So welcome back everybody. After lunch, I hope you all had bites to eat. We followed the lighting sessions that were just on before. So I'm Torsten, one of the organizers together with Niana. And we're going to run the session for the next, what is it? Almost 50 minutes. And I'll introduce our speakers just now. Just a few remarks. We'll have some people coming in and out. I'm going to make it reduce the number of interruptions. But if you could tweet about the session and you do have access, so you tweet regularly, just annotate at FastAsia, just so we get some publicity. And I think we've been trending the last few days, which is great for this event. Okay, so this session that's going to kick off now is Shinsa in a case study alternative to Western style innovation. I won't read too much about the kind of topic overview. Bani will take you through that. Bani will also have to explain what happened to his leg yesterday. So Bani has been around the conference for many years now, participating in FastAsia. Really a background kind of known for his hacking the Microsoft Xbox and kind of part of the open source hardware community really through his innovation of Novina, which was a DIY laptop. Bani also received his PhD in electrical engineering from MIT already in 2002. And so he lives in Singapore and runs a private product design studio, Kosagi. And so he's actively involved in a number of startups and student initiatives with the MIT media lab. So Bani, I think you're all mic'd up. Yep. Okay. And over to him. Thanks. All the best. Hello, testing. Thanks very much for coming. I probably can guarantee you I'm the only speaker on drugs at this conference. They gave me some really good opioid painkillers and the coffees to help counter the side effects of it, which make me a little bit dizzy and drowsy. So I'm going to talk a bit about Shenzhen as an alternative to the American way of innovation. I say the American way because there's a sort of notion that there's a lot of innovation that comes from America and because of the existence of that of the result, the process must be the process. And I think there are other alternative processes that I hope to sort of introduce you to some through the lens of Shenzhen in particular. So, basically start with a case study of sort of how Shenzhen came about. It started as a fishing village about 30 years ago. Now it's a tech powerhouse and the question is how did that come about? How many people here have actually been to Shenzhen? Okay, so the next few slides I'm going to try and sort of go and look at Shenzhen through several different lenses. One is Shenzhen as a place, so we'll talk about what you might see there if you haven't been there yet. I'm going to talk a bit about Shenzhen over time, like the time evolution of Shenzhen and the history of it. And then I'm going to put a couple of lenses on one is the flow of capital within Shenzhen and the ecosystem and then the flow of IP, which becomes a segue into a broader discussion about IP practices and how emergent innovation may happen in the internet age. So, for people who haven't been to Shenzhen, I'm going to do a little exercise where I call zooming in on the place. This is like if you've seen those videos, like the powers of 10 where they start at the galaxy and they go to like planets and they go to like Earth and then hands up. It's a bit like that, but starting at the sort of the territory level of Shenzhen. So, when I talk about Shenzhen, and a lot of people when they say Shenzhen, they're actually referring to the Pearl River Delta. Shenzhen itself is a specific city of an area. It's like when people say Silicon Valley, Silicon Valley is what? It's like San Jose or San Francisco, is it Fremont? It's this huge area. And so, Shenzhen has sort of been used as a generic term for the overall Pearl River Delta. And in 1980, it had a population of about 300,000 people. And in 2011, it's had 10 million people. Currently seems to be about 40 million people and half a trillion dollars GDP in 2007. That's a decade old, those numbers. So, it's like, you know, it's a big area. It's very productive. It typically includes Shenzhen. People will mean they land in Hong Kong. They say they're going to Shenzhen. They land in Guanzhou. They say they're in Shenzhen. They go to Dongguan there in Shenzhen. So, that's a little clarification of the overall area. So, at one extent, these are the stereotypes that basically everyone knows. There's a company called Foxconn there. It has millions of employees. And hundreds of billions of dollar revenue produces hundreds of millions of products per month. They make iPhones in Shenzhen and there's a communism in China, right? These are sort of like the things that everyone knows about it. And then you look at sort of the stuff that comes out of it and both of these devices are made in Shenzhen. So, the one on the right, you're probably familiar with. That's an iPhone. The one on the left looks like an iPhone, except it's much smaller and it runs Android and it costs about 40 bucks. And both of these things are coming out of that same ecosystem, right?  You can start pulling it. Like, how does this come about? Where does it happen? I mean, it's a very easy to sort of state the platitude of, oh, they just copied a bunch of IP and they put it into this box. Except that, like, this is not really a direct copy of IP. You don't just copy something and print it and then just turn the resolution smaller and get a smaller phone. It's actually, you know, fundamentally a different piece of thing that just happens to look the same on the outside. And it's more than just iPhones and clones. So, these are just like some examples of the types of things you might see there. And that top picture, everything in that case will make a call. So all those little model cars there have phones on the inside of them. This looks like an Apple Watch and this is from a long, long time ago. And the guy who was showing this off to me was like, unlike the Apple Watch, this watch actually has a full GSM phone and can make a call. It doesn't have to be tethered to your phone to make a call. It actually has the phone in the watch. And a lot of people in Shenzhen were like, why didn't Apple put a phone in the watch?  And then they have like this weird stuff like, oh, I wanted some Marlboro branded phones, so they just built it. So then if you zoom in a bit on the actual area where most of the electronics trading happens, sort of electronics market area, there's a district. This is a picture from about maybe five or ten years ago. And every building you see there is related to the trade of electronics. This is not a financial district. This is not an oil district. This is not a residential district. All of those things are sort of top to bottom devoted to the trade of electronics. About a square mile in size. If you were to walk inside one of those buildings and take a look, this is what a typical view might look like. It's a little bit like, if you imagine a wet market, so if you went to the Hawker Center in Singapore or you went to like the wet markets, instead of them selling like kilo-two noodles or like, you know, you know, hind and chicken, whatever it is, they'll specialize in resistors or they'll specialize in diodes or capacitors or like whatever it is. They all have little stalls that specialize in their own little thing. And if you were to, and then if you're, and there's probably like, you know, hundreds of these shops inside each one of those buildings. So you already get the idea of like the immense amount of diversity and the immense amount of traffic that has. And then to go into one of the shops and take a look on the inside you would, you can take a look at the amount of inventory they have. So if people aren't familiar on the image on the left they have those round things, those are called taping reels. Each one of those has about 10,000 capacitors on them. Okay. And this shop, each of those boxes has about 5 to 10 of those taping reels on the inside. So this shop has literally millions of capacitors and resistors on the inside of it.   