Category: Innovation

0

Will The Disruptors Be the New Dominants?: On Uber, AirBnB, and other seeming upstarts

Loving your online, decentralized model may not work when you care about safe drivers, clean rooms, and other real-world issues. Claire Cain Miller brings up this problem in today’s New York Times. She points out that AirBnB and Uber are trying to follow “a religion [from] Silicon Valley: Serve as a middleman, employ as few people as possible and automate everything. Those tenets have worked wonders on the web at companies like Google and Twitter. But as the new, on-demand companies are learning, they are not necessarily compatible with the real world.” I agree. In The New Steam: On Digitization, Decentralization, and Disruption, I point out that “transactions costs related to safety, quality, property rights, contracting, and knowledge may be more acute in a digitized, decentralized world.” Ms. Cain Miller (apologies if Miller is the preferred last name), hits on some great points about the differences between the types of harms in the online and offline world. As she looks at it, the lack of humans is a problem for the reality of the services and relates to politics: “The belief that problems can be solved without involving people is probably why many of these companies did not meet with regulators and officials before starting services in new cities.” I think there is something more going on here.

Yes, the big firms in the space will engage in lobbying, but part of their story (and practice) will have to be about how they meet the issues of labor, safety, and more that they affect. As I put it:

[E]ven with digitization, economic questions will remain, but we must understand what they are and why they persist to see what the future may be. Douglass North captures a paradox that goes with transaction costs. Greater specialization, division of labor, and a large market increase transaction costs, because the shift to impersonal transactions demands higher costs to: 1)measure the valuable dimensions of a good or service; 2) protect individual property rights; 3)enforce agreements; and 4)integrate the dispersed knowledge of society.26 Standardized weights and measures, effective laws and enforcement, and institutions and organizations that integrate knowledge emerge, but the “dramatic increase in the overall costs of transacting” is “more than offset by dramatic decreases in production costs.” Digitization forces us to revisit these issues. With digitization, we are seeing an abundance of person-to-person transactions, but with the problems of impersonal transactions.

In simplest terms, AirBnB , Uber, et al. may face some rocky times, but there is a good chance they will figure out how to address the current issues and end up being the dominant firm, not the small disruptor. As Ms. Cain Miller notes, AirBnB has added hotlines and insurance. Uber has also increased its insurance requirements. If the disruptors continue to address a decent amount of the issues North calls out, my bet is that “this era of disruption and decentralization will likely pass and new winners, who will look much like firms of old, will emerge, if they have not already.”

0

Makeup as the Killer App for 3D Printing?

A woman named Grace Choi seems to have come up with a way to 3D print “lipstick, lip gloss, eye shadow, blush, nail polish, brow powder—pretty much everything except foundations and face power” at home. Her company, Mink, uses FDA approved inks (vegetable or edible). The goal is that a consumer could take a picture or using an online image of the makeup, the software would match the color and print out just enough makeup for that application. If the prototype holds up, this product could be one to bring 3D printers into many homes. But is it the killer app for all of 3D printing?

Put differently, a fair question that comes up when I talk about 3D printing is will it really be a device in every home? The answer depends on what one means by the question. First, at this point, you need a different 3D printer for different outputs (e.g., makeup or something in plastic as opposed to metal or ceramic). If Mink takes off, yes, a type of 3D printer could be in many, if not a majority, of homes. But as Gerard, others, and I have said, this device is not a replicator. So until a 3D printer is able to have multiple mediums in one printer, the spread of the devices will probably vary depending on the medium of the output. As such the killer apps for each medium will be specific to the device. That said, Mink may have a larger importance for 3D printing and home technology.

Mink could be a sign of where home inventors and makers are headed. Ms. Choi hit on her idea and took about a month to work through 20 printer prototypes, sort the ink issues, and have her working Mink printer. Granted she is a Harvard MBA and apparently has family support, but her approach could lead to new players in her field and others. As reported by CNBC, Ms. Choi, “Much of the make-up sold by high-end labels starts with the same base substrates, or ingredients, as cheaper ones.” This point is part of what motivated Patents Meet Napster. The core things needed to make many products are easier and easier for anyone to obtain. If Mink is priced at $300 to start as promised, that price will likely drop over time. If women adopt the technology and then tinker with it to improve on the hardware or the design colors, they may be inspired to launch their own companies and tinker with other technologies to get there. Like car and computer enthusiasts, cosmetic enthusiasts may find that playing with making what they want and love can lead to new products and businesses. And if that happens at scale in one sector, it may spur adoption in others. So maybe 3D printed makeup is not a pure killer app for 3D printing, but maybe it does not have to be to still have some great effects.

