Category Archives: Entrepreneurship

… Creative Economy

This is NOT an article about how AI, automation, and robotics are coming for non-knowledge jobs. That is happening, but this is an article about how AI is coming for traditional knowledge economy jobs too, and how it will change our economy and society, and I think for the better!

A few days ago, I was watching NCIS with my mom (it’s always on some channel). As per usual, a clue came in, and with a few tips and taps on a computer they had traced it back to its source, cross-referenced it with a database, and sent the results to the field agents’ phones. In all, the scene lasted about 30 seconds. My mom said, “How can they do they so fast and by only typing? It takes me 20 minutes just to remember my password.”

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NCIS is dramatized television. There are very few, if any, people or organizations with that level of computing sophistication and coding skill. However, it’s close enough to how we think computers work to be believable. More remarkably, we’ve at least thought we’ve been at the cusp of this level of computational sophistication for nearly 20 years. I remember watching 24 with my dad in the early 2000’s and very similar tip-tap-success was going on back then in that show. Yet we all know, by sheer fact of our daily lives, that working with digital information is cumbersome, time consuming, and does not always end in success.

Societally, we’ve convinced ourselves that we are living at the leading edge, if not the pinnacle, of the Digital Revolution. The advent of AI is just around the corner, and our 40+ years of digitization are poised to pay off into more leisure and more accurate and easy computing for all of us. On the contrary, I contend that we are merely at the beginning of the Digital Revolution, and there are still many years of work ahead of us before we can enjoy the tip-tap-success that we see on television.

Data remain very compartmentalized. Throughout the digital age, companies, governments, and other entities created databases, data protocols, and computing and data languages ad hoc. Even within large organizations different databases exist to house purportedly the same data, and sometimes these databases contradict each other. Furthermore, data are often user generated, so discrepancies propagate over time. Remember when they rolled out the electronic medical record (EMR) at your office and you could not find the field for pulse until someone told you to look for “heart rate”? And is the accounting system in dollars or thousand dollars? These are the discrepancies that real life NCIS confronts when they perform data analysis, and it takes far more time than we seem to think to sometimes get less than clear results.

A few weeks ago, I met my friend at a food hall in Midtown. I couldn’t help but look around and try to imagine what everyone did for work. Most patrons were young workers in business casual. Being Midtown, I imagined a lot of bank and finance workers, with a smattering of consultants, business people, and people in media and publishing. I know how they spend their days. I used to be a finance consultant. They spend all day pulling together data from disparate sources and collating them into something that their superiors can use to make decisions. “Where’s the data?” “Who has it?” “Is it any good?” These were my daily lines. Most work time for these “Midtowners” is spent replicating data, models, and results. Much less time is spent deciding what they make of results and numbers. I had entire projects where I figured out how the data came together and simply documented the process. Despite all of our advanced statistics and calculus classes, most people in these “Midtown” jobs are just performing basic arithmetic, if that.

Food Hall

 

However, there is reason to believe that the Digital Revolution will soon be accelerating. Emerging innovations like blockchain and internet of things (IoT) are streamlining the collection, storage, and sharing of data. The rate at which we generate data is accelerating, so having clear protocols for the sharing of data is key if we want to continue to move up the digital curve. If we continue to generate astonishing amounts of data but do nothing about their balkanization then making connections between data – the tip-tap-success we see on NCIS and 24 – will be more and more difficult, not easier, as we often assume as default for digital processes.

24Over time, as fiefdoms of data come crashing down and the Digital Revolution truly does bring us closer to tip-tap-success, all of these Midtowners in clerical and finance roles will find themselves with a lot of free time on their hands (so will the consulting firms). Banks will finally be able to cut lose the throngs of high paid workers that spend their days knee deep in Excel, jockeying numbers for the few actual managers in firms whom make decisions. Managers will be able to easily retrieve <tip> the data they need, perform some manipulations as they see fit <tap>, and then make decisions based on their results <success>.

