MIT’s Andrew McAfee, Part 3: How Big Tech Could Fail, Why Capitalism Must Win

I think one of the things that a board should always think about is: 'How do we assess how exposed we are, what are the opportunities and the challenges around this wave of technology.'

Andrew McAfee will be the keynote speaker at Corporate Board Member’s boot camp for new business models in Cambridge, Mass., May 7-8, 2020.

In a time of incredible technological change, dislocation—and pessimism—there are few more original or contrarian thinkers than Andrew McAfee.

Co-Founder and Co-Director of the Initiative on the Digital Economy and a Principal Research Scientist at the MIT Sloan School of Management, McAfee has done as much as anyone over the past decade to reshape the way business people think about technology and its impact on the future. In now-classic business books such as The Second Machine Age and Machine, Platform, Crowd, he outlined— with uncanny accuracy—the way new technologies would come to dominate and reshape business, while offering practical advice about how to take advantage of the opportunity.

This May 7&8, McAfee will keynote our 2nd annual Disruptive Technology Bootcamp in Cambridge, Mass, an intense, interactive 2-day workshop—featuring some of the top minds at MIT—that’s been specifically crafted for directors looking to master the new business models that are reshaping the global economy (See agenda).

In part three of this special, extended-length conversation (Part 1 is here, part 2 is here), McAfee assesses into the technologies that will change the world in the decade to come, explains what’s truly special about today’s tech giants, and explains why he’s so optimistic about the future—with one important caveat:

What should directors and executives really be worried about when it comes to new technology you see emerging? And what do you think is overblown?

The main wave of technology that is going to change processes, companies, competition, all that, is, again, it’s artificial intelligence and machine learning. It’s just going to change how companies do what they do. Either today’s successful companies will pivot, and they’ll start doing fundamental things very differently, or somebody else in their industry will. Or a bunch of venture capitalists are going to fund a couple entrepreneurs who are going to go after that. There are competitive moats, regulation is a really good one, but they don’t last forever. So that is a thing that is absolutely happening.

I think one of the things that a board should always think about is: “How do we assess how exposed we are, what are the opportunities and the challenges around this wave of technology, around AI, machine learning, which is as transformational as electricity was to manufacturing a century ago.” But it’s not just confined to manufacturing. It goes all across the economy. That is absolutely a board-level conversation that needs to happen all over the place.

Can anyone really catch the Amazons of the world at this point, or the other big tech companies? What do you see is the next big shake-up around that? People seem to have lost some faith. Do you see a political shake-up coming, economic, anything to topple them at this point?

The tech-lash is real. I wouldn’t be surprised at all if they faced a lot more regulatory scrutiny. We can talk about whether or not that’s appropriate, or is it going to help out competitiveness in the American consumer or not. But I think the tech-lash is real. I think the main thing that’s gonna trip these companies up is what has always tripped successful companies up, is they get ossified, their radar goes down, they get complacent, they get locked into ways of doing things.

The thing that I respect about this new wave the most is not that they can hire 24-year-old whiz kids and not that they have the best machine learning or economics teams. It’s that their leaders seem to have read Andy Grove. They’ve definitely read the late, great Clay Christensen. They are more paranoid about disruption. They are more attuned to it.

Facebook is a hard company for me to defend in a lot of ways. But, man, Facebook bought WhatsApp when it was a relatively small company. They bought Instagram. Instagram had fewer than 20 employees. And at the time Facebook did both of those things, it already had a messaging app, and you could already share photos on Facebook.

The board and the executive team of that company could very easily have convinced themselves, we got this covered, we’re on top of this. Instead they spent very serious money to acquire those technologies not to kill them internally, but because they detected a faint signal out there that their main company, the mothership, was missing something. I think that’s really interesting.

When I look at Amazon’s expansion, they’ve abandoned all these very, very unrelated businesses. Selling me books is really not like selling cloud computing services. I think that the only thing that explains that success is the set of principles that Amazon was founded on. Having spent some time inside the company, I can tell you, the people there walk around keenly aware of those and trying to apply those all the time. It’s just an amazing example of successfully creating and maintaining a culture even as a company grows hugely.

Final question. You’ve been looking at the technology transformation in the world as closely as anybody over the last 15, 20 years. What makes you so optimistic at a time when so many people seem increasingly pessimistic about where the world is going?

The evidence makes me optimistic. I don’t think that I’m a starry-eyed optimist by personality type at all, but I try to be somebody who looks at evidence and goes where the evidence takes me. When I look at the evidence about most of the things that I would care about—and we’ll come back to the exceptions, because there are really really important exceptions—but when I go look at the evidence around the world about how we have, in some really important ways, cleaned up our acts on the planet, and that is spreading, not retreating, the environmental movement is becoming very global very quickly.

When I look at the evidence about mortality rates for almost all demographic groups, when I look at the evidence about how many people have access to clean water, when I look at poverty rates, when I look at school enrollment, when I look at the things that we should care about, I walk away pretty optimistic.

When the trend is right, as I say in More from Less, don’t yank on the steering wheel—step on the accelerator. We need to step on the accelerator with this modern world that we’ve created.

Now there’s a big exception to that. It does appear that our economic activity is concentrating, that wealth and income are concentrating. I think our economic activity is concentrating into a small and smaller number of companies. We see more winner-take-all dynamics. It’s pretty clear that lots of economies are concentrating geographically. America has these superstar cities and regions, and then a lot that are becoming left behind are more marginal.

That is a problem. Because there are people in communities in those left behind, in those marginal areas. They’re feeling, with some justification, that they’re not getting the deal that they signed up for. It’s not because of fill in the blank with your favorite demon. It’s not because of the Chinese. It’s not because of the Mexicans. It’s not because of the other political party. It’s not because of the foreigners or the welfare cheats. Or the plutocrats on Wall Street. I think it’s fundamentally because our economy is going through some pretty deep changes. And those changes tend toward concentration.

What we do about that and how we bring people along for this transformation when they are in these areas, these communities that are getting left behind or that are becoming increasingly precarious or marginal, that is really important homework. We don’t have a great playbook for it, I don’t think. When I look at the spike in deaths of despair, it just drives home to me how important this homework is.