EXCELSIOR CAPITAL PRESENTS

Survive and Thrive in The Digital World

Pascal is the Co-Founder of be radical, EY’s wavespace Advisory Board Chair, and a member of Pearson’s Digital Advisory Board.
Go Beyond Marketing and Create a Better Customer Experience

Podcast: Survive and Thrive in The Digital World

Pascal is the Co-Founder of be radical, EY’s wavespace Advisory Board Chair, and a member of Pearson’s Digital Advisory Board. Previously he held leadership positions at Google.org, Mozilla, and eBay, built technology startups, and launched a Venture Capital firm. He is the posse leader at TheHeretic.org, and is a general upstart when it comes to creating meaningful change.

Key Highlights

[00:01 – 11:42] Do Not Fear Where Technology is Headed

  • The Law of Accelerating Returns is the rate of change itself is accelerating
  • It is hard to make predictions of the future
  • Technology can be truly transformative when we understand the underlying premise of why things happen

[11:34 – 23:20] Investment Decisions Amidst Changing Times

  • Your next move, whether in business or investment, is guided by your understanding of the fundamentals
  • Strong leadership requires discernment and flexibility to shift the business toward the market demand
  • You’re either at the top or bottom. If you stay in the middle, you’ll completely disappear. 

[23:21 – 38:48] Technological Progress and Future Risks

  • The digitalization of business is inevitable
  • With the market data being readily available, you need to differentiate yourself from your competitor by being better at what you do
  • Education is now shifting from the traditional approach to an inquiry-based where knowing how to navigate the system and ask the right questions are much more essential
  • The best thing we can leave our children is the curiosity
  • There will always be jobs for people in the future even when technology takes over. We simply need to redirect our resources to where there’s an actual need.

[38:49 – 41:15] Closing Segment

  • Interested in how you could rewire yourself or your employees for future readiness? Connect with Pascal with the links below!

Links Mentioned:

Twitter: https://twitter.com/pfinette 

Linkedin: https://www.linkedin.com/in/pfinette 

Website: https://finette.com/ 

Brian’s Linkedin: https://www.linkedin.com/in/brian-c-adams/ 

Transcript (scroll down)

Brian C. Adams 0:00
Today I have with me Pascal Finette. And Pascal is the co founder of be radical, EY’s wave space advisory board chair, and a member of Pearson’s Digital Advisory Board. Previously, he held leadership positions at Google, Mozilla, and eBay, build technology startups and launched a venture capital firm. He is the posse leader at the Heritage.org, and is a general upstart when it comes to creating meaningful change and a big, as we say, the state soccer fan, and then we chatted about that a little bit as well. So thanks so much for joining us, I heard your presentation at a family office conference and thought it was terrific. I’ve since gone and listened to some of the TED talks you’ve given, you’ve got a really great website that will include in the show notes. But I want to start with the Law of Accelerating Returns. Could you maybe explain what it is and more importantly, what it is not? Because I think it is a very misunderstood concept, especially given this national conversation we’re having about big tech in the valley and what we’re seeing play out in everyday life.

Pascal Finette 1:08
Right. So first of all, it’s great to be on your show. So thank you so much for having me. Law of Accelerating Returns really goes back to Ray Kurzweil, Ray, a highly decorated and celebrated technologist, very famous for and some of your listeners might actually remember that last name, because Ray was the first person who recreated the grand piano on a synthesizer. There’s actually a a brand of synthesizers, which are called the curse Wilds. So raised an incredible thinker, and he was the co founder of Singularity University, where I also had a the pleasure of being part of the team, which build that in their earlier days. And what Ray observed in a nutshell, and that’s the Law of Accelerating Returns in a nutshell, is that the rate of change itself is accelerating. So the simple example, it took us, it’s pretty crazy to think about the fact that, you know, it took us like eons to like discover fire, and then you know, like with fire came, you know, better food and better food became better societies, and so on, and so on, that took all a long period of time. And what has now happened is because we’re deploying more and more and more technology, to enhance technology itself, that the rate of change itself is accelerating. And I believe that, and Ray points this out, of course, in his seminal work around this, that particular due to technology, such as artificial intelligence, the advent of big data, you know, new breakthroughs in terms of sensory data, etc. We’re actually starting to leverage technology more and more and more to invent new technologies. And Ray has a very interesting pithy way of saying this, he basically points out that the change we’re seeing in the next 100 years equals the change we’ve seen in the last 20,000 years. And regardless of if that’s an absolutely correct mathematical statement, I do believe that we’re actually feeling it right. Do you see that? You know, like, it took the telephone decades to become, you know, a mass market media, television took a long time, but not quite as long. You look at something like tick tock, tick tock took like, what, like four years to essentially unseat YouTube, which YouTube took 10 years to build, right. So that is what we’re currently seeing. And in many ways, it’s exciting. In many ways, it’s kind of frightening because it feels like stuff gets so fast that it becomes a little bit out of our control.

