NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 

When the Lack of Memory Isn’t About Your PC 

Our devices are too good at remembering the things our brains used to handle. 

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1

OCT 8, 2024

 

I honestly don’t know whether this is physiologically correct or not – or whether this whole situation is just a product of my advanced age – but I’m convinced that memory is a muscle.  And that, if you don’t make specific efforts to exercise it regularly, you will lose more and more of the capacity as you age. Call it a “use it or lose it” proposition and we’re all on the wrong side of the equation.

And, in the interests of full disclosure, this is also not a pitch for Prevagen or whatever other non-prescription remedies are being peddled non-stop on your tube these days. I have to admit that I find myself watching these particular ads more closely and that I’m relieved that whoever is writing these ads decided to give the jellyfish a break and stop claiming that the magical and curative ingredient has been extracted from these poor little creatures to further serve mankind. Feel free to Google “apoaequorin” if my reference is a little obtuse. Or maybe it’s just your poor memory.

Speaking of ad folk, does it seem that in any given hour of tube viewing, you are likely to see the exact same half dozen ads over and over – sometimes run back-to-back – in interruptive bursts that seem longer and longer all the time. Do they think that we won’t remember seeing the same ads before or – perish the thought – are they convinced that we’ll only remember the ad content if they consistently and repeatedly beat us over the head with the same junk?

As a longtime technologist, I also feel that we can’t really blame our computers and phones or the tech community for the fact that we no longer feel even the slightest obligation to remember phone numbers, addresses, directions or tons of other formerly essential information, which we used to carry around in our heads. We even used to brag about that capability. It’s a much more sensitive subject when the matter relates to birthdays and anniversaries – especially of family members and relatives.

But to be honest, most of those dates are also long gone and, but for Facebook reminders and email notifications, would be regularly forgotten. In a fit of poignant honesty, coupled with a devious wink or glance, the new Apple Intelligence ads offer repeated suggestions that when you are stuck for a memory or a name to go with an approaching face, your iPhone and Siri will quickly rise to the rescue. Whatever did we do before to fill these gaps?

Also allow me a moment to whine about the streaming strategy that sucks us in with an introductory free two-fer (two episodes of a new show or series made available, initially) and then asking us to patiently wait and then tune in once a week for the next month or two to see subsequent episodes. Apart from the complexity of trying to track what day the next installment of seven or eight different programs will be released, who honestly even remembers what happened “previously,” notwithstanding the 30-second recap that precedes each show?

Kudos to the Apple TV show, Bad Monkey, starring Vince Vaughn, where the opening weekly recap is offered grudgingly by a tongue-in-cheek narrator who admits that he hates doing it. And it’s still next to impossible to follow the multiple storylines. I find myself longing for the clarity and consistency of the hundreds of Law and Order episodes, where you could reliably count on the Dick Wolf formula with the firm knowledge and reassurance that virtually every show would be wrapped up in a nice bow by the end of the hour.

Lest you believe that these concerns are uncommon, I have a simple and familiar experiment you can use to see where you stand on this (possibly) age-related memory spectrum. Almost all of us have now been exposed to some mobile or desktop security system or two-factor authentication requirement that sends a numeric code to your phone and requires you to enter the code (ranging from six to eight digits) into some digital form in order to allow access to financial accounts and the like.

Typically, the texted code (which is time-bound) does you the “favor” of quickly disappearing so that you are required to remember it and then return to some other screen and enter it there. My own limit seems to be six digits and even then, I have to mentally break the number into two, three-digit parts to be sure I have it. There is zero chance without writing it down that I will ever again remember any eight-digit code the banks seem to increasingly favor. If you haven’t already experienced this phenomenon yourself, write down a few larger random number sequences and try it.  

The only good news is that the newer smart phones will automatically retain the texted code for you and autofill it into the appropriate place once you return to the prior location. Considering that this is their doing in the first place, it’s the very least they can do for us.

And please don’t get me started on the indecipherable buses and stoplights in Captcha quizzes or the very sad irony that we humans now regularly need to prove to the computers that we are real. It’s not something I’m likely to forget any time soon.

NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 

Technology

Amazon, AI, and the New Company Towns 

To serve its Prime members, the company-built warehouses strategically, mostly outside big cities. Now data centers — an energy and water hungry sector — are looking to do likewise. But for their host cities, the stakes are far higher. 

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1

OCT 1, 2024

One of the lessons from the pandemic that’s likely to stick around for quite a while has to do with what I have called the new three Rs — reserves, redundancy, and resilience. During the pandemic, we paid a price for our decades of reliance on fragile and foreign supply chains driven by the gospel of just-in-time everything, as well as an infinite consumer desire for an abundance of cheaply made and readily disposable goods. We were left with bare shelves, empty-handed workers with nothing to assemble, layoffs, and ultimately a shattered economy. It became increasingly obvious that on-site and nearby storage and availability of all manner of materials, inventory, and supplies is essential to avoid similar problems in the future.

