MSP55 [] Have We Reached Peak Tech?

This is a download from BFM 89.9, the Business Station. BFM 89.9, the Business Station. Now, rejoice, rejoice. The Age of Technology is over.

My Lords and Ladies, we give you the new age of the agrarian man. Yes, CulturePop's Matt Armitage is rereading Game of Thrones, but there's hard news behind his offhand frippery. With the sharp decline of tech stocks this year, some pundits are declaring that the age of Silicon Valley. Is it an end?

Matt, what do you care to explain? Good morrow. As you said, I am rereading Game of Thrones. I've actually finished the first book for the second time, if that makes any sense.

But I think the analogy may be more prescient than it may appear at first. I think that's that quote by Queen Cersei in the first book, or Series One, if you've only watched it on TV. When you play the Game of Thrones, you win or you die. There is no middle ground.

And that's often the way it seems to be portrayed to us when we read the market reports or news reports about technology companies. So we've had Apple becoming the first trillion dollar company this year with Amazon Hot and Its Hills. Of course, they've both slipped since that point. And it's always framed as being adversarial that these companies are locked in this epic battle to become number one.

Right, like the Rolling Stones and the Beatles or Blur and Oasis, if you're an older. Or BTS and EXO for listeners who won the 2008 example. But yeah, it assumes this existential battle is going on in the technology industry in a way that no one would bother to compare Exxon, Mobile and Hathaway Holdings, who were also in the top 10. No one would say they're in this kind of jewel to the death of the number one.

So in case anybody says at home, aren't Avid market watchers like you clearly are? Which tech companies are we talking about? Well, back in May this year, and thank you for that slide, the World's Top Five Companies by Market Value were all tech companies. So it was Apple, Amazon, Alphabet, which of course is Google, Microsoft and Facebook.

And China's Alibaba and Tencent Holdings also made it into the upper reaches of that top 10. So why do you think that 2018 has not been so kind on technology? Well, luckily for you all, I'm not an economic element. I'm not even someone who can pronounce it.

You can leave that in if you like. Luckily, I'm not an economic analyst, but markets have been pretty volatile globally this year. So that's affecting a lot of the top companies, not just tech specifically. Politics have a lot to do with that as well, of course.

Markets are reacting with jitters to political shocks and the unstable pronouncements of unnamed authoritarian leaders and governments across the globe. But there are more specific issues as well. So fake news has shattered confidence and it's white hundreds of millions of dollars from the value of Facebook and also in part Alphabet, Google. Analysts are also wondering whether demand for the latest generation of iPhones is going to be sufficient to sustain that incredible growth that Apple's had.

And actually even companies like Foxconn, which make the parts for Apple's phones, have suffered huge losses this year. Do you think that is a crisis of leadership within technology? I mean, that's something that's very much open to debate. I think so, but that's an opinion, not a hard fact.

So listeners can go back to episode 35 of this show, which is Vision Redeficit, where I talk about that in more detail. It doesn't need to be kind of repeated here. OK, how do we see that reflected in the way that tech companies are operating there? Well, you can certainly see the fallout.

Amazon's search for a new US location for its second headquarters has been received quite negatively. And the company was criticised for being high-handed and basically quite imperial. It seems a bit like bidding for the Olympics or the football World Cup and US cities were kind of sitting up and begging for Amazon streets. Mark Zuckerberg and Twitter's Jack Dorsey have not had a good time either in the media or in front of lawmakers.

And as for Uber, well, I mean, that's an episode all of its time. Right. And of course, we can't go any further without you mentioning Mr. Mars.

Yes, Elon Musk has spent a chunk of the year railing against his company's own shareholders, cave rescuers, and of course, the site of his own shadow. He was rather unceremoniously removed as a CEO only a few weeks ago, though he remains on the board and of course, he's still a major shareholder. So I don't think we're close to seeing him being in any way chastened. Although, I think as we reported on the gigs actually with you a couple of weeks ago, he may have finally come up against a foe.

He can't defeat, which is Mexico's CRT, the body that regulates tequila production, which has come out rather forcefully against his plans to produce Tesla. Keila, is that a view reflected by market experts as well? About the tequila or tech companies in general? The tech companies in general.

OK, well, some analysts are remarking that the new generation of tech companies has responded less forcefully than traditional companies would. One reason for that may be the relative inexperience of a lot of tech CEOs. You know, we forget that the CEOs have massive corporations, generally corporate veterans. They've been blooded at many corporations, often in several industries, and they've been through these kind of ebbs and flows of the business cycle countless times.

