Silicon Valley in 2015 and onwards: A new technology decade on its way

I have been working with Silicon Valley for the past 20 years off and on.  I have been living here for the past year, running a research and innovation center.

For the first decade of this millennia, I noticed a trend which was well articulated by Dr. Gordon Moore that "… corporate R&D is moving away from the kind of fundamental research that wins Nobel Prizes and toward a narrow focus on business goals."  See my blog on the topic here.

I start this year with the hope and I see it as well in the past couple of years that things are making a shift in Silicon Valley from Dr. Moore's concern.  In The World in 2015 from the Economist, my favorite columnist Mr. Adrian Wooldridge, writes:

"In 2015 the buzz (and the money that goes with it) will shift from social media to intelligent devices. … The most successful companies will focus on connecting the virtual and physical worlds. … The year’s buzzword will be “wearables”: for example, medical gadgets that keep a constant watch on your blood pressure, glucose level and food intake, and tell you if trouble is on the way."

Remembering the days of craze about social media in the first half of 2000s, and software doing more than automation in the 1990s, and personal computer like devices in the 1980s, the craze already has established the buzz word IOT (Internet of Things).  Makes me smile as I have never heard such an amorphous term in technology before, perhaps IOT will trump the word innovation in the coming years!  I digress.

What is absolutely thrilling and exciting for me is:

"The rise of intelligent devices will allow the Valley to rediscover its roots as an engineering centre. This Valley was briefly sidelined by the social-networking revolution. But engineers are returning to reclaim their own. Tesla is making cars in Palo Alto. BMW, Mercedes, Samsung, Nissan and General Electric have all established research and design laboratories. Medical-device companies are flocking in."

The types of business that are emerging interestingly all have one specific aspect in common, or essential to their success, data and its analysis for value extraction.  A different technology decade is beginning in the valley.

"Intelligent devices will provide the Valley with a new-found seriousness. Social-media companies essentially dealt with virtual candy-floss: nice to have but, for the most part, hardly essential. The new generation of entrepreneurs will deal in devices that can save lives. Truly, all that is airy will become solid."

Read the complete article here.

Forecast for Energy in 2015

Reproducing the Energy outlook from The World in 2015 by the Economist below.  This will be one I will follow closely to see if reality will match the Economist's predictions.

Interesting to note below is how China continues to focus on nuclear.

"As the global economy ticks up in 2015, overall energy consumption will climb by about 3%, outpacing crude-oil demand, which will creep up by 2%, to 94m barrels a day. After years of splurging, most Western super-majors are aiming for better returns on smaller investments—though Chevron will outspend its far bigger rival, Exxon Mobil, investing $40bn. Big Oil’s success will depend partly on riding the boom in oil caught in American shale rock. Thanks to that, global supplies look very comfortable and the average annual oil price will fall, geopolitical ructions notwithstanding.

A parallel shale-gas “revolution” will spawn a batch of American plants for exporting liquefied natural gas (LNG): the first, Sabine Pass in Louisiana, should start up in 2015. Import terminals in Poland and Lithuania will also begin operations as eastern Europe seeks to slip the yoke of Russian supply.

Strong Asian demand, above all, will help gas producers, as dirty coal loses share to somewhat cleaner gas. China’s attempts to tap its own, vast shale-gas reserves will be hampered by geological barriers and technological shortcomings; the country will speed up in pursuit of a 2015 production target of 6.5bn cubic metres—though to just a fraction of American levels. Given its energy-supply shortfall, Chinese reactor-building will proceed: its first “third generation” AP1000 nuclear plant could clear safety checks by late 2015. Controversially, Japan’s own reactors are also set to start returning to life.

To watch: Sea change. Shipping hasn’t attracted nearly the attention motor vehicles have from proponents of pollution abatement. No longer. From January 1st 2015, sulphur standards affecting ships along European and North American coastlines will tighten considerably. Maritime companies will demand less high-sulphur fuel oil and more gas oil. Eventually, vessels burning LNG could become popular."

