Platforms, Applications, and Idealism

Platforms, Applications, and Idealism
Tim O’Reilly
@timoreilly
Twilio
September 19, 2013
Monday, September 23, 13

“The skill of writing is to create
a context in which other
people can think.”
-Edwin Schlossberg
I like to begin my talks with a quote, because, as Oscar Wilde once said, “Quotation is a serviceable substitute for wit.”
Edwin Schlossberg once said...

The Internet as a Platform
Now, one of the big, context-setting ideas I’ve been working for the past dozen years or so is the idea that the internet is a
platform.

I even put on a conference in 2002 called Building the Internet Operating System.

2004: How can you call the Internet an operating system?
No kernel
No memory
management
No processor
Photo: Patrick Tufts http://www.flickr.com/photos/zippy/50537423/sizes/o/
Later, when we introduced the Web 2.0 conference in 2004, we focused on the Internet as Platform. In his talk at that
conference, Bram Cohen of Bittorrent gave me a bit of a roast about the Internet as operating system idea. He pointed out that
the Internet was lacking many of the features that characterize operating systems.

An application that depends
on cooperating cloud data
services:
- Location
- Search
- Speech recognition
- Live Traffic
- Imagery
But as the mobile era accelerated, it became clear that I was right. What is the operating system of an application on a
smartphone?
To be sure, there are local functions, managed locally by the device OS, but there is a more powerful service layer that resides on
the
internet. In this slide from a few years later (dated to 2010 by the Nexus One phone in it), I make the case that yes, there is an
operating
system for mobile devices that consists of software above the level of a single device. Applications like Google Maps make
numerous
calls to data services provided by this cloud “operating system.”

Keep in Mind That There are Two Types of Platform
One Ring to Rule Them All
Small Pieces Loosely Joined
Now in the case of Google Maps, all of the Internet Platform services come from one vendor. This has a few uncomfortable echoes of the era
where
Microsoft ruled the roost, and its operating system displayed what devotees of Lord of the Rings might call the “One ring to rule them all”
strategy. But
there is another model, which has always been the model of operating systems like Linux, and also for the Internet itself. I call this “small
pieces loosely
joined” - a model where services from multiple sources are nonetheless woven into a seamless whole. I’ve long represented this model with a
routing map
of the Internet.

Twilio is a great example of one of these “loosely joined” services. You built out an operating subsystem layer for
communications.
Your platform allows other companies
to rely on a service from the cloud rather than building out that service themselves. Collectively, all these services are coming
together into a kind of cloud operating system. It is still evolving.

Where is all this going?
I want to spend some time talking about where this is all going.

I’m going to start by looking at a couple of startups or tech projects that I find really interesting,
and try to explain why I find them interesting, both from a technical and a business perspective, and as a way of helping you
to develop your own “interestingness” filters.
I want to start by talking about Square. There’s so much to learn from this business.
How many of you have ever bought something from a store with Square’s iPad cash register? How many of you had the
Square Wallet app running on your phone when you did that?

It automatically checks you in when you walk into a participating merchant. Your name and face appear on the register, and
since your payment details are already on ﬁle, all the retail clerk has to do is conﬁrm your identity, as shown in this screen shot.

Lesson #1: Do Less
This is so key. The phone already knows you’re there. Why make you “check in” manually? This makes sense for apps like
Foursquare, but it’s so important to think through what the sensors in the phone let you take out of the UI. This is going to be
one of the big voyages of discovery over
the next few years, as we design interfaces for devices that have “senses” of their own.

Lesson #2:
Get creative with hardware, not just software
Square started with this creative hardware hack, a little free dongle that uses the phone’s microphone jack to turn it into a credit
card reader.
The Maker movement isn’t just about 3D printing and robots. It’s about the way that sensors are changing the landscape of
applications.

Lesson #3:
Build “software above the level of a single device”
But with the addition of the cash Register app, Square saw the possibilities of building a system that actually connected buyer
and seller in a more profound way. The software system includes both an app on your phone, and an app on the merchant’s
ipad, and a cloud database and services in between.

Lesson #4: Harness network effects in data
When I ﬁrst talked to Jack Dorsey about Square, he talked about it as a data business - using social network data to make better
credit scoring decisions. Long term, once square has millions of participating merchants and consumers, they have built a
powerful data system that literally gets better the more people use it. But even apart from this banking angle, think how Square
transforms the way a small merchant operates, bringing “knowing your customer” to a new level. Square has my face, my credit
card info, and, potentially for a repeat buyer, my preferences, like what kind of coffee I normally order.

`
Lesson #5: Rethink workflows and experiences
And that leads to a profound rethinking of the retail experience.

Another example of someone rethinking the workﬂows in retail is the Apple Store. Where most stores (at least in America) have
used technology to eliminate salespeople, Apple has used it to augment them. Each store is ﬂooded with smartphone-wielding
salespeople who are able to help customers with everything from technical questions to purchase and checkout. Walgreens is
experimenting with a similar approach in the pharmacy, and US CTO Todd Park foresees a future in which health workers will be
part of a feedback loop including sensors to track patient data coupled with systems that alert them when a patient needs to be
checked up on. The augmented home health worker will allow relatively unskilled workers to be empowered with the much
deeper knowledge held in the cloud.

