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Copyright Copyright © 2018 by Hemant Taneja Hachette Book Group supports the right to free expression and the value of copyright The purpose of copyright is to encourage writers and artists to produce the creative works that enrich our culture The scanning, uploading, and distribution of this book without permission is a theft of the author’s intellectual property If you would like permission to use material from the book (other than for review purposes), please contact permissions@hbgusa.com Thank you for your support of the author’s rights PublicAffairs Hachette Book Group 1290 Avenue of the Americas, New York, NY 10104 www.publicaffairsbooks.com @Public_Affairs First Edition: March 2018 Published by PublicAffairs, an imprint of Perseus Books, LLC, a subsidiary of Hachette Book Group, Inc The PublicAffairs name and logo is a trademark of the Hachette Book Group The Hachette Speakers Bureau provides a wide range of authors for speaking events To find out more, go to www.hachettespeakersbureau.com or call (866) 376-6591 The publisher is not responsible for websites (or their content) that are not owned by the publisher Library of Congress Cataloging-in-Publication Data Names: Taneja, Hemant, author Title: Unscaled : how AI and a new generation of upstarts are creating the economy of the future / Hemant Taneja with Kevin Maney Description: First Edition | New York : PublicAffairs, 2018 | Includes bibliographical references and index Identifiers: LCCN 2017042248 | ISBN 9781610398121 (hardback) | ISBN 9781610398138 (ebook) Subjects: LCSH: Automation—Economic aspects | Artificial intelligence—Economic aspects | BISAC: BUSINESS & ECONOMICS / Entrepreneurship | BUSINESS and ECONOMICS / Economic Conditions Classification: LCC HC79.A9 T36 2018 | DDC 338/.064—dc23 LC record available at https://lccn.loc.gov/2017042248 ISBNs: 978-1-61039-812-1 (hardcover), 978-1-61039-813-8 (ebook) E3-20180223-JV-PC Contents Cover Title Page Copyright Dedication PART BIRTH OF A NEW ERA, RIGHT NOW The Great Unscaling The AI Century PART THE GLOBAL REWRITE Energy: Your Home Will Have Its Own Clean Power Plant Healthcare: Genomics and AI Will Enable Prolonged Health Education: Lifelong Learning for Dynamic and Passionate Work Finance: Digital Money and Financial Health for All Media: Content You Love Will Find You Consumer Products: Everything You Buy Will Be Exactly What You Want PART CHOICES FOR A GOOD OUTCOME Policy: Profound Decisions to Have a Good AI Century 10 The Corporation: Charting an Unscaled Future for Scaled Enterprises 11 The Individual: Living Your Life as a Personal Enterprise Acknowledgments About the Author Notes Index To my partners at General Catalyst Libin, Phil, 183–184 life expectancy, in US, 75 life expectancy projects, 22 lifelong education, 106, 191 light sockets, as data collectors, 30 LinkedIn, 187 Linux, 163 Lipitor, 77 lithium-ion batteries, 63, 69 Livongo AI technology, 6–8, 31, 34, 43, 168 founding of, 5–8 healthcare unscaling, 77–78 Internet of Things, 81 personalized health technology, 88 logistics platforms, 38–39 longevity projects, 22, 159 L’Oreal, 106 LoudCell, 68 Louis Vuitton, 149 Luxottica, 140–141, 142, 143, 144, 151 Lyft, 37, 57, 61 MaaS Global, 56 Macy’s, 26 Magic Leap, 36 Maney, Kevin, 132 Mann, Horace, 96–97 manufacturing, 39–41 Marconi, Guglielmo, 25 market research, 141–142, 182 Markovchick, Vince, 76 Marriott, Massachusetts Institute of Technology (MIT), 15, 80, 105 massive open