Speaker 1: Brought to you by Bank of America Merrill Lynch committed
Speaker 1: to bringing higher finance to lower carbon named the most
Speaker 1: innovative investment bank for climate change and sustainability by the banker.
Speaker 1: That's the power of Global Connections. Bank of America North
Speaker 1: America member f D I C. This is Masters in
Speaker 1: Business with Barry Riddles on Bloomberg Radio. This week on
Speaker 1: the podcast, I sit down with Professor Arun Sundarajan of
Speaker 1: n y U Sterns School of Business. The professor is
Speaker 1: a technologist and an economist and studies what we have
Speaker 1: come to call the sharing economy. He likes to call
Speaker 1: it crowdsourcing capitalism, and we look at a whole bunch
Speaker 1: of different companies and platforms and technologies that are changing
Speaker 1: the way people interact with each other. If you've ever
Speaker 1: used Uber for a ride, if you've bought or sold
Speaker 1: something on eBay or eggs List or or Etsy, if
Speaker 1: you've stayed at an air b and B. There are
Speaker 1: hundreds and hundreds of different companies, platforms, etcetera that allow
Speaker 1: people to either monetize they're unused real estate, hardware, ortomobiles, whatever,
Speaker 1: or other people to only purchase a fractional usage of it. UH.
Speaker 1: The professor is is certainly well known amongst technology circles.
Speaker 1: You might not have heard of him if you go
Speaker 1: on YouTube and look at any of his presentations. They're
Speaker 1: quite fascinating and they're always filled with these amazing tidbits.
Speaker 1: I don't want to spoil anything from the actual podcast,
Speaker 1: but I have to just share this one little data
Speaker 1: point with you. In the United States, there are approximately
Speaker 1: eighty million electric drills. I have one, actually I have
Speaker 1: to the second one UH is out at the vacation house,
Speaker 1: and the data point on those drills is quite amazing.
Speaker 1: The average usage over the lifespan of that drill is
Speaker 1: a mere thirteen minutes. Now, stop and think about it.
Speaker 1: A decent drill you're paying a hundred or two hundred
Speaker 1: dollars for and essentially you're barely using it. So a
Speaker 1: platform that allows people to rent or loan or what
Speaker 1: have you drills has a certain appeal because it you're
Speaker 1: taking something that actually has a value on a cost
Speaker 1: and you're recapturing some of that cost. On the other hand,
Speaker 1: if you only need a drill for five minutes, why
Speaker 1: do you want to spend two hundred dollars. That is
Speaker 1: the essence of the sharing economy, whether it be a
Speaker 1: spare room or a ride in someone's car, or rent
Speaker 1: the runway, a a any sort of couture dress that
Speaker 1: you don't want to spend five thousand dollars on to
Speaker 1: wear just once. Uh. The professor not only thinks this
Speaker 1: is the future of retail, but he thinks that's going
Speaker 1: to have a very beneficial impact on people in the
Speaker 1: bottom half of the economic strata in terms of income. So,
Speaker 1: without any further ado, here is my conversation with Un Sundarajan.
Speaker 1: This is Masters in Business with Barry Ridholes on Bloomberg Radio.
Speaker 1: My special guest this week is Aurun Sundarajan. He is
Speaker 1: a professor at n y U Stern School of Business
Speaker 1: and is fascinated by how digital technology shapes the economy
Speaker 1: and transforms our lives. His scholarly research analyzes what makes
Speaker 1: the economics of technology, products and industries so unique. He
Speaker 1: is a member of the World Economic Forums Global Council
Speaker 1: on Technology Value and Policy, and he advises governments around
Speaker 1: the world on digital regulation. He is also the author
Speaker 1: of a new book called The Sharing Economy, The End
Speaker 1: of Employment and the rise of crowd based Capitalism are
Speaker 1: in Sundarajan. Welcome to Bloomberg. Thank you, Barry. I'm delighted
Speaker 1: to be on your show. Well, it's a pleasure to
Speaker 1: have you. I enjoyed the book very much and it
Speaker 1: raised a whole lot of questions. Let's jump right into
Speaker 1: this from a broad perspective, what exactly is the sharing economy? Well,
Speaker 1: that's a great question to start with, because that's the
Speaker 1: question that I hope to answer in the book. UM.
Speaker 1: The label sharing economy can often be distracting because it
Speaker 1: conjures up an image of something that it's not, which
Speaker 1: is why I prefer the term crowd based capitalism. But
Speaker 1: in the battle between what should we called the book
Speaker 1: between me and my publisher, sharing economy one of a
Speaker 1: crowd based capitalism um. So. I think of it as
Speaker 1: a new way of organizing economic activity where we are
Speaker 1: taking out a lot of what used to happen within
Speaker 1: an organization and decentralizing it to a distributed crowd of providers.
Speaker 1: So A, B and B hosts who are running their
Speaker 1: small short term accommodation businesses through the platforms. Uber drivers
Speaker 1: who are driving through the platform get around renters who
Speaker 1: are running tiny car rental businesses, et C sellers, funding
Speaker 1: circle lenders, and I expect that this model will sit
Speaker 1: aside the traditional industrial capitalism model in the twenty one
Speaker 1: century as one of the dominant ways in which we
Speaker 1: organize economic activity. So what you're describing sounds very much
Speaker 1: like what used to be called peer to peer or
Speaker 1: many too many as opposed to a centralized distribution where
Speaker 1: one company manufactured, they ship it, it goes to their stores,
Speaker 1: and then consumers come and buy it. That model seems
Speaker 1: to be challenged by let's call it, crowd based capitalists. Yes,
Speaker 1: I think that peer to peer is certainly a precursor.
Speaker 1: You might think of the eighteenth century economy as being
Speaker 1: almost entirely peer to peer, the Adam Smith market economy
Speaker 1: us individuals or small businesses sold to other individuals. And
Speaker 1: then we saw a resurgence of some of that kind
Speaker 1: of activity in the late nineties with eBay and with Craigslist.
Speaker 1: But what's different about the sharing economy and crowd based
Speaker 1: capitalism is two things. One is that it scales this
Speaker 1: kind of activity to the point where the crowd based
Speaker 1: alternative can be the largest provider in the industry. A
Speaker 1: B and B is already the largest provider of short
Speaker 1: term accommodation in the world. They have three times as
Speaker 1: many listings as Marriott's Star would have rooms. If I
Speaker 1: recall hearing one of your presentations, once you mentioned last
Speaker 1: night a hundred and fifty thousand people stayed at an Airbnb.
Speaker 1: Is that number still accurate? Well, that was probably a
Speaker 1: couple of years ago. Um, that's amazing, that really is right.
Speaker 1: I mean, they own no assets. This is entirely other
Speaker 1: individuals running their businesses through the platform. So the ramifications
Speaker 1: of this or are going to be significant. And you've
Speaker 1: you've discussed the blurred lines between personal and professional, between
Speaker 1: casual labor and someone who's working full time for someone else.
Speaker 1: So how does this new change affect everything? What is
Speaker 1: the ramifications of the way these digital technologies are going
Speaker 1: to impact our lives? Um? See the blurring of lines
Speaker 1: between personal and professional I think is central to a
Speaker 1: lot of the challengers that the sharing economy has faced
Speaker 1: in the last decade, because if you think about it,
Speaker 1: there are lots of activities that fall under the personal umbrella. Naturally,
Speaker 1: if you own a car, you've probably picked someone up
Speaker 1: from the airport. Sure, you've probably cooked a meal for
Speaker 1: someone at your and had them eat it at your home.
Speaker 1: You've had house guests. You may have picked your friends
Speaker 1: kids up from soccer practice. You may have lent money
Speaker 1: to a friend. You didn't need any special permit for this.
