Disruptive Technology Part 2: Artificial Intelligence / Machine Learning

This is part two of a five part series on disruptive technology. You can read Part 1 on IoT here. Disruptive technology is technology that pushes the boundaries of an industry, dramatically changing how we live or how things are made or done. The term disruptive innovation comes from the book The Innovator’s Dilemma by Clayton Christensen (1997). Many, many people have written tons of examples that are old-school: hard-drives/floppy disks, monitors/flatscreens, and so on. This series is about new technologies (at least new in 2017/2018) that are disrupting the world today.

If something can be done dramatically cheaper, it is usually considered disruptive. The human workforce costs money. What if we could replace humans with machines at an even more dramatic pace than happened with the manufacturing world? Suddenly entire industries which have relied on service workers, are fully automated and 1/10th the cost to operate. Suddenly, tasks that humans once performed are done as if by magic instead.

How can this be?

Artificial Intelligence (AI) is the answer.

AI is an often over-used, and not well-defined term. How I define it is as the super-set of all things “computer automation” that is non-robotic. A simple script that automatically checks your email is in fact AI, in my definition. In fact, once, you paid a secretary to check your messages, now it is automated, i.e. AI. This AI or computer automation effort has dramatically increased in pace in the last few years. This rapid pace of AI is due to four converging technologies:

  1. Faster/cheaper computers: from cloud to wall-plug computers, we now have fast enough computers to do reasonably good AI and automation at a very affordable cost.
  2. Pervasive internet: the internet allows much of AI processing to be done in the cloud, further reducing the cost and overhead of AI automation.
  3. Open Source: rapid progress in open source libraries such as NLTK and TensorFlow have made getting started with AI even easier than before.
  4. SaaS: From IBM Watson to API.AI, we now have a wide range of SaaS services that allow fast deployment of AI for real, helpful tasks.

So what is AI exactly?

Well, I already said it is Automation, and anything that might be automated, can be. There are generally three categories of AI, and to my definition, subsets of AI.

  1. Natural Language Processing (NLP) – This is chatbots and interacting with voice or text where you once might have interacted with a human.
  2. Computer Vision (CV) – This is image recognition, including facial recognition and more.
  3. Machine Learning (ML) – This category includes simple automation (scripts) all the way to full-on learning scripts that adapt and get better based on a feedback loop.

What is not AI?

Neural Networks (NN) are not AI. Neural Nets are a method of doing NLP, CV, or ML, not AI in and of itself. Believe me, you can write a completely useless NN.
Mechanical Turk is not AI. A human doing the job of a computer is in fact, the opposite of AI.

So, should you automate something using AI?
Will AI take over the world?
The answer to these are maybe and maybe.
If you are looking for ways to save cost or deliver faster results, consider AI for a huge leap forward. It may be easier to deploy than you think.

The Danger of Surveys

If you are starting or running a business, you might be tempted to survey your customers. “Please rate how much you enjoyed this sandwich”. Surveys are great as long as you realize, they can only answer the questions you ask. You should also realize, people who take surveys often lie (white lies/omissions/convenience).

You only get answer to the questions you ask

Instead of just using a survey to get answers to the limited set of questions that you ask, why not also do some interviews. Qualitative data like interviews get you insight into the questions you should have (or should) ask.

White lies on a survey

For survey takers it’s just easier and friendlier to say “service was excellent”, even if in reality it was just good enough. The white lies they tell may also point you in the wrong direction. Sure, I’d pay $200 for that, as long as you don’t ask me for the $200 right now that is.

Lies by convenience or omission

You know you’ve taken a survey and just hit, 5, 5, 5, 5 before, just for convenience. When someone gives you all 5s (out of 5) on everything, you know they are probably lying, most likely just to get done with the survey. Ask them to fill in a blank, by the way, and you’ll usually get a blank. Omission is just easier and more convenient.

The solution?

The solution to this is of course combining a survey with an interview. When someone is speaking to you on the phone or in person, omission is not an option and convenience is irrelevant. What about those white lies? My advice is don’t ask questions that put people in awkward positions. Then, they won’t have to tell you white lies. Instead, let people vote with their actual dollars, launch and see if people will pay!


