Industrial Capitalism vs Collaborative Economy

Here are the slides for the talk on the collaborative economy I gave at TEDx Harlem. As soon as I get a nice video of that talk, I'll post it. Here are the words that go with the slides.


TEDx Harlem 
A couple of weeks ago, the Encyclopedia Brittanica announced that it would stop publishing its print edition, after 244 years. That is a long time. It feels like the end of an era. “This has nothing to do with Wikipedia or Google” said its President. Maybe. Maybe it is just part of the diminished demand for print. Or maybe that it is really hard to compete with the 145,000 people who actively worked on wikipedia last month. I went and looked up their stats -- at the source of course -- 4m articles in English; 270 different-language wikipedias. How can you compete with that? The encylopaedia brittanica’s announcement is just another part in a trend I’ve been observing and thinking about. It is another sign that we are moving from Industrial Capitalism to a Collaborative Economy.

Over the last couple hundred years, industrialization honed a specific kind of capitalism. Companies were centralied and hierarchical. With Encyclpiedia Brittanica, I’m sure there is a small number of article writers and editors; each with their own area of expertise -- no doubt rightly deserved. But they would never ever imagine letting unvetted people -- lots of them, and unknown! -- write or edit articles. Wikipedia turned this idea on its head. It is distributed -- meaning that the writers are everywhere, and they are self selecting. They participate because they feel like it.

The result is an enormous diversity of editors and expertise. A collaborative economy thrives on this diversity. It is endlessly experimenting, learning, adapting, and evolving. Industrial capitalism is the opposite. Standardization within a company -- a form of monoculture -- is how it saves money, reduces costs, and becomes the dominant producer. And once it is dominant, it hates change. Changes costs money and is uncertain, so it will do everything to defend the status quo.

I have to add in here a quick caveat. I don’t really think there are two opposing economies at work, or that things are so cut and dried. There is lots and lots of grey. I do think that we have pretty much maxed out on the benefits to be gleaned from the Industrial Capitalism approach. The worldwide Occupy movement attests to that. Pre-industrial revolution the vast majority of us lived in hovels, but hey! we were self employed! Today, 50 percent of the private sector workforce works for BIG companies, and those big companies control vastly more than 50% of the wealth, and political power. The signature of the collaborative economy is an increasing role for individuals. There is LOTS to be gained from this approach, and we will see more and more of it that thanks to the internet. OK, so now back to painting things in black and white, so that the contrasts are nice and clear.

Bell Telephone, founded in 1877, and then bought by AT&T in 1899. It was built on its huge trove of patents and grew bigger and bigger. At one point, it had over 1 million people working for it. It was broken up in 1984. It was broken up into 7 baby bells. But now, one of these babies, ATT, is itself the 7th largest company in the US. Think of all the money and infrastructure and effort and people it took to build that company over the last 150 years!

Contrast that with Skype. Skype is 9 years old, and have 663m registered users. They built a huge telco without paying for or building out the physical infrastructure! Instead, we individuals all happily contributed. It is our internet connections, our personal computers, and our video cameras of individuals. Stuff we’ve already paid for. so what do we learn?

That Industrial capitalism seeks monopoly status and control -- the more the companies have, the more they control, using their closed proprietary systems and way of doing things, the better. Which is in contrast to the collaborative economy. These companies get bigger by maximizing participation -- usually through openness.

In fact, a big piece of the collaborative economy is built on the economics of free. By that I mean assets that have been already bought and paid for (like Skype), or excess capacity (like Wikipedia). If you as a company want to take advantage of these great resources, you have to be open, and willing to cooperate. Industrial capitalism makes its money on either scale -- getting so incredibly big that it can manufacture things very cheaply -- or by keeping its expertise very close through trade secrets and patents that it lets others use at great expense.

Because Flickr is such a Peers Incorporated company, I had to put them in here. the industrial capitalism way of doing things would be Getty images, with 80m images. The collaborative economy way of doing it gives us Flickr, which has amassed 6 billion images in just 7 years. And you have to say that the Flickr images more accurately portray the world as it really is.

There is Network TV as opposed to YouTube. YouTube has more video uploaded each month, than the 3 major networks created in 60 years. Is a lot of this stuff junk? Yes, absolutely, but so is the “Bachelorette”.

