No free lunch
People love to say that “data is the new gold”. But is it really? No, it’s not. Gold is scarce. That is exactly why it’s so valuable. Big Fat Data is not scarce at all. The human race produces 2.5 quintillion bytes per day. We have produced more data in the last two years than in all the centuries before, the internet tells me and although I wonder who has kept track, I like to believe this statement. Should we burn those data on blu-Ray discs (does anyone use those anymore?), other geeks point out, and put them in a neat pile, the height of that pile would amount to 4 Eifel towers. It is a flabbergasting picture and I still do not really grasp the size of it all, but I know it is huge. Big Fat Data. Humanity is drowning in exponentially growing oceans of data. Unstructured data. Remember: every move, every breath, every cat movie on Youtube, every selfie on Instagram and every like or stupid comment on Facebook: all data. Data is not scare. It is not gold. But if it’s not gold, what is it then? Big data is food. Food for thought. Fat food.
Data is food and eating food produces shit
Back to the free apps on our phone: by using them, we eat the food that those free app companies feed us. For free. Think Waze. Think Whatsapp. Think Instagram… Their food is like sugar: highly addictive. And what does food become at the end of the road? That’s right: shit. Yep, there we go and I don’t even apologize: we shit data. In a circular economy waste becomes the new raw material and that is exactly the case for our shit: data. Data are the food for Deep Thought.
Data are food for thought. We feed those data to Artificial Intelligence, that eats our shit and transforms it into algorithms. AI is having our shit for breakfast. And lunch. And dinner.
Artificial Intelligence explained
What is AI? One can best compare it to a brain, that of a mouse, or that of a human being. Doesn’t make any difference. A brain is a brain and every brain works the same way. It is a set of nodes that connect to create patterns combining loads of data (food) to produce ‘solutions’ to problems. A brain needs a reward (it needs to solve a problem) and it needs data, big data. The more data and the higher the computing capacity of an intelligent ‘thing’, the better and faster it can come up with solutions and the better will be able to create a pattern that enables the brain to recognize data and take a shortcut to that solution without having to spend all time and energy on computing power. Those patterns are the most important. Patterns help us to recognize, process and produce stuff with a minimal amount of data, time and energy. We call them algorithms.
Algorithms are the new gold
Algorithms are genetic. New impulses make them smarter all the time. New data keep feeding them. Language is an algorithm. Walking is an algorithm. Algorithms need…’things’ that translate these patterns into actions. When these are not human, we call that ‘robots’. Robots ‘do’ stuff and feed their brains with new data.
Robots, Artificial Intelligence and Big Data are the Holy Trinity.
People build new forms of intelligence today. Artificial ones. That work like a brain. It programs itself to produce patterns. It generates its own algorithms. We call that deep learning. People are creating brains that can think independently from humans and build patterns: alien brains, made by us, but not really controlled by their creators. We can feed them and try to define the rewarding mechanisms. They will feed robots that take over human actions. Manual labour first but also a growing number of intellectual processes. An autonomous car is a perfect example of that combination. Algorithms are the new gold. Algorithms are a brand-new virgin market. It is the ultimate blue ocean. It is not our data that are sold. It is a non-discussion to worry about data and privacy. Individual data are of no use. Our data are used to build clever ‘brains’ that outperform humans in building patterns. These patterns are then fed by the data of the company that has bought those patterns in order to better predict their future. That can be production, that can be marketing, supply chain, customer interaction… Where many factors meet and need to be optimised to predict outcomes, genetic algorithms beat humans and leverage businesses.
A car for free
Just imagine. Not an app for free. But a car for free.
A car is an amazing data-collecting device. It can and will be stacked with hundreds of sensors that produce thousands of bytes with every mile we drive. All those data can be combined, not only within one car, but connected to all other free connected cars, combined and augmented by real time data from all other sources like weather, traffic…With all those data companies can build algorithms. The data wins.
Mckinsey made a careful estimation of the value of all automotive data by 2030: in between 500 and 800 billion dollars. I dare to believe that that is a strong undervaluation of the real potential value.
All that data collected in that car-for-free can generate so many algorithms – even far beyond the ones we think of right now – that will make so much money that the car-for-free is just a minor initial investment. Think free app Waze, but than a 1000 time more powerful.
The one million dollar question is this: if a car-for-free is such an awesome business model, than why does nobody do it?
Somebody does. But in an extremely clever way. The biggest enemy of all traditional brands and their worst nightmare, their Antichrist: Tesla. Tesla is burning money? I do not think so. Tesla is investing in future value. It is the ultimate Day After Tomorrow example. How can one create value in their Day After Tomorrow?
Tesla is collecting Big Fat Data. Over 4 billion of data-miles for the moment and growing by the day, feeding Tesla’s very own Artificial Intelligence that is building knowledge and patterns. That is the value of Tesla and explains why investors keep investing. Ford and GM have close to zero miles of data and no central deep learning brain. They are lightyears behind.
A car for free for a shitload of money
Elon was clever enough to not give away that data-collecting device for free. And he was not the first data driven company that charges money for the data collecting device.
I drive a Tesla. And I have to admit: I paid a shitload of money for an grown-up toy that is hardly anything more than a large size battery pack, two engines that could be taken out of a washing machine, an XL iPad, a steering wheel, some seats, a large number of sensors and a permanent connection to Elon’s servers that collect and process all the data I collect with every mile behind the steering wheel of this favourite toy of mine. It is the best car I have ever had. I love to work for Tesla. I work hard and with dedication. I am a data miner. I do it with a big smile. I feel engaged.
An iPhone on wheels
Elon learned from the best: Steve Jobs. The iPhone raised the price of phones substantially. There is this world-famous YouTube video in which Steve Ballmer from Microsoft, being asked about the iPhone, laughs out loud, saying: “500 dollars?” And: “It is not even a good e-mail machine.” (By the way, Mr. Ballmer, I am writing this blog on my smartphone.)
Steve Jobs re-invented the phone, raised the price bar, performed amazing storytelling – ‘iPhone is like having your life in your pocket, it is the ultimate digital device’ – and we all bought that expensive phone that became our life in our pocket and the ultimate digital device…data collecting device. An expensive pickaxe.
It was all about data. Digital devices run on ones and zeros and by using them we produce ones and zeros. I am sure that the iPhone could be a solid waterproof business model if we got it for free. Like many apps are for free.
Tesla applied clever R&D: Rob and Deploy. Learn from Jobs. Tesla is an ultimate digital car. Technology has made it extremely simple to put together and will make producing cars similar to producing a PC: buying a battery pack and electromotors is all it takes. The rest is about design.
Just like the iPhone, Tesla substantially changed the interface. That touchscreen became the interface with our phone and no longer that keyboard, Apple reduced the number of keys to the absolute minimum. Look at the interior of Tesla model 3. It is an iPhone on wheels.
Not the car, but the data
The future of automotive is ACES. Autonomous, Connected, Electrical, Shared. But above all: the future business models that will emerge will all be fed by data. No data, no new mobility. No data, no artificial intelligence to build patterns to drive autonomous cars. In the Day After Tomorrow data-driven companies will eat the traditional ones. Just building electrical vehicles will not save the old industry. Without algorithms they are nowhere. It is not the car. It is the data.
And yes, they have to get that Tesla model3 production up and running. No food, no thought.
(Picture courtesy of OnInnovation (Interview: Elon Musk) on flickr)