Full transcript: Tim O’Reilly on London Real
3:03 Brian Rose: This is London Real. I am Brian Rose. My guest today is Tim O’Reilly, the founder and CEO of O’Reilly Media, which spreads knowledge of technology innovators through books, online services, magazines, research, and conferences. You were one of the first people to identify the importance of the World Wide Web, open source software, the maker movement, big data, and even coined the term Web 2.0. A pertinent voice on the past, present, and future of business and technology.
4:24 You’re often referred to as the Oracle of Silicon Valley. Your new book, WTF? What’s the Future and why it’s up to us, is a combination memoir, business strategy guide, and call to action, covering lessons learned from four decades in the industry and how they apply to business and the broader economy. Tim, welcome to London Real.
4:40 Tim O'Reilly: Hey, thanks so much for having me.
4:42 It’s great to be here.
4:43 Brian Rose: You know, we’re actually at what they call Silicon Roundabout, which is Old Street Roundabout here, which is actually the centre of tech in London, and it started that way because the office space was kind of cheap around here. And I was just curious, when you come to London in the UK, how do you think the city ranks when it comes to a technology perspective? Do you think of it or hear about it in that perspective? One thing that London is known for, I think, more than anything, is FinTech, because of the banking industry here and things like that.
5:13 But before we get started, I was always curious, you know, from a Silicon Valley perspective, what do you see in Europe, in the UK?
5:22 Tim O'Reilly: Well, first off, I would say I don’t actually pay that much attention to Silicon Valley. Interesting okay. You know, and when I come to London, I think of the fabulous statement of Samuel Johnson, who said he was tired of London, is tired of life, for there’s all of life in it. You know, I love the vibrancy of London and yes, it’s great that it’s, you know, building a tech culture, but I think we overrated the role of entrepreneurs and investment in creating the future.
5:56 Brian Rose: You made a really interesting point. You said people came here because rents were cheap
6:02 Tim O'Reilly: It turns out that every technology revolution I had been part of has started where rents are cheap, and I mean that literally, both in the sense of, you know, real estate, but more importantly in that there was access to opportunity. You know, I first came into the industry as the PC was taking off. You know, although I was kind of more on the Unix minicomputer side of the equation.
6:29 I wasn’t really a PC guy. What was about that time you know, the, and you know, IBM dominated the industry, and they had it in a stranglehold, and there were all these kids who basically realized that they could have their own computers. It was a hobbyist movement, and along came some people like Bill Gates, Steve Jobs, who saw that they could be entrepreneurs. But it didn’t start there. It started where the rents were cheap, where you could get together in a club, the Homebrew Computer Club, and share your excitement.
7:01 You know, my own first personal computer was an Osborne one. You know, I remember that, and you know, I remember, you know, I was living in Boston at the time, and I got all this software from the Boston user group. You know, it was called BOG, you know, the Boston Osborne, yeah, and they had this library of free software, and I, you know, I learned how to program, and I, you know, I, and I was actually, I had actually been programming over on the Unix side, but this was like my own computer that I controlled, as opposed to the one that was at work.
7:33 And that was it you had your own computer, you know, and it was a toy, but it grew up, you know, and then, you know, the World Wide Web. You know, here we are, at that point 10, 12 years later. Microsoft had come to dominate the PC industry. The rents were no longer cheap. Microsoft sort of sucked all the life out of the PC co-co system, right?
7:56 Brian Rose: And they were the rebels to IBM, and that’s right, they were the rebels to IBM,
8:00 Tim O'Reilly: and then, you know, the web came along. Tim Berners-Lee put it into the public domain. It was free, and you know, I literally had this conversation. Yeah, we were a publisher. We’d been doing all the stuff that Unix and we discovered the World Wide Web, and we actually first published about, there are only 200 websites, and then we built the first commercial website.
8:20 It was the freight, about a year before Yahoo, we built the site called GNN, the Global Network Navigator, was the first ad supported site on the web, and it’s a big innovation. Yeah, and what was so interesting was everybody was doing the web. It was just a hobbyist. It was like this cool thing that you could do. Rents were cheap, and then, of course, we watched the cycle repeat, and over the next, you know, decade, you got some enormously powerful companies that have become near monopolies, and the rents were no longer cheap on the web.