Disruptive Technology Part 1: IoT

This is part one of a five part series on disruptive technology. Disruptive technology is technology that pushes the boundaries of an industry, dramatically changing how we live or how things are made. It first was discussed as disruptive innovation in the innovator’s dilemma by Clayton Christensen (1997). Many, many people have written tons of examples that are old-school: hard-drives/floppy disks, monitors/flatscreens, and so on. This series is about new technologies (at least new in 2017) that are disrupting today’s technologies.

IoT stands for internet of things, and it stands to change not just one industry, but potentially many. The core idea of IoT is that something that previously wasn’t connected to the internet is now internet-connected. This simple idea can be applied to anything, from Thermostats (See NEST) to Toasters (yes, for real) all the way to pots for plants (why not get a reminder that you need to water your plant?).

Like any technology IoT must have a real use to be of any value. Real use is use that is not just “for show” but actually delivers value to the end user of the technology. IoT has four core uses that I will define here. For IoT to be useful it must save the user time, save them money, provide entertainment value, or improve their health in some way. Saving time means making something that took longer take less time. For a potted plant IoT that means instead of watering every day, you only water when the pot says it’s too dry in there. Saving money means you spend less than you otherwise would have to. The NEST thermostat knows when you are home and does not have to run your Air Conditioning quite so low when you are not there. Toys of all kinds are fun to play with, but toys that also connect to the internet can put kids into the physical world with their gadgets making them more fun. Refrigerators that know what you are eating and when can help you track calories and lose weight. Regardless of the category, IoT must be useful to be of value.

Usefulness is not enough for disruption though. To qualify as being disruptive the new technology must obviate the old technology. It doesn’t have to be cheaper (although that is one way to obviate a technology), but it does have to make the old technology essentially useless such that fewer and fewer people buy it any more. Do people still buy rotary phones? Lets be real, not unless it’s for art.

What IoT have come out to truly disrupt the market? Smart thermostats are almost there. Soon, nobody will buy dumb ones. Can you think of others? I believe that the market is wide open for inventors and startups to use a simple technology (IoT) and turn it into a true disruption. Instead of making smart toasters, think of things that would no longer be needed, IF there was a technology that obviated it. Go out and create!

The picture below is of the SmartPrompt Probe. It’s a device that tries to obviate the need for cooking thermometers. Me and the team at Key Ingredient invented and built it… neat, fun, but not disruptive. I want to try again!

How to Incorporate a Fundable Startup

This article explains how to incorporate.

First, and foremost, please consider hiring a lawyer to help you. It could save you a lot of money in the long run.
Even an online lawyer like LegalZoom and RocketLawyer are much safer options than doing it yourself.

The information below is provided to help you do it yourself (if you really want to, but not recommended) and at least to understand the process.

So, first, why incorporate?
The short answer is to provide you with some legal protection in the event of bankruptcy or lawsuit. Incorporating can help protect your personal assets, if you do it right!

So, what is the right way?

To keep it simple, let’s assume you are a startup that will eventually want to raise funds.

In this case, you should choose a C-Corp or S-Corp. Professional investors prefer to invest in corporations that are C-Corp because the laws and paperwork are standardized, and future acquisition and IPO are possible with this entity type.

Here is the difference between a C-Corp and an S-Corp:
C-Corporation – a normal common company, like you already know of.
* Has stock.
* Has Articles of Incorporation ~ filed in a State where the company is “born”
* Has a corporate shield for liability.
* Must file and pay corporate taxes
* Does not pay corporate tax. (but still files forms)
* All profits flow to shareholders and gets taxed on owner’s individual income statement
* Requires less than 100 shareholders and 1 type of stock.
* Has a corporate shield for liability.

How do you incorporate then? Simple! Get a lawyer, or….
Fill out your own “Articles of Incorporation” in your state or perhaps Delaware.

Can file in any state, most common = Delaware
Costs $89 (must fax) + Annual Registered Agent Fees
Why Delaware?
Because they built a reputation to make it easy & have a history of it.
Their laws are also quite common and accepted in all states. “Delaware Law”.
The downside, you will need to pay a “registered agent” in Delaware to forward your mail.

