2012/03/13 Tim O’Reilly interviewed by Andrew McAfee, “Creating More Value Than You Capture”, SXSW Interactive

Digest of an interview of @timoreilly by @amcafee below, abstract from schedule.sxsw.com/2012/events/event_IAP100142:

Tim O'Reilly, SXSW 2012

One of the great failures of any company – for that matter of a capitalist economy – is ecosystem failure. Great companies build great ecosystems, one in which value is created not just for a single company or group of industry players, but for partners who didn’t even exist when the product or service was introduced. Many companies start out creating huge value. [….]  Since the cycle of capitalism depends on consumers as well as producers, and consumers are less and less able to find employment, at some point, we’re going to have to start thinking about how to put people to work, rather than how to put them out of work. At O’Reilly, we’ve always tried to live by the slogan “Create more value than you capture.” It’s a great way to build a sustainable business and a sustainable economy.

Andrew McAfee, SXSW 2012

Andrew McAfee, author of “Race Against the Machine,” will engage with Tim about these ideas, and about how rethinking the economy becomes even more urgent in the face of the trend he explores in his book, in which jobs are being outsourced not just to low-wage countries, but increasingly to machines.

[long introduction]

[… skipping ahead to focus on the ideas on policy  …]

[21:40 AM] A lot of what these people did was what you called the Clothesline Paradox.  Can you tell us more about that?

[21:42 TO] … It’s a paper I read in 1975 in Coevolution Quarterly …

[23:30 TO] … We kicked the can down the road …


[23:40 TO]  Back to this clothesline paradox.  Steve Baer had this insight.  He said, when somebody decides to hang their clothes on a clothesline, instead of putting them into a dryer, we don’t take that little energy savings, and move it from the fossil fuels column into the energy renewable column in our accounting.  It just disappears.

[24:05 AM] So it’s literally a shrinkage in the economy.

[24:07 TO] That’s right.

[24:08 AM] It looks small than it used to.

[24:09 TO] That’s right.  So you can look at a lot of issues — like in the SOPA — it’s a great metaphor for how we think about the Internet economy, when people entertain themselves by watching free Youtube videos, or interact with friends on Facebook, instead of watching Hollywood movies or buying copyrighted content.  The copyright industry says “look at the value that was destroyed, the free Internet is destroying value”.

[24:40 TO] But it’s quite clear.  It’s like the utilities people saying, those people hanging their clothes on clotheslines are destroying value.  They’re not using our product.

[24:52 AM] And by that definition, the open source software movement has shrunk the software industry.

[24:55 TO] Absolutely.

[24:56 AM] And therefore destroyed value.

[24:59 TO] Except, no.  That was exactly what Bob Young, who started Red Hat, said:  my goal is to shrink the share of the operating system market.  And you look at MySQL, shrunk the size of the database market.  But it didn’t really, of course, it actually grew it.

[25:17 TO] What we understand, now, is that when we now have these breakthroughs in generosity, you grow the market.  You grow value for society.

[25:28 AM] But you don’t grow the economy that we know how to measure, that we’re kind of pointing our measurement instruments at.

[25:35 TO] Often you grow it, we just don’t look at the instruments.

[…]  [The book, Race Against the Machine]

[28:35 TO] We really need to think about a new shape of the economy. …

[28:37 AM] And this is actually a great segue, because this is the next set of questions that I wanted to post to Tim.

[28:41 AM] So we have one set of challenges, which are pretty clear and substantial about measuring value in our economy.

[28:47 AM] We have another set of challenges around compensating people for contributing value in this economy.  Because, as Tim says, a lot of the people who are putting value out there, are doing it in ways that don’t immediately lead to recompense or compensation.

[29:02 AM] There’s another problem, which Eric and I dove in on, in the book, which is as technology just races ahead, and continues to demonstrate just weirdly powerful new capabilities and skills, the data are pretty clear that it’s leaving some people, and a larger number of people, behind, in our economy, over time.

[29:25 AM] And the super-shorthand way to talk about that is:  think about what happens when we hook up Siri to Watson, and let both of those technologies improve for a few years.  Cause if they follow the trajectory of Moore’s Law, and they’re going to follow them with at least that much acceleration, they’re going to be about 16 times better than they currently are, in 6 years.

[29:49 AM] Now I think that puts a lot of people who are doing what they are currently doing for a living right in the sights of the automation of the economy.

[… customer self-service …]

[… customers create jobs …]

[32:37 TO]  It’s a situation that’s been, first of all, framed by the race of our economy to take labour costs out.  What we’ve failed to do is to find a way to redistribute those gains.  We have them go disproportionately to a very small number of people.  I find it fairly inconscionable that companies are basically firing workers while paying hundreds of millions of dollars to a few top executives, because “we can’t afford …”  That’s just bullshit.

[33:09 TO] The fact is, we’ve made choices about who we’re going to reward, and they’re ultimately self-destructive choices for our society.

[33:17 AM Okay.

