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There's a book I read a long time ago called 'Extraordinary Popular Delusions and the Madness of Crowds'.



The review from Amazon.com goes like this:

Why do otherwise intelligent individuals form seething masses of idiocy when they engage in collective action? Why do financially sensible people jump lemming-like into hare-brained speculative frenzies--only to jump broker-like out of windows when their fantasies dissolve? We may think that the Great Crash of 1929, junk bonds of the '80s, and over-valued high-tech stocks of the '90s are peculiarly 20th century aberrations, but Mackay's classic--first published in 1841--shows that the madness and confusion of crowds knows no limits, and has no temporal bounds. These are extraordinarily illuminating,and, unfortunately, entertaining tales of chicanery, greed and naivete...



When it comes to the effect of social behavior on the intelligence of individuals, 1+1 is often considerably less than 1, and sometimes less than 0.


Now I can't say I really recommend anyone go out and read this book. It was pretty arduous going -- the english language has changed a lot since 1841. But I think it's worthwhile to consider some alternative ways the madness of crowds can play itself out.



We stand on the cusp of the availability of a persistent information environment. This ambient intelligence will be a mesh of billions of electronic nodes covering everything from coffee machines to street lights to cell phones to tubes of toothpaste and grids of supercomputers -- all in the service of making our lives easier, and better. Our interactions with computers, which now require us to hunch over a desk, typing and clicking, will change in fundamental ways. New input-output methodologies will be perfected and computers and the Internet will move from the clunky boxes under the desk to an always-on resource that's available to everyone, everywhere.



There's a lot of evidence to back up this view of the way things are going -- and you'll find a lot of it in the entries on this blog.



Well, so there's going to be ambient intelligence -- so what? While people generally accept the idea of an information-soaked future, and they can understand Moore's Law and the relentless progress in the power of computers, they may not yet be able to make the intuitive leap necessary to see how this applies to Microvision.



The fundamental reason why Microvision's technology is superior to that of other display companies is that there is no screen. There are no pixels fixed in place on a substrate. There's just the light sources, the MEMS scanner to move the light, electronics that drive the scanner and the light sources, and some optics to expand and reflect the image to the user's eyes.



When you look at the progress the company has made with the Nomad, it's easy to see Kurzweil's Law of Accelerating Returns (or something like it) at work:



2002: Nomad I is introduced at an initial cost of $12,000.

2004: Nomad II (Expert Technician System) is introduced at an initial cost of $4,000. Nomad Expert boasts a dramatically streamlined form factor and includes a wireless wearable computer.



Over just the last two years, the cost of a scanned beam display has decreased by 66% -- while the product itself has higher performance and includes more content and functionality.



So it doesn't take much to say that at the same rate of progress, we'll see a Nomad for $1,666 that includes a higher-powered computer and an even sleeker form factor by 2006.



But the rate of progress will only accelerate exponentially. So while a linear curve of progress (66% cost reductions every two years with increasing functionality and reduced size) has the Nomad at $1,666 in 2006, and $550 in 2008, in reality it may be much sooner than that when we start to see this happen.



Some might say that if the Nomad will just get cheaper, why not just wait til it gets cheaper to buy one? Well, 40% productivity gains need to be grabbed now. And each Nomad sold increases the competitive pressure on the guy in the next dealership down the road to match or exceed their productivity. If it takes an extra day, two days or a week to accomplish the same task as the guy in a dealership that's outfitted each of its mechanics with Nomads, you're going to start to lose business to the Nomad-enabled shop.



So, popular delusions and the madness of crowds? Well, the madness is the cynicism and skepticism that has got Microvision's valuation at $120M while it's Lumera stake surges over $40M. It's the collective lack of vision that shuns a demonstrably superior technology. It's the panicky need for perceived security when there is none to be found anywhere. It's overlooking the key enabler of a waterfall of economic growth for the need of positive proof in the past tense. It's the association of unrelated transitory factors like the US elections or the Olympics or the 'threat level' to the value of a patent portfolio that describes 100+ inventions of light-scanning technology.



And it's the assumption that just because something has not yet been done, that it can never be done.



We all want to know what the next guy thinks before we take action. But the next guy doesn't know any more than you do. The next guy's view only muddies the water. The next guy relies on cherished axioms from days gone by about how 'no one ever got fired for buying IBM'. In the land of opportunity enabled by the pre-emergence of ambient intelligence, the capacity for critical thinking at an individual level is what will separate the big winners from everyone else.



Conventional wisdom is the domain of those who fear to think for themselves. Beyond its boundaries lie truths on the verge of presenting themselves to us all.

4 comments:

At October 19, 2004 at 7:50 PM view_from_afar said...

You're on fire, BJ. Keep it up.

 
At October 21, 2004 at 6:32 AM Anonymous said...

I don't think that I have seen you produce any evidence that the MVIS shareholder will necessarily share in any of the wealth to be produced. Perhaps MVIS will go bankrupt before they are finally able to make money. Or perhaps on the brink of bankruptcy they will sell out for a small sum.

Do you have any estimates when they will finally be able to make a profit.

 
At October 21, 2004 at 9:59 AM Ben said...

Well,
there are no guarantees in life. But the thing to remember is that they have been in business for over 10 years and just now, for the first time, have a commercially viable display product.

They raised $10M in cash last month. They also have an asset in Lumera that's worth over $40M. The revenues are going to be increasing. I see no reason to think that raising money would be a problem if they needed to, since they have done so in much worse markets, much further away from having any meaningful revenue than they are now.

I don't know when the company will be profitable but if you consider there is the Canon product, the Nomad which could move for military as well as automotive and potentially other uses beyond that, the Flic is moving some units, the MicroHUD in advanced stages of development...

I just don't see the kinds of doomsday scenarios playing out as you suggest.

Thanks for reading, and best of luck to you!
BJ

 
At September 4, 2005 at 1:30 AM Anonymous said...

Can you name one user that has paid for the Flic?

Free cash flow is a problem with this company and losing more and more money each year will not increase their chances of raising more capital.

Might be a nice poduct, but it is ahead of the time. Think Apple Newton.

 

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