We see the collaborative economy in every sector. Even banking. Prosper is a company in which individuals lend money to other individuals. It is 7 years old and already has 1.3 million members. It has made $314m of loans. If one of those lending individuals goes bankrupt -- it isn’t the end of the world.

The collaborative Economy is delightfully resilient. Industrial Capitalism, with its huge behemoths, produces companies that are “too big to fail.” Yet we know they will one day. While both systems could share value better with individuals, it seems that the collaborative economy is the one that will do it -- because remember, it seeks to maximize the participation of others, and if its going to succeed in the long run, it has to share more equitably. We will see more and more web-based companies that partner with individuals to help them make money.

I heard this great anecdote: my father had one job in his lifetime; I’ll have 7 jobs in mine, and my child will have 7 at the same time. The value sharing partnership between a web-based company and individuals will form a significant part of our economy future.

I recently founded a company called Buzzcar. We operate in France, and will be opening here in New York shortly. With Buzzcar, car owners can rent out their cars to their friends and neighbors in a safe, secure, and standardized way. I think of the car owners as Auto-preneurs, and they get 65% of the revenue generated, in contrast to the business model of traditional car sharing and car rental companies. Buzzcar builds the technology, operational, communications, and contractual support, sets a minimum standard for good drivers and safe cars, insures each car and person during the rental and with 24-hour roadside assistance, and does the payment collections. The owner is in charge of his car, and inviting his friends and neighbors to share his car. And he can make about $1000/month. You can see that we have all types of owners and cars, and all types of drivers too.

I have a goal of getting everyone to share their cars, dramatically reducing the numbers of cars needed to satisfy a given population, dramatically reducing the numbers of parked cars that clog our city streets and make our homes expensive, and dramatically reducing the enormous bite car transportation takes out of personal budgets.

And I know that the collaborative economy approach can work, even in a sector that seems so suited to big huge projects, because of my colleagues at carpooling.com. They are a 10 year old German company that provides ridesharing services throughout Europe, and shortly the US. Every single day, they transport as many people as would fill 130 Amtrak trains. Every month, they have more than 1 million people sharing trips. In fact, Carpooling.com, and the car drivers and the riding passengers, move more people than travel the length of Amtraks’ NE corridor.

Something that I haven’t yet mentioned, but that is really dear to my heart, is the fact that in the collaborative economy, one dollar is not like another dollar. The social intangibles are visible and valued. One of Buzzcar’s borrowers had mentioned to the car owner, that they were using the car to get to an Island ferry. The owner sent her an email with a list of the island highlights -- where to go and what to see. You won’t find that level of personalization and customization in the Industrial capitalism model. It costs too much money.

Some more examples: -- the mainstream media vs the blogosphere -- here is a short list of companies, many of which you’ll recognize, that are bringing us this new economic model. (airbnb, etsy, eBay, fiverr, topcoder, zilok, rentallic)

And to close with a final lovely example: we can contrast Google Maps with Open street maps. Google maps, which I know, use, and love, was created with a car driving on every single road in the world and mapping them all. that is a big job! We can contrast that with Open Street maps, that created the same with local hobbyists build out the open street map platform. Today, Open street maps offers maps that are as good -- and they think better -- than Google’s. Why? Because, just like wikipedia, they have thousands of people updating them each and every day.

When the Haiti Earthquake struck and the emergency responders flooded in, it was impossible for them to find their way through the city that had been poorly mapped, and those existing maps were clearly completely out-of-date for what was needed. With the help of a group called Crisis Mappers Net and released satellite photos, this group of people drew in the map of Port-au-Prince over the subsequent week, you can see them working.

To sum it all up, Industrial Capitalism is built and evolved to put the corporation’s survival a the center. I hope you enjoy those empty, headless suits I found. And now, thanks to the Internet, we see the rise of a collaborative economy, that puts people at the center.

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Testifying before Congress: I Can't get a Word in Edgewise

Looking for the written transcript of my testimony (March 9, 2011), I stumbled across this video clip, as prepared by the Republican-controlled House Subcommittee on Energy and Commerce website

It was billed on their page as:

"Rep. Marsha Blackburn (R-TN) questioned a supporter of the rules about how well the Internet works without government regulation, noting: “You set up a very successful company using the Internet as it was, basically the status quo Internet, and you did that without a whole lot of trouble: is that right?”