8:56 And here’s a really interesting point. Apple came along with this new innovation, the iPhone, and Google did something really smart. Well, it may actually be one of the smartest things they ever did, certainly after their initial innovation of the web, and that was, they were generous. They gave away Android, because, they, and that, I think, is such an important principle. I think that the way we keep innovation going in our society is make sure we give enough away.
9:31 One of our slogans that my company is, create more value than you capture, and we got to that originally. It was kind of a, it was a company retreat around 2000, and we were trying to figure out how to integrate all of our new businesses. We’d started conference business. We weren’t just a publisher, we were doing various things online, and we were doing a bunch of strategy work, and I happened to tell the story of a couple of internet entrepreneurs who told me that they had started their company with an O’Reilly book, and I said something like, you know, yeah, they got a billion dollars, we got $30, seems like a good trade, you know.
10:09 And Brian Irwin who was my VP of Marketing said we should make that our slogan: we create more value than we capture. And we did adopt it as our slogan, except as an exhortation to people, not as a description of ourselves. You know, I’ve used that ever since, you know, as a suggestion to the companies, but that is what, you know, if you look at what Microsoft did, they tried to hold on to their dominance. Google actually did hold on to their dominance despite this new revolution by actually taking this, you know, operating system for smartphones and giving it away.
10:45 Okay, and that’s a really interesting lesson, and the reason I bring it up is because it’s so central to today’s economy, and it’s one of the things that I talk a lot about in our book. You know, we actually need generosity. It’s a really good strategy for a sustainable economy, and right now we’re in a place where the rich are getting richer, and you look actually at the graph of productivity, and it keeps going up into the right, but average household income has flattened out starting in the 70s.
11:20 And actually, I used my exploration of the technology industry to, actually, go in the latter part of the book into an exploration of what that teaches us about economies and what we ought to do differently.
11:32 Brian Rose: Okay, wow, that’s fascinating. What you just kind of gave us a great walk-through, you know, technology and the web from 1990 to when you were at all, to, kind of, the crash around, you know, 2002. I remember being part of that, and then the iPhone, you know, and, you know, places where rent gets cheap again, and rents cheap again, and people come in, you know, what is the next wave of the rents getting cheap and kind of people coming in?
11:57 Tim O'Reilly: Yeah, that’s a really interesting question. I mean, in some ways the maker movement was that, and we didn’t quite recognize it in that way, you know, think about the iPhone. It’s actually, you know, was a maker product. I mean, here was, you know, I still remember in, not that long before the iPhone came out, Jeff Han of NYU gave a demo at our Emerging Technologies conference, and at TED, of his amazing touch screen. It was actually a big screen display, you know, where he’s kind of doing the multi-touch stuff, and everybody was like totally amazed by it, and then it comes out as a consumer product, but it was a homebrew device before it was a consumer product.
12:38 Again, you know, the timing, it was pretty close, and in fact, it turns out there’s actually kind of a secret here, kind of going back to the rents or cheap, you know. We tell so many stories about the genius of these guys. We forget that government putting things into the public domain is actually at the heart of every advance in computing so far. The original von Neumann architecture of modern computers, developed by John von Neumann and his team at the Institute for Advanced Study, as part of government-funded research for basically the atomic bomb in World War II, as a result of that, put in the public domain.
13:19 Next wave, IBM trying to catch up in this market, they didn’t think was very important. Made for them a vast strategic blunder. They published the specs to a PC made out of commodity parts that could be made by anyone. They figured, well, you know, they would be the dominant player, just like they’d always been, but instead people like Michael Dell, a kid in his dorm room, was able to make a PC, and they basically you know, again, it was this gift, but, but, okay, I’m sorry, I’m mixing my stories here, because really the story I wanted to tell here is government.
13:55 You know, what a government do for the iPhone? There’s a wonderful book by a professor at University College London Mariana Mazzucato called The Entrepreneurial State. Think about what’s in a smartphone: GPS, government research, a lot of the sort of technology, the fast Fourier transform, which is one of the key mathematical breakthroughs that helped us get to digital technology, funded by government research. Of course, the Internet itself, funded by government research.
