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Exponential technologies (AI, VR, 3D printing, and networks) are radically reshaping traditional retail.
E-commerce giants (Amazon, Walmart, Alibaba) are digitizing the retail industry, riding the exponential growth of computation.
Many brick-and-mortar stores have already gone bankrupt, or migrated their operations online.
Massive change is occurring in this arena.
For those “real-life stores” that survive, an evolution is taking place from a product-centric mentality to an experience-based business model by leveraging AI, VR/AR, and 3D printing.
Let’s dive in.
Last year, 3.8 billion people were connected online. By 2024, thanks to 5G, stratospheric and space-based satellites, we will grow to 8 billion people online, each with megabit to gigabit connection speeds.
These 4.2 billion new digital consumers will begin buying things online, a potential bonanza for the e-commerce world.
At the same time, entrepreneurs seeking to service these four-billion-plus new consumers can now skip the costly steps of procuring retail space and hiring sales clerks.
Today, thanks to global connectivity, contract production, and turnkey pack-and-ship logistics, an entrepreneur can go from an idea to building and scaling a multimillion-dollar business from anywhere in the world in record time.
And while e-commerce sales have been exploding (growing from $34 billion in Q1 2009 to $115 billion in Q3 2017), e-commerce only accounted for about 10 percent of total retail sales in 2017.
In 2016, global online sales totaled $1.8 trillion. Remarkably, this $1.8 trillion was spent by only 1.5 billion people — a mere 20 percent of Earth’s global population that year.
There’s plenty more room for digital disruption.
AI and the Retail Experience
For the business owner, AI will demonetize e-commerce operations with automated customer service, ultra-accurate supply chain modeling, marketing content generation, and advertising.
In the case of customer service, imagine an AI that is trained by every customer interaction, learns how to answer any consumer question perfectly, and offers feedback to product designers and company owners as a result.
Facebook’s handover protocol allows live customer service representatives and language-learning bots to work within the same Facebook Messenger conversation.
Taking it one step further, imagine an AI that is empathic to a consumer’s frustration, that can take any amount of abuse and come back with a smile every time. As one example, meet Ava. “Ava is a virtual customer service agent, to bring a whole new level of personalization and brand experience to that customer experience on a day-to-day basis,” says Greg Cross, CEO of Ava’s creator, an Austrian company called Soul Machines.
Predictive modeling and machine learning are also optimizing product ordering and the supply chain process. For example, Skubana, a platform for online sellers, leverages data analytics to provide entrepreneurs constant product performance feedback and maintain optimal warehouse stock levels.
Blockchain is set to follow suit in the retail space. ShipChain and Ambrosus plan to introduce transparency and trust into shipping and production, further reducing costs for entrepreneurs and consumers.
Meanwhile, for consumers, personal shopping assistants are shifting the psychology of the standard shopping experience.
Amazon’s Alexa marks an important user interface moment in this regard.
Alexa is in her infancy with voice search and vocal controls for smart homes. Already, Amazon’s Alexa users, on average, spent more on Amazon.com when purchasing than standard Amazon Prime customers — $1,700 versus $1,400.
As I’ve discussed in previous posts, the future combination of virtual reality shopping, coupled with a personalized, AI-enabled fashion advisor will make finding, selecting, and ordering products fast and painless for consumers.
But let’s take it one step further.
Imagine a future in which your personal AI shopper knows your desires better than you do. Possible? I think so. After all, our future AIs will follow us, watch us, and observe our interactions — including how long we glance at objects, our facial expressions, and much more.
In this future, shopping might be as easy as saying, “Buy me a new outfit for Saturday night’s dinner party,” followed by a surprise-and-delight moment in which the outfit that arrives is perfect.
In this future world of AI-enabled shopping, one of the most disruptive implications is that advertising is now dead.
In a world where an AI is buying my stuff, and I’m no longer in the decision loop, why would a big brand ever waste money on a Super Bowl advertisement?
The dematerialization, demonetization, and democratization of personalized shopping has only just begun.
The In-Store Experience: Experiential Retailing
In 2017, over 6,700 brick-and-mortar retail stores closed their doors, surpassing the former record year for store closures set in 2008 during the financial crisis. Regardless, business is still booming.
As shoppers seek the convenience of online shopping, brick-and-mortar stores are tapping into the power of the experience economy.
Rather than focusing on the practicality of the products they buy, consumers are instead seeking out the experience of going shopping.
The Internet of Things, artificial intelligence, and computation are exponentially improving the in-person consumer experience.
As AI dominates curated online shopping, AI and data analytics tools are also empowering real-life store owners to optimize staffing, marketing strategies, customer relationship management, and inventory logistics.