1

CUT THE CORD!! HBO without Cable

O frabjous day! Callooh! Callay! It is about time! HBO has announced it will offer a streaming service in 2015. Earlier claims about the need for cable to market and to work with the cable industry seem to have fallen away. The claim is that there are 80 million homes that do not have HBO, and HBO wants to fix that. Can you say Netflix? Netflix subscriber numbers were flat today. Still, if HBO goes over the wall, I imagine that Showtime and others will too. So I may just succeed in cutting the cable. Atlanta has decent digital signals (though there should be more). The most interesting thing to watch: ESPN’s next move. It has a hold on cable a Brazilian jiujitsu master would respect. But if ESPN decides to go with a direct pay model, it could pick up many new viewers, especially the ones who are used to watching the special college version of ESPN they have for free while at some schools.

These markets may also be quite different. Some may prefer the ease of watching the pre-programed madness that is cable. Heck, if I am channel surfing and see that Ocean’s Eleven is on TNT, I will watch with commercials even though I own the blasted DVD. Oh yes, laugh. Because you know that you do it too. May not be Ocean’s but fill in the blank with Bridget Jones or whatever floats your boat; there is something oddly comforting or easy about finding a program in a guide and selecting it. It seems like a low-grade information overload problem. Rather than reaching for the DVD or searching Netflix or Amazon, having someone else narrow the options tips us into odd choices like watching that same movie for the umpteenth time with God help me commercials!

In any event, I hope the HBO experiment works. I know unbundling may threaten many offerings. But the current costs of cable are absurd and the best content is on just a few channels. I don’t think the new golden age of T.V. will suffer in this new world. It could grow as more people are reached with niche shows (that is how I see things like Breaking Bad and other winners that don’t need huge viewership to succeed). Subscriber shows should be a real thing soon. As I said before, Firefly could have been saved today, because enough viewers would likely have fronted the costs to get a 10-13 episode season. Add in many have the patience to just buy the series and binge, or stream on Netflix or Amazon or HBO, and maybe shorting cable companies is smart.

0

3D Printed Cars: The Model T Redux?

3D printed cars were a growing possibility while I researched Patents, Meet Napster: 3D Printing and the Digitization of Things. Now a company discussed in the article, Local Motors, has exceeded expectations in a wonderful way. It has produced a 3D printed car in a total of five days. The car, called the Strati, weighs about 2,200 pounds and can go about forty miles per hour. The expected retail price is $20,000. Now that seems less cool. But here is the really good stuff.

The design time and total number of parts is super low. Apparently, the design started in May and was complete four months later. Total number of parts 49 compared to 5,000 for a standard car. As one of the engineers, James Earl, put it in the article: “The thing that this lends most to is customisation-ality, [sic] so you can get a car that really suits your needs with very little monetary input from the design side.” These facts, if they hold up, are why car makers, or at least auto-parts suppliers may be excited or scared out of their minds.

We now have customized cars, with few parts, at a low cost. Let’s assume the cost could go down if the company scales up. Let’s also assume that some of these techniques are incorporated into other auto-maker’s manufacturing. The vast array of auto-suppliers that were in deep trouble when Detroit took a dive could soon be unnecessary. That network of industries Detroit supports could shrink and, in essence, vanish. At the same time, if India’s Tata Corporation, which aims to make low-cost cars for the growing middle class in India, jumps in, Local Motors could find a partner with cash to go big with its technology. High-end makers may allow for bespoke BMWs or Jaguars. Really tall or short people could have cars custom-built to their height and sight lines. Then again, Google may want the tech for its golf cart-like self-driving cars. Lots of possibilities, yes? That’s the point. Something amazing is bubbling up and fast. Which brings me to another point.