Speaker 1: This was all under the personal umbrella. And then you
Speaker 1: had taxi drivers, you had professional bankers, you had restaurant owners,
Speaker 1: you had bed breakfast owners who were on the professional
Speaker 1: side and for whom all of the regulations were developed.
Speaker 1: And so we're now entering an economy where these lines
Speaker 1: between personal and professional up blurring, and so the regulatory
Speaker 1: structures that we have developed to regulate, say accommodation or transportation,
Speaker 1: which expect a full time professional provider on the supply side,
Speaker 1: are being challenged because you've got people who are hosting
Speaker 1: occasionally on a B and B, who are driving occasionally
Speaker 1: for left, who have become little car rental businesses, who
Speaker 1: have become little bankers. Here in New York City, there's
Speaker 1: been a number of complaints from condos and co ops
Speaker 1: about buildings originally not made for taking guests, And suddenly
Speaker 1: you think you own a private co op in a
Speaker 1: apartment building and you discover there's random strangers in your building.
Speaker 1: How does an Airbnb deal with that? How does the
Speaker 1: city of New York deal with that? Well? Um dealing
Speaker 1: with the new world of short term accommodation I think
Speaker 1: requires a fundamental rethinking of a lot of different dimensions
Speaker 1: of regulation, because we are creating, in some sense, a
Speaker 1: new form of mixed use real estate where the personal
Speaker 1: home can also become a commercial, short term accommodation source
Speaker 1: for people who are visiting the city. We're challenging ideas
Speaker 1: of zoning, and we're challenging sort of this separation between
Speaker 1: long term and short term accommodation. It's really a situation
Speaker 1: where we have to think about how do we change
Speaker 1: the laws in a way that accommodates this activity. Because
Speaker 1: a lot of people want to host on a B
Speaker 1: and B, A lot of guests want a B and B,
Speaker 1: so society wants this service. What I think will happen
Speaker 1: in the long run is a couple of things. One
Speaker 1: is that we will in fact change the laws around
Speaker 1: that prevent people from renting for less than thirty days
Speaker 1: and go on. But I think but also going to
Speaker 1: delegate a lot of the responsibility to partties other than
Speaker 1: the government. I'm Barry Ridholts. You're listening to Masters in
Speaker 1: Business on Bloomberg Radio. My special guest this week is
Speaker 1: our on Sundarajan. He is a professor at n y
Speaker 1: U Stern School of Business and is an expert in
Speaker 1: digital technologies and sharing economy. So there are sort of
Speaker 1: three levels of of sharing economies when it comes to accommodations.
Speaker 1: On the high end, you have one fine Stay, which
Speaker 1: is a way for people with lovely high end homes
Speaker 1: or other properties to generate a little income with them.
Speaker 1: You have Airbnb, which is pretty middle of the road.
Speaker 1: It's way that anybody can rent out a room or
Speaker 1: an apartment or what have you. And then I kind
Speaker 1: of like CouchSurfing dot com, whose business model essentially, hey,
Speaker 1: we have a couch for you to crash on and
Speaker 1: no money exchange his hands. What is that business model?
Speaker 1: How does that company that has venture investors, how do
Speaker 1: they make money? Well, their revenue sources. The revenue sources
Speaker 1: that couch surfing have are pretty limited. Um, they have
Speaker 1: been making money for a while by charging people for
Speaker 1: a verification service, where if you want to stay with
Speaker 1: people who have been verified, then couch surfing gets a fee. UM.
Speaker 1: They switched recently from disavowing advertising to adopting an advertising
Speaker 1: business model. This is in the Google tradition of like,
Speaker 1: you know, sort of going from anti advertising the pro
Speaker 1: advertising um. But you know, I think focusing on the
Speaker 1: revenue model of couch surfing UM takes us away from
Speaker 1: what's fundamentally different about them. They haven't been set up
Speaker 1: as a commercial business. They are a pure gift economy,
Speaker 1: so it's really more of a social network than anything else. Really. Yeah,
Speaker 1: I mean the typical couch surfing user when they go
Speaker 1: to a new city, they're not saying where do I
Speaker 1: find accommodation? They're saying, you know, where's the party? Or
Speaker 1: you know, how do I meet the interesting people? And
Speaker 1: the exchange of accommodation is sort of the gift that
Speaker 1: cements the connection. It makes a lot of sense. And
Speaker 1: there are some people who only seem to host others,
Speaker 1: and there are other people who are traveling around the
Speaker 1: country only. Couch surfing absolutely and ABNB in some ways
Speaker 1: represents a middle ground between the commercial and the gift.
Speaker 1: In that sense, I mean, it's decidedly commercial. You are pricing,
Speaker 1: you are managing inventory. If you're a supplier. As a guest,
Speaker 1: you are paying for something that is a service that
Speaker 1: you're getting from the host. But there is also some
Speaker 1: gift element and some sort of embracing of imperfection that
Speaker 1: the guest experiences, where you don't expect all the towels
Speaker 1: will be the same color and perfectly folded. Um. There's
Speaker 1: a connection that forms with the host. Even if the
Speaker 1: host is not there, you get to see how they
Speaker 1: have made up their home. There's an intimacy associated with
Speaker 1: staying at someone else's home. It's like a bend and breakfast.
Speaker 1: And I was amused I learned in your book that
Speaker 1: the name Airbnb came out from the idea of an
Speaker 1: air mattress as as a place for people to to crash.
Speaker 1: Let's let's shift away from a combination and talk a
Speaker 1: little bit about travel. So uber has been a huge
Speaker 1: success globally. Lift also has experienced a tremendous amount of growth. Um.
Speaker 1: So here's the question, how much of this is a
Speaker 1: function of the entrenched industries complacency. And let's be honest,
Speaker 1: at least as a New Yorker who who here doesn't
Speaker 1: eight taxis. There aren't enough of them. As soon as
Speaker 1: it starts to ring, you can't get one, and heaven forbid,
Speaker 1: if you want one during rush hours, some idiot has
Speaker 1: decided that's when we're gonna do the shift change, and
Speaker 1: there's no taxis available. So would Uber have been this
Speaker 1: successful if you didn't have a complacent, dominant and trench business. Um.
Speaker 1: I certainly think that the placency of the entrenched businesses
Speaker 1: opened the door for Uber and left because the bar
Speaker 1: was pretty low and it was easy to create a product,
Speaker 1: a service that was dramatically superior. You know, I've lived
Speaker 1: in New York for a long time and I've had
Speaker 1: the same frustrations with the yellow cabs. But if you
Speaker 1: think about the United States, New York has by far
Speaker 1: the best taxi service in the country, really, and so
Speaker 1: that that's horrible. Yeah, I know last Las Vegas maybe
Speaker 1: comes close, but that's pretty much it. I mean, I
Speaker 1: used to go to l A and I wouldn't know
Speaker 1: how to get around without renting a car, and then
Speaker 1: I'd be driving on the highway at sixty miles an
Speaker 1: hour having not driven for three months. So you know,
Speaker 1: that's how the door was open. But that's not going
Speaker 1: to determine the long run success of the company's because
Speaker 1: they're not really going after the taxi industry. They're going
Speaker 1: after the automobile industry. They want to shift our spending
Speaker 1: on buying new and used cars towards getting transportation on
Speaker 1: demand as a service. So they're not going to the
Speaker 1: eleven billion dollars we spend on taxi every year. They're
Speaker 1: going after the one point two trillion dollars we spend
Speaker 1: on buying new and used cars. So, so let's talk
Speaker 1: about that for a moment. You discuss the importance of
Speaker 1: idle capacity and share ability. So, and it's not just cars.
