Economics Technology

Economics of digital branding – recommendation algorithms

Not so long ago, I remember when I bought my first car. I methodically jotted down my priorities and all the available choices. After several discussion and debate with my better half, I arrived at the one that best met my requirement. I met a dealer in my area and he made the deal. Though it was quite simple then, the new era of digital sale is not the way it used to be. Does this decision of selecting my car getting transformed in the digital era by algorithms?

Today almost all the consumers have become promiscuous on their brand because of the choices available for them. This is just not the case with the brands that we buy every day but even with the brands that we aspire to buy in future. Today’s customer has the option to connect with myriad brands—through new media channels beyond the manufacturer’s and the retailer’s control or even knowledge—and evaluate a shifting array of them, often expanding the pool before narrowing it. After a purchase these consumers may remain aggressively engaged, publicly promoting or assailing the products they have bought through social media collaborating in the brands’ development, and challenging and shaping their meaning. This constitutes the digital identity of the brand. There are three basic elements to the brand identity. The first one is the value the product or the promise that the product tries to fulfil. The second is the aesthetics or the design element of the product. Finally, the fulfilment, which constitutes the economic model of the entire supply chain. These are the factors that structurally drive the information about a brand on the digital environment. This information with the inputs of recommendations that are provided by the digital media forms the basis of our decision making. In such a case, the choice that we make is our own or driven by someone else?

For example, today we have the youtube channels where a child un-box toys to the delight of toddlers around the world (The Ryan’s toy review) and a Swedish gamer with millions of teenage fans (PewDiePie), running one’s own virtual TV channel with multi-million followers and a few billion cumulative views. Have you ever wondered how they get to the top echelons of viewing? – The trick is done by the internet channels through suggestions or recommendations customised to you. The brain of such channels is – the recommender algorithm. The pioneers of this technique are the early adopters of this technology such as Apple, Facebook, Google and Microsoft which help them to make into the top 10 of the world’s most valuable brands. These are the companies that we touch, speak and feel every day and decide what we consume. If you really think the word of mouth marketing is gone, it is not. Today’s word of mouth is the social media. The key reason why the social media giants such as Facebook and Snapchat are so valuable is just because they are the identities of the new digital human.
The recommendation algorithm is used in a variety of areas including movies, music, news, books, research articles, search queries, social tags, experts, collaborators, jokes, restaurants, garments, financial services, life insurance, romantic partners (online dating), and you name it, it is there. The social media platforms and the e-commerce sites analyse the user’s past behaviour based on the links the user had clicked or the products he had purchased and similar decisions made by other users. This recommendation system can either constitute a top-down approach, in which the broad interests of the user is captured on a regular basis and then compared against the behaviour of other users. The recommendations to the user will not only include his interests but also interests of his peer groups. This is a collaborative approach and is the way google works. Using the huge user base it has google applies recommendations across its platforms. So now you know why once you play a specific video, you get similar videos on youtube.

The other option is a bottoms up approach by identifying the attributes of the product recommended in a standardised form (i.e., the key parameters of search) and identify similar products based on the defined attributes. A nice example is the music genome project. The project gets into the essence of music at the most fundamental level. Over 450 attributes such as gender of lead vocalist, prevalent use of groove, the level of distortion on the instruments, type of background vocals, etc. are used to describe songs. These attributes are mapped to the user preferences to make musical selections of a certain genre based on the user’s preferences. The output is the patented music streaming service powered by the music genome project the Pandora Internet Radio. The movie databases such as Rotten Tomatoes and IMDB also uses the same technique.

Obviously, there has to be a hybrid approach. Netflix uses this approach. It makes recommendations by comparing the watching habits of similar users as well as by offering movies that share characteristics with films that a user has rated highly. This recommendation technique is now extensively used on internet-accessing smart-phones also for GPS navigation and location based services.

