“The world needs Elon Musk!”

Elon Musk is trying to change more worlds than one. Despite his gifts, failure is most definitely an option

IT WAS not, in the end, the much anticipated take-off that took your breath away. It was the landings. Eight minutes after they had lifted the first SpaceX Falcon Heavy off its pad at Cape Canaveral on February 6th, two of its three boosters returned. Preceded by the flames of their rockets, followed by their sonic booms, the slender towers touched down on neighbouring landing pads a fraction of a second apart. After such power, such delicacy.

Up above the atmosphere, the rocket’s second stage opened its fairing to reveal its cargo: a red roadster made by Tesla, a company which, like SpaceX, is run by Elon Musk.

 Mr Musk does not simply want to have fun building rockets and fast cars. Nor is he running two multi-billion-dollar companies just to become rich, or to beat rivals. He wants to open up fundamental opportunities with which he thinks the market would not trouble itself. The purpose of SpaceX is to make humanity an interplanetary species, and thus safe from global catastrophe, by providing it with the means to build a civilisation on Mars. The purpose of Tesla, emblazoned on the wall of its factory in Fremont, California, is: “To accelerate the world’s transition to sustainable energy”.

Creating either of these companies would be a signal achievement. That the same person should have built and run them in parallel is remarkable. It shows that Mr Musk has special talents as a strategist, manager and source of inspiration, as well as lofty ambitions.

Started in 2002, and with its first successful launch in 2008, SpaceX has come to dominate the commercial-launch market (see chart). In 2017 it launched 18 rockets—more than the rest of America and Europe combined. Its Falcon 9 is easily the cheapest big launcher on the market, in part because it is the only one that can fly its boosters back to Earth for reuse. (Even at SpaceX there are glitches: the third of the Falcon Heavy’s boosters hit the sea at 500km an hour, rather than touching down gently on the barge provided for it.)

Tesla, meanwhile, showed that an electric car could be every bit as good as the best petrol car—better, according to many owners—and, in so doing, very quickly established a premium brand. Tesla’s Model S, which sells for $70,000 and up, has been the bestselling electric car in America for the past three years. There have been more than half a million orders for its new Model 3, an attempt to capture the mass market that sells at half the price of the Model S.

Both companies beat the incumbents in their industries by combining a clear view of how technology was changing the scope of the possible with a fierce devotion to pushing that technology even further. That is familiar from other Silicon Valley success stories. But the fact that the firms’ goals go beyond products and profit set the two companies apart from, say, Jeff Bezos’s Amazon or Larry Page’s Alphabet. In “The Complacent Class”, which laments lost entrepreneurial vigour, Tyler Cowen, an economist, cites Mr Musk as a counter-example, today’s “most visible and obvious representative of the idea of major progress in the physical world.” The head of one of the biggest private-equity funds in the energy industry says that nobody else is driving either clean technologies or new business models forward as much as Mr Musk: “The world needs Elon Musk!”

But the achievements, the world-historical ambitions and the adulation they have brought do not mean that Mr Musk can count his high-torque photovoltaic astro-chickens just yet. The very next words out of that fund manager’s mouth were “Short Tesla.” Production of the crucial Model 3 remains badly behind schedule, and the company’s finances look stretched. Christian Hoffmann of Thornburg, an investment firm, calls buying Tesla shares on the basis that Mr Musk will quickly solve its problems a “James Bond trade”: “He needs to dodge the avalanche, avoid the gunfire, ski off the cliff, pull the ripcord and glide to safety so that he can save the world.”

Maybe he can. In 2008 both SpaceX and Tesla were within days of bankruptcy. Now they have a combined value of more than $80 billion. But the chronic problems at Tesla mean that this is Mr Musk’s highest-stakes year since then. To appreciate the risk, look at what Mr Musk has, and hasn’t, achieved so far, and at the qualities that have allowed him to do so.

Lightly Seared on the Reality Grill
Of the two goals, colonising Mars and contributing to the greening of the Earth, the second sounds more plausible, not least because it is widely shared. But SpaceX is in much better shape than Tesla. The firm is privately held (Mr Musk, who has a controlling stake, says it will remain so). In 2015 Google and Fidelity invested $1bn, and subsequent filings put the firm’s value at over $21bn.

SpaceX has a commitment to modular design, vertical integration and continual improvement not previously seen in the space business. The Falcon Heavy, for example, used 28 Merlin engines, all of them built from scratch at the company’s plant in California, all of them much more powerful than the Merlins that powered the first Falcon 9 in 2012. The firm’s achievements have established it as a satellite launcher and as a logistics company, with its reusable Dragon spacecraft providing supplies to the International Space Station. This business will expand when, probably some time next year, the Dragon is certified to ferry astronauts up there, too.

The innovation is continuing—which is just as well, because within a few years it may face serious competition from Blue Origin, a rocket company owned by Mr Bezos which is likely to prove more sprightly, and more ambitious than those SpaceX has faced to date. Treating the Falcon rockets as cash cows, SpaceX is moving its development efforts on to an even larger (and possibly also cheaper) launcher, known as the BFR, and a constellation of thousands of communication satellites, an undertaking that would exploit its ability to get things into space cheaply so as to provide high-speed internet access all around the world. Morgan Stanley, an investment bank, reckons that could bring the company’s value up to $50bn—though it will require mastering a new manufacturing challenge and facing new competitors.