[33:18 TO] But now what we have is the race of technology, with more and more jobs being taken over by machines,

[33:35 AM] You and I had a fascinating conversation, a while back, because I was laying out the things I was saying.  And I found it really easy to find examples of encroaching automation in jobs under threat.  Tim did the best job of pointing me toward examples of job creation, not just among the data scientists and web designers of the world, which I was anticipating, but you’ve given great examples of people putting labour back into our economy.

[33:59 TO] Let me put it this way.  I’m looking for those examples, and I’m starting to find them.

[34:03 TO] The way my mind works, is I kind of have some notion, and then I start looking for some data to support that notion, or to disprove it.  In this case, the notion I came to was, oh, given what I said about if you don’t have any consumers, you don’t have any businesses, we’re going to have to put labour back into the economy.

[34:22 TO] We have to find a way to pay people. Or people will have to find a way to pay each other. Or we’ll have a very new shape to the economy.  That’s really what’s the heart of what I’m trying to talk about, here.

[… some green shoots, use of computers to add value to low-skilled jobs that we’ve been trying to ring out of society …]

[… The Apple Store …]

[… Walgreen … home health care IT people …]

[… Kickstarter, Etsy … examples of putting labour cost back into the economy]

[38:13 TO] Somebody basically took a commodity product, and lovingly added value to it, and then resold it.  I thought, that’s kind of an interesting data point.  I think we’ll be doing more of that added value for each other, in this future economy.

[ … Youtube economy, where artists are starting to make a living, based on an advertising economy]

[… P2P sharing economy … AirBnB …]

[39:25 TO] It seems to me that, when you see a sharing economy, it eventually does get monetized.  The early web, everybody was just equal, we were just doing things each other.  Then, this advertising economy grew up around it.

[39:46 TO] There’s still a huge distance ahead for the advertising economy.  The Internet average share of advertising is still a fraction of television, even though there’s more hours now spent on the Internet, entertaining each other, than there are spent on television.  So there’s a lot of money to come from industry into another.

[40:05 TO] So that kind of leads me to a policy recommendation.  Policy makers need to focus on protecting the future from the past, rather than protecting the past from the future.

[40:18 TO] Most of the policy that we see is oriented towards protecting incumbents, because of course they have the loudest voices …

[40:28 AM] … and the biggest chequebooks.

[40:30 TO] I had this interesting conversation with Nancy Pelosi about SOPA and PIPA.  It was eye-opening.  I was just explaining my experience as a publisher.  We’ve been publishing books DRM-free, and yes, some people steal them, particularly in countries where they weren’t going to pay us anyway.


[40:56 TO] It does not keep me up at night, because, in fact, our business is growing.  We were selling in markets we could never have sold in, before.  It’s a rapidly growing part of my business.

[41:08 TO] I’m trying to explain, and she says, we have to take into account the concerns of Hollywood.  I said, no you don’t.  You have to find the right answer for society.  Your job is to work for all of us.  It’s not to work for this interest group versus that interest group.

[… open for questions from the audience …]

[44:24 audience]  Do you have an axiom that you would consider for a startup founder who’s trying to make decision between where to create value for the investors, where to cleave the line and say that this should be something that goes into the ecosystem?  How you make that judgement call?

[44:47 TO] I think it should be scientific.  I remember having this argument with Richard Stallman about open source.  I said the difference between free software and open source is that open source should be science, not religion.  In other words, it should work.  The decision you’re making, if you’re looking over time, you should believe that it’s better for the investor, as well as for society.  Because, in fact, short-term thinking is not best for a long-term investor.  So that means, of course, that you also have to find an investor who is thinking in the long term.  Of course, great investors do think longer term.  They’re not looking for the quick exit.  They’re looking to build the great company that survives and grows and serves customers over the long term.  If you’re doing it right, you should, in fact, be looking at building a vibrant ecosystem around your company that creates value for a lot of other people.  You’ll find that’s actually better for your company.  So look fo rthat win-win .   […]  Although these days, win-win seems to mean we win twice for our team.

[more questions, audio ends at 1h01m01s

Audio replay available at “Create More Value Than You Capture” | SXSW Interactive | 2012 at  http://schedule.sxsw.com/2012/events/event_IAP100142

[download audio]

Subsequent blog post, Andrew McAfee, “Tim O’Reilly on Putting Labor Back Into the Economy” | March 2012 at http://andrewmcafee.org/2012/03/mcafee-sxsw-tim-oreilly-labor-automation-race-against-the-machine/


David Ing blogs at coevolving.com , photoblogs at daviding.com , and microblogs at http://ingbrief.wordpress.com . A profile appears at , and an independent description is on .