Brian C. Adams 3:45
And you’ve got this great analogy using light and Gutenberg and the printing press. And it really, it is hard for I think, humans to fathom that amount of time when you’re going through this this paradigm. But you have a talk where you talk about how if you were to go back 250 years in the 17th century, versus 250 years today, just the differences there would be astronomical and hard to fathom. Could you maybe kind of unwrap that a little bit more, because I think it’s really useful way to understand this context.

Pascal Finette 4:20
Yeah, no, absolutely. So. And again, like it plays into what we talked about earlier. So if you go back even if you go back 100 years, like you, you take today 2022 Where we record this show, and you will go back to like 100 years like 1920 20 and you’re looking at like what have we achieved in this time period. It is an incredible amount, but it is still somewhat manageable as in like you could like put down a list and like actually write this stuff down. Now think about imagining trying to imagine what would the world look like in 100 years from now? So 2120 22 which you know, some of our younger kids might even see as in like living through it. It’s unfathomable. If you just think about, you know, I grew up in, essentially the advent of the first.com. Boom, that was like my like, kind of like grounding. If I just think back what has happened in those, like, what is it like 25 ish years since we had the craziness of the first.com, boom. And in terms of what have we achieved in terms of technology and where we are today, it’s just unfathomable. And I think that’s a challenge for us as humans, because it is incredibly hard to actually make predictions about the future. And we talk a lot about like the future as a as a system of a paradox. Because on one hand, you don’t know what the future is. And by the way, there’s a very famous saying that if a futurist tells you what they know what the future is, they typically have an agenda about that particular future they tell you about. That might be by the way, true. Also in the financial industry, right? If you make predictions about the return on your fund or something, you clearly have an agenda around this. At the same time, as much as that is true. If you look very carefully, particularly as it pertains to technology, you can see these, these early indicators. Amy Webb, who is a futurist calls them weak signals, or a little bit more poetic phenol Pradel will call them the thin wisps of tomorrow, and you can actually make predictions about it. A good example is you look at the iPhone, clearly released in 2007, totally changed the way we think about computing. The early indicators of that change, you could see decades before in the 1990s, IBM released the smartphone device called Simon, which was really the first smartphone device you had even the Apple Newton, you had the Palm Pilot, which I’m pretty sure you run around with, as did I. So you could always see these things. But you need to have the fantasy to be actually able to say, what does this look like when it gets better and faster and cheaper and smaller, etc.

Brian C. Adams 7:01
I remember, I lived abroad in Germany for a year. And that was 2000 2002. And you had to get back in the day, you had to get a domestic cell phone, like a Motorola in Germany, because your US phones would work. And I remember as all of my German friends, we would SMS each other, we would call that SMS. And I came back to the States. And I was got my US phone. And I was hanging out in college. And we were trying to organize going out to a party or something. And I said, well just send me a text message. And we’ll figure it out. And nobody knew what the hell I was talking about. Like, this clearly is like happening, and it’s coming. I mean, that’s just a small example. Right. But I think your idea of understanding what today is, and you talk about how you can experience the future, if you’re willing to pay up in price today, like going to space, for instance, might be an analogy that we could use. Given all that and I liked your comment, do you consider yourself a futurist?

Pascal Finette 8:08
I try to avoid that term.

Brian C. Adams 8:11
And that’s I mean, it gets thrown around a lot, right. And I think it’s almost lost a lot of meaning. That’s exactly right. Why do you push back on that terminology for your own identity?

Pascal Finette 8:21
Mostly, because most of the futurists I know And make no mistake, there’s incredible people who are thinking and elaborating and exploring the future, you know, like, Amy Webb, I mentioned from the future today Institute is clearly one of the heroes in this industry. But a lot of the futurists I think, have a tendency to become rather dogmatic or prescriptive of a future they’re seeing, and they might have good reasons for seeing that future. But if I’ve learned anything, in the, like, 20 years, you know, I’m like, really dabbling, and like be interested in this industry is that it is incredibly hard to make very accurate predictions about the future. And you need to be very careful to like, go out there and say, This is what is going to happen. And it’s kind of interesting, because you see it currently, probably closer to your home base. When you look at the current craziness about cryptocurrencies, non fungible tokens, nfts, and all of that stuff. There is a lot of people when you listen carefully, there’s a lot of people who will tell you about what they think the future of that is, they typically have a very specific self interest in it. And I think a lot of people in the futures industry have a specific self interest in the particular version of the future. They’re selling you. So I’m trying to stay away from that and trying to like give you you know, in our clients, give them frameworks to think for themselves, rather than trying to be prescriptive about the future, and probably, it’s also because I’m too stupid, and I can’t actually figure out what the future

Brian C. Adams 9:55
I don’t think that’s the case but I did have a mentor early on when I got into financial aid. versus telling me that anytime a new product comes on the marketplace that is complex and hard to explain, you’re not sure how people make money and it’s it has some kind of abbreviation, it usually means retail investors are getting ripped off, like love it specs and FTEs all of these things, right. And it’s always in the back of my mind, whenever I hear about whatever new widget is coming onto the marketplace.

