Artificial Intelligence and The Future of Tolerance

As Trump’s victory in the US, Brexit in UK and the rise of far right in Europe recently demonstrated, tolerance is globally on decline. There are multiple reasons on how we got here, and I think use of artificial intelligence is one of them. I also think it can potentially save humanity.

Artificial what?

Historically, computers have been good at tasks we humans are not particularly good at – such as calculating big numbers – whereas they have failed notoriously in tasks that come natural to us, like recognizing cats in photos.

In the recent years, however, storing and processing huge amounts of data became not only possible but also feasible. The marriage of computer science and statistics, fueled with more data and processing power than ever gave birth to the AI revolution: By borrowing ideas from how our brains work, scientists were finally able to use statistical models on huge datasets to build neural networks and train computers to play games, recognize patterns and learn.

Artificial Intelligence is important because it allows us to build better cities, lead healthier lives and improve our financial systems. It’s also important because it will replace our jobs, summon the demons and bring an end to mankind.

What is AI doing to us?

The reasons why we have (so far) been better than computers at pattern recognition and deduction is purely evolutionary: if our ancestors had to sit down and do a rational analysis every time they heard a growl behind a bush, they would be eaten alive by tigers. Our ability to detect patterns helped us survive in the savanna.

However, in the past few centuries the world has changed must faster than our primal brains could adapt. Our tendency to take mental shortcuts which helped us survive in the the ancient world morphed into logical fallacies in our increasingly complex modern world. It started hindering our ability to make decisions on complicated topics such as how to build our financial, political and economic systems, deluding us to mistake correlation for causation or to see patterns where none exist.

One of these fallacies, confirmation bias, would be familiar to anyone who has ever been exposed to a mindless presentation in a corporate meeting: it makes people search for information that reinforce our preexisting beliefs, while actively discarding opposing views.

This is where AI comes in: scientists, designers and developers have figured out how to build addictive systems that feed our bias for confirmation. Why? Because that’s where the money is.

Enter Skynet

We may not even realize when algorithms help us decide what to watch, get a good deal or avoid traffic jams. However, the implications are much bigger when it starts to shape our perception of the world.

AI has had huge impact in social media and journalism. The business model for social networks is advertising. The main success metric in social media is “engagement”, a representation of its users’ fragments of attention measured by clicks, likes, comments and shares.

By constantly collecting data and tweaking their algorithms, social media companies did an exceptionally good job at keeping us on their apps and platforms, feeding us more of what we respond to and making a lot of money by selling ads in the process. This is why social media companies actually has very little interest exposing us to different points of views.

It would still be fine if we were just using social media for looking at funny cat videos or keeping up with old friends. However it has become our main source of receiving news, algorithmically deciding what we should see.

Add psychographic profiling and thousands of data points on potential voters, personalized messages designed to trigger an emotional response delivered through social media, and you end up with a tool so powerful that can even effect the outcome of an election and change the world.

The economic models surrounding the use of AI – especially in social media – feeds into our echo-chambers, further fragmenting our societies into self-serving bubbles.

And when we move from smartphones to virtual reality and become engrossed in it, it will become even easier for us to lose our reference points for facts and reality.

So these alternate realities with no exposure to different points of views breed the ideal conditions for skillful manipulators to drive a wedge between the cracks within the societies, pushing them further apart.

What’s next?

For the first time in history, we have the right technology and the ingredients to build truly connected societies, bridging the gap between different world views, replacing separatism and tribalism with open-mindedness and tolerance.

Silicon Valley frequently talks about making the world a better place. I think the the right way to actually do it has less to do with dominating markets and more on figuring out how to build sustainable business models that bring societies together.

I think there are three main areas where we start using technology and AI to build a more tolerant future:

Education is the fundamental building block for understanding our world and opening our minds, hence should be our starting point. The problem is that most of the time it is dreadful. I think AI has a role to play in shaping the future of classrooms and make it fun again. Alt School is one of those initiatives that tries to build custom curriculums through smart use of tech and data. Carnegie Learning offers personalized math instruction for grades 6-12. As the use of technology and AI shapes the future of classrooms, I think we will see a transformation from rote to personalized learning and as a result, more engaged and more open-minded students armed with the joy of learning.

Travel exposes us to different cultures and expands our horizons. With the decline in cost of air travel and the growth of online travel agents, we can think of ways to use technology to encourage and inspire people to travel more. Companies like WayBlazer use AI to discover traveler intent using hundreds of data points and connects it with the right accommodation. The same technology can be used to gently nudge people with travel intent into exploring new experiences. Airbnb recently announced “experiences”, allowing travelers to book local activities and get immersed in local communities. As more users and brands turn to social media for travel inspiration, I’m excited about travel industry’s ability to drive meaningful change in opening our minds.

