Max Levchin was the CTO of PayPal. He was involved in the start-up of Yelp and served as a director of Yahoo and Evernote. Currently he is CEO of digital lender Affirm. So when he looks into his crystal ball, he’s viewing it in terms of opportunity. His “Unstoppable Trends That Are Changing the World” presentation at SXSW Interactive this weekend is about predicting the future from an entrepreneurial perspective.
The first of these unstoppable trends, or what Levchin called “waves,” is beneficence. The simplest definition of beneficence is doing the right thing. And from a business perspective it is doing the right thing for your customers. An easy target here is the banking industry. If you didn’t know it already, the financial crisis of 2008 pretty clearly showed big banking didn’t have your best interests at heart. They were instead, in Levchin’s words, “looking to line their own pockets.” Levchin’s online banker Affirm is intended to take advantage of that. He describes it as a “financial service company committed to doing the right thing for its customers even if it means making less money.”
Screwing the customer to maximize profit is not solely confined to financial services. Try calling your utility company. You’re likely to sift through interminable automated menus then sit on hold for a good while because they decided to maximize profit by cutting staff even though it means a decline in service for their customers. If you’re a techie sort of innovator this is opportunity. “If you go in and say you are going to do what’s right for the customer you can win a lot of market share.”
Pretty much everyone in the tech world sees a growing role for AI. The second of Levchin’s waves is human-assisted AI. “AI is going to be performing a vast majority of intellectually demanding routines and services. We will be on standby.” He used heathcare as an example. We will want our phones to provide a diagnosis. If, for example, you are in an accident of some type, you could use your phone to take a picture of your injury and get a diagnosis from AI that has been developed through opinions of multiple doctors around the world. If, however, there is more than one or conflicting diagnoses, that is when you would seek human intervention, as in going to a doctor.
Software eating old software seems like natural selection Silicon Valley style. Levchin’s point is that being first provides you with significant advantages, however, it can also marry you to the original software. The disruptor, at least after a period of time, has the advantage of attacking the problem that you’ve already demonstrated a need to address but without having the baggage of the first generation software.
What Levchin termed regulatory arbitrage is about the role of government, which he sees as a “hidden pool of capital.” Electric cars and solar energy are two examples of where government funding for development is robustly available. But government can also inadvertently play a role in developing technology through its requirements for compliance. The Affordable Care Act is one example Levchin pointed out, suggesting that companies will be happy to pay for software that helps them avoid paying even more costly fines.
Levchin quipped that luck is the single most important success factor for an entrepreneur. But predicting future trends can work pretty well too.
You can watch Levchin’s presentation here.