Pascal Finette 10:27
I think that’s very accurate and astute observation from your mentor. And, you know, one thing I think, which is important to understand in this context, though, is when you look at something like NF Ts, and it’s funny, because we talked about this at the family conference where we both were, I highly doubt that owning a board, ape, NF t, which is one of these, like, very hyped NF T’s, which is basically, for those of listeners who don’t know what that is, it’s a picture of a literally aboard ape. And there’s a couple hundreds or 1000s of them, and they trade for insane amounts of money. Like we’re talking like half a million dollars and more. I doubt that this is a good investment long term, you know, speculative value, like set aside. But when you start digging, and you say, what is the underlying premise the technology which nfts can bring to the market, you can actually see glimpses of this being really useful for specific transactions. And I think that’s where technology always has a has a weird, like playful character to it. And he also has a very weird, exploitative character, particularly in the beginning, where, as you mentioned, you know, the retail investor gets like ripped off basically. But it has a tendency to like self correct. You know, at the unfortunately, sometimes on the back of like, retail investors, for example. But it has a tendency to self correct, and then the useful use cases emerge. And then it can be truly transformative, as we’ve seen with the Internet, mobile phones, yada, yada, yada.

Brian C. Adams 12:01
And I don’t want to talk to your book. But I think the way that you talked about, you know, futurists versus your business, the NF T’s is a good model, right? Because you’re not advocating that NF T’s are the next, you know, big instrument to create wealth. But you are saying, you know, potentially empowering the creative class or creating a structure where smart contracts enable people to retain ownership and maybe disintermediate, the galleries and the art intermediaries that have scraped fees and better friction costs between the end user and the artist, that might actually be something that we should be paying attention to. Right?

Pascal Finette 12:44
That’s correct. Exactly. So looking at the underlying fundamentals, I mean, it goes back to like, you know, financial instruments as well, where you, you think about what are the underlying fundamentals? And what could they enable, and then create, of course, you know, like, minimize friction and create wealth, etc, etc.

Brian C. Adams 13:04
And you’ve got a great quote in one of your presentations that the Gutenberg moment has now happens every year, right? So this accelerating change this this, you know, this Kurzweil effect that we’re talking about? So how do you if we, if we assume that’s correct, we believe that Ray knows what he’s talking about? He seems like a pretty smart dude. How do you help clients think through asset allocation investment decisions? Because it does seem like this change keeps coming sooner and sooner and sooner, things keep getting outdated, quicker? How can you actually navigate these waters today?

Pascal Finette 13:48
So I think you need to distinguish between an approach which is more speculative, and an approach, which is more fundamental. On the more speculative side, this is where you would actually invest into an aboard ape NFT. Because you see the hype happening around it. And it’s really about, you know, classic timing, like, when do you get into the market when you get out of the market? We stay away from that that’s not my world. What we are interested in, and also the clients question we’re getting is, well, the question around the fundamentals. So if you build a business, like what are the fundamentals you need to pay attention to as they’re shifting as in figuring out where does the market go and how do I invest accordingly, either as a company in operational assets, or as an investor. And the the two pieces I think, which are important to understand here is one is we have this model where we talk about disruption probably slightly differently than most of the people in the market where in our world we think about disruption as what we called state changes. And state changes this idea out of the worlds of physics where water goes through state changes, right? It’s frozen, it’s solid, becomes water when it what can becomes warm and eventually becomes gas. And what’s interesting is the, the reason why we use this as an analogue is the underlying molecule, h2o doesn’t change. And what you find in markets is that the underlying in all of these disruptive technologies, the underlying consumer need actually very rarely changes. It’s very rare to actually invent something which creates a completely new class of neat, simple example, you take the advent of Netflix or the decline of blockbuster. The underlying need is I want to have home entertainment at home, right? Like I want to watch a movie on my television set, the way it’s being delivered changes. So you start from VHS video cassettes, to DVDs, which get shipped to you in the mail to ultimately streaming. And I think it’s important to understand that because it demystifies a lot of the weirdness around disruption, because there’s a lot of like people who run around and say, Oh, my God, Netflix, so disruptive is is this, it is disruptive in the market. But the underlying technology, the underlying need, actually has never changed. It’s just the way we deliver it. So I think that’s important to understand. That’s number one. And number two is if you look at from a fundamental perspective, so if you’re looking at cryptocurrencies and FTS as one example, what you find over and over and over again, is that it actually takes some time. Even in today’s world, even where everything gets super fast, it takes some time years and often decades for technology to mature to the point that they are scalable, and that we have figured out the utility of them. What this means is that it actually becomes if you look carefully, for an investor, it becomes actually a game of getting the timing right. So opening up your antennas to see all these like changes. And then getting the timing right, beautiful example for this is, if you think about the COVID vaccine based on mRNA technology that technology was invented, essentially, was pushed forward by DARPA, as a research project about 20 years ago. And it took a while for that technology to become stable enough and understood enough. And then it took a global pandemic to basically have billions of dollars poured into the application of the technology. But now we’re at this point where it like flips, right. And now we will see 1000s of new drugs being developed based on mRNA technology solving, like really interesting medical problems creating billions, if not trillions of dollars of value in the market. So again, like the short version for me is tuning into the market, looking at what is happening, but then also having the ability to not getting caught in the hype zooming out and saying, When does the technology actually become good enough and scalable enough that I can actually do something with it so that it becomes a real driver of the real utility and value driver in the market?

