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In a normal year, I always look forward to attending conferences such as Fortune’s Brainstorm Tech, as they give me a chance to take the pulse of the industry and see the topics that are top of mind for some of the leading executives. This year, these conferences have been virtual, and while it’s not the same, I still did find the annual Fortune event to have a few interesting things.
IBM CEO Arvind Krishna said that IBM expects to have quantum computers with the equivalent of 1,000 cubits by 2023, and expects it will have a commercial impact in 3-5 years.
Moore’s Law as we’ve known it is coming to an end, he said, so “If you want to understand penicillin or caffeine, you can’t do that on a conventional supercomputer, no matter how big you make it.” He sounded particularly upbeat on applications such as drug discovery in medicine, which he said was further down the road, but also talked about applications such as materials science, weather forecasting, and financial modeling. He predicted quantum computing would have an impact on its clients of hundreds of millions of dollars.
Krishna talked about how studies indicate AI could unlock $16 trillion in productivity, and said IBM is focusing only on enterprise AI, giving examples such as looking for risk in financial regulations and analyzing legal documents. He noted that unlike consumer AI where you may be dealing with lots of examples, in enterprise areas you may have smaller sample sizes. He said IBM has worked on thousands of projects with clients, and cited Children’s’ Hospital in Atlanta using Watson to answer COVID-related questions.
He also talked about the company’s plan to spin off its managed infrastructure services group into a new company, so that IBM can focus on hybrid cloud and AI, with the goal of getting to “sustainable mid single-digit growth.” I asked why that goal seemed so much lower than the growth we’re seeing in cloud from competitors such as Amazon Web Services and Microsoft Azure, and Krishna said that the growth number applies to the whole company, not just the cloud portion which is growing faster; and that he viewed AWS and Microsoft as partners, not competitors.
Google Cloud CEO Thomas Kurian talked about how the pandemic has accelerated the shift to digital that was already underway, as seen in areas such as telemedicine, e-commerce, online ordering from restaurants, and even manufacturing. He said the company was focused on taking every workplace and helping to digitize it, and on helping people collaborate.
I was particularly taken by his ideas on how the hybrid office might evolve, with people coming to a physical space primarily to collaborate. He described how this might work with an “onsite offsite” where people who are normally working remotely gather at the office but remain socially distant in order to brainstorm and create new product ideas.
With WhatsApp surpassing more than 2 billion users, Will Cathcart, who heads the Facebook-owned application, discussed ways the company might make it more profitable. He noted that the messaging app is mostly used outside of the US, with the top countries being India, Indonesia, and Brazil, so it has a potential to grow more (although it is blocked in China).
Cathcart said the product is mostly being used to help people connect “in a private, personal way,” but is frequently now being used for “getting things done” such as getting World Health Organization updates, and by businesses for keeping in touch with their customers.
He said that while Facebook makes the basic service free, people use the service to connect to businesses, saying it is better to send a text and get a response than to wait on hold. “If you are someone who uses WhatsApp, and you want to reach a business, you should be able to do it over WhatsApp,” he said.
This offers businesses a better return on investment than traditional call centers, and “we charge for that.” To the end of making this better, Facebook acquired Kustomer, an application that helps businesses manage such communications; and has partnerships with other tools such as Zendesk, that plug into its ecosystem.
He said Facebook has discussed putting ads in the status part, though not in the messaging tab, but that this was not something it planned on announcing anytime soon. He said he could see advertising that instead of pointing to a website, asked potential customers to message them on WhatsApp. He said customers like that, and businesses prefer it because they get more sales.
Cathcart strongly defended the application’s use of end-to-end encryption, citing the need to keep conversations private, and the increasing threat from both hackers and foreign governments. He said that for sensitive communications, ” trust is important,” and how with end-to-end encryption, “no one can see what you’re saying, not even us.” This he said was important for governments, doctors, and businesses. Asked about the debate to outlaw strong security, he said “that would be a grave mistake” and said governments should be mandating more security for the Internet, not less.
Dan Ammann, Chief Executive Officer of Cruise (which is backed by GM, Honda, and SoftBank) gave a cautiously optimistic view of where autonomous driving is heading. His firm was recently granted a permit to do fully driverless testing in San Francisco, but said we were “just at the beginning of seeing how this can get deployed in the real world.”
He said he expected autonomous driving to make tangible and dramatic progress in the next year or two, as it is getting closer to a commercially viable product. Showing off the company’s prototype vehicle, which he said was designed to have a useful life of more than a million miles, he said the goal is to make transportation more affordable, safer, and better for the planet. He said this year’s approval was a big moment, but also just another waypoint on a longer journey.
Managing in the Pandemic
A lot of the discussion dealt with the changes that business is facing due to the pandemic.
