Ed note: The following is a transcription of an interview with Tim O'Reilly webcast live (see video here) from the Cube at O'Reilly's Strata 2011 conference. Participants are:
- John Furrier, founder/CEO of SiliconANGLE.com
- Dave Vellante, Co-founder/Chief Analyst of Wikibon.com
- Tim O’Reilly, founder of O’Reilly Media
JF: I'm John Furrier, the founder of SiliconANGLE.com. We would not be here [at Strata 2012] without the support of O'Reilly Media, and O'Reilly Media is headed up by Tim O'Reilly. Tim, welcome back to the CUBE.
TOR: Great to be here.
JF: Tim, Strata is a huge success; your team's done a great job; it's been a fantastic conference – a range of topics from changing the business and society to the tech conversations from innovations around big data, but then also the existing players like data warehousing and business intelligence, so it's been fantastic. My first question to you is what are you thinking about these days?
TOR: One of the things I've been chewing on a lot lately is a piece that I read back in the '70s called “The Clothesline Paradox,” by a guy named Steve Baer. It was published in Stewart Brand’s CoEvolution Quarterly, and it stuck in my mind and came up again recently, and it was a piece about alternative forms of energy. It made the case that we were undercounting the impact of renewables in our energy economy. Of course, this was what, 30-plus years ago, and it used a humble analogy that said that when someone decides not to put their clothes in the dryer and instead hangs them on the clothesline, it doesn't move from our fossil fuel column of our accounting to our renewables column. It just disappears from our accounting. And, the point was our accounting doesn't necessarily match the real world, and this occurred to me recently in thinking about our economy in a variety of contexts.
I was very engaged with the piracy protests for example, and it struck me that the movie industry and the record industry were trotting out all kinds of what were seemingly bogus statistics about the economic impacts of piracy, and on the Internet side we were talking about “freedom.” And I said, no, we need to be looking at the economic side, too. What is this new economy that's growing up on the Internet? For example, music creators who are making money on YouTube with live events? It's kind of like the clothesline paradox; it's showing up in places that are not being counted. I've been thinking about that also around this notion that I have; it's kind of a slogan that we have at O'Reilly: “Create more value than you capture.” We have, it's a terrific example, in Goldman Sachs and other financial firms leading up to crash of 2008, of companies that were extracting enormous amounts of value from the economy but clearly, actually destroying value for the economy as a whole. And on the other hand, you have things like the Web, created by Tim Berners-Lee, put in the public domain, or open-source software, which created enormous value and yet not a lot of value capture.
We talk about innovation, and we talk about value creation, but we don't actually measure it. All we measure is the capture by people. So if you ask people to quantify the open-source economy, they might say, "Well, Red Hat was such-and-such size company, and mySQL was such-and-such size before it got bought," and of course, we totally miss the point of all these companies that exist because of this open-source software.
I think the same thing applies to a lot of what’s happening to Strata. We're starting to build all kinds of new services using data. Some of those data services have been well monetized. Others are still very much in their infancy. And, if you look at that sort of curve of value creation vs. value capture, we need to get a lot better at understanding that ultimately you will be able to capture value downstream from this creation. It might be captured by different people, but I'm trying to rethink the economy.
DV: You just may not be able to count it. We just came out with a study at Wikibon. It was sort of a "tongue and cheek" to quantify the size of the big data market because no one else was doing it, so we did it. So you know how we did it; we counted up the value capture and quickly realized that it’s virtually impossible to count this stuff because the value creation is so enormous.
TOR: Right, but what you can do, is start -- particularly if you show your work -- then it helps people evaluate are you thinking in a reasonable way; you can draw some assumptions. So for example, I was recently working with a company called Bluehost, which is a Web-hosting firm, and you know, they're looking at the notion that they've been able to deliver low-cost services to SMBs because they're able to use this free open-source software. And, there actually are studies of the economic impact to a small business having a Web presence. People can measure that and count that. So you can work backwards. We're talking about putting a study together based on their customer-base which will allow us to say here is an economic impact from the use of open-source software.
JF: Dave and I were talking with our guests this week about how big data seems to be a new industry by itself because of the massive innovations in value it creates; and it's kind of comparable to the PC revolution in a sense that we have no other way to draw an analogy to it, so it feels like that now. So, what's your perspective on where we are with big data? It's not just the computer industry, it's not just tech; it's a lot of things.