In the short term,retail store locations will serve as the next big user interface for production 3D printing (custom 3D printed clothes at the Ministry of Supply), virtual and augmented reality (DIY skills clinics), and the Internet of Things (checkout-less shopping).
In the long term,we’ll see how our desire for enhanced productivity and seamless consumption balances with our preference for enjoyable real-life consumer experiences — all of which will be driven by exponential technologies.
One thing is certain: the nominal shopping experience is on the verge of a major transformation.
The convergence of exponential technologies has already revamped how and where we shop, how we use our time, and how much we pay.
Twenty years ago, Amazon showed us how the web could offer each of us the long tail of available reading material, and since then, the world of e-commerce has exploded.
And yet we still haven’t experienced the cost savings coming our way from drone delivery, the Internet of Things, tokenized ecosystems, the impact of truly powerful AI, or even the other major applications for 3D printing and AR/VR.
Perhaps nothing will be more transformed than today’s $20 trillion retail sector.
Hold on, stay tuned, and get your AI-enabled cryptocurrency ready.
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The key difference between science fiction and fantasy is that science fiction is entirely possible because of its grounding in scientific facts, while fantasy is not. This is where Black Mirror is both an entertaining and terrifying work of science fiction. Created by Charlie Brooker, the anthological series tells cautionary tales of emerging technology that could one day be an integral part of our everyday lives.
While watching the often alarming episodes, one can’t help but recognize the eerie similarities to some of the tech tools that are already abundant in our lives today. In fact, many previous Black Mirror predictions are already becoming reality.
The latest season of Black Mirror was arguably darker than ever. This time, Brooker seemed to focus on the ethical implications of one particular area: neurotechnology.
Warning: The remainder of this article may contain spoilers from Season 4 of Black Mirror.
Most of the storylines from season four revolve around neurotechnology and brain-machine interfaces. They are based in a world where people have the power to upload their consciousness onto machines, have fully immersive experiences in virtual reality, merge their minds with other minds, record others’ memories, and even track what others are thinking, feeling, and doing.
How can all this ever be possible? Well, these capabilities are already being developed by pioneers and researchers globally. Early last year, Elon Musk unveiled Neuralink, a company whose goal is to merge the human mind with AI through a neural lace. We’ve already connected two brains via the internet, allowing one brain to communicate with another. Various research teams have been able to develop mechanisms for “reading minds” or reconstructing memories of individuals via devices. The list goes on.
With many of the technologies we see in Black Mirror it’s not a question of if, but when. Futurist Ray Kurzweil has predicted that by the 2030s we will be able to upload our consciousness onto the cloud via nanobots that will “provide full-immersion virtual reality from within the nervous system, provide direct brain-to-brain communication over the internet, and otherwise greatly expand human intelligence.” While other experts continue to challenge Kurzweil on the exact year we’ll accomplish this feat, with the current exponential growth of our technological capabilities, we’re on track to get there eventually.
As always, technology is only half the conversation. Equally fascinating are the many ethical and moral questions this topic raises.
For instance, with the increasing convergence of artificial intelligence and virtual reality, we have to ask ourselves if our morality from the physical world transfers equally into the virtual world. The first episode of season four, USS Calister, tells the story of a VR pioneer, Robert Daley, who creates breakthrough AI and VR to satisfy his personal frustrations and sexual urges. He uses the DNA of his coworkers (and their children) to re-create them digitally in his virtual world, to which he escapes to torture them, while they continue to be indifferent in the “real” world.
Audiences are left asking themselves: should what happens in the digital world be considered any less “real” than the physical world? How do we know if the individuals in the virtual world (who are ultimately based on algorithms) have true feelings or sentiments? Have they been developed to exhibit characteristics associated with suffering, or can they really feel suffering? Fascinatingly, these questions point to the hard problem of consciousness—the question of if, why, and how a given physical process generates the specific experience it does—which remains a major mystery in neuroscience.
Towards the end of USS Calister, the hostages of Daley’s virtual world attempt to escape through suicide, by committing an act that will delete the code that allows them to exist. This raises yet another mind-boggling ethical question: if we “delete” code that signifies a digital being, should that be considered murder (or suicide, in this case)? Why shouldn’t it? When we murder someone we are, in essence, taking away their capacity to live and to be, without their consent. By unplugging a self-aware AI, wouldn’t we be violating its basic right to live in the same why? Does AI, as code, even have rights?
Brain implants can also have a radical impact on our self-identity and how we define the word “I”. In the episode Black Museum, instead of witnessing just one horror, we get a series of scares in little segments. One of those segments tells the story of a father who attempts to reincarnate the mother of his child by uploading her consciousness into his mind and allowing her to live in his head (essentially giving him multiple personality disorder). In this way, she can experience special moments with their son.
