Vinod Khosla

@vkhosla

Reinventing Societal Infrastructure with Technology: The Summary

December 29th 2017

This is the summary of “Reinventing Societal Infrastructure with Technology”. The full version and slightly revised version will be released the end of January. Feedback, questions, and new ideas are welcomed.

We need large innovations!

“What can be imagined technologically reasonably can be invented” is more true than not. Technology and new inventions have always shaped the human world, and have disrupted the way we live and work, and yet we are only at the beginning. Innovation in the areas of clean energy, food tech, digitization, robotics, artificial intelligence, as a few examples, have the potential to prevent climate change, achieve food abundance, reshape cities, knit humanity, and enhance human capability exponentially.

The big needs in society, food, health, housing, transportation, financial services, entertainment and more are being and will even more so be reinvented by technology in an “increasingly more accessible to all” way. We need to turbocharge our efforts to utilize technology to accelerate accessibility. Many of society’s GDP and business-related needs are being reinvented everyday in a truly innovative and non-institutional way. Seven hundred million (or so) people have the rich lifestyle, either in environment, energy, housing, healthcare, education, food, that seven billion people on this planet want. Technology is the necessary, though not sufficient, resource multiplier. It’s the only thing that can multiply resources. Technology will enable bridging this gap here, and the key word being “non-institutional” reinvention is not only powerful in increasing innovation, and but more importantly for accessibility.

The future belongs to those dreamers who think of these unreasonable possibilities, who aren’t afraid of the high probability of failure, and who take, bold and, radical risks. They are willing to change the world by imagining what’s possible. So, what comes next for reinvention? Public transportation? Construction? Buildings? Healthcare? Food? Cities? Communications? Companionship? Financial system? Imagine the possible and take it from impossible to improbable to possible, but then again unlikely to plausible to probably to real! Individual entrepreneurs and their passion for a vision (and tons of good luck) give the improbable reality a shot. Now, many, even most, of these attempts will fail and the press will denigrate you for hubris, arrogance, fraud, naivety, and much more. Even so, it is these improbable attempts that will, when they occasionally squeak by the “existing reality, institutional noise (and fear)” will change the world (hopefully mostly for good). The future is not knowable, but it is inevitable and inventable so we need great entrepreneurs and technologists to invent the future.

It’s almost always the entrepreneurs, not institutions, that drive large innovations

Why is non-institutional innovation so necessary? Looking back in the last twenty years, the Internet upended telecom (AT&T refused to adopt the internet and cellular), Amazon disrupted Walmart with a clear vision of changing choice and cost structure that Walmart could not imagine. Netflix, Youtube, Facebook reinvented media, maybe even the elections and politics! Airbnb changed hotels, Google changed libraries and many new and old markets, Uber took over the taxi service, Google Photos and Instagram reinvented how we capture moments. You get the picture here. These industries were not reinvented by large corporations, but in fact the power of ideas driven by technological advances and entrepreneurial energy. Most people in business reduce the risk of failure to the point where the consequences of success are inconsequential on society (but they can make money for their shareholders which they are obligated to do). Instead, the ideas that change the way we live and work are the ones that originally have a sparser space of higher probability of failure, but the consequences of success are consequential. There is as much profit and increased social impact to be gained through higher variability. As I personally say, my willingness to fail gives me the ability to succeed and contribute in my small way in causing good change to happen. In my view, it is only improbables that are important, we just don’t know which improbable when it comes to large changes and innovations!

This is the exact opposite of how incentives are usually set up in larger, non-founder led institutions. We have incumbents, institutions, and pundits predicting more of the same “extrapolation of the past” to predict the future” world view. Most of these are wrong when it comes to large changes or big innovations. I’d give you the odds that no large innovation will come out of any institutional player. They believe improbably is not important, while technology entrepreneurs believe the usual is not important. Improbable is what creates the next Facebook, Google, Apple, Uber, or Airbnb, driven, of course, by an entrepreneur’s vision of the unreasonable possibility. Luckily, most of these players I named are still driven by founder vision, and aren’t sensible in the way business school professors would teach their students. These founders ask “why not” and “why not try it” be it Alexa, AWS, space, driverless cars, global location maps, phones without keyboards.Big companies do help scale innovation and bring gobs of capital later when risk of a new phenomenon is low. But it’s the seeds — what Uber, Tesla, Google with Waymo and driverless cars will do to completely replace all public transportation, as an example, with a new style of public transportation (this was inconceivable even five years ago by anyone in auto or transportation business).

