Augmenting Our Reality

We have transformed our world by automating our everyday tasks with computers. We replaced calculators, accounting ledgers, and typewriters. Computers help us consume, create and deliver information. Letters, memos and reference books are a thing of the past. Increasingly we have crawled into our computer screen to work, play and communicate.

Last year I wrote about wearing our computers and embedding computing in ourselves. I firmly believe the next big thing is computer augmented reality -- bringing us out of the screen and putting the screen on the world around us. A future where rather than doing things on the computer, the computer does things on us.



Pranav Mistry demonstrates this future. It is worth a few minutes to check it out.

Change We Can Believe In

Don’t you just hate influential vested interest groups that make change impossible?

“What’s wrong with our country?,” we wonder. It’s not just that the numbers are bad – unemployment, foreclosure rates, uninsured and segment after segment needing rescuing. We know something is wrong. We want change, but change in this country – where every vested interest is armed with lawyers, lobbyists and PR experts – is hard. We suspect that we are up against something big and influential.

We are on a hunt for the culprits who are keeping us from this needed change: greedy bankers, corrupt financiers, evil pharmaceutical companies, corporate lobbyists, and the list goes on. But the vested interests that keep us from meaningful change are much closer to home. In fact they include my home and probably your home.

Our system is rife with structural distortions that cause or aggravate our problems and prevent urgently needed changes. One reason this is hard for us to see is that it deliberately favors people like us: educated and employed. We who own a house, have employer-provided health care, and figure we will survive our later years even if social security is ill-funded.

We have long enjoyed a system that significantly subsidizes these basic structural supports. We pay no tax on our mortgage interest or health care payments and – amazingly - contribute only the same fixed amount to social security regardless of income.

There was a time when these subsidies served a purpose. But since the middle to upper income families will buy houses, have health insurance and invest in their own retirements even without these subsidies – they have outlived their usefulness.

Bernie Madoff’s culpability may be more singular and despicable than our quiet political insistence on mortgage deductions, but that deduction is what distorts home prices, encourages risky mortgages and fuels mortgage backed securities.

It is impossible to justify disincenting rental property given rising homelessness coincident with nearly 70% home ownership. We have reached a point where the disproportionate support of owner-occupied suburban communities is destroying our social fabric.

Similarly, tax advantages for employer-paid health insurance effectively make those uninsured and under-insured impossible to cover with cost-effective private plans. As long as employer-paid health insurance is subsidized, we are disincenting other options when we need them most.

Capping social security deductions – pretending this is actually a public retirement plan instead of a tax-supported social safety net – is a cynical regressive tax that will do nothing in the coming decades to aid retirees.

Meaningful change starts with correcting the structural distortions we take for granted:

1. Phase out the mortgage interest deduction. Start by capping it at some comfortably high number. Reduce the cap each year until it is phased out all together. Five to seven years should give everyone time to make adjustments in their financial and tax planning.
2. Make employer-paid health benefits taxable and individual premiums non-deductible. This will level the financial playing field and make it possible to address more affordable health care and broader access.
3. Eliminate the cap on Social Security payments.

Fixing these foundational issues paves the way to the change we truly need. Putting a small amount of good regulation back in place at investment banks and in other key spots to help ambitious types focus on long-term goals should be easy by comparison.

Conversely, if we do not change these distortions nothing else we do will make much difference.

Changing the IC'y mind set

Last year we took our family to China for spring break. People asked, hell our kids asked, “why go to China for Spring Break? Hawaii is cheaper and warmer.”





My wife and I felt it was important that in this time unprecedented change, we prepare ourselves to understand what is happening. If we think of China as peasants in rice fields, or hordes of poor in the streets of urban centers, we are ill-equipped to adapt to the change that is sweeping over us. In ten days we only scratched the surface, but I think it helped each of us get a better feel for what is happening in China.

The trip gave us the opportunity to experience what Hans Rosling teaches – we need to change our mind set to match the current data set.

TED Hans Rosling from Pedro Andrade on Vimeo.

India promises to have a similar impact to China.