14:26 Siri, funded by government research You can kind of go on down the list, and all of these things put in the public domain. So that’s again a version, the commons, you know, of, you know, is a version of this metaphor of where rents are cheap, you know Tim Berners-Lee again, working at a government lab in Switzerland, develops the World Wide Web, puts it into the public domain. You know. So whenever we make rent, and we give things to other people, when we’re generous, you know, we get these incredible bursts of innovation.
15:05 And what really bothers me is that companies take the benefits of that innovation, and they don’t realize that with that great power comes great responsibility, as Spider-Man says, right? They give it back. Actually, here’s the little, such generosity is key to us continuing to grow and have all these innovations, and if people try to catch all the value and hold on to it. Yeah, we all stagnate. Yeah.
15:27 Now I know you like to get people off of their kind of talking point, so I’m going to give you a little, little tidbit. I happen to kind of reference Spider-Man. Maybe I got my instinct for, with great power comes great responsibility, because when I was 14 years old, I was the subject of a series of experiments. I was a control subject in a series of medical experiments by my father, who was a pioneer in what they were calling nuclear medicine, you know, and he studied something called Wilson’s disease, which is a genetic disease involving abnormal retention of copper in the brain and in the liver.
16:02 Brian Rose: Okay, and so, is this part of the study?
16:04 Tim O'Reilly: My best friend and I, from, you know, from school, were basically injected with radioactive copper, and then we go in. Everybody, that, yeah, we have every couple of weeks, we go in, an hour, every cup, every day, we’d go in and get measured, see where it was going in our body, and how it was normally excreted in a normal person, rather than in a Wilson’s disease patient.
16:25 Brian Rose: So maybe it’s the radioactivity. You know, you do live in Silicon Valley, and you,
16:30 Tim O'Reilly: well, I live on the, I’ve always lived on the fringes.
16:33 Brian Rose: Okay, but you spent your time out there, but you say you don’t necessarily pay attention to Silicon Valley. You pay attention to a lot of things.
16:42 Tim O'Reilly: Well, I tend to pay attention to the people on the fringes, you know, the people who do things because they love them, because I really do think that the future comes from those people who are just exploring the possibilities. You know, and if you really want to get ahead, you want to find the people, like, somebody’s called the alpha geeks.
17:04 You know, these are the people who are just doing interesting work, just because, and there, often, like, decades ahead. And it was really interesting. Sometimes you’ll find people at the conjunction of two or three different trends. Yeah, you know, so right now I think there’s a lot of amazing work going on, and there are science. There’s a lot of amazing work going on, in, you know, in genetics.
17:32 You know, so I’m actually also, you know, you know, I don’t think necessarily believe that it’s going to come out of Silicon Valley. The next big thing, it’s going to come out of some area that people aren’t paying as much attention to.
17:44 Brian Rose: Okay, because if I was British, and I am British, but I’m also from California, funny enough. Yeah, um, you know, if you look at it, big technology names, it’s the Google, Amazon, Apple, Uber, and these are all coming from this area of Northern California or southern Washington, and Microsoft, and you know, and you know, I was always wondering how I explained that to my son here, and in Britain, like, why does it all come from there?
18:07 Brian Rose: You know, and 10 and 20 years from now, will it always still come from there? And absolutely not. And then maybe you could even tell us from your perspective why, why it did come from there in the first place?
18:21 Tim O'Reilly: Well, there’s a wonderful explanation in a book called Learning by Doing by an economist named James Bessen and he describes the evolution of the textile industry, but also with reference to his own experience. Before he was a professor of economics, he was an entrepreneur in the early days of digital publishing, and he basically describes why it takes so long for new technology to really make society more productive, and he comes to the conclusion that it takes an ecosystem of people they have to have enough people who know how to use the technology effectively.
18:58 You can’t just have, you know, hire somebody what happens if something happens and they go somewhere else? You have to be able to hire a replacement, so you need a critical mass of people who have the skills, or you have to train those people. You have to have people who can improve the machines. You look at the history, from the spinning jenny up to the fully integrated, you know, fabric mills of the 1840s. You know, it was basically decades of invention, improvement, and then, any people who can fix the machines, and just think about it.
19:31 The internet is now nearly 50 years old. We don’t even think about it, but it, you know, it’s like, 20 set, what’s 27 and 17? You know, you know, 45 years old, and you know, it’s been this succession of a combinatorial innovation, and we’re seeing more and more people employed in the sector, because it’s taken that long, and you look, you know, I just think back in my own career, and I tell a little bit of this story in the book. You know, think about 1992, 1993.
