Episode 119 - Tim O’Reilly on the Shift to the Vast Cloud, the Mirage of Self-Publishing and 1 Million Followers

Transcript

Susan Bratton: Welcome to Dishy Mix. I’m your host Susan Bratton, and on today’s show you’re going to get to meet Tim O’Reilly, founder and CEO of O’Reilly Media. Welcome Tim.

Tim O’Reilly: Hi. Thanks for having me.

Susan Bratton: Hey, it’s my pleasure. I’m glad I caught you before you’re going, what, to Italy for a month? Is that where I heard you’re headed?

Tim O’Reilly: Not really. It’s more complicated than that. I’m going to Italy for a couple of weeks and then I’m going to Canada, Boston, Iceland and Frankfurt. It’s complicated…

Susan Bratton: Wow, it sounds like a complicated but really fun group of locations. Well Tim just so that some of my listeners can get a level set, could you just give a very brief overview of the vast and continually growing O’Reilly empire.

Tim O’Reilly: Well just to be clear right from the outset, it has nothing to do with the other O’Reilly, Bill O’Reilly, or still the other O’Reilly, O’Reilly Auto Parts. We’re the company that started out as a publishing company, but we’ve gone on to do technical conferences, magazines, online publishing and probably what we’re best known for is a kind of activism driven marketing. We talk about big ideas; we don’t talk about products.

Susan Bratton: Well I’m going to talk about products for just one second because I was looking at the top, I don’t know I guess it’s top 25 of your publications, and some of them are best iPhone apps, iPhone: The Missing Manual – that’s a series you do that’s very popular – Mac OS The Missing Manual, Head first Java, Switching to the Mac, Face Book Missing Manual, the Twitter books, (unintelligible), Access 2007. And I was actually really surprised to see that in general a lot of these are much more consumer oriented publications than what I would’ve thought about you as having; things like Python and Ruby On Rails and, you know, God, I’m going to date myself, but, you know, Pearl development or whatever.

Tim O’Reilly: Absolutely. Well we started out doing hardcore technical documentation for Unick Systems many years ago. We noticed that everybody was starting to use Unick’s, but there wasn’t any good documentation. We went from there to turning some of those things into books. That’s where we made our name. It’s still, even though it’s no longer the best selling part of our publishing line, it is still the largest. The thing that has changed in the last eight or nine years, the radical restructuring of the computer book business, is that there’s so much more information available online. And we used to sell, you know, tens or even hundreds of thousands of copies of technical books, of deeply technical books, and now the numbers are way, way smaller because so many people can in fact get the information online. And that has been slower to hit the consumer computer book market, because of course you have more people who are less sophisticated technically, less able to find what they need online. And so in some sense it’s a business in transition, which is why you see that we have so many more of our best sellers on the consumer. We actually got into the consumer business after the dot com bust in 2000; it was really a deliberate strategy to, you know, stay in the business because we felt that there was a transition that was happening. Now we have in the last ten years also built a very significant online publishing business that’s subscription based called Safari Books Online that represents about 20 percent of our publishing revenue and going up we’ve also, in the last year we’ve jumped into iPhone book publishing with both feet and that’s turning out to be pretty exciting. We also, you know, sell downloads directly from oreilly.com and what we call e-book bundles where you get your choice of any and all of PDF, e-pub and Moby files; Moby files of course work on the Kindle.

Susan Bratton: You also have, what, 28 books now available as Android apps, right?