Sometimes when I presented the paper, there’d the law professor response of “I just don’t think the tech is there yet.” That view missed what motivated the paper. For once, I wanted to be ahead of the curve on law and technology. Being at Google solidified my view that one can assume the tech will come. “Whether 3D printing will realize all the dreams it currently inspires is not the question” is part of how the article engaged with this point. Local Motors and cars. 3D printed guns. The dreams or nightmares are coming true. Expect some incumbents to fight, some to fear monger, and some to embrace the change. As I offer in The New Steam: On Digitization, Decentralization, and Disruption “this era of disruption and decentralization will likely pass and new winners, who will look much like firms of old, will emerge, if they have not already.” For now, the car-world could be plunging into the disruption and decentralization phase. As Local Motors and others ramp up their factories and break through the regulatory issues, new players may find it harder to play. Until then, let the games begin!

0

3D Printing and Quality Ears. Ears? Expensive Monitors Really

It turns out that musicians wear customized earpieces called monitors to hear the music they make at a concert and to protect their ears from the speakers. A company called Ultimate Ears Pro is in this line of business and uses 3D printing for its next step in creating the devices. As Digital Trends explains the shift is not lowering cost but is increasing the quality:

“Bringing this process in required a tremendous investment in capital, time, resources and training.” Dias explains, which is why 3D printing hasn’t lowered the price points for the devices, as we had imagined. In fact, the company apparently had to take a hit just to keep the pricing the same. Apart from throwing down a hefty load for equipment and software, all of the craftsman who had been working with UE Pro’s in-ear monitors in the traditional method had to completely relearn their craft to work with the new 3D printing technology. As difficult as the process was, the company believes it was necessary to create a revolution in “speed, fit, quality, and comfort” for UE Pro’s monitors.

The company has been mainly serving professional musicians, but is now reaching music lovers too. UEP started from work for Van Halen’s drummer and then its opening act at the time, Skid Row. The desire to keep the quality up is where 3D printing comes in. The turn around time is abut half but given the customer-base, professionals and upscale music lovers, the quality improvement. As Ryan Waniata put it in his article, designers “can be more brazen with their sculpting, allowing them to create a fit for each user that is virtually perfect. And when it comes to in-ears, it’s all about the fit.”

The process still require several other steps including taking a mold of your ear. But the head of UPE mentioned something Gerard and I discussed in Patents, Meet Napster: 3D Printing and the Digitization of Things. Scanners may soon allow someone to get a scan at a store or make the scan themselves.

It’s not magic, but each step may move us to a world of bespoke earpieces for almost everyone. An upgrade for an iPhone or Samsung phone may be supercool headphones, customized and as good as rock stars, which, after all, is what Apple claims we can all be, at least in our heads.

2

There She Is, Your Homemade AR-15

I cannot give a talk about 3D printing without addressing the question of homemade guns. As Gerard and I pointed out in Patents, Meet Napster: 3D Printing and the Digitization of Things, this is America and making guns at home is legal. The issues many faced was whether the gun would work well, fail, or possibly misfire and harm the user. These issues are important as we look at the shifts in manufacturing. Many of us may prefer authorized, branded files and materials for home made goods or prefer to order from a third party that certifies the goods. That said, some gun folks and hobbyists are different. They want to make things at home, because they can. And now, Defense Distributed has made the “Ghost Gunner” “a small CNC milling machine that costs a mere $1200 and is capable of spitting out an aluminum lower receiver for an AR-15 rifle.” That lower is the part the the Federal government regulates.

Accoridng to Extreme Tech, Defense Distributed’s founder Cody Wilson, thinks that “Allowing everyone to create an assault rifle with a few clicks is his way of showing that technology can always evade regulation and render the state obsolete. If a few people are shot by ghost guns, that’s just the price we have to pay for freedom, according to Wilson.” This position is what most folks want to debate. But Gerard and I think something else is revealed here. As ExtremeTech puts it, “This is an entirely new era in the manufacturing of real world objects, in both plastic and metal. It used to be that you needed training as a gunsmith to make your own firearm, but that’s no longer the case.” That point is what motivated me to write about 3D printing and look deeper at digitization and disruption.

The first, short, follow-up on these ideas is in an essay called The New Steam: On Digitization, Decentralization, and Disruption that appeared in Hastings Law Journal this past summer.

1

Now That’s Innovation: Punkin Chunkin – He Chunked It!

Several Thanksgivings ago, John Scalzi and I had returned to his house after a lovely meal at his in-laws and melted into his couch as food coma rendered our brains incapable of thought. Required channel surfing followed. We hit upon the Punkin Chunkin contest (before the Myth Buster folks tagged in). The coverage lacked quasi-reality show production. It was pure unadulterated silliness. We had no idea what it was, but the first images of a launched pumpkin exploding in the air and the phrase “He chunked it!” had us rolling in laughter.

