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G100 Network Notebook | December 2015

The Future of Transportation

Apple turned heads recently by announcing its electrical vehicle will have a 2019 delivery date, one year ahead of the earliest forecasts for road-ready, autonomous vehicles. While Apple intends to roll out autonomous features in later models, the ambitious goal signals how fast the secretive “Project Titan” is moving. One vocal skeptic, former GM Vice Chair Bob Lutz, dismissed the project as a “money pit:”

There is no reason to assume Apple will be financially successful in the electric car business.

This overlooks the speed of change underway in transportation, especially as Uber’s latest funding round seeks a valuation higher than the market cap of several iconic car makers. A recent report in Forbes observes:

It only took Uber five and a half years to surpass the valuation of 107-year-old General Motors.

Growth in India

India now ranks as the number one destination for foreign direct investment, jumping ahead of the US and China. This opportunity is not lost on Sam Altman, president of the startup incubator Y Combinator. In a wide-ranging interview, Sam elaborates on diversification of the Y Combinator portfolio and his bullish view on India:

[It] is one of the largest and fastest growing markets globally and that’s why we have been investing in Indian startups (Cleartax and Razorpay) over the last couple of years. I think there will be multiple $10 billion-plus companies which will be started in India in the next few years.

Y Combinator maintains a portfolio of startups valued at $65 billion. What is the secret to this “Midas touch?” Discovering and developing the best talent, The Economist says in a timely profile:

In its investments YC has benefited from the power of “network effects”, the notion that a platform becomes more valuable the more people use it. As it grows, YC has become better at what it does, by enlisting its alumni to find new applicants, advise those going through the programme and be the first testers of their products.

Defining the Terrorist Threat

In the wake of lone-wolf attacks on Paris, a British House of Commons debate over lending military support to fight ISIS in Syria took a dramatic turn. Labor Party MP Hilary Benn delivered a memorable and potent speech that spurred colleagues to defy party leadership and support Conservative’s plan to bomb ISIS territory. The speech is good throughout but skip to the 12:12 mark for a stirring conclusion that compares the ISIS threat to Mussolini-era fascism. An excerpt:

We are here faced by fascists, not just their calculated brutality but their belief that they are superior to every one of us in this chamber tonight and all the people we represent. They hold us in contempt. They hold our values in contempt. They hold our belief in tolerance and decency in contempt. They hold our democracy – the means by which we will make this decision tonight – in contempt. And what we know about fascists is that they need to be defeated.

The Truth About China’s Economy

Amid the contrasting views on doing business in China, there is one area of common ground — concern about debt. A recent McKinsey Quarterly article puts this concern in perspective by debunking popular myths about the Chinese economy:

While the borrowing does border on recklessness, China’s government has plenty of financial capacity to weather a crisis. According to MGI research, state debt hovers at only 55 percent of GDP, substantially lower than it is in much of the West.

Tapping Entrepreneurial Spirit

Amway, the world’s largest direct selling company, has more than one reason to share this optimism. Besides China being its biggest market, Amway has also kept its finger on the pulse of global attitudes toward entrepreneurship with broad studies conducted over several years.

Based on surveys of 49,775 people in 44 countries, the 2015 Amway Global Entrepreneurship Report shows 75% of people have positive mindsets about starting their own business, but fear of failure, especially financial risk, poses a big obstacle. I sat down with Amway Chairman and longtime G100 member Steve Van Andel to discuss his latest research and explore how business can cultivate entrepreneurial spirit. One takeaway from our interview:

Have a conversation about entrepreneurship – not only how it can help businesses but also communities around the world. As entrepreneurs develop businesses, they hit a sweet spot in global economies by creating jobs, opportunities, and ultimately, positive GDP in countries of operation. This is especially true when starting a business is relatively easy.

Beware of Phishing

“Today, the vast majority of advanced persistent threats (APTs) gain their first foothold inside victim companies by sending a few emails,” says Information World columnist Roger Grimes who describes in sobering detail how professional hackers work and why business must understand their sophistication. One of many good parts to this reality check on “spearphishing:”

Malware writers use of standard encryption is so good that even the FBI is telling ransomware victims to simply pay up.

Can Technology Improve Developmental Economics?

The World Bank is betting on it. A pilot study with Orbital Insights aims to provide more accurate poverty data – through satellite imagery and artificial intelligence – than traditional door-to-door surveys. Orbital Insight CEO Jimi Crawford says in this Fast Company report:

Computers are now on par with humans at determining what they are looking at So we can take a million images and have the computer identify and count particular objects to figure out what they collectively tell us.

One company set on leading in artificial intelligence is Google, according to a comprehensive report in Popular Science that describes both the technical and practical sides of its open source platform. Do not be surprised, for example, if machine learning soon helps to write an email. An excerpt:

Internally, Google has spent the last three years building a massive platform for artificial intelligence [AI] and now they’re unleashing it on the world. Although, Google would prefer you call it machine intelligence. They feel that [AI] carries too many connotations, and fundamentally, they’re trying to create genuine intelligence — just in machines.

Winter Reading

Software entrepreneur Martin Ford’s Rise of the Robots, recently named Best Business Book for 2015, challenges the rosy picture of technology and creative destruction. He predicts automation will trigger unmitigated job loss and necessitate a rethinking of economic structure, perhaps in the form of a basic living income. From a recent book review by The Financial Times:

Almost any job that involves sitting in front of a screen and manipulating information is either disappearing, or will do soon. … Assuming that highly skilled jobs can take up the slack is “analogous to believing that, in the wake of the mechanisation of agriculture, the majority of displaced farm workers would be able to find jobs driving tractors,” [Ford] says.