TOR: No, it's everything. Quite honestly, as we realize that we're really moving into this era of a networked economy – we've used that term for decades, but each decade it becomes truer – you realize how much data is the currency of that economy. It's the currency of science. It's the currency of entertainment. It's the currency of business. So, in one sense, Strata is about the infrastructure and the tools that support that entire economy. So, in that sense, it's sort of like having a computing conference, it’s like computers are now a part of everything. You can't buy a device that's not a computer.
JF: There's always a ramp up before you can really harvest. That's a risk in business; you have to ramp up to grow with growth, so you have challenges.
So how do we start establishing some accounting in this ramp of innovation and invention, not just within Silicon Valley, but globally, with data? Because we're talking to Abhi Mehta, one of your speakers here, about just the fraud data capture, the data creation value around that; it's trillions of dollars. It's not just 50 billion like we forecast in the big data market side. There has to be a ramp-up in the community. I guess it's an expense, if you want to look at it that way, but it’s a cost; it's an innovation cost, but then it will kick into some harvest. So, where are we? What's your perspective on that because it has to be accounted for? You talk about the scope, these things kind of play into that.
TOR: Maybe I'll take this in a slightly different direction. There are, I forget who it was, Cory Doctorow always quotes this line, and I forget who said it originally, "Every complex system has its parasites." A very complex ecosystem has its parasites.
When you look at the value that's being created, there are people who are free writers; there are people who are outright pirates. One of my favorite comments when the subject of piracy comes up, you know the real pirates are really patent trolls if you look at the real negative impact on our economy from a tech point of view. You look at the way that financial firms became pirates; whereas, the people who often are often referred to as pirates by the music industry are actually enabling this new value economy that just hasn't been measured yet.
I think we're in this really interesting phase where there all kinds of claims and counter-claims about who is creating value and who is destroying it; and probably the most important thing to recognize in a phase like that is that we don't really don’t know the answers yet. I think Larry Lessig made this point way back when he wrote his first book on code, Know the Laws of Cyberspace, which was simply to emphasize that let's not get the legal system involved; let's not write new laws until we let things run for awhile and we understand exactly how this is going to evolve.
JF: Last time you were on theCUBE, when we were at Strata 2011, it was the inaugural event. You were pretty humble. You said, "I'm just a trend spotter. I just make observations from the cheap seats," I think was your line...
TOR: Good memory there!
JF: I've seen it so many times, and I get so many comments on e-mail from our audience, but I want to give you more credit. I kind of view you as a social scientist because you have the intellectual and practical experience. But also we're living in an age where social science is intersecting with computer science -- that's the motto of SiliconANGLE.
One of the things that Dave Vellante and I are tracking right now is as we move from this wild-west social web where people are anonymous, you have anonymous hackers, there's a trend around identity and trust becoming mainstream, where these new generations of users are looking at trust paradigms, where identity and trust are core tenants now in the equation.
I know you have had a lot of discussions in the past around identity and trust, but how is that playing out today? And what roles do you see identity and trust playing in the future as big data analytics makes the world more transparent? Society is measurable now in an instrument. We can actually measure a global society, and actually see behavior, and so trust and identity take a whole new dimension. What's your perspective on this?
TOR: I kind of got some new thoughts. I was just down at TED, and Reid Hoffman gave a talk there about the shift from the Information Age to the Network Age, and the contrast he gave was that we just used to collect information, and now we have to see networks. And trust is a great example of that. You can try to measure and model trust by collecting a lot of information about someone, or you can measure and model trust by looking at the network of other people who trust them. That's also a kind of information.
I think we're still in the early stages of moving out of kind of the model of where we're establishing a history for someone based on all their transactions, and into a model where we're understanding more about people on the basis of the networks they belong to, and I think Reid has been somebody who has seen pretty deeply into that. Probably more deeply than other social networks that are better known than LinkedIn.
JF: It's a fascinating conversation. My final question: What are you seeing around data changing the world? Because that's always been kind of a hallway conversation during the sessions here at Strata, and a lot of the O'Reilly events, you guys have been known. You do have a good business. It's very profitable and growing rapidly. But your company also gives back to the world. I know that's a mantra for you guys.
TOR: That's self interest by the way. If you create a healthy ecosystem, and you play a good role in that ecosystem, then you'll do well. I think one of the things that a lot of companies forget is that if you take out more value than you create, the whole ecosystem eventually falls down. It's kind of like everything from the environment to the financial crisis to business; really, we forget those simple rules of how to live well.
JF: We're talking about human capital involvement in data. We're seeing companies like Accenture, and other consulting companies, have old models around how they deploy human capital to serve the needs of their customers. But now with machines and data, there's still a human capital element. We’re living in a data economy, a data society, and yet there's a lot of public data. But as data becomes the scarce resource that creates value – to your point, as more data becomes private, it's less accessible. What trends are you seeing and what are you watching around data?