This Digital Revolution is a necessary prerequisite for the full advent of AI. Data are the fuel for AI. Machine learning algorithms require vast quantities of data, and preferably data that update in real time, so the algorithms can truly learn and improve upon themselves. As it stands now, all of the world’s data are too balkanized for machine learning algorithms to pull them in and turn them into the true putty that will lead to cognition-level algorithms. However, when it does, it’s not only the Midtowners that need to worry about their jobs. Managers – true actually make decisions of import managers, will begin to see their judgement challenged by algorithms. When there is little uncertainty in what has transpired in the past and what the forecast prognosticates for the future, there is little room for what we now think of as managerial judgement in decision making.

When I discuss this future with business people they see it as a hard pill to swallow. This is a natural response, but I’m apt to point out that there are excellent companies that are already working on AI for managerial decision making. As consumers, we are most familiar with Alexa or Google Home as voice-enabled personal digital assistants. However, Salesforce has Einstein, which helps sales and marketing teams with routine tasks. They’re already working on more advanced business applications for Einstein, and before long you’ll be able to ask Einstein, “Should we acquire a company or build a new capability in-house?” We are taught analytical frameworks to solve these questions in business school, so once we have the requisite data packaged into something that a machine can consume, why couldn’t, and why shouldn’t the machine answer the question for us (or even alert us to what questions we ought to be asking)?

[Salesforce CEO] Benioff even told analysts on a quarterly earnings call that he uses Einstein at weekly executive meetings to forecast results and settle arguments: “I will literally turn to Einstein in the meeting and say, ‘OK, Einstein, you’ve heard all of this, now what do you think?’ And Einstein will give me the over and under on the quarter and show me where we’re strong and where we’re weak, and sometimes it will point out a specific executive, which it has done in the last three quarters, and say that this executive is somebody who needs specific attention.”

 – Wired

I am not saying that the clerical workers of today are overpaid data jockeys not worth their weight in avocado toast. Nor am I criticizing their managers for hiring them and needing their assistance. I recall a particularly large project from my old consulting firm. It required an army of fresh-out-of-college consultants to comb through loan files and flag missing documents and other discrepancies. The work was tedious, but it required attention, occasional analytics, and downright intelligence. The young consultants did not find it particularly rewarding, only repetitive, and the bank certainly did not want to be paying the millions of dollars for error identification. Nevertheless, we still live at the dawn of the Digital Revolution, and this work was a necessary evil for everyone involved in the project. With AI far more popularized now than it was only ten years ago, nearly everyone can see the promise of AI in automating audit work like that. Nevertheless, it is still not a reality.

Salesforce EinsteinWhen the Digital Revolution does usher in true machine-powered cognition, I foresee banks, investment houses, insurance companies, and trading businesses, just to start, operating drastically differently from what we are used to today. Midtown will be cleared out – both the food halls and the corner suites. A few managers will rely on AI for most decision making, and the remaining workers will be more creative in nature, delving into new and emerging business models, or possibly still toiling in the age-old task of sales (with Einstein’s help, of course).

I hardly see this as apocalyptic for our knowledge economy. Yes, Midtown will be desolate, but Brooklyn will be bustling. Suit peddlers will be out of business, but hipster boutiques will be teeming. The advent of AI will be the advent of what I call the Creative Economy. Today, the creative economy is the corner of our economy focused on arts and leisure, design, media and entertainment, performing arts, fashion, and a smattering of other cottage industries.

Although people will lose jobs (or fewer new jobs will be created in the knowledge sector), our economy will be operating more efficiently. This relieves pressure on prices and leaves employed people with more disposable income. As an economy we can then deploy this disposable income into new interests, hobbies, passions, and arts. With more of the world’s most intelligent people free to devote themselves to their passions and leisure, there will be an explosion in creativity and creativity-as-commerce. Rather than focusing on high paying jobs devoid of meaning (if anyone who spends their whole day collating data says they “love their job,” they are lying), far more of our collective intellect can be dedicated to creative pursuits. We can create more content of an intellectual nature and consume more downright leisure.