And another interesting bit about it is that like a lot of these shops, if you look at the chip inventory on the inside, I was like walking around and just sort of counting the chips and you went to go to like for example Digikey or Element 14, they'll have more inventory in the shelves of those shops than all of North America in these little shops for certain chips, right. And so it's pretty remarkable the amount of stuff they have. And it turns out that like a lot of these shops are really just sort of family run businesses. Like these are people who came from, a lot of them came from one particular part of China, they all speak the same dialect and instead of you know being a fisherman or trading in ducks or live animals, they just became experts in trading resistors. And they weren't, they don't have degrees in electronics, they don't have like actual knowledge of how to use it, but they're extremely good at trading it. They know where to buy them from, they know how to sell it, they know how to negotiate the price these people, you see these people that have like maybe a thousand products available and you can just be like you know I want this one, how much for a thousand, they'll just write out the price, they don't look it up in the book, this is all they long want to do is trade these components, they're very good at it. And then you know at the end of the day you can just bulk it up and hire a guy to push it around for you in the market and go to your factory and start production. One of the other interesting things is that when you go outside the market, I call this the market zoom, you go into the streets, you'll see things like this going on. It's easy to sort of like not even look at them because you're so overwhelmed by the pretty lights and like flashing things and whatever it is.  Or you'll see people like shrouded around mobile phones laying on the sidewalk. Or you'll see a scene like this where this is right next to it, you can see there's the little pink stalls, that's kind of a hawker stall kind of thing and right next to it is like just spilling over the cornucopia of like mobile phone cases. And people are walking up there and like taking parts out of the mobile phone cases doing this sort of thing. So you see this happening a lot in the district. Because the district has become a little more gentrified, you don't see it quite as much today. But this is really an interesting phenomenon. And what they're doing is they're basically doing a lot of recycling of the parts. And if you think about why these people are so excited to do this, just think a little about the economic incentive. So the value of one of these parts is new might be ten bucks. But if you can pull it off of a board and refurbish it and make it look like new, it's a perfectly good part. Silicon doesn't really go bad. You can sell for five dollars. And the other thing is a lot of times if you go into the market, you can actually, they'll actually tell you no these are used ones, these are new ones. So they're not dodgy about at that level. If they're using you, it's usually when you get the fake parts and you're supply chain, it's someone who bought it from them and then is blending it into their supply chain size. The recyclers are pretty much up front about what they're pulling out or not. Their cost of goods is virtually zero. And the minimum wage, this is a little bit out of date, but about a thousand RMB per month in the factory, maybe now about two thousand because of inflation, it's only about three or four hundred bucks per month. But the value of the parts in that little dish there alone is like a couple thousand bucks. So it's like twelve and a half X over a minimum wage if it took them a month to pull those out of the parts. And so if you were to compute the wage parity of what you would get, like your cost of living assuming that your minimum wage of eight dollars would be the equivalent of having a 200,000 dollar a year job basically pulling junk out and upcycling it. And one of the really important things that we know is that the skill used to do the recycling is actually a skill that's trained at factories.  They're going to recover all the memory and they're going to reuse it in production. So this girl was being paid probably a minimum wage to recycle parts at enormous value to the company. And what happens is these people are like, wait, why am I being paid a minimum wage to do this? Why don't I acquire those parts myself and then go into business selling parts like new because this is what they do in the company's old time. So that's why you see a lot of recycling happening in the ecosystem. And to put a little bit more of a fine point on what the gray market and fakes are, a lot of people when they think of faking they think of the thing on the left, right, is like, oh, we're going to make a fake iPhone. The thing is it's super hard to do that and it's really trivial to tell it's a fake, right? It's actually the wrong equation. You put all this effort in and a lot of people are like, I'm not going to pay as much as a real iPhone for this because it's a smaller, crappier iPhone. They expect it to be really cheap. Actually the more common type of fake is what happens on the right-hand side. This is an example of a part that I actually had bought. It's a genuine design like Spartan 6, but if you look at the chip, you see a little white rectangle that I kind of highlighted in the arrow there. What happened was that the vendor had taken a laser cutter and sort of blasted off a label on this that said ES, engineering sample, right? And so they're perfectly valid silicon from Xilinx, right? In fact, the engineering samples for this particular chip had only one small Radom versus the main product, but when Xilinx retired the engineering samples, the shubas were all supposed to grind them up and throw them away because you're not allowed to sell them into the market. Instead what they did is this particular problem, they actually were very clever about it. They went, they laser marked off the ES, so when someone checks particularly the untrained people to say, okay, we have to make sure all the numbers are there is nothing extra. And then this white rectangle, they're like, okay, whatever, right? There's just a white rectangle on it, right? And then so it gets into the factory and they only blended it in at a rate about 3% into the supply chain, right? So if you had any problems you might think that it was just a problem with your design or some defectivity or whatever it is. But the average part vendor when they're in the supply chain only makes a few percent margin. So by blending it 3% they