Tesla is already worth more than that: roughly $60bn. That is more or less the same value as GM, which makes 80 times as many cars. In 2004 Mr Musk took a big stake in Tesla, founded the year before, and became chairman; in 2008, when the company faced closure, he became CEO. It went public two years later and quickly became the world’s leading electric-car company; last year it produced over 100,000 vehicles. At the Model 3’s launch Mr Musk claimed that, by the end of 2017, it would be churning out 5,000 a week.

It wasn’t. In fact it was nowhere near it. It made just under 2,500 Model 3s, half that promised week’s worth, in the entire fourth quarter of 2017. It now says it will hit 5,000 a week later this year; a previous claim that it would go on to 10,000 a week by the end of the year has been dropped. Meanwhile, it faces ever stiffer competition. The world’s established carmakers are getting into the electric game. Other new entrants include Alphabet, which owns Waymo, an autonomous-car firm that began as part of Google.

Given all this, many think Tesla’s valuation unsustainable. Mr Musk sometimes seems to see their point. “This market cap is higher than we have any right to deserve,” he said when speaking to an audience of state governors in July 2017, soon after the company’s valuation first topped that of Ford. To reassure shareholders of Mr Musk’s commitment, in January Tesla proposed a new pay plan that ties all his earnings to strict milestones for revenues, annual profits (of which, so far, it has made none at all) and market capitalisation. The last of these sets a target of $650bn by 2028. That is roughly the current value of the world’s largest ten carmakers combined.

To accomplish such rapid growth—all but unheard of in a company its size—Tesla has to become more than just the successful mass-market car company it still isn’t. It has to become an industry in and of itself, providing better, battery-powered alternatives to the internal-combustion engine wherever it is found, from lawnmowers to juggernauts, and also selling battery-storage systems to consumers and utilities on a huge scale.

Why should anyone believe such hubris? One argument is that electric vehicles, designed and built the Tesla way, are both better and potentially much more profitable than the alternatives. A recent tear-down analysis by McKinsey, a consultancy, concluded that electric cars designed from scratch are much better (for example, on range and interior room) than those that are modified versions of petrol-fired cars and still made on existing production lines. And by keeping a great deal of its cars’ engineering in-house, as SpaceX does with its rockets, Tesla may stand to be much more profitable than its current competitors. Jeffrey Osborne of Cowen, an investment bank, calculates that 80% of the value of a Tesla is created in its manufacturing plant in Fremont, some three to four times the share for a typical passenger car.

What is more, electric-car factories could be a lot more productive than those for internal-combustion engines; whereas a conventional car has about 2,000 components in its drive chain, a Model S has fewer than 20. Mr Musk says that these advantages mean he can create a “machine that makes machines” qualitatively better than anyone else’s. But the so-far-pitiful production of the Model 3 suggests that, at best, that machine is proving hard to bed in. It also means Tesla is not getting the revenues it based its spending plans on.

The “gigafactory”, a battery plant in which Tesla and Panasonic are investing $5bn, also has its problems. The investment is based on the idea that Tesla needs economies of scale in its battery business only achievable in a factory that is highly automated and utterly huge. Mr Musk says the gigafactory—near the town of Sparks, Nevada—will be, by footprint, the biggest building in the world.

Romit Shah of Nomura/Instinet, a bank, estimates that in late 2014, when the gigafactory was announced, global battery demand for electric vehicles was about 12 gigawatt-hours a year. Nomura thinks the gigafactory alone will have 40GWh of capacity by the end of this year. In 2016 Tesla bought SolarCity, a solar-power and home-energy-storage firm that Mr Musk had helped two of his cousins set up, for $2.6bn. One of the reasons was to soak up some of this huge supply of batteries. (Another was that SolarCity was drowning in debt; the bail-out of the CEO’s side-gig was controversial, but Tesla shareholders ended up backing it by a large margin.) Storage, not cars, may be the biggest market for batteries long-term: it was not an accident that the company changed its name from Tesla Motors to just Tesla last year.

Getting the gigafactory up to its promised speed and scale is vital to Mr Musk’s plans. It has proved frustratingly difficult. A visit to Sparks late last year found J.B. Straubel, a co-founder of Tesla and now its chief technical officer, completely consumed with the automation efforts: “Ramping up such a complicated machine,” he says, “on this unprecedented timescale, has never been done before.” Last October Mr Musk tweeted that the project was in “Production hell, ~8th circle”.

A Series Of Unlikely Explanations
While Mr Straubel struggles in hell, Tesla burns money as the Falcon Heavy burns kerosene. Barclays, a bank, reckons that Tesla will consume $4.2bn this year. With just $3.4bn in cash at the end of 2017 Mr Musk will almost certainly need another injection of funds by the middle of the year—and maybe more later. Mr Osborne of Cowen reckons Tesla’s capital expenditures will amount to $20bn-$25bn between 2017 and 2020. Jim Chanos of Kynikos Associates, a prominent short-seller who predicted the collapse of Enron, recently denounced Tesla’s history of missing deadlines and targets as meaning that “the equity is worthless.”