Count how many words I get to say (5?) compared to the torrent of her words. If memory serves me, what happens after this clip is she moves on to "question" the person next to me allowing them the same "response time." Yet on the Republican website about the testimony, all the quotes are from the Republican congressmen making their statements, with zero quotes from those experts who were testifying.

I realize this is politics, but the spin is pretty scandalous. The fact is, that the rules I got to play by in 2000, are not the rules start-ups today live under. In 2005, the FCC was stripped of its right to ensure fair play on the Internet, and immediately thereafter ensued lots of bad behavior on the part of the big telecommunications companies. The FCC Order, the one was testifying for, and that the House overturned, and that is now before the Senate, was to reinstate the FCC's right protect the openness of the Internet.

Associated blog entries: I wrote up immediately after testifying. and OpEd in Politico

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Net Neutrality protects Innovation & Jobs

Here is my OpEd published in Politico, days before vote in House on whether to overturn FCC ruling that protects net neutrality.

You can read my testimony before Congress and my reactions to that experience in previous blog.

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Testifying before Congress: Net Neutrality

I testified this week to the House Subcommittee on Communications and the Internet.

Here is my written testimony and here is my oral testimony and here the video version.
In general, the Republicans who wished to repeal the FCC order tried to:

• Confuse regulating access to the Internet (telecommunications providers: i.e. Verizon and ATT for the vast bulk of Americans) which is the subject of the FCC order, and regulating services (Google, Amazon, Facebook) which aren’t under the FCC’s jurisdiction.

• Confuse controlling Internet Openness (which everyone agrees is a good thing) with controlling Access to -- and Who Defines -- that Internet: 1) an industry that tends toward monopoly power or 2) the government who should serve the American public’s interests.

• Confuse innovation, jobs, and investment in the economy created by entrepreneurs and small businesses (75% of all jobs over the last 10 years and what percent of the economy?) with the “innovation,” jobs, and investment of two telecommunications giants (ATT invested $19b last year in infrastructure).

Congressmen who had done some work in preparation for my testimony raised the following points against my personal testimony:

• Asked by two members (a talking point?): When the search term “carsharing” is entered into Google, Zipcar has an ad that runs above the first search result. How does Zipcar’s ability to buy a paid ad sync with my testimony that startups can’t afford to pay for premium services?

The first time this was asked, I said that it wasn’t relevant. What was a better comparison was to think of newspapers, where big companies could take out full pages ads, and little companies only tiny classifieds, and that the internet had changed that access into one of a meritocracy. The second time I was asked, I said “This isn’t the question at hand” to which the Congressman replied that indeed, it was his question (true). A thoughtful short response should have been: The fact that an eleven-year old company can afford to buy a Google ad has no bearing on whether a startup could afford to pay a premium for access to the Internet, nor whether other structural hurdles could be established by the duopoly gatekeepers to the Internet.

Several times, Republicans raised the idea that if the unregulated Internet worked for me to start up Zipcar before, why did I think it wouldn’t work in the future? One Congressman even repeated to me two times how easy it must have been for me to start Zipcar (I didn’t let her get away with that). The response I tried to make, and I don’t know if I did, was that the Internet was a baby industry back then, the telcos power was much less, and in fact, the industry was regulated and under the jurisdiction of the FCC (which was later taken away in 2005).

• My favorite question: It appears that Zipcar gets free parking that taxpayers have paid for, depriving these taxpayers of on-street parking dedicated to a for-profit company, as well as received other government grants to succeed….not clear to me how this has any bearing at all.

To which I replied that during my three-year tenure as CEO I had paid for municipal parking won through RFPs and had received no federal grant money at all. Gigi Sohn of Public Knowledge later reminded me that the carriers have received rights of way, spectrum rights, and millions (billions?) of dollars of subsidies from government.

• Two ill-formed, grand-standing, and not quite completed questions were trying to relate to my sensibilities as a business woman. They seemed to be aiming at this point: Wasn’t the only way to respond to market demand to build out more infrastructure? And shouldn’t a company be able to set prices any way it wanted to without government interference?