Speaker 1: Let me throw a statistic out, and again this is
Speaker 1: from an earlier presentation of yours. There are eighty million
Speaker 1: power drills in the United States. Each drill is used
Speaker 1: over the course of its total lifetime a grand total
Speaker 1: of thirteen minutes. Yes, that seems like an enormous waste
Speaker 1: of idle capacity. Absolutely, And I think that the sharing
Speaker 1: economy sort of came to be because we decided that
Speaker 1: there must be ways of tapping into capacity that is underutilized.
Speaker 1: And once we got the smartphones, we were equipped with
Speaker 1: the technology that allowed us, in some ways to think
Speaker 1: about re engineering our consumption in the same way as
Speaker 1: that the company sort of re engineered their businesses twenty
Speaker 1: years ago when they got the PCs and the Internet
Speaker 1: and the ethernet. UM. But and if you think about
Speaker 1: the two industries we're talking about accommodation and transportation. UM.
Speaker 1: Part of the reason why they're so visible is that
Speaker 1: they reflect the two most valuable personal assets that the
Speaker 1: average individual has, their home and their car. And so
Speaker 1: we've managed to create sharing markets for these assets, even
Speaker 1: though the transaction costs are still pretty high. It's been
Speaker 1: harder to create markets for power drill rental, or for
Speaker 1: vacuum cleaner rental, or for you know, tent rental. All
Speaker 1: of these underutilized assets. What what about some of them?
Speaker 1: The high end designer clothing. I know there's a number
Speaker 1: of companies that rent high end dresses and I forgot
Speaker 1: some of the names of Absolutely, there's rent the Runway.
Speaker 1: It does this on demand as a business. There's another
Speaker 1: one called Style and that I really like that does
Speaker 1: this peer appear where you can sort of monetize your
Speaker 1: wardrobe by renting things out? Um. The logistics are still
Speaker 1: sort of the economics, the unit economics of the logistics
Speaker 1: are still being worked out on that front um, but
Speaker 1: I think that things are going to get a lot
Speaker 1: easier once drone technologies take off and we have the
Speaker 1: ability to sort of tap into you know, if an
Speaker 1: object knows how much it's being used where it is
Speaker 1: and can call on transport on demand, which will be
Speaker 1: possible in about a decade um. You know, with drone
Speaker 1: technology so far off in the future, not at all,
Speaker 1: then we have the spectra of not just sort of
Speaker 1: drones flying above, but carrying power drills. I'm very results
Speaker 1: you're listening to Masters in Business on Bloomberg Radio. My
Speaker 1: special guest today is Professor Arun Sundarajan. He is a
Speaker 1: professor at n y U Sterns School of Business specializing
Speaker 1: in the impact of digital technologies and how they shape
Speaker 1: our economies. He is not only a member of the
Speaker 1: World Economic Forums Global Agenda Council on Technowlogy, he is
Speaker 1: also the author of a new book called The Sharing Economy,
Speaker 1: The End of Employment and the Rise of crowd based Capitalism.
Speaker 1: Let's jump right into the technology backdrop of of the
Speaker 1: collaborative economy. Um, you've talked about the iPod as the
Speaker 1: first successful mass market product that was developed for consumers
Speaker 1: rather than businesses or governments. So what is the consumerization
Speaker 1: of digital technology mean for us? Well, I think that
Speaker 1: this was the consumerization of digital technology represented a radical
Speaker 1: shift in the focus of the industry producing the technology.
Speaker 1: Because if you think about the sixties, seventies, eighties, and nineties,
Speaker 1: technology products were built for business or government and meaning
Speaker 1: meaning computers, phones, all those various texts. Didn't consumers eventually
Speaker 1: take advantage of those. They did, But if you think
Speaker 1: about the primary focus of R and D in all
Speaker 1: of the companies except Apple, the business was the primary focus.
Speaker 1: The PC was built for business, and then a home
Speaker 1: computer version was developed. The larger computers were built for business.
Speaker 1: Software was built for business frames, databases, etcetera. That's that's
Speaker 1: really very interesting. So and so there was a shift
Speaker 1: in like you know, the late nineties, because computer technology
Speaker 1: got cheap enough and fast enough that you could conceive
Speaker 1: of mass market consumer products, and the iPod was the
Speaker 1: first big one. But what this has done is that
Speaker 1: it shifted the focus of the technology industry away from
Speaker 1: businesses and to consumers. If you look at the big
Speaker 1: innovations of the last ten years, social media, tablet, smartphones.
Speaker 1: They were built for consumers and then adapted for businesses.
Speaker 1: So so let's talk about you mentioned Apple. Let's let's
Speaker 1: talk about from iPod to I phone. How much of
Speaker 1: the sharing economy is really directly dependent on the iPhone
Speaker 1: coming out and just upending the mobile phone market and
Speaker 1: then everything else that that fouled from there. Is that
Speaker 1: the prime enabler of all these technologies. Um, I think
Speaker 1: that the iPhone or smartphones becoming mass market is one
Speaker 1: of the enablers of a number of industries that have
Speaker 1: been changed by the sharing economy. You can't imagine uber
Speaker 1: without a g Press enabled smartphone or knows where you are,
Speaker 1: knows where the car is yep. And there's a whole
Speaker 1: bunch of labor markets that have become possible because you know,
Speaker 1: if I have a smartphone, then I become a potential
Speaker 1: source of labor to a market. They don't have to
Speaker 1: equip me with one of those devices that the ups
Speaker 1: drivers have. But I think that there was a broader
Speaker 1: adoption of digital technology and a comfort level we got
Speaker 1: using this technology and interacting with other people through an interface.
Speaker 1: We digitized a lot of our social capital on networks
Speaker 1: like Facebook and LinkedIn. Explain that because you you discuss
Speaker 1: that frequently the what do you mean by we've digitized
Speaker 1: our identity and we've digitized our our trust? Well, if
Speaker 1: you think about pre two thousand five, we carried around
Speaker 1: a driver's license, and this established through a government system
Speaker 1: that you were who you said you were, and you
Speaker 1: had a professional and a personal network that was known
Speaker 1: to you, but wasn't translatable into information that could make
Speaker 1: someone else who didn't know you trust you. So what
Speaker 1: Facebook and LinkedIn now represent is a lot of connections
Speaker 1: on Facebook and LinkedIn are meaningless, I agree, but a
Speaker 1: lot of it represents real world social capital, professional capital
Speaker 1: that you have built up over your lifetime that makes
Speaker 1: you more credible as a trading partner. When someone says,
Speaker 1: well should I rent my car to this person? Or
Speaker 1: should I trust this person enough to sleep in their
Speaker 1: spare bedroom, or should I sort of like you know,
Speaker 1: borrow money from them? Should I lend them money? This
Speaker 1: becomes part of a trust infrastructure. Along with tech oologies
Speaker 1: that allow you to hold up your driver's license in
Speaker 1: front of your webcam and have it verified. So you
Speaker 1: referenced earlier Craigslist and alf Rowan Wikipedia, But one of
Speaker 1: the earliest of the tech companies was eBay. And the
Speaker 1: way eBay built in their trust verification is if you
Speaker 1: want to buy something from someone and you say, oh,
Speaker 1: this guy has a five star rating and there's ten
Speaker 1: thousand transactions, they're fairly trustworthy. Is eBay the first entity
Speaker 1: to digitize that trust factor. eBay was definitely the pioneer
Speaker 1: in using these pure feedback systems or to create reputation
Speaker 1: some ways. They created the equivalent of a digital institution.
Speaker 1: You didn't have to have courts of law or contract.
Speaker 1: You could just rely on the feedback. The thing with
Speaker 1: eBay is that, um, the stakes were low receiving a
Speaker 1: package from someone, or you need to get paid by someone.
