Leading into the 3rd Industrial RevolutionExploring the future of value creation

Dr. Robin Teigland Karinda Rhode in SLStockholm School of Economicswww.knowledgenetworking.orgwww.slideshare.net/eteigland

@RobinTeigland

October 2014www.hhs.se

Who am I? (LinkedIn Inmaps)

SSE

Exec Ed

Swedish IndustryResearch

Wharton

Stanford

McKinsey

vonorange.com

Then…

Thx to R. Wieselfors, Ericsson for photos

…Now

Thx to R. Wieselfors, Ericsson for photos

History tends to repeat itself….Innovation, financial crisis, industrial revolution,

…

Steam engine

Internal combustion

engine

Microelectronics

Late 18th C Late 19th C Late 20th C

Schön 2008

Third industrial revolution?

Valuecreation

People• “Net generation”• 24x7 “mobile”

workforce• Knowledge via MOOCs• Sharing not consuming• Sustainability

Technology • Broadband access• The Cloud• Mobile phones• Internet of Things • Big Data• 3D printing• Robotics/AI• VR/AR

Open Source

• Software • Hardware• Physibles

Convergence of…..

Finance•

Microlending/microfinance

• Crowdfunding/equity/P2P

• Non-fiat cryptocurrencies

• Mobile money/payments

No one knows everything, everyone knows something,

all knowledge resides in humanity.

networks.

Adapted from Lévy 1997

Six degrees of separation

- Milgram, 1967

What’s happening today?24x7 Global Internet Collaboration + Open Source + 3D

Printing

http://mashable.com/2013/02/13/robohand/

$60,000

$150

Available for free download on

Where is the

firm?

Bitcoin = The power of community + open source + internet + CPU

• Developed by self-organizing community of thousands of “strangers” across globe

• Not one but many motivations (intrinsic, extrinsic)• 91 bln SEK in circulation vs SEK 36 bln of Bitcoin in

five years• Approx USD 5 bln in circulation (Oct 2014) and 70,000

daily transactions

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2263707

”Bitcoin has made me interested in issues like finance and money – things that I never thought about before. Now I am really curious and questioning why things are the way they are in the finance

world….and wondering what can I do to change them.”

- Bitcoin 2014 Conference Attendee

Rise of local currencies

The genie is out of the bottle….

Launched June 2010

USD 17 bln valuation

43 countries globally

Limited physical assets

UberPop, Uber Rush, ??

UberGlobal platform for local community

collaboration

IoT + Smartphones + Bitcoin protocol = ?

IoT connecting everything

Android smartphones <USD

50

Bitcoin protocol enabling global

property transfers

If the rate of change on the outside (of an organization) exceeds the rate of change

on the inside, the end is near....

-Jack Welch

Many are stuck in our old ways …

Increasing pace of change

From 1920s to 2010s−Average lifespan of S&P 500 company fell from

67 years to 15 yearsFrom 2000 to 2010

−40% of companies on Fortune 500 list replacedPredictions

−In next few years, 70% of Fortune 1000 companies to be replaced

−By 2020, >75% of S&P 500 companies do not exist today

−By 2025, >45% of Fortune 500 companies to be from emerging markets

Fast Company, McKinsey & Inc

In just a few years in Sweden alone…

Company Founded Business

Klarna 2005 E-commerce payment services

MyLoan 2006 Loan broker

Trustly 2008 Online payments

TrustBuddy 2009 P2P lending

iZettle 2010 Mobile payments

FundedByMe

2011 Crowdfunding, crowd equity

Kivra 2011 Digital mailbox

Tink 2012 Personal finance

Safello 2013 Cryptocurrency exchange

KnCMiner 2013 Cryptocurrency mining equipment

Toborrow 2013 P2P lending for companies

http://techcrunch.com/2014/09/04/kncminer-raises-14-million-to-take-bitcoin-mining-to-the-moon/

Banks’ share of wallet is rapidly shrinking

Nordic BanksPay, Save,

Lend, Insure

Nordic Entrepreneurs

International Entrepreneurs

Four forms of crowdfunding

 Form Benefits for funders

Donation-based

Donation Intangible benefits.