One of the questioners cut me off after a sentence reply saying that his allotted time was up. And I think I didn’t answer well or clearly to the first time this question was asked. The answer which I managed to squeeze in later in answer to another Congressman’s question was a better one, although admittedly not as nicely said as written below:

Capitalism works when markets respond to demand and competition. The Internet gatekeepers are at best an oligopoly and for most consumers a monopoly. These companies don’t need to respond to demand (they can create scarcity to raise prices) and they also don’t have to respond efficiently or cleverly because they have no competition.

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Net neutrality imperative to Protect Innovation

Here is OpEd I wrote last week for Bloomberg Government, and the interview I did for Bloomberg TV.

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People Powered Innovation

Here is an interview I did for Thrivable.

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The Internet is Not Triple Play

Five years ago, when I first started focusing on the Internet, I attended a small meeting at the Harvard Berkman Center that was given by the Chairman of the Federal Communications Commission. I was dumbstruck by the irrationality of what he was saying. And the FCC – which acronym I had previously glossed over with little understanding or interest – became an arm of government that I realized I should care about.

The irrational ideas, so curious and intriguing and yes, dumb founding, to my outsider and newcomer self was that the FCC had special rules for telephone, and special rules for TV, and special rules for data, as if they weren’t all the same thing! Didn’t everyone know that it was all just 1s and 0s? totally interchangeable and free flowing over both the wired and wireless world? That it didn’t make sense to think of telephone as something different from Voice Over IP?

And then of course, I learned that I was the dumb one. The FCC’s structure stemmed from the long history of the evolution of the telephone over the 20th century, which had a lot to do with what was learned from dealing with railroads over the 19th century.

The result is a bureaucracy and regulatory structure that just doesn’t make any sense for the underlying technical reality, but has structured vast ecosytems of companies built to respond to the old reality, and little inclined to change business models and give up existing profit streams (a problem in the energy and transportation sectors too).

I recently signed onto a FCC comment written by Seth Johnson that enunciates the difference between the services and the Internet. The many signers include Steve Wozniak, Clay Shirky, David Isenberg, David Weinberger, and David Reed.

While the FCC letter reads pretty technically, David Reed wrote a beautiful essay that explains in terms that everyone can understand, the distinction between the internet and the services.

To give you a taste:

..the Internet was created to solve a very specific design challenge – creating a way to allow all computer-mediated communication to interoperate in any way that made sense, no matter what type of computer or what medium of communications (even homing pigeons have been discussed as potential transport media). The Open Internet was designed as the one communications framework to rule them all.

However, the FCC historically organizes itself around “services”, which are tightly bound to particular technologies. Satellite systems are not “radio” and telephony over radio is not the same service as telephony over wires.

…The Internet really is “one ring to rule them all” – a framework unto itself, one that cannot be measured against its “wirelessness” or its “terrestriality”...It was carefully organized to incorporate innovations in transport of information, along with innovations in uses of such transport…What would happen if the FCC were to begin to recognize that all communications are to a large extent interchangeable?

What would happen if the FCC recognized the technical and practical reality? Go read David’s piece and become informed in a dramatically faster and shorter period of time than it took me.

The Internet does not equal Triple Play.

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Tapping End User Content (2.0) for Speed & Scale

In the spring I gave a number of talks on how web 2.0 should really be talked about as 2.0 -- platforms for participation that invite and enable end-users to add their own content. Letting people tap into their own excess capacity is particularly potent because it is so low cost. And the platforms mean that this small and local content can be scaled to national and international proportions and influence.

Quickly.

IF you can get the platform right.

The video is a 4 minute edited synopsis of a 20 minute talk I gave at Columbia Unviersity a number of weeks ago for their Brite conference (Brands, Innovation, Technology). I reference chatroullette and couch surfing, both excellent examples of the phenomenon. 350.org does an excellent job of this as well.

Related blog posts of mine:
How Sharing Increases Innovation
Thinking about Scarcity & Abundance

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The inevitability of choosing cars

Infrastructure is destiny. And our insurance, safety, and legal systems, as well as our land and road use requirements are the infrastructure that that pushes us inevitably towards cars.