As yet, though, the shareholders do not seem to agree. Tesla’s stock price has held fairly steady; people might even buy more, if offered. They invest because, as a SpaceX insider puts it: “They believe in Elon.” When he says, as he did on February 7th, “If we can send a roadster to the asteroid belt we can solve Model 3 production,” many happily accept the non sequitur.

His power to inspire is not limited to the public and his investors. It attracts bright people to his companies, where they work with a passion which matches his own (and may well feel his temper all the same). Mr Straubel insists that “the mission really matters—that’s why we’re working so hard.” Gwynne Shotwell, SpaceX’s chief operating officer, says Mr Musk’s extreme goals for SpaceX are “incredibly invigorating” and help her recruit the very best prospects: “We rarely lose a candidate.” Outside observers agree. Vinod Khosla, a Silicon Valley venture capitalist, says “Elon’s mission is motivating so many people. This is common at small social enterprises, but very rare at scale.”

But Mr Musk’s companies rely on more than just his ideas and allure. Two other attributes stand out: his approach to risk and his embrace of complexity.

His way with risk is unlike that of his Silicon Valley peers, according to Amy Wilkinson of Stanford. She says entrepreneurs rarely take big risks on another venture after they have scored a stonking success. The few that become serial entrepreneurs typically stay within the same industry.

Mr Musk, having sold his first company, Zip2, to Compaq for $341m in 1999, ploughed the gains straight into X.com, an online bank that later become PayPal. Within 18 months of selling that to eBay for $1.5bn he had invested almost all his gains in Tesla and SpaceX. He takes on more risk with each new round of financing.

A risk-taking boss does not mean a cavalier company. Ms Shotwell points to a dichotomy in attitudes to risk at SpaceX. It is in many ways a very unified operation. Most of the managers and engineers have desks in the manufacturing facility, in among production experts and line workers. People circulate easily, trying out new ideas and learning from colleagues who, in a more traditional structure, they might never meet. But the designers and engineers are encouraged to be mavericks, whereas the operations and manufacturing teams are most definitely not. A former senior executive says that Mr Musk takes the risks he thinks he has to, but does not run extra ones just to cut corners. Another insider describes him as “a risk taker for himself, but a risk mitigator for everyone around him”.

Looked at like that, his risk-taking may fit with his greater purpose; a gamble, perhaps a self-sacrifice, undertaken as part of his urge to fend off catastrophe. His faith in technological progress is, unusually for Silicon Valley, explicitly tinged with darkness: he is a paranoid optimist. Thus Tesla offers amazing air filters on the basis that they will help passengers “survive a military grade bio attack”.

As befits a paranoid optimist, his broad hopes for the future are also tied up with fears. Some, such as climate catastrophe, are fairly widespread, some are more unusual—the need for civilisation to be backed up to another planet, just in case. He has been one of the loudest voices warning Silicon Valley and the world of the threats posed by out-of-control artificial intelligence (AI) and has set up a not-for-profit outfit devoted to lessening it.

Mr Musk’s second defining characteristic is the willing embrace of complexity. “Complexity will happen inside or outside the organisation,” says Antonio Gracias of Valor, a venture capitalist who sits on the boards of both Tesla and SpaceX. “Elon’s view is that if you have it inside, you can manage it better…and can build faster, cheaper and to higher specifications.” His approach echoes that of Andy Grove, a legendary former boss of Intel whose investments in integrated chipmaking turned the firm into a global powerhouse. It eliminates the “margin stacking” enjoyed by layers of suppliers and allows a continuous improvement of what the companies offer. Understanding all the linkages and dependencies in such a system is a huge challenge; so far, Mr Musk has met it.

This systems thinking can be strategic; you can see it in the way SolarCity has provided more in-house demand for the gigafactory, or in SpaceX’s plans to use its launch capability to create a vast new constellation of satellites. But it figures in the smallest decisions as well as the biggest. Spurning the received opinion that micromanagement is a bad trait in bosses, Mr Musk prides himself on being a “nano-manager”. “Unlike other CEOs he’ll really walk through the technology with you,” says a veteran engineer at one of his firms. Mr Gracias says he is the best zoom-in manager he has seen: “Elon can be at the macro, see everything that’s highly disruptive, and then can zoom all the way down to the micro, down to the door handle.”

The Ends of Invention
One worry is that such intense focus, divided between two companies, cannot last—especially as Mr Musk endlessly plays around with yet more ideas, such as ultra-high-speed intercity travel (a scheme called “hyperloop” which he conceived of in 2013 and is now revisiting), novel tunnelling equipment to solve congestion on the streets (see next article) and mind-computer interfaces to keep humans—or at least cyborgs—a step ahead of the AI menace (a startup called Neuralink). With Tesla seeming to need all the attention it could possibly get, these tangents appear self-indulgent. At the same time, for many of the faithful the endless flow of ideas further burnishes his image.