Brian C. Adams 17:58
And you talk about this path to doom? And maybe let’s back up, do you believe in this idea that there can be creative destruction? In other words, this path to doom that I want to get into with you? This digitalization this, this Kurzweil effect that we see play out, destroys a lot of old line legacy companies that that aren’t on this path. But that leads to things like Netflix and others moving forward. Is that the right way to think about it? Yeah,

Pascal Finette 18:32
absolutely. It’s I think creative destruction is definitely a thing, right? I mean, trumpet shouldn’t be there was definitely right, in this in this regard. Our work is the work I do with my companies predominantly working with incumbent organizations, large incumbent organizations all around the world, privately held and publicly traded in helping them essentially not stumble over their own two feet, because ultimately, what I think happens is and we have the data already, like, it makes also like intuitive sense, I think these companies, there is nothing in evitable in the in their demise. There is no like predetermined, oh my god, they can’t do it, right. Like they will die like creative destruction is a given. It is mostly these companies for various reasons getting into their own to in their own ways like and again, like I mean, Blockbuster is such an over cited example. But blockbuster had multiple opportunities to buy Netflix, and they decided not to, they had built a DVD rental service, which was actually relatively well set up and successful and killed it for various reasons. So this is challenged that and we talk about this quite a bit and I think this is literally the biggest challenge you have as a company which is when you go through a state change as a as an industry. So you go from, let’s say VHS video cassettes in the store to DVDs being shipped to your house. What big hams emergent is that your existing skills and processes become irrelevant. And that’s really hard for companies to to flip. It’s doable, absolutely doable. I mean, you know, again, like Netflix being a good example where they went from DVDs to streaming media powerhouse now competing with a business of this world. It’s absolutely doable. So it’s not inevitable, but hard to do.

Brian C. Adams 20:30
And it makes me think about, and I get my years mixed up, I’ve got COVID brain, but at a certain point, Zuckerberg realized that everything was going mobile. And I remember he essentially stopped all internal initiatives and put everybody he’s the entire enterprise on to making sure that they were the most mobile oriented app possible, because he, he clearly saw what was happening. He didn’t want to be kind of left behind. Is that the type of thing that you’re talking about how organizations have to be able to pivot in today’s world?

Pascal Finette 21:04
Yeah, that’s exactly right. And it’s interesting about, it’s interesting that you bring up Facebook, because you might remember when you go back to the even like the earnings calls, Facebook was heavily criticized for not being in mobile, when mobile was basically already you could see the signs clearly emerging, and then to Xbox and his executive teams credit. They eventually woke up to it, and then did the right thing, which is they, as you mentioned, they completely shifted their whole enterprise towards focusing on mobile. So absolutely, it’s doable. And you see it a little bit in the car industry, I would make the argument that, you know, some of the car manufacturers like Ford, maybe you’ve seen like the big announcement that Ford basically wants to split the company into an old dying arm, which is a combustion engine company, and then the new one, which is all around Evie and autonomous. That makes sense to me. Because I think what Ford has realized is that if you keep those things together, like GM tries to do, it is really hard. Because you’ve got all these interesting factions fighting with each other, we talk a lot about this idea around the immune system, or like an auto immune like defense system where like the company is like starts fighting internal wars, while they also need to fight external ones, which like then basically just eats up all of your resources. So I think it’s doable. To your point, it requires strong leadership.

Brian C. Adams 22:30
So this is super interesting to me, because you start your the presentation that I attended in Denver, you start by chastising other groups of using Kodak and Xerox as these hackneyed examples, but it’s true, right? If you look at this age of conglomerates, or consortiums, you think about a GE, which, you know, GE Capital was this unbelievable firm that got just destroyed internally with these other industries that were doing poorly, and they were taking resources away, and they had to spin it out. You think about Skunk Works, what was going on with these other, you know, older industries? So, do you think the age of the holding company consortium is over, given the speed and acceleration of technology and change? You know, I