20:02 We had this one job. It was called the webmaster, and it was the person who could stand up a web server. We didn’t even have database-backed websites when we started GNN. That had been invented yet. And you know, it was this hack, CGI it was called, and then we went through multiple iterations of how do you integrate websites with databases, and, you know, new languages, new innovations.
20:28 It’s really again, think, the World Wide Web. How old is the World Wide Web now? You know, crazy, with forgetting. It’s like, what, 1992? Yeah, that was 1989 when Tim first did it.
20:41 So you know, we’re basically 25, 30 years into the web alone, and the continued innovation, and then out comes the smartphone, and you think about how all of a sudden the digital is penetrating the physical. You know, we had this whole digital revolution that affected media, and now we have it’s suddenly kind of in the real world, with you know, next-day delivery or same-day delivery from Amazon, with drones, with, you know, on-demand car services, and we’re figuring out all the potential of this technology, and we’re going to look up, and, well, by the time we go, oh, we really understand all the things that the Internet can do to our society, will be 50, 60, 70 years in, you know, just like we were with, from the spinning jenny to the fully integrated, mill.
21:34 This idea that technology’s going faster is crazy, and will go through that same cycle, in which, you know, wow, in the early Industrial Revolution, you know, some innovation like, you know, the mills in Lowell, Massachusetts, where this made it an economic powerhouse, and now, then, it became a ghost town. Later, anything going to happen in tech? And then, of course, you know, it’s kind of ironic, because Lowell was one of the places I first encountered my computers, because it became an old mill.
22:06 Actually, in Massachusetts, it wasn’t in Lowell. It was in Maynard, was the, became the home of Digital Equipment Corporation, one of them, you know, many computer companies that rose up to challenge IBM, and you know, we’re going to have that, we’re going to basically, people will be, and of course, even in Silicon Valley, you know, Google’s in the old campus of Silicon Graphics. You know, crazy, right?
22:28 Brian Rose: Yeah, and that company went bankrupt. I used to use those machines back in the eighties to, like, model some climate stuff.
22:35 Brian Rose: Yeah. You’re in the media business, what do you see as the future of media, or new media? Like, what do you see those innovations happen in the next 10 or 20 years? You know, we’ve seen obviously all this on-demand video being there, and the big, big rise of YouTube. But what do you see?
22:53 Tim O'Reilly: Well, first off, I will say, despite that inflated title, the Oracle of Silicon Valley I actually don’t make predictions about the future. What I really try to do is to describe the present in a way that helps people to see things that they haven’t otherwise noticed. So let me just tell you a couple of things that I’ve noticed about the present of media that might tell us something about the future. One is that reputation is a currency and it’s becoming a convertible currency.
23:23 One of the stories that I find really interesting is the story of a social media agency, and I should disclose that my adventure friend is an investor, they call for card, and I meet the founder, guy named James Nord, and he’s explaining to me what they do. They aggregate, you know, social people with social media presence around particular demographics for advertisers, and he said, but here’s the secret, he said, well, you have to understand that for people with big social-media followings, a lot of it is barter. You said, if you’re, you know, a, you know, high-class brand, you know, you’ve opened some fancy new hotel in a resort city, and you want somebody who has a large Instagram following, or Tumblr following, you say, hey, we’ll fly you and, you know, some of your friends to have a vacation that are, you know, amazing new resort if only you’ll, you know, publish all your pictures.
24:20 And he said, but if you’re Old Navy, you’re gonna pay cash. You know, and that’s sort of, it was just like one of those kind of, you know, William Gibson once said, you know, the future is here, it’s just not evenly distributed yet, and I thought that’s one of those moments when I went, oh, yeah, you know, and he actually kind of whipped out his phone, and he kind of showed me you know, here’s my last vacation. I mean, my family. He’s driving around in two Porsches, you know, which he didn’t pay for, because, you know, social media following is a convertible currency today.
24:50 And the thing that I find, of course, that’s just an interesting tidbit. But when I, the one who I really love is Brandon Stanton of Humans of New York, because he has decided to walk away. That’s actually a wonderful concept that I got from Cory Doctorow, and I’m gonna come back to that. Gurion here, so fill out landing Humans of New York, just so you miss of New York. Brandon was a photographer, again, somebody with a following.
25:19 You know, he was just publishing on Tumblr originally, and then I think, or actually, my name is shir, if that’s true, where he started, but he started to build a following on Facebook. He goes around, he photographed people, and he interviews them, and he gets a small snippet about their life. You know, it’s called Humans of New York, and he just has a gift for finding people to tell some essence of their life, and he said he told me I just wanted to, you know, see if I could make a living doing what I love, and then he actually fell into, actually, his business model.
25:58 He actually, he decided he didn’t want to do advertising on Facebook, but he decided to turn these stories into a book, which was, for seeing you, and he started giving lectures, you know, and mostly, too, because he built the social media following, but then he discovered by chance he ran into this kid, and he asked him who was the most inspiring person in his life, and they said, well, it’s my principal at my school, and he told the story about this principal in this very poor school, and he then went, and he, you know, talked to the principal and did, you know, photographs, and he discovered that her ambition was to take these kids to, to show them Harvard, and they kind of convinced them that even though they’re from this very poor neighborhood, that they could go there, and he’s thought, well, let me see if I can use my social media following to raise money for them.
26:47 Again, he was convertible currency, but here, like, used for someone else, that generosity theme again, and he thought he was trying to raise $30,000, and he raised 1.3 million dollars, and he went, wow, I’m on to something, and he’s done that since. He’s raised money for refugees, for he met a woman who was sitting on the bench in Central Park that was dedicated to her son, who she had lost to some very rare form of cancer. He raised six or seven million dollars for this guy, for some doctors’ research into this rare cancer.
27:19 You know, what a wonderful, inspiring story of somebody who said, yeah, I have this following, now tens of millions of people who follow me on social media. I can convert that into goodwill, into money for causes that matter.
27:33 Brian Rose: That’s awesome. Okay, and he’s walked away from it now?
27:37 Tim O'Reilly: Well, no, I guess no, he’s doing, he’s continuing to do this.
27:41 No, the idea of the walk away is he walked away from the idea that he was going to monetize it through advertising. Okay, he decided, and here’s the walk-away concept. Cory Doctorow, as a science fiction writer, has written a number of books. His very first novel was called Down and Out in the Magic Kingdom. It was about a future where there was a reputation currency, because all of the work was done by machines, and so the only thing that people have left to do is to entertain each other, to impress each other.
28:13 You know, effectively, what we have today, social media is, you know, people are trying to entertain, inform, get other people to care enough about what they do. And then here, in another book, now 15, 20 years later, I don’t know quite how long it’s been, called Walk Away, which is a prequel that explains how we got to that reputation economy, and it’s a world not a lot, a lot like the one we have today, except even more extreme, where technology is doing more and more of the work, but the fruits of that technology are hoarded by increasingly rich people, and ordinary people, you know, are, you know, kind of disposable, but, but they can, you know, and it opens actually with a scene in a factory that could make anything, but it’s shuttered because there’s not enough demand, because people don’t actually have enough money to buy anything now, because we’re still in this economy that expects people to pay for stuff rather than giving it away, and it turns into this world where it turns out that this whole alternate society that’s being built elsewhere, people just walk away from, you know, that dominant economic paradigm and decide to live cooperatively and build a society where you just do f*** it.
29:29 It’s a little bit like Permanent Vermin, Burning Man. Maybe that’s a pipe dream. But here’s the thing for that. Don’t you, well, no, I know, I mean, I just, I just observe it, because you know, ideas like that are tools for seeing, one of the ways that I feel like I, you know, have noticed interesting futures is, uh, there’ll be some idea like that, and it just kind of lodges in my head, and then just like, you know, you see a rock in the stream, and the branches catch on, and eventually there’s a big, you know, stuff catches on that idea.
30:05 So I read Walk Away, and then they go on a family trip with my wife Jen, and we go first of all to Code for Tulsa, which is a chapter associated with her nonprofit, Code for America. Not Code for America, is itself a kind of walk away. It’s got all these people from the tech industry who instead of going and trying to make their millions, say, I’m actually going to go work on projects to make more effective, and particularly, we’re focused on improving services for, you know, for, you know, food aid, Medicaid, criminal justice, you know, in terms of helping people, keeping people out of jail, building, using tech superpowers for good.
