Innovation Near and Far . . . Really Far

Earlier today I read an interesting post from Venture Hacks about how disruptive innovation will continue in the near term. Their analogy was about how computers are evolving and accelerating. We all know the evolution from mainframes to personal computers to laptops. This is common knowledge.

The technically adept also are very well aware about how mobile phones are the next phase, and will replace personal computers in the near future. This analysis reminded me of a post by John Gruber of Daring Fireball, who a year ago wrote about how the iPhone has as much computer as the top of the line Desktop computer from just 10 years ago. This is really fascinating and eye opening, and really supports Naval’s point.

It gets even more interesting when you start thinking another 10 or 20 or 40 years from now, and look at that type of innovation and acceleration in technology. I had a couple of beers with Matt Hodgson and Moe Kelley this evening, and we got into some very interesting discussions about the future, and business, which builds on the previous points (but in all reality deserves its own post, but since I’m bad about blogging, I thought I’d just throw it all in here)

Our discussion ranged from general technological advancement, to the companies that will die as a result of that advancement (think book publishers, newspapers, and “value-add” content distributers that are really dumb pipes), to the long term implications of this technological advancement. And that’s where things got really interesting. So we thought about a framework to capture this evolution, which I’ll roughly lay out here.

Phase 1: Today’s Reality – The $200 Billion Technological Revolution

Let’s face it, as much as we’re all excited about the companies that are changing the world today (Google) and the companies that will change the world in the coming months or years (Facebook), a lot of it really comes down to the shift in dollars from traditional advertising (TV, print, radio) to Internet and new media advertising. Google has already shown how profitable this can be, and many others are well positioned to take advantage of the remaining advertising dollars that have not shifted to the Internet, but inevitably will (really, it’s inevitable, just a matter of time). Yet even as exciting as that is, it’s still just 3-5% of our economy.

Phase 2: Augmented Reality – The Next Technological Revolution

There is a lot of talk among technology circles about Augmented Reality. Simple and known versions of this are location based services that tell you where your friends are (e.g. Loopt), or great local deals through coupons. More advanced augmented reality includes the ability to layer on information into any real world setting (e.g. Layar), which nearly infinite uses and benefits. In terms of economic benefits, I find it difficult to quantify the impact. It’s probably broader than advertising (think services, transactions, shopping, etc.).

Phase 3: Parallel Reality – The $2 Trillion Technological Revolution

The real mind bender is when you start looking at “Parallel Reality” (which given by the dearth and inconsistency of the Google search results isn’t even a broad concept). I define “Parallel Reality” as the third stage, where the real world continues to exist, but a “parallel reality” exists along side it. This is Second Life taken to a whole new level of realism, where things try feel, smell, and seem real. In this world, you still live your normal life, but might plug in (or something else) to a parallel reality where you can enjoy things you might not otherwise be able to do. This could mean things you could not afford (luxurious trips), things you couldn’t physically accomplish (climbing Mt. Everest for the physically able but not quite fit, or going for a jog for the physically incapable), or things that would be physically impossible (being in Tokyo for breakfast and Paris for lunch) or difficult (walking around Mars).

The reason I call this a $2 Trillion revolution is that it has the potential to impact fundamental industries such as travel, tourism, entertainment, restaurants, alcohol, etc. Basically anything that costs money to do in order to provide a mental or even physical stimulation that can be replaced in a virtual world is no longer safe from disruption the way it currently is.

Phase 4: Post Reality – All Bets are Off

Finally, at some point of technological evolution, we move past the physical world and even the virtual portrayal of the physical world. Fans of Ray Kurzweil will realize I’m treading into his territory. But once we move into a “world” where the virtual is more real and satisfying than the real, all bets are off. Government, the economy, society, are all irrelevant as they are defined today. Even if we’re all digital, enjoying immortality in a utopian “Matrix”, how do we physically keep the power on for all of our virtual brains and selves? I can go on, but I mainly wanted to illustrate how irrelevant everything we know is once we cross that chasm.

Before you write this off as sheer lunacy or even too far in the future for you to worry about, consider how fast technology is improving:

By the year 2020, your $1,000 personal computer will have the processing power of the human brain-20 million billion calculations per second (100 billion neurons times 1,000 connections per neuron times 200 calculations per second per connection). By 2030, it will take a village of human brains to match a $1,000 computer. By 2050, $1,000 worth of computing will equal the processing power of all human brains on earth.

That excerpt is from an article by Ray Kurzweil, and is worth a full read if you’re interested. But it’s clear that the computational power will be able to recreate worlds, recreate human brains, and recreate intelligence in the foreseeable future.

Back to Real Reality

Now bringing this all back to earth, there are lots of real opportunities in the short, medium, long, and real long term. I’m excited about all of them, and will be continuing to think and work in all realms. But every now and then it’s really interesting to step back and think about what the current technology revolution really means beyond the business models. Even more interesting is to think about what the world will be like when I’m really old dying (or not).