Tim O’Reilly: Yes, I believe so. Yeah, and we’ll have more coming. Yeah, so the whole e-book ecosystem is exploding. And what’s actually most interesting about it is it’s actually teaching us, and hopefully other publishers, a lot about price elasticity and the elasticity of demand. You know, when we first started publishing online e-books, you know, our principle concern was to maintain the kind of pricing that we have had in print. You know, you take a knockoff of it because you don’t have the manufacturing costs. But that’s way less than most people think that it is. You know, and so we, you know, we kind of set the pricing, you know, and, you know, it’s like 30 percent off, I think, of the print book price, or 10 percent over the print book price to get both the book and the e-book and that was sort of our initial strategy. When the iPhone came along we felt, well, the iPhone isn’t really a substitutable good in the same way that, you know, that a PDF on a laptop may be for a print book. So we said lets, you know, really experiment. And we got down there, we put out, the first book we put out at a really low price was David Pogue’s iPhone: The Missing Manual as an iPhone app at $4.99 and we said it was an introductory offer and it was, you know, flying off the shelves. We were selling way more than we were of the print book, you know, which I think was $19.99. And we then, we thought well we’ll  raise the price to $9.99, you know, which was where we kind of wanted to be. And we saw that we sold only a quarter as many books at $9.99 as we did at $4.99; of course that meant that we were making more money at $4.99 so we went back there on the price. And what we found as we’ve put more and more of our books on our iPhone at that low prices is it does not seem to be dilutive at all of print sales. These are all incremental sales, either for people who want a digital copy as well or more to the point, you know, people who would just not buy the book, you know. For example a huge number of people in, you know, Czechoslovakia and Russia and, you know, Poland, you know, buying iPhone copies of our books because they just can’t get print books here. And so at least so far it seems to be growing the market, rather than, you know, diluting or diverting from print sales. Now a quick aside there; in terms of maintaining prices, you know, I’m a big believer in trying to get content out to as many people as possible. We published many books over the years that we put out for free under, you know, open publication licenses, there’s a whole section of oreilly.com, open books at oreilly.com where people can download our books for free. But at the same time, we also look at many of the kinds of books that we publish and we know that without the right kind of economics we’d never do it. And our goal is really to maximize the value in the ecosystem, and that means value for the author… You know, sometimes people will write a book because they want to document something and get the word out, but other times you really got to paid them and they’re motivated by money and you have to figure out, well what’s going to make them the most money to get them to do this thing that we really want them to do. And my main message to anybody who’s ideological about, you know, things need to be free or things to be not free is just, it’s really, we don’t know what’s going to work and we have got to be in a period of profound experimentation. Eventually we’ll figure out, you know, the right way to do all of these new digital markets. I’m pretty confident that work that is needed will get paid for in the long run, but how we get there is pretty unclear.

Susan Bratton: You know it’s interesting because the model that we’re working on this year with our downloadable publishing business is to… You know, I mentioned that I have 18 titles in production; I’ve launched 5 so far. And what we decided to do was to take a particular subject and of course you get a PDF. You also get a mastery workbook of some kind because our titles are things that teach you. And then in addition to that you might get a series of audio files, you might get some video files, you might get some bonus material from interviews with other experts. And all of that, plus great custom photographs in the PDF’s themselves, that’s my thing I call the, you know, the e-book with benefits or the workshop in a box…

Tim O’Reilly: Right.

Susan Bratton: and those have a fairly high price point because they take, you know, months to put together, something like that; it’s even harder to write a book, any book with benefits than it is to write an e-book, you know.

Tim O’Reilly: Oh absolutely. And I think with all of this we just need to try different things. We…

Susan Bratton: Yeah.

Tim O’Reilly: At O’Reilly one of the things we try to focus on is what job do our products do…

Susan Bratton: Right.

Tim O’Reilly: You know, some of our products, for example, were primarily used for reference, and that was why we launched Safari back in 2000…

Susan Bratton: Yeah, so Safari is access to online information, right?

Tim O’Reilly: That’s right. And…

Susan Bratton: It’s not really downloadable books, it’s

Tim O’Reilly: No, it isn’t, but…

Susan Bratton: Yeah.

Tim O’Reilly: the whole point was if you’re, if you’re searching for answers it’s better to be able to search six or eight thousand books than it is to search just one book; you’ve got to know what book it is. And so that’s proven to be a really powerful value proposition. On the other hand, you know, if people are trying to learn, you know, we went in a very different direction with your out of school technology, which is we actually have an online learning sandbox, it’s teleteaching, you know, with remote instructors, and, you know, a real sort of course ware method backed up by real people. And so you have the extremes. And then, you know, we also realized that some of our customers look to our books for a kind of entertainment; so we launched Make magazine, which is really about having fun with technology.

Susan Bratton: Oh yeah; the Martha Stewart of the tech crowd, right?

Tim O’Reilly: Right.

