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Joel Peterson could have written his first book on any number of topics. As treasurer, CFO, and then CEO of Trammell Crow Co., the world’s largest private real estate development firm, he helped craft countless deals. As the founder of Peterson Partners and JCP Capital, he has become a savvy judge of companies and entrepreneurs. And as chairman of the board of JetBlue and a director at dozens of other companies over the past 35 years, he is an expert on corporate management and governance.
Yet Peterson, the Robert L. Joss Consulting Professor of Management at Stanford Graduate School of Business, chose to write about trust.
Peterson defines trust as a giving up of control, at some level, to another person. His book, The 10 Laws of Trust, which he wrote with David Kaplan, explores the mechanisms of trust creation in organizations. “You have to be intentional about building a high-trust environment. It doesn’t just happen,” he says. “It’s just like diet or exercise.” The steps of trust include:
- Start with integrity
- Invest in respect
- Empower everyone
- Require accountability
- Create a winning vision
- Keep everyone informed
- Budget in line with expectations
- Embrace conflict
- Forget “you” to become an effective leader
Peterson provides three tests for deciding who to trust. The first is character. “We can’t trust a leader without integrity, who we can’t count on to do what he or she says,” he explains. Next is competence. You trust your mom, for example, but would you trust her to fly a 747 to London? The third, he says, is authority to deliver. There’s no point in trusting a pilot to fly to London if she doesn’t have permission to take off.
“Trust and betrayal are two sides of the same coin,” Peterson notes, “and you need to start out understanding that there is a risk of betrayal. But I make the argument that it is worth the risk and that there are ways to limit it.”
What should you do when trust is betrayed? “You have to fix it,” he says. “You need to apologize. If it’s early on in the game, you can correct things. You can provide direct feedback.” On the other hand, there are certain betrayals that are so serious that you’re really better off parting ways. It may not be worth fixing if the value differences are too great, the priorities are too different, or the betrayal is too profound.
“In all betrayals of trust, however, there’s a healing process that you have to go through,” Peterson says. “The most important thing to do is forgive. Forget it and start thinking about the future.”
Creating and building trust requires a consistent effort, but Peterson is convinced that it is worthy work for leaders. “You have to be rigorous about following the laws of trust. But it’s a better way. It’s a more excellent way of living a life.”
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Ever since we started as Google[x] in 2010, X has had a single mission: to invent and launch “moonshot” technologies that we hope could someday make the world a radically better place. At X, we’re trying to do much more than just research dazzling new tools and scientific approaches. We’re trying to create the processes and culture that will help us systematize innovation. We hope to find repeatable methods for delivering real impact to the world, by developing technology products that provide the foundations of large, sustainable new businesses.
- Responsibly irresponsible
We embrace failure as a powerful tool for learning and, counter-intuitively, making progress; this is one of our most important values. To make progress toward any audacious idea, you have to make mistakes — you have to seek out frequent, messy, instructive failure that shows you what to do (or not do) next. We couple radical, 10x thinking that throws previous conventions to the wind with the discipline to identify risks early, learn cheaply and quickly what’s wrong with our ideas, and face brutal honesty about where we’re succeeding and where we’re not. - Finding people who fall in love with problems We want to fall in love with a problem, and aim to understand it so deeply that it becomes easier to find fresh new approaches. We seek people who are “T-shaped”: they have enormous intellectual flexibility with deep expertise in a particular field, and they can also collaborate easily across diverse domains. While each moonshot has a core team, we try to keep that team as small as possible, and supplement them with people from a permanent roster of in-house experts.
- Thinking about X as a portfolioBeing a “corporate lab” is a difficult balancing act: place big bets on the future, but don’t spook the people giving you the money. We look for opportunities to balance X’s overall portfolio sensibly, and aim for diversity.
