Month: July 2016

Society can HOPE for a better Link

Last weekend, at the Eleventh HOPE, we took a front row seat for the talk entitled LinkNYC: Free Public Wi-Fi That Isn’t Free or Public knowing it would critically challenge the recent local deployment of connectivity infrastructure, not unlike that which is core to our vision.

LinkNYC is an infrastructure project currently being rolled out across New York City’s five boroughs, promising “Free super fast Wi-Fi. And that’s just the beginning”. This is achieved via up to 10,000 links, progressively replacing pay phones. Each link includes two large screens for advertising and PSAs, a tablet for interaction, 3 cameras and 30 sensors, and, of course, Wi-Fi, with plenty of bandwidth thanks to a dedicated fiber connection.

Free, widespread Internet connectivity for the masses, how brilliant! As we’ve previously argued, connectivity is the critical underlying fabric of not only the Internet, but life itself. Imagine what the promise of ubiquitous connectivity holds! That is, until you inspect the underlying fabric of LinkNYC as the Hackers On Planet Earth (HOPE) are so adept at doing.

Benjamin Dean, President of Iconoclast Tech and Fellow for Cyber Security and Internet Governance at Columbia SIPA, did exactly that in his presentation, raising what for us are two critical concerns regarding the future of ubiquitous connectivity infrastructure.

1. The digital business model is transposed to the physical

Dean illustrated that when you add up the published revenues and expenses, the corporate partners appear to lose $50M over the course of the project. This, of course, raises suspicions of an alternative revenue stream, which was clearly alluded to in the following quote from Don Doctoroff, head of Google/Alphabet’s Sidewalk Labs, one of the partners in the project.

“By having access to the browsing activity of people using the Wi-Fi — all anonymized and aggregated — we can actually then target ads to people in proximity and then obviously over time track them through lots of different things, like beacons and location services, as well as their browsing activity. So in effect what we’re doing is replicating the digital experience in physical space.” (Original source)

While there are definitely aspects of our collective digital experience we feel would be beneficially transposed to the physical world in the age of the Internet of Things, the advertising-driven business model certainly doesn’t top our list. Especially given Dean’s calculation that the project could be entirely publicly funded at a cost of fractions of a penny per citizen per day. Is that too much to ask? And would the economic benefits generated by ubiquitous connectivity alone not indirectly subsidise taxpayer investment in the project many times over?

2. Vague policies promote privatisation, not privacy

Given his background, Dean had no difficulties raising serious concerns with the privacy policies of the project. To paraphrase these policies (with no attempt to emulate his articulate analysis thereof):

  • we won’t do creepy stuff like facial recognition
  • we can share the data we collect with third parties
  • we won’t explicitly state anything that prevents them from doing creepy stuff

In other words, nothing appears to prevent your private information from ending up in the hands of private organisations. Perhaps not the organisations involved in the project, but at least those within their arms reach.

Contrast this to our privacy policy which we’ve done our utmost to keep short, clear and readable, and which concludes with the sentence:

Wish we had more to tell you but honestly, we really want to have as little as possible to do with your personal information aside from enabling you to share it when you want, where you want and with whom you want!

While we’re quite proud to champion the notion of users retaining the control of their data and with whom it is shared, the LinkNYC debate nonetheless reminds us of its fragility, given that nothing prevents subsequent layers of third party platforms from exercising policies analogous to the aforementioned. Perhaps a GPL-style privacy policy that influences/contaminates (depending on which side of the debate you’re on!) subsequent policies is the answer? Although for those who attended Richard Stallman’s talk at the same conference, it’s clear that such policies are controversial even within a sympathetic community!

And as for applying the digital advertising-driven business model to the physical world, we have a simple counter argument in economic terms: it’s an outdated, inefficient model. We’re in the early throes of an industrial revolution which will create overwhelming volumes of real-time contextual data, with, arguably, much more of it consensually shared, promising massive economic gains through efficiencies. However, in any revolution, the outgoing paradigm will coexist alongside the new for some time. While LinkNYC seems poised to continue to bet on the former, we’re confident that a growing number of startups, ourselves included, are betting wisely on the latter.

In conclusion, while there are clearly valid concerns around the LinkNYC project, overall the benefits of ubiquitous connectivity, free and public or not, are arguably positive. The history of the Internet suggests that the public will nonetheless overwhelmingly accept any such tradeoffs. A revolutionary change in the underlying business model is unlikely to come from public dissent, but rather from the sustainable competitive advantage of a new economic paradigm. Ultimately, we’d argue that the companies first to exploit that novel competitive advantage will enjoy the economic benefits, and bear the ethical responsibilities, of leading the way forward.