In the tech sphere, the CEOs are often at the company they founded, a company that has gone from being start-up to a colossus, literally in only a few short years. So we often hear the complaint, especially with tech companies, that there are no adults in charge. Which is fine when everything's very well. But as we've seen over the last couple of years, the tech industry, you know, it's often a bit chaotic and incoherent when things aren't going well.

So structural issues get resolved too slowly rather. Stakeholders aren't respected, and then they start to be hit with criticism from all sides. But, you know, market fluctuations are a normal part of the business cycle. What's different now?

As I said, I'm not a financial expert, as I'm not a doctor. But really, from what I can see, actually nothing's different. I think it's more symptomatic of us falling out of love with Silicon Valley and with technology in general. So we haven't reached peak technology?

Not even close. I'm sure I think there are some issues that we're coming to grips with earnings for a lot of tech companies. They're not always matching investor expectations. We have a lot of tech companies that have multi-billion dollar valuations, whether they're publicly listed or still held privately.

But they really don't earn that much money. So I'm going to talk about Tesla again. Wonderful. Under the hatchet job?

No, I'm going to be very fair to the company. One of the things that for me makes it so hard to reconcile Tesla as an investment is that I don't think it really is a disruptor in the car industry. It's actually tried to replicate a lot of the infrastructure of traditional car companies, especially when it comes to manufacturing ability with the plant. And it's nowhere near as able as the traditional car companies who have global operations and they've had those global operations for decades, if not close to 100 years in some cases.

So how can Tesla compete with their supply chains or their economies of scale? So when you look at companies like Nissan and Renault, which are also having their own share price, I was over the last couple of weeks, thanks to Carlos Gosin. These other companies can share parts across several different models of car in plants across the world. And that's very common in the auto industry, but it's not common for Tesla.

You think Tesla's really doing an incredibly difficult task in a hyper-competitive industry? I couldn't have phrased that better if I'd written it myself. I think Tesla has a good chance of succeeding if it can make it to the long term. It's innovative, it has a pretty good set of products, but cars are a long term commitment for both consumer and manufacturer.

And also for the third party companies in that network that provide the fittings and the fixtures and the servicing and all these kind of ancillary services. So unless you're someone who is buying in the supercar category, most of us actually buy a car and expect to keep it for a few years. It's a practical decision. We look for car makers who have the infrastructure to maintain and service those cars.

We're looking for companies with longevity. So for a company like Tesla to demonstrate that its new and has longevity is a very, very difficult prospect. And this is relevant to peak technology. Because I think that consumers and investors are starting to see tech companies in a very different light.

It used to be that the hot new tech company went public. Those who were able to grab a chunk of that IPO flipped the shares and made a killing. And then in some cases, the company went on to become my space or friendster with literally no market value at all. But venture capitalists on the other hand, don't seem to be put off because there are still massive rewards to be reached, especially when you're one of the groups that gets in very early.

But I do wonder if we're at the end of that period of these kind of firework IPOs. I think in future we'll see fewer companies listing on the basis of their potential and more listing on the basis of actual cash flow and profitability. All right, we're going to take a short break. And when we come back, is this the end of Silicon Valley?

Of course, you are listening to Matt's Blaine here on BFM 89.9, the business station. Beyond frivolous mishmash, BFM 89.9. BFM 89.9 at the business station. Now welcome back to Matt's Blaine.

Before the break, we were talking about the term peak technology and asking if we've reached the end of our tether. Have an interesting question. Have you dreamed of the end of Silicon Valley? I have flown with the three-eyed raven over a ruined Silicon Valley.

I have for seen its charred remains, the flash fires that came from the energy company developing miniature supernovas jumping to the biofuel innovation lab in the lot next door. And the heap of molten metal resembling a jagged throne that the fires left behind. That's a yes, then, I suppose. That's a yes, yeah.

But my lucid dreams are obviously not fact. But I am actually far from the only one who's thinking along these lines. So the economist featured a cover story about Silicon Valley's demise on its September, one of its September cover stories. The story highlighted various reasons ranging from costs of living and bringing up a family, the high costs of hiring and retaining talent, and the fact that digital infrastructure and collaborative tools make it easier to locate startups outside the valley than it was five years ago.

Right, we addressed some of those issues in episode 53 a couple of weeks ago. Quite right, so no reason to go off-peast and rehash them here. Although I am going to go off-peast and take a quick detour to bring up something I discussed with you on geeks the last time we were here together. The new land-grind egg?

That's the one. A US congressman called Ro Cana is proposing legislation that would set up high technology schools across America. The idea is that the talent would help to drive new technology industries in the region surrounding the schools. And that way people don't learn to code immediately head out to California.