double their take essentially out of the deal on a very, very expensive part and it's very hard to detect. This is very easy to do, but very hard to detect. This is actually the much more typical type of faking that you have in the market. So the most notorious fakes are usually derivatives of genuine goods. So it's not like someone's actually gone and copied the good, but they're actually, for example, a ghost shift. So this is when you have a factory line that produces a particular product. It's fully approved. All the workers are trained. They have all the test procedures. What they do is they run a fourth shift in the middle of the night when the manager are out and they keep the product themselves and all the margin they sell directly at the market. That's a ghost shift. But those are very, very hard to detect because they're actually, for all intents and purposes, genuine. It's just that they may not care as much to throw away the rejects. They'll blend them into the production. Refurbishing, like they talk about, remarking of parts. Warranty fraud is a very typical thing. So this is where people will say, okay you've got a phone that's got a problem. I'm going to go ahead and do something to it so I can hand it back to Apple and get a brand new phone. So essentially they can take a phone that someone would throw away and hack it a little bit and they'll trigger a code from Apple that causes an automatic, like there's these codes they put in the screaming and go in the genius bar and plug it in. They're like, oh, this is ID code. Okay, well, you're getting a new phone. So essentially it's a form of fraud that they do to try and upcycle phones that would otherwise be thrown away and then also improperly destroy production defects. So anyone who does hardware knows that you don't get 100% yield. It's stuff that doesn't work. You're supposed to destroy it and throw it away. They don't get destroyed and throw it away instead of remarked or labeled and sold on the market. So that's more typically the types of fakes that you see. So that sort of shens in as a place. I'm going to talk about shens in over time. So the snapshot you saw was probably accurate as of about like two or three years ago. The place is very dynamic, constantly changing. But in the 1980s, China had a billion people and they didn't have a shenzhen. And what happened was around then some very large manufacturers, the Foxconn and the Huawei, started setting up huge mega factories there because of cheaper labor and had almost no infrastructure. They just brought in sort of assembly laborers to build PC motherboards back in the day. It was the big thing. Hand stuffing components, whatever it is, toys, whatever. And so out of a billion people, they maybe took a percent of them and they got 10 million assembly laborers trained up to do factory assembly. And then in the 90s, they had sort of like a diaspora of medium to small factories. What happens when you have one large factory is you have other small factories that crop up around it to service a large factory. So a Foxconn facility might be assembling a PC case, but then you need someone who supplies the metal for the case. You need someone who supplies the cables. You need someone who supplies test equipment, someone who services the assembly robots. And those all become small factories near the area because it's more efficient and more competitive. And so you have a diaspora of small to medium size factories filled with hundreds of thousands of technicians and engineers. These are people who over the last decade had maybe been assembling stuff and figured out how to repair things or figure out what's going wrong. They've learned a little bit on the job. And that led to around the turn of the millennium the rise of the Shanzai. The Shanzai are the people who are sort of the copycat barons of China. And essentially the perhaps the anecdote that I heard about where they come is they're a bunch of people who are like tax engineers in companies like Motorola and Nokia, BlackBerry Rim, that sort of thing.  They would have all these meetings and reviews and throw away things and like guys, we can build this phone for half the price if we just did it this way.  And they would build phones at half the price and sell them and they would change one letter in the name from Nokia to a Nikia or whatever it is. And then you had these sort of phones arising. And they were pretty much direct copies back at the time. But out of those, you know, sort of Shanzai, you end up getting thousands of sort of managers and designers of shops that now have routinely produced a difficult consumer product and they know a lot about it and they're pondering, okay, well, we have all this capability. We need to differentiate ourselves. We had to do something different. Now they really are at a position where they can be like, okay, what innovation should we do? And out of those from the Shanzai around 2010, we started to see the rise of companies like Xiaomi and Tencent, Haba, Alibaba, these sorts of things. They sort of emerged out of this as the people, the group of people who were able to actually come up with an idea, innovate, create something different. And now you have your sort of dozens of major tech corps in China sort of rising up out of it. But the really interesting thing is that like at the point at which the innovation happened, it wasn't sort of top down. Someone didn't walk in and say, we're going to build like a huge factory and do it. The point at which someone wanted to innovate, they had the whole supply chain behind them to do it. They could execute very quickly and very rapidly.  Why aren't we doing this in Silicon Valley? How much money would it take? Surely you just have to take a few key players, transplant them and give them some money and things will happen. And I'm just like, you don't understand, you need to have hands that know how to do these things to build these products or not just, you know, it's not like GitHub we just clone and make, right? So another lens to look at Chenzhen through is the flow of capital. And this is another piece of the puzzle that sort of explains the phenomenon. Decades ago, someone invested million dollars in a pick and place line. And this pick and place line probably built into a Blackberry phone, right?  And they're doing 0402 components that cost millions of dollars. That machine ran for three years and the company decided they had to upgrade so they got rid of the equipment. But they don't throw it away. They sell it at 10% of the price, $100,000 as scrap, right? Another factory picks it up and says, okay, I'm going to use these, I'm going to build, I don't know, DVD players using this old mobile phone line. They'll use that for 10 years. Robots don't go back, right? They have essentially an infinite lifetime as long as you replace the parts that wear out. That guy says, okay, I'm done with this business. I'm going to sell this line for $10,000, right?  