Susan Bratton: So, two questions from listeners in this category. I’ve got plenty of questions from listeners, everybody wants to ask you something. But lets start with this first one, which is from Chris Brogan, the president of New Media Labs. He, well you know Chris because you keynoted Chris’s conference, I saw you there. So Chris said you breathed life into computer books; what other segment should get a makeover, and he was kind of asking something I was thinking, which is where’s the disruptive crack in the book publishing industry? What’s a good marketing opportunity?

Tim O’Reilly: You know, I guess I wouldn’t think about it as disruptive crack in the, in the book market because I think the book market is in such transition, and we rollers thought what is it in the information market? What do people need to know? And I think that there’s a lot of interesting opportunity in the area of energy literacy and just understanding better the challenges that are going to be coming out as both as a culture and as individuals in dealing with a world that is less profligate with energy than it has been for our lifetimes. I think there’s also a huge and interesting opportunity in applied neuroscience…

Susan Bratton: What is applied neuroscience?

Tim O’Reilly: Pardon me?

Susan Bratton: What is applied neuroscience?

Tim O’Reilly: Well it just, you know, at the fun end of, remember I said we do different jobs in our publishing?

Susan Bratton: Mm hmm.

Tim O’Reilly: You know, the fun end of it is books like Mind Hacks, you know, just helping to understand how your mind works better. You know, we also have consumer titles like Your Brain: The Missing Manual. There’s a lot of new understanding about how our minds work…

Susan Bratton: Oh yeah.

Tim O’Reilly: And there’s also technology that’s starting to interface with, you know, our brains. In fact it was a great tweet from Linda Stone, my friend, recently. I tweeted something about exoskeletons…

Susan Bratton: I saw that.

Tim O’Reilly: And she wrote back, she said, “20 years of tech taking us out of body, future tech and UI will take us back into our body.”

Susan Bratton: Mm hmm.

Tim O’Reilly: And so this is something that I’m very much interested in thinking about. I’m looking at the whole world of sensors. This is something that’s kind of been on our radar for a number of years. We have an event called Foo Camp; I know you wanted to ask me a little bit about that. But it’s an unstructured conference, kind of a like a Wiki, except in person. And we invite a couple hundred of people, no program, and they design the conference on the fly and you learn all kinds of things about what people are thinking about. And it must’ve been three or four years ago at one of these, we had one of these talks about body hacking and mind hacking, and it was everything from Quinn Norton who had a magnet implanted under her fingertips so she’d sense magnetic fields, to Romez Nam who, you know, we had invited because he was doing cool stuff with Microsoft Search but he ended up wanting to talk about cyborgs and, you know. And you started seeing this whole undercurrent of people playing with their senses. You know, in fact there was just a piece about this, I just saw the other day somebody’s figured out some anklet cuff with sensors that will always tell you where north is. And there’s this thing that’s happening where people are starting to… Well first of all there’s this whole new world of sensors that we see bubbling up to the surface. A lot of our methodology and figuring out what’s interesting is just to watch interesting people and what are they playing with. You know, we really think that a lot of new technology comes in on the backs of people having fun. You know, when the Wright brothers were trying to fly they weren’t sitting there saying, “We’re going to make a big new industry”; they were like, you know, “We want to do some cool shit, man.

Susan Bratton: Exactly.

Tim O’Reilly: And, you know, wouldn’t this be a blast if we could actually, you know get off the ground.” And, you know, back when, you know, Jobs and Wozniak were making personal computers in their (unintelligible) computer club they weren’t thinking that they were going to launch this big company, at least in the beginning; they were thinking, “Man, this is something really cool and fun.”

Susan Bratton: “We want to build computers.”

Tim O’Reilly: That’s right. And the web, same thing; it was just all of us who were there in the days of the early World Wide Web, we were like, “How awesome is this?” And…

Susan Bratton: I want to tie this back to my last question about publishing because Renee Blogett, the president of Magic Sauce Media – I’m sure you know Renee…

Tim O’Reilly: I do know Renee.

Susan Bratton: Renee gets to everything everyone does. She’s so great. She had a question and it really ties to this idea that we all as individuals have so much knowledge and information to share, that she wants to talk about, she wants to hear your opinion about self publishing. She says it’s growing and anyone can now be an author with the click of a button. Self promotion and getting the presentation right, however, is still tough for a lot of people. So you might know things, but do you know how to package them? So she wants to know what two things you think self publishing vendors can do to increase the complexity and mystery around self publishing, as well as make the process more efficient.

