Tom Stewart: 10 years ago, I think, our, in many cases, mutual friend, Paul Saffo, told me, it was more than that, it was 15, said that, called the internet a “full employment act for entrepreneurs.” I think you could now say, you could use that phrase again about the cloud and mobility, you could say, these are also new opportunities for a full employment act for entrepreneurs.
But the question is, as we see the rollout of technologies and also as we see the continued story of globalization, and like the internet, you know, globalization is a 25-year-old story and you ain’t seen nothing yet, as we see these rollout, are we seeing more, in the business of the future, are we going to see large companies? Will large companies still play as big a roll in the business eco system that they do now? Or will we see many more small companies networked together? Is it a big company future or a small company future?
Michael Schrage: The answer to that question, of course, is yes, but I think that you framed it in exactly the wrong way. Because you’re going to have very large companies that don’t employ a fraction of the people that large companies employed in the year 2000.
Tom Stewart: So sales huge, employment small?
Michael Schrage: The revenue to employee ratio is going to be transformed because of the brilliant innovations from people like SAP and the entrepreneurs represented here. And the one other area where I’m going to disagree with Professor Kaku is, you know, you can’t mass produce minds. Forgive me, but my serious academic background was AI. You know? And if there’s anything that we’re focusing on, it’s the ability to algorithm-ize, to use technology as a vehicle to either leverage individual minds or to usefully and cost-effectively automate or augment how people make decisions and how people create. So the economics are being transformed for this and I think it’s going to be a very interesting challenge how people are going to find jobs. I don’t know what the answer to that is, but I know what the answer is not. The answer is not four years in college.
Tom Stewart: I’m going ask… I’m going to pick a little quarrel with the word jobs, because I think that may be the model that doesn’t work.
Michael Schrage: Oh, I thought you meant Steve Jobs, sorry.
Tom Stewart: No, one never picks a quarrel with him. But it may just be that the idea that a, for those of us who are Americans, the idea that the choice between a W2 and a W9 may just become a different choice, in terms of how you add value. But, yes?
Michio Kaku: I must disagree with my esteemed colleague here. First of all, let me say that science is the engine of prosperity. From steam power to electricity, to the laser, to the transistor, to the computer—
Michael Schrage: That’s science, that’s not true, we’re talking about technology.
Michio Kaku: Hey, can I have my—you had your say, let me have my say. However, the information revolution has a weakness, and the weakness is precisely the educational system. The United States has the worst educational system known to science. Our graduates compete regularly at the level of third world countries. So how come the scientific establishment of the United States doesn’t collapse? If we’re producing a generation of dummies, if the stupid index of America keeps rising every year, just watch network television and reality shows, right? How come the scientific establishment of the United States doesn’t collapse? Let me tell you something. Some of you may not know this. America has a secret weapon. That secret weapon is the H1B. Without the H1B, the scientific establishment of this country would collapse. Forget about Google! Forget about Silicon Valley! There would be no Silicon Valley without the H1B. And you know what the H1B is? It’s the genius visa. Okay? You realize that in the United States, 50% of all PhD candidates are foreign born. At my system, one of the biggest in the United States, 100% of the PhD candidates are foreign born. The United States is a magnet sucking up all the brains of the world, but now the brains are going back. They’re going back to China; they’re going back to India. And people are saying, “Oh, my God, there’s a Silicon Valley in India now!” “Oh, my God, there’s a Silicon Valley in China!” Duh! Where did it come from? It came from the United States. So don’t tell me that science isn’t the engine of prosperity. You remove the H1B visa and you collapse the economy.
In Wall Street Journal, editorialized against a congressman who wanted to ban the H1B, saying they’ll take jobs away from the American people. The Wall Street Journal said, “Look, there are no Americans who can take these jobs. These are at the highest level of high technology. They don’t take away jobs for Americans, they create entire industries.” And so that’s why we have an Achilles heel, and that’s the educational system. And again, sociology majors are not necessarily going to be the ones determining the future Silicon Valley, but physicists, the engineers; we need more of them, not less.
Michael Schrage: The irony is, I agree with the immigration issues to what you’re saying, and I’m at a school, of course, and Peter’s a graduate of a school where, indeed, immigration is—Your school wouldn’t exist without the H1B.
Michael Schrage: Of course, but I’m not—
Tom Stewart: We’ve got to get back to the future of business.
Michael Schrage: No, no, no, I’m not arguing against an H1B, I completely agree with this issue and the point on the future of business that he’s making, which is very, very important, is the nature of human capital. What is misunderstood here is again, how poorly run schools are—MIT is a notable exception in this regard—his school is not. Because what happens is, they run in these introductory science and engineering classes, at Illinois and Wisconsin and Michigan, they run freshman and sophomore years as flunk-out operations. They do it to, they run it as a boot camp, and then people are surprised that people don’t take science, that they don’t take the stem courses.
The point that I’m trying to make is, which I think is an important one in this regard, is that the way educational systems are set up right now, is that we have distorted incentives that undermine the ability for America to have a homegrown science and technology center. Immigration is a wonderful—
Tom Stewart: I want to move this, just a second; I want to move this from an American conversation to a global conversation. It is a global economy, and so on, I mean, obviously to those of us who are Americans, this matters hugely, politically, but as we talk about the future of business, one pretty clear thing is, and it’s going to be increasingly borderless, and one of the questions we sort of want to ask is, if you’re wearing your CEO hat, some of these implications might be, where are you going to put your headquarters, are you going to put your headquarters in Bangalore, or in Buenos Aires, and in Silicon Valley? You’ve got a lot of issues around that. I’d like to move it to that. Peter, you had your hand up first and I know you want to comment on this, and then I want to start asking about the, some questions about where the big industries will be in the future. But, yeah.
Peter Diamandis: So, to bring this back to the focus on SAP and mobility and cloud, the fact of the matter is that the rate of changing is increasing. The rate of change is increasing, period. And we’re working into a day and age where the ability for, again, an individual or small team to innovate and build a company is greater than ever before. The cloud and mobile computing, 3D printing, AI-enabled capabilities, are going to allow for the birth of extraordinary industries. And the fact of the matter is, there is no industry that’s safe. Medicine, I just got finished speaking to a group of 500 medical CEO’s, over the next 10 years, medicine is going to be completely redefined. And the fact of the matter is that when regulations are holding an industry back, like it is in medicine, it simply means it’s going to be redefined in a different country. There are no boundaries any more, companies are multinational, individuals are multinational, ideas go across the globe at the speed of light and we’re going to see a rate of change that is not stopped by regulation, especially when governments can no longer regulate at the speed of change that’s going on right now.