online courses (MOOCs), 105 mass-market consumer culture, 27 mass-market products, 16 mathematicians, 33 Mayweather, Floyd, 121 McAfee, 28 McDonald’s, 27 McKesson (pharmaceutical distributor), 75 McKinsey (consulting firm), 93 media advertising, 135 AI technology, 132–137 augmented reality, 138 consolidation, 131–132 journalism, 125 music services, 125–126 newspapers, 129–130, 131, 132 overview, 125–129 radio, 126–129, 130–131, 143 television (see television) unscaling, 132–134 virtual reality development, 137–138 Medic Computer Systems, Medicaid, 168 medical AI, 90 medical information, and AI analysis, 84 medical records See electronic health records (EHRs) medicine digitized drugs, 88–89 handheld, 83 personalized, 73, 81, 85 precision, 43–44 telemedicine, 83 See also healthcare; pharmaceutical industry Mercatus Center, George Mason University, 167 Mercedes, 63 Merck, 89 Metcalfe, Bob, 17 Metcalfe’s Law, 17–18 MetraHealth, 74 Metropolitan Life, 74 microbrews, 142–143 Microsoft beginnings of, 10 cloud computing, 33, 161 competing against AWS, 178 digital platform, 162 Holotours, 108 Partnership on AI, 158 virtual reality development, 35 Minecraft, 35 Mixer Labs, 71 “mobility as a service” (MaaS), 56 Model 3, Tesla, 56, 61 monopolies, 23, 53, 120, 160–163 monopoly power, 23 Monster.com, 132 Moore, Bill, 127–128 Moore, Gordon, 17 Moore’s Law, 17, 18 Morgan, J P., 112 Morris, William, 84 Moskovitz, Dustin, 157 Murphy, Bobby, 17 music services, 125–126 Musk, Elon, 55–56, 62, 65 Nadler, Daniel, 159 National Broadcasting Company (NBC), 130, 131 National Energy Administration (China), 59 National Human Genome Research Institute, 166 Nature (journal), 85, 92 Nest, 63–64 Nestlé, 150 Netflix as AI platform, 137 AI technology, 31, 128, 129, 134 DVD-by-mail, 141 media industry, 125 outsourcing, 179 technology and, 132, 133 Netherlands, basic income research, 160 Neural Dynamics and Computation Lab, 32 New England Clean Energy Council, 64 New Republic (magazine), 157 New York Journal of Commerce, 130 New York Times Co., 132 New York Times (newspaper), 79, 125, 159 New York University, 164 New York World’s Fair (1939), 131 News Corp., 132 newspaper companies, 129–130, 131, 132, 182 Newsweek (magazine), 125 Nike, 40, 144, 149, 179 nineteenth-century technology, 25–26 Nivi, Babak, 119 Nixon administration, 74 Nokia, 13 Nordstrom, 146 Northwell Health, 78–79 nuclear power, 59, 69–70 Numenta, 33 NV Energy, 65 Oakley, 140 Obama, Barack, 157 Obamacare, 168 obesity, Oculus Rift, 34, 35 Ohio State, 98 omni-channel stores, 151–152 on-demand transportation, 37–38 online data, and personalized health care, 82 Opternative, 143 OrthoSensor, 88 Ortlieb, Oliver, 39 outsourcing, 11, 40, 179 ovarian cancer vaccine, 81 OvulaRing, 88 owning scale, Oxford University, 21–22 PalmPilot, 33 Pampers, 151, 174 Pan Am, 26 Paris Accords, 52 Partnership on AI, 158–159 Patel, Naimish, 49–51, 56, 68 PatientBank, 89 Patrick, Deval, 64 PayPal, 116 Pearle Vision, 140 Penrose Studios, 36 Perez, Carlota, 18, 45 Pérez-Arriaga, Ignacio, 58 personal assistant bots, 31 personal health cloud, 89 personalized curricula, 99 personalized health data, 89 personalized health technology, 88–89 personalized medicine, 73, 81, 85 personalized products, 16 Pew Research, 21, 132, 133 Pfizer, 75 pharmaceutical industry, 43–44, 75, 76, 77, 85–86, 167 Philippines, credit scores, 122 Philips, 64 Plastic Bank, 124 platforms artificial intelligence, 137 big businesses as, 177–179 car sharing, 187 electric utilities, 57 