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  • SHANE GREENSTEIN: Thank you for having me.

  • Look, we're small enough that we can have a conversation.

  • I do have a presentation, but you can also

  • interrupt me if you want.

  • It's really quite OK.

  • I wrote this book, OK?

  • Took a lot of years.

  • And I hope to share a little bit with you.

  • I can't share the whole thing with you now, but perhaps

  • get you to motivate a little bit.

  • And I really appreciate you taking the time.

  • So let me just say what the book's aspirations were

  • and then give you some flavor for it.

  • The big question is why did the commercialization

  • of the internet have such a large economic impact?

  • That's a big question.

  • It's the big question in this area.

  • What the book does, it accomplishes three things.

  • It puts everything into one place

  • I like to say there's nothing in this book that wasn't already

  • known by somebody.

  • It just had never been all together.

  • Second, it focuses on innovation and commercialisation.

  • There's lots of very good writing on invention,

  • a lot less on commercialization.

  • And then third, it offers a big picture,

  • this phrase "innovation from the edges," which

  • we can get to if you want.

  • You might reasonably ask, who cares?

  • And Jonathan gave the answer, because it

  • changed everyday life.

  • If you have children and you talk to them,

  • I don't know if you've had this experience of showing them

  • "Leave It to Beaver on TV" and then you say, look, look,

  • there's no internet there.

  • And it really did change life.

  • It's changed it as we know it.

  • It changed business as we know it.

  • It's changed an enormous number of industries, how they behave.

  • It changed the identities of the leaders in many industries.

  • It's the kind of thing that it was

  • responsible for a boom in investment

  • for about five years in the US.

  • These are sort of things you don't see happening together

  • very often in the 200-year history of capitalism,

  • if I can make an overstatement.

  • It's the sort of thing you only see with electricity,

  • automobiles, the big things.

  • Indoor plumbing.

  • I put a list there.

  • Television, telephones.

  • There aren't many examples like this,

  • and so that, in and of itself it's of interest.

  • But I thought it's also interesting just

  • to understand what happened and why,

  • and why we had a big impact.

  • You can also see some of the symptoms in other things

  • like all the households that were

  • online-- you had half the households online

  • by the beginning of 2001, which is extraordinarily fast,

  • and the number of businesses online 90% of US businesses

  • were online by 2001, which is also extraordinarily fast.

  • The other place to start is to start

  • with misleading metaphors.

  • The other reason to write this book-- many people, when they

  • look at the internet, want to look

  • for an Edison or a Manhattan Project,

  • look for something that the government did,

  • as if the US government orchestrated this, or somebody

  • invented the whole thing.

  • And that's just wrong.

  • That's actually a very misleading metaphor.

  • There are some very, very smart people

  • who were involved in inventing the internet.

  • But if you want to understand why

  • it had the economic impact it had,

  • that's not the place to start.

  • That's the other reason to write a book like this.

  • So I'm going to focus on commercialization.

  • This is the best picture I could find of tubes.

  • And commercialization, in particular,

  • is taking technology and finding value in it.

  • And that's where the focus of the book is.

  • That's typically not something people write about,

  • although you're all living it at the moment.

  • The reason you want to focus on innovation

  • and commercialization, it is a much better focus

  • for understanding creative destruction

  • and the kinds of processes we saw

  • in the latter part of the 90s.

  • And it's also a much better way to understand

  • why some government policies succeeded and others failed.

  • So the big question that shows up in the middle of the book

  • is, how do major technologies deploy?

  • And what are the processes that we observe

  • and what are the patterns we observe?

  • And by the way, these are very durable patterns,

  • the kinds of commercial patterns you find, again,

  • over 100 years, the sort of things you see in electricity,

  • major agricultural inventions, telephones, and so on.

  • So if you start from that question

  • and you look at what happened in the middle of the 1990s,

  • you actually look at computing as in sort of its 2.0 phase.

  • We're presently, by the way, in about a 3.0 phase of big data.

  • Actually, you're at the center of the present phase.

  • I'd say historically, in about the mid-90s, we were at 2.0.

  • 1.0 was pushing out the processors into the frontier

  • and finding value in that.

  • And the typical uses were just the first times anybody'd

  • ever done databases for airlines, hotel

  • reservations, simple logistics.

  • And 2.0, a lot of people knew that it was coming,

  • was to do internetworking, that is,

  • to connect computers over large geographies

  • and do a lot of automated processes.

  • And a lot of prototypes had been built. So the value

  • was identified in advance.

  • What wasn't understood was what form it would

  • take in commercial markets.

  • That was where a lot of the mystery was.

  • In this case, what happened is a very good identification

  • of processes you find in lots of major technologies

  • when they diffuse.

  • And I would call them the two conundrums in order

  • to just identify for a general audience what a lot of research

  • sees over and over again.

  • So the two conundrums are, I call

  • them the circular conundrum and the adaptation conundrum.

  • So when major technologies diffuse,

  • the big problem they face is you have

  • to coordinate multiple suppliers all simultaneously

  • around the same effort.

  • And typically those suppliers are competing with one another

  • or they're not even talking to one another.

  • And so getting them to coordinate

  • can be very challenging.

  • The second conundrum, adaptation conundrum,

  • is when you have major technologies diffusing,

  • typically they have to be adapted

  • into a variety of circumstances in order to be valuable,

  • and that's actually where most of the investment takes place.

  • And nobody wants to make that investment

  • unless they're sure the darn thing is going to pay off.

  • And so then everybody holds back.

  • So you typically get these two conundrums

  • holding back major technologies from deploying.

  • And the question that emerges if you

  • look at any major technology is, how do you

  • resolve these two problems?

  • So I'll just do both of these in this case.

  • And I actually think it helps people understand

  • what we're going through today in a couple other major

  • technologies.

  • OK?

  • That was the plan.

  • So the circular conundrum is often

  • called the chicken-egg problem.

  • If you've not heard this, that's a joke.

  • I'm trying, all right?

  • So the theory is, you have to coordinate multiple firms.

  • So how do you do that?

  • The classic chicken-egg problem has the characteristic

  • that multiple firms need to get their stuff to work together

  • in order to create value.

  • But all of them hold back, and so they all sit on the fence,

  • and so you get long, long delays.

  • Typically what you need is either a focal point,

  • a mandate, a platform that coordinates,

  • a standard that's voluntary that all can participate in.

  • You need a mechanism like that to generate

  • an overcoming the circular conundrum.

  • I put a picture of Google Maps up here

  • because, in fact, that is the function it serves.

  • Just to give you an example, this is still