As with so many things, Amazon, even before the pandemic, was already focused on a fourth and equally critical R: rapidity. In the right-now world of the new digital economy, having to wait for anything is a mortal sin. Everyone wants everything instantly, if not sooner, especially when ready alternatives are just a click away.

Even more compelling was the Bezos realization that the faster you can deliver, the more products the online buyer is likely to buy. Instant gratification is just around the corner — no muss and no fuss — so why not stock up on a few other things your heart desires while you’re at it. Amazon’s success during the pandemic and thereafter in sustaining its delivery capabilities and the speed with which it has operated since its inception is a model for logistics firms across the world.

In further response to the teachings of the pandemic, Amazon began a massive program to build additional, enormous, well-stocked, and strategically located warehouses. These distribution centers are typically located close to, but carefully outside of, major urban centers (except in New York, where a major facility is located in Staten Island). Proximity to huge populations of Prime customers is crucial, but dodging the pitfalls and the extortionate politics of our major U.S. cities was equally critical.

Collar counties and small exurban cities are ideal targets for these mammoth facilities, which promise to bring hundreds, if not thousands, of jobs. By and large, with some occasional whining about the associated truck traffic, these burgs are happy to have Amazon as their big new neighbor and employer, especially because there appeared to be no economic or environmental downsides. Funding for social projects, schools, and other local government initiatives also helped to smooth the path for these facilities.

But a new and far more problematic wave of development, modeled on Amazon, is gathering speed across the U.S., which communities have endorsed and supported based on their prior assumptions and overall positive experiences with the DCs. But this new activity — the building of self-standing and substantial data centers — is a far different and more complicated undertaking. Data centers come with near-term and potentially far-reaching environmental and other adverse consequences.

Everyone hears Chicken Little stories about the evils of AI, but in terms of the general public’s awareness, these tales are almost exclusively focused on the generative content created by the huge, large language modules that support the processing. Very few civilians and almost no city or state regulatory authorities have any real understanding of the ancillary costs in terms of power requirements, water consumption, and carbon footprint that these facilities will spawn. Common agreement — while noting that there are varying methodologies and measurement approaches — is that an AI inquiry takes many times more compute (power) than a comparable Google search does. Google, in the meantime, has also built its own AI stack.

The companies proposing and building these centers are making representations about control, remediation, and elimination with far distant timeframes, which are speculative at best and most likely unrealistic in any event. Meta’s DeKalb, Illinois, data center is a good example. Its plant envelope is about 2.4 million square feet, and cost about $1 billion to construct. Meta claims that it will support several hundred jobs when fully operational, has provided more than $1 million in direct funding to local schools and nonprofits, and has made more than 60 grants and sponsorships for other community organizations and programs.

At the same time, the company notes that it “expects” to be “water positive” by 2030 (at which point the project will restore more water than it consumes). Meta also notes that its global operations have reached net zero emissions. Needless to say, there are no remedies or redos for missing any of these objectives, and no regulatory tools to enforce or assure compliance — or even progress — in the interim.

Aurora, Illinois is another city that has quietly become the home for a number of co-located data centers for major firms such as the CME Group and Google Cloud, which are constructing multiple buildings to house trading systems. It wasn’t lost on anyone that Chicago’s new mayor has been threatening for some time to impose new taxes on traders, but that wouldn’t be possible if the trades are being conducted on computers and systems located outside city limits. Like in Aurora. Edged Energy — a division of Endeavour — is another national data center builder and operator that is building a new net-zero waterless data center campus in Aurora. And finally, Amazon itself has two fulfillment centers in Aurora with about 1,000 employees.  

The bottom line is an exciting and very mixed blessing for smaller cities in many states where no one can offer anything more concrete than their best guesses as to the long-term environmental concerns of the new technologies being tested and implemented. Data center power use will reach 35GW by 2030, according to one recent report, up from 17 GW in 2022. If we thought that crypto processing ran away with the world before anyone figured out exactly how much heat it generated and how much power it consumed, we may be looking at another version of the same old entrepreneur’s credo — build first and figure things out later.

STOP MAKING BIG TECH THE ENEMY

 

Stop Making Big Tech the Enemy

We're in a critical fight to stay ahead of China and India in A.I., yet our government and its regulators keep targeting the companies that are critical to winning. It's time we all played on the same team. 