Pascal Finette 23:23
wonder about this. And I think, in some way, shape or form, I believe that we will see large holding companies emerge or reinvent themselves, who manage to leverage the power that a large holding company actually offers you. I give you a simple example. So we have this. This other body of research where we talk about the economy, essentially turning into a particular consumer economy is turned into an hourglass shape. Some people talk about the bottle shape. So the idea being that in old markets, you have this classic pyramid structure where you have high volume, low margin at the bottom, you’ve got the exact opposite at the top typical luxury goods. And then there’s this like big middle, juicy middle in the like, which is affordable luxury, or whatever you want to call it. Good example, fashion industry. So you’ve got h&m and Inditex at the bottom now sheen, of course, you’ve got at the top, you’ve got maybe the Gucci’s the products, B whatever Patagonia’s and then in the middle you had the gap and what we saw over the last decade essentially is that for various reasons and we did a whole bunch of studies around why that is but for various reasons the middle just basically completely disappears and you see it again like fashion like you see like they’re all dying like the gap the you know, like all these companies are disappearing, the bottom gets bigger, because you now get the call. What we have mostly managed to do at the bottom is high quality, low price and the quality has gotten better. Like you know a good example is like when h&m first came into the market I remember Buying like shirts or something from them, they literally fell apart after two washings. Now you can buy a shirt from h&m, it’s totally fine. Like, it’s actually really good quality. And then at the top, you’ve got a lot of like the brand, building the niche E and so on. And one thing we talk a lot to our clients about is, you know, one of our clients is one of the largest beverage makers in the world. I believe they will be really interesting markets for people who figure out how to essentially create a conglomerate a hive of the smaller brands at the top. But then leverage the infrastructure you get from a large corporation, the benefits you get in terms of manufacturing, distribution, etc. It’s really hard for companies to do because, you know, again, like this beverage company, we talked about acquiring smaller beverage, you know, like niche players, and they literally said to me Listen, like I can’t do $100 million acquisition, it just makes no sense. If he can’t do it physically can’t do it. Which is crazy, because these companies grow like wildfire. So if we will see companies, which we’ll figure this out, and we’ll create probably a whole new generation of these, like conglomerate type of businesses.

Brian C. Adams 26:15
What’s the most compelling industry that you’re consulting with right now?

Pascal Finette 26:23
That’s a good question.

Brian C. Adams 26:25
Because you mentioned some old I mean, you mentioned automotive, you mentioned retail consumer, which is interesting to be because, you know, you, when you’ve listened to the examples, you you talk about, and the way you present yourself, it’s very much is a more tech oriented type of perspective. And so I’m curious to your using your, your background, I assume, with with Google and Mozilla and some of these other firms. Are you talking about these old line industries for reason? Because you think they’re ripe for disintermediation?

Pascal Finette 26:57
Yes. So I’m personally particularly interested in terms of industries, I’m particularly interested in the ones which are, which see the largest amount of change, mostly driven by technology, and some societal changes, as well as in like, consumer preferences, etc, etc. As well as the surrounding factors, like, for example, climate change, which clearly puts a lot of pressure on on certain industries. Make no mistake, I think there’s industries which are largely untouched by these changes. And, you know, like, the classic example, everybody always brings up as the funeral industry. Yes, there’s some changes. And yes, they do like their marketing differently. And, you know, like, they might, instead of sending out like paper cards, then I’ll send electronic cards, you know, that kind of thing. But I am particularly interested in these fast moving industries. And, again, I think my fascination after having been in the startup world for whatever, 20 plus years, the last 10 ish years, I have a real interesting fascination with these incumbent organizations. Because what I see with them is that there’s so much potential for them, to not only weather these, like storms, and tsunamis, which are coming but actually do something really interesting with them, because they’ve got so many resources. And I find this interesting, the question interesting, how do we leverage those resources? And how we, how do we turn these huge companies into like, actually innovation powerhouses? Which they can be without a doubt?

Brian C. Adams 28:37
That was another question I was going to ask you. Because for a long time, it seemed like the market some of these bigger firms, you alluded to this a little bit earlier, it was cheaper and more efficient to just buy the r&d, right. So for Facebook, when they saw Instagram coming, cheaper to just buy them before they got too big, as opposed to try to, you know, copy and build it yourself. And I know that when I’ve read some other tech books, this is the playbook that a lot of firms use in the valley. Do you think that’s still true? Or do some of these firms still have the ability internally to to spin up really compelling, new initiatives? I think it’s

Pascal Finette 29:24
doable to do it internally. I think it’s really hard. Mostly for the reasons we’ve already talked a little bit about and alluded to, like the like these internal politics, the immune system response, we talk a lot about, you might be familiar with the three time horizon model was originally invented by McKinsey where they’re talking about companies operating or should operate in three distinct time horizons time horizon, one two here and now every company is good at that time horizon 310 years out r&d time horizon two is this kind of like interesting middle ground and the challenge with the time horizon two is Have you seen this over and over again and builds on work, Geoffrey Moore did is this notion that when you operate in time horizon to particular in inside of a large corporation, very often you get measured by time horizon, one metrics. And then you’ve got these like weird like dynamics where time horizon one comes to you and like you ask as a time horizon to person for resources, and then time horizon one asks you, this is great. When will you make you know, whatever, 100 million dollars, and if you’ve truthful in time horizon two, you basically shrug your shoulders and say, I don’t know, nobody has ever done this before. Right. So I think there’s this inherent problems, companies have to do this internally. I believe that that’s one of the reasons why the better companies are actually doing a lot of the innovation externally as in to your point. They leverage the, the fluidity and the efficiency of markets, have the startups basically figure out the new thing. Also, quite frankly, I mean, I had an interesting conversation with Axel Springer is a large media company in Europe, very well known for the acquisition strategy, very successful acquisition strategy. And like their, their leadership team points out to me, they basically say this is great because the market is dominion. Like, why would we start a single initiative and like, believe that we figure it out and have it right, when we can have 10 of them in the market, competed, battle it out. And then once they’re like, you know, we see winners emerge, then we can basically like swoop in and basically acquire them and minimize our risk. So I think it’s a totally valid strategy to go into the market for this.