Speaker 1: The worst thing that happens is that you don't get
Speaker 1: the product, the products broken, you don't get paid. These
Speaker 1: are very different stakes from trusting someone enough to let
Speaker 1: them into your apartment, trusting someone enough to get into
Speaker 1: their car and be driven to another city. Um. And
Speaker 1: so we needed the social capital and the identity to
Speaker 1: come in and to pair up with the peer to
Speaker 1: peer feedback systems, which all of the sharing economy platforms
Speaker 1: use before we could see these high stakes activities emerge
Speaker 1: and assume these sort of population scale businesses that we're
Speaker 1: seeing today. I'm very hults. You're listening to Masters in
Speaker 1: Business on Bloomberg Radio. My special guest today is Professor
Speaker 1: Arun Sundarajan. He is a professor at n y U
Speaker 1: Stern School of Business, an expert on digital technologies and
Speaker 1: the sharing economy. Let's talk a little bit about crowdfunding
Speaker 1: because there's some really interesting companies. Kickstarter, Kivalone Angel List
Speaker 1: are the first three that come to mind. Let's start
Speaker 1: with simply, what is crowd based capitalism. Well, crowd based
Speaker 1: capitalism is my conception of a new model of how
Speaker 1: we organize the world's economic activity. So if you apply
Speaker 1: it to the funding space, what we're talking about is
Speaker 1: shifting the way we finance things out of the hands
Speaker 1: of an institution that gives you money. Could be a bank,
Speaker 1: could be a venture capital fund fund, could be like
Speaker 1: a foundation that is giving grants to support the building
Speaker 1: of a theater, and shifting that towards a platform that
Speaker 1: still collects all the information that you would give a
Speaker 1: bank or a foundation or a VC but then gets
Speaker 1: the financing through a distributed crowd of financiers, whether it's
Speaker 1: um individuals buying equity in your company through angel list,
Speaker 1: whether it's individuals contributing towards a loan that is then
Speaker 1: given to you through funding circle, whether it's individuals who
Speaker 1: are you know, becoming philanthropists through a platform like Kickstarter.
Speaker 1: So angel list, I think is the easiest to understand.
Speaker 1: There's a list of potential cl it needs to interview.
Speaker 1: You could either invest in anyone or into a whole
Speaker 1: group at once. That that follows the traditional angel investing model,
Speaker 1: only minus the uh, the venture capitalists or the angels.
Speaker 1: It's the crowdfunding. So I think most people get that.
Speaker 1: Let's let's talk about Kickstarter a bit, because I think
Speaker 1: Kickstarter sort of crosses the lines. We we've seen and
Speaker 1: other similar groups to Kickstarter, there's a few of them.
Speaker 1: We've seen people who have said I'm thinking about recording
Speaker 1: an album I'm not, and people who are famous musicians.
Speaker 1: If enough people say they're interested, if we raise fifty tho,
Speaker 1: I'll record this album and they do. Or we want
Speaker 1: to put on a play, we need this much money here.
Speaker 1: My prior plays if you like to see me do
Speaker 1: another one that makes perfect sense. And you're a contributor,
Speaker 1: you're you don't get any of the upside of that,
Speaker 1: but you helped bring something to light. But then there's
Speaker 1: something like oculus left and I thought that was sort
Speaker 1: of I thought that was sort of a great, great
Speaker 1: situation and wrote about it. Look, it's clear the people
Speaker 1: who were contributing to Kickstarter, no, they're not equity investors.
Speaker 1: But you get a company that raises a couple of
Speaker 1: million dollars and then turns around and sells himself to
Speaker 1: Facebook for a couple of billion dollars. That sort of
Speaker 1: leaves a bad taste in people's mouth. How do we
Speaker 1: define what kickstarter is and how do we make sure
Speaker 1: that we're not being taken advantage of if we like,
Speaker 1: oh that's a cool idea, let's fund that, and and
Speaker 1: then the founders cash out. Well, I think the Oculus
Speaker 1: rift investment on Kickstarter happened at a time when kick
Speaker 1: startle was a lot of different things to a lot
Speaker 1: of different people. Um, they were a philanthropic crowdfunding platform.
Speaker 1: They were a platform for demand generation where you say,
Speaker 1: here's my product. If you sort of contribute to my campaign,
Speaker 1: you will get one of the early instances of that product.
Speaker 1: And so they were sort of estimating demand there, and
Speaker 1: there were companies like Oculus that were getting off the ground. Um.
Speaker 1: I don't think we're going to see another Oculus on
Speaker 1: Kickstarter for two reasons. One is that for a company
Speaker 1: like that, there are far better platforms today where you
Speaker 1: actually do sell equity and you get access to a
Speaker 1: much more sophisticated bunch of equity investors. Give us a
Speaker 1: few examples of those platforms. Well, angel Lists is certainly
Speaker 1: one of them. There's another one called circle up. Um.
Speaker 1: I've been hearing a lot about one called we funder.
Speaker 1: All of these are where you can become a tiny
Speaker 1: venture capitalist by like you know, tapping into people who
Speaker 1: are listing their businesses. Um. But Kickstarter has also shifted
Speaker 1: direction and positioned themselves more squarely as a philanthropic site,
Speaker 1: and so they're less likely to attract investors into the
Speaker 1: next Oculus Rift. That's that's quite fast. And I mean,
Speaker 1: if you ask me, I figure that the right thing
Speaker 1: for Oculus Rift to have done would have been to
Speaker 1: sort of give back some of the equity to all
Speaker 1: of its early funders, even though they didn't have to.
Speaker 1: I think that would have been that would have been
Speaker 1: the right thing to do. Yeah, much nicer end to
Speaker 1: end to that story, turns out that some folks are
Speaker 1: nice than others. What are you gonna do? And and again,
Speaker 1: they didn't do an oculus rift, didn't do anything wrong.
Speaker 1: They never promised that they were going to actually give
Speaker 1: capital back to people. But anytime there's a two billion
Speaker 1: dollar windfall on a two million dollar investment, it's piggish
Speaker 1: not to at least do something for the people who
Speaker 1: got you off the ground with that. But that that's
Speaker 1: just my perspective, and I think we're going to see
Speaker 1: sort of a similar thing, a similar sentiment among the
Speaker 1: providers and the sharing economy when Uber and Lyft and
Speaker 1: b and Big Public because the providers on these platforms
Speaker 1: on shareholders, especially the drivers or the host So what
Speaker 1: have you? And didn't Etsy do something with some of
Speaker 1: its early I may be misremembering this is either Etsy
Speaker 1: or another um. Well, there's a new platform called Juno
Speaker 1: that is an Uber competitor that has reserved fifty of
Speaker 1: its equity for providers for drivers whoever the driver will
Speaker 1: participate in the upside YEP, it's funny because you know
Speaker 1: there's the old joke the second maskets the cheese. Uber
Speaker 1: was the pioneer. They they did all the heavy lifting.
Speaker 1: I wonder if someone else could come in and jiu
Speaker 1: jitsu them with the technology. Hey, we're just like Uber,
Speaker 1: only you get equity and when we go public, it's
Speaker 1: part of yours. It seems like a really interesting twist
Speaker 1: um on the model. It really is, And I think
Speaker 1: it's compounded further by the fact that the relationship between
Speaker 1: providers and platform is not employment, but it's more hands
Speaker 1: a So there's nothing like a non compete. I mean,
Speaker 1: you couldn't sort of build a Walmart next to Walmart
Speaker 1: and steal all their um, you know, sort of well
Speaker 1: qualified and highly screened workers. But you can do that
Speaker 1: with Uber. So so let's talk about what you just reference,
Speaker 1: the gig economy. So we have fifty three million freelance
Speaker 1: workers here in the United States. Um, I think the
Speaker 1: numbers are one in far one in four? Do it
Speaker 1: for some supplemental income? Is this gonna ever replace full
Speaker 1: time work or is this always going to be a
Speaker 1: side gig um? I think it's gonna replace full time
Speaker 1: work for a lot of the workforce over the next
Speaker 1: couple of decades. Um. I think what we're gonna see
Speaker 1: is a shift in the role of the individual in
Speaker 1: the economy away from someone who provides talent and labor
Speaker 1: for a wage and towards someone who runs a tiny
Speaker 1: business through a platform in exchange for a share of
Speaker 1: the revenue that the business generates. And you you called
Speaker 1: this a micro business, yep, or I call these people
Speaker 1: micro entrepreneurs, and you know, I think that that's really
Speaker 1: the future of work because a lot of things that
Speaker 1: are done by human labor today are going to be
Speaker 1: done by machines in the future. Algorithms are reading everything
Speaker 1: absolutely and um. We're also seeing the emergence at scale
Speaker 1: of these crowd based capitalism platforms, both on the finance
Speaker 1: side and on the sort of the real world services side.