Investing in a Value-First Sharing Economy

Last month we had the pleasure of reading The Sharing Economy and subsequently meeting the author, Arun Sundararajan, with whom we shared our praise, at the New Cities Summit. The book, which we’ve added to our bibliography, eloquently ties together many of our pioneering thoughts on innovation and economics, which we’ll discuss here, starting with the economics which Sundararajan frames as follows:

The sharing economy, although not politically neutral, is creating a new economic model – an interesting middle ground between capitalism and socialism – that also appears to lend itself to fulfilling the desires and needs of people who identify with the extreme ends of both the economic and political spectrums. More importantly, it has developed an economic model that appears to lend itself to fulfilling the desires and needs of people who identify with neither of those extremes.

Conceptually, it seem paradoxical that a new economic model can benefit both those closest to and furthest from the extremes of traditional models. But, as we highlight in our blog post on the Pervasive Sharing Economy, scepticism wanes as even companies that have been notoriously slow to adapt are defying expectations:

General Motors, a company that long ago conspired to derail public transit to boost private vehicle ownership, just bet $500M on Lyft anticipating the end of said ownership!

In that post we argue that while the current sharing economy is largely limited to higher-value underutilised assets such as vehicles and real-estate, the proliferation of Internet of Things technologies will extend the marketplace to include the majority of everyday things from clothing to tools and beyond. However, unlocking this enormous potential is predicated on a significant investment in technology and infrastructure, a proposition which is today typically met with resistance. But such attitudes are clearly evolving, as evidenced by the book’s citation of a post by Brad Burnham of Union Square Ventures discussing their investment in OB1 which develops the enabling technologies for OpenBazaar, “a free market for all with no fees or restrictions”:

How can a business that is consciously architected to undo network effect defensibility, one that is tearing down the walls and filling in the moats that every paper on market based competition has insisted are necessary for success … succeed?
OB1 will offer a set of value added services to buyers and sellers […] and they don’t expect to have any proprietary advantage over those competitors. As investors, we hope that their familiarity with the marketplace and the goodwill they generate as early sponsors of the open source project will give them an advantage but we understand they must execute very well or be left behind. (link)

While it is both refreshing and motivating, as startup entrepreneurs, to witness this shift in attitudes towards investment, we must point out that it is not access to capital alone which is gating progress. Policies and protocols play an equally important role as Sundararajan’s quote of Albert Wenger, also of Union Square Ventures, this time discussing Bitcoin, highlights:

Policy makers, however, need to understand the importance of protocols for enabling distributed permission-less innovation – that is innovation by many individuals and startups. For instance, the hypertext transport protocol (http) is what lets a browser talk to a web server – as long as the server implements the protocol it can deliver innovative content or services to any browser. HTTP itself builds on many other lower level protocols, such as DNA and TCP/IP. Historically, protocols have emerged from either research projects or from individuals / small groups simply throwing something out that sticks. (link)

Case in point, Vint Cerf, co-inventor of TCP/IP, and currently VP & Chief Internet Evangelist for Google, who we recently had the pleasure of meeting at an IEEE science conference. As we argue in Vint Cerf and the Good Fight for the IoT: “in our opinion, he is one of the few individuals applying a long-term vision to balance what’s optimal and what’s profitable for the still nascent Internet of Things”. Cerf equally argues for permissionless innovation. Without the Internet-enabling TCP/IP protocol he co-invented as a researcher, Google’s highly profitable business could not exist! At reelyActive, we thus stand by our approach of publishing protocols as science, upon which we build our innovative business, driven to execute very well or be left behind!

In the coming weeks reelyActive will celebrate its fourth anniversary. One might say that we’ll celebrate having survived four years (see threelyActive), as indeed our hybrid approach hasn’t made life easy under the existing paradigm. Nonetheless, the recent developments discussed in this post and in the book are enormously encouraging. So, what is the next economic paradigm? On that topic, Sundararajan argues the following, paraphrasing Douglass North:

[H]istory suggests that it is neither possible nor economically viable to simply adopt existing rules and apply them to a new economy. The challenge, then, is to determine what comes next.

What comes next is a value-first approach. Investment in the projects and startups developing enabling technologies, including the underlying open protocols, will unlock massive value, generated through permissionless innovation by their peers; value that will lend itself to fulfilling the desires and needs of people across the political-economic spectrum. Investment in massive value creation is Phase 1. Embracing this approach, investors, be they private, institutional or government, need only find a clever means to collect their fair share of the resultant massive value in order to profit more handsomely than could ever be afforded by the current economic paradigm.