19 – #LOOP

Charles pulls up to the curb in a brand-new Lincoln Towncar, black and sleek, radiating wealth and privilege, and stops before me. His car is mine, and Charles is my driver — temporarily. I have magicked him up from my mobile, firing off a text message with my address to a service called Uber. I receive confirmation of receipt of my request, then, just a few seconds later, confirmation that Charles would be with me in three minutes.

If I had been using a smartphone, the process would have been slicker and more visual. I would have launched an app that would locate me – using GPS – then place me on a map, showing all of the nearby available limousines. After I my pickup request had been received and accepted, all of those limousines would disappear from the map, except the one coming to fulfil my request. As the car drew closer to me, I’d see it approach, allowing me to meet it precisely as it arrived. Seamless coordination, courtesy of the mobile.

Even though it costs a fair bit more than a taxi, with this kind of convenience Uber has been blessed with raging success. People like the feeling of control – real or perceived – that comes from watching their driver approach. While they stare down into the screen, Uber gives its users a sense of ominpresence. They know, if not everything, much more than ever before. That knowledge allows them to do more, giving them a small taste of the freedoms enjoyed by the very wealthiest.

Limousine drivers like Charles love Uber, too. Before the service launched, those drivers would spend half their time doing nothing, idling their hours while waiting for the next pickup call to come in. Drivers now add Uber jobs to their regularly scheduled pickups, nearly doubling their earning power within the same eight-hour shift. Mobiles have given limousine drivers the same economic acceleration that mobiles gave the fishermen of Kerala fifteen years ago – creating a highly efficient market which satisfies an increased demand, dramatically improving the earning potential of everyone connected.

Economists recognize that when a sudden change in market dynamics produces a burst of new wealth it encourages people to enter the marketplace. A ‘gold rush’ begins, as everyone looks for a way to vacuum up some of the new-found fortune. Most markets have ‘barriers to entry’ – to be a fisherman, you need a boat and rigging and nets and a crew; to be a driver you need a rather pricey limousine. These barriers make it difficult for the market to become immediately overcrowded, but the lack of competition increases the incentive for everyone already participating in the market to maximize their productive behavior. The more productive you can be within a closed but growing market, the more you will earn.

For Uber drivers, this means putting their limousines where they’re most needed. But they’re not alone in this, so the busiest parts of the city are also those with the greatest supply of drivers, which means drivers still have to wait for jobs. Even closed markets can be locally oversupplied – particularly where participants within a market can smell all the money to be made.

Uber drivers run a companion version of the smartphone app that Uber customers use. This app allows them to bid on pickups, but does not reveal the location of any of the limousines around them, competing for the same business. Uber’s drivers have less information than Uber’s customers. As a consequence, limousines tend to cluster, because drivers don’t know that they’re all converging on the same small – and presumably lucrative – area.

My driver Charles has a solution for this dilemma: he owns two mobiles, and runs both Uber apps. The driver app delivers pickup requests, while the customer app reveals the locations of any limousines nearby. “One evening I came into the city,” Charles reports, “and there were four limousines within a block.” Knowing this, Charles moved on, finding another, under-served area of the city, and got plenty of work.

Uber may not want its drivers to know about the location of other drivers, but it wants to reveal that information to its customers, so drivers simply poke holes in the wall that separate the two sides, peering through, and learning where to position themselves for greatest profit. The drivers use all information on offer – from every source – to give themselves the greatest advantage.

Charles says he’s one of the few Uber drivers using his smartphone to give him the inside track with a degree of omnipresence. It’s a technique new to him, and he doesn’t say whether he thought it up himself, or if he copied it from another driver. Either way, as Charles’ success becomes more visible, his peers, watching what he does, will copy his keys to success. What he knows will be replicated throughout the fleet of drivers until this exceptional behavior becomes pervasive and normal.

Soon, Uber will either need to provide drivers with all of the information drivers provide to Uber, or every Uber driver will use two mobiles, one for orders, and another for omnipresence. As drivers learn more about one another, they learn how to avoid economically damaging behaviors, such as clusters. The drivers self-organize, spacing themselves throughout an area in a way which generates the greatest economic advantage for each individual. They will act as a unit – as if they all answered to a common mind – although they have no central command, accept no controlling influence, and simply work to maximize their own financial interests. This emergent behavior – seen first along the Kerala coast – is the inevitable consequence of connectivity.

The information flows of connectivity move back and forth, never just in one direction, looping through us, out into the world, and back again. At every step, this information, transformed by the individuals it passes through, also transforms those individuals. “All knowing is doing, and all doing, knowing.” To connect is to know, to know is to do, and doing carries with it the opportunity to connect.

This never stops, nor ever slows.

 

2 – #INTRODUCTION

2 #INTRODUCTION

We live in a connected world.  

