My brain appears to have purged a bit during a break in the morning brainstorm coffee break. The Internet is out again, so I guess I typed out my frustration? Now I think I have a few days of material, which is more business-oriented banter about innovation. Here is part one. Innovation, ivory towers, and the reality of ROI.
Yesterday I watched a TED talk with Joi Ito about innovation and the new trend with the MIT media lab in how ideas would be developed. I was like, “cool, so I have been doing something right, just about 30 years too soon.” I wondered why do we like to repackaging old and renaming it new, because we have better tools to see further and compute faster today?
I guess what bothered me wasn’t the talk or the context of the talk, it was everything one expects from a Joi Ito talk. What bothered me was what wasn’t talked about. We are seeing with the shrinking globalization and ability for multiple groups to work together is the potential for radial innovation, new products, and technologies to come forth like never before. While this is truly very exciting and is happening faster than ever before in peacetime history, what I didn’t hear was, “how will the world and the players make nice when it comes to divvying up the spoils of successful ideas (the money) in the future?”
In the past governments & universities were the only ones that could fund research at the cutting edge level, you had many private sector organizations working alongside that took the ideas out into the reality of the world for a tidy profit with patents that were many times paid for by the taxpayer. As the speed of technology as well as the ability to move globally very rapidly has increased, the private sector has stepped up to fill voids that are probably too expensive for debt-laden governments to undertake. Private companies have an advantage in being more nimble and able to move and adapt faster than government and large institution of higher learning. This is where I agree with MIT pushing more towards cross-pollination of ideas today, versus, “what is possible sometime in the future.”
From a legal standpoint, I do understand and agree where it is better to err with conservative judgment with law, but unless you are a large conglomerate with an army of expensive tax and intellectual property lawyers who know how to play the loophole game, innovating at the traditional small scale appears to be insane to the “norm.” At least innovation has become trendy again, but i am not sure if it is because it is "cool," because the tools make it easier, or because of the necessity of the changing US marketplace.
As the innovation speed has increased, society itself also seems have also become more short term with an instant gratification view - desiring/demanding a reward for self. An old record producing legend, Bob Johnson told me almost 15 years ago. “Its all about singles in the future, no one cares about albums, just figure a way to get a few hit singles out and sell lots of digital downloads.”
Today people are wired into their social network, documenting their every moment of time on this planet, as if we are somehow more important than we really are. Fame has become something you have the ability to gain, by simply doing nothing. I wonder what one man I truly admire for how he handled his fame, Neil Armstrong, would say about today’s, “fame.”
Another area that helps build this idea of quick wealth is Silicon Valley itself. The dot.com billionaires and stock options handed out to employees as “normal” job compensation, while not as ridiculous as in the 1990’s, still exists. I still remember an old friend calling, “what do I do with these stock options, hold them, take a loan and buy more?”
I was amazed companies were just handing out stock like toilet paper in a bathroom to every employee as an option to bootstrap that there would be no profit..ever. Even before the first dot. Bomb crash, there was a term, “burn rate” being used as something “good." (it did and still seems insane to me)
Every few months i would get a call from my friend, all employees giddy with delight with the financial windfall. "what do i do?"
I would do a few quick calculations, “You have a PE ration of -16,500 (it actually was negative sixteen thousand, five hundred)…sell all of them and enjoy your quarterly Christmas gift from Santa.”
He asked, “What’s the PE ratio? Is it good to have such a big number?”
i had to laugh and say, “If you are looking for a dramatically overpriced, horrifically performing stock. yes, you have found one!”
"so, uhm...sell asap?"
Maybe that is the best place to stop for the day, with a chuckle for anyone that has to do financial analysis. Reality can certainly be funny at times.
That was half a cup of coffee, and part one.