Journalism helps us uncover facts and keeps organisations honest. However the advertising business model for news outlets in the age of social media is in direct conflict with it’s original goals of journalistic integrity, which is why we can’t stand news anymore. News outlets should figure out how to build a sustainable business model that support their original goals (hint: subscription) that does not rely on shoving ads in our faces, so we can maintain our reference points for facts and reality. Although it’s easier said than done.

I don’t know how future will unfold, yet I do feel we have both the tools to shape it as well as the responsibility to be mindful of the consequences while doing it. This means considering the social impact of the businesses that we build as entrepreneurs, or the nature of businesses we choose to support as consumers.

How do you think technology and AI can contribute to building more open-minded and tolerant societies? I’d love to hear your thoughts.

Marketing Lessons from a Yoga Studio

About two years ago, I started doing yoga at Yoga Inc, a small studio within walking distance of my apartment. Their facilities are basic, their locations are not central and their prices are not necessarily competitive. However in only three years, they managed to gain a loyal following and expanded into three new branches, not a small feat in such a saturated industry. I attribute their success to basic principles of good marketing.

Find your niche

Most studios are in Singapore are in the central business district, targeting overworked white collars. My studio seems to deliberately set up shop in residential neighbourhoods, enabling them to pay lower rent and reach an under-served audience (stay-at-home moms, working people who don’t like carrying gym bags around) at lower cost. This is a good niche to start expanding from.

Finding a niche is important both for startups trying to disrupt existing incumbents and established businesses trying to expand into new market segments. Having a clearly defined, under-served audience makes it easier to build a strong brand,  foster loyalty and generate word-of-mouth. Targeting “everyone” is essentially the same as not targeting.

How well do you know your audience? Do you know where they live, what they like, how they like to spend their time? Does your product address this audience’s needs better than competitors?

Get a foot in the door

The basic tactic employed by most gyms and yoga studios is to lure new customers in with free classes and hard-sell expensive packages. At my studio, there’s no such thing as a free class. As a first-timer, you can either pay $30 for a single class or get an introductory 5 class package at $70. This is interesting for two reasons:

Relativity – It would be wiser to spend only $30 to evaluate a studio instead of $70. However, the existence of a perceived “better” deal makes the $30 look inferior. So you reach for the bigger package.

Commitment & Consistency – Now that you have made the smarter choice and bought the 5-class package, you have skin in the game. You end up attending 5 classes instead of 1. Now you are familiarizing yourself with the studio and instructors. You start picturing yourself as a health-conscious, mindful, flexible yogi like the ones you see on Instagram. As Robert Cialdini explains so brilliantly in his classic book Influence: The Psychology of Persuasion, we have an inherent desire to appear consistent with our previous commitments, which is why they are so powerful in influencing our decisions.

How do you encourage first time customers to try your services? Do you rely on “free” and “discounts” or do you have a sustainable strategy in place? Which brings me to my next point:

Use promotions sparingly

The studio’s prices fixed at the beginning of the year and there are no discounts for 12 months (except for their birthday week, more on that later). Although this seems counter-intuitive, it makes a lot of business sense – it subtly encourages taking action now!

Promotions are usually the first tool in the arsenal of incompetent managers. They can be effective when used sparingly to get new customers or introduce your product to a new audience segment. However, they can also be fatal when overused since they either attract cheapskates or teach your existing customers to wait for the next discount later rather than buy your product today. I’ve even seen is savvy online-shoppers deliberately abandoning their shopping carts at the payment step, with hopes of receiving a promo code later!

How do you use promotions today? Is it a strategic tool that helps you grow your business or test new ideas, or the marketing equivalent of a fire-extinguisher that you find yourself reaching for a bit too often?

Ride the waves

The only time they have a promotion is in the first week of January, during their “birthday” week. It also conveniently happens to be the time of the year when most of us are guilt-ridden from excessive eating and drinking in December and have resolved to be “fitter and healthier”, only to fail miserably in February. Combined with the principles of commitment, you can see why the timing and positioning is brilliant.

Another example of good timing is using trends on social media effectively. When a Singaporean minister famously declared that “You need a very small space to have sex“, they jumped at the opportunity to encourage their members to post on Instagram with the hashtag #yogainsmallspace. They consistently engage their community by hosting challenges (14 day yoga challenge), organizing events (Halloween special) or featuring their members on social media.