When we need to travel, most people in most countries have three transportation choices before them:

1. Walk or bike in unsafe conditions
2. Take mass transit that is infrequent, low quality, unreliable, and not point to point
3. Own their own car that delivers on demand, safe, and point to point travel
•These cars must be owned and driven by one person or household; sharing cars or rides for money is not legally allowed nor supported by the insurance industry.
•Commercial and residential real estate developments require accommodation for cars but not for other forms of transportation, and these car accommodations are almost always mandatory, not optional.

Is it any wonder that as soon as people can afford one or are old enough to drive one, the car is the mode selected? This is as true in Delhi as it is in Detroit. Some countries are better than others – the Dutch and Danish for example.

What can be done?

1.Make sure that there are safe walking and biking possibilities. I would further encourage the development of roads that are restricted to low speed and low weight vehicles. We accommodate not only feet and bicycles, but any vehicle that is relatively clean, slow, and light weight – with minimal safety requirements or licensing necessary. It doesn’t make sense that New York City will allow bicycles and pedicabs to use certain streets, but not lightweight and non-polluting CNG auto rickshaws that travel at similar speeds. We would see a boom of innovation and creative vehicles that can deliver more safe, convenient, point to point and personal travel options for this category of roads.


2. Redefine mass transit. In rich countries today, we have drawn very hard lines between personal and commercial vehicles, with the result that willing people with their own cars can not fill mass transport gaps in exchange for money. Typically this is illegal and our insurance systems won’t support it. I can’t formally pay you $5 to pick up my mom and take her somewhere – even if you are going there yourself. I can’t let you drive my car in exchange for money. Once money is involved – and why shouldn’t it be? – current laws define this endeavor as a commercial one and apply significant safety and legal structures that just don’t make sense. If we want to see more innovation in the transportation sector; if we want to enable more people to satisfy their needs without owning a car, we must let small scale efforts flourish. Once a “small” business becomes a large one, we can apply safety and licensing laws that make sense for large volumes where risk is magnified. At small volumes, these rules are overkill.

3.Change the rules (insurance, licensing, parking) that assume one owner/one adult/one building unit/one car. We need to make sure that people can buy, or rent, or consume fractions of cars and parking spaces. If we don’t change these rules, we are forced to buy, consume, and park whole cars, whether or not that is what we want.

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How Sharing Increases Innovation (part 2)

I believe there is a strong tie between sharing and the ability to innovate. This post will walk you through the logic.

Innovation is built on these things:
1. The existence of problems and the desire to solve them
2. The ability to apply new ways of thinking to these problems
3. The cost of the inputs needed to solve the problem (skills, data, resources, devices, networks)
4. The ability to iterate, adapt, evolve and scale.

1. PROBLEMS: Frankly, there is no dirth of problems and some kinds of people really like to think about how to solve them if they have the time. So problem-solving people who have at least some time on their hands try to problem-solve and people who don’t have time, can’t. [Why are there so many fewer historical examples of women doing remarkable innovative things? Well, duh…]

2. NEW THINKING: The ability to apply NEW ways of thinking, with an emphasis on the word “new.” Problems that are kept hidden in discipline silos don’t get any new thinking applied to them. See all the great work done by Innocentive, that gets problems out of silos and opens them up to a diverse group of solvers.

3. THE COST OF INPUTS. Here is where I want to linger for a bit. There is a whole world of inputs that could come at much lower cost – wherever there is excess capacity, an underused resource that has already been paid for and which therefore has lots more value locked up in it! If only we could get people, companies, governments to “share” more – to make sure that their unused unneeded excess capacity was made available to others to make use of.

Exactly when are we NOT willing to share?
• When we believe that abundance only comes from hoarding and we perceive that everything is rivalrous (see previous post).
• When we have just witnessed a communal sharing debacle (Chinese cultural revolution) or when goods really are rivalrous.
• When things really are scarce, there is just simply not enough to go around and so we hoard to protect our closest family.
• When things are abundant, why bother?