growth of, 11–12 logistics, 38 in media, 136 monopoly concerns, 161–163 new technologies and, 13 overview, 10 personalized products, 16 utility grids, 59 virtual reality, 35 See also renting technology platforms Pokemon Go, 36 Politico, 132 postal service, 38 Postmates, 145, 153 power cloud, 59, 68 power plants and distributors, 49–51, 57, 58–59, 66–67 Prada, 140, 143 Predix, 30, 175–176 privacy, 134–135 processes, as detrimental proxy, 182 Procter, William, 173 Procter & Gamble (P&G), 4, 144, 146, 149, 150, 173–174 products, focus on, 179–180 proxies, 182 public policy automation, effects of, 157–160 education, 170–171 energy, 168–169 environmental issues, 64–67 finance, 169–170 jobs, shifts in, 159–160 monopoly platform issues, 160–163 robot delivery laws, 153 shift to unscaled world, 189 unscaling impact, 45 Puerto Rico, saltwater batteries, 63 Quest Diagnostics, 75 radio industry, 126–129, 130–131, 143 Radio Ink (trade publication), 129 Radio Mill, 128 Raider, Jeffrey, 140 Rajkumar, Raj, 62 Ravikant, Naval, 119 Ray-Ban, 140 Reading High School, Pennsylvania, 97 real estate market, 148–149 rebundling corporations, 180–181 recycled plastic, 124 Reeves, Joshua, 188 regulated industries, 16, 49, 52, 53–54, 113, 126 regulations, creation of, 164–165 Renewable Energy Resources Act (Germany), 59 renting technology platforms blockchain, 41, 163 cloud services (see cloud technology) education, 96, 101 finance, 111 manufacturing, 40 monopoly concerns, 161–163 overview, radio, 127, 128 Research Beam, 81 Ridder, Hermann, 130, 131 Ritter, Bill, 65 robot delivery, 152–153 robots, 37–39, 84–85, 145 Rodeo Donut, 120 Romano, Pasquale, 69 Roomba vacuum cleaners, 37 Rosedale, Philip, 36, 138 Rosen, Emanuel, 142 Roser, Dave, 152 Safeway, 149 Salesforce.com, 29 saltwater batteries, 63, 69 Samsara, 29 Samsung, 137, 150 Sandoval, Brian, 65 Saverin, Eduardo, 157 Scanadu, 90 Schulman, Stacey Lynn, 129 Schwartz, Jon, 39 Scott Intelligent Restroom, 30 Seamless, 145 Sears, 26 Second Life, 138 security software, 31 Sedasys, 85 SeedInvest, 120 self-driving cars, 31, 37, 61–62, 137 self-paced learning, 14–15 sensors, electronic, 30, 31 Sequoia Capital, 121 Shapeways, 188 Shark Tank (television show), 127 Sharma, Yogesh, 148 shopping malls, 146, 149 Shultz, George, 65 Simonson, Itamar, 142 Singh, Lily, 133 SiteAdvisor, 28 skin cancer, 90 Skyline High School, Texas, 97 Skype, 153 Slim, Carlos, 99 small companies, 4, 176–177 smart contracts, 42 smart grid, 58–59 smart lights, 64 smart thermostat, 64 smartphones, 10, 12–13, 29, 81–82 Snapchat (Snap), 4, 14, 17, 36, 133–134 SNL Financial, 113 Snow Crash (Stephenson), 192 sociological impacts, of AI, 21–22, 45–46 solar energy batteries, 20–21 driver of unscaled energy, 59–60 on homes, 57 power grids, 50–51, 54 sale of excess energy, 65 SolarCity, 65 somatic cells, 92 Sony, 144 South Korea, ICOs, 121 Southwest Airlines, 28 Spiegel, Evan, 13–14, 17 sports, virtual reality use, 36 Spotify, 41, 125 Spruce, 83 SRI International, 102–103 Srivastava, Pramod, 81 standardized curricula, 97 Stanford University, 32 Starship Technologies, 153 The Start-Up of You (Hoffman & Casnocha), 187 Stash, 122 Stephenson, Neal, 192 Steyer, Tom, 65 Stion, 60 Stitch Fix, 147 Strickler, Yancey, 119 Stripe banking industry and, 115–118 beginnings of, 13–14 cofounders’ background, 93, 116 commercial services and, 123 evolution of, 178 focus of, 16 outsourcing model, 179 technology and, 186 as unscaled company, studio model, 183–184 Suleyman, Mustafa, 159 Sunglass