Thought Starters: Andreessen’s forecast, Google Assistant, Brexit and the global wealthy

Thought Starters provides me with a chance to review and highlight some of the more important or interesting research and opinions that I’ve read over the last week or so. This edition looks at the Marc Andreessen’s forecast for the future of tech, Google’s recent keynote address and launch of Google Assistant, an update on Brexit and a look at how the wealth differ between countries among other matters.

The advertising industry has seen a lot of change over the last 15 years with the growth of online advertising, social media and smartphones all impacting how brands reach consumers. What Eric Chemi’s analysis of DB5’s figures suggests is that these changes haven’t really enabled the marketing industry to take a greater share of the pie with advertising budgets staying constant as a proportion of GDP:

Ad industry's flat-line growth

One more recent window into how the world of marketing is changing can be seen in product discovery. Amazon is now where more than half of online US consumers begin their product searches according to Spencer Soper’s report on Bloomreach research, with the online retail behemoth strengthening its hold on consumers thanks to its low prices, growing delivery network and Amazon Prime offering.

Marc Andreessen in an interview with Timothy B. Lee gives his view on where technology and innovation will be sending us next. This sees him cast his opinion on artificial intelligence, drones, employment and autonomous cars:

To me the problem is clear: The problem is insufficient technological adoption, innovation, and disruption in these high-escalating price sectors of the economy. My thesis is that we’re not in a tech bubble — we’re in a tech bust. Our problem isn’t too much technology or people being too excited about technology. The problem is we don’t have nearly enough technology. These cartel-like legacy industries are way too hard to disrupt.

Google’s I/O 2016 keynote saw the company launch various new offerings including the Pixel smartphone, Daydream virtual reality headset, Chromecast Ultra streaming device, Google Wifi router and Google Home smart home assistant. The most interesting feature from the Pixel smartphone is Google Assistant, offering a real step forward from Google Now and Apple’s Siri:

Ben Thompson’s analysis of the launch of Google Assistant points to it as signalling a real change in Google’s mobile strategy, with its move to limit the service to Pixel rather than all Android handsets:

Google has a business-model problem: the “I’m Feeling Lucky Button” guaranteed that the search in question would not make Google any money. After all, if a user doesn’t have to choose from search results, said user also doesn’t have the opportunity to click an ad, thus choosing the winner of the competition Google created between its advertisers for user attention. Google Assistant has the exact same problem: where do the ads go?

After all, if a user doesn’t have to choose from search results, said user also doesn’t have the opportunity to click an ad, thus choosing the winner of the competition Google created between its advertisers for user attention.

Sony is in the throes of releasing its Playstation VR headset which is expected to be a frontrunner in the race to get virtual reality in consumers’ living room. Brian X. Chen’s review suggests we’re still a long way off from having virtual reality in most of our homes:

Virtual reality is still in its early days, and it’s unclear whether it will ever catch on with people beyond gamers. If you already own a PlayStation, spending a few hundred dollars for the headgear and accessories is a worthwhile purchase to get started on virtual reality.

But for the average consumer, the thrill of virtual-reality gaming with PlayStation VR may be fleeting. Initially, virtual reality will probably mesmerize you because it’s so unlike any gaming experience you have ever had. But the scarce number of good games available today, combined with the fatigue you will experience after 30 minutes of game play, may drive you back to gaming on your smartphone or television screen.

Another area that might not live up to the current hype is self driving cars. We’re seeing Google and Uber trying out live experiments but there’s little sign of these being available to consumers (Tesla’s Autopilot is a much more limited version of self driving) and Tom Simonite suggests we’re not likely to have this situation change anytime soon:

But don’t expect to toss out your driver’s license in 2021. Five years isn’t long enough to create vehicles good enough at driving to roam extensively without human input, say researchers working on autonomous cars. They predict that Ford and others will meet their targets by creating small fleets of vehicles limited to small, controlled areas.

One area where we have seen real change is in consumers’ growing adoption of digital photography, fueled by the now ubiquitous smartphone.  It’s been interesting to watch is how smartphone  software is increasingly giving high end cameras a run for their money in their picture quality as Michael Zhang’s comparison of the iPhone 7 and Leica M9-P attests to:

iPhone 7 vs Leica M9-P: a side-by-side photo comparison

Diane Coyle provides a valuable refresher on how the move into the digital age is changing our conceptions of property ownership:

Conceptions of property seem to be evolving again with the rise of the “sharing economy”. The ease of using digital matching platforms make the consumer’s decision to buy or rent less stark than in the past ; the legal ownership rights are clear but the economic choices and consequences are changing.
The wider point is that technology and the law have between them significant effects on the kinds of market transactions that take place. Some consequences might seem minor. Others concern land grabs for economic assets.