There has been lots of talk of the BRIC countries; although it doesn’t work well phonetically, I think we need to focus on the IC countries. Perhaps they are better thought of as CHI.

Cooking - A Genetically Encoded Evolutionary Adaptation

Always a Michael Pollan fan, I jumped to his New York Times Magazine cover article on “decline and fall of everyday home cooking.” It without a doubt struck a nerve in our collective consciousness. Since it appeared, I’ve herd multiple interviews of Pollan motivated by the article. Even today’s NYT Magazine two weeks later has Pollan as the lead subject in the Letters section.

I love cooking: partaking probably 4 times a week. There is something profoundly satisfying about it. And, apparently with good reason. In Pollan’s NPR interview last week he reference research by Richard Wrangham at Harvard. Wrangham conjectures that cooking is what allowed us to redirect our biological energies from digestion to thought. Not needing the extensive digestive system required to process raw meat and grasses, we evolved a simpler gastrointestinal track and diverted the nutrients and oxygen to our now expanded brains.

Wrangham goes as far to posit that cooking is what separates us from primates and all other animals: Not thumbs, language, tools, or social organization. Without cooking, he argues, we don’t biologically achieve human intelligence. His theories and research are summarized in his book, Catching Fire.

Intuitively this makes a lot of sense to me. Memories from my childhood of the family crowded in the kitchen with my mother cooking dinner are indelibly burned in my brain: the mere whiff of browned butter brings them rushing back. And today I find no greater pleasure than hanging with friends around the BBQ, wine in one hand, and tongs in the other. Cooking connects in our psyche at a very deep level. It is easy for me to accept that this is genetically encoded evolutionary adaptation.

So I wonder what it means culturally if we stop cooking. Is it, as Pollan implies, evolutionarily regressive--a step toward Armageddon? Or is it further adaptation – replacing expensive (biologically and materially) individual cooking with collective food preparation? With a population of 7 billion (heading to 9.5 billion), a strong argument can be made that factory farms and processed food are critical to our next evolutionary steps. Even if true, I am happy to revel in my relatively Neanderthal ways, getting profound pleasure in searing meat on an open flame in my own back yard. Here’s to our frontal lobes.

Cheers

All the news that's fit to print

Yesterday, I returned from 10 days in the mountains – fresh air, sailing, long hikes, lazy mornings. Nestled in the forest on a high mountain lake, our cabin has no cell coverage, and only dial up Internet. For my family summer vacation has come to mean forced withdrawal from electronic communication. But what I miss most when cloistered in our mountain retreat is the daily newspaper.

Friends joined us mid-week and parlayed the goings on of the outside world – the Obamas went to Russia, Billy Mays died, GM came out of bankruptcy, and Goldman Sacks was making more money than ever. Nothing earth shattering, but I still felt out of the loop not knowing.

We are living in the dawn of the digital age, a modern renaissance, but the decline and death of the daily newspaper really bothers me. I like holding a paper in the morning. I just absorb more info in my groggy morning state looking at news print rather than staring at a screen.

But the bigger issue is the news itself. The online sources that are displacing newspapers are largely opining about the news and not reporting. Researchers at Cornell analyzed some 90 million online articles during the election cycle last year – Aug to Oct 08. Of all the discernable story lines only 3.5% originated from an online source before appearing in a traditional news outlet. So 96.5% of all stories originated with traditional reporting and were later picked up and discussed online.

The implications are obvious. We need to find ways to preserve and support real reporting, real journalism. We can’t let reporting die with newsprint. Blogging as it exists today is not professional journalism. This is the challenge of the modern information age – come up with a business model that can support broad professional, diverse, independent journalism. Until that emerges, I will happily pay the recession driven higher subscription rates for daily delivery of the New York Times.

Startup Now: The Oregon Opportunity

While we obsess over the impact of the economic downturn and the State’s unemployment, we risk missing the incredible opportunity Oregon has. Obama recognizes this crisis is a once in a life time opportunity. Marching to the tune of “never waste a crisis”, the nation is collectively spending $1 trillion on not just solving the credit crisis, but recreating our social economic landscape.