With “no privacy for him, and no agency for her” the good intention slowly goes very wrong. This story raises a critical question: should we be allowed to upload consciousness into limited bodies? Even more, if we are to upload our minds into “the cloud,” at what point do we lose our individuality to become one collective being?
These questions can form the basis of hours of debate, but we’re just getting started. There are no right or wrong answers with many of these moral dilemmas, but we need to start having such discussions.
The Downside of Dystopian Sci-Fi
Like last season’s San Junipero, one episode of the series, Hang the DJ, had an uplifting ending. Yet the overwhelming majority of the stories in Black Mirror continue to focus on the darkest side of human nature, feeding into the pre-existing paranoia of the general public. There is certainly some value in this; it’s important to be aware of the dangers of technology. After all, what better way to explore these dangers before they occur than through speculative fiction?
A big takeaway from every tale told in the series is that the greatest threat to humanity does not come from technology, but from ourselves. Technology itself is not inherently good or evil; it all comes down to how we choose to use it as a society. So for those of you who are techno-paranoid, beware, for it’s not the technology you should fear, but the humans who get their hands on it.
While we can paint negative visions for the future, though, it is also important to paint positive ones. The kind of visions we set for ourselves have the power to inspire and motivate generations. Many people are inherently pessimistic when thinking about the future, and that pessimism in turn can shape their contributions to humanity.
While utopia may not exist, the future of our species could and should be one of solving global challenges, abundance, prosperity, liberation, and cosmic transcendence. Now that would be a thrilling episode to watch.
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I don’t have to open the doors of AImotive’s white 2015 Prius to see that it’s not your average car. This particular Prius has been christened El Capitan, the name written below the rear doors, and two small cameras are mounted on top of the car. Bundles of wire snake out from them, as well as from the two additional cameras on the car’s hood and trunk.
Inside is where things really get interesting, though. The trunk holds a computer the size of a microwave, and a large monitor covers the passenger glove compartment and dashboard. The center console has three switches labeled “Allowed,” “Error,” and “Active.”
Budapest-based AImotive is working to provide scalable self-driving technology alongside big players like Waymo and Uber in the autonomous vehicle world. On a highway test ride with CEO Laszlo Kishonti near the company’s office in Mountain View, California, I got a glimpse of just how complex that world is.
Camera-Based Feedback System
AImotive’s approach to autonomous driving is a little different from that of some of the best-known systems. For starters, they’re using cameras, not lidar, as primary sensors. “The traffic system is visual and the cost of cameras is low,” Kishonti said. “A lidar can recognize when there are people near the car, but a camera can differentiate between, say, an elderly person and a child. Lidar’s resolution isn’t high enough to recognize the subtle differences of urban driving.”
Image Credit: AImotive
The company’s aiDrive software uses data from the camera sensors to feed information to its algorithms for hierarchical decision-making, grouped under four concurrent activities: recognition, location, motion, and control.
Kishonti pointed out that lidar has already gotten more cost-efficient, and will only continue to do so.
“Ten years ago, lidar was best because there wasn’t enough processing power to do all the calculations by AI. But the cost of running AI is decreasing,” he said. “In our approach, computer vision and AI processing are key, and for safety, we’ll have fallback sensors like radar or lidar.”
aiDrive currently runs on Nvidia chips, which Kishonti noted were originally designed for graphics, and are not terribly efficient given how power-hungry they are. “We’re planning to substitute lower-cost, lower-energy chips in the next six months,” he said.
Testing in Virtual Reality
Waymo recently announced its fleet has now driven four million miles autonomously. That’s a lot of miles, and hard to compete with. But AImotive isn’t trying to compete, at least not by logging more real-life test miles. Instead, the company is doing 90 percent of its testing in virtual reality. “This is what truly differentiates us from competitors,” Kishonti said.
He outlined the three main benefits of VR testing: it can simulate scenarios too dangerous for the real world (such as hitting something), too costly (not every company has Waymo’s funds to run hundreds of cars on real roads), or too time-consuming (like waiting for rain, snow, or other weather conditions to occur naturally and repeatedly).
“Real-world traffic testing is very skewed towards the boring miles,” he said. “What we want to do is test all the cases that are hard to solve.”
On a screen that looked not unlike multiple games of Mario Kart, he showed me the simulator. Cartoon cars cruised down winding streets, outfitted with all the real-world surroundings: people, trees, signs, other cars. As I watched, a furry kangaroo suddenly hopped across one screen. “Volvo had an issue in Australia,” Kishonti explained. “A kangaroo’s movement is different than other animals since it hops instead of running.” Talk about cases that are hard to solve.