So Much For Subtlety
Another worry is that Mr Musk’s technological insight might let him down. For example, he believes that cameras and ever smarter software will be good enough to make Teslas fully autonomous. This puts a huge demand on the company’s AI team, and goes firmly against the technological grain. Other, currently more advanced, autonomous carmakers insist that lidar sensor systems are also vital. If they are right, Tesla will for the first time find itself on the technological back foot, and might even come to look unsafe (which would surely gall Mr Musk deeply).

And then there are the overly ambitious targets. Mr Musk routinely gets his teams to do things no one else can do, but they rarely pull it off by the date he originally set. Do not expect fleets of BFRs to head for Mars at any date he may suggest. Such dates are goads as much as targets. They drive the enthusiasts—and him—even harder. This has often proved forgivable. “Even if he misses his deadline, we are betting that he will still get there first,” as one equities analyst puts it. The Falcon Heavy is a case in point. When Mr Musk unveiled the design in 2011, he said it would be on the pad in 2013. The task turned out to be a lot more difficult than that, and continual improvements to the Falcon 9 made it rather less necessary. But SpaceX was making money. Tesla is not.

It may be that Mr Musk’s appeal will keep the company’s finances together. It may also be that, even in failure, he achieves his goals. Now there is one gigafactory, others may see its merits and build more. Now there is a market for high-quality electric cars, others will expand it. Indeed, if a truly big Silicon Valley fish wanted to do so, and Tesla stumbled badly, buying it might be a good way in.

Asked about a new space race after the Falcon Heavy launch, Mr Musk was enthusiastic: “Races are exciting.” They also let pacesetters guide the field. If you start a race in the direction you think people should be going, it may not, in the end, matter if you win.

And if Mr Musk does not personally deal the death blow to the internal-combustion engine, he will always have a gorgeous car in space to console him.

source: The Economist

How Understanding Team Roles Can Improve Team Performance

When a team is performing at its best, you’ll usually find that each team member has clear responsibilities. Just as importantly, you’ll see that every role needed to achieve the team’s goal is being performed fully and well.

Dr Meredith Belbin studied team-work for many years, and he famously observed that people in teams tend to assume different “team roles.” He defined a team role as “a tendency to behave, contribute and interrelate with others in a particular way” and named nine such team roles that underlie team success.

Creating More Balanced Teams

Belbin suggests that, by understanding your role within a particular team, you can develop your strengths and manage your weaknesses as a team member, and so improve how you contribute to the team.

Team leaders and team development practitioners often use the Belbin model to help create more balanced teams.

Teams can become unbalanced if all team members have similar styles of behavior or team roles. If team members have similar weaknesses, the team as a whole may tend to have that weakness. If team members have similar team-work strengths, they may tend to compete (rather than cooperate) for the team tasks and responsibilities that best suit their natural styles.

Knowing this, you can use the model with your team to help ensure that necessary team roles are covered, and that potential behavioral tensions or weaknesses among the team member are addressed.

Belbin identified nine team roles and he categorized those roles into three groups: Action Oriented, People Oriented, and Thought Oriented. Each team role is associated with typical behavioral and interpersonal strengths.

Belbin also defined characteristic weaknesses that tend to accompany each team role. He called the characteristic weaknesses of team roles the “allowable” weaknesses; as for any behavioral weakness, these are areas to be aware of and potentially improve.

The nine team roles are:

Action Oriented Roles

Shaper (SH)
Shapers are people who challenge the team to improve. They are dynamic and usually extroverted people who enjoy stimulating others, questioning norms, and finding the best approaches for solving problems. The Shaper is the one who shakes things up to make sure that all possibilities are considered and that the team does not become complacent.

Shapers often see obstacles as exciting challenges and they tend to have the courage to push on when others feel like quitting.

Their potential weaknesses may be that they’re argumentative, and that they may offend people’s feelings.

Implementer (IMP)
Implementers are the people who get things done. They turn the team’s ideas and concepts into practical actions and plans. They are typically conservative, disciplined people who work systematically and efficiently and are very well organized. These are the people who you can count on to get the job done.

On the downside, Implementers may be inflexible and can be somewhat resistant to change.

Completer-Finisher (CF)
Completer-Finishers are the people who see that projects are completed thoroughly. They ensure there have been no errors or omissions and they pay attention to the smallest of details. They are very concerned with deadlines and will push the team to make sure the job is completed on time. They are described as perfectionists who are orderly, conscientious and anxious.

However, a Completer-Finisher may worry unnecessarily, and may find it hard to delegate

People Oriented Roles

Coordinator (CO)
Coordinators are the ones who take on the traditional team-leader role and have also been referred to as the chairmen. They guide the team to what they perceive are the objectives. They are often excellent listeners and they are naturally able to recognize the value that each team member brings to the table. They are calm and good-natured, and delegate tasks very effectively.

Their potential weaknesses are that they may delegate away too much personal responsibility, and may tend to be manipulative.

Team Worker (TW)
Team Workers are the people who provide support and make sure that people within the team are working together effectively. These people fill the role of negotiators within the team and they are flexible, diplomatic and perceptive. These tend to be popular people who are very capable in their own right, but who prioritize team cohesion and helping people get along.

Their weaknesses may be a tendency to be indecisive, and to maintain uncommitted positions during discussions and decision-making.

