Sunday, August 31, 2008

The long arm of the corporate agenda

One of the most interesting places to look for social commentary is … in corporate annual reports. The medium is ripe for gaffes, unmasked agendas and misdeeds, for example, Big Oil's unabashed proxy statement solicitations to shareholders each year to vote against greenhouse gas emissions goals and environmental impact reports (documented in this post and comments).

General Mills. America’s processed food provider.
The 'fattening of America' trend has treated General Mills well, the stock is up 15% this year to date (vs. the S&P 500's 12% decline) and up 40% since 2005.

General Mills 2008 Annual Report - front cover

You be the judge - is the General Mills 2008 Annual Report a triumph of demographic marketing or would it be over the top to see it as a perpetuation of racial stereotyping?

The Latina is featured center front with a Fajita product (go Hispanic demographic!). Why is she is the only one sitting? The fit-looking Caucasian woman, in pearls, is holding snack bars (because as a size 2, she is only entitled to diet food?). The African American man is holding nothing (what is the messaging here? General Mills does not have products (or jobs, see back cover) for African Americans?).

General Mills 2008 Annual Report - back cover

Flipping to the back cover, another healthy looking Caucasian woman is holding party mix (sorority alumnae?). The older guy with the paunch is leaning on several cases of sugar-coated cereal, and the balding corporate executive is holding reports, not food items. Only the women and the overweight men have food? Where is that lucrative gay demographic? Or maybe the African American male is doing double duty as a metrosexual.

General Mills 2008 Annual Report
Chairman and CEO photo

Inside, the story continues. The Chairman and CEO jauntily appear, strangely without food products, though collegially in shirtsleeves.

Sunday, August 24, 2008

Economic fallacies II

Fallacy #3: The singularity is a great investment opportunity
A technological revolution like that brought about by the PC or the Internet is a great investment opportunity. Current possibilities for this kind of compound growth in technology-driven financial returns include alternative energy, genomics, personalized medicine, anti-aging therapies, 3d data manipulation tools and narrowly-applied artificial intelligence.

A technological singularity is not necessarily a great investment opportunity. A technological singularity implies change so radical and diffuse that prior models for understanding and exploiting or profiting from the world will no longer work. There is a substantial risk that financial markets as they are known today could disappear. Growth, alpha and superior financial returns may be irrelevant in a post-traditional financial markets era. Planning for the possibility of a technological singularity suggests a much broader definition of what the assets of the future may be and allocating to these areas, a substantial shift away from the traditional asset preservation and financial returns that outpace inflation in the long-run mindset of today.

Fallacy #4: Economic systems become irrelevant in a post-scarcity economy
This is the notion that economies and markets go away in a post-scarcity economy for material goods. At present, an increasing number of goods and services are becoming available for free or offered via modern business models such as the freemium. In the future, substantially all material needs may be easily met at low cost or for free in a molecular-nanotech society, but scarcity as an economic dynamic is likely to persist and economics systems in general are also likely to continue.

Scarcity would be perceived in whatever material resources were not yet plentifully available and in any finite resources such as time, ideas, attention, emotion, reputation, quality, etc. Economic system dynamics could change substantially, for example, property tax would not make sense in a world where nanotech could rapidly build or absorb structures. Unless economics and markets as the most effective means of resource distribution are superceded, they are likely to endure.

Fallacy #5: Social capital markets need not deliver competitive returns
The conventional notion is that it is acceptable for social capital market investments to deliver lower returns than traditional financial instruments. Social capital market investment products include SRI equity funds, corporate governance initiatives, social capital venturing (private equity), fair trade coffee and organic products. On average, consumers are willing to spend 5% more for attribute products (products with affinity attributes such as fair trade, local, organic, etc.) and investors have been willing to sacrifice 5% or more in financial return for socially responsible investments.

However, after some implementation time lag, social capital could have equal or higher returns. Sustainable socially responsible businesses should be more profitable not less. Both direct tangible economic benefits can accrue as well as the indirect benefits of marketing and market-knowledge that the business is more principled and sustainable. Corporate governance and other green or social initiatives should benefit the bottom line, not penalize it. The notion that return and social good are mutually exclusive is a fallacy.

The article with all nine fallacies is available here

Sunday, August 17, 2008

Fallacies when thinking about the economics of future technology

Future technologies seem so impactful and fabulous that it is easy to jump to incorrect conclusions about what things would be like with their advent.

Fallacy #1: Molecular assemblers will have a worldwide overnight rollout
The conventional assumption is that once humans are able to make one molecular assembler, it will be able to self-replicate, and therefore within twenty-four hours everyone worldwide will have one. It is far more likely that a molecular assembler would follow the usual s-curve adoption pattern of any other newtech; early versions are expensive and clunky with minimal functionality, continued improvement iterations make the newtech more relevant and usable.

The first molecular assemblers may be like a next generation 3d printer, printing the T-shirt a friend sent as an email attachment. Only early adopters will have the utility (read: money and interest) to purchase the first molecular assemblers. Also, the first molecular assemblers will not be able to self-replicate as the intricate molecular manufacturing processes will need to be conducted at special facilities.

Finally, the full newtech ecosystem needs to be considered, while carbon and other basic elements could be obtained easily from dirt piles delivered to suburban driveways, industrial utility solutions are need for the 50% of the urbanized world. Cartridge supply for specialty elements (think Gillette) will be required. Matter decompiling will need to be a feature of the molecular assembler or there will need to be some other means of recycling. More here, here and here.