Tagged with: , , , , ,
Posted in Talk Audio Download, Talk Audio Streaming

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Beyond this media queue
This content is syndicated to Twitter. For professional perspectives, look to Coevolving Innovations; for a photoblog, look to Reflections, Distractions.
  • Socio-Technical Systems, Service Systems Science
    In order to move forward, the Systems Changes Learning Circle has taken a step backwards to appreciate the scholarly work that has come before us.  This has included the Socio-Psychological Systems, Socio-Technical Systems and Socio-Ecological Systems perspective, from the postwar Tavistock Institute for Human Relations.  The deep dive on “Causal texture, co […]
  • Causal Texture of the Environment
    For those who haven’t read the 1965 Emery and Trist article, its seems as though my colleague Doug McDavid was foresighted enough to blog a summary in 2016!  His words have always welcomed here, as Doug was a cofounder of this web site.  At the time of writing, the target audience for this piece was primarily Enterprise Architecture practitioners.   [DI] Pub […]
  • Causal texture, contextualism, contextural
    In the famous 1965 Emery and Trist article, the terms “causal texture” and “contextual environment” haven’t been entirely clear to me.  With specific meanings in the systems thinking literature, looking up definitions in the dictionary generally isn’t helpful.  Diving into the history of the uses of the words provides some insight. 1. Causal texture 2. Conte […]
  • Trist in Canada, Organizational Change, Action Learning
    Towards appreciating “action learning”, the history of open systems thinking and pioneering work in organization science, the influence of Action Learning Group — in the Faculty of Environment Studies founded in 1968 at York University (Toronto) — deserves to be resurfaced. 1. Trist in Canada 2. Environmental studies, and contextualism in organizational-chan […]
  • Remembering Doug McDavid
    The news that Doug McDavid — my friend, colleague, and one of the original cofounders of the Coevolving Innovations web site in 2006 — had passed, first came through mutual IBM contacts.  More details subsequently showed up on LinkedIn from Mike McClintock. Doug left us on May 9, while working at his desk, likely in the very earliest hours of the morning. Hi […]
  • Pattern language, form language, general systems theory, R-theory
    One of the challenges with the development of pattern languages is the cross-appropriation of approaches of techniques from one domain (i.e. built physical environments) into others (e.g. software development, social change). The distinction between pattern language and form language is made by Nikos Salingaros. Design in architecture and urbanism is guided […]
  • 2020/07 Moments July 2020
    Daytimes full of new work assignment and training, evenings and weekends bicycling around downtown Toronto as it slowly reopens from pandemic.
  • 2020/06 Moments June 2020
    Most of month in Covid-19 shutdown Phase 1, so every photograph is an exterior shot. Bicycling around downtown Toronto, often exercising after sunset.
  • 2020/05 Moments May 2020
    Life at home is much the same with the pandemic sheltering-in-place directives, touring city streets on bicycle, avoiding the parks on weekends.
  • 2020/04 Moments April 2020
    Living in social isolation in our house with 5 family members, finishing off teaching courses and taking courses.
  • 2020/03 Moments March 2020
    The month started with a hectic coincidence of events as both a teacher and student at two universities, abruptly shifting to low gear with government directives for social distancing.
  • 2020/02 Moments February 2020
    Winter has discouraged enjoying the outside, so more occasions for friend and family inside.
  • 1969, 1981 Emery, System Thinking: Selected Readings
    Social Systems Science graduate students in 1970s-1980s with #RussellAckoff, #EricTrist + #HasanOzbehkhan at U. Pennsylvania Wharton School were assigned the Penguin paperback #SystemsThinking reader edited by #FredEEmery, with updated editions evolving contents.
  • 1968 Buckley, “Modern Systems Research for the Behavioral Scientist: A Sourcebook”
    Resurfacing 1968 Buckley, “Modern Systems Research for the Behavioral Scientist: A Sourcebook” for interests in #SystemsThinking #SocioCybernetics #GeneralSystemsTheory #OrganizationScience . Republication in 2017 hardcopy may be more complete.
  • Wholism, reductionism (Francois, 2004)
    Proponents of #SystemsThinking often espouse holism to counter over-emphasis on reductionism. Reading some definitions from an encyclopedia positions one in the context of the other (François 2004).
  • It matters (word use)
    Saying “it doesn’t matter” or “it matters” is a common expression in everyday English. For scholarly work, I want to “keep using that word“, while ensuring it means what I want it to mean. The Oxford English Dictionary (third edition, March 2001) has three entries for “matter”. The first two entries for a noun. The […]
  • Systemic Change, Systematic Change, Systems Change (Reynolds, 2011)
    It's been challenging to find sources that specifically define two-word phrases -- i.e. "systemic change", "systematic change", "systems change" -- as opposed to loosely inferring reductively from one-word definitions in recombination. MartinReynolds @OpenUniversity clarifies uses of the phrases, with a critical eye into mo […]
  • Environmental c.f. ecological (Francois, 2004; Allen, Giampietro Little 2003)
    The term "environmental" can be mixed up with "ecological", when the meanings are different. We can look at the encyclopedia definitions (François 2004), and then compare the two in terms of applied science (i.e. engineering with (#TimothyFHAllen @MarioGiampietro and #AmandaMLittle, 2003).
I welcome your e-mail. If you don't have my address, here's a contact page.
%d bloggers like this: