Vaporized - Book Summary

Dive into the journey of transformation as tangible knowledge and industries evaporate into the digital ether.

Picture the scenario centuries ago, when the primary gatekeepers of knowledge were the monks sequestered in ancient monasteries. They meticulously harvested wisdom from around the world, penning it down and preserving it for future generations.

However, the birth of the printing press swiftly made their laborious efforts redundant. Fast forward to our present digital age, and we see that printed books are facing the same fate as these once venerated custodians of knowledge. Simply put, information, once a tangible entity confined to the pages of books, has now become vapor.

But it's not only information that has been subject to this process of vaporization. A plethora of tangible entities — and the industries they belong to — are slowly but surely disappearing into the ether.

This narrative will guide you through envisioning what an economy taking on a gaseous form might look like. You'll get to understand the transformation that takes place with the vaporization of information and the economy, and what that implies in terms of opportunities and risks. Moreover, you'll learn how to equip yourself to navigate this vaporized economy successfully.

Through this journey, you'll explore:

- The three stages that information goes through in its transformation,

- How internet behemoths like Google and Facebook generate value in a vaporized realm, and

- The implications of our economy's vaporization for human labor.

Explore the three stages of information: solid, liquid, and vapor.

In today's world, where the internet is as ubiquitous as air, it’s no wonder we call it "the information age." However, understanding the behavior of this seemingly omnipresent information can be a bit of a puzzle.

Perhaps the best way to comprehend information is to visualize it akin to water or other substances that transition through various states — this can be based on how we utilize it.

Initially, information existed in a solid form, encapsulated within the pages of a book or engraved onto a CD. The caveat of this solidity was the difficulty in sharing it with more than a single individual at a time. Despite this, the sale of physically embodied information was a straightforward method of monetizing it, hence the preference for maintaining information in this solid state for centuries.

From the time of Johannes Gutenberg's invention of the printing press in 1455, right up to the dawn of the internet, the means of information exchange saw little to no evolution. Information remained locked in a solid state, whether it was bound between the covers of books, imprinted on CDs, or burned onto DVDs.

While these tangible mediums provided a lasting and durable means of information storage, they came with their own set of drawbacks. The high cost and energy expenditure required for production and distribution, the necessity for storage space, and the one-to-one sharing limit were all significant limitations. Moreover, certain mediums such as laser discs had a limited shelf life, becoming obsolete within a short span of time.

The advent of the internet provided the perfect solution to these predicaments, liberating information from its physical confines and enabling it to take a more fluid form. Picture an ice cube beginning to melt; information had now turned water-like, easily spread across vast expanses. Posting, editing, and instantaneously sharing a file with the entire world was now merely a click away.

Yet, there was another transformation on the horizon. As information shifted from stationary desktop computers to portable smartphones, it assumed the state of vapor — swift, unrestricted, and continually evolving.

This is where we currently stand. With high-speed internet at our fingertips, information no longer remains tethered to a specific location or device. It swirls around us like the gases in the atmosphere, ever-accessible, ever-ready.

Whether you're a scientist ensconced in a lab, or a monk secluded in a mountaintop monastery, access to learning has been revolutionized. Today, acquiring knowledge at any time, on any subject, is only a tap or two away.

Software has the power to digitize businesses, physical goods, and entire industries, leading to their vaporization.

One of the fascinating aspects of contemporary software-based technologies is their potential to drive massive efficiency with less resource consumption.

They enable us to observe and scrutinize functionalities while supplying new information and insights that aid in better designs. For instance, modern cars collect data on their own performance, helping automobile companies create more efficient, less polluting models.

Software can even supplant substantial utilities, like telecommunication networks that manage the communication traffic of thousands of individuals.

Imagine a world without telephone poles and wires, replaced instead with an efficient, internet-based network that directs calls more accurately and reliably than ever before — that’s the power of advanced software.

An array of physical goods that are part of our daily life could also be exchanged for their software counterparts, not to mention the old CDs and DVDs gathering dust in our cupboards.

The wave of vaporization is inevitable. It will engulf everything in its path — from individual jobs and brick-and-mortar stores to corporations and entire industries. Anything that can be vaporized and replaced by software will inevitably face that fate.

This process is not a distant forecast. It's already underway, with the music industry standing as a prime example. Traditional record stores have given way to online platforms like iTunes and Amazon. Now, instead of settling for a limited physical selection and queuing at a store, anyone with internet access can dive into a vast ocean of digital music.

And as these record stores vaporize, the entire consumer experience and the supply chain dissolve along with them. The industry that churns out CD packaging will also fade into obscurity, as will the warehouses brimming with CD inventories. The same destiny awaits industries producing secondary products such as CD players — all will be rendered redundant by software.

Online giants build ecosystems with their own nebulous rules in place.

The meteoric rise to fame of internet behemoths like eBay, Amazon, Google, and Snapchat isn't accidental.

Each of these companies mastered the art of connecting the right individuals, much like operators at an old-fashioned telephone exchange.

For platforms like Amazon and eBay, identifying the 'right people' was straightforward — buyers and sellers. This strategy, however, isn't unique to these platforms.

Google has earned a fortune by linking information seekers with those who have the requisite information. YouTube has bridged the gap between video creators and their audience. Social apps like Snapchat simply facilitate the connection between people wishing to stay in touch.

But as these companies expanded, their ecosystem of connections grew increasingly intricate, roping in different and unexpected users.

Consider Apple's App Store. What began as a marketplace for developers to sell useful applications soon transformed into a fiercely competitive arena, with developers hiring firms to boost their sales.

These platforms can't be considered public spaces where individuals exercise free speech. The platform owner can draft arbitrary rules — whether they're well-articulated or not — and enforce them. This leaves users with two options: either conform entirely or opt out.

Apple maintains that this approach ensures the apps sold in the App Store adhere to their standards of acceptability.

However, their justifications often appear vague, attributing an app rejection to it being "creepy," "objectionable," or "over the line." Interestingly, while apps mimicking flatulence regularly get ousted, you could find something like a "Sexy Poker" app on their platform.

Moreover, while Apple gets 30 percent of every purchase in the App Store, the system used to determine an app's ranking — a crucial factor in an app's success — remains equally ambiguous.

This lack of transparency has fueled rumors suggesting that clandestine payoffs, bribes, gifts, and other questionable tactics could potentially be used to elevate an app's ranking in the store.

Successful online platforms aim to retain and monetize their users.

Internet companies don't create rules merely to regulate user behavior; these guidelines can also help ensure user loyalty and repeated visits to the platform.

This retention challenge can prove difficult in a vaporized economy where users naturally lean towards the most prominent platform. Therefore, let's delve into the various strategies companies employ to attract people to their platform, increase their activity, and simultaneously generate profits.

A widespread method to retain users is to offer unique tools enabling them to generate their own content.

Whether it involves posting pictures or videos or initiating chat threads, these tools encourage engagement and prevent users from straying, as they would lose access to their content upon leaving. This is precisely why Apple and Google provide free content creation tools such as iMovie and YouTube.

Another effective retention strategy is to simplify content discovery, sharing, and discussion. Companies like Facebook and other social media platforms thrive on this user dynamic.

Moreover, successful platforms typically offer storage and playback features.

Without these functionalities, there's a risk of users finding alternatives to store and access their content elsewhere. Google’s range of hardware products like Chromebook and Nexus, along with features like Chromecast, serve this exact purpose. Similarly, Apple provides content that is compatible exclusively with their products.

Content provision can also open avenues for monetization when a platform sets up its own marketplace for content. This allows the platform owner to earn a portion of each transaction, as seen in the iTunes Store.

A further prevalent monetization approach adopted by several platforms involves encouraging users to complete detailed profiles, with the ultimate objective of selling this comprehensive user data to marketing firms.

The proliferation of the internet of things is set to enhance the volume and worth of data.

The vaporized economy has carved out various routes for businesses to generate revenue, most of which are tied to converting data into significant profits.

The constant connectivity of people to the internet yields enormous volumes of data — a quantity that's poised to escalate further.

Predictions for 2020 indicate that each person will be generating an astonishing 1.7 megabits of data every second.

This surge in data volume will be attributable to the internet of things, a scenario where everyday objects — from your fridge to your washing machine — will all be linked to the internet, incessantly collecting data.

In the present, most of us cherish moments during the day when we're disconnected from the internet. However, it won't be long until we're perpetually connected and ceaselessly churning out data.

