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Episode 1: How A.I is changing everything

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All The Rod & Gary show episodes

Hosted by Rod Drury and Gary Turner

This month Rod and Gary discuss the major announcements coming out of last weeks Google keynote. The big talking points, Googles goal to leverage artificial intelligence to create a personal Google for every person on earth, and the introduction of Made by Google, the new range of Google hardware. 

The guys also discuss how the Amazon Echo experience stacks up at opposite ends of the planet and wrap up by weighing in on the future of autonomous and electric cars and how they're poised to disrupt the automotive industry.

Episode transcript

Hosts: Rod Drury and Gary Turner

Gary Turner: Hello everyone. It's Gary Turner here. Some of you may already be familiar with my name and my capacity as Managing Director of Xero in the UK, but my job today is to introduce a brand new podcast that we're producing at Xero where I'll be getting together with Xero CEO Rod Drury, and Rod and I will pick over and debate, and analyse some of the more interesting announcements and developments in the world of technology and obviously specifically about how they may play out and relate to the world of business technology in the coming months and years, so I hope you enjoy it. Hey Rod, how are you doing?

Rod Drury: I'm good, Gary. How are you?

Gary Turner: I'm good. It's just getting into autumn here, but it feels still summery in a way. It's not short sleeve weather, but it's not winter yet. It's pretty good.

Rod Drury: Yeah. We just finished two weeks of school holidays and it's rained the whole time, but I believe we're up to 23 degrees Celsius tomorrow so back into the shorts. That's the fun thing being on the other side of the world.

Gary Turner: Do you know, it's funny, because we use Yammer and I've never been more aware of the Northern Hemisphere/Southern Hemisphere seasonal change since I've been part of Xero because we're all dressing differently throughout the year. It's weird.

Rod Drury: Yeah. I think there're people smarter than us, probably in their 30's, who are just not doing winters because whenever I travel and it's warm, they're always there.

Gary Turner: Yeah. Interesting stuff from Google this week.

Rod Drury: Yeah, it's been interesting. I love watching the big keynotes and the Google IO keynote last year and this year at the amphitheater was so good, talking about machine learning and AI. This one, I was quite looking forward to and it was slightly different. It was called "Made By Google" so they started to introduce their hardware products.

Gary Turner: I think one of the things that struck me and a few people have picked up on this is that it was, I think somebody described it as the most bottomed up product presentation or launch that Google had ever done. Actually, it was really professional and integrated and well presented and very Apple-esque in the way they did that, which I thought was really interesting.

Rod Drury: Yeah. It's interesting you say that because I love watching these things and at each end of the spectrum, you have the Apple one which is so buttoned down but yet, they do it quite naturally. The presenters are very, very good but everything is so, so slick. This one, I felt like they were trying really hard and it wasn't quite as natural but I thought the content was good, and it was good seeing ... What I really like is the female presenters that they're putting forward, I think a lot of tech companies are now really focusing on that which is good.

Gary Turner: What were the big things? I mean, I was interested in the AI, Amazon Echo competitor, apart from the fact that it looked a bit like an air freshener. I was interested in that, and I've got some thoughts. I've just picked up my own Amazon Echo a couple of weeks ago, but what struck you about what they covered this week? What was the standout stuff for you?

Rod Drury: Yeah, there was a few things. I really liked, in the same way we've been thinking about AI being so important, that's been their message for the last two or three events that they've done. We're clearly in sync there, and I love they start using this word about a personal Google, a version of Google for everyone. This mirrors some of the experience that we've had as we've looked at doing big models of machine learning. We've found that that solves some problems but the idea of building these little micro models that are working on a particular customer is super interesting, so that was the first time I'd heard them talk about that and that mirrors our own experience so it's pretty exciting.

What I find fascinating is Google has to model the entire world and we get to apply that AI and machine learning on a much smaller domain so I think we're tracking, even though they're doing much, much more work than we're doing, because they're spending so much more money, I think as we're doing it in a smaller domain, we're actually tracking fairly closely.

Gary Turner: Yeah. I think probably the best term I've heard recently to describe the focus is just the real intensity on AI right now and the AI spring. It just feels like it's all coming together and there's a real, almost uprising of ideas and innovation and investments in different products. AI has been around for a while and it's largely been comical and not really a serious product for a very long time because speech recognition and lots of things rely on it. Human interface with engagement with AI, it just hasn't been there until recently, but it definitely feels like it's about to really ... I mean, I've been playing around with the Echo. We've all had Siri for about five years, I think, pretty much.

