Innovation may be “the only national strategy” the U.S. can have, but what about the jobs?

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Session name: CE Mobile Trends and Innovation
Om Malik
Gary Shapiro

Moderator 00:00
Let’s get moving. I want to bring out the first talker today, it’s my boss, so Malik is going to be talking with Mr. Gary Shapiro, the President & CEO of the Consumer Electronics Association, please welcome our first panel of the day.
Om Malik 00:21
Welcome Gary.
Gary Shapiro 00:23
It’s great to be here, very exciting.
Om Malik 00:25
You didn’t get me out to see, that’s why I got you out here. I’m kind of winning right now. Welcome, I also wanted to talk you because I’m super excited to read your new book “Ninja Innovation: The Ten Killer Strategies of the World’s Most Successful Businesses”. Hopefully, you will write an 11 killer strategy and talk about us in the future. But jokes aside, you know what I really wanted to talk to you is about innovation especially the American innovation and how it fits into the context of the world we live in today where everything is getting connected and digitized. So, how do you see us as a country playing a role in the future?
Gary Shapiro 01:16
Well, to us innovation is the only national strategy we can have, if you look what’s going in Washington today, it’s a battle between those who want to raise taxes versus those who want to cut spending. But, the third way that we advocate is growth and growth only comes from innovation. So, we believe that innovation is and should be our national strategy that can bring everyone together and it’s what we’re made for. Innovation is important in U.S. not only because it’s a solution, but because it’s who we are. Innovation benefits from free trade, it benefits from a cultural factor such as the ability to fail and have that success. That’s unique only in United States and maybe Israel is that where you can, failure is something which is actually growing in education, elsewhere it’s a badge of designer. We’re the most diverse country in the world that is really good for innovation to have different points of view at the table. You go into a lot of the Asian culture, it’s very homogeneous, they don’t every say no to each other, they’re not honest. And well, our kids may not be very well on some of the standardized tests sadly, they do grow up from a very young moment in our schools asking questions. Why, why not?
Om Malik 02:23
Sure. One other thing which we’ve been about is the idea of the marriage of silicon and the web, like the web technology, right. For the longer of time silicon has always existed in isolation and I kind of look at this in a few, this is a golden opportunity for American entrepreneurs and young people to kind of try marry the silicon with newer technologies like Java script and known and do interesting themes. Do you think that becomes the thin edge which kind of open new opportunities both on a manufacturing and devices on that standpoint?
Gary Shapiro 03:04
Yes. This is the only point in the history of the world where anyone can start an international business basically with a broadband connection and a device. And that’s good, because it’s international and anyone can do, it’s more difficult in a way for any unique area or the role to say, we’re the best of that. But, you have the manufacturing component and obviously one of the things that’s really cool is developing very quickly is 3D printing technology. So, you can buy 3D printing technology and the concept of being able to start the business internationally anywhere, manufacturing becomes less of an issue and you have an opportunity really for anyone. Now, when I go around rest of the world now, as in Israel, London and Paris in the last two weeks, everyone is talking about how they could be like the United States, except Israel. And Israel, they probably have more innovation per person and even Silicon Valley, if you measure innovation either by patents, startups or IPOs. So, what they have difference I was told by the way is, they have Jewish mothers which are really good for innovation.
Om Malik 04:01
Have you met an Indian mother ever?
Gary Shapiro 04:09
Have met a tiger mom, a Chinese mom, my wife insists on–
Om Malik 04:14
And the phone is about during; thank god it’s not in my pocket right now.
Gary Shapiro 04:18
So, we’re like incredible point in history and everyone says, well, we’ve invented lot of great things and certainly the internet revolutions made a difference, the wireless revolution as we shift to the internet and things. But, I’m convinced we’re still the very, very beginning here, we have so much to go in terms of robotics, sensing technology, nanotechnology, obviously driverless cars have a huge impact in so many different areas and things that where we’re going. Last Friday, I was in Detroit at GM OnStar, GM OnStar has been around for a while, but we’re paying our attention what they’ve done, they have this map with the United States and they show when, like every airbag was deployed that day and it was amazing how many airbags were deployed by noon at that day, every accident, every call and from that you get a tremendous amount of information and we’re going towards using all these things to change the world literally, in a safer way.