TOR: Well, first off, data doesn’t have to be free and public to be valuable for the public good. So for example, I was talking the other day with Nathan Wolfe of the Global Virus Forecasting Initiative. They're becoming a virtual CDC for developing countries that don't have the resources. They're looking at how to turn that into a business, but you know it's still for the public good because identifying disease outbreaks through collective intelligence is really valuable.
I think the biggest lesson I would have for anybody who wants to think about the public good is that the public good is not just the province of nonprofits and NGOs. The public good is the province of anyone who thinks rightly about creating value in this world. I think of O'Reilly; we're a for-profit company, but we think a lot about creating value in the world.
JF: My career has been influenced a lot by Bill Hewlett and Dave Packard. After college in the early '80s, I went right to HP, and they were still around. They were kind of older and still doing the hallway management by walking around. But at HP at that time, the old HP, citizenship was always a big part of HP; and citizenship, you don't hear that conversation in companies anymore about citizenship.
What do we need to do as these private entities acquire data and have real-time capabilities to add value? How does citizenship in companies, as you said and I agree, you don't have to be a nonprofit to add value to the world. Is it changing? Is citizenship changing?
TOR: Well, absolutely, look at Kick Starter. What an amazing citizenship engine. It's funny; you can look at a lot of other ways people are trying to crowd-source good. But Kick Starter is an amazing one. It's like funding for the arts. It's an astonishing engine. The Internet is throwing up wonderful new examples all the time of ways to be a citizen.
If you think about that kind of philanthropy that used to be reserved for wealthy people, and now we've crowd-sourced that kind of patronage. And I think we have crowd-sourced to some extent other forms of philanthropy. You look at the micro-lending and the like; we're bit by bit we’re finding interesting ways to act as citizens. Jennifer Pahlka at TED just gave a great talk about that. She talked specifically about how we can't fix government without fixing citizenship. But she said, “When it comes to tackling the big problems, do we just want to be a crowd of voices or do we want to be a crowd of hands?” So crowd-sourcing to actually get stuff done is a big element.
JF: If we could get that into the accounting, that would be fantastic.
TOR: I want to throw in a word, there's a great organization -- a great project out of the UN, UN Global Pulse that's very much lined up with this idea of data for the public good where they're trying to gather data from NGOs and from UN activities and create it as a service layer. So, I think there are a lot of people who are thinking about this.
JF: If I could change gears, just to draw from your personal experience because you've been a big part of the computer industry and a big contributor of knowledge through O'Reilly Media, but I want to draw from your perspective as someone who has been in the industry looking at the big players, the big conglomerates who have made money, and a lot of them are here with booths.
The data warehousing/business intelligence marketplace has been a very big, lucrative industry, and it’s kind of old and being retooled. At the same time, the greenfield opportunity with Hadoop and analytics has been changing the world for all the good reasons we've been covering here at theCUBE and SiliconANGLE.com.
What's your advice to the industry folk here, the big whales, and the big guys, who are trying to evolve with this new trend because they have legacy infrastructure and products at stake, like a mainframe back in the day I guess, what's your advice to them? Where's the whole thing of do over?
TOR: There's a couple of ways of looking at it. The technology layer, and will they be disrupted by new players using new technology? But I'd like actually to talk about how to think about business intelligence and data and the deep change that I see. And, it's the change from a model in which the human is presented with data in order to make a decision, which is really the old model of business intelligence. We're going to analyze a bunch of data; we're going to present it to human who will then make a decision to a model in which the role of visualization, the role of business intelligence, is to help someone design an algorithm. So, that's a fundamental shift that I don't think a lot of companies have completely understood. The end game here is the design of systems that do the right thing in response to data faster than we can do them.
Look at hedge funds, they're not just sitting there with this sort of visualization display for their traders so they can make choices – I guess there’s some element in that. But no, they're writing algorithms that can do trading much faster than humans can. When you're flying a plane, the plane is really flying itself, and you’re watching it; the human is not actually in the decision-loop but at certain times.
I gave a talk recently about the Google autonomous vehicle, and I started with a slide that read: This used to be a book – it was a publishing talk – and I show an atlas, and now it's a car. This notion that, this idea that, here is a business intelligence thing: “What's near me?” I'm going to look at a map, and we have this entire fabulous thing. It's dynamic, it's mobile, and we have all these different layers. It’s visualization and sort of personal intelligence. You look at Yelp or Foursquare and say, “What restaurants are nearby?”