Tim O’Reilly: You know, I think that self publishing is a mirage. Let me explain what I mean: anybody who does self publishing and then gets good at it becomes a publisher. I was a self publisher; my first print run of my first book was a hundred copies. You know, think about something that’s a little closer to most people; blogs. Anybody can launch a blog. Why is it that some people got really good at it and ended up building big blog publishing empires, you know, whether it’s Nick Denton at Gawker or Huffington Post…

Susan Bratton: Or Arianna Huffington, right.

Tim O’Reilly: Or, you know, Mike Arrington at TechCrunch. They were just like everybody else, they started a blog and all of a sudden they have all these people working for the. What gives, you know. And the point is that there’s no such thing as self publishing. You know, publishing is pretty straightforward. Even the old days, you know, when you had to go to a local print shop, it’s not significantly easier because you can, you know, go to LuLu or Blurb or, you know, Lightening Source. You know the challenge has always been finding an audience and building, you know, your market. And that’s the same today as it was, you know, in the days of Benjamin Franklin…

Susan Bratton: That’s right.

Tim O’Reilly: You know, so I guess I would just, the idea that somehow it’s gotten easier is just wrong. And the parts that are easy have always been pretty easy and the parts that are hard have stayed hard.

Susan Bratton: Well that’s good advice and a great perspective. Tim we’re going to take a break to thank my sponsors, ‘cause I really appreciate them letting us do this together. And when we come back I want to talk to you about social media marketing and your opinions about some of the popular things going on there, about online communities and about careers of the future.

Tim O’Reilly: Sure.

Susan Bratton: Great! Stay tuned. I’m your host Susan Bratton. We’re with Tim O’Reilly, O’Reilly Media. We’ll be right back.

Susan Bratton: We’re back with Tim O’Reilly. So Tim I’ve got a cluster of questions for you from some of my listeners. Chris Bralick, partner at First Round Capital, wants to know if you have a Kindle and if you like it and use it.

Tim O’Reilly: I have a Kindle; I use it very occasionally.

Susan Bratton: Okay.

Tim O’Reilly: I have to say it has not found a compelling place in my, in my reading. And it’s funny because I like it in theory and, you know, it’s not a bad reading experience. And, you know, I just loaded it up with a bunch of books ‘cause I am going on…

Susan Bratton: Right, I was going to say, it’s a travel, it’s a travel companion…

Tim O’Reilly: It’s good travel…

Susan Bratton: Yeah.

Tim O’Reilly: experience. But it’s funny because where I decided I didn’t like it was I actually started reading a book on the Kindle during a trip; it was actually Anthony Trollope’s The Way We Live Now. And I got home and I picked up my little, one of the things I collect just for books are small paperback sized hard covers; you know they were very popular through the late part of the 19^th century and the, you know, early part of the 20^th century, up really until the 50’s and 60’s even. But I had this little Oxford edition of the book, and it was just so much more pleasurable to read. And the reason was actually something that was really small; it was the fact that the print book had running heads and if you, you know, if you read Jane Austen or Trollope, you realized that each chapter has a title that is very descriptive of what’s going on. And when I saw it on every page it was sort of situating me in the story in a way that was just missing in the print book. Now of course, you know, Liza Daily has built beautiful e-books and she’s gone to show that you can build e-books that are just as beautiful in format as print books. But right now the, you know, the experience on the Kindle is sort of like the lowest level of acceptable content, you know. I mean many of the publishers did a pretty crappy job of formatting. You know, I started out reading some science fiction books on it and they, you know, whenever there would be blank lines in the original title to separate a change of scenes, they were just, you know, omitted and so the scenes would just run together seeming as if it were just sloppy. But I think, you know, I’m somebody who loves his books. But I, you know, it’s funny when I look at the market I’d say that the biggest revolution that the Kindle is driving is actually around pricing. You know, just as the paperback, you know, changed the way people opened the market up to new people because you could buy a book a lot more cheaply, I think that e-books are going to end up being a way of creating another peg along the pricing spectrum. You know, there are a lot of books that I would not pay full price for, but I’m happy to pay, you know, a smaller price ‘cause I want to get a taste of it or, you know, I might read it and not care to keep it and so on. And so it’s really just increasing the amount of choice, and you know, for that though I find that, you know, I think that the Kindle may not go far enough because what we’re saying is that the magic price point for e-books is $4.99 and below, not even the $9.99 that, you know, that Amazon has been pushing.