Brian C. Adams 31:37
Yeah, they just they invested with Axios, I think, right. Excellent. Spring, right. Yeah. And so that’s a really interesting space, right media talk about a total dog, according to Wall Street, just a dead industry with no growth potential. But you look at a shop like Axios that spun out I mean, I’m a huge I love their newsletters, I subscribe to a number of them. I think they do incredible things they actually have a Nashville specific Axios now is they have a few markets are doing this in. And it’s it’s it’s like reading the local newspaper was back in the day. And I think there’s still an audience for it. And they’re just kind of coming at it through this digitalization lens. And they have this whole, you know, playbook of how they structure the writings and everything, which is really interesting. And that leads me to the next question. Is the digitization of of business. Inevitable?

Pascal Finette 32:32
Yeah, every business is a software business is this? Yeah, I think it’s absolutely I mean, it’s kind of funny that we even talk about this that like is is ironic, I just, I just produced a course on digital transformation with Udacity, the big online learning platform, and we were joking about this as it is, in some way, shape, or form. It’s actually crazy that we still talk about this. I mean, there’s not a business, which is not using computers and software at their core, like even if you are the proverbial funeral Institute, you run your books through QuickBooks Online, you know, like you do your emails on your phone. Like, it’s absolutely inevitable. And I think the the interesting question becomes, for me, is is twofold. And I think that’s where still a lot of the potential is. The first question I would ask myself is, which of my current workflows are still analog and or manual, which I think a lot of those we can actually automate. And we’re getting better with this. Which gets us to the second part, which is really odd around automation. So there’s this buzzword robotic process automation, rpa, which is being thrown around a lot, which essentially just means like, I take a process, which I do manually, and essentially turn them into software. And I believe that one of the biggest changes we’re seeing there, and it’s, it’s as monumental for me as when back in the day on the apple, two E, you got VisiCalc, right the first time we had spreadsheet, and we’re like, Oh, my God, we can do like the sheer. I mean, you might remember this, like the sheer idea of doing a spreadsheet, which updates itself. And I mean, the impact this had on the financial industry wide was massive. And rpa, or process automation, generally speaking, has a similar will have a similar impact. And the big unlock for this is, and there’s an interesting opportunity for someone to invest in is this whole low code and no code movement. So there’s a big, big, big movement at the moment to build tools, which allow you to essentially, to become you and I become essentially authors of our own software by clicking stuff together. Very similar to what the spreadsheet did originally. And that’s huge. It’s massive.

Brian C. Adams 34:47
Yeah, I’m in the real estate business, and the last three to five years. You know, we increasingly talk internally about how we have an investor relations Portal. And the reporting is done, you know, through the portal and the communication with the investors is done through the portal. And then we have a CRM, we use HubSpot that interfaces with the portal itself. And so all of these funnels and automations and leveraging technology. Yeah, I mean, I tell young people all the time, in real estate, you know, I think if you put yourself in the intersection of kind of traditional real estate investing, and technology, something really interesting is going to happen in that space. I mean, I don’t know what it looks like. But there’s going to be a lot going on there, I think in the next five or 10 years.

Pascal Finette 35:35
Yeah, absolutely. And I mean, even in your industry, if you just look at what has happened to the industry by the sheer advent of ubiquitous data, so thinking about the red fins and the zeros of this world, it has turned at least the the private market for houses, etc, has turned that completely upside down, completely shifted the power dynamics in the game completely, like created a whole like new way of like thinking about this industry. So and you’re absolutely right, I think we’re only at the beginning of this stuff.

Brian C. Adams 36:07
So same question about digitalization, a term that gets thrown around a lot that I sometimes push back on, but I don’t have a better substitute for it. But this democratization or this fractionalization, of assets of investing, is that inevitable?

Pascal Finette 36:25
Yeah, I think. So the way we think about this is, and we’ve been talking about this for, I don’t know, a good 15 years now. And I learned this concept of this idea comes from a friend of mine, the former CEO of Mozilla. In software, we’ve got something called the software stack. So if you think about, if you want to write software, there’s like an operating system on your computer. And then you run a piece of software like a database software on top of that, and then you run a customization on top of that, and so on, and so on. And the ways basically, like visually, it’s like a stack. So you go from like, the lowest level, like the stuff which runs on your computer, just to make the computer run all the way to the customization at the very top, the cherry on the on the icing, basically, the icing on the cake. And what we’ve seen in software for the last God knows 30 years is that more and more pieces of the stack from the bottom up, become commoditized and become in the software world open source. So to your point, they become democratized, they become also devalued, you would not dream of writing your own operating system, it just like makes absolutely no sense whatsoever. You wouldn’t write your own database system, and so on and so on. Whereas, you know, 20 years ago, you would have very most likely had to write your own database system. And I think the same is true for any technology driven business. So to your point, about, let’s say, for example, the real estate industry, I believe more and more of the common pieces of that of your business stack, if you want to think about the value chain, essentially as a vertical stack, become commoditized, which in many ways, I think is beautiful, because people like yourself, you can really focus on the value creation at the top, right, you don’t need to think about, you know, back in the day, like, you know, I know, real estate investors, like you know, 20 years ago, like getting market data was a pain in the neck, and it was expensive. Now getting market data is basically like you plug into one of the big databases, you’re like you’ve got the data right? Now that diminishes your competitive advantage you might have based on market data, so it forces you to become better and better and better at the higher levels of that stack. But I think that’s an exciting movement. Because, again, like it allows us to differentiate in very interesting new ways.