Speaker 1: I expect we'll see platforms like this in the energy sector.
Speaker 1: Once battery technology gets good enough to store the solar
Speaker 1: power that you generate, we'll see it emerge on the
Speaker 1: low end or the easy end of healthcare, once trust
Speaker 1: gets high enough that you can sort of go onto
Speaker 1: the platform and get a registered nurse to come and
Speaker 1: stitch up the finger that you cut cooking and so
Speaker 1: at that point, and you know, I'm already seeing platforms
Speaker 1: like this for accounting, for law, for architecture, forum sales,
Speaker 1: for high end computer programming, where you can start to
Speaker 1: run your own tiny business as an individual rather than
Speaker 1: working for someone else. So it's definitely the work model
Speaker 1: of the future. And we've really got to rethink our
Speaker 1: education system in a way that prepares our kids for
Speaker 1: this world of work where they're not going to be
Speaker 1: joining a well structured job that gives them a career path,
Speaker 1: but they're gonna have to make it up on their own.
Speaker 1: It's ongoing skills and continuing to accumulate and improve them
Speaker 1: in order to do those micro entrepreneurial tests. That that's
Speaker 1: how fascinating. So all of this raises a fascinating question.
Speaker 1: We we know GDP is not a terrific measure of
Speaker 1: what the economy is totally producing. And then what's probably
Speaker 1: my least favorite data point in terms of its accuracy
Speaker 1: is the productivity numbers, which I think completely failed to
Speaker 1: capture all of the impact of technology and how it
Speaker 1: the fact that we have tens of millions of people
Speaker 1: running micro businesses is not reflected in those data. So
Speaker 1: two questions. First, are we no longer accurately measuring the
Speaker 1: economy based on the changes in digital technology? And second,
Speaker 1: how do we catch up? How can we accurately capture
Speaker 1: of those metrics. Well, on the first point, I do
Speaker 1: think that there is a growing gap between what the
Speaker 1: government statistics say and what the state of the economy
Speaker 1: really is in terms of the size of the economy,
Speaker 1: in terms of the amount of employment, and in terms
Speaker 1: of like the value creation from technological innovation. Um. You know,
Speaker 1: the BLS has a tough job because, um they've got
Speaker 1: to capture these changes in real time, in real time,
Speaker 1: but they also need to maintain historical consistency because we
Speaker 1: want to see trends, so they can't just sort of
Speaker 1: throw out their survey and pull in a new one.
Speaker 1: I do know that they worked over the summer and
Speaker 1: adding new questions to the current Employment survey to try
Speaker 1: and capture some of these effects, but I don't know
Speaker 1: if they will be enough. They make these changes very
Speaker 1: slowly over long periods of time. It's a real gradual shift,
Speaker 1: and it's almost imperceptible, and by the time they make
Speaker 1: the change, it's already having a substantial deviation from from
Speaker 1: what they should be measured absolute Lee and I think
Speaker 1: that the fundamental shift that we're going to see is
Speaker 1: away from measuring employment by counting jobs and towards measuring
Speaker 1: um activity by human beings in terms of the total
Speaker 1: amount of work. We've been speaking with Professor are runs
Speaker 1: Underajan of n y u Stern. If you enjoy this conversation,
Speaker 1: be sure and stick around for our podcast extras, where
Speaker 1: we keep the digital tape rolling and continue discussing all
Speaker 1: things economic, finance and investing. You can check out my
Speaker 1: daily column on Bloomberg View dot com or follow me
Speaker 1: on Twitter at Rid Halts. We love your comments, feedback
Speaker 1: and suggestions right to us at m IB podcast at
Speaker 1: Bloomberg dot net. I'm Barry Ri Halts. You've been listening
Speaker 1: to Masters in Business on Bloomberg Radio, brought to you
Speaker 1: by Bank of America Merrill Lynch seeing what other have seen,
Speaker 1: but uncovering what others may not. Global Research that helps
Speaker 1: you harness disruption. Voted top global research firm five years running,
Speaker 1: Merrill Lynch, Pierce, Finner and Smith Incorporated. Welcome to the podcast,
Speaker 1: um Aaron, thank you so much for doing this. This
Speaker 1: is really interesting. I enjoyed the book. I found it
Speaker 1: to be an intriguing way to sort of reorganize in
Speaker 1: my mind what's going on in the broader economy, and
Speaker 1: and there's some really fascinating things in it. UM. Let's
Speaker 1: talk about a few things that we missed during the
Speaker 1: broadcast portion. There was something you had written early in
Speaker 1: the book that I thought was interesting about three technological invariants.
Speaker 1: I thought that was really intriguing digitalization, exponential growth, and modularity.
Speaker 1: I think most listeners know what each of those three
Speaker 1: things are. Why is that unique to technology and why
Speaker 1: is it unvarying? Well, it's UM trying to come up
Speaker 1: with three things that don't change about digital technology was
Speaker 1: in response to the fact that so many things do
Speaker 1: seem to change or digital technology, and so how do
Speaker 1: you frame what the future is going to look like?
Speaker 1: And so UM to me, these the combination of these
Speaker 1: three things, like, you know, the digitization of information UM,
Speaker 1: exponential growth in bandwidth and computing power and storage, and
Speaker 1: the idea that you can call on the capabilities of
Speaker 1: a digital machine through software UM and you don't have
Speaker 1: to sort of rebuild the capabilities into a new machine
Speaker 1: you can just call on it. All of these are
Speaker 1: unique to digital technologies. There's what they sort of set
Speaker 1: them apart from say the steam engine or the other
Speaker 1: general purpose technologies in the past. And I think that
Speaker 1: that's These are the three things that are causing um
Speaker 1: the pace at which digital technology is changing the world.
Speaker 1: The second derivative, the rate of change is accelerating and
Speaker 1: accelerating in a in an ever faster mode. Yeah, in
Speaker 1: in some ways, the consumerization of digital the fact that
Speaker 1: we've got sort of handheld computers that we can use
Speaker 1: and carry around with a morble portable. Yeah. And then
Speaker 1: on top of that, the app economy has allowed for
Speaker 1: these really specialty, narrow purpose driven products, and that continues
Speaker 1: to explode because the digitization and the exponential growth or
Speaker 1: what put the smartphone in your hand at an affordable price,
Speaker 1: and it's what makes one be able to predict twenty
Speaker 1: years ago that this is going to happen. And then
Speaker 1: the modularity means that you don't have to build all
Speaker 1: the capabilities into the phone when you buy it. You
Speaker 1: can start to sort of download them and extend what
Speaker 1: your phone does for you in a modular way. Over
Speaker 1: time and well, and that basically is what's going to
Speaker 1: be the ongoing development of information technology. Those three and
Speaker 1: and this is gonna explode even further as three D
Speaker 1: printing comes of age. So your reference that it's it's
Speaker 1: the old format was reductive. You you know, I I
Speaker 1: forgot whose quote I'm stealing. Um, maybe it was michel Angelo.