Now Google are getting into it, and I think it's exciting to think about what the next couple of years might hold but also, I'm annoyed that ... I've just invested in an Amazon Echo device and we're playing around with that in the kitchen at home, and it feels really cool, but then Google are building their own and I'm sure Apple will come up with some disembodied Siri product or widget or something like that in the near future. I'm annoyed that we look like we're going to be forced to choose a platform in the way that you're either on iOS or Android on your mobile device, or you're on Windows or you're on Mac on your PC, and I'd love to not have to be a Google only or an Amazon only or an Apple only user when it comes to this new platform of AI and automation.

I'm kind of annoyed, because I really like the look of this new Google thing but it's going to be ridiculous. You're not going to have two. Maybe you could have two, and you could have them talk to each other, but you're not going to have Alexa book me an Uber and right next to your Google Home device or your Apple Home device because they'll all get really confused. Maybe they'll keep themselves company like pets.

Rod Drury: Yeah. Or, you can imagine going into this infinite loop where they both start asking each other questions and consume all of the computing resources on the planet.

Gary Turner: I read a really interesting thing the other day about that. We've got all of these new AI services coming out and we joke about having a Hey Google device talking to an Echo but actually, the concept of scraping, machine learning scraping or AI scraping is going to be a thing, according to the research. You present this interface, a natural voice interface, or some other kind of interface that's got a whole host of capability, lots of insights, lots of really clever deep machine learning capability and you can then start asking it questions and it will give you answers, and if you do that systematically, it's a bit like scraping a web page, it's a bit like scraping a database. You effectively are then replicating the machine learning capability of that machine learning service, or that AI service.

You know the way that you have to log into some websites and before you do anything it says, "Prove to me you're not a bot" by typing in some kind of pictorial graphic? That is going to be a thing in the next five years, that people building AI and machine learning services are going to have to deal with because what's stopping us bombarding a smart agent with a thousand questions a minute and effectively replicating what it knows and then presenting a copy of that machine learning service to another group of customers and you've just completely ripped it off and you haven't invested in any machine learning yourself. You've just bombarded a machine learning or AI service with lots of questions. I thought it was fascinating, these kind of things that people are going to have to think about.

Rod Drury: Yeah, absolutely, but I really feel you on the fragmentation thing. This has been the history of computing. Remember back in the Apple and Microsoft days, you never had a full set of products that work. There was always one product that you needed on the other platform, and I find now I've got most of my business apps, all Google, but I still prefer the Apple mobile experience and Google's got some great apps there but they don't really quite work and it feels like you're almost the first person in the world to have to make all these things work together and I still think the IT industry hasn't done a good enough job yet for consumers and businesses.

As we went from being 20, 30, 50 people to I think we're about 1500 people now, it feels like we're the first ones who have to connect all this enterprise IT together and I'm just finishing off a house at the moment and what I've been trying to do is to keep the network done so I just want to basically run some wires everywhere from a switch and put the intelligence at the edges, so looking at Nest for cams and been waiting for HomeKit now with the new iOS 10, there's Apple Home in there, but still trying to find a garage door product that works and all of these things.

It's like you're the first person to try to make all of the stuff connect, and I really think the IT industry has really let people down. They've been so busy, or we've been so busy fighting with each other, we actually haven't designed a fantastic experience to all consumers and to businesses.

Gary Turner: I tell you, I think that whole thing about home automation and connecting up lighting and Nest and thermostats and central heating and security and everything else, with all due respect to people in that industry, that for the last 10 to 15 years has been a bit of a cottage industry. It's been a bit of an amateur/professional really niche, very specialized set of skills and therefore, you'd have to be pretty wealthy or really oddball to play in that space as a consumer over the last 10 or 15 years. It feels like that's really going to explode and that market for service providers in wiring up and digitizing the house I think is going to explode in the next 10 years with all of these things.




You're right. It is very much DIY at the moment. "How do I connect up my garage door opener or my children's bedroom security camera?," or whatever to something, and at the moment, it's like the Wild West and I think there will be some smart people that grab that and build quit significant businesses just servicing their local housing community. It'd be huge.

Rod Drury: Yeah, but the products are so good now. About four or five years ago, we put in this very expensive security system, mainly because someone was throwing eggs at our house and we wanted to catch the number plates and I think the cost was like $6000. No one told me about it until I saw the bill and I was like, "What?" Then, we've just been playing with Nest over the last three or four months and I'm stunned by how easy that product is, but what we're also seeing, and we see this more being from a small set of rocks in the South Pacific, that a lot of the global companies like Google who own Nest, still aren't rolling out these services completely globally.