You wouldn't think that they would need to have a robot that can do BGA in 0402 and all this sort of stuff. But for $10,000, someone's getting that million dollar line that was producing these phones a couple of decades ago. And so what ends up happening is you have a huge amount of excess capacity that reflects the innovation and investment in the ecosystem for very cheap at the very bottom of the pyramid. And so this is a picture that I saw, I snapped, that's a pick and place line on the back of a truck. And you can see how very carefully they've packed it for transportation because obviously it was a very expensive purchase and they really cared to get there in one piece. But I mean, you know, all that being said when we got to this side, they had technicians who knew how to like tweak and tune it. It wouldn't be an issue. They're like, save the money in the box, we'll just calibrate it when it comes. That's kind of the level that they are at that ecosystem. So if you look at sort of then also the flow of parts another lens on the flow of capital, when you have a build of a million plus units, right, there's two paths that the builds can go. One is to users, which is the lower path and then the users eventually throw it away. It becomes e-waste, there's zero cogs to it, goes in recycling and as I told you about it, you can resell it for 50% original price on the gray market. The other direction it can go is that like if you have a million plus unit build, you have what I call the hot dog and buns problem except on a massive barbecue sale. If you have a barbecue you have buns, pack of ten, hot dogs, pack of eight. And so at the end of the day you're going to have two buns left over. When you do a million unit build you're going to have some hot dogs and buns left over, except that at that scale it's like 10,000 is your tailings after the run. And of course the factory doesn't just throw them away. The factory will scrap and liquidate them for about 10% of the original purchase price. And one of the other key things to keep in mind is that factories often have an aging schedule. They can actually keep parts on the line for longer than two years because they have oxidation where problems. So they have mandatory trash deadlines for the inventory if it doesn't get used up in time. So there's this constant flow like trickle down flow of scrap and excess that's coming into that gray market. People will aggregate, repackage and test that scrap and sell on the gray market. So this is another source of the components in gray market. So when people say you go into the gray market and key trusted components, well you really have to know where it's coming from. If it came from factory excess and it's a bunch of resistors it's going to be fine. Just take it. It's not a big problem. If it's like recycled memory chips, okay, you might want to be a little bit careful because splash memory does wear out over time. So those are the three lenses I showed in Shenzhen just now. But now there's a question of IP. Now that we know that they can get parts and where the parts come from, how do they go from like a tray of like parts into an actual phone. It doesn't just happen overnight. It has to be some IP added. So I went through and I tried to sort of trace the flow of IP as it happens in the ecosystem. And this is an example of like a drawing I managed to pull off the internet inside China of like one of the older phones being built.  It's not actually the word for open source. There's actually a proper Chinese word for open source. But as everyone here knows, open source implies a certain license. You have the right to license it under a BSD license. Or you have the right to license it on a GPL license. And gongkai, you don't have the right to license it. You have it, right? And so the gongkai sort of means public.  Or I happen to be like carrying it from my window and someone took a picture of me and they put pictures out on the internet. They're both on the internet, right? But one of them was intentional, the other one was not. And so, you know, the gongkai system sort of evolved in the absence of Western influence largely insulated. It has a similar impact from the standpoint of interlink access, but a very different cultural legal construct and it enabled a rhythmic spurn of Harvard that we see. But the question is how, right? How does this come about? And the reason why it's a conundrum is if you review the Western IP theory, there's a social bargain that struck between innovators and the public, right? If you were to read the U.S. Constitution it actually says that Congress shall have the power to promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive right to the respective writings and discoveries, right? And so the idea was that you wanted to reward risk-taking behavior with an exclusive right to any inventions you may come up with, right? So this is the social bargain because, you know, obviously you want to disseminate the information so other people can innovate, but you also want to make sure the person has some time to go ahead and monetize it. There's some problems with the bargain today is that limited times is now 20 years for patents. 20 years in the tech industry is an eternity. That was like from the 8088 to the Pentium III, so we went from a 5 megahertz machine to 800 megahertz machine. Might as well be forever, right? Maybe it's in perpetuity. And copyrights are in fact an eternity.  You can't own your childhood anymore. It is owned by Disney and other people who will sell your childhood back to you again in the form of sequels. So the interesting thing about open source is that the open source bargain recognizes that money wealth is not the sole driver of innovation. So this one strikes a slightly different bargain. One is that maybe I want public recognition. I want attribution. Maybe I want to have a legacy. Maybe I'm just curious. Maybe I have some altruism. And so what they did is they said, okay, instead of saying like I'm going to have a limited amount of time to sort of milk the public for this, you're going to promise not to sue me and you're going to go ahead and attribute me and then you're going to share my idea with the rest of the crowd. So that's what a lot of the basic licenses look like. The problem is that Western style openness still bears a heavy legal burden. And the example I decided this is that the two open source initiatives, open source initiative and open source hardware initiative had a lawsuit over their logo because they looked too similar.  It's because there's actually like legal theory that if you don't try to enforce your rights, then you lose your rights. There's actually sort of an encouragement in the law to try and actively pursue, particularly around trademarks, these types of things. And so like who in this room has money and time to just go ahead and like go into courts and like fight over stuff like this. Unless you're a lawyer in which both of these institutions had like lawyers on their board so it's not a problem for them to do that.  There's a whole like, am I GPL clean? There's a whole bunch of like if you license something, GPL will never end up in a Microsoft repo for example, but if you do BSD, Microsoft might pick it up and use it. There's a whole bunch of overhead that goes with it. So what's the impact of that legal burden? Okay, so this is a perhaps slightly skewed example, but like I like to say this is an example of what Gomkai can produce on the left and what open source produces on the right. And so these two are like a snapshot from around the same time. On the right-hand side is the Arduino UNO. A lot of people are familiar with it.  