But what is the flipside to these recommendation algorithms? They will take off adventure and serendipity on our choices. These algorithms will slowly discourage exploration. Soon there will be a method to the madness and the human behaviour will become more predictable. Amazon will suggest similar books to you, Netflicks will show you the similar movie, SoundCloud will play the similar songs and obviously you will end up taking the same route to the office. So who wins in the end? It would be these internet giants that control the users and their preferences. These goliaths will be able to muscle with the sellers, (I would say the car company, that want me to but the car in future) who want to access the users through their platform. So it is neither me nor my car company that would benefit. It is the broker that wins. This will catapult the oligopoly of our internet companies that touch our daily lives to a different level – driving them to not billion dollar enterprises but trillion-dollar enterprises.


The data theory of chatquake

Some silly things do happen in life. I was desperately looking for my marriage photographs to prepare a romantic album for my wife over last weekend considering my impending anniversary. I initially thought of digging out old photographs and making a collage and make a superb gift. Since I am decently unorganised, I had to hunt for the album over the night and I was dumbstruck to see that the thin films in the album had already made a natural collage of the photographs.

OMG, I had to find an alternate way to get something of sentimental value to her. I decided to hunt for my hard disk to get some pictures of our “good old days”. I was blessed with the soft copies that I found on the hard disk. The happiness didn’t last much. My daughter grabbed the disk from my hand to get hold of the “Tom and Jerry” collection and here it goes onto the ground…. I didn’t know what to say. There lies my whole collection of songs, photographs, videos, and movies I had collected over past few years. I had some hope to connect and check the data. I could just hear a ticking sound from the hard disk. It was all over.

I started to search for an online secondary data storage. I was amazed at the kind of progress that we had from our era of floppies to the latest DNA storages devices. I had to pinch myself when I came across the work in which DNA suspended in water is used for data storage. To give a perspective of DNA, around one tenth of million molecules of DNA can be fit into the width of a hair. Literally, the library of Congress can be fit into a few strands of hair. I remember around 4 years back I had read a news that scientists successfully stored 5.5 petabits of data in a gram of DNA, that’s equivalent to 700, 1TB hard disks. The research over the past few years must have taken this number that would need a few minutes to count the zeros at the end.

Moreover with such “simple mechanics”, there would be no fear of losing data. I am glad that my marriage photos can be stored for more than 1000 years. But can we transform the data storage to a service that can be seamlessly accessible? I think we can. Even if we do it, what would we do with such a large quantum of information? It would be a daunting question for a technology leader who is planning to use such data for enhanced “client experiences”.

Let’s see what is happening to our services industry. As we see it the industry is getting transformed or, rather I would put that the burgeoning clusters of startups are transforming such client experience. Let’s take a simple example of banking. Why are (or were, possibly it has come down drastically) we going to banks? Is it just the matter of money? I think people never banked with an institution just for money. They banked to have a trusted companion and a feeling of support (from the perspective of money). With the emergence of the modern technology, we lost a little bit of personal touch on such relationships. I don’t think you would have met your chic relationship manager at the bank personally (I haven’t). There are banks that charge if you try to do that. Anyway, how would we able to bring back that personal touch for the banking or for that matter, any other services with the new age technologies?

It is a question that would haunt any company that would aspire to design the consumer-centric front end. It would be wise for such companies to consider the new emerging bot platforms. In the supersaturated digital economy where the website and mobile app are taken for granted for any business, the emergence of the bot economy would be a silver line. Humans, being social and connected, have time to spend over a 300 minutes over a week in connecting and chatting with those connects through the popular chat applications such as facebook chat and WhatsApp. For the facebook, this opportunity will open up a new way of business to reach users – via a chat interface. But is this going to be scalable? Is it going to be the next big market or is it just hype?

So what is a bot and how we can use it? They are apps that would enable the users to interact through textual or conversational interfaces rather than the traditional click to action kind of interfaces. It would take us one step towards the machine intelligence that would understand what you would say and then respond(which has been the idea behind developing the computer program by Alan Turing). The bot may not be a completely new concept. It is the new age version of billboards or chat rooms from the times of ActiveBuddy’s Smarterchild (later taken over by AOL). The way Smarterchild developed intimate friendships with over 30 million Instant Messenger users and over a billion messages a day, these new age bots would change the way of human interaction with the computer. But what could change or has changed from now and then? Two factors as I see it would be the growth of measurable data and the growth of the internet and mobile technologies. According to IDC, in 2011, we created 1.8 zettabytes (or 1.8 trillion GBs) of information, which is enough data to fill 30 billion 64GB Apple iPads. That’s enough iPads to build a Great iPad Wall of China. In 2012, it reached 2.8 zettabytes and IDC now forecasts that we will generate 40 zettabytes (ZB) by 2020.