A number of tech executives talked about things that have improved during the pandemic. Box CEO Aaron Levie said while no one has enjoyed the pandemic, “we’re making the most of it, making sure that we are continuing to build strong cultures, making sure that we continue to drive innovation in our software and products.”
He talked about how technology has allowed organizations to bring together more people than ever before, in some forms of productivity and collaboration. But he said he is missing the “messiness of people in person,” which he said leads to innovation, such as through team brainstorming and new ideation. He said he believes “the future will be hybrid.”
PagerDuty CEO Jennifer Tejada agreed, saying that while she did not anticipate a requirement to come back to the office for full-time work, that after months of remote working, more people want to be in the office somewhat. People will want the convenience to choose what works for them, she said.
Okta CEO Todd McKinnon agreed that video is not good in getting multiple voices talking at once, and he believes it requires more pre-sharing of written information before meetings. But overall, he said, the pandemic has highlighted how leaders need to listen to the concerns of their staff and make the proper adjustments.
Accenture Chief Executive Officer Julie Sweet talked about the challenges of reopening “How do you bring people back and not disproportionately affect those who are not able to go back?” she asked, citing employees who are caregivers or who might have young children.
She talked about how the challenge was not to maintain business culture during this shift, but to evolve it. She said that the digital leaders are doubling down on digital transformation, but some companies that were before are using the learnings of other organizations to “leapfrog” their competitors.
She was particularly concerned about the impact on more diverse groups of employees, noting that people of color tended to have professional networks that were “smaller and more fragile before COVID” and have been really challenged by working remotely. She said Accenture has worked to help employees of color at its company build their own networks but said the pandemic has challenged that progress.
One of the most interesting sessions dealt with how technology has helped map the spread of COVID and should help distribute vaccines globally.
Este Geraghty, Chief Medical Officer of Esri, showed how looking at a map of cases in Iowa and facilities that could handle the vaccines, you could identify communities at risk because they weren’t within a 60-minute drive. She also noted that we can now do things like use mobile phones to monitor movements, so you can see how people are behaving and identify “pandemic fatigue.”
Michelle A. Williams, Dean of the Faculty at T.H. Chan School of Public Health, Harvard University noted that technology can help identify the problem for remote delivery, but doesn’t also address the human factors, such as rebuilding trust and dealing with hesitancy to take a vaccine. She said that there were advantages to things like tele-medicine for preventive care and wellness care, and a possibility to bring more services to rural communities, she also highlighted the need for “thoughtful communications” to identify other risks, such as food and housing insecurity.
Of course, as always, there were financial sessions, fitting in with Fortune’s basic point of view. The opening session focused on special purpose acquisition companies (SPACs), a resurgent way that several tech companies have chosen to go public. Ashley MacNeill, Co-head, Emerging Technology Capital Markets at Morgan Stanley talked about how this year has seen lots of innovation in both SPACs and traditional IPOs and highlighted how either approach still needs public investors to participate.
Paul Ryan, board chairman of Executive Network Partnering Corp (and former Speaker of the US House of Representatives) discussed his firm’s variation on the SPAC idea, which brings in not only capital, but management to the company, which he said allows for better “long-term sustainable value creation.” Lise Buyer, founder of Class V group noted that SPACs have traditionally been used by companies that had reasons for not doing a traditional IPO and noted that SPACs often have a short window to invest, which raises prices. But she thought Ryan’s approach was a clever variation.
New York Stock Exchange President Stacey Cunningham said this has been the busiest year in the history of the stock exchange, which was surprising because things have been so volatile. She noted that this was true for not only IPOs but for secondary offerings as well. She noted that companies have been staying private longer, but that starting in March, it got harder to access private markets but easier to get in public markets, so that’s why a lot of companies wanted to get ready to go to give themselves more flexibility.
Angel investor Ron Conway, known for early investments in a host of Silicon Valley successes such as Google, Airbnb, and Stripe, says that despite the pandemic, the amount of deal flow “has not reduced at all.”
“About 60 percent of all the companies we invest in go out of business; we don’t make a nickel,” he said, with another 30 percent that may break even. But he noted, that he’s had successes with 10 to 20 percent of companies, and said, that’s “enough to pay for all the ones that went out of business.” He talked about the importance of founders, and suggested even if a founder has a failure, if they handle it well, he will invest with that founder again. His example here was Napster, which he described as his “most colorful disaster” but how one of the founders, Sean Parker, was later involved in many big successes, including Facebook and Spotify. Of new companies, he said, one of the most exciting was Faire, an online wholesale marketplace.
He said he was proud of having invested in companies like Facebook, Twitter, and Snap, but noted the potential negative impacts. He said over the years, users had goals and ambitions that the founders never anticipated; and that all of these firms are still trying to catch up with the “bad people.” He said this will take a lot of conviction and a lot of work.
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