Beyond the entrepreneur, what does it take? The greater the number of axes, that is the dimensions in which innovation is possible, and the better the tools for innovation, experimentation, and lower the cost of trials for ideas, the faster the rate of change. That means more the possibility of a surprise like an Amazon disrupting retail or Tesla or Google changing transportation with electric and driverless cars, respectively. So, what is in store for us for the next twenty years? It’s hard to forecast, but easier to speculate. It seems likely that 3D-manufacturing, artificial intelligence, biology tools especially new physics-based tools, biology fashions like CRISPR and it’s likely successors for precision biology and computational biology, along with traditional old standbys like increased computing and bandwidth will all form a soup which catalyzes many new ideas and reactions. Now, add to the soup the potential for new types of computing, like quantum computing, which might accelerate AI even beyond our wildest imagination. The possibilities become truly unpredictable.

To make the new possible, you need new tools, a visionary and persistent founder, and evangelizing market participants. They must understand where this vision is going, and they need to be convinced they need to come along and ultimately change, especially if it’s radical innovation.

Looking at the infrastructure of society, what can be reimagined and reinvented?

Most of the non-governmental components of GDP can be re-imagined and reinvented with an entrepreneurial rather than a policy/legislative/regulatory approach be it 1) Transportation and related city services 2) Health, disease diagnosis and management, drug discovery 3) Manufacturing, Construction, Buildings, building efficiency and cities 4) Food and Agriculture 5) Financial, insurance and legal services 6) Energy 7) Consumer consumption items, services, education, durable goods.

Change happens, but is not credible until after the fact. Retrospective predictability by pundits is common, but until large change happens one sees mostly skepticism. I have hence come to believe in the power of ideas driven by entrepreneurial energy by almost foolish, somewhat naive entrepreneurs, by those who didn’t know what could not be done. Almost no major change is driven by institutions that one would expect to have power to cause that change!

The technology soup enabling societal innovations

Fundamental reinvention has never been more possible than it is today. There are a range of new recent technological axes of development that give me hope. Driver technology tools that are plausible and visible today are: 1) AI and large scale data capability, 2) Robotics, 3) Additive manufacturing a la 3D printing, 4) Biotechnology (ohmic measurement, CRISPR, gene synthesis, precision control of genes, pathways…), 5) Computational design, computational modelling/simulation and computer networking, 6) Social connectivity and networking; distributed access, 8)Software eating the world, 9)Blockchain, 10) other new still fermenting ideas I have surely missed or underestimated. The “older technologies will continue to be axes of innovation that continue to have impact and provide benefit include: software, computing and cloud computing, Internet, sensors and cameras, mobile.

The way I think about it is the greater the number of axes (dimensions in which innovation is possible) and the better the tools for innovation, experimentation, and lower the cost of trials for ideas, the faster the rate of chance and the more possibility of a surprise like Amazon or Tesla or Google.

It’s hard to forecast, but easier to speculate what might be new tools for the next two decades, again though, the best reinvention is seemingly imaginable. All the “known” axes today form a soup which catalyzes many new ideas and reactions. Add the potential for new types of computing like quantum, which might accelerate AI even beyond our wildest imagination today, are truly unpredictable. New axes will surely happen, perhaps with sophisticated broad quantum-computing, fusion energy, or molecular assembly.

Reinventing Transportation

Key drivers: Driverless technology, electric cars, reimagined public transportation, batteries, dedicated self driving public transit lanes, mobile hailing and scheduling solutions. From public transportation to flying cars… it can all be reinvented. For instance, we could have public transportation in smart cities, enabled by clever legislation, point to point on demand, that is cheaper than today’s fixed route, fixed schedule transit services in most cities enabled by electric cars/pods and driverless technology. With dedicated lanes or even car free cities it would be much faster, cheaper, safer and environmentally better. Batteries and electricity would be the main cost per passenger mile if vehicles a\were driven 10x more than today’s private cars. Just as cars changed cities, electric and driverless technology could change them again. Parking lots and spaces could be replaced by parks or housing, commuter lanes by driverless lanes ro streets, commute distances may expand, housing may get cheaper and environmental pollution decline. Driverless car technology may kill the combustion engine and set the oil industry in permanent decline. Cities could be redesigned to work differently, especially if one adds communications technology and space efficiency and resuse paradigms. And the number of cars could decline by 5X or more and the need to natural resources like steel, rubber and plastics decline concomitantly. The city without automobiles (mostly in most but not all places) would be a different animal.