30:46 They’re walking away, so there’s a walk away, but then here we are at this chapter meeting in Tulsa, Oklahoma, and this is woman, and she comes in wearing kind of this odd outfit. She’s wearing overalls, and it kind of looks like a train conductor’s cap, and you know, start talking to her, and, and I said, what would he do, and she says, well, I used to be a real estate agent, and then I started volunteering at a food bank, and I found it so much more fulfilling, and I realized that a lot of people don’t have good access to food, and what I do now, I started a small nonprofit, my partner and I have an organic farm, and we raise food, and we actually have created a horse-drawn mobile store that we take around to women’s shelters, to old folks’ homes, to, you know, food deserts, so that people can have fresh access to fresh food.
31:41 We sell very close to cost, and we also carry staples. We’re not big enough to, you know, acquire you know, to get stuff from distributors, but we just watch all the sales at the big-box stores, and we go there and we buy a lot of stuff, and we sell it close to cost. Oh my god, this is a walk away. She has walked away from the dominant economic paradigm, and she’s making her own world. And then, you know, we go to this family reunion in Wisconsin, and we’re staying at an old miners’ hotel which has been converted into a B&B, and the proprietor, a retired moment, starts telling me that, well, my husband died after he retired.
32:17 He was a professor of philosophy. He wanted to be useful, and we decided to take this up as a project, and you know, we basically, it’s not really a business. You know, another walk away. Yeah, she said, you know, Bobby Joe, who works in the kitchen, you know, she’s never able to keep a job, but she can make a mean pie, you know, and, and, and you know, we’ve made the part of our workshop, because they’re renovating this old hotel, we’ve made an apartment of the workshop, so she’ll have a place to live, and, and, and you know, Mary, you know, who does our housekeeping, you know, she was a widow, and you can only clean your own house so much, so many times.
32:59 Brian Rose: You’re kind of fascinated by this concept.
33:01 Tim O'Reilly: Yeah, and she basically, again, here, you know, these people have just kind of gone, we don’t really care about this, acquire morally. Real London Real is a bit of a walk away.
33:10 Brian Rose: Yeah, you know, yeah, I was in banking for ten years, and I just didn’t want to do it anymore, and so we walked away. Yeah, broadcasts, and now we’re, we’re doing it.
33:18 There are like higher reasons. That’s right.
33:20 Brian Rose: Very cool. So you’re kind of always keeping these things on your radar, to see that these things are happening, and that’s not the only story out there.
33:27 Tim O'Reilly: Yeah, because a lot of times with the media, we only see the big story.
33:30 Brian Rose: Yeah, and the company that dominates. Yeah, speaking of companies that dominate, you wrote a great article about the Uber phenomenon. You know, I was wondering if you could kind of summarize what you saw, because you saw this company grow and dominate, and then recently, obviously, executive left, and it’s trying to just figure itself out. Yeah, what do you see there?
33:52 Tim O'Reilly: Well, you know, each time I’ve told a big story about technology, I’ve had kind of a parody Mat company that I could talk about, you know, like with open source software, I was talking about, you know, Linux and Perl and these programming languages being given away, and the role of open source in the internet.
34:11 With Web 2.0, I was able to talk about Google and Amazon and the way they used collective intelligence and big data to make themselves smarter constantly by learning from their users. And what I saw with this current revolution was not just on-demand, that’s pretty interesting, but it’s the fact that the digital realm was big data and algorithms, and was starting to penetrate real-world services. And the problem I had was that Uber, unlike, you know, Google, was very hard to say, oh yeah, they’re this great paradigm.
34:48 You know, they’re very problematic in a lot of ways. It wasn’t obvious. I had a conversation recently with an Uber executive, and she said, what do you want from us? And I said, I want you to be better, you know, because you teach us so much about what could be right in the future economy, and you’re a lousy exemplar. You know, it’s like, if you could just fix some things, you’d be this great story.
35:10 You know, and one of the things I used to talk with Rachel Whetstone, who used to run public policy and communication, is a new brand. It’s, how can you be so boneheaded talking about self-driving cars as well? We’re gonna get rid of the drivers. Why aren’t you saying, you know, hey, we did this great experiment starting in 2012, when we used Uber to deliver flu shots? You’d call Uber, and you get a nurse with a flu shot.