Reward-based Donation or pre-purchase

Rewards in addition to intangible benefits.

Equity-based Investment

Return on investment if company does well. Rewards sometimes also offered and

intangible benefits may motivate too.

Debt-based LoanRepayment of loan with

interest. Alternatively intangible benefits if loan given interest-free.

Ingram & Teigland 2013

Measuring demand in advance

How big is crowdfunding?

Global crowdfunding almost doubled 2012 to 2013 to USD 5.1 bln

March 2014 Kickstarter passed USD 1 bln in total pledges

FundedByMe raised USD 10.5 mln to dateSwedish market to be SEK 100 mln in

2014By 2025 global crowdfunding could reach

USD 90 to 96 bln (1.8 times today’s global VC industry)

Growth potential greatest in emerging markets?USD 50 bln in China by 2025?

Toborrow.se

Democratizing innovation through access to capital?

Women in USA <30% of business owners <15% of angel investors <10% of venture capitalists

But…Women on Kickstarter

35% of project leaders 44% of investors on platform >40% of projects women invested in had

female project leaders

Marom, Robb and Sade 2014

Democratizing innovation through access to capital

Kickstarter• Women 13% more likely to to

meet crowdfunding goals than men

• 67% of women-led technology ventures reached goals vs 30% of male-led ventures

Indiegogo• Women 61% more likely than

men to meet goals • Women account for 41% of

projects that meet goalshttp://online.wsj.com/articles/kickstarter-closes-the-funding-gap-for-women-1407949759

“Made in Africa” 3D printer (Togo)crowdfunded through Ulele

Winner of International Space

Apps Challenge

http://www.engineering.com/3DPrinting/3DPrintingArticles/ArticleID/5712/E-Waste-3D-Printer-to-Mars.aspx

DIY 3D printing becoming more commonplace…

http://openfabpdx.com/fffiddle/

Innovation in automotive design/production

“Local Motors is the place for people to create influential vehicles together.”

http://www.youtube.com/watch?v=azCRuwtE_n0

The Firm

The Collective

vs

E.g., Microsoft~ Built by employees within

organizational boundaries

E.g., OpenSimulator~ Built by users and distributed freely regardless of affiliation

Models of Knowledge Creation

Teigland, Di Gangi, & Yetis 2012

OpenSimulator: A value-creation ecosystem

AcademicEntrepreneurHobbyistLarge FirmNon-profitLocal PublicFederal PublicResearch InstSME EmployeePeriphery

Teigland, Di Gangi, & Yetis 2012

USD 5.5mln in development

costs

From the mobility of goods to the mobility of financial capital to …

Teigland, JVWR, 2010

...the “mobility” of labor?

Knowledge becomes quickly outdated

Ray Kurzweil, Singularity Institute

Thomas Jefferson (1816)“Laws and institutions must go hand in hand with the progress of the human

mind.”

The problem is that the human mind itself can’t keep pace with the advances

that computers are enabling. 

http://wadhwa.com/2014/04/15/mit-technology-review-laws-and-ethics-cant-keep-pace-with-technology/

http://www.futuristspeaker.com/2014/09/should-robots-have-their-own-bank-accounts/

Institutions

Emergent Collective vs

E.g., Central Bank~ Long-standing financial

institutions and regulations

E.g., Bitcoin Community ~ Emergent collective of users across globe connected through internet

Challenges to institutions?

Teigland, Yetis, Larsson, 2013http://papers.ssrn.com/sol3/papers.cfm?

abstract_id=2263707

Some questions…

What basic assumptions about value creation will no longer hold?

What opportunities are there related to the future of money, collaborative innovation, and the sharing economy?

What strategic challenges are there within the nearest 2-3 years in connection with the future of money, collaborative innovation, and the sharing economy?

What will you do tomorrow as a result of today’s discussion?

The future is already here, it’s just not very

evenly distributed.

- William Gibson

Robin Teiglandrobin.teigland@hhs.se

www.knowledgenetworking.org

www.slideshare.net/eteigland

www.nordicworlds.net @RobinTeigland

If you love knowledge, set it

free…

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