At the moment, Nest isn't supported in New Zealand, so I've got to fake that I live in our Hawthorn office in Melbourne, because Nest does work in Australia, and that means all of the out of home stuff doesn't work properly. When I tried an Amazon Echo about four weeks ago, again, it was very crippled because some of these cloud services haven't been fully rolled out all around the planet. We are seeing some countries that are moving ahead and becoming far more experienced or finding these new services much more natural and common because they're there and everyone's using them and there's a big gap now between other countries that don't have these services which is fascinating.

Gary Turner: I got this Echo last week and I'm hugely impressed with the speech recognition accuracy. I mean, apparently it has like eight microphones in it. All different kinds of microphones, B microphones, wide angle, so that regardless of where you are and the background noise level, chances are it's going to pick you up and it picks up my wife, it picks up my daughter when she speaks to it really, really, clearly. The technical and hardware articulation of it is just fantastic. I have to say, and it might be because a lot of the mainstream services haven't landed in the UK yet, I was actually then really quite disappointed. Apart from telling it to play music or "What's the weather?," or "Give me the news headlines," and quick single threaded questions you can throw at it, a lot of the services or "skills" that they're called, if you go to some of the websites online and show me the top 20 Amazon Alexa skills, you can tell that the people are playing with that right now are 20 something single white guys, because it's like order pizza, fart noises, pick up lines, and how to mix drinks.

Actually, I felt a bit disappointed about that because it’s still the demographic of early adopters and I'm well beyond my 20's now but it's still blokes, it's still that stupid juvenile stuff. I want to see some really cool services on things like Alexa and Google that will be not just respect the needs of a 25 year old white guy but actually children and families and grownups. I hope that improves. It must improve. It must just be a function of the early nature of it, but I was kind of disappointed, I have to say.

Rod Drury: I had my Amazon Echo for about two days and I passed it onto a friend. I will try the Google one when it comes but I really love the Google WiFi and what we're seeing now, I hadn't really understood this but we're seeing a new generation of WiFi products which are all meshed together and from what I understood watching the keynote was that home WiFi is very inefficient, especially if you have two or three AirPort Extremes, I just naturally flipped onto the strongest one but we're not seeing the smart home networking products. Of all of that, I think Google WiFi was the most interesting that I'll probably get and bring into the house.

Gary Turner: Yeah. I think, and regardless of how polished the presentation was, it's clear that Google are very aware of Apple having presented this very well integrated selection of products and services, some of them better than others, and Amazon definitely going after a much broader base of products to sell customers, and Google kind of feeling like they might be a bit late to that party and trying to catch up. I think one of the things that strikes me about that is, I was thinking a lot about, I mean, Yahoo being swallowed up in the next couple of months, and I saw an article about the rise and fall of Blackberry the other day and it strikes me that you look at businesses like Nokia or Blackberry or Yahoo, they got famous for one thing.

Yahoo, right place right time, luck, whatever, was the first real mass market search engine, but never did anything beyond that. They just failed to be known for more than that one thing and effectively therefore were what I think of as a feature company and not a product company. Blackberry got known for that one thing, Nokia got known for that one thing which is that cool, cosmetic almost fashion item, mobile phones, and didn't do anything else, and Apple clearly are a product company, not a feature company. Microsoft a product company, but became a feature. We were all using Microsoft but then that in itself just became a feature. It became a very linear universal way of looking at it and they lost their way a little bit, but Amazon really going for it.

 

I mean, Amazon are diversifying in lots of different ways. Jeff Bezos went from Kindles to Amazon video to Alexa to rockets to space. It's crazy. It's really interesting seeing this almost splitting of the marketplace, and I think Twitter is a feature company. I think Twitter are in that dangerous category of being known for that one thing and if they're not careful, and there're rumors circulating at the moment, they're just going to get swallowed up into something else. I think as the world gets more complicated, it's all about bringing together a cohesive product story, not just being known for that one really cool innovative thing that nobody else was doing. I just think that's fascinating, looking at how that plays out.

Rod Drury: Yeah. That's exactly what Google was doing with its Made By Google event, right? So interesting that their strategy they talked about so much for the last five years of Android and having multiple hardware manufacturers building these devices, finding that strategy hasn't worked and now having to do the Apple model and launch a piece of hardware that's totally linked to the software. It's going to be interesting because you do have to make a choice and it is frustrating that it's not an obvious choice and things don't work as well as they should together.