When this shift takes place, big data companies will mine the data generated by these appliances to monitor and enhance the metrics.

Consider a beer keg, for instance. SteadyServ, a US-based company, has developed a sensor that's placed at the bottom of a keg and transmits data to a server. This enables restaurants and bars to manage their inventories in real time. Thus, when a keg nears depletion, an alert is triggered for a replacement. Moreover, companies will gain real-time insights into sales trends at various bars, allowing them to discern local, statewide, or national patterns.

Traditional companies are also recognizing the increasing value of data, but they're often overwhelmed by the sheer volume. The challenge lies in how to archive, categorize, retrieve, and efficiently analyze data to extract useful information while safeguarding it from potential hackers.

Overcoming this hurdle will pave the way for numerous business opportunities in the future.

Revolutionary business models are challenging the traditional notions of ownership and intermediaries.

In the past, you could reliably estimate a business's worth by assessing its physical assets. However, that formula isn't applicable to companies like Airbnb and Uber, which, interestingly, don't own any rooms or vehicles, respectively.

So, how come Airbnb is evaluated at thirty billion dollars and Uber at sixty-six billion dollars?

These firms have created a peer-to-peer marketplace through software that serves as the intermediary between their clients, who possess the apartments and vehicles, and their customers, who wish to utilize these assets temporarily.

This business model is often referred to as "access over ownership," and a key contributor to its success is the collaborative approach, pairing, for instance, users looking for accommodation with apartment owners willing to rent their spaces. Furthermore, both parties have the option to decide whether they want to engage in a transaction based on the reviews from previous deals.

Blockchain technology, an innovative breakthrough, is set to elevate this business model by eliminating even more intermediaries.

This technology leverages cryptographic principles to enable business transactions between two parties without the need for corporate or banking supervision, thereby eliminating any related fees.

Currently, blockchain technology is the backbone of Bitcoin, the digital currency.

Platforms that function on blockchain payments can operate independently of banks and credit card companies that levy substantial charges on transactions and misuse user data for questionable purposes. A "blockchain" iteration of Airbnb, for example, could potentially help both users and property owners save money.

Crowdfunding is another example of a streamlined service that is simplifying the way entrepreneurs secure funding.

Crowdfunding circumvents the traditional, tedious process of raising investor funds by eliminating the paperwork and endless interviews. This approach empowers individuals to reach out on a software platform, attract investors through incentives, and even incorporate feedback throughout the development process.

A necessary response to job displacement is reforming the US education system.

We've been exploring the vaporization phenomenon that's impacting services, physical products, and even entire sectors. It's natural to question, “How many jobs is this going to eliminate?”

Indeed, with the vaporization of human labor, automated robots are already equipped to substitute many human tasks.

Consider the Henn-na Hotel in Nagasaki, Japan, where ten robots effectively manage the hotel, undertaking a range of tasks such as carrying luggage, changing bed sheets, and cleaning rooms.

Although these may not be highly coveted jobs, more desirable professions like journalism, medicine, law, and accounting are also at risk of automation.

A startling revelation from a 2011 Oxford report estimates that nearly 47 percent of all US jobs could potentially be automated.

While this might seem gloomy, there are optimists who view automation as an opportunity to enhance everyone's standard of living and broaden personal liberties. However, there's also the perspective that automation could lead to mass unemployment.

The critical question is whether automation will wipe out more jobs than what new business forms can generate. Unfortunately, it's too early to make a definitive conclusion.

What we do know, however, is that our education system is ill-equipped to confront the challenge of retraining and educating millions of workers displaced by this shift. It was never devised with the intention of educating a workforce and imparting professional skills, but rather to introduce students to abstract concepts.

In a vaporized economy, the education system needs to evolve so that humans can perform tasks beyond the capabilities of computers — tasks such as leading student discussions, debating, and applying knowledge in innovative ways to solve problems.

While we may not be able to halt job losses, we can ensure that we're ready and equipped to face what's to come.

In conclusion

The central idea of this book:

With the rise of the internet, an increasing amount of information is being vaporized — it's detaching from physical objects and migrating to the cloud. By harnessing data from our surroundings and integrating it into software, we can achieve more with less. In the present age, the data a business generates and amasses is its most valuable resource. The prosperity of future generations might hinge on their ability to perform roles that can't be automated.