All That Glitters

Creative Destruction, Israeli Startup Style

Nimrod Kozlovski, the cyber expert at Jerusalem Venture Partners, provides his 10 takeaways from the DLD conference in Munich on how the world economy is changing

DLD conference in Munich
DLD conference in Munich Hubert Burda Media

When I asked an economist who works in both business and government what impressed him most at the Digital Life Design conference that ended Tuesday in Munich, his answer was surprising. “It’s possible that the way economists think, for example about margins, isn’t appropriate for the next stage of certain technology sectors,” he said.

The economist also felt that way because technologies exist that can do what we do today much better and more cheaply. In other words, people should be thinking about what to focus their time on.

The latest DLD conference was like that. Instead of putting people on stage selling their product or service, the conference dealt with the big questions on technology and science, sometimes at a level approaching the philosophical.

There were financial interests and sponsors in Munich, not to mention mediocre lectures and discussions. But DLD stressed issues that made participants think about where they can bring the world. So the conference’s slogan rang true: “It’s only the beginning.”

The latest DLD conference was different from previous ones in several ways. In previous years there were more finance gurus and startup entrepreneurs. There also seemed to be fewer suits and ties this time, and the startup entrepreneurs didn’t come to give three-minute pitches. If entrepreneurs and investors could be seen in corners engaged in animated conversation, these conversations were more on general impressions.

The conference was also more modest in terms of the Israel connection. Yes, dozens were there due to Yossi Vardi, a founder of the conference. But unlike previous years, there was no invasion of Hebrew-speakers or many conversations about the “startup nation” and the Israeli technological miracle.

Does that have to do with the cooling of Europe’s relationship with Israel? Maybe, and maybe a few managers of European companies told their employees to look for Israeli technology but not to say so in the media. The Israelis were still prominent, and plenty of Europeans went there specifically to catch a group of Israelis all at once without having to fly to Tel Aviv. Still, this phenomenon was secondary in comparison to past years.

What impressed people at the conference? Nimrod Kozlovski, the cyber expert at Jerusalem Venture Partners, has attended the DLD conference for 10 years in a row. The following are some of his insights.

A fuss over Uber

1. The cooperative economy is bursting through. If consumers can be connected by technology, then, once critical mass has been achieved, it’s possible to improve performance and analytics and offer products that did not exist.

The Uber ride-booking company is one example, but the entire urban space is suitable for the cooperative digital economy. Many conversations on the cooperative economy centered around the unit of the “city.”

2. There is great tension between regulation and innovative technology. Whether it’s the taxi business or the management of cities or banks, enormous tension has evolved between the old and new models.

Here, too, Uber is a good example. Regulation must be part of the process.

3. There is tension in the job market, which is changing rapidly in response to technology. Many white-collar positions are being replaced by technology and are in danger of extinction. On the other hand, jobs are being created at both ends of the market: blue-collar jobs such as packing shipments, and jobs for the technology whizzes creating the new wave of “machines.”

If in the past a professional was assured a job for life in return for loyalty, that contract is changing. Today we’re talking about a commitment for a few years until a specific task has been completed.

In this new contract, the employee commits to finishing the job and no more, while the employer commits to giving the employee the means to go on to the next tasks, perhaps more advanced and financially rewarding.

4. The word “trust” was uttered many times at the conference — there is a severe crisis of trust. The banking system is one example; there is a feeling that institutions work for their own sake, not for customers.

The state is another area because technology lets the state to spy on people. The breaking of trust creates an industry around the concept of privacy, including technologies that enable individuals to act without surveillance.

5. There’s a link between virtual and physical space. As opposed to virtual tools like Facebook, we’re returning to geographic, physical space. E-commerce companies must tackle the challenges of distribution. Attempts to skip over the cultural connections in foreign countries are stumbling.

6. But the tools of the new media such as BuzzFeed say otherwise: Traditional media doesn’t understand the consumption of content. Readers consume content on their smartphones, bounce among applications, look at Facebook and lose their concentration as they multitask. People therefore focus on headlines and brief excerpts. They want formats suitable for viral sharing: lists, simple games, Q&As.

7. The basic architecture of information security is broken. The infrastructure on which the Internet was constructed wasn’t built with information security in mind.

The first example is telecommunications, in which the protocol that brings a subscriber to the Internet includes a raft of information on the user — information that could be leaked. The protocol knows who you are, where you are and a great deal more, as if it had been created for a detective agency. As a result, the system allows for espionage by both the state and companies.

Nobody thinks this is going to change; the question is whether tools that enable a higher level of privacy can be built. These problems also exist in the banking system, not to mention wearable technology.

8. “Too big to innovate” is a problem. The starting assumption in Europe was that large companies could create the next innovation. This potential was emphasized at previous conferences, but this time people began to challenge it. Many people say large corporations aren’t the place to create innovation; we simply need startups.

At the conference, people spoke over and over about the success of innovation centers like the ones in Berlin, Stockholm and of course Israel. They’re based on large corporations. The question of the state’s role in innovation and how large corporations could be integrated comes up in this conversation.

9. There’s the notion of the state of now. New systems are pioneering new insights about what happens in real time, making them very valuable to consumers. The fields of matching offers and product purchase are examples of systems that update in real time.

Another example: sensors everywhere that can create maps, information and insights in real time. Yet another example: drones that record what’s going and update systems and maps in real time.

10. Optimism is back. In previous years — for example, after Internet stocks tanked in 2001 or the financial crisis of 2008 — there was an atmosphere of depression at the DLD conference. Prophets of doom held sway, such as economists who criticized technology.

At the recent conference, optimism was back. The conversation about “It’s only the beginning” combined with forecasts of rapid growth at many companies and talk of how technology can support economic growth.