It's early days, but it could do more to revitalize America's heartland than any amount of cosmetic coal mine reopenings. OK, let's assume Silicon Valley falls out of favor. What replaces it? Well, as Silicon Valley sinks, a new Leviathan will undoubtedly rise.

And if we go back to our discussion a couple of weeks ago, I think it might be those damnably delicious donuts again. We'll leave Silicon Valley, possibly for Sugar Mountain, where baking innovation will help us to develop the donuts of our dreams. So much in iteration. Forget the unicorns.

We want donuts with horns and sweet delicacies that will rain down on us from the highest peaks of Sugar Mountain. OK, so that's clearly Matt's pro placement for Chris McGree and Dan for this week. Now, of course, we're not going to replace a valley with a mountain. And again, we're back to these kind of Game of Thrones-type analogies.

So I love a fair with technology maybe over, but that's partly because what was once novel is now normal. We don't swoon over products and announcements anymore, partly because our phones and computers can do things that we once needed. A whole bunch of other gizmos to do. Even those home control systems that everyone is tapping right now, once you've attached everything to your router, you can control it all with your phone and often now by voice.

We're just not excited or wowed anymore. Well, we've become really mad at the fact about it. I mean, imagine somebody back in the 1990s, we already have the internet back then. But imagine them looking at the prospect of self-driving cars being on the road within a couple of years, sometime in the 90s.

That would be considered to be miraculous. You'd never get that subject off the newspaper covers. And if you don't know what a newspaper is, you can tweet Richard. And I'm sure he will explain to you.

But to us, the idea of self-driving cars has become such an inevitability that we can see here discussing whether they would be a good or a bad thing. The technology that, well, in fact, absolutely incredible and incomprehensible technology that drives it is something that we just take for granted. And that's what's so mind-blowing about our acceptance and our trivialization of all of this technology and innovation. And we do that over and over dozens of times a day.

There are all these fantastic things that we don't give a second thought to. Where does this leave us in relation to peak technology? I don't know. I'm kind of bored with the subject now too.

No. You know, the idea that we've reached peak technology really is nonsense. It's as nonsense as the idea that was fashionable in the 1950s, that we would soon know everything that there was to know about science. Or earlier people thinking that the world was flat and the moon was made of cheese.

Incidentally, the Flat Earth International Conference was actually held a couple of weeks ago with keynote speaker and corpse disrespecting YouTube star Logan Paul. It is possible that Paul was actually trolling the Flat Earthers, especially as he struggled to maintain a tone of sincerity as he told a daily beast reporter that if the world was round, we'd all be wearing shoes with curved soles. Isn't he also the one that said Australia was an invention, everybody living there was a hologram or something? I think along those lines.

OK, that's a timely different tangent, though, right? Well, actually, this one isn't so much of a tangent. It's a cunningly placed analogy. As I said, we have all of this incredible technology.

You can take plain journeys that allow you to see the curvature of the Earth, but that hasn't stopped the Flat Earth becoming a viable conspiracy theory today. I mean, it's growing in popularity. And when you look at most conspiracy theories, they're really easy to debunk with even basic science and information. And I think this is kind of part and parcel of this idea of peak technology, this idea that we don't like technology anymore.

If we still had the technology and knowledge we had in the 1950s, you'd all be listening to this show on a valve-based radio, and we would sound like we were speaking from inside a tin can very, very far away. You'd have a car with no air conditioning that broke down three times a day. There would only be three types of breakfast cereal. You know, it would almost be the dark ages.

And people would actually be communicating verbally instead of sending WhatsApps. It would be horrible. You'd have to manually unwind and wind up your car windows. If you had to, we'd know at all.

Right, so this is what we're coming back to the idea that technology is a new normal. Well, that's why I've been talking about donuts for the last couple of shows. You know, we have to find something that we can get excited about. It could be technology or science or politics or donuts or dairy-free cheese.

You know, for a while, we were really excited about space exploration. But these days, the old guy bagging your groceries has probably been on a space mission. Video games consoles dominated the early 1980s as did VHS recorders. And before Amazon made Seattle cool.

Sorry. Before Amazon made Seattle cool. Grunge did. And these things don't stop just because our attention switches.

Precisely, we're still exploring the stars, even if it's with probes, more often than with manned missions. Although we will be talking about Mars, Musk and manned space exploration in Geeks after the break. I guess that very few people could tell you who is currently growing the International Space Station, which is an engineering feat that is as close to a miracle as any of us are ever likely to witness. Incidentally, I took a spacewalk on the ISS this week.