35:37 And they could have said, imagine all the services that you could deliver with a self-driving car. You know, we’re not gonna be replacing humans. We’re gonna be giving them a platform for new kinds of businesses, new kinds of opportunities. Why weren’t they telling that story? They were trying to capture all the value.
35:55 Exactly. And I think that this idea, though, that increasingly this is a new relationship between humans and machines. Come, you know, the Uber driver is a cognitively enhanced human being. You know, the reason, you know, people in London will know about the Knowledge, you know, the knowledge of the streets and the monuments and streets of London, you know, the black cab drivers here, they have to memorize the streets. Yeah, absolutely.
36:20 Brian Rose: It’s astonishing. Fear for years. Yeah, because basically you become a human GPS. So if I understand it correctly, the test is they’ll give you two random points in London, again and again, and you have to literally recite the turn-by-turn directions that will get you from one point to another.
36:35 Tim O'Reilly: Yeah, apparently it physically changes some of the cerebral cortex.
36:39 They’ve done studies, and it links, well, but I hear, I think anybody can do it. And this idea of cognitive augmentation by our devices, what does that make possible? How might we change healthcare? Like, if you could have, say, a community health worker who was empowered by AI, you could have a lot more people delivering health care, perhaps even on demand. You can, we already know with big data that if you intervene with the heaviest users, often with preventative care, you can actually reduce the costs in the system.
37:09 That is, everybody could have concierge medicine, just like the rich, if we actually restructured the way we use technology plus people to do more.
37:17 Brian Rose: Okay, and they didn’t do that. When they didn’t do that, there was a missed opportunity. So for you, was this train wreck always gonna happen? Was Uber always gonna end this way?
37:27 Tim O'Reilly: This is crazy, because you know, one of the investors in Uber, I forgot his name, Chris Sacca, one of the guys, the things that would seem for us, he always used to tell, her, soccer, Chris Sacca. He always used to tell the story about Travis, that Travis came over to his house, and his dad was trying to play online tennis, and that, uh, he finally got Travis to play a game with him, and Travis played him and beat him, and he was like, let’s play again, and then probably beat him again, and then Travis play with his left hand and beat him again, and then he said, oh, look at the high scores, I’m actually the fifth highest scoring person in the world, and he said, that’s the executive I want, someone who’s that obsessed to play this game and dominate at it.
38:04 That’s what he used to tell this story.
38:07 Brian Rose: Of drugs, was it obvious this was gonna end this way?
38:11 Tim O'Reilly: Yeah, I think so. I mean, I have to say I actually prefer to tell the story of Lyft, again, it’s probably less familiar over here in the UK, but it’s really interesting, the story of Lyft and Uber, and SideCar, which failed, but, you know, it’s so interesting. It tells a really interesting story about innovation and how it doesn’t come from one place.
38:39 Sunil Paul, who later started Sitecore, actually wrote a patent in 2000, you know, like eight years before Uber was conceived, and long, long before Uber became what it is today, which really wasn’t till about 2013, which laid out a lot of the ideas of that. You could use phones to match up passengers and drivers in a variety of different ways. He didn’t conceive of the whole business model, and the phones weren’t, they’re ubiquitous, with GPS, and so on.
39:08 And then, you know, Travis and Garrett Camp came up in 2008 with this really good idea of, you know, being able to summon, actually, black cars, and they lucked out. It was actually, they were, you know, two already successful, fairly rich guys who were summoning limousines, and they were doing it with text messaging originally, and it kind of grew from there. And there have been previous attempts, like Taxi Magic, which had some of the same ideas, but they kind of tried to work within the confines of the old taxi industry, you know, and, and it turned out that the black car industry was a better place to start, because it was less regulated, there were fewer drivers, that was already kind of this pickup mentality, as opposed to, you didn’t have the problem of street hail.
39:57 So they lucked out there. And then Sunil Paul came back into the market around 2011 with SideCar. He finally went, okay, the time is right. He unfortunately didn’t raise a whole lot of money, and I think he’s more of an idea guy than he was, kind of, the hard-driving entrepreneur, but he really invented the model of, let’s have ordinary people deliver this service. Okay, so you put that together with, by then, Uber had driven a kind of a man above to this sort of magical user experience of summoning the driver.