What I did find interesting was when you look at the apps that Google have on the phone, they're all cloud based apps, as strong as the Android version that's actually installed on the device, whereas you look at what Apple's, it's productivity tools really haven't changed materially since the very first iPhone. They're still little productivity apps that render information. They might be pulled from a server. They're not really a mobile version of these big cloud properties that Google's developed, so that was one thing that really hit me in the keynote, how much better are prepared when you bring their own hardware and connecting it to their very, very deep cloud services. It's just stunning to me that I'm sitting here on a 27 inch 5K iMac. This hardware's two or three years old.

I got right into the Macbook 12 with USB-C on the promise that, "Hey, in the next month or so, there'll be a new 27” monitor to plug into," and that hasn't arrived now for almost two years, and we're still waiting, hopefully this month we'll hear about the new family of MacBooks and things like that, but it's amazing to me that a company so big, that's making so much money, the innovation has just completely slowed down.

Gary Turner: Yeah. I think the iPhone 7 is just about a month old now and I think you could take a view, I mean, some of the Mac stuff's really old but largely irrelevant. I mean, I was having issues with my MacBook the other day and the guys in IT were saying maybe we should nuke my Mac and rebuild it again and would I need to take anything off it before they did that. I actually thought no, because I'm largely a cloud user. We'd be using Google, a lot of my stuff is synchronised and actually there's very little on my hard disk that I would miss. I think in Apple's defense, perhaps, in hardware manufacturers’ defense, and I don't think anyone holds Dell to the same high degree of expectation that they do with Apple and I think Apple perhaps get a bit of a ding on that unfairly, but the desktop or the mobile PC marketplace, it's like, do we really need to ... I don't even know how much memory is on my Mac these days.

The hardware part of it is not really that cool. Maybe the aesthetics are, but on mobile, I mean, Apple got a lot of flack for the iPhone 7 not really being that transformational and I'm romantically hoping that they're trialing the removal of the headphone jack and moving to a haptic home button and a couple of other things, in advance of a bigger shift because it almost feels like they've perfected the smartphone, at least in this generation of smartphone form factor. There are only so many more things that you can do to something like an iPhone 6S to make it transformational in terms of an experience, but the problem that Apple has is that it is such a huge business for them now.

If they go too far off-beam and too radical, then they might begin to disenfranchise their customers so I do have sympathy on the mobile front that if they want to do more radical things and maybe get rid of the bezel, maybe have a double sided device or whatever, they can only tamper with a winning recipe so much before they then start disconnecting customers. My romantic expectation for the iPhone 8, I'm sure it won't be called that. My bet is it'll be something like "iPhone X" since it'll be 10 years from the first one, and not just X, Roman numerals, but it's like the next generation, the next branch of the family tree of iPhone or smartphone design. I'm hopeful that they've sold us a bit of a dummy this year and there's a couple of changes just to habituate people to the idea of having no headphone jack but next year we'll see a big shift, but you're right, we don't see anything like that on the Mac at all. It's going to disappoint.

Rod Drury: Yeah. I'm actually not that upset with the iPhone 7. I think it's an amazing thing. I was a bit disappointed for about a day or two and then I ordered one, of course, so that actually should get here in the next day or so but I'm really excited about the EarPods. Being able to get rid of that cable, when I got back from driving back from Wellington a few hours ago, I jumped on my bike and rode up the hill and I had a couple of phone calls come in that I had to stop for and just being able to have a single EarPod in my ear that I can take when I'm exercising or on the cross trainer and the way that it looks like it moves between devices between your iPad, your phone, and your Mac, I think that's going to be a fantastic device and seeing the smarts that they have and the specific chip, they've put a computer inside some earphones, so you can imagine almost the phone goes away and maybe you've got some kind of watch device and this vision of the future feels a lot closer after the EarPods.

For me, the two things I really enjoyed out of the Apple keynote were the EarPods and actually, the collaborative iWork apps, especially Keynote, because we use the Google work products which are fine for internal collaboration, not so great for the big presentations we do, and we're sending around 200 meg files and being able to collaborate on those is really going to help us, for all the Xerocons we have coming up. Pretty excited about that, so starting to play with Mike on those tools to see how it works, but other than that, our big news in New Zealand, it’s just been announced that Tesla's coming, so that's pretty cool.