Taking advantage of social events is a great way to keep relevant when it’s smart, timely and authentic. The opposite can also be true, as history is full of failed brands trying to get in on the conversation.

Are you keeping up with trends relevant to your industry? Is your team nimble enough to take advantage of opportunities to delight your audience?

Bring it all together

Lessons on getting smarter about marketing are simple but easy to overlook: Start with clearly defining your audience, figure out how to position and price your products and services to resonate with them, and keep your audience actively engaged by being timely, relevant and authentic. Loyalty will follow.

Best Books of 2016

A year is never complete without a “best of” list. Here’s a list of books I’ve truly enjoyed reading in 2016:

Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity

Internet promised us a future with true peer-to-peer value exchange, a digital return to the free marketplaces of 16th century. Instead, it gave power to monopolies like Amazon and Uber and enabled them to value extraction to scale, without being restricted by geography and borders. Rushkoff argues that our existing economic operating system is incompatible with our modern digital world and needs an upgrade: one that prioritizes needs of people over companies that focus on growth for the sake of growth. One of the best books I’ve read this year.

Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley

A must-read for anyone who has ever worked in online advertising, a startup or both. In his roller-coaster ride of a career including crunching numbers at Goldman Sachs, building an ad-tech startup as a Y Combinator graduate, monetizing ads for Facebook and advising Twitter, Martinez lays it out how online advertising works and why success in Silicon Valley has more to do with chance than skills. His writing occasionally sounds like a resentful ex-employee, but his politically incorrect, often cynical and absolutely hilarious writing makes this book super-entertaining.

Sapiens: A Brief History of Humankind

A fascinating read on how we evolved from our savannah-dwelling, hunter-gatherer roots to become the dominant species on earth through cognitive, agricultural and scientific revolutions. Harari argues that our ability to believe in imagined realities such as religion, nations and money played a big role in allowing us to live together in groups bigger than 150 people, building civilizations and conquering the earth. His writing is intriguing, humorous and entertaining. Reading this book is a bit like playing Civilization, sans the game-play.

An Astronaut’s Guide to Life on Earth: What Going to Space Taught Me About Ingenuity, Determination, and Being Prepared for Anything

Chris Hadfield, an astronaut who has logged more than 4000 hours in space shares his experiences in space in vivid detail while explaining how “thinking like an astronaut”, being persistent, sweating the small details and preparing for the worst can help us live better lives on earth. If you’ve ever dreamed of going to space, you will love this book.

Genghis Khan and the Making of the Modern World

The Mongolians are well-known for their hugely successful military campaign that resulted in more land in 25 years than the Romans did in 400 years. This book does a good job of explaining the lesser-known principles of the Mongol Empire, such as free trade, primacy of the state over the church, freedom of religion, diplomatic immunity, and international law—all ideas that gained new importance in their time and contributed to the making of the modern world.

The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich

Although I don’t necessarily agree that outsourcing everything to third world countries and exploiting global arbitrage opportunities will necessarily help you spend your days sipping piña coladas in tropical islands next year, this books makes valid arguments such as the importance of focusing on living life “now” rather than deferring it to “retirement”. It introduces the concept of “lifestyle design” while supporting it with great resources on how to start a business while keeping your day job. If anything, it’s worthy of a read in order to appreciate how Timothy Ferris likely built an empire by convincing people that it’s possible to essentially have your cake and eat it too.

Proof: The Science of Booze

Finally, an excellent book on one of my favorite topics: booze. A Wired editor distills scientific research on everything we know about alcohol, infuses it with witty and cynical humor we have learned to appreciate from the magazine. The book goes into detailed explanations about fermentation, distillation, aging and the effects of alcohol on humans. Spoiler alert: we still don’t know what causes hangovers or how to fix it.

Tinder and The Sharing Economy

Platforms like Uber and Airbnb have been tremendously successful, precisely because they are extremely effective at connecting supply and demand. So good that they make us question the lifestyles we’ve taken for granted: Do we really need to own a car when we can Uber anywhere or buy a house where we can Airbnb our way around the world?

Tinder is suprisingly similar to Uber and Airbnb in the sharing economy: it’s a novel approach to catering to our fundamental need for human connection, physical or emotional. It invites us to question the expectation that relationships should be long term and monogamous.

The idea of romantic marriage is relatively new. We now turn to one person, asking them to give us what an entire village used to provide not so long ago. No wonder we are so bad at it.

Do we really need to be in a committed relationship if we can have intellectual stimulation with one partner, mind-blowing sex with another, and emotional fulfillment with a third?