If we look at these reasons for not sharing excess capacity (and thus facilitating a whole lot more innovation), I see lots of room for improvement. We have to stop our rapid and prejudiced assumption that sharing reduces our own personal abundance. There are lots and lots of goods that are non-rivalrous (the new push towards open data for example), and many once-rivalrous goods that can now be shared (cars) thanks to technology. We’ve also come to appreciate that anything with a network effect actually has a much higher value the more it is shared (carsharing, ridesharing, social networks, mesh networks, the internet).

Recently I’ve been doing a lot of writing and talking on this topic of increasing openness.

4. EXPERIMENTATION & EVOLUTION. The ability to experiment, iterate, adapt and evolve. In some cases, even if we deliver up items 1-3, there are some sectors in which we still don’t get much innovation because of institutional or government barriers. The status quo has developed a whole set of rules and regulations to protect existing ways of doing things, as well as protect the health and safety of people. I would put the automotive, housing, and a good piece of the telecommunications sectors into this category.

Sometimes the rationale is good and sometimes it isn’t. In any event, if we are going to see successful innovation, we have to let small scale (some volume) experiments flourish without many of the safety and regulatory requirements we place on large volume sellers of goods and services. Bureaucratic and even well-meaning red tape just make experimentation impossible.

A quote I heard from Tom Watson, founder of IBM: “if you want to improve your success rate, double your failure rate.” And a far less elegant quote from Robin Chase: “if you want to improve your innovation rate, open up more data, devices, networks, platforms, sources, and stuff.”

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Web 2.0 is like Yeast: Rampant Growth Possible

I'm preparing a talk and this New York Times interview I found with Andrey Turnovskiy, age 17!!!, exquisitely and quickly explains the components that make Web 2.0 a force to be reckoned with.

Let's deconstruct parts of the interview quickly. I've put it in BOLD so I don't get int trouble about attribution.

Have you always wanted to be a programmer?
No, actually I had no interest in being a programmer. I was always interested in language, I studied English and Chinese and I hoped to be a translator. Then I got a computer and saw that you could write code, so I decided to try it.

How long did it take to build?
It took me three days. I built it on an old computer I had in my bedroom.

First point: we now have the tools available that enable people with little money and discrete skills to build things quickly and try them out. I think of these as "platforms for engagement." They dramatically reduce barriers to entry. Governments should be doing what they can to make sure these platforms exist. This is why I'm advocating open source, open data, open standards, internet protocol, open devices, and open networks for things built with taxpayer money.

Then what happened?
Well, at first I showed it to my friends and they criticized it; they asked why anyone would want to use it. So I went onto a few Web forums and asked people to try the site, and I got 20 people to try it.

He persisted even though people who theoretically knew better thought it was a stupid idea.

How many users do you have now?
Well, after the initial 20 users the site doubled and it continued to double every day since then. Last month [5 months in] I saw 30 million unique visitors come to the Web site and one million new people visit each day. It continues to multiply and I just couldn’t stop it from growing.

I would love to see that growth chart! But if you double every day, starting day one with 20 people, it takes 3 weeks to get to 30 million unique visitors (okay, so ChatRoulette didn't actually double every single day).

Remember that this success was totally unpredictable. This is one of the key reasons we (as a society, company, individual) need to make sure we have made room for easy experimentation and iteration. For every ChatRoulette, there are no doubt hundreds (thousands) of failed experiments. But if you don't open yourself (your company, your country) up to innovation, others will and will pass you by.

Lastly, recognize that the growth was possible thanks to other platforms -- the internet, email, Facebook, Twitter, wired and wireless communications -- that already exist, that make telling your friends really easy and fast. See Clay Shirky's book "Here Comes Everybody."

This speed and scale of adoption of new ideas and behaviors -- newly made possible by the internet and associated technologies -- is what gives me hope about our ability to solve the most terrifying and intractable problems this world faces.

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More sunlight on cars: Open up the data!

The New York Times ran this OpEd I wrote (and pasted in below). I've appended additional thinking about implications for innovation.

Cambridge, Mass.
IN the wake of the Congressional hearings on the Toyota recalls, we have heard various proposals for countering unintended acceleration in automobiles.

Transportation Secretary Ray LaHood recently said the federal government may recommend that carmakers install “smart pedals” that give brakes priority when both brake and accelerator pedals are pressed simultaneously. Meanwhile, Toyota has said that, in contested acceleration accidents, it will give regulators access codes to data recorders — essentially, onboard black boxes being installed in some new cars.