Brian C. Adams 38:43
I tell people all the time, I think in my industry in business, having a really robust investor relations portal, having a robust CRM, having excellent reporting, transparent communication, all of these things used to be nice to haves. And now they’re just table stakes, like if you want to be in this business, is just the price of admission to get into the world. And really, you’ve got to figure out how to differentiate yourself and create value beyond that, which maybe that moat has gone away. And the barrier to entry is lower. But to your point, I think it just compels everybody else in the business to get better at other aspects. Right. And that’s, I think, at the at the end of the day, good for the end user, consumer retail investor, whoever. Yeah, absolutely.

Pascal Finette 39:29
And then like, I think it’s, it puts stress on the system without a doubt. It means that you just can’t rest on your laurels ultimately, right? Like you have to continuously think about how do I create value higher up in the stack? How do I differentiate in that stack, but I do think it is beautiful because it allows for really interesting innovation, because you just don’t need to do the drudgery anymore. You can really focus on the innovation on the differentiation too. What’s your client?

Brian C. Adams 40:02
So I really liked your approach, because you are an optimist, which I think in this day and age is very refreshing. They put you on as kind of the the last speaker in the conference, it was the end of a long, two days, and you brought a lot of energy into the room, which is a testament to your personality. Given everything we’ve gone over, right, this exponential growth, this path to Doom, the blockbuster examples, if I am talking to my nine year old, and we had a school event at my house last night, and I’m talking, I’m thinking through allocating my resources to my children. Where should I have him be focused so that he can be competitive in this new marketplace that we’ll be entering into and say 10 or 15? years?

Pascal Finette 40:51
Yeah, it’s a good question. And it will not surprise you, I get that question a lot, which is like, you know, based on everything, like I talked about on a stage, for example, like what should my kids learn, and I think the, there’s an interesting wrinkle to this, which is I’m on the Digital Advisory Board of Pearson, which is the world’s largest learning organization, which is maybe infamous for selling your textbooks at overpriced, heavily overpriced prices. Arguably. That being said, I think there’s an interesting shift, which is happening. And I think unfortunately, most schools haven’t quite caught up with this, which is, the old model of industrialized learning was clearly was about learning was like getting as many facts into your heads as possible, which I think that is today is rather useless. Like your nine year old, for example, if they need to know, when was, you know, like the Declaration of Independence being written, they just go to the Alexa and ask Alexa and Alexa will tell them. And I think that points us to two interesting skills. One is how do you become a navigator of this world? So how do you actually, like, learn how to ask the right questions of the systems? And I think that’s a that’s an interesting skill. Because you can ask flat and dumb questions are, you can ask really interesting questions. And then the second one is, how do you become a discerning consumer of this information? For Kids? Right? So I believe the interesting question, in a classroom setting, for example, to be debated today is not when was the Declaration of Independence being written? But it’s much more important to understand like, why was it being written? What were the fractions? What would the discussion what’s going on? Like to essentially create a critical thinking, you know, why were certain things worded the way they were worded? Why would they turn out this way, etc. And those are skills again, like I think skills, we unfortunately don’t teach all that much. It’s ironic, because I grew up in Germany, very traditional schooling system. So I did a lot of factual learning. And I remember we had a bunch of kids, we went, which went to Montessori schools, which are these alternative schools, where the idea is like you learn holistically and your problem based learners, right, so you get a problem being posed. And then you essentially solve this by thinking about the physical concept as well as you know, whatever that’s, and we always looked at these kids after se as a little bit like, Oh, they’re kind of weird. They’re like little alternative. And like, it’s kind of weird how they’re learning. And today, I look at these kids, and I’m like, this is the way we should learn. So it’s interesting how, like the world has shifted. But again, like, for your nine year old, your nine year old would will live in an already lives in a world of absolute abundant information. I mean, that the beauty of today’s world is to tell you an interesting example. I spoke to an entrepreneur from Africa and asked her what her education was, and she rattled down this list. She’s like, you know, I did. I did this Stanford alert AI at Stanford. I did, Lloyd Harvard. And I was like, that’s incredible. Like, how did you like, you know, like, as an all African entrepreneur, how did you do this? And she’s like, well, I did. I took all these classes online for free. So she learned from the world’s best teachers for free. But I think that challenge is the curation, right? Because there’s so much of that stuff out there. So again, like the skill you want to teach kids is curation. And the one thing you don’t want to beat out of them, because unfortunately, we do it and have a tendency to do it is curiosity. So like, kids ask, like, why, why, why, why, why. And then, the unfortunate reality is we send them to school and beat it out of them. Right? We say no, no, no, stop asking why here’s the book read it. And I think that’s the worst thing we can do.