Romanticising entrepreneurs?

The Economist's Schumpeter states:

"… the reality [for an entrepreneur] can be as romantic as chewing glass."

Schumpeter's article referenced here highlights the simple fact that a true entrepreneur, the absolute risk taker with his or her time and money, is not understood and misunderstood by almost all of those who are not.

"Over half of American startups are gone within five years. Most of the survivors barely stumble along. Shikhar Ghosh of Harvard Business School (HBS) found that three-quarters of startups backed by venture capital—the crème de la crème—failed to return the capital invested in them, let alone generate a positive return. In 2000 Barton Hamilton of Washington University in St Louis compared the income distributions of American employees and entrepreneurs, and concluded that the latter earned 35% less over a ten-year period than those in paid jobs."

I lived in North Carolina for five years, and had the opportunity to be the president of The Indus Entrepreneurs - Carolinas chapter.  One of its founders was Mr. Vivek Wadhwa:

"Vivek Wadhwa, an entrepreneur turned academic, had a heart attack when he had just turned 45, after taking one company public and reviving another."

I as an entrepreneur am biased towards experiential learnings rather than acamedia teaching one to be an entrepreneur.  Though now having gone through 2002 and 2008 economic melt downs as an entrepreneur and recovered successfully, I simply choose to walk away from the pundits and so called experts on entrepreneurism.

You are born an entrepreneur or not.  See further proof in my blog "Its in the genes" here.

Read the complete article here.

Mobile money - a developing countries' business model

From The Economist:

"Kenya leads the world in mobile money, with more active accounts than adults in its population. The total value of transactions made by mobile phone in 2013 was around $24 billion, more than half the country’s GDP. The leading mobile payment system in Kenya, M-PESA, was launched in 2007. A year later it expanded to Tanzania. While uptake there has not been as strong, the total transaction value is close to that of Kenya. As mobile phones have become more widely available, mobile payment transfers have helped reach the “unbanked”. In at least eight countries, including Congo and Zimbabwe, more people have registered mobile-money accounts than traditional bank accounts."

Worth revisiting: Jobs for new grads in oil and gas

I have received numerous calls and requests for employment in the past two months from new college engineering graduates and recent hires in oil and gas who have been laid off.

Its worth revisiting that things have not improved and continue to get worse in the jobs for new graduates of engineering disciplines focused on oil and gas.  The article "Is There Money to Be Made in Oil? New Grads Don't Think So" in Bloomberg here from January of 2015 still holds true as  towards the end of this year 2016 more layoffs are coming from the oil companies and oil and gas service providers.

Unfortunately, college graduates who are not able to pivot into sector independency and learn to learn the reapplication of their education and capabilities, will find it a hard life from now on.  The education that will remain premium and become more so as this century progresses will be in mathematics and computer science.

The impact of oil price drop in regions heavy on energy commodities based economies like Alberta is severe:

"Colleen Bangs, manager of career services at the University of Calgary, says only about a third of the 659 engineering students at the school have found placements for their year-long internships as companies cut back on campus recruitment.

"Something I've noticed, particularly in this last semester, is that there's a bit of an impending feeling of doom,'' said Bangs."

Read the article "Engineering Graduates Wait Up To 1 Year To Find Work" from April 2016 in The Huffington Post here.

I graduated as a Nuclear Engineer from Georgia Tech.  It is an industry that is perhaps the most heavily regulated amongst its peers.  I interned in the sector for a quarter and never reentered it.  I have looked at coming trends and redesigned my future and successfully delivered on it a few times.  My advice to those who have not been able to find jobs is to remember that fulfilling work is better than no work and work you love is even better.  Yet, to be the best of the best in a continuously changing world requires a tenacity and will to succeed that the college graduates have not had to deal with before.  It is due to the global talent availability and technologies march to commoditize what most colleges teach today.