Susan Bratton: It’s interesting because Dan Brown’s new book The Lost Symbol – now I don’t read Dan Brown’s work, but it’s bestseller material – I guess Random House has made this particular book the largest print run in its history at five million copies, yet when it launched it was selling more downloads on the Kindle than it was selling print copies.

Tim O’Reilly: Right and it’s going to be very interesting because they may regret that because in this case it may well be that there will be people who are choosing to buy the e-book instead of the print book and they’re going to end up with a higher remainder rate as a result, and not only will they have gotten less revenue, they will have ended up with a higher overall cost. Again, we don’t know that. I mean it’s possible it will increase the market. But I in fact do like Dan Brown and I probably would’ve bought the hard cover but instead I did buy the Kindle edition. And so it is going to be kind of interesting, and, you know, I personally as a publisher wouldn’t want to experiment with a five million copy print run because I think there are a lot of unknowns still, but, you know, hey, more power to them. I’m glad they’re doing it and if it, if it works out for them that’ll be great.

Susan Bratton: Random House is in it with both feet. Congratulations for that right?

Tim O’Reilly: Yeah.

Susan Bratton: So you have one, as of today, you have one million, ninety-six thousand, seven hundred and eighty-eight Twitter followers. And Chris Bralick wants to know how you manage to stay connected to them, and I want to know if you feel like there’s any level of responsibility to that.

Tim O’Reilly: You know, I would definitely say there is a level of responsibility, but it started for me with five thousand followers. You know, I didn’t, I signed up for Twitter, I played around with it and then I went away and didn’t use it, and then one day I noticed that I had five thousand followers and said, “Oh, I better start giving them stuff”, and so I just started using really a lot like I might’ve used Delicious, which was just to save links, except I saved them by sharing them, and that became really a fairly popular way of using Twitter at about that time. But here’s the thing I would say about the, you know, the million plus followers: I don’t really know how meaningful those numbers are. It’s nice to be on the big lists and people take it pretty seriously; but, you know, I, mostly what I post are links, and my peak link click through happened in June, you know, and I probably – you know, somewhere in there – and I probably had sixty or seventy thousand followers, and I was getting, you know, ten percent click through. And now that I have a million followers – so I would, you know, sometimes get, you know, five or six thousand clicks on a link that I posted. And now that I have over a million followers I’m getting one to two thousand. You know, so I think the amount of…

Susan Bratton: It’s diluting.

Tim O’Reilly: Totally diluting.

Susan Bratton: Mm hmm. How’re you tracking the clicks, Bit.ly?

Tim O’Reilly: Bit.ly.

Susan Bratton: Yeah.

Tim O’Reilly: Bitl.y’s fabulous for that…

Susan Bratton: Yeah.

Tim O’Reilly: And it’s also fabulous because it is kind of, you know, a memory.

Susan Bratton: Well the little fish is so cute too.

Tim O’Reilly: Yeah. But I think that, you know, this is still a story that’s very much evolving, you know; Twitter is finding new use cases all the time. But I think that the obsession with follower counts it somewhat misplaced. It makes great press…

Susan Bratton: Yeah.

Tim O’Reilly: but I don’t think it’s really meaningful.

Susan Bratton: So you know David Kirkpatrick, right?

Tim O’Reilly: I do.

Susan Bratton: Yeah, he’s one of our Ted buddies, I know. He’s now an author in process; he’s writing a new book called The Face Book Affect, and he wants to know if you think that Face Book has changed the landscape of the software or internet industry?

Tim O’Reilly: Oh boy. You know, yes and no. I mean Face Book certainly put social media on the map in a way that, you know, previous social media startups had not. They, you know, the Marx concept of the social graph sort of I think electrified people; it made them understand that the world that we’re building – this is something I had been talking about with Web 2.0 – is a data driven world and that there are these, in some sense, data subsystems that, you know, they’re these connections waiting to be discovered. And, you know, in the same way that Google discovered something fundamental with page rank. You know, Marx thinking about the social graph, you know, put a stake in the ground and got people thinking about, you know, how this information web actually works. And in that sense I think absolutely its changed the landscape. But I’m not sure that, you know… Well let me just put it this way; there’s sort of a lot of things that people pay attention to. You know, in the early days when we were first talking about Web 2.0 everybody was obsessed with Ajax. They were obsessed with…

Susan Bratton: Wow, that’s like, that’s the way back machine moment for me. Ajax, right…

Tim O’Reilly: Right, you know…

Susan Bratton: Oh yeah. How’d that, where’d that come go?