It's a 16-bit, 8-bit 16MHz CPU with 2.5K of RAM. Has a serial interface and a voltage regulator cost about $29.1K. Around the same time if you went into the markets and you look at what the Shanzai were producing, they were building quad-band GSM boards, phone boards with the 260MHz CPU, Bluetooth OLED display, MP3 lithium-polyneum battery, $12.1K. So with these people on the left-hand side had no burden at all to acquire the IP to build that phone. And so they were able to go ahead and build that phone. Whereas on the right-hand side, the people who built the Arduino UNO had no burden to acquire the IP to build the Arduino UNO. But that's about as far as you can get. You're good luck trying to get the IP to build a phone in the Western ecosystem. You try to write through the front door. They'll literally be like, you have to pay us a quarter million dollars to even see the datasheet for a lot of these phones. So based upon this, the question is how does Gunkai survive? According to Western IP theory, the basic bargain is broken. There's no motivation to take a risk. You take a risk and it's going to get stolen from you. But the evidence is that business is booming. You have Xiaomi, you have MediaTek, all this sort of stuff. They're coming up. So clearly, either they're broken or the idea of the bargain is broken. And the evidence seems to show the opposite. So the explanation I have for this is a picture of the Galapagos. China is like a Galapagos. It's an insulated ecosystem that was able to create its own sort of norms and rules in a stable fashion that was sustainable. And so, if you were to look at sort of the changing face of innovation at internet age, on the left hand side is a picture that I pulled out from whatever the internet of what, as a classic view of innovation, this is like, I think it's called Alchemist's Stone or something like this. And it's literally a gray-bearded white guy, right, kneeling in front of the moment of entry. It's sort of the Tony Stark idea that like there's a person who discovers something big and they are the big mind, the big man who deserves the reward for doing that.  But, you know, they're incidental to the plot, right. And then, you know, but on the other hand, if you were to look at sort of the internet age, you know, people, if you were to try to do, look at what the graph of innovation looks like, you get something like this. This is a picture of like, you know, the IP address of the internet, right. You just can't put, I mean, you might be able to say, you know, Linus Torvalds did Linux, but the list of contributors that go into it is just enormous that goes into the offering system. So the difference between sort of old-style and new-style innovation is that back in the day, attribution is very important. We can pull up the patent for the zipper, number 1,219,881. And I can tell you that G Sundback is the guy who has the patent on the zipper. And this is from like, I don't know, 1917, right. This is amazing. We can attribute this guy to the dimension of the zipper. On the other hand, on the right-hand side, we have cat memes. And, you know, I've been asked in the past when I give presentations to signed forms that say that I have the right to present everything that I'm presenting, you know, I've asked the license holder and I was like, okay, I want to show some cat memes in my presentation. Who took this picture of this cat meme photo? Like, you can't find out who took the photograph. And these are all technically copyright violations. The person who takes the photo has an inherent copyright in that photograph. You're not allowed to copy that and remix it or do whatever you want. But what really matters is virality, right? You know, that person is not going to be like, oh, you can't use my photo for cute cat things, right? You know, because it's mine, I want to charge you some money for it. I think they're more excited to see their cat now, you know, trending on Reddit and being like, oh my God, my cat is trending on Reddit. And then that's it for them, right? So virality is sort of like the new currency, not so much attribution. And so the concept is that like, you can have different forms of IP protection, right? So these, like whales and bats are both mammals. They're actually both they both get birthed like young, but all sorts of stuff like we are. We're also mammals too. But they're very, they look very, very different. So it's not that you don't have IP protection in China, it's just that they're very different classes of organisms. So IP in China, the best way I can sort of summarize it, it's factory culture meets the internet, right? And so China has sort of like this tendency to sort of promote factory culture. Like this is from propaganda posters from the Communist Party celebrating the working man, right? You know, going into the factory and building stuff and working the factory is glorious, right? And then the thing that happens is that when factories are incredibly cheap and the parts for factories are easy to acquire, you end up in a situation where everyone is owning a factory, right? In this picture here, every person here is an owner of a factory. This particular facility is that old guy. This is a factory where you can go ahead and sort of do a heat press lamination of plastic bits together.  It's easy to go ahead and start a factory. The result is that you have what I call capability over inventory. So inventory is the picture on the left.  He'd be like, I'm sorry, we only have 1.5 or 2 meter cables. How about you buy the 2 meter cable and just coil the bit that you don't use and you're like, no, no, no, I need a 1.8 meter long cable. Please make one for me. The guy looks like you're crazy, right? You're like, no, I have these cables. Why don't you be reasonable and buy one? That's inventory. They try to sell you on something that you don't need because they have it in their supply chain, right? Capability, on the other hand, is the ability to produce cables. In China, there's a guy who has a machine that takes cables and USB ends and the bottom is the injection molding machine that goes in and puts the head on it and there's a number he can dial in as 1.8, enter, cut to length and he come up with a cable that's 1.8 meters long. This guy you have a conversation with and you say, hey, I want a cable that's 1.8 meters long. He's like, sure, yeah. How many you want? You want 1, you want 10,000. They'll be available tomorrow. That's capability, not inventory. When you have a factory culture you have a lot of capability. When you lose your factories, what you have is a lot of inventory at the end of the day. You have a huge massive ecosystem of factories inside China. There are factories that feed factories that go into the gray market that eventually produce the big factory at the end that you hear of the Foxconn that eventually goes to consumers. If you were to go to a maker fair in Shenzhen, it looks more like a trade show unless like a show and tell is one of the criticism people had from the West. This is like, oh, this is just a startup incubator. This is not a maker fair. This isn't real. These aren't real makers. No, no, no. This is making in China. This is the base level, entry level because everyone has a factory. The internet in China is different than the internet outside. Inside China content is very openly shared. This is a screenshot of a website, duikt8.net where they're just, you can just download whole blu-ray videos, finding Nemo, Born, Ultimatum 