Reinventing Health, disease diagnosis and management, drug discovery

Key drivers: Artificial intelligence for comprehensive understanding of medical knowledge, new measurement techniques enabled by and for machines allowing for 1000x or more data for algorithms to use, new algorithms to discover new knowledge in medicine, better research based on more data, more , better drug discovery using AI, and AI guided robotic surgery. There are probably a million doctors in the United States, give or take, but with AI systems, we could create ten or a few hundred million doctors worth of expertise and use human doctors only for what they love to do, which is interfacing with patients, making health more more personal, accessible, convenient, and less costly. AI will do much better diagnosis, monitoring, and follow-up than most human doctors and complement the human element of care.

We will treat patients holistically because of integrative knowledge and not separate their cardiologist from their orthopedist or endocrinologist. Medicine’s much better than it has ever been, so we have to acknowledge every aspect of medicine has improved over the last many decades, but that doesn’t mean it’s as good as it can be. We will be able to measure many more variables (thousands or hundreds of thousands per sample of blood for example or exquisite feature extraction beyond today’s human capability from an ECG) and make decisions based on complexity and knowledge no human doctor could master, and even specify dosage for drugs for each patient’s current state, monitor disease progression as well as side effects at the molecular level. Disease will be detected early (it’s a shame that most people with heart disease learn about their disease from a heart attack, not twenty years earlier when it started) and we will move closer to healthcare from the sickcare we have today. Data and AI technology intensive healthcare could be a lot cheaper, accessible and better.

Reinventing Manufacturing, Construction, Buildings, building efficiency and cities

Key drivers: automated construction, robotic delivery, “transformer” type spaces, shared and higher percentage reusage, 3D printing of buildings and furniture, social networking and increase in community spaces and relationships. Buildings are a key part of our urban landscape and a large consumer of resources. If space was reconfigurable and we needed half as much to live comfortably? Affordability and availability would go up and land use would decline for housing of large numbers of people. Further, imagine buildings were manufactured like automobiles reducing cost dramatically or possibly next generation buildings were 3D printed locally and designed with AI, and weighed a fifth as much with much better insulation because of air pockets? What if structural elements like beams needed far less steel or could be 3D printed with composites because all unnecessary material unneeded for structure could be subtracted with AI design (generative design being one avenue) and 3D printed? What if we could accommodate twice as many people twice and services like restaurants, gyms, bookstores and work spaces in the same square feet of space?

Cities and urban living can be far more efficient, sustainable, and with dramatically less costs and more community. Imagine a city world where we need less restaurant space because of robotic kitchens, robotic food delivery, self picking mini grocery store warehouses for Instacart like ordering with robotic delivery, virtual entertainment and get togethers, more parks for being outdoors that substitute for parking lots, or houses that multiply space because of AirBnB like models to reduce need for hotel rooms and increase space efficiency. WeWork like space efficient buildings that are further reused for homeless housing or hotels in the evenings with transforming furniture? Our assumptions about space, cities, density, efficiency, transportation, parks could change in unpredictable ways.

Reinventing Food and Agriculture

Key drivers: Robotics, machine vision and AI, plant by plant care eliminating much of herbicides and insecticides, meat alternatives, sensory technologies to pack sensation with nutrition, better land use, drone and satellite imaging, better seed and chemical technologies, microorganisms, precision agriculture. Precision agriculture also implies the use of such technologies as data science, aerial imaging, early disease detection. Further development of AI for imaging and data analysis, more easily and frequently accessed satellites, bio techniques like increased microbial communities, all aided by the use of fewer chemicals that would traditionally sterilize the soil because of new roboticized weeding and insect targeting will dramatically reduce the impact of and land use for agriculture. And it might even be that for specialized crops, vertical farms and data science led yield maximization coupled with robotic labor make a real change in the yield or resource or acres used. Of course, our sidewalk delivery robots take care of the deliveries. Another dimension of innovation is the creation of new foods, such as beef without cows, milk from plants, eggs without chickens, all far less environmentally harmful at that.