Hut, 140 Superwoman (YouTube channel), 133 supply chain, and blockchain technology, 42 sustainable energy, 56 Switzerland, basic income research, 160 Sycamore Networks, 49–50, 68 synthetic biology, 44 systems thinking, 15, 190 Tampax, 174 Taneja, Hemant biographical information, 14–15 company investments, 60, 72, 95 on developing public policy, 64–65 as entrepreneur, 15–17, 43 nonprofit organizations, 5, 102, 158 as venture capitalist, 4–5, 15, 28, 39, 119 Target Optical, 140 taste graph, 28–29 tax preparation, 123 Taylor, Charlie, 26 Teachers Pay Teachers, 107 Technological Revolutions and Financial Capital (Perez), 18 technology future impacts, 158–159 nineteenth-century inventions, 25–26 twentieth-century economies of scale, 27, 52–53 technology platforms, 10, 19 telecommunication, 66 Telecommunications Act (1996), 126 telemedicine, 83 telephone, invention of, 25 television AI technology, 137 beginnings of, 131, 143 cable companies, 66, 67–68, 125 consumer products, 143 on-demand, 132 unscaling, 132–133 Tesla batteries, 20, 62–63 charging stations, 69 company profile, 55–56 Model 3, 56, 61 self-driving cars, 31, 37, 61 as unscaled company, 4, 50 Thiel, Peter, 70 Thinx, 174 Thompson, Ian, 35 3D printing, 21, 39–41, 188 Thrun, Sebastian, 90, 106 Tidal, 125 Tide, 173–174 Tiffany, 143 Time Warner, 132 TiVo, 127–128 Toyota, 56 transportation automobiles, 19–20, 26 car sharing concept, 55, 61, 187 driverless cars, 61, 159 electrified, 56, 61–62, 68–69 energy and, 54–55 future of unscaling, 19–20 self-driving cars, 31, 37, 61–62, 137 ten-year vision, 57–58 Whim subscription service, 56 The Travelers, 74 trends, embracing, 182 Tri Alpha Energy, 70 Trump, Donald, 21–22, 52, 136, 160 Trump administration, 168 Tufts Center for the Study of Drug Development, 77 Tullman, Glen, 5–7, 77–78 Tullman, Sam, 6–7, 78 TuneIn, 128–129, 135, 137 TurboTax, 123 TVision Insights, 134 twentieth-century technology, 27, 52–53 23andMe, 80, 92, 166 Twitter, 71, 125 Uber AI technology, 34, 164 autonomous cars, 61 capital investments, 52 car sharing concept, 61, 188 as personalized product, self-driving cars, 37, 61 smartphones and cloud technology, 13 UberEats, 145 as unscaled company, 19 UberEats, 145 UBS Securities, 80, 82, 91 Udacity, 106 unbundling giant companies, 150–151 United Kingdom basic income research, 160 Brexit, 160 home batteries, 63 UnitedHealth Group, 5, 8, 73–75 Unity Biotechnology, 22 universal basic income (UBI) projects, 23, 158, 160–161 universal healthcare, 74–75, 86 universities, as scaled education, 98 University of California, 127 University of Central Florida, 98 University of Connecticut, 81 University of Illinois, 105 University of Pennsylvania, 92 University of Texas, 63 University of Washington, 70 unscaling beginnings of, 10–19 description, 4, economic displacement, 22–23 future of, 19–24, 44–46 UPS, 12, 142, 152, 153 Upwork, 186, 188 Urban Outfitters, 28 UroSense, 81 US Bancorp, 113 US Census, 176–177 US Department of Energy, 58 US federal government, 27 US Federal Reserve, 110 US Food and Drug Administration (FDA), 85–86, 166–167 US interstate highway system, 37 US Postal Service, 142 US Securities and Exchange Commission, 119, 121 US Steel, 53 USA Today (newspaper), 132 utilities, 49–51, 57, 58–59, 64–67 “Utility of the Future” (Pérez-Arriaga), 58 vaccines, 81 Venter, Craig, 42–43 venture capital, 119–121 Venture Hacks, 119 vertically integrated corporation, 11 Viacom, 132 Viagra, 43, 77 Vice, 133 virtual reality (VR), 34–36, 107–108, 137–138, 