Resource Investigator (RI)
Resource Investigators are innovative and curious. They explore available options, develop contacts, and negotiate for resources on behalf of the team. They are enthusiastic team members, who identify and work with external stakeholders to help the team accomplish its objective. They are outgoing and are often extroverted, meaning that others are often receptive to them and their ideas.

On the downside, they may lose enthusiasm quickly, and are often overly optimistic.

Thought Oriented Roles

Plant (PL)
The Plant is the creative innovator who comes up with new ideas and approaches. They thrive on praise but criticism is especially hard for them to deal with. Plants are often introverted and prefer to work apart from the team. Because their ideas are so novel, they can be impractical at times. They may also be poor communicators and can tend to ignore given parameters and constraints.

Monitor-Evaluator (ME)
Monitor-Evaluators are best at analyzing and evaluating ideas that other people (often Plants) come up with. These people are shrewd and objective, and they carefully weigh the pros and cons of all the options before coming to a decision.

Monitor-Evaluators are critical thinkers and very strategic in their approach. They are often perceived as detached or unemotional. Sometimes they are poor motivators who react to events rather than instigating them

Specialist (SP)
Specialists are people who have specialized knowledge that is needed to get the job done. They pride themselves on their skills and abilities, and they work to maintain their professional status. Their job within the team is to be an expert in the area, and they commit themselves fully to their field of expertise.

This may limit their contribution, and lead to a preoccupation with technicalities at the expense of the bigger picture.

Knowledge of Belbin’s Team Roles model can help you to identify potential strengths and weaknesses within your team, overcome conflict between your co-workers, and understand and appreciate everyone’s contributions.

If you want to learn more about the Team Roles that you and your team exhibit, you can purchase a full, personalized behavioral report by going to belbin.com (prices may vary according to the number of reports that you require).

Once you’ve received your report, you can apply it with the help of the Team Role Circle. This is a free resource from belbin.com that gives you a structure to follow. It comprises four steps:

If you have a large group, divide participants into “teams” of approximately five or six. If you work with a smaller group, avoid splitting it up.

Ask each team to draw a circle, to divide it equally into nine sections, one for each of Belbin’s team roles, and to enter their names in the segments that correspond to their top two roles.
Encourage discussion among the team members by asking them to list five main areas where they think their strengths and weaknesses lie, and how these match, overlap or contrast with those of their co-workers.
Ask your team to come up with three action points based on its findings, focusing on helping the team to perform more effectively.

US Stock Market saw biggest fall since 2011 !

US stocks saw the biggest one-day fall in six years on Monday. The Dow Jones Industrial Average fell nearly 1,600 points for its biggest intraday drop in history in points terms, or more than 6%, before ending down 4.6% for it’s biggest one day fall since Aug. 2011. Only last month the Dow and S&P500 index had their best monthly gains in two years with stocks reaching record levels on 26 January, supported by the benefit of cut in US corporate taxes in December, rising earnings, and healthy global economic growth. But with the Federal Reserve seen likely to raise short-term interest rates again at least three times in 2018, bond yields have been rising, and last Friday’s healthy US jobs market report sparked fears of rising inflation, leading to Monday’s sharp bout of profit taking.

Decoding AI for HR

Artificial intelligence will be another successful big new technology for HR. This time let’s start by understanding what it means.

Artificial intelligence will likely become as successful as the ‘90s architecture “client server.” So let’s recall that one piece of our history, every bit as confused and full of hype as AI.

In the late ’80s, many companies used mainframe HRIS software. A handful of vendors offered it on various minicomputers or PCs, often standalone or in small local area networks. Then along came PeopleSoft in 1989, declaring it had a new architecture called “client/server” that did away with the very expensive mainframe.

As PeopleSoft gained traction in the market, every mainframe vendor raised its hand to shout: “Me, too, I’ve got client/server!” Of course, there were honest disagreements over what client/server meant. Oracle, for instance, showed a client/server HRIS in 1990 without a graphical user interface, not foreseeing it would turn out to be the new architecture’s most popular feature, at least with end-users, if not IT. Oracle eventually pulled the software from the market.

Even within the bounds of varying definitions, some of the offerings were laughable. My favorite was Dun & Bradstreet Software (comprised of mainframe leaders MSA and McCormick & Dodge) at a trade show with a seven-foot-high rack of equipment in its booth in order to demonstrate its so-called client/server!

The analogies to the current state of AI are almost too perfect. I don’t know which one is the modern PeopleSoft, but once again every vendor is yelling “Me, too, I’ve got AI!” And almost nobody agrees on what that umbrella term actually means, including full-time AI experts. There were 2,300 attendees at the recent AI World Conference in Boston, with reportedly half as many differing opinions.

So we are still very much in the education phase. You may know that by the number of e-mails you get with AI in the subject line. I certainly do. We also know, thanks to John Sumser’s recent intelligent software report, that predictably 90 percent of the vendors claiming they have AI offer some form of recruiting. (Always a hard sell, John personally rejects that term for all of them, but nonetheless describes some very interesting products.) Bersin’s Christa Degnan Manning offers a perfect AI primer in her six-minute video on Firing Line with Bill Kutik®.