Your home state is also a good choice, you can be the registered agent.
In my case, Texas:
https://direct.sos.state.tx.us/acct/acct-login.asp Costs $300 (no annual fee)

An S-Corporation is simply an extra form of C-Corporation. To elect as an S-Corporation, you send an extra form to the IRS:

Financial Models For You

Several Venture Capital firms, such as S3 Ventures here in Austin, provide downloads to, in my opinion, rather complex financial modeling spreadsheets to help you get started.

I have my own version of this and it’s much simpler to work with (in my opinion).

In fact, I have three versions:
One version for “online sales“.
Another version for “subscription sales“.
And a final version for “sale-person sales“.

These three should be modifiable for most business models.

Have a model that you’re not sure of? Leave a comment or shoot me a message, and I’ll be glad to help you think it through.

Want those complex models from S3? I’ve saved them here.

Three reasons it’s okay not to follow your dreams.

Those of you who know me, know that I am being facetious. I really do want you to follow your dreams, succeed, and live an awesome life. Put me in coach!

That said, I think there are actually real, serious reasons to sometimes not follow your dreams. If one of these reasons applies to you, I give you permission to take the easy way out and not work hard, not take risks, and/or not care. For the rest of you, what’s stopping you? Seriously, what is stopping you? No, really, tell me, hit my contact form and tell me, and I’ll see if I can help.

So here is the three excusable reasons.

1.) You are sick or a close loved one is sick.

It’s sad, but it happens. If you need to take time off from chasing your dreams to care for yourself or a loved one, I’ll give you a pass. Better yet, you can give yourself a pass. It’s totally understandable and acceptable. Hopefully there will be time in the future to chase your dreams, but putting them on hold now is okay by me.

That said, it’s my opinion that having children doesn’t “always” qualify. I mean once they hit a certain age, they could even help you achieve your dreams. Enlist them in your dream. They could help you study, help you make fliers, or help push you to keep going. Use that energy! Of course, kids get sick too, and that takes priority. Don’t get me started on babies!

2.) You are in school or serving your country.

Listen, civil service is important. I’ve done a little (not as much as I would have liked) serving as a civilian contractor to the Navy. That said, I applaud and appreciate the men and women of our armed forces, and yes, even the politicians.

If you are deployed or otherwise it is illegal for you to pursue your dreams, I’ll give you a pass for now. It’s only a respite, you’ll be back in country soon enough, and it’s never too soon to start working on your dreams, even while you are serving.

If you are in school, that needs to take priority. That said, why are you in school if not pursuing your dreams. You don’t really get a pass; I challenge you to study, and study some more. Study what will help you achieve your dreams (plus your other required boring classes). Be sure your major relates to your dreams or is part of your pathway.

3.) You are struggling to feed yourself or your family.

Yes, the struggle can be real. If you’ve never had to live off of food stamps or welfare, you might not understand, but it is real. As a child, my family was here. My mom and dad both would take any job, apply to everything and accept anything, that would help keep the family fed. They literally had concerns about our next meal, if we could pay rent, and if we would survive.

That said, most of us are not here. We have family to help us, we have friends who will take us in. We can get a job, especially if we are able and willing to move.

I know you are expecting me to say, if you are struggling to feed yourself or your family, you get a pass on chasing your dreams. You don’t.

Dreaming can be done with no money. While you are looking for a job, you could be going to the free library and learning to code Python. Chasing your dreams is possible, although, understandably, I give you permission to take that intermediate job to take care of you and your families needs. But while you have that temporary job, keep seeking, keep dreaming, study on. Don’t give up.

For most of the rest of you, having a “low” bank account, or “not being able to buy a house yet” are not valid reasons not to chase your dreams. If you are “struggling” but have food on the table, then, no, you don’t get a pass. Get to work! Keep on struggling WHILE chasing your dreams. It’s achieving your dreams that will get you out of the struggling phase. After all, chasing your dreams IS struggling.

So, that’s it, if you don’t have one of these three reasons, I challenge you, what’s stopping you from chasing your dreams, right now? Tell me.