Speaker 1: I start with a block of marble and take everything away.
Speaker 1: That's not the final sculpture, which is a little glib.
Speaker 1: But three D printing is the opposite. It's additive. You're
Speaker 1: adding layer on top of layer, and it's the design
Speaker 1: that matters, not not necessarily the physical skill and in
Speaker 1: producing it. And so what happens because of additive manufacturing
Speaker 1: is that you might start to see what happened to
Speaker 1: the newspaper industry happened to other industries where, you know,
Speaker 1: the newspaper industry also relied on the movement of physical goods.
Speaker 1: The newspapers, the distribution networks. Music was the same thing,
Speaker 1: the retailing channels. All of that went away when the
Speaker 1: products became digitized. Now, if you're selling jewelry in ten years, um,
Speaker 1: you may not need a physical distribution network. You may
Speaker 1: just have to come up with the best designs because
Speaker 1: everybody is printing the jewelry that they want and adapting
Speaker 1: it on their home three D printers, So a whole
Speaker 1: host of new products start to become purely digital in
Speaker 1: terms of selling them, and the consumer by themselves sort
Speaker 1: of renders the design into physical form in the same
Speaker 1: way that we're rendering the news into something that we
Speaker 1: could read, or rendering the music. So so h three
Speaker 1: D printing. Has There been some nice three D printers,
Speaker 1: but it's not the sort of thing. Just about every
Speaker 1: house in the United States has refrigerator, has a television
Speaker 1: as a washing machine, but not every house has a
Speaker 1: digital printer, a three D digital printer. How far off
Speaker 1: in the future is that and what does that mean
Speaker 1: for consumption of future goods and physical retail stores. Well,
Speaker 1: I think that it's about ten years in to the future.
Speaker 1: On two fronts. Um you will probably have a sort
Speaker 1: of a limited functionality three D printer in your own home,
Speaker 1: but there will be a network of print shops in
Speaker 1: your neighborhood that will start to play some of the
Speaker 1: role that the local retailer plays. Where you know, you
Speaker 1: may not you for the more complicated items that need
Speaker 1: to be printed. You may not want to do it
Speaker 1: at home, but you just sort of walk down the
Speaker 1: street and you know, send your design to the three
Speaker 1: D printing shop and then pick up the object and
Speaker 1: bring it back. This. You know, this is one of
Speaker 1: many forces that is going to change physical retailing over
Speaker 1: the coming decade. UM And I assume you're not a
Speaker 1: big investor in large retail shopping malls. No, I'm not
Speaker 1: a big investor in shopping malls. I'm not an investor
Speaker 1: in power companies either. Why is that that's interesting? Well,
Speaker 1: I'm starting to see us getting close to a point
Speaker 1: where there will be good enough battery technology for us
Speaker 1: to start to think of the individual as the producer
Speaker 1: of power for the neighborhood. I mean, there are some
Speaker 1: people who have a lot of roof space and they
Speaker 1: don't need as much power. There are other people who
Speaker 1: need more power they don't have enough roof space. And so,
Speaker 1: you know, solar power technology right now is a I
Speaker 1: install it for myself now, once we have good battery
Speaker 1: technology that can store the power um and ways in
Speaker 1: which we can retransmit it to people in our neighborhoods,
Speaker 1: either overrid or smart grid where that routes it and
Speaker 1: knows who's supplying and who's consuming it. Yeah, that's one way.
Speaker 1: Another way is to actually transport the batteries themselves, physical batteries,
Speaker 1: the physical batteries. That happens when it's local. Then then
Speaker 1: you start to sort of realize that the fundamental underlying
Speaker 1: economics of producing solar power dramatically superior to the coal
Speaker 1: and gas technologies because they're not mechanicals. You don't lose
Speaker 1: so much of the power as you're generating it. But
Speaker 1: there's still solar still relatively inefficient. The photovoltaic cells capture
Speaker 1: a tiny percentage of the solar energy that hits it.
Speaker 1: We lose some in transmission, we lose some in storage.
Speaker 1: How far away is that technology from? How many years
Speaker 1: away is technology from what you're describing a higher efficiency
Speaker 1: photo vote ex l and a much lower loss and
Speaker 1: much longer lasting battery for for the storage of that energy. Well,
Speaker 1: both those technologies are progressing rapidly, the photovoltaic technology perhaps
Speaker 1: sort of more rapidly. Um, But I think what the
Speaker 1: real key missing piece of the infrastructure here is is
Speaker 1: the storage technology where you don't sort of lose it,
Speaker 1: use it or lose it um And once that happens,
Speaker 1: the critical infrastructure won't be the distribution infrastructure of the
Speaker 1: production infrastructure. It will be the platform that sort of
Speaker 1: ties together all these generators of power individual generators of
Speaker 1: power and creates a market where this becomes comparable to
Speaker 1: getting your power from the power plant. And so I
Speaker 1: think we're going to see the emergence of this more
Speaker 1: rapidly in countries where the traditional power infrastructure isn't quite
Speaker 1: as reliable as it is in the United States. And
Speaker 1: that's those are the fringes where you will see these
Speaker 1: energy platforms come of age more in emerging markets than
Speaker 1: developed nations. Initially, Yeah, but then once these grow up
Speaker 1: and mature there, then they will start to take on, like,
Speaker 1: you know, sort of the traditional energy industry. You know,
Speaker 1: it's funny when you look at the emerging markets. They
Speaker 1: jumped over plane old telephone lines. They went right to mobile.
Speaker 1: Why do we want to wire an entire country for
Speaker 1: phone when they're playing all telephone service. When mobile is
Speaker 1: here and it's relatively cheap, and we're gonna more or
Speaker 1: less see the same thing in energy is that is
Speaker 1: that the expectation absolutely I think that the you know,
Speaker 1: sort of the future for a lot of emerging markets
Speaker 1: that don't reliable power supply is going to be a
Speaker 1: more advanced future than the present for us today. And
Speaker 1: again during the broadcast portion, we were talking about uber
Speaker 1: and we were talking about lift. We didn't talk about
Speaker 1: the car rent. So those are driving services where someone
Speaker 1: will drive you. But you tell told the story of
Speaker 1: you know, you live in New York, you don't have
Speaker 1: a car, and then here are all these cars that
Speaker 1: spend twenty three hours a day sitting there doing nothing.
Speaker 1: You just wanted to borrow a car, do something for
Speaker 1: half hour, put it back and leave a leave a
Speaker 1: twenty on the dashboard. There are a bunch of these
Speaker 1: services from zip car to get around to drive e um.
Speaker 1: How what is their future like and and are there
Speaker 1: what does this mean for the future of ownership To
Speaker 1: someone like me who grew up a car meant freedom.
Speaker 1: Kids the current generation they don't perceive it that way.
Speaker 1: They could always get a car from somewhere. Yeah. I mean,
Speaker 1: you know, you look at the number of sixteen to
Speaker 1: nineteen year roles who have driver's licenses in the United States.
Speaker 1: I think back in the eighties, it was over eighty
Speaker 1: five percent. Today it's under fifty. That's amazing. So so
Speaker 1: some of them are just going to stick with Uber. Yeah,
Speaker 1: and some of them, the half that has a license,
Speaker 1: they don't need to buy a car, They could just
Speaker 1: rent one on demand from one of these services. Absolutely because, um,
Speaker 1: you know, that notion that your car defines who you are,
Speaker 1: all of this work that the auto industry put into
Speaker 1: sort of making it a lifestyle, um, that's starting to
Speaker 1: wither away for two reasons. One is that you know,
Speaker 1: you call an uber on demand or a lift on
Speaker 1: demand when you need, you don't really care what the
Speaker 1: brand of the car is. You don't send it away
Speaker 1: saying I wanted a Cadillac and you send me a
Speaker 1: Chevy Um. But it's also that that statement of identity
Speaker 1: among the youth is more through the mobile phone, that
Speaker 1: they own their Instagram, Snapchat, Facebook profile, and so the
Speaker 1: role of the automobile and defining who you are your
Speaker 1: peers has become a lot less. So these you know,
Speaker 1: I think that there are great prospects for platforms like
Speaker 1: get Around on Turo in the United States, Drive, which
Speaker 1: is taking over different countries in Europe, there's one called
Speaker 1: pp Douche, which is, um, you know, sort of the
Speaker 1: largest peer to peer car rental platform in China. Um.