Let’s take a look at one of those recruiting vendors, Paradox.ai. John didn’t cover it in his report, but I chose it because it has a “digital assistant,” one of the more common ways we will first experience AI or whatever you insist on calling it.

Digital assistant is itself muddled by the various labels used for it: bots, chatbots, robots, intelligent assistants, voice-activated assistants. Let’s eliminate voice from the conversation. When my Amazon TV perfectly understands my spoken request to find 2001: A Space Odyssey, (to watch HAL, the ultimate AI dream from 1968 of a fully autonomous computer, now not expected to be realized until 2027), the problem of translating voice to text has pretty much been solved.

The fact is voice to text is not yet perfect. Everyone with a home spy device from Google or Amazon knows this, as does anyone who dictates email or text on a smart phone. Looking at the iPhone’s garbled beta transcripts of voice messages just means we all must now assume everything is transcribed, and therefore speak more slowly and distinctly.

Separate is natural language processing (NLP) which vendors can’t buy from Google and are solving themselves. That’s the much thornier problem of the software understanding what the perfectly translated text actually means and what it should do in response. Easy enough when you’ve clicked a button on a laptop screen. Not so easy when you can ask in at least a dozen ways what you got paid last week! You’d imagine that’s one of the simplest requests around, but it’s actually making ADP work pretty hard.

Paradox is, for the moment, solving one of the larger but simpler problems in talent acquisition: high volume, low complexity hiring. That is its current sweet spot, according to company Evangelist Rob McIntosh, a long-time recruiting expert. The company has more than 100 customers, including large employers such as CVS, Sprint and Delta.

Its system deals with the large top of the recruiting funnel, where historically lots of candidates need to be pre-screened and eliminated with such basic “knock out” questions as, “Have you ever been convicted of a felony?” (“High volume” is, of course, corporate-speak for “low wage.”)

The Paradox system presents candidates with “Olivia, your virtual job assistant,” complete with a picture of a friendly-looking woman and no jive that she’s real.  Of course, on the company’s website for prospective buyers, she is “Olivia, the AI assistant.” Today’s magic acronym.

Whatever. Olivia is a simple digital assistant that starts the candidate experience.

It asks questions and gets answers in a standard chat format via the phone or desktop. Pre-screening can include up to 20 questions (straight off a traditional job application to my mind). Depending on the candidate’s answers, it then branches to other questions, using NLP to understand longer answers.

It can also find the candidate’s LinkedIn profile, which is either “robotic processing automation” or “swivel chair automation,” depending on your preferred term. Both refer to finding and taking data from one system and either linking to it or putting it into another system with no human fingers touching screens or keyboards. Imagine sitting in a corner with a screen on either side to get the “swivel.” If that’s basically your job right now, time to get some new training fast.

Like the very best applicant tracking systems, Olivia can be told who your organization’s top competitors are and fast track any applicant to a human recruiter who has worked for one. The same for anyone with skills you desperately need.

Olivia gets more interesting with the “Schedule” module, negotiating a time for a phone call or personal meeting between the candidate, recruiter or hiring manager. And even sending chatty reminders. This is a standard digital-assistant function outside of recruiting, too—a huge time-saver for anyone whose workday is consumed by meetings, conference calls or even private scheduled calls without a human assistant to set them up.

(Another vendor, Zoom.ai, sells an “automated assistant” that does that and lots more for sole proprietors or large companies.)

With the “Ask” module, Olivia can handle lots of different questions, such as company culture and job details or however much text the client is willing to write. If the answers sound canned, that’s the client’s fault. But it can approach free-form conversation and by using Google’s translation services, this and other functions can take place in 73 languages.

The final module—maddeningly named ERP (probably because of the first client’s insistence) —handles the employee-referral process.

A conversation with intelligent software is still not easy stuff. Have you ever been driven crazy by Siri? I recently tried Skype’s beta digital assistant for help (created by its owner Microsoft), and after five frustrating minutes, I had lots of names for it and none was “intelligent.”

Clearly, what Paradox is doing allows recruiters—who should be handling the candidate outreach—to work more efficiently at the narrower part of the funnel, where the active candidates are much fewer. The term for that is “cognitive augmentation,” helping someone do a job better.

On Jan. 18, Paradox announced a partnership with SmashFly Technologies and its well-regarded recruitment marketing platform, with the stated aim of merging functionality! While that rarely happens without large amounts of money changing hands, Olivia may soon be showing up in a lot more places than client/server ever did.

Source: https://goo.gl/QZYftc

The concept of a Silicon Dragon has gone mainstream

Since 2008 China’s tech and venture scene has evolved quickly. It’s no longer considered a joke to say that China is winning the tech race. There are just too many examples of how China IS leading advances in a new era of technology. It’s clearly no longer a case of copying ideas from the West. Today, it’s about ideas traveling from China to the West and being copied. What a transformation!

The world’s biggest tech companies are no longer mainly from America. In addition to Facebook, Amazon, Apple and Alphabet, there’s Baidu, Alibaba, Tencent and Xiaomi from China. Right behind them are China’s next-in-line leaders: news aggregator Toutiao, group e-commerce dealer Meituan and ride-sharing leader Didi Chuxing.