But increasingly, you can start to see the trend. Where, sure, it's like: “Find me a Mexican restaurant nearby.” You see where we’re going; increasingly, it's just, “Take me there.” And the design of systems that are smart enough to do what we want. And I think going back to that Google autonomous vehicle, I've been spending a lot of time thinking about that as a metaphor for where we’re going. Peter Norwich said, "We didn't have better algorithms, we just had more data."
So the whole role of data collection is there. But also this notion that the car drives itself. You're interface becomes, “Take me to Bob's house,” as opposed to, “Show me the route to Bob's house, and I'll drive there.” And that is a metaphor for where we are going with all of this stuff; it is really important to anyone involved in business intelligence. The people who are going to be using a lot of those tools are people who are designing algorithms, as I said, not the people who will be making decisions.
JF: Yeah, I think everyone talks about user experience, and the application explosion here at Strata is what Dave and I have been talking about – the year of that application explosion: platforms stabilizing; there's no more data model lock-in, so data sets are kind of being meshed together; values being created; applications are exploding.
That brings up the next question in the evolution, which is user experience. So, what's your perspective on the evolution of the current user experience with completely connected individuals? You have… you have AI guys talking about this; you have real-time analytics that apply these kinds of benefits; you have mobile; cloud-mobile and social is truly creating a new user experience and expectations. So, is there any kind of change in your mind in perspective as to where it's going? Any tweaks?
TOR: Again, looking into the future of user experience, and by the way, this is just the way I tend to think. You have a sense of where things are going. It's kind of far out. Then you look for signs that it's actually going there.
So, just a good example, Tan Le from Emotiv is here, and the whole Emotive headset. I remember when I first saw that at Google, how amazing it was that you could actually put some electrodes on your head, and you could control stuff on the screen just by thinking. I was recently wearing a heads-up display, and we've had the rumors of the Google goggles becoming real goggles. We have wearable computing of all kinds. We have the sort of interfaces that we're starting to see with Microsoft Kinect, so we're on the threshold of a UI revolution. We are still thinking of mobile and tablets as our interfaces, and they're beyond what we had with keyboards and the like, but I think we're going to find somebody's going to have a breakthrough. This is a really good thing to think about. Everyone should go back and look at an early iPod. Everybody should have one in their house because it looks so clunky today, and yet, I remember the magical experience of that little scroll wheel. It was so awesome. And somebody will just come up with a little metaphor that will kind of break. That was before touch screens, but it was the first little sense of, “Oh we're going to have some kind of new touch-based interface!” We're going to have these things right now that seem a little odd, and maybe they seem cool, and you know some years from now we'll go, "Oh yeah!" That really was the beginning.
DV: The original Mac -- we've seen all these images now with Steve Jobs’ passing; it's just amazing.
TOR: Oh yeah, actually it was fantastic. I was recently in Hawaii, and I went to the Pearl Harbor Memorial, and they've got the Battleship Missouri, which was retired in 1991. And in the war room, you'll see the computers of the day, and you'll see this little time capsule and think, “Oh, that's what they were actually using on a battleship in 1991,” and actually it was an old Mac. But there were computers from like Olivetti. It was really kind of like, “Wow, we've come a long way, haven't we?”
JF: Tim O'Reilly, great insight, "Signal from the Noise," right there, a lot of knowledge being extracted from Tim right now sharing with us post-TED. Of course, now I'm sure to TED you're intellectual candy to the brain. TED is a great conference.
TOR: What do we say about Strata? Strata is TED for real people? There are so many wonderful places where people are sharing their experience and their vision, and it's a wonderful time in history when we're able to share so much with each other so easily. And, hopefully, we'll take all those connections that we make and start applying them to solving the world's great problems, which are bearing down on us faster than we can appreciate.
DV: And you're doing it; you’re thinking about it. I love it when Tim comes on, John, because we go back the '70s and back to some of the principles of the '70s and apply them to today. We talk about creating more value than you capture as a self-serving concept; we love that right? We try to create more value from what we capture as well, so it's music to our years. One last question is: Strata; we're here at the humble beginnings; we were here last year; where do you see it going?
TOR: Well, it's pretty clear that data is the currency of this whole new economy, and I'm hoping this becomes the gathering place for all the people who are inventing the future of the data world. It's well on its way to being that event. I think we're going to see it ... we saw it double in size from last year to this year. I think we'll see it three or four times the size next year. We'll see more and more areas being touched by data, and more and more people demonstrating how they're getting breakthroughs through data analytics and data science. I think we're in a really exciting time.