192–193 VisionSpring, 139 Vital Connect, 88 VivoSensMedical, 88 Volvo Cars, 56, 61 Voodoo Manufacturing, 39 Vree Health, 89 W2XB, experimental TV station, 131 Wagner, Todd, 127 Walmart Fortune 500 list, 27 Jet.com, 176 mass-market consumerism, 144 online subscription services, 149 product expansion, 145 small businesses and, 177 solar energy, 59 Warby Parker app-based eye exams, 83 platform renting concept, 12, 141–143 technology and, 11, 139 unbundling companies, 150, 151 as unscaled company, watchdog algorithms, 165 Watson (IBM), 31, 33, 84, 123 Watt, James, 96 Wayfair, 138 Wealthfront, 122 Weather Company, The, 31 Wefunder, 120 Wells Fargo, 113, 114 Wessels Living History Farm, 147 Wharton School, 139 Whim, 56 Whitacre, Jay, 69 wind energy, 54, 60–61 window-washing drone, 38–39 wireless broadband providers, 66 work education and, 185–186 human need for, 160–161 new paradigm, 189 See also entrepreneurs; jobs World Bank, 123 World Economic Forum, 40 World Health Organization, 76, 77 Wright brothers, 26 WXYC FM (Chapel Hill), 126 Xanax, 77 Y Combinator, 22, 160 Yahoo, 127 Yale Center for Emotional Intelligence, 96 Yale Law School, 164 YouTube, 99, 100, 125, 132–133 zeppelin airship, 26 zettabyte, 80 Zimmer, John, 61 Zuckerberg, Mark, 157 PublicAffairs is a publishing house founded in 1997 It is a tribute to the standards, values, and flair of three persons who have served as mentors to countless reporters, writers, editors, and book people of all kinds, including me I.F STONE, proprietor of I F Stone’s Weekly , combined a commitment to the First Amendment with entrepreneurial zeal and reporting skill and became one of the great independent journalists in American history At the age of eighty, Izzy published The Trial of Socrates, which was a national bestseller He wrote the book after he taught himself ancient Greek BENJAMIN C BRADLEE was for nearly thirty years the charismatic editorial leader of The Washington Post It was Ben who gave the Post the range and courage to pursue such historic issues as Watergate He supported his reporters with a tenacity that made them fearless and it is no accident that so many became authors of influential, best-selling books ROBERT L BERNSTEIN, the chief executive of Random House for more than a quarter century, guided one of the nation’s premier publishing houses Bob was personally responsible for many books of political dissent and argument that challenged tyranny around the globe He is also the founder and longtime chair of Human Rights Watch, one of the most respected human rights organizations in the world For fifty years, the banner of Public Affairs Press was carried by its owner Morris B Schnapper, who published Gandhi, Nasser, Toynbee, Truman, and about 1,500 other authors In 1983, Schnapper was described by The Washington Post as “a redoubtable gadfly.” His legacy will endure in the books to come Peter Osnos, Founder ... publisher Library of Congress Cataloging-in-Publication Data Names: Taneja, Hemant, author Title: Unscaled : how AI and a new generation of upstarts are creating the economy of the future / Hemant... GOOD OUTCOME Policy: Profound Decisions to Have a Good AI Century 10 The Corporation: Charting an Unscaled Future for Scaled Enterprises 11 The Individual: Living Your Life as a Personal Enterprise... diabetes by as much as $100 billion just by keeping more people with diabetes well more of the time Unscaled solutions can change the game and reduce healthcare costs by keeping people well The nation