Om Malik 05:14
Airbags are going up or going down?
Gary Shapiro 05:16
Well, it’s over the course of a day where they’re deployed around the United States, one of the worst areas of travelling and when an airbag is deployed and some pretty serious happen and the good thing about that and using technology and saving lives is they’re contacting the local police immediately and saying an airbag was deployed.
Om Malik 05:32
Outside of this GM, so kind of dodge cars anyway.
Gary Shapiro 05:36
I don’t know if GM is dodge cars, the car companies are competing now on the basis of technology, used to be a horsepower, now it’s can you bring the Wi-Fi and everything else into the car and make it a great experience. Eight of the ten largest car companies are now with CES in a big way and it’s the whole roles have changed for them and I might add, the guys who [monitors?] so they have hundreds of positions for software engineers that they’re trying to recruit in Silicon Valley. So, they’re helping bring back the trade. I mean, all these are good things.
Om Malik 06:05
So, it seems like you’re quite an optimist about things in the future, but at the same time all of us know that we’re hobbled by people who want things not to change whether it’s Washington, the legislator, the FCC, the AT&T and horizons outdoor, everybody has a vested interest in status quo and the future we talk about the internet of things, sensors everywhere, which means amazing amount of connectivity in bandwidth and an openness and a willingness to work with other people. But these relics of the past are still playing by the rules of the old industrial era, so like, how do we overcome that like you’re talking to all of them?
Gary Shapiro 06:50
Well, here is a great point. So, I’ve spent 30 years of my career working for this trade group of 2,000 technology companies and because of this technology and it’s innovation, every innovation is affecting someone else’s balance, so as per my entire career in Washington fighting status quo industries, where it’s Hollywood, the broadcast, cable industry and they all want to keep their monopoly as they have it and they view the world as the status quo show is changed. If it stay the same and it’s not going to change that is a challenge, and look whether it’s Huber or [?] a few years ago and now it’s Aerio and there’s companies have come along and changed the rules. And we are out there and our view is you have that this is the American way, this is what the first amendment does, this is what due process does, and we’ve to play the game, we’ve to lobby, we lobby on the side of innovation that is our bias. And our best moment was the pepper supper debate when all of a sudden the world of innovation stood up together and said this is unacceptable, you may not freeze the internet because you have a status quo and you want to protect. And so, yeah, it is a huge battle, the rise is above, some people are fighting to copper lines mandatory all the time and then the phone companies must keep replacing copper lines, I mean, copper is ancient at this point that’s not the future. But that’s a challenge we face Washington is not usually our friend on these issues; it takes a lot of work.
Om Malik 08:13
I don’t want to get into the whole argument why we need to keep the copper in place because frankly we should not trust the phone companies they’ve never done like by the consumers, like that’s like ask anybody and they’re except from the people who are from the phone company, they’ve never done, like I can get across the board nobody is in love with their phone company.
Gary Shapiro 08:34
Actually I’ve [Fios?] and I’m in love with my phone company.
Om Malik 08:38
I have web pass that is called true love. $400 a year for 200 megabits per second at home.
Gary Shapiro 08:46
To me the important thing is, there will be compensation between if the broadband providers and all these other issues it is transparency, they build it to get out of a contract and competition, you don’t need Washington.
Om Malik 08:57
Well, I think if there was no Google fiber, they wouldn’t be doing the gigabit networks, AT&T wouldn’t be experimenting with that in Austin and time won’t be looking, I mean, the facts is the guys who have status quo are the enemies of innovation. What can we do to fight them, basically that is the challenge of today, because the future is staring us in the face, these business models are of the past and that is the clash we have now. How do we overcome that?