To put the data explosion/generation in context, every minute of every day we create, more than 204 million email messages, over 2 million Google search queries, 48 hours of new YouTube videos, 684,000 bits of content shared on Facebook, 100,000 tweets. It is pretty much huge measurable information.

When we know the user muscle of these messaging apps is headed to 2 Bn users globally which are around 30% of the global population in 2016, what would happen if we are able to chat to a bot without even knowing that the discussion is done with our machine counterpart? The beauty of the opportunity lies in refining the Natural Language Processing(NLP) capability and instead of a monotonous IVR we hear the pleasant voice of a Siri/Cortana and get into a discussion on a topic of our interest. Even though the research on NLP is focusing on English, it will soon expand to other languages too to address the local crowd. We are talking about a “chatquake” in countries such as India where already we have an average millennial (aged 16-30 years) spending about 2.2 hours a day (or about 34 days of a year) on their mobile devices. Once we have that expertise the “click market” would transform to a “chat market”. You could be conversing with an app rather than swiping over the phone. This would increase the local marketing engagement and reduce customer support costs.  The companies planning to enter this market would need support from platforms such as Facebook and Google that would charge for the privilege of talking to their customers. This will open up a bot economy parallel to the app economy and in turn, open up another channel for client services.

This space has been revolutionised day before yesterday by the launch of a bot platform by facebook. With the “big data analytics”- the quantum of data that’s being generated exponentially as we saw earlier, and with the intelligence that we would be able to imbibe into the bots through analytics on human thoughts, the bots will be as much part of the conversation as real people are.

Who knows for my next anniversary, a bot would recommend me another bot that I could gift to my wife on my behalf. Need to wait and see.

Economics Ethics Technology

Economics of bodybuilding – the new bot

The best story that I had heard for the week was that of an “aspirational” techno geek of Hong Kong who made a Scarlett Johansson (ScarJo bot) clone. I mean a robotic clone. Though this bot can be the future of objectifying women, I would be happy if I were greeted by one of them when I step into a hotel (which I cannot say in front of my wife, though). But what have we achieved so far from the bionic technology? According to the creator of the ScarJo bot, it took eighteen months and just over $50000 to complete this amazing project in his patio with a 3-D printer and the self-learned software. Moreover, our Siri is a woman and our Cortana is also a woman! On a lighter note, if a bot would exist to perform labour or any personal assistance, I bet it would be a woman and I felt it is so obvious with our physiological and evolutionary requirements.

But what is bionics? It is defined as anatomical structures or physiological processes that are replaced or enhanced by electronic or mechanical components, which would assist in acquiring extraordinary powers or capabilities of being superhuman. Bridging the gap between man and machine, once a science fantasy is now a global industry.

In the age when Europe is lacking people to work in their fabulous factories and China thrashing up its one-child policy considering the exploding old age population, do we need to think an alternate through the bionic humans powered by artificial intelligence? Tomorrow I might have a bionic human in the family – a  cybernetic organism (a cyborg) that knows more about me than I know about myself. These organisms would be a complex hybrid system (may be living or non-living, I am not sure how we will draw the line between living and non-living) combining biological and engineering parts. With the current technology that could control the limbs with the thoughts alone, just as the way in which our limb performs, the extended application of such a technology is limitless. As I had always dreamt during my examinations about getting the access to my classroom notes just through a pen drive plugged into the brain, I believe this possibility is not as far as we think. In future, except the logical decisions that we could take considering the information available, the rest of the data can be loaded and unloaded to the brain as we need.

From the time when amputated humans were assisted with the twigs from the tree to the intelligent eyes that helped the blind to understand the colours of the world, we have made an immense progress in bionics technology. In the new era of the machines when humans are required to satisfy the social and physiological needs of humans, we could see a transformed era of bionics which can reduce the impact of ageing and make the older more mobile. Will this increase the retirement age? Need to wait and see.