- Moving through the factoryWe now have a clear process for how ideas move through the factory. They start with our Rapid Evaluation team, where we investigate the seedlings of technology and science breakthroughs that might offer the core ingredients and inspiration for a moonshot. There are two stages of Rapid Eval investigations. In the first stage, investigators get a few weeks and a few thousand dollars to try to understand a nascent moonshot’s biggest risks; this kills many dozens of ideas quickly. The second stage is “Extended Investigations.” A couple of team members are given a few months and a bit more money to build prototypes, running at the hardest and riskiest parts of the technology to deeply understand the problem they’re trying to solve. Then we have the X Foundry. We developed Foundry because an idea that’s only a few months old may still carry a lot of risk, including risks that we don’t fully understand yet. So we wanted to create a special environment that lasts about a year or so where we could keep teams small and nimble (usually with less than 10 people, and often fewer than five) and focused on the riskiest elements. In this stage we want to learn that an idea can eventually be turned into a product and business, or that it can’t. We expect Foundry to have a handful of projects at any one time. We generally expect that half of the projects will be killed, and half will survive.
- Actively killing our ideasOne of our most valuable cultural habits is our willingness to kill our ideas. Our teams start each day assuming failure is the norm, and we manage moonshots-in-progress on that basis. Kill signals are another one of our important tools. These are metrics that a team agrees on when the project starts, which, if you reach them (or in many cases, fail to reach them in a certain timeframe), indicate that, “We should walk away from this project now.
- Graduating moonshots from the factoryX is designed to be a protected space for long-term thinking, prototyping, and de-risking. Our strength is building the bridge from idea to proven concept. We’ve gotten good at pushing forward things people think are crazy to the point of feasible product prototype. Once a team is ready to polish products or scale operations, they’re ready to graduate from X. All of our life sciences projects became Alphabet company Verily in 2015. The Genie team, which developed smart software for designing green buildings, blazed a graduation path to the outside world: they’re now the independent venture-funded startup Flux.io. We also graduate early-stage teams as we see that they can bring a lot of value to another part of Alphabet. That’s why Tango, Insight, GCam, Watch, Glass, and Google Brain, among others, graduated to Google.
- The world needs more moonshotsWe’re by no means done with our factory, but we think it’s working pretty well so far. I believe it’s possible to manage long-term bets responsibly by creating a culture where people cheerfully run at the hardest things first, kill their work, and head back to the drawing board to find the next great idea. From climate change to transportation, from protecting our oceans and forests to improving access to food and water, there’s no shortage of problems in the world: what we need is more moonshots.
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People are concerned about how AI and robotics are taking jobs, destroying livelihoods, reducing our earning capacity, and subsequently destroying the economy.
In anticipation, countries like Canada, India and Finland are running experiments to pilot the idea of "universal basic income" — the unconditional provision of a regular sum of money from the government to support livelihood independent of employment.
But what people aren't talking about, and what's getting my attention, is a forthcoming rapid demonetization of the cost of living. Meaning — it's getting cheaper and cheaper to meet our basic needs.
Powered by developments in exponential technologies, the cost of housing, transportation, food, health care, entertainment, clothing, education and so on will fall, eventually approaching, believe it or not, zero.
The majority of expenditures are in these top 7 categories:
- Transportation
- Food
- Healthcare
- Housing
- Energy
- Education
- Entertainment
Now, imagine what would happen if the cost of these items plummeted. Here's how…
Rapid Demonetization — What It Means
To me, "demonetization" means the ability of technology to take a product or service that was previously expensive and make it substantially cheaper or potentially free.
Consider Photography: Today, during the megapixel era, the camera in your phone is free — no film, no developing. Completely demonetized.
Consider Information/Research: Today, during the Google era, it's free and the quality is 1000x better. Access to information, data, and research is fully demonetized.
Consider live video or phone calls: Demonetized by Skype, Google Hangouts, the list goes on:
- Craigslist demonetized classifieds
- iTunes demonetized the music industry
- Uber demonetized transportation
- Airbnb demonetized hotels
- Amazon demonetized bookstores
Let's look at the top seven areas mentioned above where people globally are spending their cash today and how these things are likely to demonetize over the next decade or two.