Brexit has been thrust back into the spotlight by British Prime Minister Theresa May’s announcement that the country will start formal negotiations for Britain to leave the EU by March 2017. Gideon Rachman criticises May for essentially giving away one of the few bargaining chips that the country has in its negotiations with the European Union:

So why has Mrs May been so reckless? The short answer is politics. If the prime minister had delayed triggering Article 50 any longer she might have faced a revolt from Conservative MPs, who would have feared that she was backsliding on Brexit. By making her announcement just before the Tory party conference, she has also guaranteed herself some favourable headlines and applause in the conference hall. She may have bought herself another couple of years in 10 Downing Street. But she has also significantly increased the chances that Brexit will cause severe damage to the British economy.

Theresa May and British foreign secretary Boris Johnson would be well advised to give an ear to Centre for European Reform director Charles Grant who provides some valuable advice on how we would best negotiate Brexit.

There’s been a lot of talk of protecting manufacturing jobs in both the US and UK but does this really reflect problems of contemporary society?  Binyamin Appelbaum suggests it might be more a case of reflecting the group that shouts the loudest rather than those most worthy of support:

The enduring political focus on factory workers partly reflects the low profile of the new working class. Instead of white men who make stuff, the group is increasingly made up of minority women who serve people. “That transformation really has rendered the working class invisible,” says Tamara Draut, the author of “Sleeping Giant,” a recent book about this demographic transformation and its political consequences.

The old working class still controls the megaphone of the labor movement, in part because unions have struggled to organize service workers. Manufacturing was, logistically speaking, easier to organize. There were lots of workers at each factory, and most knew one another. Service work is more dispersed and done in smaller crews. Workers living in the same city and employed by the same retail chain, for example, would likely know only a handful of their compatriots. Fostering a sense of trust and shared purpose under these conditions is difficult.

Tyler Cowen draws on Jonathan Wai and David Lincoln’s research into the global wealthy to point out differences between countries with some counterintuitive results:

Percentage of rich individuals who primarily inherited their wealth

Our World in Data provides a reassuring forecast of the growing levels of education we can expect in the coming years. This should go someway to addressing the issue of global population growth and increasing standards of living:

Projection of the total world population by level of education

The Economist has collated Nobel laureates’ age at the date of their award and the trend is definitely older (with the exception of the Peace category). Now if only I’d achieved half as much as Malala Yousafzai had by the age of 17:

Age of Nobel laureates at date of award

Amnesty International has released the following map which points to the disproportionate load that some countries are bearing in the hosting of the world’s refugees. What makes this even more concerning is the state of many of these countries’ economies leaving them ill placed to host refugees compared to the countries of Western Europe and North America:

The world's top 10 refugee host countries

The featured image at the top of the page is Stone Quarry by Zest in Villars-Fontaine, France which was published in StreetArtNews.

Thought Starters: A look at Facebook, Snapchat, hidden truths and London

Thought Starters provides me with a chance to review and highlight the more important or interesting research and opinions that I’ve read over the last week or so. This edition looks at adtech bloat, Facebook and Snapchat’s role in the social media landscape, the truth behind the statistics and London’s changing economic landscape. 

There’s been a lot of coverage about the growing adtech bloatware face and the countervailing rise of ad blockers as consumers look to improve their user experience and increase their privacy. I have considerable sympathy for the media sector which is in many cases scrabbling for a decent revenue model. But the situation doesn’t look great when consumers end up footing the bill with growing data chargers as highlighted by Rob Leathern:

When I cover deceptive ad practices/fraud, some people find it interesting, sure, but when I have explained how mobile websites are making far less money from ads than you’re paying in mobile data… People. Got. Pissed.