I have watched the T.V. coverage since then and despite the rubbish narrative/competition/inner thoughts of the contestant shift, I still love the event. Each category is great. The way contestants study the previous winners’ work; create, test, and iterate; and invest in expensive rigs or squeeze huge results from limited resources makes me think, “Now that’s innovation!” And it seems quite American. Junk yards, scrap iron, applied engineering, contests, bragging rights, open fields, and a big ole party (chili and I imagine beer) to see what’s what is all very American to me. It may not be the America’s Cup, and I am not sure that we will need siege engines in the near future, but the spirit is in the right place. Take your ingenuity, build something fun, and share it.

5

Tesla encourages free use of its patents—but will that protect users from liability?

Tesla Motors made big news yesterday with an open letter titled, “All Our Patent Are Belong to You.”

The gist of the letter was that Tesla Motors had decided that, in the interest of growing the market for electric vehicles and in the spirit of open source, it would not enforce its patents against “good faith” users. The key language was at the end of the second paragraph:

Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.

Tesla made clear it was not abandoning its patents, nor did it intend to stop acquiring new patents. Rather, it just wanted clear “intellectual property landmines” that it decided were endangering the “path to the creation of compelling electric vehicles.”

The announcement, made on the company’s website, immediately attracted laudatory media attention. (International Business Times, Los Angeles Times, San Jose Mercury News, Wall Street Journal, etc.) As one commentator for Forbes wrote:

[H]anding out patents to the world is smarter still when you think how resource-sapping the process is. Engineers want to build not fill out paperwork for nit-picking lawyers. Why bog them down with endless red tape form-filling only to end up having to build an expensive legal department to have to defend patents that would likely be got around anyway?

Patents are meant to slow competition but they also slow innovation. In an era when you can invent faster than you can patent, why not keep ahead by inventing?

That’s a pretty concise summary of the general response: Patents are bad, Tesla is good, and all friction in technological innovation would be solved if others followed Tesla’s lead.

Setting aside a pretty loaded normative debate, I had a practical concern. Just how legally enforceable would Tesla’s declaration be? That is, if a technologist practiced one of Tesla’s patents, would they really be free from liability?

The answer isn’t clear. (At least, it wasn’t to a number of us on Twitter yesterday.) Certainly, Tesla could enter into a gratis licensing arrangement with every interested party; a prudent GC should demand that Tesla do so, but it’s unlikely Tesla would want to invest the time and money. In a nod to the vagueness of Telsa’s announcement, CEO Elon Musk also told Wired that “the company is open to making simple agreements with companies that are worried about what using patents in ‘good faith’ really means.”

But assuming Tesla offers nothing more than a public promise not to sue “good faith” users, this announcement may be of little social benefit. Worse, it seems to me that such public promises could provide a new vehicle for trolling.

Sure, Tesla may be estopped from enforcing its patents—though estoppel requires reasonable reliance and this announcement is so vague that it’s difficult to imagine the reliance that would be reasonable—and Tesla isn’t in the patent trolling business anyway. (Sorry, patent-assertion-entity business). But what if Tesla sold its patents or went bankrupt. Could a third party not enforce the patents? If it could, patents promised to be open source would seem a rich market for PAEs.

Tesla is not to first to pledge its patents as open source. In fact, as Clark Asay pointed out, IBM has already been accused of reneging the promise. (See: “IBM now appears to be claiming the right to nullify the 2005 pledge at its sole discretion, rendering it a meaningless confidence trick.”) The questions raised by the Tesla announcement are, thus, not new. And, given enough time, courts will have to answer them.

0

Public Service Announcement for Google Glass Team

The Google Glass team has a post about the so-called myths about Google Glass, but the post fails to see what is happening around Glass. That is sad. Instead of addressing the issues head on, the post preaches to the faithful (just read the comments). As Nate Swanner put it “We’re not sure posting something to the tech-centric Google+ crowd is really fixing the issues though.” Google and other tech companies trying to do something new will always face challenges, fear, and distrust. The sad part for me is when all sides line up and fail to engage with the real issues. Some have asked what I did when at Google. Part of the job was to present the technology, address concerns, and then see where all of us saw new, deep issues to come. I loved it, because I knew the technology was driven by high-standards. The problems flowed from not explaining the tech. This post highlights talking past each other. Furthermore the truly wonderful advances that might be possible with Glass are not discussed. That distresses me, as no one really wins in that approach. But I will show what is not great about the post as a possible public service announcement for the Glass Team and others in the tech space.