Fallacy #2: Don’t develop newtech if it’s not cheap enough for universal access
This is the view that we should not develop any beneficial newtech unless it can be immediately accessible worldwide at a low price. “Folks, lets not make the Eniac since not everyone can have one.” However noble this view may be, it again ignores the historical precedent of technology development, rollout and penetration. A fundamental property of technology is that it may be expensive at the outset but then price drops, functionality improvements and re-purposing to new markets occur over time. For example, those currently paying $100,000 a year for life extension treatments are hopefully helping to rationalize, standardize and develop a broader market for these services.

Work can still be done on open-source and universal accessibility models, and diligence applied to clearing public goods to non-IP protected regimes (e.g.; the human genome), but with the understanding that traditional technology development models (cost drops over time) will continue to drive progress.

In fact, there can be benefits in not adopting newtech immediately; costs are higher, unintended consequences are unknown, early adopters can work out the kinks (e.g; the first generation iPhone cost $600, the second generation iPhone 3G with expanded functionality emerged a year later at $199) and older technology generations like landline telephony can be skipped. World-is-flat cycle time speed-ups and new business models (e.g.; OneWorldHealth as a non-profit pharmaceutical company directed at developing world disease) illustrate market efficiency in applying traditional technology development in today’s world.

The article with all nine fallacies is available here

Sunday, August 10, 2008

Human augmentation via bacterial biome

Human augmentation of physical and mental capabilities by bringing electronics on board seems a likely future. The early stages have already been realized, 10% of Americans are cyborgs today in the sense of having synthetic items permanently implanted: hearing aids, teeth, pacemakers, hip and knee replacements, RFID chips etc. Cochlear implants interfacing with hearing cognition for deaf children are routine. Neuroengineering research has been progressing in the implementation of electroencephalography-based computer controllers. Brain cap video game headsets may become the norm.

There are at least three ways for achieving human-electronic interfaces; physical implants, wearables and a third as yet unconsidered possibility, exploiting the human bacterial biome.

The 1,000 trillion bacteria that are part of each human (10x the number of human cells) could be an ideal augmentation substrate.
There are trillions of them, they are already on board and pass easily and unobtrusively in and out of the human. They are easy to obtain, test and experiment on in the lab. They are expendable. Functionality could be enabled individually, or distributed over the 500 – 100,000 classes of bacteria.

Augmentation applications: communications and processing
The two most important augmentation applications are communications and processing, both of which could potentially be conducted via the human’s microscopic bacteria. Communication is required between the bacteria, which they are already doing to some extent, and externally, to the Internet using wireless, Bluetooth or some other, possibly to be developed protocol. What a vast improvement on board connectivity would be, never having to depend on the vagaries of PC wireless cards, modems and Bluetooth devices.

The second main application is processing, the initial killer app being a memory aid. Coordinating the bacterial biome into a distributed biocomputer for searching, downloading, accessing and delivering information would be an obvious first goal. Other applications could include continuous lifelogging perhaps (literally) through eye cam bacteria, personalized biosensing and remediation of the external environment as it interfaces with humans, virtual reality and nutrient and waste cycling. Electricity from the body could possibly facilitate these computations.

Easy upgrade and maintenance
The continual turnover, ingress and egress of bacteria in humans means that upgrade cycles and retirement of dead or non-functioning elements could occur seamlessly. Bacterial updates could be printed regularly from a 3d printer or automatically dispensed in smarthome air or water. Mechanically, the updates might be delivered through the air, in the shower, or by a nutrient blanket during sleep.

Nanobot intermediaries
Enhancing the human bacterial biome would really just be extending the life support functionality it already provides and could be a nice intermediary step to the more robust bionanodevices and nanobots envisioned in molecular manufacturing. Existing bacteria could be enhanced, much of the human microflora does not appear to be doing anything anyway, or additional bacteria could be engineered and brought on board.

Sunday, August 03, 2008

VC life extension opportunity redux

The VC life extension investment opportunity could happen in at least three areas: first and most importantly, translational medicine, second, health social networks and third, distantly, standardized longevity treatments and delivery systems.

Translational medicine
The biggest and most obvious longevity play for VCs is in translational medicine, shepherding and commercializing science findings from basic research to patient therapies. The vast majority, perhaps even 90% or more, of basic research findings never go beyond the lab or journal publication. A particularly high profile example of an early stage longevity company that rocketed from test tube to IPO to big pharma acquisition is Sirtris, bought by GlaxoSmithKline for $720M in June 2008. Some other early stage translational medicine longevity startups are Elixir Pharmaceuticals, Juvenon and Sierra Sciences. In the plethora of remedies claiming science support, it is critical to tightly link the research evidence to the intervention. For example, in this year’s exploding brain fitness market, there is much claim of scientific support but little published clinical trial evidence.

Health social networks
Another VC play is health social networks (for example, PatientsLikeMe, CureTogether, DailyStrength, HealthChapter, Experience Project and peoplejam). Not only can patients connect and generate group-synthesized, curated and moderated knowledge, but health social networks can also facilitate the development of personalized medicine by being a repository for the quantitative data of genomics, ongoing biomarker measurements and electronic healthcare records. Big pharma can approach patient communities for field studies and clinical trials.

Longevity treatment delivery
Standardized longevity treatments and delivery programs via private clinics are not a traditional VC play, but some interesting 10x business models may be possible. In the several years before longevity treatments are more proven and automatically administered via traditional healthcare channels, these services can be provided by private clinics as they are now.

What would improve the longevity treatment market is standardization; standardization of doctor qualifications, certifications, validations, services and treatments, and treatments supported by scientific research clearly evidenced to consumers. Currently, longevity doctors offer heterogeneous suites of services which is challenging for consumers to parse. Positioned appropriately, there is more than adequate demand despite the current lack of insurance reimbursement. Since longevity treatments are currently outside the purview of traditional medicine, third party certification (for example led by the Methuselah Foundation) could help validate doctors and treatment programs, and contribute to industry standards.