A recent report in The Information (paywall) points to consumers using Facebook less to share their personal thoughts, although figures from GlobalWebIndex indicate these might be part of a broader trend:

Decline in personal sharing on social networks

Ben Thompson puts Facebook’s position in the context of the broader social media landscape, contrasting it with the more personal mediums such as Snapchat (see below). Facebook’s launch of Moments and Facebook Live suggest it’s not happy being typecast in just this role:

It is increasingly clear that there are two types of social apps: one is the phone book, and one is the phone. The phone book is incredibly valuable: it connects you to anyone, whether they be a personal friend, an acquaintance, or a business. The social phone book, though, goes much further: it allows the creation of ad hoc groups for an event or network, it is continually updated with the status of anyone you may know or wish to know, and it even provides an unlimited supply of entertaining professionally produced content whenever you feel the slightest bit bored.

The phone, on the other hand, is personal: it is about communication between you and someone you purposely reach out to. True, telemarketing calls can happen, but they are annoying and often dismissed. The phone is simply about the conversation that is happening right now, one that will be gone the moment you hang up.

The growth of smartphones has had more than a helping hand in the growth of sexting among teenagers. This has raised serious questions for lawmakers who face criminalising teenagers using child pornography laws that were designed with different situations in mind and risk compounding the problem as Madeleine Thomas reports:

“You can allow them, or you can prohibit them, but [teens] are going to sext and they are going to have sex regardless,” Hasinoff says. “The potential for harm that technology creates is legitimately new, but the way we’re dealing with it is just completely the wrong approach. If you think you can stop it by criminalizing consensual sexters, it just doesn’t make any sense.”

Snapchat is one of the platforms most closely associated with sexting with figures from comScore showing the disproportionately high share of younger age categories when compared to other social networks in the US:

Demographic Composition % of Major Social Networks

Snapchat’s recent launch of an updated version of its mobile messaging platform with a richer range of features again put it in the spotlight and left many marketers wondering how they can get onboard. Dakota Shane Nunley does his bit to pour cold water on some of this excitement pointing out there are plenty of situations where Snapchat simply doesn’t make sense:

Snapchat is not for:

  1. Big brands looking to be “relatable” (unless those brands are buying space on Discover, Filters, or paying Influencers)
  2. Businesses not based around an individual or personality
  3. People without a social following elsewhere
  4. Most small to mi-sized businesses

The commercial launch of Oculus Rift has left many commentators wondering whether virtual reality is the next big thing. The platform’s hardware costs mean that it’s not going to challenge the smartphone for the foreseeable future but that will change over time. For a closer look, it’s worth having a read of Benedict Evans’ look at the different development paths and the relationship with its cousin, augmented reality:

If one can answer those questions, then AR has the potential to be a new computing platform in a way that VR cannot – AR can be with you everywhere whereas VR needs a room, and so AR could be the next universal computing platform after mobile. 

The transition from physical to digital distribution of music has been a far from smooth one with no shortage of musicians complaining that the shift to a streaming model is leaving them out in the cold. Figures from the International Federation of the Phonographic Industry suggest the industry may have now turned a corner with the fastest revenue growth since 1998 – whether that money reaches musicians remains to be seen:

Music sales growing at fastest rate since 1998

The Guardian is one of my go to news sources even if I am not always in sync with their view of the world and their drift to a more lifestyle format. Given this, I was disheartened to read Michael Wolff’s analysis of the organisation’s management under Alan Rusbridger which suggests it may face the same fate of other newspapers struggling to make the transition to a digital world:

Alan Rusbridger’s disciples consider him a visionary, but the former Guardian editor oversaw enormous losses, a huge fall in circulation and a ruinous faith in free content. Now, as he returns as chairman of its parent company, has his legacy of unchecked idealism condemned the iconic brand to terminal decline?

Right through my university career I identified as politically correct reflecting strongly held views on the sexism, racism and homophobia of various aspects of contemporary society. Given this, I’ve watched with considerable interest recent debates around political correctness particularly in American universities of today with commentators pointing to activists overreaching and the silencing of broader debates. Whilst I feel too far removed to give a considered judgement, Greg Lukianoff and Jonathan Haidt’s article in The Atlantic and Lauren Modery’s commentary on Medium gave me plenty of food for thought.

Tim Harford has become one of my favourite commentators, separating the truth from fiction in news reports via the More or Less radio show/podcast and his regular column in the Financial Times. A recently penned feature article profiles the distortion of statistics and outright lies by politicians looking to shore up support among the general public – something well worth reading as UK approaches the Brexit referendum and the US head towards their presidential elections:

Perhaps the lies aren’t the real enemy here. Lies can be refuted; liars can be exposed. But bullshit? Bullshit is a stickier problem. Bullshit corrodes the very idea that the truth is out there, waiting to be discovered by a careful mind. It undermines the notion that the truth matters. As Harry Frankfurt himself wrote, the bullshitter “does not reject the authority of the truth, as the liar does, and oppose himself to it. He pays no attention to it at all. By virtue of this, bullshit is a greater enemy of the truth than lies are.”