Brian C. Adams 44:38
Final question, because we’re going long, but this is really good. You have a presentation, we talk about how we have a need to create 600 million new jobs by 2030. Yeah. And so to continue to pull the string on this job market, futurist type conversation. How do you see that playing out? I don’t I don’t believe the end is coming in terms of long haul truckers all losing their jobs. This is a story that we’ve heard over and over again, and there’s always this new frontier. But it does seem like we are into entering into a place where and again, I’m not trying to be apocalyptic. But technology is eliminating a lot of these jobs. Are you talking about your friend at Panera are one of the first ones to use iPads to digitally check out and pick up etc? Are you optimistic or pessimistic about the impact that technology will have on the on the workforce on the workforce in the future?

Pascal Finette 45:43
So I think I think the challenge with the with the current debate is there’s a lot of conversation about the way we talk about the future of work or the future of jobs. Right. And I think it’s really, the conversation is a misnomer, because the way it’s being presented is this idea that so the pessimistic view of it being presented is what you just described as like, 3 million truck drivers will be out of a job. So first of all, that will not happen for quite a while because autonomous is by far not as far as the people who are talking about futurists, by the way, like the people who build these cars want to make you believe.

Brian C. Adams 46:25
like Elon Musk. Yeah. Yeah. I

Pascal Finette 46:27
mean, you know, as a as a as an exam, I mean, I don’t want to take away from the like technical marvel, that is a Tesla in self driving mode. But it is by far not a car, you want to drive in self driving mode, like by far. And there will always be work for truck drivers, for example, to do last mile, et cetera, et cetera. So this one, this is one side, then the other side is the crazily optimistic, I mean, totally utopian, like, oh, we will all be poets and artists in the future. And we’ve got universal basic income, which by the way, I think is the same level of BS. The reality is, and I called Tim O’Reilly, the founder of O’Reilly Media, which is a big like computer business book and conference business. He points out that basically, as long as we’ve got these massive change, challenges as humanity, climate change, aging population, like you name it, right, as long as these challenges are around, we are awash in jobs. The challenge we I think we need to figure out as as a society is how do we re and upskill our people? How do we actually deploy the human capital, which is on this planet, towards those challenges or towards the right, jobs? Right. And I think it’s, you know, it’s naive to believe that you take a burly 55 year old trucker and turn them into a nurse in a in an old people’s home. I mean, that’s just naive and idiotic. That being said, I think we need a society and unfortunate don’t see society doing a lot of that we need to get much better at directing our resources towards the future, where we actually know the need there, they’re needed. That being said, if you run a trucking business today, you know that you are out of truckers, like they are desperate for truckers, right. So I’m optimistic about it if we just get our, our resource allocation, right.

Brian C. Adams 48:25
One final question. Why not on a fun note, we kind of talked about this on the pre call. You think Jeremy’s got a chance to World Cup and guitar?

Pascal Finette 48:35
I think time will be super interesting because the weather is so vicious. I think it’s a bit like a human race. There were a couple of Olympic Games, for example, where I’m also a marathoner used to be an ultra marathoner, where you basically see like, endurance athletes like falling like the flies, because the weather is so terrible. And I think Qatar will be an interesting test for teams, because it will be on one hand, clearly your ability to play and you know, German plays very technical soccer. So I’m very, you know, I’m hopeful. And they’ve got a young team, but also your just your ability to endure the specific conditions in Qatar. So it will be interesting to watch it will be I think it will be it will throw a couple curveballs for people.

Brian C. Adams 49:19
Yeah, I think it’ll be a lot of fun. I’m just thankful the US actually qualified this year. That’s a big. Yeah. I mean, if you want to

Pascal Finette 49:28
watch us soccer watch the women. Incredible. Absolutely. Incredible.

Brian C. Adams 49:33
Yeah. Well, Pascale, I want to thank you so much for taking the time. This has been awesome. You create incredible content. Your website is a really great resource. And if anybody out there listening is looking for a keynote panelist wants me to do an in person presentation. He has a ton of energy. He’s very good with the crowd. So I highly recommend you reach out we’ll include contact info and the site on the show notes. But if people are interested in engaging with you You are learning about some of the speaking opportunities that you have what’s the best way for them to get in touch?

Pascal Finette 50:06
Literally website has our personal contact details on there. The other thing just as a fun note to end this on and by the way I’m super grateful was really incredible conversation amazing questions. If you Google my name, you will realize that there is other than me no other Pascal Freenet in the world. So I own my Google search results because for the sheer fact that my name is so unique.

Brian C. Adams 50:31
You are your SEO from the from the womb. That’s exactly right. That’s awesome. Bhaskar. Thank you so much for the time I really appreciate it.

Pascal Finette 50:38
Fantastic. Thank you so much.

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