I see four creative sectors staking claims for themselves and growing rapidly alongside AI:

  • Pure Leisure & Arts
  • Digital Arts
  • Creative Enablement
  • Physical-Digital Interaction

Pure Leisure & Arts

We already consider leisure & arts as very virtuous pursuits, although one that relegates all but the luckiest artists among us to being the perennial starving artist. These arts include writing, painting and drawing, film-making and acting, music, dance, fashion, gastronomy, architecture, other forms of literature, performing arts, and visual arts. With more time left to pursue the consumption of leisure or the practice of these arts, the traditional arts will proliferate.

Digital Arts

Digital arts will be one of the fastest growing new creative pursuits. With more immersion in the form of augmented reality and virtual reality (AR/VR), there will be immense demand for graphic design, 3D design, animation, and VR environment design.

Creative Enablement

 

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All of this art begs for software in which it can be designed, rendered, mixed, shared, and experienced. Today we have a knowledge economy, and Microsoft, along with the likes of SAP and Oracle, dominate knowledge software, so they are some of the largest companies in the world. In the future, the creative economy software manufacturers will be among the largest companies in the world. Design software by companies like Autodesk and Adobe will dominate our daily lives, and those companies will be vaulted into the Dow 30. There are even companies that are merging many technologies, from teleconferencing and virtual reality to design and architecture. They are creating software that will allow remote teams to interact in virtual reality environment and collaborate on design and creation real-time. Imagine a team of architects, all over the world, being able to virtually fly around the buildings they are designing and make changes together based on each other’s comments.

Physical-Digital Interaction

We will continue to live in a physical world (I am not predicting The Matrix), and manufacturing, engineering, medicine, and other physical sciences and fields will continue to be of the utmost importance. While less creative in nature, companies that bridge the physical-digital divide and allow AI and automation to assist in these fields will be extremely valuable. Importantly, they will continue to fuel the creative economy by freeing workers from tasks that can be performed by computer and machine, allowing them to more freely contribute to the creative economy.

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3D Printer in action

The shift from a knowledge economy to a creative economy will have to be supported by the educational system. Training for trade and business will diminish. Instead, there will be more learning how to learn. Liberal arts will flourish, alongside an emphasis on mathematics and statistics, engineering, biology and medicine, and hard sciences. Coding, which is already moving to the mainstream of education, will gain even more importance, and humanities and the arts will once again be respected and valued fields of study. Education will also be prolongated and emphasized throughout one’s life, not just at its beginning, and there will be more economic emphasis on education. The creative economy will also self-reinforce the education sector by more effectively immersing learners in their education and create new and innovative ways to learn. If we can align our education system with the promises of the future and coordinate our data protocols for our collective well-being, the future will be bright, colorful, and fun and filled with enjoyable work and pleasurable leisurely pursuits.

 

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… Local

A few miles west of Chapel Hill, North Carolina, there is a raised wooden pavilion with tables and chairs, surrounded by acres of farmland. On these fields they grow berries, herbs, and even tea leaves, which are steeped and served at Honeysuckle Tea House, an establishment inside the breezy open-air structure.

Honeysuckle

The farm and Honeysuckle Tea House are part of a large ecosystem of corporate entities that work together to reinforce each other and enrich the local community.

EastWestHoneysuckle and the farm are owned by EastWest Organics, a farm management company that owns or leases 227 acres of farmland and food producing forest land in Orange County, NC. They produce agricultural products that are used in beverages, such as berries, nuts, tea leaves, and honey.

In addition to the farms, EastWest owns the aforementioned tea house, as well as the Looking Glass Café in Carrboro, NC and the Honeysuckle Meadery and Wine Bar, also in Carrboro. Looking Glass is a traditional coffee shop which is attached to the meadery’s tasting room. Here you can sample Honeysuckle’s meads as well as other local beverages, such as wines, ciders, beers, and fermented beverages like kombucha. The meadery makes Honeysuckle’s meads, with ingredients sourced from EastWest’s farms.