The graduates can blame the colleges or the economy or etc. yet it is dependent on them to cause the change in their lives.  Action yields results not reactions in this case.

It's in the genes

In 2000, I took various rather intensive profiling tests to better understand myself.  Being a nuclear engineer, I wanted to understand Sammy a bit more "nuclearly"!

One of the tests was done with Johnson O'Conner Research Foundation.  The outcome for me was that people are not good or bad at things, they are simply born with particular genetic makeup, elevating or demoting the ability to excel at specific activities.

When I read Malcolm Gladwell's "Outliers", I found the fallacy in analytics of causation is correlation repeatedly showcased in the book, though an enjoyable read none the less.

Recent research "Practice Does Not Make Perfect: No Causal Effect of Music Practice on Music Ability" by Dr. Miriam Mosing of Karolinska Institute in Sweden, and Dr. Guy Madison of Umeå University published in Psychological Science provides a bit of demystification of the adage that significant practice always leads to success in a particular activity.  The abstract states:

"The relative importance of nature and nurture for various forms of expertise has been intensely debated. Music proficiency is viewed as a general model for expertise, and associations between deliberate practice and music proficiency have been interpreted as supporting the prevailing idea that long-term deliberate practice inevitably results in increased music ability. Here, we examined the associations (rs = .18-.36) between music practice and music ability (rhythm, melody, and pitch discrimination) in 10,500 Swedish twins. We found that music practice was substantially heritable (40%-70%). Associations between music practice and music ability were predominantly genetic, and, contrary to the causal hypothesis, nonshared environmental influences did not contribute. There was no difference in ability within monozygotic twin pairs differing in their amount of practice, so that when genetic predisposition was controlled for, more practice was no longer associated with better music skills. These findings suggest that music practice may not causally influence music ability and that genetic variation among individuals affects both ability and inclination to practice."

The paper can be read at Research Gate.  For those without access to Research Gate can have a look at the Economist, which covered the paper and states:

"That is not to say practice has no value. Playing an instrument and singing are physical skills, and do take a long time to master. But, though the experiment could not measure this directly, it is a fair bet that only those with high musical ability in the first place can ever hope to master these skills—and Dr. Mosing has shown that musical ability has a big genetic component."

Read the complete article here.

This does not only hold true for music, I believe it is true for various human activities that leverage our senses to using our brains for mathematics and physics.

At a Global 100 company, I tried to institute a small amount of testing to help allocate individuals to the work they excelled at naturally. This would alleviate poor performance, create a happier work force, and productivity would see unimaginable gains. Let's just say, we are far away from the day when 100% of our work force is doing what they are good at.  Question is, are there people who do not excel at anything?  And if so, what would one do if such discoveries were made?

Mobility driven consumer banking disruption

Necessity is the mother of invention!  Perhaps such "necessity" is more obvious in Kenya?  Following is old news but worth revisiting to remember that emergent consumer focused trends and capturing their value is more and more an emerging markets forte.

"SWAHILI continues to creep into the language of global finance. M-PESA, a thriving money-transfer system run by Safaricom, a Kenyan mobile-phone operator, and named after the word for “cash”, has already entered the lexicon. Having persuaded millions of Kenyans to send cash through an SMS network, … . 

Safaricom has nearly as many subscribers as Kenya has adults—19m people from a population of 43m. Almost 15m of them use M-PESA for everything from paying electricity bills to school fees, thanks to a simple text-based menu that is accessible on even the most basic mobile phone. The firm, which is 40%-owned by Vodafone, makes its money through transaction fees when customers withdraw or transfer cash at a network of more than 40,000 M-PESA agents throughout the country."

Read the complete article at the Economist here.

Real estate: Conundrum of property rights and economic growth

I have recently been working on understanding real estate investments, mostly commercial.  It is rather fascinating that I only come to one conclusion; real estate investments over a period of time, in a particular growing region will form a bubble, collapse, and start again.  And that the minority incumbents in a free market system do not come out as winners either.