First, the post sets an absurd tone. It starts with “Mr. Rogers was a Navy SEAL. A tooth placed in soda will dissolve in 24 hours. Gators roam the sewers of big cities and Walt Disney is cryogenically frozen. These are just some of the most common and — let’s admit it — awesome urban myths out there.” Message: Glass critics are crazy people that by into extreme outlying beliefs, not truth. And if you think I am incorrect, just look at this next statement: “Myths can be fun, but they can also be confusing or unsettling. And if spoken enough, they can morph into something that resembles fact. (Side note: did you know that people used to think that traveling too quickly on a train would damage the human body?).” Hah! We must be idiots that fear the future.

That said maybe there are some myths that should be addressed. Having worked at Google, I can say that while I was there, technology was not done on a whim. I love that about the company and yes, the Glass Team fits here too. Furthermore, as those who study technology history know, even electricity faced myths (sometimes propagated by oil barons) as it took hold. Most of the Glass myths seem to turn on cultural fears about further disconnection from the world, always on or plugged in life, and so on. But the post contradicts itself or thinks no one can tell when its myth-busting is self-serving or non-responsive.

On the glass is elitist issue: Google is for everyone, but high priced, and not ready for prime time. Huh? Look if you want to say don’t panic, few people have it, that is OK and may be true. But when you also argue that it is not elitist because a range of people (not just tech-worshiping geeks) use Glass; yet nonetheless the $1500 price tag is not about privilege because “In some cases, their work has paid for it. Others have raised money on Kickstarter and Indiegogo. And for some, it’s been a gift” the argument is absurd. That a few, select people have found creative ways to obtain funds for Glass does not belie the elite pricing; it shows it.

The surveillance and privacy responses reveal a deeper issue. Yes, Glass is designed to signal when it is on. And yes that may limit surveillance, but barely. So too for the privacy issue. Check this one in full:

Myth 10 – Glass marks the end of privacy
When cameras first hit the consumer market in the late 19th century, people declared an end to privacy. Cameras were banned in parks, at national monuments and on beaches. People feared the same when the first cell phone cameras came out. Today, there are more cameras than ever before. In ten years there will be even more cameras, with or without Glass. 150+ years of cameras and eight years of YouTube are a good indicator of the kinds of photos and videos people capture–from our favorite cat videos to dramatic, perspective-changing looks at environmental destruction, government crackdowns, and everyday human miracles. 

ACH!!! Cameras proliferated and we have all sorts of great, new pictures so privacy is not harmed?!?!?! Swanner hits this one dead on:

Google suggests the same privacy fears brought up with Glass have been posed when both regular cameras and cell phone cameras were introduced in their day. What they don’t address is that it’s pretty easy to tell when someone is pointing a device they’re holding up at you; it’s much harder to tell when you’re being video taped while someone looks in your general direction. In a more intimate setting — say a bar — it’s pretty clear when someone is taping you. In an open space? Not so much.

So tech evangelists, I beg you, remember your fans are myriad and smart. Engage us fairly and you will often receive the love and support you seek. Insult people’s intelligence, and you are no-better than those you would call Luddite.

2

The Economist Notes that Patents Do Not Equal Innovation

The Economist had a recent piece about software patents and said, GASP “[P]atent issuance is a poor measure of innovation.” Amen. But wait! Don’t order yet! There’s more! “Patenting is strictly a metric of invention. Innovation is such a vastly different endeavour—in terms of investment, time and the human resources required—as to be virtually unrelated to invention.” (The applause and boos commence simultaneously).

Innovation is meaningless as well, but the first step is to admit the problem. There may be some relationship between patents and incentives to create certain things. But not all patents or all creations show a correlation to a general claim that patents equal innovation or whether innovation will occur without patents. Innovation as “Hey that rally changed the way we do things” probably can’t be identified until much after the event. Innovation as “Hey we made tons and tons of bitcoin, oh we mean cash” is easier to spot but a different metric as far as policy should be concerned. The better disposable razor or even iPhone is incremental while also important. Parsng the differences amongst what types of innovation is well-beyond a blog post. But should folks want to hurt their head and wear out their hands, please write at length. I will look forward to reading what you find.