Tim O’Reilly: And everybody was obsessed with advertising. And, you know, now they’re all obsessed with social media. And I guess what I keep trying to get people to think about are what are the deeper trends that are going on and, you know, when I first started talking about Web 2.0 I said, “Look, this is really about the shift of power away from” – in the computer industry – “the shift of power away from software to vast cloud databases that literally get better the more people use them.” And that’s as true of Face Book as it’s true of Google, it’s true of virtually every company that has succeeded. And so in that sense Face Book is just one more of many of these companies that get better through user contribution. And, you know, where the next sort of way of real transformation is happening is really the mobile revolution. And the mobile revolution, you know, certainly has elements that, like for example with Twitter, the idea that, you know, is becoming more minimal, you know, something that can be consumed and created on a phone. But the part that I’m most fascinated with is the sense of revolution that is starting to emerge. In fact, John Batell came up with this new name – I had been talking about Web Meets World as the big theme that I’m seeing happen now, and he said, “Web, two W’s, lets call it Web Squared”, right. But I, you know, I, you know, I started talking about this as soon as people started asking me, “Well what’s after Web 2.0?” I said, “What’s really happening that’s really interesting is when these collective intelligence applications start being driven by sensors rather than by people typing on keyboards. And you can see this, one of the examples I’ve been giving in my talks is the Google mobile app, you know, the speech recognition. And that’s not, you know, the speech recognition isn’t so great yet. But if you look at what happens with that application, it’s really quite remarkable because there are three cooperating cloud databases to give you your results. You know, there’s some cool stuff happening with the local sensors on the phone; you know, you pick it, put it to your ear and it automatically goes into speech recognition mode, and you say, say, pizza, and… Speech recognition is hard, you know, particularly if it’s not, untrained, different accents, different, you know, quality of phone connections, and you know Google doesn’t always get it right, but they get it more right than you would expect. And why? Because they already know what you’re likely to say because they’re coordinating their speech recognition algorithm not just with what they hear, but with what they expect to hear based on effectively Google suggest. And they have this huge database that they’ve been building now for, you know, 11 years of what John Batell used to call the database of intentions, and that helps them be good at speech recognition. So then you think about that and then the phone is also reporting where it is all the time. And so then they return you on that pizza search, you know, the three closest pizza places, you know. And that’s really quite unimaginable, you know, this is… And now you start thinking about those searches and the kind of data that they are generating, you know, for Google; you know, they know what people are searching, where they are when they’re searching for it. You know, this is going to explode in the not too distant future.

Susan Bratton: Is the next layer augmented reality?

Tim O’Reilly: Yes, I think augmented reality is a big piece of this…

Susan Bratton: It’s really interesting, isn’t it? I would like to spend a week just learning about augmented reality, you know?

Tim O’Reilly: Yeah. So this is really the focus of that we’re really looking at at the Web 2.0 summit this year in this web squared theme and, you know, how sensors are really picking up, in some ways they’re creating the information shadows of real things in cyberspace. And the kinds of things that we’re going to be able to do and the kind of information that we’re going to be able to mine – Sandy Pentland at MIT calls it reality mining – as a result of people walking around with a cloud connected sensor package in their pockets are truly remarkable. And there’s also all kinds of new consumer devices; you know, Nike Plus sort of the front end of a wedge. You know, there’s things like Fit Bit or Phillips Direct Life, there’s medical monitoring sensors, there’s hacker things like, you know, Katie London’s Botanical’s where, you know, she wires a plant up with a moisture sensor and it, you know, SMS’s her when it needs to be watered. You know there’s just all kinds of cool crazy stuff happening that (unintelligible) sensors.

Susan Bratton: Wasn’t this kind of also the IPV 6 domain where everything was going to be addressable?