This may be the real opportunity for new information retrieval UIs like Google Glass - in specialized settings where access to a
computer can be seen as a powerful kind of human augmentation. I expect it to be used in professional settings before it
becomes popular as a consumer device. (In social settings, it will require even more profound resets of behavior than the
“always-on” mobile phone.)

Aaron Levie of Box said it perfectly in a tweet: “Uber is a $3.5 billion lesson in building for how the world *should* work instead
of
optimizing for how the world *does* work.”

Many of the notions that I highlighted about Square also show up in an app like Uber. A driver and a passenger both augmented
with a smartphone changes our expectations about transit, and has the ability to change the way we organize public transit.
Uber also shows us the principles of Software Above the Level of a Single Device, the use of sensors (both you and the driver have
phones that know where you are), a data back end as part of the system, and “doing less.” Because your credit card is already on
ﬁle, they’ve taken payment out of the workﬂow. And replaced it with reputation - they ask you to rate the driver, and the driver
to rate the passenger.
And like Square, they have a focus on building value for stakeholders - every driver I talk to loves the service because it increases
their utilization and thus their income. It’s a win-win all around.

Lesson #6: Close the loop
But there’s one other great lesson from Uber.

“What I learned from Google is to
only invest in things that close the
loop.”
- Chris Sacca
Investor Chris Sacca, who used to run special projects for Google, and who is an early investor in Uber, once remarked “What I
learned...”
This is what Google did with advertising, ﬁguring out how to predict what ads people would click on. And in the case of Uber,
it’s fundamental to the value proposition. With a taxi, you wait and hope to ﬁnd one. With Uber, you know where the car is,
when it’s going to arrive, and can even watch its progress towards you. Uber closes the loop and takes the uncertainty out of
the experience.

Applications Like Uber Rely on that “Internet Operating System”
Real Time Location Sensing
Real Time Communications
Identity
Payment
Reputation
And at Twilio, you should be really proud to have identiﬁed one of those key subsystems of that operating system. I love the way
Twilio lets the Uber driver and passenger communicate in real time without having to share phone numbers.

Lesson #7: Create More Value Than You Capture
But I want to return to Square. There’s one other great lesson there. Create value for more than yourself.
Jack’s original inspiration for Square was that he wanted to make it possible for anyone to take a credit card. He wanted to
enable a fairer, more evenly distributed economy.
Don’t just think about how much value you can create for yourself, your company, and your investors. Think about how much
value you can create for your customers.

“There’s a wonderful section in Les Miserables about the good
that Jean Valjean does as a businessman (operating under the
pseudonym of Father Madeleine). Through his industry and
vision, he makes an entire region prosperous, so that “there
was no pocket so obscure that it had not a little money in it; no
dwelling so lowly that there was not some little joy within it.”
And the key point: “Father Madeleine made his fortune; but a
singular thing in a simple man of business, it did not seem as
though that were his chief care. He appeared to be thinking
much of others, and little of himself.”
I’m reminded of this wonderful quote from Les Miserables.

I call it “the big lie” of modern business
This is in sharp contrast to the dominant ideology of modern capitalism over the past few decades, which says that the
only responsibility of a company is to make money for its shareholders. Leaving aside the fact of excessive executive
compensation as prima facie evidence that no big company really believes that principle, this notion misses the point
that an economy is an ecosystem.

This desire to build value for a community of stakeholders also shapes companies like Etsy, AirBnb, and Kickstarter.

Lesson #8: Work on stuff that matters
Perhaps the more general lesson here is to work on stuff that matters.

Open Source
Web 2.0
The Maker Movement
Open Data
Open Government
But there’s one more lesson here. Let me point to some of the things that matter that I’ve worked on. In each of these cases, I
did some good for my business, but I was mainly concerned with telling the story of an industry movement, and trying to create
awareness and value that beneﬁted many people besides myself and my own company.

Lesson #9: Idealism is the best marketing
People are hungry for meaning. When you really care about creating value for more than yourself, and work hard at it, people
understand it. So don’t be afraid to talk about your values, and why what you do matters. Tell it to yourself, and then tell it to
your customers. That’s another reason why the Twilio for Good announcement is important. You encourage others to do
likewise.

Why I love hackers
One of my best experiences with doing this was when I gave a talk at my Emerging Technologies Conference in 2008 entitled,
“Why I love hackers.”
They work on what is hard.
I recited a poem by Rilke, the Man Watching, which talks about Jacob wrestling with an angel. He knew he couldn’t win, but came
away strengthened from the ﬁght. The poem ends with something like this:
“What we ﬁght with is so small, and when we win, it makes us small.
What we want is to be defeated decisively by successively greater beings.”

A great example of this is a company called Makani Power, which is building drone aircraft for high altitude wind farms. One of
the early employees left a Wall Street hedge fund not because he thought he’d make more money, but because, as he said, “the
math is harder and more interesting.”

