerburg and Facebook or any one of thousands of other Web start ups hoping to follow his path. Sure, they may fail, but the cost is measured in overdue credit-card payments, not lifelong disgrace and a pauper’s prison.
The beauty of the Web is that it democratised the tools both of invention and of production. Anyone with an idea for a service can turn it into a product with some software cost (these days it hardly even requires much programming skill, and what you need you can learn online)–no patent required. Then, with a keystroke, you can ‘ship it’ to a global market of billions of people.
Maybe lots of people will notice and like it, or maybe they won’t. Maybe there will be a business model attached, or maybe there won’t. Maybe riches lie at the end of this rainbow, or maybe they don’t. But the point is that the path from ‘inventor’ to ‘entrepreneur’ is so foreshortened it hardly exists at all anymore.
Indeed, startup factories such as Y Combinator now coin entrepreneurs first and ideas later. Their ‘startup schools’ admit smart young people on the basis of little more than a PowerPoint presentation. Once admitted, the would-be entrepreneurs are given spending money, whiteboards and desk space and told to dream up something worth funding in three weeks.
Most do, which says as much about the Web’s ankle-high barriers to entry as it does about the genius of the participants. Over the past six years, Y Combinator has funded three hundred such companies with such names as Loopt, Wufoo, Xobni, Heroku, Heyzap, and Bump. Incredibly, some of the (such as DropBox and Airbnb) are now worth billions of dollars. Indeed, the company I work for, Conde Nast, even bought one of them, Reddit, which now gets more than two billion page views a month. It’s on its third team of twenty something genius managers; for some of them, this is their first job and they’ve never known anything but stratospheric professional success.
But that is the world of bits, those elemental units of the digital world. The Web Age has liberated bits; they are cheaply created and travel cheaply, too. This is fantastic; the weightless economics of bits has reshaped everything from culture to economics. It is perhaps the defining characteristic of the twenty-first century (I’ve written a couple of books on that, too). Bits have changed the world.
We, however, live mostly in the world of atoms, also known as the Real World of Places and Stuff. Huge as information industries have become, they’re still a sideshow in the world economy. To put a ballpark figure on it, the digital economy, broadly defined, represents $20 trillion of revenues, according to Citibank and Oxford Economics. The economy beyond the Web, by the same estimate, is about $130 trillion. In short, the world of atoms is at least five times larger than the world of bits.
We’ve seen what the Web’s model of democratised innovation has done to spur entrepreneurship and economic growth. Just imagine what a similar model could do in the larger economy of Real Stuff. More to the point, there’s no need to imagine – it’s already starting to happen. That’s what this book is about. There are thousands of entrepreneurs emerging from the maker Movement who are industrializing the do-it-yourself (DIY) spirit…
We are all Makers. We are born Makers (just watch a child’s fascination with drawing, blocks, Lego, or crafts), and many of us train that love in our hobbies and passions. It’s not just about workshops, garages, and man caves. If you love to cook, you’re a kitchen Maker and your stove is your workbench (homemade food is best, right?). If you love to plant, you’re a garden Maker. Knitting and sewing, scrapbooking, beading, and cross-stitching; all Making.
These projects represent the ideas, dreams, and passions of millions of people. Most never leave the home, and that’s probably no bad thing. But one of the most profound shifts of the Web Age is that there is a new default of sharing online. If you do something, video it. If you video something, post it. If you post something, promote it to your friends. Projects shared online become inspiration for others and opportunities for collaboration. Individual Makers, globally connected this way, become a movement. Millions of DIYers, once working alone, suddenly start working together.
Thus ideas, shared, turn into bigger ideas. Projects, shared, become group projects and more ambitious than any one person would attempt alone. And those projects can become the seeds of products, movements, even industries. The simple act of ‘making in public’ can become the engine of innovation, even if that was not the intent. It is simply what ideas do: spread when shared.
We’ve seen this play out on the Web many times. The first generation of Silicon Valley giants got their start in a garage, but they took decades to get big. Now companies start in dorm rooms and get big before their founders can graduate. You know why. Computers amplify human potential: they not only give people the power to create but can also spread their ideas quickly, creating communities, markets, even movements.
Now the same is happening with physical stuff. Despite our fascination with screens, we still live in the real world. It’s the food we eat, our homes, the clothes we wear, and the cars we drive. Our cities and gardens; our offices and our backyards. That’s all atoms, not bits.
This construction-‘atoms’ versus ‘bits’-originated with the work of a number of thinkers from the MIT Media Lab, starting with its founder, Nicholas Negroponte, and today most prominently exemplified by Neal Gershenfeld and the MIT Center for Bits and Atoms. It is shorthand for the distinction between software and hardware, or information technology and Everything Else. Today the two are increasingly blurring as more everyday objects contain electronics and are connected to other objects, the so-called Internet of Things.
The idea of a ‘factory’ is, in a word, changing. Just as the web democratized innovation in bits, a new class of ‘rapid prototyping’ technologies, from 3-D printers to laser cutters, is democratizing innovation in atoms. You think the last two decades were amazing? Just wait.