Reinventing Financial, insurance and legal services

Key drivers: AI technology to replace people functions and judgement, blockchain, mobility, data, software automation. While some companies are changing banking, lending, payment, investing and planning for consumers and small businesses by disrupting incumbents, others are creating radical new business models. Lower cost, algorithmic based financial services are now possible. Blockchain-based services and software contracts that eliminate overhead and people costs. For many insurance and financial institutions the business model has become “fine print jargon gotchas|. Their profits are a “financial tax” that in my view far exceeds the value of the services they provide.. It is possible that AI and other technologies will replace many of the supposed value added functions, as it has already been proven in stock trading and financial planning? Why not in capital formation? It appears to me that 10 percent of all financial transactions (a wild guestimate) actually add value to society and the rest is for the benefit of financial institutions. Industry’s financial needs can be met at a fraction of the cost with less overhead or transaction taxes, and it can be done more fairly by more objective algorithms. The speculation and circular trading worth trillions of dollars daily that could be minimized to the bare essentials! Many if not most aspects of finance can be replaced with technology that make financial services more affordable and accessible.

Reinventing Energy Services

Key drivers: Scientific talent and long view funding. The best minds getting PhD’s are not going into energy or cleantech today, which poses the fundamental problem. People realize it is hard to get funding, and for that reason, we are not seeing as many entrepreneurial efforts as I’d like to see. Cleantech is very capital intensive, and although there was a period of too much exuberance in the area, now it is met with investor disinterest. Organizations like Breakthrough Energy Ventures are trying to address this. There are many areas in which large breakthroughs must be attempted: From fusion to geothermal where linear cost for deeper drilling instead of exponential cost per foot when drilling at depth is the key breakthrough needed), storage, new materials and manufacturing, building materials, new agriculture and food.

Reinventing Consumer services from retailing, entertainment to elder care to delivery

Key drivers: Mobile, AI, Internet, communications, social networking, voice and image technology, sensor and cameras, data, mass personalized manufacturing. Technology is changing the way we discover products, how we order them (products with groceries), how we make purchase, and how we find what’s right for us, and personalized manufacturing. The supply chain is being reinvented, starting from 1 hour deliveries, a virtual pantries within minutes from many homes, all the way to completely re-invented grocery stores. Wallet share is changing as well from physical products to technology-enabled experiences, often community experiences. 3D printing will allow us to print items on-demand, whereas AI will transform the experience to be truly personalized, whether that is tailored furniture or food plan unique for each individual. Lastly, robotics are changing how we interact from food delivery to Amazon Echo.

Reinventing Education

Key drivers: AI to personalize education, open source content, AI tutors, mobile and Internet create more accessibility to knowledge and education, AR/VR changing how students can get information. I recently asked a simple question: Is majoring in liberal arts a mistake for students? The problem, I argued, is that the current liberal arts education does not teach critical thinking and scientific progress in the way that it should or in the way that STEM does. Now, STEM perhaps, doesn’t teach enough of liberal arts — how to create real businesses from science and technology, and applications for best impacting the world. The education system is full of opportunity, and yet, it’s an industry that’s challenging and complex to change. With technology and new tools, accessibility and equality in education will change, no matter what style or subject of education you want. The ideal “tutor” for the task will always be available. AI tutors will not only allow for more affordable or free accessibility 24x7, but they will personalize education for each person. Perhaps, because of this personalization, the very notion of majors such as STEM or Liberal Arts will change altogether.

Reinventing Business, Cyber, defense, governmental services

Without too much elaboration, it is worth point out that business services, resource uses, and products have been changing and will change even more. No business, be it fintech, consumer goods design and production, industrial products design, drug research or manufacturing, materials design, manufacturing, spare parts, sales AI agents, or customer support agents, will remain untouched. Technology will have an impact all of these, though my focus here is on things an individual entrepreneur can drive, not on governmental or regulatory driven change though those are often necessary followers. Space and cyber will be often entrepreneurially driven, although the latter will have many state actors. On cyber services I refer you to AI; Scary for the right Reasons but suffice it to say that massive entrepreneurial opportunities in defensive and offensive cyber tools and services will exist. Entrepreneurs will need to push further innovation across these areas for true innovation to happen.

Silicon valley culture

Whether it’s Washington, Wall Street, or Silicon Valley, no one really knows what’s important, but what Silicon Valley does really, really well is originated interesting experiments. For instance, while you may think Uber is a mess, I think of Uber having started the chance in our notion of transportation and started with a limo service at the very high end, and Airbnb started with rooms in Philadelphia in 2008 during the Democratic National Convention and brokering rooms. That seed of an idea ends up being way more important than Hilton Hotels after almost a hundred of years. While the world thinks they know what’s important; that Volkswagen or General Motors is important to innovation in cars; reality is they are largely irrelevant to innovation. It’s the improbably that’s important.

