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G100 Network Notebook | April 2019

Jeff Bezos on Failure and Scale

The most interesting part of Amazon CEO Jeff Bezos’ 2018 letter to shareholders is his section on product failures. In one passage, he compares Amazon’s Fire phone (a spectacular flop) and its voice-driven Echo speaker, which were both developed around the same time:

As a company grows, everything needs to scale, including the size of your failed experiments. If the size of your failures isn’t growing, you’re not going to be inventing at a size that can actually move the needle. Amazon will be experimenting at the right scale for a company of our size if we occasionally have multibillion-dollar failures.

Disruption to the Hollywood Talent Model

This week, the biggest story in Los Angeles is the disagreement between members of the Writers Guild of America and the organization that represents the talent agents getting them work. Guild representatives urged writers to fire their agents. The Hollywood Reporter suggests that what we are witnessing is not an old-fashioned labor dispute, but a shift in the business model:

The war between the Writers Guild of America and the Association of Talent Agents has mostly been viewed within the prism of fairness. Should agents be allowed to collect packaging fees or partially own equity in content? Is this too much of a conflict of interest when agents have been nominally tasked with ensuring top compensation for their clients? But there’s another way to view this war: A story of competition that’s not unlike the battle between the taxi industry and Uber.
On May 30th, we will learn more about how to manage high-profile talent from Creative Artists Agency Global CEO Steve Hasker.

Small Teams Drive Disruption

When G100 Talent Consortium members visited Amazon headquarters earlier this year, we learned from their senior leaders that the company intentionally keeps team size small in order to drive more out-of-the-box thinking. New research published in Harvard Business Review supports this practice. The authors surveyed millions of patents, papers, and software products from the last 60 years. They found that despite the growing trend towards larger R&D teams, small team work led to more innovation:

Work by large teams tends to build on more recent, popular ideas, while small teams reach further into the past, finding inspiration in more obscure prior ideas and possibilities. Large teams, like large movie studios, more likely generate sequels than new narratives. We found that as team size grows from 1 to 50 members, the associated level of disruption drops precipitously.

Robot Package Delivery…and Return

Online retailers may have perfected home delivery, but consumers yearn to move things out of their homes too, either by returning, re-selling or de-cluttering. A provocative piece in predicts that the next stage of robots will not only bring the package to your door, but also take away the ones you don’t want:

Returning items remains relatively cumbersome, and a delivery can’t be undone with the same single button-push that brought it there. …55 percent of online shoppers in an NPR survey reported keeping an unwanted purchase because of the inconveniences involved in returning it…[Yet] If the arrival of automated delivery robots could lower the effort to sell or return goods to the minimal amount it now takes to buy them, users might exchange products through a new kind of logistical network that would make the process of acquiring and trading physical objects as frictionless as that of downloading and deleting digital files.

We will learn more about the next generation of robots and what it means for business when Scott Phoenix, CEO of Vicarious, the leading AI company in the robot space, joins us at our joint G100/G100 Talent Consortium meeting on May 30th. At dinner, we will also hear about the future of package delivery from UPS CEO David Abney.

Are Games Better at Measuring Human Potential?

A quiet startup intent on disrupting standardized testing with game design and AI is working with McKinsey to identify the skills that matter most to the future of knowledge work. A Bloomberg Businessweek profile on Imbellus founder Rebecca Kantar explains how immersive video games can measure diverse cognitive skills, such as decision making and critical thinking, overlooked by traditional assessments.

[Our test] is not just interested in whether you got it right in the end. Cognition is dynamic – so we are also incredibly interested in how you got there. The goal is not the same as in scoring a multiple-choice test. We want to know: How did you make the choices you made? When you made errors, how did you correct them?

The Truth About Electric Vehicles

A detailed study in McKinsey Quarterly confronts the biggest challenge of electric cars, profitability:

Today, most OEMs do not make a profit from the sale of EVs. In fact, these vehicles often cost $12,000 more to produce than comparable vehicles powered by internal-combustion engines in the small- to midsize-car segment and the small-utility-vehicle segment. What is more, carmakers often struggle to recoup those costs through pricing alone. The result: apart from a few premium models, OEMs stand to lose money on almost every EV sold.

The authors advocate rethinking how carmakers design and build electric vehicles, providing detailed examples. Their prediction: EVs may reach cost parity with and become equally—or even more—profitable as ICE vehicles by around 2025.

The Holy Grail of Data Privacy

The challenge facing data privacy is how a company can glean insights from the patterns they find in large data sets – without revealing the private, personal nature of the data. Solving this problem of analytics without decryption has long been considered the holy grail of data privacy. Now Duality, an encryption startup, has pioneered an approach to “homomorphic encryption” that would allow companies to keep their data fully encrypted and still find patterns in it. FastCompany asked the company’s co-founder to explain the technology:

Imagine that you’ve put your data inside a box to protect it. You’re the only one who has the key. With homomorphic encryption, you can then give the box to someone else, and they can put their hands in with their eyes closed. That person can shuffle around the numbers inside without ever seeing them. It means the entity doing the math doesn’t ever see the data, doesn’t see the answers but can employ the computations.

How a Defense Contractor Builds Cyber-Resilience

Focus on people, the best defense – and biggest vulnerability – in every organization, says Raytheon CEO and G100 member Tom Kennedy. In a recent interview, Kennedy explains how leaders cultivate a culture of shared risk and why training for cyber-awareness delivers high ROI:

Getting employees to become part of the solution needs to be communicated through education. … Since increased training not only lowers the risk that employees will unknowingly facilitate breaches, but that when bad things do happen, they know how to respond to minimize the impact. Good training brings to life the dangers of bending rules and how to be alert for malicious insiders.