(1) Transportation
The automotive market (a trillion dollars) is being demonetized by startups like Uber. But this is just the beginning. When Uber rolls out fully autonomous services, your cost of transportation will plummet. Think about all of the related costs that disappear: auto insurance, auto repairs, parking, fuel, parking tickets. Your overall cost of "getting around" will be 5 to 10 times cheaper when compared to owning a car.
(2) Food
As I noted in Abundance, the cost of food has dropped thirteenfold over the past century. That reduction will continue. Additional gains will be made as we learn to efficiently produce foods locally through vertical farming (note that 70% of food's final retail price comes from transportation, storage and handling).
(3) Healthcare
Healthcare can be roughly split into four major categories: (i) diagnostics, (ii) intervention/surgery, (iii) chronic care, and (iv) medicines.
(i) Diagnostics: AI has already demonstrated the ability to diagnose cancer patients better than the best doctors, image and diagnose pathology, look at genomics data and draw conclusions, and/or sort through gigabytes of phenotypic data… all for the cost of electricity.
(ii) Intervention/Surgery: In the near future, the best surgeons in the world will be robots, and they'll be able to move with precision and image a surgical field in high magnification. Each robotic surgeon can call upon the data from millions of previous robotic surgeries, outperforming the most experienced human counterpart. Again, with the cost asymptotically approaching zero.
(iii) Chronic/Eldercare: Taking care of the aging and the chronically ill will again be done most efficiently through robots.
(iv) Medicines: Medicines will be discovered and manufactured more efficiently by AIs and, perhaps in the near future, be compounded at home with the aid of a 3D printing machine that assembles your perfect medicines based on the needs and blood chemistries in that very moment.
(4) Housing
Think about what drives high housing costs. Why does a single-family apartment in Manhattan cost $10 million, while the same square footage on the outskirts of St. Louis can be purchased for $100,000? Location. Location. Location. People flock to high-density, desired areas near the jobs and the entertainment. This market demand drives up the price. Housing will demonetize for two reasons: The first reason is because of two key technologies which make the proximity of your home to your job irrelevant, meaning you can live anywhere (specifically, where the real estate is cheap): (1) Autonomous Cars: If your commute time can become time to read, relax, sleep, watch a movie, have a meeting — does it matter if your commute is 90 minutes? (2) Virtual Reality: What happens when your workplace is actually a virtual office where your co-workers are avatars? When you no longer need to commute at all. You wake up, plug into your virtual workspace, and telecommute from the farm or from the island of Lesvos.
The second technology drivers are robotics and 3D printing, which will demonetize the cost of building structures. A number of startups are now exploring how 3D printed structures and buildings can dramatically reduce the cost of construction and the amount of time it takes to build a building.
(5) Energy
Five thousand times more energy hits the surface of the Earth from the Sun in an hour than all humanity uses in a year. Solar is abundant worldwide. Better yet, the poorest countries on Earth are the sunniest.
(6) Education
Education has already been demonetized in many respects, as most of the information you'd learn in school is available online for free. Coursera, Khan Academy, and schools like Harvard, MIT and Stanford have thousands of hours of high-quality instruction online, available to anyone on the planet with an Internet connection.
But this is just the beginning. Soon the best professors in the world will be AIs able to know the exact abilities, needs, desires and knowledge of a student and teach them exactly what they need in the best fashion at the perfect rate. Accordingly, the child of a billionaire or the child of a pauper will have access to the same (best) education delivered by such an AI, effectively for free.
(7) Entertainment
Entertainment (video and gaming) historically required significant purchases of equipment and services. Today, with the advent of music streaming services, YouTube, Netflix and the iPhone App Store, we're seeing an explosion of available selections at the same time that the universe of options rapidly demonetizes. YouTube has over a billion users — almost one-third of all people on the Internet — and every day, people watch hundreds of millions of hours on YouTube and generate billions of views.
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