Whilst we’re on the subject of politics and its impacts, CEPR have had a look at the economic impacts of Brexit and it’s unsuprisingly not positive:

The economic consequences of leaving the EU will depend on what policies the UK adopts following Brexit. But lower trade due to reduced integration with EU countries is likely to cost the UK economy far more than is gained from lower contributions to the EU budget.

Even setting aside foreign investment, migration and the dynamic consequences of reduced trade, we estimate the effects of Brexit on trade and the UK’s contribution to the EU budget would be equivalent to a fall in income of between 1.3% and 2.6%. And once we include the long-run effects of Brexit on productivity, the decline in income increases to between 6.3% and 9.5%. Other possible political or economic benefits of Brexit, such as better regulation, would have to be very large to outweigh such losses.

Diet is one area where we’ve seen the media and public opinions shaped by evidence that often falls well short of gold standard in scientific research. Ian Leslie’s fascinating coverage of attitudes to sugar points to a situation where strong scientific wasn’t enough to change societal norms with personal politics getting in the way of the truth (see below). Unfortunately many countries are now paying the price with growing obesity rates:

It is a familiar complaint. By opening the gates of publishing to all, the internet has flattened hierarchies everywhere they exist. We no longer live in a world in which elites of accredited experts are able to dominate conversations about complex or contested matters. Politicians cannot rely on the aura of office to persuade, newspapers struggle to assert the superior integrity of their stories. It is not clear that this change is, overall, a boon for the public realm. But in areas where experts have a track record of getting it wrong, it is hard to see how it could be worse. If ever there was a case that an information democracy, even a very messy one, is preferable to an information oligarchy, then the history of nutrition advice is it.

There’s been growing awareness of discrimination faced by women in the workplace, reflected in the lack of women in leadership roles and the gender pay gap. Whilst a lot of attention focuses on the need for flexibility in the workplace and familial demands, research from ICEDR suggests that what thirtysomething women are really interested in is better pay:

The top 5 reasons people in their 30s leave companies

London has long had a character that set it apart from the rest of the UK both in terms of its international character and its economic output. One of the more recent consequences of this is the growing squeeze on poorer residents, reflected in the decline in the number of children eligible for free school meals as London’s central boroughs increasingly gentrify (see below). It’s no surprise that first time buyers are finding it increasingly hard to get on the property ladder compared to the rest of the country with regulation compounding the problem of population pressures:

Free school meal eligibilitySilicon Valley with its sea of office parks provides a rather different development model to London. Hunter Oatman-Stanford provides a fascinating look at the growth of this suburban corporate campus model as companies looked to flee inner cities. Unfortunately by sealing themselves off from the rest of society, businesses risk losing touch with the noisy and chaotic world they’re in many cases trying to serve:

While many modern office developments specifically include lounges or multipurpose zones where employees might randomly interact with one another, these spaces are entirely limited to office staff—with the aim that conversations would further relationships or spark ideas beneficial to the business. “I look at Apple’s Norman Foster building, and it’s 1952 all over again,” Mozingo says. “There’s nothing innovative about it. It’s a classic corporate estate from the 1950s, with a big block of parking. Meanwhile, Google is building another version of the office park with a swoopy roof and cool details—but it does nothing innovative.”

Online dating is reshaping the way people meet their flings / boyfriends / girlfriends / future partners. You can see this in Michael J. Rosenfeld and Reuben J. Thomas’s research from the US (see table below). The 2009 cut off date suggests the graph is substantially underreporting the current situation given the growing penetration of smartphones, services such as Tinder and growing social acceptance of online dating.  Alex Mayyasi reports on some of the consequences of this trend including a likely growth in assortative mating which is ultimately likely to undermine social mobility:

How straight couples met their partner

Whilst we’re on the subject of relationships, it’s worth reading Gay Talese’s account of one motel owner’s voyeurism. You might not learn a whole lot about human relationships, but it does makes for an entertaining read.

The featured image is a GoddoG mural from Bordeaux published in ekosystem.