5, wherever it is. You just go click it and download. That's the sharing of content in China. It's a bit of the Wild West. It's not just movies. The same goes for technology. This is a website called 52rd.com and this is a website in which people trade and swap like mobile phone schematics, data sheets, tips and phones, how to build things, post questions, all that sort of stuff. There's a very sort of open ecosystem where people can go in and very on the surface, they don't have to hide. They're like, hi, I would like to know about everything about the latest Apple CPU. It's like, oh yeah, I have leaked docs from the factory and they're like, okay, cool, I'll trade you my leaked docs from this factory and then they all sort of trade and share. It's a very different ecosystem. I asked at one point, can I download a phone? I took part this phone you saw from the earlier slide and it says I want to find the plans for it. I want to make my own version. Sure enough, you can. So I go and I go on to the website and I'm able to download the data sheets, the schematics, the board layout, and even part of the board layout, these aren't Gerbers. These are live editable like PCB in a LEGO format. So it's not like I was just getting like something I couldn't modify. It's actually like if I wanted to go ahead and take this thing and add like a bunch of flashing lights on the side, it would be about five minutes of work to go ahead and add the LEDs and I could go fab it out and build it. Right? And that's very enabling. That's why you can get like all these little remixes of phones stuff because like you can get that sort of stuff.  So then that result of sort of factory culture meeting the internet is that you go from an ecosystem where virality means cat memes, it turns into one of virality means phone memes. So people instead of just at the level in the west of being able to mix pictures and put cute text on it, they can be like, I'm going to take motherboards and parts and components and other brands and trademarks and stick them together. I'm going to build a Ferrari phone or I'm going to build like a Hello Kitty literally an Apple phone that's a Hello Kitty with a Hello Kitty on it. And so if you were to unpack that ecosystem which you have is you have a bunch of small factories who do like industrial design tooling, plastics, components, circuit boards, firmware and they feed into a system integrator who then outputs the device at the end and there's a gray market below sort of like supporting all this by having a buffer inventory to do it and the role of sharing in this network is that there's a lot of people who could be your component vendor. There's a lot of people who could be tooling, a lot of people who could do plastics right? And so the biggest risk to you is not that you're not attributed for it. The biggest risk is that you're just not discovered and you don't go viral, right? And so the more barriers you put between you and being discovered is the less likely chance that you're going to survive in this ecosystem. So there is an incentive for people to share a portion of their IP. Obviously you don't put 100% of what they do out there but there's a large portion of it. Enough for you to go ahead and potentially rip mix burn and do other things with the IP. Another thing that is important in this ecosystem is that embodiment really matters. So there's this phenomenon of the hover boards that you might have been familiar with from a few years back and it was two wheel hover boards. There's a guy who has a patent on United States. His name is Shane Chen and he got it on May 27th, 2014 in 2013, right? And people are like wow, this guy invented it, right? So he should have the right to it according to Western IP theory. However, before this guy even filed the patent all this stuff in this gray box here in this middle column was happening in China. There are people with factories who could build electric bikes, who could build single wheel unicycles, who could build battery packs for like, you know, razor scooters, that sort of stuff, right? And so when people saw Justin Bieber go on stage with his hover board, right?  We have the capability to do it. We already have the tooling and ability to create molds for the sort of stuff. We have the motor capability to do the motors for the wheels, the high torque low RPM motors. We have the control systems for doing self-bouncing unicycles. We have battery systems, all sort of stuff. In a matter of weeks, they're able to sort of turn these things out in huge mass volume. And so a lot of people are like, okay, who is the question in the West is who is the person who's building these self-bouncing scooters? And everyone's like, I don't know. It seems to come from all different factories. They must be really good at obfuscating themselves. Maybe they're using a Torah-like network to go ahead and obfuscate the source. No. It's not actually, it's fully distributed manufacturing. You couldn't shut it down because you would hit one and there's still 99 others surviving at the end of the day. And because there was this impression obviously from the West is that someone must have invested in the factory. They're like, it's amazing someone built a factory in two weeks that can build these things as if they went from like bare earth, poured concrete, raised the buildings, hired people, put the machines in and built the factory in two weeks. The only way it happens is these guys already knew how to do it. They are very, very focused on embodying practical inventions and turning them into practice. And when you have that sort of capability, you can go from idea to invention very, very quickly. So the net result is that it's products over paths at the end of the day. It will take you three months and $20,000 to negotiate even a simple license with lawyers. Or it could just take cash and carry and take the product. Who's going to get the profit faster? The guy who takes cash and carry over product. So it's a reinforcement cycle. The guy who goes ahead and manages to sell product before the guy is worried about getting all his trademark filings in order is building a factory. And that guy produces more product even sooner than the guy who's just signing the license deal goes ahead and makes more money. And then by that point, he's on B2 the product already innovating on the next thing where the first guy is just finally getting his VC money to go ahead and build a factory. So it's a natural reinforcement cycle that happens that really accelerates and gets people focused on products over pattern. And then you end up with a bit of emergent innovation as a result from a very diverse ecosystem. You get stuff like these wacky little phones. You end up with Xiaomi. You end up with stuff like Alipay, which in 2014, across the $770 billion in transactions, Apple Pay only did $11 billion. And this Alipay wallet, if you read the Chinese there, it says we're an open platform for innovation for payments in that ecosystem. So they're really starting to embrace the idea that this openness allows technology and virality to an adoption at the user level. And so what you end up with is that, yes, you have IP like in the West. There's also IP in China. There are different practices of IP. They're both IP protection and they both work in their own way. They're just, they grew up in different environments. The Western IP environment was pre-internet and China IP is post-internet if you think about it. So China itself came of age in the 80s. They were building the computers that eventually built the internet that they eventually used to share their IP on. Whereas the Western IP practices were drafted in Venice in 1700 or something like this. And so it's a very ancient system that we still use and we think is the system they use. It hasn't been calibrated at all for the internet today. So if you're to compare the classic Western IP ecosystem, it does encourage high risk basic research. So if you need to do, for example, a cancer drug or drug discovery, it's 20 years of hard work and then maybe it comes out the end of the day. You're going to want the IP protection. It has a place. There's a purpose for that type of IP protection today even. There are certain processes where it's very, very reasonable. You can give you predictable, defensible earning models which allows you to collect investors.   