Speaker 1: You know, in twenty years, we would have shifted automobile,
Speaker 1: the automobile industry to a place where for a lot
Speaker 1: of people, it's an on demand service where the car
Speaker 1: without the steering wheel is coming to pick you up
Speaker 1: and take you where you want to go. So at
Speaker 1: a certain point it's not just drivers on demand, it's
Speaker 1: autonomous drivers on the Yeah. I mean, you know, I
Speaker 1: know that Uber projects that that future is going to
Speaker 1: come in five years. I think that that's aggressive, ten years,
Speaker 1: twenty years on that range. Yeah, it's um you know,
Speaker 1: I think the path through which we'll see it emerge
Speaker 1: initially is through the on demand platforms, because they can
Speaker 1: vouch for the autonomous vehicles. They can say, listen, we'll
Speaker 1: keep the speeds under two any we'll make sure they
Speaker 1: don't drive in front of schools, and so they will
Speaker 1: sort of introduce them before say Tesla has a car
Speaker 1: without a steering wheel. I'm thinking long haul truckers are
Speaker 1: probably the first place we see that really adapted because
Speaker 1: it's mostly highway and it's really easy to keep that defined.
Speaker 1: Local driving is a little more challenging. Absolutely. I think
Speaker 1: Uber bought a sort of a long haul saw the
Speaker 1: Less trucking company. It's kind of it's kind of fascinating. Um.
Speaker 1: And then there was before we get to my favorite questions, Uh,
Speaker 1: there was a company mentioned in the book, Feastly. What
Speaker 1: is Feastly, Well, Feastly is one of a number of
Speaker 1: platforms that allow you to convert your dining room into
Speaker 1: a restaurant occasionally. So if you like to prepare food
Speaker 1: and you're good at it, um, you prepare a meal
Speaker 1: you listed on Feastly, and you know that, you say, well,
Speaker 1: here's the menu, and it's forty five dollars a seat,
Speaker 1: and people will either book the entire table or if
Speaker 1: you're in a new city and you want to hang
Speaker 1: out and sort of eat at someone's home with a
Speaker 1: bunch of locals, that's the way to do it. How
Speaker 1: widespread has that been in terms of being adopted. So
Speaker 1: in other words, we've already done taxis, we've already done hotels.
Speaker 1: Now we're looking at restaurants. Yep. I think that restaurants
Speaker 1: are being challenged by you know, these supper clubs on
Speaker 1: demand like Feastly. And there's another one called Eat with
Speaker 1: um with Yep, and it's essentially just a supper club
Speaker 1: on demand. Ye. People who enjoy cooking, people who enjoy
Speaker 1: entertaining and serving. It's a way for them to meet
Speaker 1: people and other people to get together. Yeah, there's also
Speaker 1: a platform called Josephine, which is not um I feed
Speaker 1: you in my home, but I prepare it in my
Speaker 1: kitchen and send it to you. So this is sort
Speaker 1: of the next generation of restaurants and seamless UM. All
Speaker 1: of these platforms are starting to face regulatory pushback from
Speaker 1: you know, the departments of Health. I mean you've been
Speaker 1: in a number of New York City kitchens. I mean
Speaker 1: none of our kitchens is going to sort of pass
Speaker 1: the Department of Health inspection, right, So probably not. And
Speaker 1: so although it used to be that have the restaurants
Speaker 1: in New York before the abc D grades, a lot
Speaker 1: of those restaurants didn't have the greatest kitchens. And as
Speaker 1: much as the restaurant industry pushed back on those grades,
Speaker 1: it's the healthiest has ever been to go out to
Speaker 1: eat in terms of food poisoning and things along those lines.
Speaker 1: And I think Yelp has played a role as well
Speaker 1: in being able to sort of direct the government attention
Speaker 1: to the restaurants that need it. You know, most city
Speaker 1: governments actually have automated systems that mine Yelp and sort
Speaker 1: of look for things like food railing. And I had
Speaker 1: no idea, and I feel sick when those that word
Speaker 1: will kick out something and or um, you know, just
Speaker 1: that a bunch of keywords that signal that something needs
Speaker 1: to be done, and then they send an inspector there.
Speaker 1: That's fascinating, the interplay of of the ratings and social
Speaker 1: with government, and I think that's the future of regulation
Speaker 1: for this sort of more fluid sort of personal professional blurring,
Speaker 1: you know, restaurant and food delivery industry where you can't
Speaker 1: have government inspectors sort of doing all the work. If
Speaker 1: you've got half a million people who are occasionally delivering food,
Speaker 1: you need some sort of peer feedback system, maybe pere monitoring,
Speaker 1: looking at the data on the platform and using the
Speaker 1: government resources more judiciously. Mess up enough time, get a
Speaker 1: bit enough rating in the government will will shut you down,
Speaker 1: prevent you from doing this in the Yeah, and meanwhile
Speaker 1: the platform will send an expert to you to sort
Speaker 1: of help you sort of get up to speed and UM,
Speaker 1: like you know, sort of get on board before the
Speaker 1: need for like government intervention comes along. I know I
Speaker 1: only have you for another ten or so minutes, so
Speaker 1: let me jump into some of my favorite questions. You've
Speaker 1: been at in h you for a while before that.
Speaker 1: You are a couple of other schools. Who are some
Speaker 1: of your early mentors who really influenced your the development
Speaker 1: of your career, And you're thinking, well, Um, I'd have
Speaker 1: to say that um, as a researcher, the person who
Speaker 1: perhaps was the most influential to me is an economist
Speaker 1: called Roy Radner. Um. He's like a world class economist.
Speaker 1: I worked a lot with him right after joining n
Speaker 1: y U, and he really shaped my thinking on two fronts.
Speaker 1: One is what does it mean to ask an answer
Speaker 1: questions that really matter, to not think of research as
Speaker 1: sort of an end to itself, but a means to
Speaker 1: understanding the world better. And I think he's also got
Speaker 1: an approach to treating other human beings as equals that
Speaker 1: is really remarkable and was very influential and sort of
Speaker 1: how I interact with the world very interesting. Um, what
Speaker 1: about other technologists venture capitalists, other folks like that. Who's
Speaker 1: influenced your thought process when looking at some of these
Speaker 1: luma rolls, new companies, new ideas in the in the
Speaker 1: sharing economy, Well, um, if I look at the sort
Speaker 1: of the most recent crop of UM, like, you know,
Speaker 1: technology leaders. Um. I've been very impressed by the way A.
Speaker 1: B and B is run. And I really think that
Speaker 1: there's a lot of inspiring thought that has come out
Speaker 1: of Brian Chesky, Jgba, and Nate the three co founders UM.