As the elderly population grows so is the global bionic industry. Extending the life of ageing limbs and the functioning of the damaged ones, in the next 5 years, this industry is expected to grow over 20 Bn., unless there is a disruptive breakthrough. If such a breakthrough happens it will be much bigger. By 2050, it is expected that the elderly population of the world would be around 16% (around 1.5 Bn.). In developing countries such as  China, the older population (those over age 65) is likely to swell from 110 million today to 330 million by 2050 and that of India from 60 million to 227 million. The key problems for the elderly include the lack of mobility and the companionship. If the new bionics age is able to address these growing needs of the population, it would be the next game-changing field for the years to come.

The bionics will also level the playing field between the physically challenged people and the common human. More than 1 billion people have some form of disability. This corresponds to about 15% of the world’s population. The key disabilities for them are related to the vision and the mobility that are being addressed as we speak. If such new technologies become scalable and mass production of these inventions are achieved, they would turn out to be a boon for the amputated and disabled.

Another possibility is to look at the need for a mechanised organ that could be developed through the technology. The current transplantation covers only 10% of global need. Either the world has to move to an organised organ market to kerb the black market of the organ smugglers or it should find a biological or mechanical source through technology to build a stockpile of bionic organs that would address the growing global organ demand.

So we should be ready to accept a new family member, who could help us in our old age and possibly a limb or an organ that would be a machine to be part of our aura. The blend of man and machine of the future would be a necessary transition for the generations to come and thus see ourselves as civilised and rational cyborgs.

Economics Technology

Is the future of food we eat is still a mystery ?

After celebrating the new year, I decided to give my wife a break and hence devour in one of her favourite restaurants. We went to a Japanese restaurant and ordered grilled meat Yakiniku, one of the full-fledged Japanese steak. When I asked the manager about the quality of the meat used in the steak, he conveyed to us that the restaurant uses meat only from sustainable sources. I smiled at him and started to think what would define the sustainability of food consumption, especially meat. I started to wonder how the food platter will look 20 years from now? In the modern era of culinary laboratories such as El Buli and fine dining chefs from Michelin’s, where we refine the science of gastronomy, should we be a little more sensitive about the methods of sustainable agriculture?

Let’s explore how as a human race, we have mastered the techniques of the production and consumption of food. If we take the case of arable land,  one-third of such land is used for agriculture and 70% of that land is used for growing only meat. Is this an efficient way to harness the productivity of nature? On the consumption side, we are doing a commendable job. The world’s population is predicted to hit 9Bn by 2050 and the food demand is expected to increase at least by 60% for cereals and 85% for meat (according to World Bank). How would we satiate this enormous appetite for food?

The post-world war agricultural development in developed countries and green revolution (not so sure whether we should call it a red revolution or green revolution), which encouraged the insensitive use of fertilisers and pesticides in agriculture, have contributed one-third of freshwater pollution with elements such as phosphorus and nitrogen. The insensitive usage of hybrid and GM crops has extinguished the local varieties resulting in soil degradation and sky rocketed sales for the Monsantoes and the Potashcorps of the world. The highly acclaimed “positive effects” of these changes are levelling off in terms of production and pests are getting increasingly resistant to disease. Taking into account the current production rates, our current agricultural output will not meet the projected demand of the world.

Moreover, it would be an amazing fact to note that around 50% of the antibiotics are used in the cultivation of crops and rearing of livestock, not on humans for which they were intended for. By the way, these antibiotics are not being used to fight diseases that spread among animals but to increase their weight, ensuring higher meat output. Interesting paradox !!!

Water stress and desertification that have been the results of global warming are reducing the amount of arable land available every year. Dramatic changes in the consumption patterns of protein rich food in emerging economies such as China and India are going to catalyse the slaughter of livestock day by day. Another interesting anomaly to note is that 20% of food produced or harvested is lost owing to insufficient processing, storage and transport. To give a perspective, every day around 4.4 million apples, 5.1 million potatoes, 2.8 million tomatoes and 1.6 million bananas are thrown as waste. This is not just a waste of produce, but also is a loss of the factors of production.

So how would future generations address these problems? It would be interesting when our kids get us bugs for a protein rich diet. Are we ready to accept the bugs instead of beef?