Are we returning to communal societies weaved together by smartphones and fuelled by smart platforms, where the tribe takes care our needs, whether transportation, accommodation, sex or companionship?

Leaving the judgement on how to live our lives “the right way” aside, is this transformation is happening so fast that we are failing to notice?

The Big Business Marketing Conondrum

Big corporations are usually oblivious to modern marketing. They typically lack not just the technology to capture, analyse and understand consumer data, but also the mindset and strategic framework. In isolation and indifference, they continue to run campaigns and bask in the glory of irrelevant “success” metrics, simply because they can: they are too big to fail. However, it’s not exactly fair to blame them, let’s blame the industrial revolution instead.

A brief history of marketing

A few centuries ago, marketing was simpler. If you were a baker, you had no choice but to bake consistently good bread, every single day. Your customers knew your name and remembered your face. Bad product or service meant you’d not only lose one customer but the entire village. You had nowhere to run or hide: word of mouth marketing at its best.

The industrial revolution brought a significant change: production on a scale. Companies grew bigger. With the invention of mass-manufacturing technologies, supply surpassed demand for the first time in history, giving birth to the door-to-door salesman. As competition got more fierce, mass-communication, differentiation and branding started to gain importance.

By the 60s, markets were becoming saturated. With so many brands and products to choose from, consumers became increasingly picky about how they spent their hard earned cash. The mere act of manufacturing was not sufficient to sell anymore — companies needed to deliver a compelling reason for consumers to prefer their products as opposed to competitors. Those realizing the need for this shift started paying attention to their consumers’ needs and tweaking their story to better communicate with their audience.

The invention and widespread adoption of internet was naturally the next step in the evolution of modern marketing. Compared to previous channels, the ability to constantly stay connected to consumers, almost real-time feedback, and understanding what made them tick was priceless. With the proliferation of social networks by 21st century, the circle was complete: Consumers were empowered to rely on their network of connections for purchasing decisions in an increasingly noisy world polluted with ads and commercials. Word of mouth was in full-force again.

So what’s the problem?

In an economy built around scarcity, ability to design unique products, manufacture them on a mass scale and access to logistics to distribute them on time were huge competitive advantages. Most of today’s big companies were founded in early 20th century, and their first-mover advantage combined with the momentum enabled by unprecedented growth propelled these companies to become the behemoths they are today.

As these companies grew, they started getting bloated. Slowly, bureaucracy took over the workplace. Then there were TPS reports, office politics, legal approval processes and of course, meetings about meetings. The industrial revolution introduced the concept of working hours, in an attempt to introduce efficiency and basically turn employees into replaceable parts. These employees did not have to look their customers in the eye anymore, they could hide behind the giant billboard ads their employers bought. Speak of lack of authenticity.

The changing fabric of the workplace was still somewhat compatible with a world of big ideas, 5-year marketing plans and multi-million dollar ad campaigns of the 60s. However, the “build it and they will come” mindset and the mass-production mentality of these companies fueled by their success at the beginning of the century — combined with their bad habit of attempting to solve problems by throwing more money at them — did not change as quickly as the changing marketing landscape. This is why big companies increasingly see their marketing expenditure growing, their return on investment shrinking and their consumer loyalty dwindling today.

Is there hope?

Modern marketing requires a willingness to listen to consumers, truly understand the rational/emotional driving forces behind their purchasing decisions, consistently delivering high quality products and services, and having authentic, relevant and personal interactions with consumers. The only valid strategy to thrive in a world where marketing opportunities, platforms and mediums are evolving faster than you can spell “marketing” is to learn to adapt.

Adaptation requires agility and a eagerness to experiment, take risks, test and learn. The big businesses, on the contrary are too big and slow, hate risks and love the status quo. The bright, ambitious marketers working in these big companies who are capable of driving change and possess adaptive traits either become docile through politics and bureaucracy and start saving up for retirement, or leave the corporate world to open the proverbial cafe and restaurant.

Change for these big business must start with empowering the bright ones to take initiative. A particularly interesting approach to do so is holacracy, gaining popularity thanks to companies like Valve, Github, Treehouse and very recently Zappos. Of course, getting rid of managers will not change a company’s culture and mindset overnight, yet it may very well be the first step in giving autonomy back to those who are self-driven and capable. And in a world of without managers, everyone is a producer. A small group of doers with complete autonomy can show everyone else that it is possible to be smart, agile and adaptive.

And one day, these big companies will find out that it makes a lot of business sense to listen to their consumers and build their businesses around what consumers want, instead of what they can produce or what they think they can sell. Then and only then, marketing will evolve from interruption into utility — meeting genuine consumer needs with truly useful products and services.