Gary Shapiro 09:27
I want to challenge that assumption because I do not give a rise in AT&T, Google, Microsoft, even Facebook now, Intel, Qualcomm, they’re big successful companies, I don’t think they’re the enemy, I think they’re like, Intel’s view of the world is they’re paranoid about the future and they should be because they know the world is changing that’s a question of leadership and they’re all different. They want to survive in the future too, and the smart ones are saying we’ve to change, we’ve have to do things differently and my experience with Verizon and AT&T is that they’re desperately trying to change quickly because they know they will passed by just the way broadcasters have been passed by, cables being passed by. Anyone who has a pipeline knows they got to be something more in the pipeline and that’s why you have, people go into production of original content, they’re doing all sorts of things which are really good.
Om Malik 10:14
But, should they be anything more than a pipeline, what’s wrong with being a good pipeline?
Gary Shapiro 10:18
Well, the problem being a pipeline is my vision of the world that I want to see, we’ve advocated for 20 years now as broadband pipeline should be competitive with each other and if you have really good competition honestly their profits go down pretty low and that’s a great thing for consumer so then the innovation occurs either end, in the cloud and at the device.
Om Malik 10:37
I challenge you on this mostly because I look at this and say they should do good networks not worry about how we use it, like PGNE doesn’t worry about how I use my electricity or do I buy GE appliances or Samsung appliance, they want to bring me power.
Gary Shapiro 10:56
I’m sorry, PGNE is one of the worst utilities in the country, I mean, they’re disaster.
Om Malik 11:00
But, it doesn’t go like except for a few months where Enron was messing with the. Things were like working, they’ve never like, electricity always works and whereas there is like, I’m standing in my bathroom in my apartment and my phone doesn’t work though it works right next door. So, the companies like Verizon and AT&T and I’m picking on those two, but they’re not the only one. The encumbrance like the wireless encumbrance should be spending more attention and making better networks.
Gary Shapiro 11:30
Well, they should be spending on the intention of what they want to, where they see a business opportunity not allows innovation. I was looking at Verizon they have these glasses you put on your head and for blind people and for firemen to smoke things and you could actually see in areas where people who never seen before. So, if they see an opportunity for innovation they should go after it, that’s what innovation is about, is about chopping in, now innovation is tougher for big companies because they’re always a protecting their legacy businesses. But they can’t do it, look how Steve Jobs did at Apple, he created a ramp group and said, go for it and they went for it. But that’s what big companies can do, but there is no question that smaller companies have an opportunity because bigger are protecting status quo and they’re tough, they’re like ocean liners that are tough to turn around. But given credit it is America it is free for them to try things and I wouldn’t write them off.
Om Malik 12:15
So, what are your liking these days, what are the new companies, new technologies was exciting you?
Gary Shapiro 12:20
I guess I was pretty pumped up from returning from Tel Aviva last week where there is so much going on in different areas that are really solving a lot of major problems and the things are happening very quickly. Given the debate about Obama kind of healthcare and to me the real answer is not the debate or even the issues, the issue is how could technology bring down healthcare costs and we’re seeing things like the Fitbit and other products which allow monitoring of all sorts of things but then, it is going to be, there is a company called Healthspot for example where you can put a kiosk anywhere in the world where there is wireless and someone goes in there and they’re immediately hooked up and the vitals are taken there and hooked up to the appropriate doctor and they have other things taken and they get a diagnosis and was near a drug store to get their drugs, this could happen anywhere in the world. So, in terms of solving healthcare problems I’m so geared up about the wireless cars, because I feel bad that people are texting while driving and it’s wrong and we’re trying to stop it and we’re working with AT&T and Verizon and everyone else. But, our products are causing people to die and I want that to end and the solution to me is, everything on the way to a driverless car, whether it’s collision avoidance or all sorts of technologies are coming so quickly or even steering wheels and dashboards which look at whether you’re paying attention or not or do sorts of things. So, there are lots of technology that provides the solutions but with the driverless car, think about it, it will be here, it is inevitable and now are causing major societal change, there will be few accidents, insurance companies, tow trucks, all sorts of things will change dramatically and maybe even the concept that car ownership will change. Why would you need to own a car if you could always summon one relatively and expensively. So, robotics is another example of things, they’re saving lives, saving injury, getting away from menial tests. But a lot of these have societal implications on jobs, on the economy and we’ve to play it out. But to me, it almost religious that you to have to look innovation and its course.