But sometimes the solution to a safety problem is simply more transparency. Indeed, there is a relatively easy solution that would help identify problems before they affect thousands of cars, or kill and injure dozens of people: allow drivers and carmakers real-time access to the data that’s already being monitored.

Current federal law requires annual emissions and safety inspections for all cars. A mechanic plugs an electronic reader into what’s known as the onboard diagnostic unit, a computer that sits under your dashboard, monitoring data on acceleration, emissions, fuel levels and engine problems. The mechanic can then download the data to his own computer and analyze it.

Because carmakers believe such diagnostic data to be their property, much of it is accessible only by the manufacturer and authorized dealers and their mechanics. And even then, only a small amount of the data is available — most cars’ computers don’t store data, they only monitor it. Though newer Toyotas have data recorders that gather information in the moments before an air bag is deployed, the carmaker has been frustratingly vague about what kind of data is collected (other manufacturers have been more forthcoming).

But what if a car’s entire data stream was made available to drivers in real time? You could use, for instance, a hypothetical “analyze-my-drive” application for your smart phone to tell you when it was time to change the oil or why your “check engine” light was on. The application could tell you how many miles you were getting to the gallon, and how much yesterday’s commute cost you in time, fuel and emissions. It could even tell you, say, that your spouse’s trips to the grocery store were 20 percent more fuel-efficient than yours.

Carmakers could collect the data, too. Aberrant engine and driving behavior would leap out of the carmakers’ now-large data set, allowing them, if necessary, to conduct recalls much earlier. And, in exchange for your contribution of anonymous data, carmakers could send you driving benchmarks aggregated from your peers; then your app could tell you how your driving compares with the average of all drivers of the same car.

Having such readily accessible data streaming from your car might raise fears of a Big Brother scenario, in which carmakers would know where you are and how you are using (or misusing) your vehicle. But you would still decide whether you wanted to tap into the data, how you would use it and with whom you’d share it.

Allowing drivers and carmakers access to real-time performance data wouldn’t prevent every future mechanical failure. But it would allow carmakers and entrepreneurs to develop analytical tools to help catch developing problems in both individual cars and entire model lines. Cars would continue to break down and even cause accidents, but it wouldn’t take a Congressional hearing to figure out why.
*******

On the same day, the NYTimes reported that the National Highway Traffic Safety Administration (NHSTA) is considering requiring that a black box be installed in all cars. This is an idea that could be either really good or really terrible.

Really good: An implementation that uses open standards, open data, and open devices. That same data and devices could be reused and innovated upon to produce fabulous apps for cars.

Really bad: It’ll be another closed proprietary system that ends up adding to the cost of the vehicle and eventually becomes ancient technology, much like after-market navigation devices and transponders.

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Creating the Conditions for Explosive Innovation

Here is the most succinct description of how I think we can drive innovation, economic development, and spur our world on to the new low-carbon economy.

One of the reasons to make anything more open is the admission that there is more value to be extracted. Whatever we are talking about is underused. So in my mind, “open” implies “excess capacity.”

There are also levels of openness. Some kinds of open mean that certain people, with specific attributes (enough money, enough expertise) can participate in the newly opened asset. Other kinds of openness dramatically change the equation of who can participate: this kind of openness reduces the cost of participation and the level of expertise required to participate and therefore is game-changing, especially in the number of people who choose to engage.

Examples:

Guest bedrooms -> hotels -> couchsurfing (in 10 years since its founding, beds are now available to visitors in 55,000 cities in 231 countries – try that private sector!)

Ma bell phones -> cellphones -> iphone (in 2.5 years since its market entry, over 100,000 applications have been made)

Cars with fixed ownership & fixed wireless offerings ->
Zipcar/TomTom/Sync ->
multi-purpose open devices inviting creation of an infinite number of apps (who knows? We have yet to produce an open in-vehicle after-market platform)

Single-purpose wireless devices ->
Extensible malleable wireless devices ->
Open wireless devices with a mesh communications protocol (ubiquitous low cost local data transmission worldwide!)