40:28 Would the smartphone because smartphones were now out and widely distributed, they had figured out the payment stuff, but Sunil kind of figured out the crowdsourcing part of it, and then Lyft copied him. Now, Lyft had been around also since about 2007, she, before Uber, but they were used, they were kind of matching up drivers and passengers for long-haul routes, you know, long for commutes or inner city, but it was sort of peer-to-peer, and they had this sort of crazy, you know, we’re gonna be counterculture, the big pink mustaches, and then they kind of gone, oh, wait, let’s meet on the front of the car. Yeah, right.
41:01 So let’s be like Uber, and, but doing it with ordinary people, and Travis, and you know, didn’t buy that at all, you know. So actually Lyft was the first company that did the what we now think of as the Uber model, and Uber copied them about a year later. And the thing about Logan Green and John Zimmer, who were the founders of Lyft, their public transportation geeks. They wanted to reinvent public transportation to make cities better, and they’ve always had the public spirit at the part of what they do, and they’ve always treated their drivers better, and I’ve just been really heartened to see that they’ve been gaining share in the US, and that hard-driving, win-at-all-costs mentality actually caused Uber to trip up.
41:47 And I like to think who the good guys may win in the long run. You know, there’s a guy named Stein, Simon Sinek, and he hasn’t really talked, called Start with Why, you know, and he said that’s what all great companies are great because we buy into their why, and maybe that why of Lyft is very, yeah, at a core different than that of Uber. Maybe, I mean, I do think, you know, there’s a fair amount of evidence, I unfortunately, in our current society, that, you know, the ruthless, hard-driving people do tend to win.
42:19 You know, you look, you know, Bill Gates, for all these, a philanthropist today, you know, totally hard-driving, you know, ruthless businessman. Larry Ellison of Oracle, you know, ruthless, hard- driving businessman. Steve Jobs, ruthless, you know, hard-driving businessman. Larry and Sergey, kind of exceptions, yeah, they, they just, I think left into something that was so, because they really were, I kind of, idealistic good guys. Pierre Omidyar from eBay, similarly, so the work have been some set of Jeff Bezos, again, you know, ruthless, hard-driving businessman, although I think really long-term thinker.
42:57 You know, I think quite probably the most, you know, interesting person in tech today is Elon Musk, maybe being a rival, the only rival.
43:07 Brian Rose: Okay, they have more of a vision than let’s just dominate the world. Yeah, yeah.
43:13 Tim O'Reilly: And I, you know, I I kind of feel that we, you know, we celebrate those, but more importantly, and this is actually a theme that I came to really in the course of writing my book, we actually have a system that rewards that, and if we really want to have a better economy, we have to change the rules so that we stop rewarding winner-takes-all players.
43:39 Brian Rose: The system is capitalism.
43:41 Tim O'Reilly: Yeah, well, no, it’s not capitalism. It’s a particular interpretation of capitalism. It’s super important to remember that capitalism, you know, there’s a wonderful line again from this professor, Mariana Mazzucato: “Markets are our outcomes.” You know, we like to pretend, and they’re people who like to say this is just capitalism, just like gravity is the reason why, you know, things fall.
44:06 Water goes downhill ain’t so. You know, we actually have a system of incentives that treats capitalist scarce. You know, you think about, you know, that lower taxes on capital and there is on labor. We basically have financial statements that say the return to capital is the actual output of the business. We take about the bottom line.
44:28 You know, what if you actually had financial statements that said, you know, here are all the inputs and all the outputs? Here’s what the community gets, here’s what customers get, here’s what, you know, workers get, and here’s what the owners of capital get. Yeah, that would be a very different picture, and you’d look over time, and you could say, oh yeah, let’s look over time. You know, Google’s taking more of the on the inside. Certainly we had one of those near-death experiences.
45:05 The first and hardest thing I had to learn was to I had to let people go, and I’d always had a very, so paternalistic approach, and so it was so painful for me, you know, when, you know, we’re at this point, and it was like, we do, we all go down with the ship. You know, I still remember, like, we’re looking at these binders of people to lay off, and I looked at the book as we try to make these decisions, and book is covered with hair.