Expert Opinion By Howard Tullman, General managing partner, G2T3V and Chicago High Tech Investors @howardtullman1

Sep 24, 2024

Election years are notorious for cheap stunts, useless hearings and the annually recurrent attacks on the tech and pharmaceutical industries. There's no lower-hanging fruit for these pointless pontificators than Big Bad Tech, and Big Pharma isn't far behind.

Nothing good ever comes of these abusive sessions except that they permit groups of know-nothing legislators to attempt to humiliate the leaders of some of the most important companies in America. They also consume loads of key management hours which - in these hyper-competitive times - is costly, counterproductive, and actively damaging to America's global market position.

Why anyone thinks these clown shows are productive has never been explained. Although in fairness, the price caps on insulin prices and prescription drugs that the Biden administration has executed are major and long-overdue accomplishments. They were so material and beneficial that the Orange Monster now claims that he was responsible for these new policies. He wasn't. The MAGAts had nothing whatsoever to do with it, but that's just another lie in Trump's vast portfolio of untruths.00:0001:49

The "gotcha" questions in these made-for-media harangues by idiots like MTG (R- GA), Lauren Boebert (R- CO) and James Comer (R-KY) are mostly for the benefit of right-wing cable networks. But they rarely result in anything more than displays of the ignorance of GOP hardliners. In 2018 Orin Hatch asked Meta CEO Mark Zuckerberg how his company could sustain a business model where its users didn't pay for the service. Zuck answered, "Senator, we run ads." Congressman Louie Gohmert (R- TX) once opined that climate change legislation requiring climate-controlled environments for computers could affect the Earth's orbit.  It's often hard to tell the monkey from the organ grinder in these boring bouts of one-upmanship.

And remember when Fox host Bret Baier tried to gotcha Secretary of Transportation Pete Buttigieg by asking him why Tesla wasn't invited to a White House session on tailpipe emissions? Imagine his surprise to learn that EVs don't have tailpipes. There's a quote attributed to Abe Lincoln that goes, "It's better to remain silent and be thought a fool than to speak and remove all doubt." Apparently, there are plenty of politicos and pundits where Abe's warning never got through to its intended audience.

One of the most vocal and insufferable of these congressional clowns is coup conspirator "Gym" Jordan (R-Ohio) who at last count - over a six-year period - clocked more than 565 appearances on Fox and has written exactly zero pieces of legislation during that period. This idiot appears to be preparing additional hearings on nonsensical subjects and is once again planning to seek the speakership in the House if Mike Johnson, the current holder, falls by the wayside because he partnered with the Democrats to avoid the pre-election government shutdown that Trump has been demanding.

Intelligent people might simply ignore these theatrics and the millions of dollars shredded by these stupid shows, but sadly the constant noise and attacks have had two more serious and destructive effects. They have turned substantial portions of the public against the tech industry and they have encouraged and empowered long and very costly litigation by various governmental and regulatory agencies with their own agendas, who never seem to learn their lessons either.

In a digitally connected and fundamentally borderless world of increasing global competition, our own government continues to be short-sighted enough to sue, hamstring and interfere with the operations of our best and brightest businesses in a number of critical tech areas. Decades wasted in pursuit of Microsoft led nowhere, just as breaking up AT&T did absolutely nothing to help the consumer. Threats to break up Amazon and spin out AWS are a bad joke, especially since AWS presently operates more of the U.S. government's back-end computing power than the government itself. The next obvious and very precarious battlefront - with the meetings and hearings already starting - is going to be artificial intelligence, where our edge is already being seriously challenged by China and India.

Only five or six major U.S. tech companies are sufficiently resourced to do battle on our country's behalf in these massive, expensive and complex technology spaces. I've previously explained how challenging it is for smaller operators, entrepreneurs and new business builders to go up against the power and ubiquity of these major players. And that contest seems to be largely over already. Nothing that the U.S. government does in the way of trying to restrict or interfere with their growth is likely to help us in the long run.    

It doesn't take an A.I. prompt engineer to figure out that it's not really a fair fight when the government is on one side of the battle, even if the biggest and most successful tech companies in the U.S. are on the other. And, sadly for our country, it's a more obvious problem and threat when the government in question isn't even ours. The officials and regulators of the People's Republic of China are sponsoring, funding and leading the charge against the U.S. tech industry on behalf of their own China-based businesses as they try to compete with us in the critical industries of the future - especially in the area of artificial intelligence.    

Instead of the government tearing these tech leaders down with stupid hearings and pointless litigation and further slowing our country's growth and initiatives in A.I., we need our political leaders to implement programs and strategies that permit and encourage collaboratives, consortiums, and other shared efforts to put all our resources behind a concentrated effort and a single goal - a U.S. win. Or we can count on being overtaken and outrun by China in the A.I. global marketplace.  