This idea has important implications. For companies, opening up some platforms is a way they can farm for innovation cheaply. Losing ideas lose on their own R&D dollars. Winning ideas can be purchased by the platform-providing company. Voila! low cost R&D with 100% success rates!

For governments, the implications are much more far reaching. If a government seeks to maximize the private sector or individual gain from its expenditures, it should open up as many of its technology investments as possible. It should seek to lower the cost and expertise barriers for participation, with the resulting explosion of uses and innovations on the underlying platform.

This is why I have been advocating that government technology purchases require that excess network capacity be make open, that devices chosen be non-proprietary and able to be multi-purpose, that open standards and internet protocol be used.

Related posts:
Lowering Barriers to Innovation in Cars
Creating an Open In-Vehicle Platform
Open Platforms, Smart Grid & Smart Transportation
Whats "open" got to do with it?
Time for Cooperative Capitalism
Technology Recommendations for Congestion Pricing

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Lowering Barriers to Innovation in Cars

In 1890, there were 2000 car companies in and around Paris. I haven't been able to find the data for Detroit, but its a good guess to imagine that it was the same. Today, what do you think? Maybe 50 new cars being seriously tested for market consideration worldwide?

In a time when everyone is talking about the need for innovation and new vehicle types, it is basically impossible for a couple of clever guys (used in a gender-neutral way) to think up, test, sell, and improve upon their ideas. We have set the regulatory bar so high, that we've basically excluded innovation from any who doesn't have several hundred million dollars handy. The US Department of Energy recently gave Tesla Motors a $465 million loan that will be repayable only if they succeed. This is an expensive approach, for the government and for car manufacturers.

There is a lower-cost way forward, with precedents in the food industry. Here's what I think should be done.

To promote innovation In the existing vehicle stock:

1. Create an open in-vehicle technology platform/device that can be installed in existing vehicles, which brings car-specific data to the internet (with open APIs) for developers/innovators. This will facilitate changes in ownership, access, driving behavior, connectivity to other relevant data in the environment. [This idea is in hand and doesn't need government regulatory intervention.]

To promote innovation of new vehicles and new mobility choices:

2. Create a government insurance plan for small transportation businesses, to be paid into by these start-ups, that provides insurance, likely with reasonable per incident caps, that enables them to try innovative things that don't match the insurance industry status quo. Carsharing, carpooling, pick-up shuttles, PAYD insurance, innovative vehicle designs have all be held back by the insurance problem. By capping at some specific "small business" volume, innovation can be enabled and the real liability risks can be learned from these small groups. Ideas that succeed (and increase in volume beyond small business) will have the track record to move into the private sector insurance industry.

3. Remove government oversight of safety standards for low sale-volume vehicles. There is insignificant public health risk from small volume vehicle accidents. As an analogy, the health standards we apply to the corner deli are different from what we apply to Nabisco. In the vehicle space, there is only one rule that applies. And like the corner deli, locals won't frequent one that serves old or unhygenically prepared food.

4. Consider creation of low speed, low weight class of roads on which any vehicle and mode of transportation is at low risk for mortal accidents, and on which these small volume new vehicles could travel very safely. "The probability of death from an impact speed of 50 mi/h (80 km/h) is 15 times the probability of death from an impact speed of 25 mi/h (40 km/h)....only 5 percent of pedestrians died when struck by a vehicle traveling at 20 mi/h (32 km/h); however, the proportion of fatalities increased to 45 percent at 30 mi/h (48 km/h) and to 85 percent at 40 mi/h (64 km/h)." Source data.

On this last point, I'm imaging that many urban areas (and perhaps some roads or some lanes in suburban/rural areas) could have this classification. If this new classification were just by speed, allowing a diversity of vehicles could travel on those roads, we would get one kind of innovation. If we pushed the restriction further to include weight restrictions, these low speed/low weight roads would have a totally new and different characteristic that would favor pedestrians, bicycles, and small vehicles. Right now, many people tell me they don't ride their bikes (or let their kids ride) because of the weight/speed problem of other traffic.

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Innovation in Transportation

Time magazine held a panel in Washington 10 days ago on which I participated, and then published highlights in this week's Time magazine.

Here is the print version on innovation.
Here is the almost the same thing, but the edited video (along with Amory Lovins and Dan Barber)

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