Om Malik 14:10
So, how do you think we deal with the shift in jobs and the displacement of a lot of workers who are involved in making up the cars and making of all the gadgets, there is a lot of industrial economy which employs a lot of people, what happens to those?
Gary Shapiro 14:27
I keep wondering about that. I’ve been in factories throughout the world, in China, in the Philippines and Asia and Mexico and elsewhere and these factory jobs are and I’ve worked in a factory, it was a finding moment for me, I told my dad, I’m going to college after that. These jobs are not jobs that educated Americans when want to take. So, on the one hand these are not jobs we want and machinery will replace them, on the other hand you have billions of people and when you’re productive and you’re employed and you feel you’re contributing, can happy replace with doing things more culturally are not. I don’t know the answer to that question, but we just can’t become a society of security guards and fast-food workers with the fuel lead at the top and I don’t pretend to have the answers but I do think that’s not a reason to stop innovation from occurring.
Om Malik 15:11
Have you heard any reasonable ideas or experiments around this, how we transition from today to tomorrow, what’s the right way of thinking about creating new opportunities, redeploying all these industrial workers?
Gary Shapiro 15:27
I use a very lot of science fiction and some of these fancy and some isn’t. I think that the move towards localism is an important movement whether it’s for agricultural purposes or smaller businesses, I think we’ve to have this bias in this country that we have towards smaller businesses and startups. The most important there is a book that just came out that point out all the net job growth in all last ten years comes from startups. I think to the extent we focus the United States leisure like nano and innovation but the concept to startups and risking and raising money and start trying to things as a good thing, naturally healthy. Because startups do employ a tremendous number of people and is a way of getting great experience.

Statistically it may not be lucrative for everyone who is there, but it does move you onto the next thing, and the next thing, and the next thing. So, I think as long as we keep going forward will be okay.
Om Malik 16:15
So, would you flag the start, what are the startups you come across, you feel very excited about right now?
Gary Shapiro 16:22
Well honestly, this is like asking which your children and you favor when you thousands of children. I see so many.
Om Malik 16:29
Which one?
Gary Shapiro 16:30
Well, there is a company that I’ve just read about in Israel which it has nothing to do anything here, but it does have the ability to take a fiber optic cord and measure vibrations on it and you step of the way so you can get tremendous amount of important information which viable now in pipe drilling, enjoying for a while, but if you take a pipeline for example and you want to avoid terrorism, today you know there is terrorism the oil pressure goes down at the end and we trace the pipeline up thousands of miles. There you just put this fiber line along the whole thing and you can terrorist to be there before they do. They caught some terrorists because there was a car there, two in the morning they knew exactly what it was, vibrations of the pipe and when that car showed up again they were there waiting for them and they knew that they were about to blow up the pipeline. So that has border implications which is one of the big issues that are dividing republicans and democrats, the immigration reform which I think is essential because we got to get strategic immigration, that means you have to get past the bigger immigration issue. So there is a lot of ramifications of technology to solve these problems and healthcare and immigration and elsewhere, Washington fights but the solution is coming from this community right here.
Om Malik 17:38
Well, thank you Gary, I like to go on and on, but seems like our time is up. If you guys get a chance buy a Gary’s book, “Ninja Innovation”, he writes a lot, you shall follow him online and thank you Gary for coming and speaking to us.
Gary Shapiro 17:52
Thank you, I appreciate it greatly.