Because Silicon Valley runs so many experiments and people love to write about failures, the hubris, the messes, the trivial, the fraudulent or self-aggrandizing claims, be it Uber, Theranos, Juicero, Soylent, make better headlines. These same factors are critical to get the self delusional attempts at grandiose or evolutionary innovation. If these entrepreneurs had normal expectations, they would not attempt the things they do. And their failures and diversion into societally good or bad business is a necessary side effect. Most businesses are improbable and fail but the few (1 in 1000? 1 in 10,000?) that emerge as game changers have disproportionately large impact. As Martin Luther King said, “Human progress depends upon the socially maladjusted”. And George Bernard Shaw said that, “reasonable people adapt themselves to the world, the unreasonable man (he should have added woman) adapts the world to them.” Hence, human progress depends upon the unreasonable man or woman.

It’s not just the improbable sounding experiments that are really important about Silicon Valley and what’s becoming even more exciting and healthy isn’t IPOs, it’s the number of new areas the valley is attempting to innovate in. For example, a few years ago, we invested in this hamburger company Impossible Foods, now there’s probably forty or fifty PHDs and probably forty or fifty other technologists working on designing the perfect hamburger. Why? The founders started it, because thirty to fifty percent of our planet’s land area, (and till Elon Musk gets us to Mars, this is the only planet we have) is dedicated to animal husbandry and he wanted an environmental better way of producing meat (in addition to other practices he wants to avoid like cruelty to animals, unhealthy food, environmental degradation, antibiotics in our food chain). He wanted a couple of million dollars to run an experiment. Could he do this? It’s now gotten into a robust product that’s today a niche product, but the goal, clearly, for the founder, is to replace all animal husbandry (oh, and Silicon Valley is much more mission-driven than anywhere else, in my view, though one can find plenty of strictly money making, even cheating, hacking attempts at money making here too).

Silicon Valley is much more about the mindset and a culture than it is about a place. What makes it harder in other places is that when somebody innovates they don’t get that support around them. In Silicon Valley, I’m sorry to say if you’re fifteen years at Hewlett-Packard, or Cisco, you’re not qualified to do any important job in the startup world. Every other part of the world, and I grew up in India, people go “wow, you work for GE or Citibank!” Here, “you work for GE and Cisco for fifteen years?” Again, it’s the mindset that enables new ideas or new tools for testing that creates the disruptive innovation that matters. Here to much experience can be a handicap.

Conclusion

If there is a 90% chance of failure on a transformative project then we have a 10% chance of transforming the world. That’s pretty great. If we have ten attempts each at many different areas covered in this essay we will really change the world. Change and innovation will be technology driven, non-institutional, let’s break the rules, radical kind of approach. And in this non-institutional way of doing things though less predictable is way more exciting and probably the main way we will get to getting seven billion people the kind of lifestyle they’d all want. Machines and systems can do medicine better than humans. But that’s just one of many. Or that most jobs will be replaced or fusion energy is possible in my lifetime or that AI can make work an option for most people who will work if they want to work, but not need to work because we will have sufficient abundance. Imagine the possible!

As Yogi Berra said “It’s tough to make predictions, especially about the future”, but if there is an answer this speculation is more likely to be right than any other single prediction I can think of. This reinvention will be chaotic, disruptive, unpredictable with many failed attempts, but failure won’t matter; the sparse successes will. The disruption will be temporarily painful to some as being disrupted is never fun. We have to get things right and meet society’s expectations of technology to help equality, diversity and more. New technologies also rock the world by reallocating power and wealth and accentuating inequality. Fortunately capitalism is by permission of democracy and the electorate will have the ability to rectify the inequalities. All these social factors will become urgent and critical to enable this transformation through democracy and the people who will be impacted. It’s impact in the less democratic societies is harder to predict.

Table of Contents
We Need Large Innovations!
Entrepreneurs, Not Institutions, Drive Large Innovations
Beyond the entrepreneur, what does it take?
What Can Be Reimagined and Reinvented?
The Technology Soup
Reinventing Transportation
Reinventing Health, Disease Diagnosis & Management, Drug Discovery
Reinventing Manufacturing, Construction, Buildings, building efficiency & cities
Reinventing Food & Agriculture
Reinventing Financial, insurance and legal services
Reinventing Energy Services
Reinventing Consumer services, retailing, entertainment, elder care, delivery
Reinventing Education
Reinventing Business, Cyber, Defense, Governmental Services
Khosla Ventures’ Companies Making A Difference Now
The Silicon Valley culture
Conclusion

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