That's the VC pitch. And it's also a very methodical form of invention. You have named inventors. You have a pedigree. You can sort of point to where things came from at the end of the day. On the other hand, innovation in the internet age is an agile, robust network. So it's not just a single person. It's a network of people. And this network of people can handle systemic complexity very easily. So very very complex things, even like the hoverboard can arise overnight because you have a network of people who can collaborate together to create innovation at the end of the day. It does mean there's a constant churn. It's very highly competitive. You're not going to be like, yeah, I'm going to have this factory 20 years from now or I'm going to retire on this wherever it is. You've got to love what you do. You've got to keep working at it to survive in that ecosystem. But a lot of times these people, it's not sort of, in the western model, you're like, we're going to go for an IPO and that's like your cash. Where your stock turns into cash. On the sort of more hardware-focused internet model, it's the day in which you start selling product the first time. Usually your product sales are very high at the beginning and they kind of tail off over end. So you actually, a lot of people who own factories, get the cash out a lot faster than people who necessarily are investing their time and effort in building whatever like your latest social media company that needs a scale of 10 million people to even begin to monetize with ads. And the other thing is that innovation is sort of an emergent network property. So a lot of people are like, what innovation in China? Show me the Tony Stark. I mean there's Jack Ma on those kind of guys. But you don't have Steve Jobs and Reed Hoffman and all these people who are Elon Musk, the named inventors, the heroes and that sort of stuff. A lot of it in China is very anonymous. People just, they're happy to get the virality out there and to make the money and then whatever. At that point in time, we've got our money. We're going to move on and do our next thing. So innovation tends to come more as an emergent network property. And the fact that it's emergent from the network doesn't mean it's not there. The fact that I can't point to the person's innovative or I can't point to a single region or whatever it is as the center of innovation, right? And just say this whole area is innovative doesn't mean it's not innovative. It means it's just a different kind of network based innovation. So the opportunity at the end of the day here is, the way I look at it is how actually can we create a hybrid between the two styles of innovation? Is it possible to, for example, take advantage of this emergent network of innovation, sort of combine it with a bit more of the risk-taking and sort of named inventor style and create products that then end up going to consumers? So a lot of the work that I do as a sort of freelancer in manufacturing is basically like small design vignettes. Like what is the smallest run I can do in do injection molding and not lose money? That's a question I want to answer. What's the smallest run I can do of a laptop and not lose money? What's the most crazy custom thing I could get built out of this factory? So I do a lot of these weird sort of almost, you know, quixotic sort of projects but a lot of them are just sort of trying to find different facets of like what are the parameters we can plug into innovation models and actually utilize and then turn into sort of an impedance-matched form of innovation that you can market and sell into the western ecosystem. And so that's my talk. Thanks. Great. Very insightful, Bani. A lot of photos too. Any questions from the audience about machines and supply chain? Thank you very much for the talk. It's usually very interesting. I've got a question. There's things that you describe would it work only for consumer-facing products or that style of innovation applicable for any aspect of software development or biology or other things? Yeah, right. Can this network style emergent innovation help? I mean, I think the network style emergent innovation is exactly what open source is in software today. You have that already and people are willing to accept that because there's no cost of goods in this solid attribution. I think in, for example, in areas like biology, it can help. There are some examples of it helping but it also can hurt because biology is actually a really difficult field. Reproducibility is like the number one enemy. You do an experiment, you get a good result, the next day you don't get the same result. If you have a supply chain with fake reagents and bits and pieces going through it, you're tearing your hair out trying to do basic experiments. There's a fine line in there but one of the things is you can get reagents much cheaper in China. There's a balance between how much do you go towards a populist model of innovation versus an institutional model of innovation versus the difficulty of the research that you're trying to approach. Most of the stuff you see is people taking components and doing new things with components. They're all already baked goods, the fundamental components. I've been recently a lot of figures involved with the RISC-5 project and they're using like chisel as a means of creating CPUs and I have an idea of like a stack processor or what. At what point in time or do you think they're going to be to the point where I could take a design that I did as FPGA and get an ASIC that's actually going to run competitive to something that I would go through in their chip fab. I think we're basically at that point. We're at that inflection. There's an inflection point we're hitting very soon. It's a combination of factors. Moore's Law slowed down. Even like the top-end chips are still taping out 14 nanometers today. We would expect it to be like 9 by this point or wherever it is if it was keeping up. The slowdown on Moore's Law means that a lot of the fab capacity that is accessible to mere mortals and smaller companies is now coming down in price on the same curve that Moore's Law predicted but now you're basically running the same fab that Intel or IBM might be running a Power9 or an X86 in level. Probably not fortune but maybe 28 nanometers. Still good enough. That's one thing. The other thing is yes, that sort of fab capacity