If you mention Jack Ma’s name today in a conversation with friends and family, they actually know who you mean. Name recognition is easier when you’re one of Asia’s top billionaires and running one of the world’s most valuable companies.

Not content to dominate China tech in their homeland, Chinese power businesses are going global, moving into Hollywood, real estate in New York and LA, and innovative startups in Silicon Valley. They’re beating American businesses to newly emerging opportunities in Southeast Asia too, an important next frontier.

Chinese entrepreneurs are known for moving with lightning speed and at non-stop work hours to start up new businesses. A new term has been coined to describe their work life, 996, meaning 9 to 9, 6 days per week. Silicon Valley can look decidedly sleepy, by comparison.

China is getting ahead in many fields that are revolutionizing tech, from artificial intelligence to fintech to virtual reality to the sharing economy and retail e-commerce. What’s more, these categories see U.S. and Chinese businesses competing head-to-head: Baidu with Google, Alibaba with Amazon, Facebook with Wechat, and Huawei with Apple.

There’s plenty of money in the Middle Kingdom to finance these China’s next upstarts. China venture capital market now matches the U.S. investment in startups, to about $50 billion. Moreover, China’s startups have gotten into the unicorn elite, and now claim nearly one-quarter of the world’s unicorn-financed emerging companies.

As China progresses, a new generation of angel investors has sprung up from the initial successes of founders from the prior boom a decade ago. These angel investors are not only financing the next leaders but inspiring them to do more. They are the necessary heroes.

Yes, there are government curbs on content and some investment spirals in China. But China’s tech economy operates in its own sphere, often isolated from broader economic and political issues.

It’s clear as we enter into 2018 that China’s Silicon Valley will challenge the West more than ever — and this is just the beginning.

A guide to the Nunes memo

BEFORE the Nunes memo was published, the White House’s biggest cheerleaders said it would be bigger than Watergate. The FBI argued against releasing it, citing “grave concerns” about its accuracy. The stage was set for an extraordinary fight between the president and his party on the one hand and the country’s premier law-enforcement agency on the other. When the long-awaited memo was declassified by the president and published, on February 2nd, mainstream opinion declared it a nothing-burger. So what is it? A giganotosaurus of a scandal, a significant act of institutional norm-busting or nothing really to worry about? Here is Democracy in America’s guide so you can make your own mind up.

First, a recap of the allegation in the memo, which was released by the House of Representatives Intelligence Committee, chaired by Devin Nunes. At the end of October 2016, only a few weeks before the presidential election, the Department of Justice (DoJ) and FBI received permission from the Foreign Intelligence Surveillance Court to perform surveillance on a Carter Page. More on him in a bit. It is highly unusual for an American citizen like Mr Page to be subject to such an order. As the court’s name suggests, such warrants are granted when there is a reasonable suspicion that the subject of the warrant is an agent of a foreign power, meaning that they are helping a foreign power or entity commit espionage or terrorism. The memo alleges that the warrant was granted improperly, because the evidence put forward in support of the application came from Christopher Steele, a former MI6 agent who had been paid by Democrats to find dirt on Donald Trump. The memo quotes Mr Steele as saying he was, “desperate that Donald Trump not get elected and was passionate about him not being president.”

The memo does touch on some raw nerves, pointing out some weaknesses and conflicts of interest that embarrass the FBI and Department of Justice, and provide Trump supporters with evidence for their core belief that there is a “deep state” out to get their president. The memo notes that the same research firm that employed Mr Steele also employed the wife of a senior justice department investigator, Bruce Ohr, who knew Mr Steele. It cites text messages calling Mr Trump an “idiot” and dreading his election win, sent between a senior FBI agent, Peter Strzok, and his then-mistress, an FBI lawyer, Lisa Page.  

The FBI says this is a misleading account of what happened. But given the partisan distrust now being hurled at that agency’s leadership, it is a useful thought exercise to imagine that the core charge of the memo is wholly accurate, and weigh its value on that basis. America’s intelligence services have sometimes been known to violate the constitution, which is why the court exists and why elected politicians have a duty to point this out when it happens. This, however, is not one of those occasions. Mr Steele was a credible source (he had been in Moscow for the British secret intelligence service, MI6, and later ran its Russia desk) and had provided the FBI with good intelligence before. He was not politically motivated in the sense that the memo implies, because he is a British citizen and cannot vote. Instead, his motivation seems to have been alarm that Mr Trump and people around him might have been compromised by Russian intelligence. People who know Mr Steele say that towards the end of the election campaign he was not no longer being paid.

The attacks on the FBI and DoJ officials are also misleading. Mr Ohr had no connection to the Russia probe; he specialises in gangs and drug smugglers. And Mr Strzok and Ms Page’s texts have been selectively cited by their enemies. A review, by the Wall Street Journal, of their many thousands of pages of phone messages, revealed that they are patriotic, centrist politically, scornful at many points of Hillary Clinton and above all outraged by Russian meddling in the election.