Even though Creative ideas like Lab-grown meat, 3D printed food on request and the meal in a pill are still in the labs with exorbitantly expensive bills, such technologies will be the way forward for coming generations.  The concoction of algae and living tissue from a livestock currently brews in a sugar scaffolding at a cost of US$32500 to make a piece of burger sized meat. Can the brew be a little cheaper on a larger scale? Something yet to be seen.

But another alternative that can be seen in future could be vertical farming. When the technology becomes more efficient, the current industrial and technology districts may alter it’s size and shape to semi-agricultural factories producing year round produce or carniculture through indoor farming. Even though we haven’t been able to perfect the formula for baby milk since last 200 years, we would be forced to perfect the formula for a meal in the pill if that could partly solve the instant food problem for the rich.

What would be the economic impact of these technologies?

The current consumption of meat is over 200 pounds per person per year in US. (In India, it is just around 6 pounds). It is estimated that around 200 gallons of water are consumed in the process of making a single pound of beef and around half of it is consumed in the process of making poultry. If there is a shift of the Non-vegans in developed economies to any of the alternate sources of protein, the process will have a huge impact on the economics of natural production of food.

If we consider the alternative to eating “cold-blooded bugs”, a change synonymous to the shift of our generation from incandescent bulbs to LEDs, the future food platter would be more sustainable and nutritious. The process of manufacturing bugs consumes so less energy and a lot less land considering the factors of production for other sources of food.

May future generations consider options such as having bugs instead of beef and a deeply learned computer controlled vertical farming, that reduce water usage through hydroponics, thus reducing greenhouse gases.

Hail the kids who would decide that for us !!

Fintech Technology

What is so common between a community of ants and a bitcoin ?

Over the weekend, I visited one of my friend’s home. I knew that the guy had some weird hobbies, but I never expected to see a living ant colony – a formicarium in his bedroom. A little curious I started to read on how ants colonise a locality and how we can measure the brain power of these little creatures?

An ant has only 250,000 brain cells. They use these connections so efficiently that they build complex nests and create rudimentary agriculture and public health systems. As far as humans are concerned at the age of 5, a human baby has over 1000 trillion neural connections. Over time, it refines itself and transforms the number of neural connections to just over 100 trillion just one tenth of the original quantum. The transformation of these neural connections is the basis of human intelligence.

What does that result in? Intelligence helps us to develop a social network. Have we exploited the power of our social networks yet? I would say we haven’t. Do we trust someone whom we meet on the internet or a social network? I would say considering a few exceptions (that often results in marriages), we do not. But the evolution of super-intelligence and the distributive ledger technologies will change the finance industry works in a few years.

When Satoshi Nakamura in 2008, introduced the concept of the blockchain technology and the corresponding distributive network, it was the personification of Sigmund Freud’s comment about the origin of civilisation – “The first human who hurled an insult instead of a stone was the founder of civilisation.” Here is the era of Super-intelligent block chains – Intelligence built by the intelligent to make decisions. This technology is currently a baby, born with unlimited possibilities to transform the way the business is done. The refinement of this intelligence will be a unicorn in the financial technology space.

I am not a programmer and I do not know how to code. I am a banker who used to run advisory portfolios for clients. I came across the term of blockchain technology, distributive ledger and bitcoin around 4 years back.  These technologies are synonymous to open source payment platforms unlike the closely guarded platforms of the banks and payment institutions. If one look at the evolution of the Blockchain technology – bitcoin, it is evolving just like the internet. There were initial comments about the internet that it is of no good other than to distribute porn. But the transformation that the internet brought to our lives is incomparable to any previous technologies.

So how does this work? I will give you an analogy for the block chain. Assume that you have a cake to be distributed among friends. In the old school, you give it to a friend and he may take a fair chunk of cake to get it distributed evenly. In the blockchain concept, you hire butlers. The butlers do not charge a chunk cake and since they are wearing the butler’s gloves, if they eat, you can see that on their gloves. The butler is rewarded if s/he distributes the cake in a fair manner and it is just a small piece of cake, unlike what your friend would take. Such butlers are called miners, a very funny word though in the block chain terminology.