Gary Turner: Wow. That's just for you. Like, just opening up around the corner from you I guess.

Rod Drury: Possibly. I did order one actually when the model 3 came out. They said that they were going to sell to New Zealand but you're really buying them out of Australia and there's a whole lot of taxes you had to pay and claim back. They're actually going to put them here as well, so that's quite exciting and it's interesting for us because we're about 90% our renewables, and we're in a small, skinny country with lots of mountains. It's not very good for cellphone receptions, but it's pretty good for rolling out electric networks. It's basically only a few lines that you need to cover and you really cover the country so it's really exciting to think that we'll be able to have those toys over the next year or so.

But I was chatting to some people last night. There's actually a lot of competition going on in that space at the moment. There's a lot of other technology companies that are working on electric cars and when we heard the rumor about Apple doing electric cars, I was like, "Nah, that doesn't really make sense. Maybe they'll do the center stack but not a whole car," but as you think about it, all of that heritage for the big car manufacturers, the main thing which is preserved that they still have to do is build these big supply chains and actually do the manufacturing which obviously Tesla's having to do having 400,000 pre-orders of the model 3, but really what is a car now?

It's basically an aluminium skateboard with a whole lot of batteries in it, and it's either two, three, or four electric motors all driven by software, and I've been following this little company called Rimac who are operating out of Croatia I think, and the Rimac concept 1, if you go and do a Google on that, is just the most amazing high performance electric car, and it's not just mechanically good, the software interface these guys have done out of Croatia is absolutely stunning. I think we're going to see a huge amount of competition coming in electric cars over the next two or three years and after the FIAT/Audi emissions scandal, a lot of R&Ds come forward, and I think actually what we'll see is maybe a smaller number of base manufacturers and what the car brands become, it's basically some pressed aluminium and some interiors, so it's going to be a fascinating next three to five years as our transport systems change.

Gary Turner: I completely agree with that. I managed to break a few bones in July and haven't been driving for 10 weeks because my foot and leg have been in a cast, and so I've been spending a lot of time in the back of cars lately. We do a lot of work remotely and we're using video conferencing but occasionally got to get out of the office and so I've had the privilege of sitting in the back of a car, maybe for half an hour or an hour and being driven from one location to another one and just sitting in the back of my car with my iPad and working.

It was almost like simulated autonomous vehicles. It's like this is what life's going to be like in 10 years when we just jump into some available car or driverless Uber. It's going to be electric, it's going to be literally waiting for me whenever I need it, and so it's just such a huge contrast from me having been so used to driving everywhere, being forced to not drive has really helped me frame up what that new value proposition could be. Clearly the idea of a taxi isn't novel or the idea of having a chauffeur driving you around isn't novel. It's not like a new concept, but nothing that we generally do very often and I'm having to do it not through choice, because it's being enforced, and I think you're right.

Whether it's Echo or AI services or whether it's autonomous cars or electric car, innovation I think is 10 years from now, 5 years from now, there's a whole lot of companies we've never heard of today will be really important parts of the landscape. It's really exciting.

Rod Drury: I wrote an article on Medium this week because I was speaking to a few people over the last two weeks and a point that someone made that really resonated strongly with me was autonomous cars and their role in income equality. Quite a lot of the focus has been on safety up until now and all of those types of issues but as we started talking about it, if you think about a low income family, their car vehicle expenses could be their first or their second, if they do own a house, biggest expense each week. Quite often low income families get trapped into buying a car that's worth say $10,000 and by the time they've put all their interest charges on, it's cost them $16,000. At the end of it, it's worth $3000.

It's a really, really big cost so while there's a lot of focus on what's happening in New York and San Francisco around these programs, if you think about low income areas and we take the burden of people having to go and buy a car to get around, it could be one of the ways to actually really raise a real income quite quickly and at scale. It's such an interesting lens to think about it. You have to make sure that the cost of transport becomes so cheap that you think nothing of putting kids in the car to take them down to sport. Has to be down in the few dollars per trip but what an interesting concept this could be one of the ways that technology does actually make income equality a little bit less of a problem.

Gary Turner: You're right. Fascinating, and I think I've been in technology for a very long time, always passionate, there's just something really exciting about the next 5 or 10 years. So many things going on. VR, AI, machine learning, cars, it's just so much happening all at once. It's going to be fascinating to keep track of it all. This has been cool. We've done our half hour, so we should probably wrap up.

Rod Drury: Fantastic. Thanks, Gary, and see you soon.

Gary Turner: See ya. Bye.

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