HOWARD TULLMAN JOINS LISA DENT ON WGN RADIO TO DISCUSS A.I.

 LISTEN TO THE SHOW HERE

LISTEN TO THE SHOW HERE

NEW INC. MAGAZINE COLUMN BY HOWARD TULLMAN

 

Why Tech Isn't Improving Your Advertising

The algorithm may have taken over the ad buying, but there's still no telling exactly who is watching your messaging.

 

BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@HOWARDTULLMAN1

 

Every entrepreneur will tell you that they absolutely hate to spend any of their scarce cash on advertising, for two main reasons. First, they're not sure that ads work-- there's a lot of "spray and pray" going on and not much in the way of credible measurement or tangible results. Second, they believe that their product or service is so great that people should simply be flocking to their doors to buy whatever they're selling. They think that, if you use your money to create exceptional products and services, you won't need to spend on advertising.

If only life were that fair or entrepreneurs were a little more realistic. For some businesses, advertising is the cost of being boring.  For others, it's an attempt to put lipstick on a pig. But at the end of the day, there's really not much choice. It's like dancing with a bear - you don't get to stop when you want to.

This antipathy is hardly an attitude limited to new business builders. The advertising industry has always known that, while everyone wants to make money, no one really wants to buy advertising. On its best day, advertising is a necessary evil and - much like cable television or insurance - always a grudge buy. Even worse, the advent of new technologies, which in other industries have dramatically improved transparency, productivity, and accountability, have only added more confusion, uncertainty, and imprecision to the ad game.

Advertising follows audiences, but with programmatic algorithms dictating the placement, frequency, and duration of digital ads, no one knows much of what's happening in the field. Claims about the effective addressability of digital ads are mostly optimistic fantasies clothed in the belief that the underlying tech will somehow get the job done. As John Wanamaker said long ago: "Half the money I spend on advertising is wasted; the trouble is, I don't know which half." Some things never change.

While some new companies like Dumbstruck can help advertisers determine whether the content of their ads is going to be effective, it's still anybody's guess as to whether you're getting your ads in front of the right buying audience at the right time and place. Context, given the abundant noise and clutter, is just as important as content, if not more so. Smart reach is still the name of the game and, as the migration from linear TV to digital video accelerates, determining whether ads are reaching the right folks, resonating with them, and driving purchase behavior is becoming increasingly difficult.  Average daily TV time is down from 3.5 hours a day in 2020 to less than 3 hours a day in 2023 while daily digital video viewing has grown by almost that exact amount from 2.5 hours a day to almost 3 hours a day in 2023.

As a result, linear TV ad spending has been flat to down over the last four years (stuck in the mid-$60 billions) and, even in an election year, there's not much enthusiasm for 2024. But, at least in the old days of traditional TV, you could sometimes see your ads running on the tube, while these days no one has any idea where their digital placements are showing up, what they're adjacent to, and who's seeing them. X (formerly Twitter and soon to be toast) is the most visible poster child for the risks of having no control and no say over what some algo decides to position next to your offerings. But the whole industry is now driven in large part by fraudulent next-gen click bait systems designed to attract programmatic ads.  These MFA programs have led to an environment where one in five links is to a fake site delivering made-up facts, phony health products, or pathetic financial pitches.  

That's no problem if you're targeting kids up to age 18, because since  TikTok and YouTube completely own the video market, the choices are pretty much locked in,  and frankly the advertisers focusing on these kids don't really care about quality engagement or first-party data. It's all about tonnage. TikTok's ad business is growing about twice as fast as Meta's and almost 4x faster - year over year - than Alphabet's. And because of TikTok's delivery methodology and typical video duration,  cost-per-view to advertisers is a fraction of what they have been paying for decades in more traditional channels.

But for mature and serious businesses seeking to actually connect to real human beings who are interested in learning about and ultimately purchasing their products and services, the problem is much more complex and challenging. TikTok isn't going to get the job done, but new ancillary networks are being built which make much more sense for serious advertisers. The most attractive of these are the retail media networks being developed by merchants like Walgreens, Kroger-Albertsons, and Walmart. They have extensive first-party data about their customers, strong and recurrent connections to them, and relatively high-quality engagement. But they lack the massive scale of players like Netflix. However, in combination, they can provide a solution which also offers levels of addressability, measurement and accountability that the digital vendors can't yet duplicate or effectively compete with.

The bottom line is pretty simple. As attractive and rapid as the newest delivery and tracking ad technologies may seem, as the ad buyer you're being asked to put far too much trust and money in "take my word for it" systems where the results are machine-driven and fundamentally unmeasurable. A much better bet is to take a step back and use channels and vendors whose methodology and mechanics are clear, understandable and auditable in more concrete and convincing ways.