Tim O’Reilly: Well yeah, but they got it wrong.

Susan Bratton: That never went off. That was like another Ajax, right?

Tim O’Reilly: Yeah. So here’s the thing that… Well I mean Ajax really mattered, it did in fact change the user experience of websites, and IPV 6 is…

Susan Bratton: True.

Tim O’Reilly: eventually going to matter. But the idea that the internet of things requires everything to have an IP address is wrong. And I think also the semantic web idea that somehow we need to encode meaning, you know, and attach meta to everything is wrong. Now I had a realization one day when someone asked me the inevitable Web 2.0 versus semantic web question at a conference. And I was wearing a name badge, and I held it up and I said, you know, I said, “Can you read my name?” And I took the name badge off and I said, “Do you still recognize me?” And, you know, I said, “The fact that you can still recognize me is Web 2.0.” You know, Jeff Jonas at IBM calls it context accumulation…

Susan Bratton: Mm hmm.

Tim O’Reilly: The way these, you know, the way these machine algorithms are, they’re basically gathering data all the time from the people and the things that they’re interacting with. And so our applications are getting smarter by accumulating data. And metadata helps, but once we’ve been introduced, you know, once we’ve got that nametag the first time or maybe the first couple of times, at that point you actually just recognize from various other features who it is. And now you think about all the metadata that’s starting to be generated; you know, when somebody tweets or goes from four square or does something and his location is attached, there’s some text attached. Or, you know, think about face recognition; you know, going back to this idea I talked about with the Google mobile app of cooperating databases. You know, face recognition is fairly hard if you’ve tried it with Picasa or iPhoto, you know, you have to train it and so on….

Susan Bratton: Yeah, it’s laborious at this point.

Tim O’Reilly: Think about it a little bit and you say, “Well first of all, you know, once Google has, you know, all of, a fair number of those four billion photos in Picasa tagged with faces, they’ve got a huge face recognition database. But now imagine that I have a, an augmented reality application – and by the way the first people are working on contact lenses that, you know, will actually have ARR displays; it’s a long, it’s a few years out but the research is being done. You know, and I, you look at a face and you go, “Wow, I have to pick that face out of, you know, four billion images, right?” Uh uh, because what if I know that you’re already, there’s only, you know, three hundred people in this room, they’re all carrying phones, they’re all reporting their names, you know, because, you know, the phone is associated with some application that’s on the social graph. And all of the sudden, you know, my face recognition algorithm only has to pick out, you know, a name to match one out of 20 faces, you know. They go, “Well you’re standing in this direction, you’re looking over here and, you know, this person is over in that direction. You know a lot of the ARR apps are actually kind of cheats. You may have seen this one that was announced recently called Nearest Tube. And, you know…

Susan Bratton: Oh yeah. That’s a terrific app. I saw it while I was in London this summer with The Traveling Geeks.

Tim O’Reilly: Right, and, you know, but you imagine, you know, they show the video of you (unintelligible) and you’re panning the camera around and up each street is says, you know, how far it is to the nearest tube station, and you think, “Wow, it’s recognizing the streets.” It’s not doing anything of the kind. It knows what direction you’re pointing ‘cause there’s a compass in there, and it knows where you are ‘cause there’s location sensing. And so it basically just overlays that data on the image so it looks like it’s seeing. And I think a lot of this is basically the coordination of multiple senses is enabling all kinds of magic. And I guess maybe that comes around to something we’ve, we always refer to at O’Reilly, which is this wonderful Arthur Clark quote that any sufficiently advanced technology is indistinguishable from magic. A lot of what we do in our business is we look for magic and then we try to figure out how to document it and share the word so that other people can do magic too.

Susan Bratton: You know, you’ve been talking a lot about what computers can do when we bring these databases together and what the shift of power away from software to these cloud databases that get better when people use them…

Tim O’Reilly: Right.

Susan Bratton: Alutha Jamancar, who’s an knowledge engineer over at Pixel Core – he works with Alex Lindsey – he wants to talk about online communities and when we get beyond chat and posting and their hubs are gateways for skills in a community of shared learning or that wisdom of the tribe. What are you seeing as far as tools for aggregating this kind of online community expertise? How is that evolving?