We are going after climate change; international instability and terrorism; energy scarcity; and the aging population in the developed world, just to name a few. This combined with the international economic downturn is driving unprecedented global change. Oregon has the opportunity to play a lead role in this change and drive job growth at the same time.

Oregon has the expertise and experience in the segments that matter right now:

• Alternative Energy
• Urban Design
• Medical Records
• Opensource Technology
• Mobile Technology
• Elderly Care
• Universal Health Coverage
  

Oregon has attracted young highly educated people who flock here for the quality of life and affordability. For instance Portland has among the highest percentages of college degrees, spending on book purchases, and broadband penetration.

Venture Capitalists invest in Team (the skills and drive of the individuals involved) and TAM (total addressable market – the size of the opportunity). Some smart funds like Voyager and Madrona see Oregon’s potential and have put people here. In the past Oregon has lacked the will to drive growth. Voyager and Madrona are here as not to miss a potential opportunity: they won’t drive anything. The initiative has to come from the Oregon community.

Local money has been shy and scarce. Worse, to date, the state shows little support for its own potential. Only trivial amounts of capital have made their way to Oregon startup ventures.
If we don’t invest in ourselves it is worse than just missing an opportunity. We marginalize our entrepreneurs and starve them to death. Why would anyone else invest in Oregon companies if we can’t even see fit to do so? It is like a mother not supporting their child, you start at less then zero.

Small businesses drive employment. Venture models have demonstrated the potential return of small growth companies. We have the opportunity to spawn high growth businesses that will deliver additional employment and high return on capital. These businesses will succeed because the crisis we face will economically reward new businesses the deliver solutions to our problems.

A proposal is a foot to direct $100 million of State controlled capital to Oregon startup ventures. This is the right move at the right time. This effort seems to have prodded our State Treasure Ben Westlund into action. He is now hosting an event on April 29 to catalyze Oregon investment.

The big question: will this result in putting Oregon’s talent and money to work? It is the right move at the right time and it deserves our support at every level, especially that of our elected representatives. Or will it just be an exercise by all parties involved to look like they are playing lip service to this grass roots push while fulfilling their fiduciary responsibility and maintaining the status quo.

Stimulate VCs

I am amused by the controversy caused by Tomas Friedman’s comments on stimulating venture capital. The discussion is missing the point. We shouldn’t be arguing if government money would help or hurt Venture Capital. Nor should we be arguing about whether funneling money through Venture Capital firms would create more or less jobs than giving it to GM or Ford. The discussion about venture capital is relevant because we should be discussing what kind of world we want to build.

The old world is dead. The one dominated by industrial giants. The ones listed on the Dow. Yesterday we sold that world and no one was buying. Today we are willing to pay less than we did more than 10 years ago. And all indication is we will discount it more.

So the question is: what's next? The die is cast; the government is the economic engine of the next several years. We the people get to decide what we put our collective capital and efforts into. We will invest in infrastructure and services. We will invest in bolstering manufacturing. We will remake the systems that deliver education, health care and social services. We get to reinvent and reprioritize how we produce and deliver food, water, transportation, and energy. And in our choices of what we build and how we employ, we will create a new world.

So I really don’t care if government money goes to any particular VCs. If Gurley can do better with just the private, pension, and endowment money, more power to him. What I do know is venture money a couple of decades ago funded people and ideas. Now it seems to go much more to companies with established revenue: companies that have little market risk. This use to be referred to as expansion capital. It was second round capital and came after development stage funding. Venture money use to focus on building great companies that create new emerging sectors. Now it goes increasingly to creation of products and services that may be attractive to large companies; essentially nothing more than off balance sheet R&D efforts.

I am all for stimulus dollars for VCs if it puts venture back in venture capital. Small growth companies have always been employment engines. There is perhaps no better way to create jobs than to invest in high growth companies. But the real win - new ventures will innovate and create the world we need. Saving jobs at GM won’t do that.

Like the New Deal and the Marshal Plan, this stimulus and recovery needs to be about building and recreating, not saving what was. So what kind of world do we wish to recreate. Let’s have that discussion.