EastWest is 20% owned by Unique Places to Save, a local non-profit. Unique Places (“UP2Save”) conserves unique social, cultural, natural, and agricultural places around the United States, and has a lot of assets in North Carolina. One such is the Keith Arboretum and Forest, in Chapel Hill. The arboretum was founded by a University of North Carolina professor over 40 years ago, and now has more than 4,000 species from temperate forests around the world. The core arboretum is buffered by additional protected woodlands and the Keith family farmstead which is available for private rental.

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UP2Save has allowed Bee Downtown, a local startup, to house their beehives at the arboretum. Bee Downtown places beehives on the premises of corporations and other institutions who pay to sponsor hives. In exchange, the corporations receive educational content, have a new method of engaging with their employees, and get the honey from the hives. Bee Downtown is a successful, growing company that is now expanding to Atlanta from the Research Triangle region of North Carolina. The arboretum is also one of the farms for EastWest Organics. The company cultivates botanics from the forests and fields and also uses the bees’ honey for its meads (Bee Downtown also has hives at the tea house location farm. The bees pollinate the plants at the farm which produce the crops, such as berries). Given the extreme biodiversity of the arboretum, the honey from these hives is arguably some of the most unique in the world!

bee-logo-orange-01The number of large corporations that Bee Downtown works with is remarkable. Just in the Research Triangle area they have hives at IBM, SAS, Murphy’s Naturals, North Carolina State University, and even Burt’s Bees. Although many of its customers are large companies, it partners with other local companies as well. They have designed t-shirts with Durham, NC-based apparel company Runaway. Local companies that sponsor hives can also take the honey they collect and sell it under their own brand name (as Runaway has done).

One of the interesting aspects of these strong ties between entities is that UP2Save is a non-profit. Nevertheless, it sits as an anchor and facilitates a lot of commercial activity. Another revenue generating activity for UP2Save (beyond the proceeds it receives from EastWest Organics) is mitigation banking. The US Army Corps of Engineers requires new developments to offset their impact on wetlands by purchasing mitigation credits. These credits are created by mitigation banks. The “banks” are conserved wetlands which conform to Army Corps of Engineers environmental standards. UP2Save is able to meet its conservation mission, generate revenue, and help facilitate the development of new properties in local communities.

Keith ArboAll of these interconnected activities also create educational opportunities. The various entities offer educational programs as well as have spaces for formal or informal educational events. Bee Downtown educates its corporate clients about the importance of bees to the world, and they also host school groups at the arboretum. The arboretum doubles as an educational and research laboratory, given the array of species that it houses. Honeysuckle’s beverages educate consumers about agricultural practices and beverages and wellness. Furthermore, the agritourism promoted by Honeysuckle Tea House, the arboretum, and Bee Downtown grow interest in conservation and agribusiness, and all of these entities offer internships and other practical experiences for students from all of the local universities.

Local business is not an ideal in and of itself. The economics of local and small business is more nuanced than money staying in communities. However, local businesses that offer unique and superior value are worthy of our praise and patronage and can certainly strengthen communities all around the United States. Ecosystems of local businesses, such as the one highlighted here centered around UP2Save, promote culture, provide sustainable products for consumption, offer employment for individuals of varying levels of skill, and integrate with the society and education system. Importantly, they also offer partnerships and platforms for new local businesses to start up and grow. Perhaps the best argument for supporting local is that strong local business promotes income equality, whereas big box retail continues to consolidate wealth in the hands of a few wealthy individuals.

ROMRStrong local economic ecosystems also enhance service companies, and tech and platform companies. Many of the logos above were designed by a local creative agency called The Splinter Group. ROMR, a local tech company that allows individuals to book recreational access to private land (kind of like the AirBnB for conservation), has the Honeysuckle farm and the Keith Arboretum on its platform. However, these local economic ecosystems also rely on one-to-many companies for a variety of critical business services, and I continue to believe that one-to-many companies have an important role to play in the national economy and our local economies.