Tim O’Reilly: Boy, there are so many different ways that you can aggregate, you know, community expertise. You know, certainly there are tools for asking questions and getting answers; you know, everything from Vark to, you know, Google Moderator. There are, you know, obviously Wiki’s performed that function; so do old fashioned news groups, so does Twitter. You know, people can ask questions…

Susan Bratton: Right. I crowd source all the time on Twitter.

Tim O’Reilly: That’s right. And…

Susan Bratton: It’s wonderful.

Tim O’Reilly: You know, I think it’s really an ongoing discovery process. There’s a lot of tools; you can use whichever ones work for you.

Susan Bratton: I want to switch gears.

Tim O’Reilly: Yeah.

Susan Bratton: You’ve recently tweeted something that’s near and dear to my heart and that’s Michael Pollan. He wrote the American way of eating has become the elephant in the room in the debate over healthcare. You also tweeted about the possibility of taxing soda and sugary drinks, and I’m right with you on that. I mean you’re a West County Sonoma guy, you live in the rolling hills, you know…. There are 49 vineyards that you could probably walk to from your house, and sustainable agriculture and…

Tim O’Reilly: I grow my own food.

Susan Bratton: biodynamics and you grow all your own food, so Michael Pollan devotees we are both. What’s going on with that? How can we as a technology industry help with the knowledge that we have and the tools that we have to change this problem?

Tim O’Reilly: Well one way obviously is simply by spreading the word. But there are other ways. For example, with our venture firm we just recently came to an agreement to invest in a company called Local Dirt, that was started…

Susan Bratton: It’s called Local Dirt?

Tim O’Reilly: Local Dirt.

Susan Bratton: Okay.

Tim O’Reilly: And it’s really a way of automating the process of small farmers selling to supermarkets.

Susan Bratton: So what is it like CSA’s? Aggregating CSA’s?

Tim O’Reilly: It’s really this woman who started it was a buyer at Whole Foods. And the reason that Whole Foods didn’t use as much local food as they could is because the farmers weren’t automated. You know, it was all done by fax or phone call or even, you know, flips of paper made out by hand, you know.

Susan Bratton: Right, what you want to do with the government. Your government two point is the same thing with the farmers and the government, isn’t it?

Tim O’Reilly: Right.

Susan Bratton: Yeah.

Tim O’Reilly: And so there’s a lot of problems where just some things that we take for granted in the tech world are really revolutionary. You know, we’ve certainly heard about this in, you know, in Africa. You know, there are applications where just letting farmers know, you know, “Is the price for my crop better in this village or that one”, you know, can be revolutionary. You know, so one of the things I’ve been encouraging people to do is stop looking at these silly consumer internet applications, you know, that you think, you know, you’re going to have some kind of hit and, you know, turn it into the next Twitter and you’ll have an advertising based business model. Go find hard problems and, you know, use your IT skills to make this a better world. And some of those problems will turn into real businesses, but even if they don’t we’ll be better off for you having tried. You know, the whole idea that… you know, most startups fail, and so my advice to people is fail at something that will be worth failing at.

Susan Bratton: I can’t end the show on a better note from that. I always ask for an aspirational something at the end; I try to move the show towards something that gives us the big food for thought, and you’ve done it for me. It’s Friday; lets just say goodbye and thank you.

Tim O’Reilly: Thanks a lot.

Susan Bratton: Tim it’s been a pleasure. The most amazing thing is how you can quote so many people’s different constructs. I was taking a lot of notes; there are a lot of people that you’ve opened doors and ideas, I’ll go check them out. And have a great trip, travel safe, and it was very, very fun to have you on the show. Thank you so much.

Tim O’Reilly: Oh you’re welcome. And send me a link when it’s up.

Susan Bratton: I sure will. You can tweet it to your million followers.

Tim O’Reilly: Alright.

Susan Bratton: Alright, thanks Tim.

Tim O’Reilly: Bye-bye.

Susan Bratton: I’m your host Susan Bratton, and I hope you have enjoyed Tim O’Reilly. It was no small feat to get that man on the phone, but I did it. It’s about 8 o’clock at night here in California on a Friday night. I’m ready to go toast to a great interview with an amazing man with a Sonoma County Cabernet. I hope you have a great day today and that your mind has been expanded. And you can tweet this show, I’d love that. Have a great day. Thanks.