And here is the thing. Even if taken at face value, the memo still does not prove what Republicans claim, namely that the entire Russia investigation was born out of a Democratic dirty tricks campaign. The memo, drafted by staffers working for the Republican majority against the objections of Democrats on the committee, actually notes in passing that the genesis of the counter-intelligence probe into the Trump campaign was a probe into another campaign adviser, George Papadopoulos, who has since pleaded guilty to misleading federal agents about his contacts with Russia. That is a major concession, which suggests—whether inadvertently or not—that there was “a there, there”. To try another thought experiment, imagine a parallel universe in which a left-wing Democratic presidential candidate, say, Senator Bernie Sanders, was suspected of exactly the same contacts with Russia, and imagine what Republicans would be saying now.

There is also a cynicism to claiming anti-Trump bias on the part of FBI leaders urgently investigating his Russian ties in 2016. If FBI agents sincerely believed a presidential candidate might be compromised by a hostile foreign power, dreading his election is not “bias”.

A Democratic counter-memo, which to date the Republicans who control the committee have declined to make public, objects that the Foreign Intelligence Surveillance Court was aware that Mr Steele had a possible animus against Mr Trump, and notes that Mr Page had been the target of investigation for years. Democrats also note, with reason, that the memo creates the false impression that evidence supposedly used to corroborate Mr Steele was inaccurate or misleading, when that evidence was not used as corroboration.

Mr Page is a strange figure, whose centrality to this story says quite a bit about how the Trump campaign operated. Because of the unorthodox foreign-policy positions that Mr Trump took on many subjects, including Russia, no top-tier Republican foreign-policy advisers were prepared to work for the Republican nominee. This left a vacuum which people like Mr Page, who would never get anywhere close to influencing a more normal candidate, gladly filled. Both sides benefited from this. Mr Page got to sound important and Mr Trump’s campaign acquired a veneer of expertise which it never really had. Thus Mr Page, an oil and gas consultant with some experience in the former Soviet Union, a man lacking any prior political experience and whose consulting firm consisted of one Carter Page, came to be a foreign-policy adviser to the Trump campaign.

Republican members are outraged by Mr Page’s treatment by the FBI and DoJ, because it is evidence, they say, that the agencies were determined to target the Trump campaign using Mr Page. Mr Trump’s lawyer, Donald McGahn, the same man who signed-off on the declassification of the Nunes memo, had previously written to Mr Page crossly. “You never met Mr. Trump, nor did you ever ‘advise’ Mr. Trump about anything. You are thus not an ‘adviser’ to Mr. Trump in any sense of the word,” he wrote. So which is it? Were the agencies after an innocent man who had nothing to do with Mr Trump, or conspiring to discredit the man who would become president?

It seems fairly clear that the memo is not really about the thing it seems to be about. What it is really doing is providing public fuel for the burning sense of grievance that the president and his cheerleaders feel about the FBI and about the investigation into Russian interference in the 2016 election led by Robert Mueller. This may be sincere, or it may be born out of alarm at what Mr Mueller may find. We cannot really know that until Mr Mueller has done his work. Likewise, the release of the Nunes memo may prove to be a moment of peak hysteria. Or it may be a prelude to firing Rod Rosenstein, the deputy attorney-general, or even Mr Mueller. If that were to happen it would be the most serious act of rule-breaking this presidency has seen.  

Until this Russia investigation, the House and Senate intelligence committees have been relative havens of bipartisanship, putting aside party differences in the cause of defending the United States. Now the Nunes memo stands as further evidence of a dramatic process of political decay that has been going on for a while and will probably continue. But it is not more than that, yet.

Source: https://goo.gl/aoHYmS

Ebay is moving from Paypal to Adyen!

One of the tech industry’s most successful partnerships is coming to an end.

EBay announced last week that the company will stop working with PayPal as its main payment service provide in 2020 and will start their migration on a phase by phase to  their new partner Amsterdam based Adyen.

After the existing eBay-PayPal agreement ends in 2020, PayPal will remain a payment option for shoppers on eBay, but it won’t be prominently featured ahead of debit and credit card options as it is today.

PayPal’s stock dropped as much as 12 percent on the news in after-market trading.

At eBay, the move is being billed as a way to take more control over the critical checkout experience as other giant online shopping destinations like Amazon and Alibaba have, while giving more payment options to eBay shoppers. Adyen supports more than 200 payment methods across the world, eBay said in a blog post announcing the news.

The move is also expected to eventually add $2 billion of revenue to the eBay business, because the company will start to charge eBay sellers for the payments service; today, PayPal does.

That said, “most sellers can expect their costs of payments processing to be reduced after they transition to eBay’s intermediated payments model,” eBay said in its announcement.

For Adyen, the eBay deal is a huge win for a company of its size; Adyen registered net revenue of $178 million in 2016 compared to nearly $11 billion — yes, with a B — for PayPal.

One would assume, then, that there’s a good chance that eBay is taking an equity stake in Adyen alongside the commercial agreement so it can benefit from the upside this will create. For now, the company isn’t saying if that’s the case. It’s fair to wonder if Adyen had to make any financial concessions to win the business of a platform of eBay’s size.

Adyen is expected to file for an IPO as early as this year.

PayPal became eBay’s main payments provider in 2003, a few months after eBay had acquired the company in a deal valued at $1.5 billion. The two companies split into separate public companies in July of 2015 and signed a five-year operating agreement to maintain a close relationship through mid-2020.