Twilio for Good
Untitled copy
I was really pleased to see the announcement of the Twilio for Good initiative this morning.

There are lots of ways to work on stuff that matters. Code for America, a non-proﬁt I’ve been working with, brings talent from
the tech industry to work with local governments to build simple, beautiful and easy-to-use interfaces to government services
and helping government to reinvent the way it engages with citizens.

The White House Presidential Innovation Fellows, inspired by Code for America, offers similar opportunities to bring technology
expertise into the Federal Government. I encourage any of you to apply to either of these programs.

Show Twilio related projects
We use Twilio in a number of Code for America applications. Here, side by side, are Textizen, which we built to let Philadelphians
weigh in on city planning
issues without having to go to planning meetings, and CityVoice, which we built for South Bend, to let people give feedback on
abandoned properties.
Both use Twilio’s inbound messaging capabilities.

Prompt.ly is an app in San Francisco that uses text messages to remind social service recipients of required reporting and other
alerts, to make sure they don’t lose their services.

Text My Bus
Sadly, that’s not an uber-like timeframe.
But at least knowing is a big help.
TextMyBus lets schoolkids in Detroit know when buses are coming. They don’t all have smartphones, and Twilio’s messaging
platform lets
anyone with an SMS-enabled phone get information about when the next bus is due. This photo was taken in summer,
but our fellows noticed this as a real problem last winter.
Sometimes kids were waiting in the dark, in freezing weather, for half an hour, to get to school. Knowing when the bus is
coming really matters
in a situation like that. Of course, the fact that the bus comes only every half an hour may be a problem of another sort.

Government as a platform
Public transportation is one aspect of what I’ve called Government as a Platform. So are roads, sanitation, power and water and
other regulated
utilities. But there are also twentieth century examples of government as a platform, including the National Weather Service and
the GPS
satellite system.

Government as a platform means an end to the
design of only complete, closed “applications.” Instead
the government should provide fundamental services
on which we, the people, (also known as “the market”)
build applications.
Government as a Platform
That’s why I’ve been trying to shift the mindset from government as a vending machine for services paid by taxes, to the notion
that
government should be a platform. This doesn’t mean that the government doesn’t provide any “applications” - any more than
the
iPhone as a platform means that Apple outsources everything!-but it does mean that government should provide affordances
for the private sector to build on.

Federal Aid Highway Act of 1956
Dwight Eisenhower
One of the clearest expressions of this notion are national highway systems, not to mention the role of government in setting
and enforcing
rules of the road. But apart from aberrations like the Road to Nowhere, the crowdsourced destinations we call cities determine
where the roads go, and
we the people are free to use them to go where-ever we want.
The US Interstate system, which provided a transformative economic foundation for our country, was championed by
President Eisenhower in 1956.

“We’ve opened up huge amounts of
government data to the American
people, and put it on the Internet for
free.... And what’s happening is
entrepreneurs and business owners
are now using that data -- the
people’s data --to create jobs and
solve problems that government
can’t solve by itself or can’t do as
efficiently.”
Barack Obama
Last month, when President Obama talked about his second term management agenda, open data, and its role in enabling
private sector to
build on government as a platform, was a key part of the message.

google home page / information age
Government has been in this business for a long time. Consider weather.
Here’s Google’s forecast for San Francisco yesterday when I was creating the slides for this talk. But where did that data come
from?
I’ve always found myself wondering why people aren’t more aware of how government data powers non-governmental services
that citizens take for granted, many of them never taking the time to think how much government investment went into building
the infrastructure that makes it possible for the private sector to offer services like weather predictions.

GPS: A 21st century platform launched in 1973
How about Global positioning satellites? Here government investment in a hard, long term project, is paying off in uncounted
new private sector developments.
A huge project with uncertain return, started in 1973 and now showing enormous fruit in the 21st century, with huge value add
from the commercial sector. Everything from maps and directions on your phone to future self-driving cars spring from this
platform investment, and the key policy decision to open the data and make it available for commercial use. No one dreamed of
the unexpected applications that became possible by opening up this data. That’s why we need open web services by default.

Health care is another area where today’s skills can be put to use working on stuff that really matters.
Here’s a report I co-authored last year that covers some of my ideas on the subject.
I don’t have time to go into all the details today, but the report is a free download.

And there are also amazing entrepreneurial opportunities building companies that also solve interesting social problems. Jen
Pahlka, who founded Code for America, wrote a blog post recently that summarized one of these opportunities, which we’ve
been brainstorming recently. How do you reinvent the corner store so that it delivers what people really need, at affordable
prices, in a walkable city?

These are the kinds of opportunities that we’re looking for at O’Reilly AlphaTech Ventures, our early stage venture ﬁrm. If you
want to apply the principles I’ve outlined here to build a great business that also just happens to make the world a better place,
we’d love to hear from you. plans@oatv.com

Platforms, Applications, and Idealism

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Platforms, Applications, and Idealism