Speaker 1: In particular sort of Brian's idea that, um, you know,
Speaker 1: everything is a design problem that you know, you've got
Speaker 1: to design the world that you want because otherwise someone
Speaker 1: else is going to design it for you and you
Speaker 1: may not like what you get, and so sort of
Speaker 1: take control and design your own reality. I've read things
Speaker 1: he's written about that and they're quite fascinating. Yeah, and
Speaker 1: I think that that's core actually to why A. B
Speaker 1: and B is successful, because the idea that you can
Speaker 1: build a platform that will connect individuals with spare space
Speaker 1: was to a new one. It was really the design
Speaker 1: of the experience for both the person who's staying and
Speaker 1: the person who is hosting and designing it carefully as
Speaker 1: an experience that doesn't just work for someone renting out
Speaker 1: a vacation property, but works for someone renting out their bedroom,
Speaker 1: renting out their entire apartment. I mean this is this
Speaker 1: is really a design accomplishment and not a technology accomplishment.
Speaker 1: Very interesting. Let's let's talk a little bit about books.
Speaker 1: What are some of your favorite books, be they fiction
Speaker 1: or nonfiction and related to technology or or finance or
Speaker 1: not so. Apart from Code and other laws of cyberspace,
Speaker 1: another book that I've really been influenced by is a
Speaker 1: book called Collapse by Jared Diamond. I think that it
Speaker 1: sort of lays out this pattern of why civilizations rise
Speaker 1: and fall in a way that was incredibly compelling through
Speaker 1: sort of research that was done over thousands of years,
Speaker 1: over a thousand year period um. I've personally been influenced
Speaker 1: by this wonderful book called siddarth Uh by Herman Hess.
Speaker 1: I think anybody who's a parent should read this book
Speaker 1: because it's sort of defines what to expect um like,
Speaker 1: you know, later in the process of parenting, and it's
Speaker 1: just you know, it's a slim volume really sort of
Speaker 1: changes the way that you think about the world. UM,
Speaker 1: Jared Diamond had written a book what is it, um, Guns,
Speaker 1: Germs and Steel. Is that I remember reading that for
Speaker 1: a while ago and thinking it was fascinating. I haven't
Speaker 1: read collaption. Collapse and the Third Chimpanzee are both like
Speaker 1: really interesting. All we'll put we'll put that down on
Speaker 1: our last third Chimpanzee. UM. So, since you started looking
Speaker 1: at technology and the sharing economy, what's been the single
Speaker 1: biggest change? What is what has altered this? Well? UM,
Speaker 1: you know, I started programming when I was a teenager,
Speaker 1: and so I used computers for many years before the Internet.
Speaker 1: And so while this is a cliche to answer, it's
Speaker 1: pretty clear that the commercialization of the Internet at has
Speaker 1: been the single biggest technological shift that I've seen, like
Speaker 1: you know, in my studying digital technology. I think the
Speaker 1: consumerization of digital that we saw in the late nineties
Speaker 1: is perhaps sort of like you know, the most significant
Speaker 1: manifestation of this. UM. I'm expecting great things from the
Speaker 1: blockchain and I think we're at I think a lot
Speaker 1: of people are, and so far it's been unfulfilled promises.
Speaker 1: Is that a fair statement? UM? I think that it's
Speaker 1: really early days. UM. I put sort of where we
Speaker 1: are with the block chain today as where we were
Speaker 1: with the internet. Um in like this was like a
Speaker 1: couple of years before the emergence of Netscape or any
Speaker 1: of the browsers, before the world wide Once we got
Speaker 1: to a graphical interface, suddenly everythink took off. And so
Speaker 1: they're going to be layers built on top of the
Speaker 1: blockchain that will suddenly bring it to life, and then
Speaker 1: over the next decade it will start to change a
Speaker 1: lot of businesses. I don't think it's gonna disintermediate as
Speaker 1: much of a lot as a lot of other people
Speaker 1: think it is, but I think it's going to be
Speaker 1: a tremendous source of efficiency. So outside of your work,
Speaker 1: what do you do to relax and kick back? Oh? Um,
Speaker 1: you know a lot of different things. Um. I I
Speaker 1: like to ski. UM. I like beaches. I like quiet beaches.
Speaker 1: I try to travel too. I try to travel to
Speaker 1: beaches that I don't know about as much as I can. UM.
Speaker 1: I like to read. Um, I like parks. Um you
Speaker 1: know I um you know, I do strength training in
Speaker 1: the gym when I can. I sort of yeah. I
Speaker 1: focus on movements that replicate what you do in everyday
Speaker 1: life as opposed to machines, and so I would do
Speaker 1: a dead lift or a squat over sort of machines
Speaker 1: that isolate particular muscles. That's interesting that, by the way,
Speaker 1: that is a question that has come to a come
Speaker 1: to us from a reader who said, you ask all
Speaker 1: these same questions of your guests at the end of
Speaker 1: the interview, here's something that I'd really like to know.
Speaker 1: And you're the second person we've we've worked that in with.
Speaker 1: So so now we're down to my two favorite questions.
Speaker 1: And you work with students, and many of whom are millennials.
Speaker 1: What sort of advice would you give to a recent
Speaker 1: college graduate or a millennial who wanted to go into
Speaker 1: either technology or venture capital as a field. Well, the
Speaker 1: one consistent piece of advice I give recent college college
Speaker 1: graduates or millennials is to expect that the world of
Speaker 1: work that they're going to be facing in twenty years
Speaker 1: is very different from the world of work today. UM
Speaker 1: STEM capabilities are going to matter less science, technology, engineering
Speaker 1: and math and design, thinking, creativity, ent apprenticeship, um interpersonal interaction.
Speaker 1: These are the skills that are going to matter more
Speaker 1: UM and so think of your career as not working
Speaker 1: for someone else, but as sort of defining your own
Speaker 1: path and accumulate the skills for that. Um. For the
Speaker 1: ones who want to go into venture capital, I tell
Speaker 1: them that the only way to learn how to be
Speaker 1: a venture capitalist is to do it. There are lots
Speaker 1: of platforms that allow you to do it today. And
Speaker 1: so you know, if you want to become an investment banker,
Speaker 1: you try and join one of the big banks as
Speaker 1: an associate, that isn't really the path in venture capital.
Speaker 1: And so you know, if you really wanna either by
Speaker 1: working for early stage companies or by investing yourself build
Speaker 1: up a portfolio, if you want to be a venture capitalist.
Speaker 1: Very interesting and our final question, what is it that
Speaker 1: you know about technology in the rise of the new
Speaker 1: digital sharing environment today that you wish you knew ten
Speaker 1: or fifteen years ago. Well, Um, one of the things
Speaker 1: I wish I had seen is, um, just how dramatic
Speaker 1: the consumerization of digital was going to be. Um, you know,
Speaker 1: back in two thousand, sort of looking on the horizon,
Speaker 1: seeing the iPod, UM, it wasn't as clear to me
Speaker 1: that we were going to see as rapid apace of
Speaker 1: consumer technology adoption and all of the changes that came
Speaker 1: with it, because had I seen that coming out of
Speaker 1: bought a ton of Apple stock at the time, because
Speaker 1: you know, they were really the only game in town
Speaker 1: at that point. I mean, you know, they had a
Speaker 1: tenure headstart over everybody else in terms of thinking about
Speaker 1: the consumer as you know, sort of the audience for
Speaker 1: technology products. Um, that's quite interesting. We've been speaking with
Speaker 1: Professor Arons UNDERAJN of n y u's Stern School of Business.
Speaker 1: If you enjoy this conversation, be sure and look up
Speaker 1: an Inch or down an Inch on iTunes and you
Speaker 1: could see the other hundred and nine in or so
Speaker 1: such conversations we've had over the past two years. I
Speaker 1: would be remiss if I did not thank Taylor Riggs,
Speaker 1: my booker, Charlie Volmer, our recording engineer, and Michael Batnick,
Speaker 1: our head of research, for helping to put together these
Speaker 1: interviews and podcasts. We love your comments, feedback and suggestions.
Speaker 1: Be sure and write to us at m I B
Speaker 1: podcast at Bloomberg dot net. I'm Barry Ridults. You've been
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