When VISA processes around 18 billion dollar transactions a day, bitcoin, in its infancy, is processes around half a billion dollar transactions daily. But VISA charges around 3% for such transactions. Global remittances move around 800 billion dollars through the payment network and such establishments charge around 10% commission. The revolution of blockchain would trim such fat to less than 1%. Goldman Sachs has estimated the savings that blockchain technologies would bring – It is around a whopping 200 billion dollars.

So what are we expecting out of block chains?

Ethics Technology

Are we getting to the final frontier of science?

After the defeat of Lee Sedol by the AlphaGo, I have started losing sleep on the thoughts of the evolution of machine intelligence. I don’t think anybody should, but let us see whether the news is worth pondering.

The game Go is from China. It is a simple game with black and white stones on the board in which the players try to capture the opponent’s stones or surround empty space to make points of territory. Though the rules are simple, it is jaw-droppingly complex. As per the mathematicians, there are more positions in Go that there are atoms in the universe. Did you get the number? If not it is googol times complex than chess. Still, you did not get it, it is defined as 1 followed by 100 zeroes.

This game has been considered the most challenging classical games for artificial intelligence owing to the enormous space and difficulty of deriving the positions and the moves. This was an epic game in which a computer program defeated a professional human player, which was previously considered at least a decade away.

I think with the advent of this victory we are concurring to the dangers that Nick Bostrom the global authority on superintelligence, had his concerns on. According to him the development of superintelligence may pose an existential risk to humanity over the coming century. We would not be a match for the evolving machines. The cognitive performance of these machines would considerably exceed the capacity of all the mankind put together. Is there a way out from this catastrophe?

The superintelligence is a baby that is being conceived by the defeat of Lee Sedol, but it should not be the defeat of the humanity. As the guardians of the concept, the thought leaders has the moral responsibility to ensure an ethical application of science. I believe we as a mankind should drive science to reduce the existential risk of humanity and use the superintelligence to protect the humanity from the existential risks posed by nature or any other similar technologies.

A baby is never born criminal, it is the environment and the people who mould it are responsible for the behaviour. Will our generations venerate us for developing the ethical sense on machines or would they curse us for making a Frankenstein’s monster?

Ethics Technology

The emergence of a trusted Leviathan

Leviathan is a term coined for the sea monster in the Tanakh or the Old Testament. It is a word that is used contextually for the sea monster. You may be thinking what it has to do in an era of the technologies that emerge even before the predecessor makes its presence. Though the term was coined out by the seafarers, the term came to my attention after reading the book written by Thomas Hobbs. His argument for the necessity of absolute sovereignty emerged in the politically unstable years after the Civil Wars of England, which underlined the existence of unseen Leviathan for a stable society to prevail and equal justice for the equal imposition of taxes.

Yesterday morning I was surprised to see a buzz on my phone. I thought I had kept a reminder and just tried to switch it off. It didn’t go off.  I was surprised to understand that it was an alert regarding my upcoming flight that had been preponed by 45 minutes. I was little curious. I checked my mail box and I had accidentally deleted the mail that had come from the booking agency. I called up the agency to confirm and it was confirmed. Wow ! I appreciated the effort Google has done for me. I felt happy and relieved.

On the flight, I started to think about the technology that we are depending on. The phone has been so intelligent to know exactly what we do and where we are and more than that why we are where we are? Isn’t that intrusion of personal life knowingly or unknowingly or can I term it as an information slavery?

The decline of mobile hardware as we had seen with Motorola and Nokia and the emergence of data and IoT(Internet of Things) giants such as Google and Apple IOS, may transform the political landscape too. The news of Apple steam rolling FBI to protect the data privacy laws is still a controversial topic to discuss. But I believe that we have come to an era in which the private enterprises could stand against even the Uncle Sam. But are we acknowledging that there is no data privacy for us when we indiscriminately use our Facebook and Whatsapp?

I look forward to an era in which the borders may vanish and world political powers will be dislodged with the emergence of super data powers. The unequal taxation and the borders will go off-limits and the world would shift to a data constitution, and indirectly a data citizenship. You never know it may be soon that you enlist with super data powers and pay tax so that your civic and social rights are guaranteed!

Am I getting to the society of Hobbesian philosophical system which had its origins in the fear? Hope not.