To validate some of my learning, here is a good analysis on real estate from the Economist:

"There is a strong correlation between economic growth and secure property rights for foreign and elite investors. But when Ms Lawson-Remer looked for a relationship between property security for minority groups and economic growth, she could find none. Nor was there any correlation between property security and a country’s ranking on the UN Development Programme’s Human Development Index. Securing the property rights of minorities seems to have no clear consequences for economic growth."

Read the complete article here.

Reality of energy - now that we have some experience

I am educated as a Nuclear Engineer who barely worked in the industry.  Like many, I left the nuclear industry twenty two years ago.

It was clear back then that the focus on nuclear in the US was non-existent, new plant costs were skyrocketing, with regulatory burden on maintaining and restarting existing ones, becoming cost prohibitive.  There has not been much future in nuclear industry in the US.  Even Mr. Bill Gates is developing the next generation nuclear options with Korea, versus in the US for the above reasons.  Even Georgia Institute of Technology closed its Nuclear Engineering program back in early 1990s, I think I may have been the last graduate!

Here is an article that takes the numbers on various alternate and existing energy sources, and showcases the work of Dr. Paul Joskow of Massachusetts Institute of Technology, and Dr. Charles Frank of Brookings Institute.  The conclusions are interesting.

"If all the costs and benefits are totted up using Mr Frank’s calculation, solar power is by far the most expensive way of reducing carbon emissions. It costs $189,000 to replace 1MW per year of power from coal. Wind is the next most expensive. Hydropower provides a modest net benefit. But the most cost-effective zero-emission technology is nuclear power. The pattern is similar if 1MW of gas-fired capacity is displaced instead of coal. And all this assumes a carbon price of $50 a tonne. Using actual carbon prices (below $10 in Europe) makes solar and wind look even worse. The carbon price would have to rise to $185 a tonne before solar power shows a net benefit."

Read the complete article here.

I would be remiss in not mentioning a few rebuttals.  Unfortunately, I have not found convincing numbers from any that covers multitude of energy sources, hence, not linking them.

Yet one thing has remained constant in all the rebuttals, they have missed the point; that Schumpeter's Creatively Destroying technologies require value realization in a breakthrough fashion; that the investments in alternate energies must continue for them to be viable one day; and that declaring one way over another as the perfect way has always been a fallacy and detrimental to innovation.

TIECON - Energy: Oil & Gas - Entrepreneurial Opportunity Panel

As the Executive Director of Baker Hughes's Palo Alto Innovation Center, I chaired and my company sponsored the first ever Energy: Oil and Gas conference track at TIECON 2014, see here.

A panel discussion on entrepreneurial opportunities in oil and gas sector with Dr. Mario Ruscev, CTO - Baker Hughes; Mr Jim Sledzik, Partner and President, Energy Ventures; and Mr. Art Schroeder, CEO, Energy Valley, Inc. Enjoy!

TIECON - Energy: Oil & Gas - Ram Shenoy

As the Executive Director of Baker Hughes's Palo Alto Innovation Center, I chaired and my company sponsored the first ever Energy: Oil & Gas conference track at TIECON 2014, see here.

Dr. Ram Shenoy, CTO - ConocoPhillips keynote below is a history of the significantly positive impact oil and gas sector has had on the world, and how it is continuing to do so.  Enjoy!

Amazon

Amazon - the name does imply immensity and ability to consume all…!

Hachette, a privately held and significant book publisher, is negotiating pricing terms with Amazon on e-books.

"“In a sense, Michael Pietsch is like ‘Horatius at the Bridge,’ ” says the literary agent and former Amazon executive Laurence J. Kirshbaum, referring to the soldier of legend who single-handedly saved ancient Rome by fighting off an invading army. “He is carrying the rest of the industry on his back.”"

Amazon has been one exceptional example of Schumpeter's Creative Destruction, in the past two decades, let's see what else is in store for the retail world in general.

Read details at NY Times here.