Not limited to the wealthy nations and peoples of the world, nearly six billion of the planet’s seven-billion-and-counting individuals own a mobile.  Rich and poor, everyone sees the value in being continuously in-touch.  Connectivity creates opportunity.

A story related in THE ECONOMIST perfectly illustrates the relationship between connectivity and opportunity.  For thousands of years, fishermen in the Indian state of Kerala, on the nation’s southwestern coast, sailing their sturdy dhows into the Indian ocean, have dropped their nets, said their prayers, and harvested the sea’s bounty.  Once they’d filled their hold, the fishermen would head back to the mainland.  At this point, they’d be faced with a choice: where should they sell their fish?  The Kerala coastline, dotted with ports and fish markets, offers fishermen lots of choices, and the markets need fish every day.  Working from instinct, the fishermen would pick a port, and sail into it.

Inevitably, other fishermen would have had the same idea, pulling into the same port at the same time, their holds also filled.  Suddenly there’s a problem of oversupply: Too many fish for sale means low prices at the market.  A fisherman might just barely cover their costs, no matter how hard they worked, or how many fish they caught.  Meanwhile, just a few kilometers away, another fishing port had been forgotten by all the fishermen that day.  No fish for sale in that market, at any price.  The Kerala fishermen had grown used to their subsistence lifestyle, and Kerala fishmongers to their inconstant supply.  It’s just the way things were, the way they’d always been.

In 1997, mobiles came to Kerala.  Cell towers began to spring up all over Kerala, including its extensive beaches.  Radio signals travel in straight lines, so mobile coverage carried out to sea for nearly 15 miles.  Anyone could make a call from the middle of the Indian ocean, almost out of sight of land – if they had a reason to make a call.

As is the case everywhere, the first mobiles were expensive to own and use, so only the wealthy could afford them.  A month of a fisherman’s income barely covered the price of the cheapest mobile.  (In relative terms, mobile cost as much to a Kerala fisherman as a good used car would cost us.)

At least one fisherman had enough spare cash to purchase a mobile.  That mobile went out to sea and at some point – no one knows precisely who, or where, or when – someone rang that mobile.  Over the course of a conversation, the fisherman learned about a fish market which going without fish that day.  He immediately set his sails for that port, and made a tidy profit on his eagerly awaited fish.

The next day, the fisherman phoned around, calling each of the fish markets in succession, learning which of these markets most needed fish – and would pay the most for it.  That day the fisherman made another excellent return on his catch.  The same thing happened the day after that, and the day after that.  With his mobile to check the markets, every day brought a very nice profit.

News of the mobile-facilitated fish market spread very quickly throughout Kerala.  Within a few months, every fisherman, from the poorest to the most well-off, owned a mobile, checking prices at several fish markets before selecting a port of call.  Three things happened as a result: every fish market now had a supply of fish; the price of fish at one market matched the price of fish in another market; and the fishermen now got the best possible price for their fish, every day.  That mobile, which had cost a month’s income, could be paid off in just two months.  

Kerala’s fisherman have a new tool, helping them earn more money.  They’re not alone.  Farmers in Kenya use DrumNet, a text messaging service allowing them to check the current market prices for their produce at a range of locations.  When a farmer readies his vegetables for sale, he sends a text message to DrumNet, using the response to select the market offering him the best price.  Forever at the mercy of the weather, insects and crop blights, farmers have also suffered from ‘informational asymmetry’ in the marketplace, never knowing quite enough to make the most of their opportunities.  Connectivity wipes away these asymmetries: using DrumNet, Kenyan farmers have been earning as much as 40% more for their vegetables.

In Karachi, the largest city of Pakistan, barbers have always had to rent an expensive stall in the public markets to ply their trade.  As Pakistanis bought mobiles, a different kind of commerce became possible.  A barber can just print up signs reading “FOR A HAIRCUT CALL 03XX-YYYYYYYYY”, posting them on any available space.  Everyone is better served by this relationship: the client gets on-call service in his home, while the barber saves a fortune in rent.  

The market, which had always been attached to a place in space and a point in time, has migrated into our mobiles, following us everywhere, all the time.  Unexpected and unpredicted, most businesses have little understanding of how this transition to a universal market fundamentally transforms commerce.  Yet billions of individuals have already grasped the truth: the mobile is the most potent tool for wealth-creation since the invention of the metal axe-head, thousands of years ago.

The business case for the mobile is irresistible: a small investment yielding enormous returns.  Owning a mobile in Bangladesh or Peru or Nigeria dramatically improves your capability to care for your family.  As people saw their employers and friends and family using the mobile to earn more money, the mobile became the must-have device, the universal item in the 21st-century toolkit.

Marshall McLuhan wrote “We shape our tools, and thereafter our tools shape us.”  Seeing it as an essential element for our success in the world, we have taken up the mobile.  We grow richer, but this gift comes at a cost: the more we use the mobile, the more we are transformed by it.