AImotive is currently testing around 1,000 simulated scenarios every night, with a steadily-rising curve of successful tests. These scenarios are broken down into features, and the car’s behavior around those features fed into a neural network. As the algorithms learn more features, the level of complexity the vehicles can handle goes up.
On the Road
After Kishonti and his colleagues filled me in on the details of their product, it was time to test it out. A safety driver sat in the driver’s seat, a computer operator in the passenger seat, and Kishonti and I in back. The driver maintained full control of the car until we merged onto the highway. Then he flicked the “Allowed” switch, his copilot pressed the “Active” switch, and he took his hands off the wheel.
What happened next, you ask?
A few things. El Capitan was going exactly the speed limit—65 miles per hour—which meant all the other cars were passing us. When a car merged in front of us or cut us off, El Cap braked accordingly (if a little abruptly). The monitor displayed the feed from each of the car’s cameras, plus multiple data fields and a simulation where a blue line marked the center of the lane, measured by the cameras tracking the lane markings on either side.
I noticed El Cap wobbling out of our lane a bit, but it wasn’t until two things happened in a row that I felt a little nervous: first we went under a bridge, then a truck pulled up next to us, both bridge and truck casting a complete shadow over our car. At that point El Cap lost it, and we swerved haphazardly to the right, narrowly missing the truck’s rear wheels. The safety driver grabbed the steering wheel and took back control of the car.
What happened, Kishonti explained, was that the shadows made it hard for the car’s cameras to see the lane markings. This was a new scenario the algorithm hadn’t previously encountered. If we’d only gone under a bridge or only been next to the truck for a second, El Cap may not have had so much trouble, but the two events happening in a row really threw the car for a loop—almost literally.
“This is a new scenario we’ll add to our testing,” Kishonti said. He added that another way for the algorithm to handle this type of scenario, rather than basing its speed and positioning on the lane markings, is to mimic nearby cars. “The human eye would see that other cars are still moving at the same speed, even if it can’t see details of the road,” he said.
After another brief—and thankfully uneventful—hands-off cruise down the highway, the safety driver took over, exited the highway, and drove us back to the office.
Driving into the Future
I climbed out of the car feeling amazed not only that self-driving cars are possible, but that driving is possible at all. I squint when driving into a tunnel, swerve to avoid hitting a stray squirrel, and brake gradually at stop signs—all without consciously thinking to do so. On top of learning to steer, brake, and accelerate, self-driving software has to incorporate our brains’ and bodies’ unconscious (but crucial) reactions, like our pupils dilating to let in more light so we can see in a tunnel.
Despite all the progress of machine learning, artificial intelligence, and computing power, I have a wholly renewed appreciation for the thing that’s been in charge of driving up till now: the human brain.
Kishonti seemed to feel similarly. “I don’t think autonomous vehicles in the near future will be better than the best drivers,” he said. “But they’ll be better than the average driver. What we want to achieve is safe, good-quality driving for everyone, with scalability.”
AImotive is currently working with American tech firms and with car and truck manufacturers in Europe, China, and Japan.
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Can A.I. Be Taught to Explain Itself?Cliff Kuang | New York Times“Kosinski’s results suggested something stranger: that artificial intelligences often excel by developing whole new ways of seeing, or even thinking, that are inscrutable to us. It’s a more profound version of what’s often called the ‘black box’ problem—the inability to discern exactly what machines are doing when they’re teaching themselves novel skills—and it has become a central concern in artificial-intelligence research.”
Semi-Synthetic Life Form Now Fully Armed and OperationalAntonio Regalado | MIT Technology Review “By this year, the team had devised a more stable bacterium. But it wasn’t enough to endow the germ with a partly alien code—it needed to use that code to make a partly alien protein. That’s what Romesberg’s team, reporting today in the journal Nature, says it has done.”
4 Strange New Ways to ComputeSamuel K. Moore | IEEE Spectrum “With Moore’s Law slowing, engineers have been taking a cold hard look at what will keep computing going when it’s gone…What follows includes a taste of both the strange and the potentially impactful.”
Google X and the Science of Radical CreativityDerek Thompson | The Atlantic “But what X is attempting is nonetheless audacious. It is investing in both invention and innovation. Its founders hope to demystify and routinize the entire process of making a technological breakthrough—to nurture each moonshot, from question to idea to discovery to product—and, in so doing, to write an operator’s manual for radical creativity.”
PRIVACY AND SECURITY
Uber Paid Hackers to Delete Stolen Data on 57 Million PeopleEric Newcomer | Bloomberg “Hackers stole the personal data of 57 million customers and drivers from Uber Technologies Inc., a massive breach that the company concealed for more than a year. This week, the ride-hailing firm ousted its chief security officer and one of his deputies for their roles in keeping the hack under wraps, which included a $100,000 payment to the attackers.”
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