Splinter Group

Splinter Group’s work

For instance, all of these local companies and non-profits have websites, so they hosting and domain name registration services from companies like GoDaddy and Digital Ocean (I use these providers for my company). Splinter Group probably relies on Adobe for its design software. Nearly all of the companies promote themselves on a combination of Facebook, Twitter, Instagram, and Pinterest. Some also use LinkedIn for certain services. In addition, the local companies use payment services like Square or Clover to take payments and keep track of their finances. Companies that cheaply provide important business services to many companies will continue to play an outsize role in our economy. However, they need to proactively support the country’s economic values, or they run the risk of becoming vilified by the country, as we have recently seen with Facebook and other large tech companies.

… My Favorite Entrepreneur

MomofukuOver my years (well, year and a half) at business school, I’ve been asked a handful of times, in formal interviews and informal settings, who my favorite entrepreneur is. I didn’t have an answer. However, over the last few months I’ve become increasingly impressed by David Chang. I’m now prepared to formally declare him my favorite entrepreneur.

David is a restauranteur. He opened Momofuku Noodle Bar in the East Village of New York City in 2004. It served Asian buns and noodle bowls. It gained a reputation for serving tasty food, and David opened another restaurant nearby. It did not take on quite as well, and was at risk of closing. David and his team scrapped the kooky Korean dishes for a more inventive late-night menu, and people began to show up in droves. He also fostered a friendship with a New York Times food writer, Peter Meehan, and in 2009 they published a cookbook inspired by Momofuku.

The cookbook was not David’s last foray into media. With Peter, he started a magazine called Lucky Peach (it recently published its last edition), and they have a new show on Netflix called Ugly Delicious. David’s restaurant business has proliferated into an empire, with approximately 13 properties around the world. In addition to the restaurants, he has a fast-casual fried chicken sandwich chain called Fuku and co-owns a chain of soft serve ice cream and cookie joints known as Milk Bar.  David is also prolific on Instagram, with far north of one million followers across his personal and professional accounts. He has made #uglydelicious one of my favorite hashtags. He was just in South Korea (David is a first-generation Korean-American) working with NBC on the Winter Olympics.

David’s work has always had a hint of the digital to it. Momofuku Ko is David’s two Michelin star restaurant. You can dine there by online reservation only, and it only has a tasting menu. Reservations become available 30 days prior to the day of service. David extended this online-only idea into a food delivery concept in New York called Ando. It was a delivery only company that aimed to use technology to revolutionize the food delivery space. It received millions of dollars in funding, but always had rocky business fortunes. In January, Uber Eats acquired Ando and will be integrating Ando and its technologies into the Uber Eats platform.

David did not stop at food service, media, or technology. He has also dived into food research. This has sparked a line of packaged food products that take seemingly off-kilter approaches to traditional Asian staples. David sells a miso made from chickpeas, sunflowers, or pistachios that he calls hozon and a grain-based soy-type sauce called bonji. I think my friend Dave (not Chang) even had a bonji Old Fashioned at Momofuku Má Pêche when we went there back in November. That meal remains my only Momofuku dining experience (although I did get a Compost Cookie at Milk Bar upstairs after the meal).

In addition to the packaged foods, David has partnered with a food lab called Booker and Dax to sell kitchen appliances. They have a special blowtorch for food, a food centrifuge, and a special tumbler for cocktail shakers. Booker and Dax is now also a bar inside one of David’s restaurants.

So why is he my favorite entrepreneur?

Sure, he is successful, but there are plenty of successful entrepreneurs, even more so than David. What I admire about David is that he has used different types of business to ever-expand his empire further outward, but has always kept a connection to his roots. It’s all food related, and shares similar themes of experimentation, and even the melding of the culinary and the technological. I value narrative as a high art form, and David seems to always have a narrative – whether it be literally telling stories on television shows or speaking about Asian gastronomy through his dishes.

I’m also excited to see how David can use his knowledge, experience, and funding, to make a positive impact on the world. He talks about improving the quality of life for food service employees. Booker and Dax is about finding solutions to food problems. Ando was about innovation in food delivery, and Ugly Delicious tackles issues of culture, politics, and place in the world. I hope that David, his team, and his posse expand the empire a little bit further and strive to make a persistent, positive impact that uses good business sense and a positive narrative to leave the world better off.

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