South by Southwest Headwinds for Tech

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Publication March 20, 2019

This opinion piece was first published as 'South by Southwest signalled problems for tech sector' in the Australian Financial Review on March 18, 2019.

This week’s South by Southwest is one of the biggest tech events in the world, boasting 75,000 delegates and 5,000 speakers. Attendees heard from IT company execs, Talking Heads’ David Byrne, Handmaid’s Tale actress Elisabeth Moss, as well as six 2020 US Presidential Candidates, including Starbucks CEO, Howard Schultz. Gwyneth Paltrow was even there talking up her online jade egg and face cream business Goop. 
 
All the big tech companies invade Austin, Texas and spend millions renovating restaurants and bars into “Experience Spaces” giving away merch and free drinks in the hope of accessing SXSW’s “influencers”. This event is a pilgrimage for the mostly Millennial crowd. It is Burning Man for tech nerds. 
 
This is the event where Twitter was launched and one would have thought it to be the most tech-friendly crowd in the world but this year it was different.
 
Setting the scene for the discontent was Silicon Valley kingpin Roger McNamee. He is a Co-founder, along with U2’s Bono, of venture capital firm, Elevation Partners and an early investor in Facebook. McNamee was promoting his new book Zucked, his treatise setting out how Facebook is destroying democracy. His key themes are that the big tech companies have breached our trust by monitoring us, then taking that data and selling it or using it for behavioural modification. The crowd were right on board and the theme of loss of trust was one that played out on a number of other stages, reaching a crescendo with Presidential Candidate Senator Elizabeth Warren. Senator Warren delivered her campaign promise to break up the big tech companies where they both operate and participate in a marketplace. Further, she wants to undo some of the major acquisitions such as Facebook and Instagram. 
 
This was also the year that SXSW woke to the dominance of China in the world of Artificial Intelligence. Bessie Lee, former CEO of advertising giant WPP in China, filled one of the big rooms this year and was invited back for a rare Encore performance the next day. Lee told me she was not expecting this popularity as last year she barely filled a third of one of the small rooms. 
 
The urgency around responding to China’s ascendancy was clearly stated by Congressman Will Herd who started his panel with stern words to the EU that they should stop the Transatlantic bickering over privacy rights and “focus on the real issue for us all, China”.
 
The Chinese government has a plan for AI hegemony, and it seems to be working. Last year China led the world in AI patents and academic publishing. The plan is well funded, resourced with 5 Million new STEM grads every year and, importantly for AI, is fuelled by enormous amounts of data from its citizens in a country with no significant privacy laws. 
 
The need for our data to train AI means that more organisations are going to want access to our information. While McKee’s optimism about limiting corporate access to our data has a visceral appeal, the reality seemed to be summed up by Futurist Amy Webb when she proclaimed to 2,000 people that  “Privacy is Dead”. 
 
Webb discussed numerous key trends and when asked why she didn’t mention AI, she said “AI is in everything and driving every trend.” A theme taken to heart by the Finnish government who was a finalist in the SXSW Awards for its “AI Basics” free course where they hoped to educate 1% of the Finnish population on AI. They ended up doubling that number and creating a global education phenomenon with students from more than 80 countries enrolling.
 
The biggest issue around AI came from concerns around bias, with six panels devoted to this subject in whole or in part. Examples such as MIT research showing that facial recognition software had a 35% error rate for darker-skinned women compared to just 1% for lighter-skinned males. Beyond trying to have more diversity in programming teams, there did not seem to be any simple solution to this issue and likely it will be a key blocker for organisations wanting to embrace AI solutions. 
 
The audience got schooled in the link between passion and success when Meg Whitman (former CEO of eBay and HP) got together with Jeffrey Katzenberg (Founder, Dreamworks) to get the Millennials excited about their new short form, mobile-first content play, Quibi. With a combined worth of almost $5 Billion they pitched with all the hustle of two twenty-somethings embarking on their first start up. Quibi, backed by all the major studios, launches in April, 2020. 
 
The real stars of the content world were the podcasters. More than 50% of Americans have listened to podcasts, with more than a quarter having listened to a podcast in the last month. Podcasts audiences are growing at 25% a year. Subscription podcast service Luminary just got funded for $100 Million and the audience heard from the founders of two podcasting companies, Gimlet and Anchor, who were just bought by Spotify for a combined $US340 Million.
 
Gimlet announced that its two minute teeth cleaning “skill” on Amazon’s Alexa, Chompers, is the first first Voice Assistant advertising campaign to win a Cannes Lion. But it will not be the last as voice-control/operation was a huge topic with all major appliance and car manufacturers promoting some form of voice-enablement being available now or in the near future. 
 
Voice-operation becomes a huge enabler of the next big trend, emotional-recognition. One of the big tech companies has filed a patent which will enable its smart speakers to assess your emotional well-being as well as knowing when you are sick. Car company Kia has its Real-time Emotion Adaptive Driving System which changes the interior conditions of the car in response to the driver’s emotional state. The end of road rage?
 
According to SXSW, everything will be connected in the future. Witness the launch of Nadi X connected yoga pants. I don’t think my trousers ever need to be connected, but clearly there is a market. The real Internet of Things battleground is the home. Amazon has launched its range of AmazonBasics home appliances, starting with the voice-controlled microwave. Till now Amazon’s data was limited to what happens up to the front door when the package is delivered. Now, via connected appliances, it can know exactly when you are out of popcorn.  Then for those wanting the full George Jetson experience you can now buy an Amazon Connected Home. Amazon have joined with the US’ largest home builder Lennar and are pumping out new connected homes by the hundreds.
 
On a sad note, the slow train that is Blockchain still struggles. There were very few sessions on this tech this year. The genetically gifted Winklevoss twins, best known for being sort of involved at the beginning of Facebook, were present to talk about their new Gemini app which allows you to buy cryptocurrency from your phone. Bitcoin and other currencies have taken a savage beating this year but if we ever emerge from this crypto-winter, it may be that the Wrinkevoss boys are well placed. 
 
I attended one session which promised “Blockchain - Beyond the Hype”. However real use cases of people making money or gaining efficiencies from deployed blockchain solutions were few and far between. One company Open Health Network seems promising in the blockchain healthcare space.
 
Human evolution seems destined for a tech-created fork in the next few years as cyborgs, part man, part machine are becoming commonplace. Neural implants which allow people with disabilities to move prosthetic limbs by thought are in market today. The next step is mainstream according to prominent Neuroscientist, Doctor Heather Berlin. “Within five years you will likely have the opportunity to give your child an implant which will triple their memory”. Forget expensive schools to get your kid set for life, just buy them a bit more RAM. 
 
As always, the robots were out in force, vacuuming floors, bringing drinks and playing the piano. But this year was the advent of the social robot, with Furhat, an Awards finalist showing what AI can do to create a robot that you can have a conversation with. While we are still a while away from passing a full Turing Test, the advances in robotics are exponential and an area to watch.
 
Of all the robots, the best was the robot coffee maker - fully robotic and on the market. Robo-barista  made the best coffee I had while in Austin. Once they figure out how to put some tribal ink, a nose ring and groomed beard on this bot, human baristas might be in trouble.

 
Nick Abrahams is the Global Head of Technology & Innovation at Norton Rose Fulbright. Nick is the author of the books “Digital Disruption in Australia” and “Big Data, Big Responsibilities”. He is a regular speaker on innovation and future trends and co-host of the tech trends podcast, Smart Dust. Register here to attend Nick’s webinar summarising the key trends of the above event later this week.

 

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