Thankfully, it was only virtual reality because I ran out of oxygen and died. But, you know, look at space invaders. Look at Pac-Man. Compare those games to something like Red Dead Redemption 2, a game that literally makes friends with you and then blows the hole in your head.

Yeah. You know, big deal if we've fallen out of love with Facebook and smartphones and streaming for TV. We will find other things to love. And even though we don't love them anymore, smartphones are still going to get better.

And Facebook will keep adding more and weirder buttons and tabs to its eyes. What do you think the next big thing will be then? I mean, who knows? We're in a post-truth world where predictions have absolutely no meeting.

Maybe the next wave will come out of Silicon Valley. Maybe it will come out of land grants or a similar legislation worldwide. We're on the verge of so many mind-bending developments that, in a way, it's no surprise that we're switching off. Do you think that's some of the innovations too big for us to comprehend that?

Well, we genuinely have no idea what kind of future quantum computing could unlock for us. We talk about stuff like AI, but the added boost to processing that quantum computing offers might allow us to solve problems that have eluded us throughout history. It might help us to discover where in the universe we are most likely to find intelligent life. It could help us to cure the common cold or develop new gene technology tools.

Our understanding of the world might be radically transformed by this kind of technology, simply because we have the ability to compute tasks and come up with theories that could have taken a human lifetime. We inferred the computers we had only a few years ago. But quantum computing and a lot of these new technologies challenge our ability to understand how they work. And that can be really alienating.

Meaning the better technology gets the less we like it. It does sound really odd when you say it out loud, but yeah, exactly that. I mean, if we go back to quantum computing, we're talking about a machine that we can create, which is able to make use of a dimension that we can't experience. It sounds like the most outlandish Z-grade science fiction, but it's a living reality.

It's something that we actually have. So technology like this may make our future, assuming that we have one, as long as we don't blow ourselves up or destroy the planet for Amazon and Elon Musk who got their Mars colonies ready, it may make our future genuinely unforeseeable. Because of the extra dimension. Well, that's true, but not quite what I meant, but because of the knowledge that they uncover.

So knowledge that may set our species off in new directions. It's the same story with artificial intelligence. We're building machines that process information and learning ways that we can't understand. So our knee-jerk at reaction to that kind of development is one of fear, or very simply, reservation.

But that ability to think in new ways is a bit like the quantum computing. It's accessing that dimension of thought that we aren't capable of. So whether we're excited about it or not, these developments and discoveries are going to be transformational. Who cares if the company is controlling them, have flamboyant figures like Elon Musk, or whether they're just crude by faceless people?

Could you argue that there's less incentive to push technology if people aren't as interested? But that forgets about the geeks. There were geeks and nerds on this planet long before being a nerdy geek was cool. We've had our time in the spotlight.

It's time to give the jarks and the popular kids a chance to shine. Most scientists and engineers and coders don't get into it for the glamour. I know those Hollywood red carpets are not going to sizzle half as much once the pioneers of fecal transplants and gene transferance technology stop turning up to the premiers in their bling-dap Maybacks. But they will continue to work and research and pioneer and discover.

Physicists aren't trying to figure out whether we can build Star Trek warp drives and teleporters because they think that other people will find it cool. They do it because they think it's cool. And frankly, they're going to carry on doing it for as long as there are new truths to be discovered. What do you see as the peak of technology?

I don't think we'll ever get there. I really hope that we don't. It's not a question of whether we find it interesting or engaging. In 10 years time, every product may be a technology product in some way.

And we're adding smart characteristics to everything you can conceive. We're even making food protein smarter. We've got a bunch of unbelievable new discoveries and innovations coming up in geeks after the break, for example. And that's just the whole for this week.

Maybe in a few years time, we'll have the geoengineering technology to make the earth flat, or at the very least, to make shoes with curved soles. But this is a mountain that we keep on climbing. And every time we think we're near the summit, we see that the real peak is over the next ridge. And while that frustrates some people, it is actually a really good thing.

Because that desire to search for those peaks, to gaze off into the distance and to figure out how to reach those things is for me one of the most unbelievable and astonishing things about us as a species. You don't want to wrap up with a Game of Thrones quote? If you give me 10 minutes for the other one, I can only think of the rumors right now. Of course, ladies and gents, of course, that was Matt Spleynd here on on BFFM89.9.

All about the fact of all the question of has the Silicon Valley burst. Has the Silicon Valley bubble burst? Stick around, we've got geeks all coming up just after these messages. You're, of course, listening to BFFM89.9, the Business Station.