South by Southwest Signalled Problems For Tech Sector

First published in the Australian Financial Review on 18 March 2019


Last week’s South by Southwest was one of the biggest tech events in the world, boasting 75,000 delegates and 5000 speakers. Attendees heard from IT company execs, Talking Heads’ David Byrne, Handmaid’s Tale actor 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.

It 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, which sets 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 delivering her campaign promise to break up 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 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 it should stop the trans-Atlantic 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. Its plans are well-funded, resourced with five million new STEM graduates 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 more organisations are going to want access to our information. The reality seemed to be summed up by futurist Amy Webb, when she proclaimed to 2000 people “Privacy is Dead”.

Webb discussed numerous key trends and when asked why she hadn’t mentioned AI, she said “AI is in everything and driving every trend.” It was a theme taken to heart by the Finnish government, a finalist in the SXSW Awards for its “AI Basics” free course, where it hoped to educate 1 per cent of the Finnish population in 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 about bias, with six panels devoted to the subject.

MIT research showed facial recognition software had a 35 per cent error rate for darker-skinned women compared to just 1 per cent for lighter-skinned males.

Beyond trying to have more diversity in programming teams, there did not seem to be a simple solution to this issue, and likely it will be a key blocker for organisations wanting to embrace AI solutions.

Content advances

The audience also 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 20-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 at SXSW were the podcasters.

More than a quarter of Americans listened to a podcast in the past month, and podcast audiences are growing at 25 per cent 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, which were just bought by Spotify for a combined $US340 million ($479.5 million)

Gimlet announced 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 teh big tech companies has filed a patent which will enable its smart speakers to assess your emotional wellbeing 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?

Connected pants

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, though, was shown to be the home. Amazon has launched its range of AmazonBasics home appliances, starting with a voice-controlled microwave.

Until 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.

For those wanting the full George Jetson experience, you can buy an Amazon Connected Home. Amazon has joined with the US’ largest home builder Lennar and is pumping out new connected homes by the hundreds.

Where art thou blockchain?

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 Winklevoss 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/Cyborg relations

Human evolution seems destined for a tech-created fork in the next few years as cyborgs – part-man, part-machine – are apparently becoming commonplace.

Neural implants, which allow people with disabilities to move prosthetic limbs by thought, are available today. The next step is mainstream, according to prominent neuroscientist, 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. Furhat was an awards finalist, showing what AI can do to create a robot 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 on display, 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.

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