is coming online and dressing those markets. You're starting to see more and more, there are a lot of Chinese companies that do ASICs like Huawei and Rockchips and all those guys who are turning these things out either based on arm or wrist or wrist 5, whatever it is. I think it's more just that ecosystem trying to organize itself. Once a business model is found that produces money people are going to jump all over and it's going to really explode. So I think you will sort of see that level of innovation taking off and there's also another whole section of innovation in the ASIC space which is not around SOCs and the high end stuff but there's actually a huge untapped market at the bottom. So sort of like 250 nanometer, 180 nanometer, like oldish silicon but the wind there is condensing a whole bunch of analog discrete IP into single chips and really making things tiny, tiny, tiny. So completely in your earphones they have a lot more processing pills that you can swallow that do tracking of your intestines and that sort of stuff and telemetry of packages through RFIDs that sort of thing. These all require that level of silicon integration that was very inaccessible before. I think you'll sort of see a second boom of the echo wave. So the leading wave is sort of the high end processors and then there'll be like another wave behind it of people sort of like okay well we have smaller and more niche products that are interesting to do and they're sort of riding this other wave behind. Any other interesting questions to this topic? I can just ask something you've just mentioned in your answer now is that a lot of this is commercially driven and so perhaps one of the points to raise is in the west a lot of the innovation is altruistic, some sort of new creative designs and sort of thoughts to that in this Shenzhen model. Yeah I mean there are people who are kind of sort of otaku-ish. They just build stuff and they innovate and they don't really care they just sort of keep drinks about. But like you know in every sort of organization there's like I had a boss who once said like in every company there's a division of 200 people there's that one guy in the back room who like no one knows he never talks to anybody but he like produces like 90% of the actual innovation in that company right? And so I think the ecosystem does have pockets of those guys and they don't even care like they're so far from the attribution layer they're so fundamental to a bunch of stuff so that does happen but I think that's just a there's just certain human beings who are like that who really get into something they lock in and they and I think that's the nice invariant is that happens regardless of the ecosystem. You see them in Japan, you see them in China, you see them in Europe and the United States. I've seen them everywhere. But overall I do think that particularly when you talk about hardware there is fundamentally a commercial bent to it. In order to build the hardware you have to spend some money for the atoms.  They don't even give you water for free. So at the end of the day fundamentally hardware innovation is tied to a commercial aspect which is and that's one of the big differences between like when you talk about open source software, open source hardware, a lot of people in open source software don't wrap the heads around the fact that money and liability are actual things you have to deal with in hardware. Good, I mean just a round of applause again for that money.


So, we'll have like 30-40 minute presentation after me, Giorgio Salentes will speak from the European Commission, then Michiel Lenars from NLNet, on the NGR Next Generation Internet Study, and then Maritje Schrager from the European Parliament. I will just have a few stories, and I think this is one of them. I think we basically know this slide. This is a little bit of an extremely old-school situation here. I never actually took a selfie, but I'm tempted to start taking one. But I'm also tempted to start in the same, which probably is not a very good idea. So, this actually is the old-school situation that we all know that we want to get away from. Now, we know that Burroughs is right. We need some kind of manager for the planet, but it will not be a manager. Like, it will be a network, it will be a team, it will be a community, just like we heard. So, just a few stories. These are the Fukeshu, and they were ronin, samurai without a master, and they could not carry a sword, and they were living around 1600, 1700 in Japan. And when you see, and they're still around, they play shakubashi music, and so what they did was they moved into a temple. They stayed there for about 10 years and didn't do anything. Then after 10 years, they got out, and they went to see the shogun, Edo, and they asked him, can we go out and play shakubashi music in the streets and collect alms? And the shogun said, OK, you can do that, but then you have to spy for me, because you wear these masks, nobody's looking at you, you hear everything, and so they said yes. So, they wore the mask. Now, when you see this, you see there's a mask, but when they take off the mask, it's good old Nietzsche, I'm the masquerade mayor, give me another mask, another mask. Basically, in the end, it's a group of people coming together, starting something. And this, I think, at this moment in time, with Internet of Things, AI, the big over-the-top players, the Uber, the Facebook, the Google, we all know them, sometimes it feels like it's sort of set, the game is done, but it isn't done. And it's always an alternative, and all the situations are historical. To me, this story was always very important, because it shows that, at any moment in time, if we have enough building blocks, we can start a new situation, a new given. This also was very important for me. This is, these are volcano readings. And for decades, actually for over a century, the volcanologists thought that the data was in the middle layer, and they had theory after theory, and they threw idea after idea into that middle layer, but nothing came out of it, because at some point, there was a physicist, Bernard Chouet, he looked at this, and he realized that the data is in the other layer, the data is in the small layer over there. And he actually managed to do that, and now the volcanologists are actually working with his theory. What was very interesting to me is that it's actually possible for a whole group of people to get such tunnel vision for decades, maybe even over a century, that they will not believe that they should look at something else, unless of course it takes another position to start doing that. And I think that's where we are, because the questions that we have is very simple. Naturally, it really, really is very simple. So what this next generation internet, this NGR, wants to get up, wants to sort of start a debate on, well first of all, the debate needs to be public. We need to get a lot more people involved in thinking with these questions, because we can only get one shot at making this a smart society if we want to make it smart and the question is, what kind of smart society do we want? And you're here, and you're very much a part of this. So how can we build a kind of team Europe, a kind of network communities, like a 500 million platform, making people, processes, and machines wiser every day in a meaningful way? Thank you. So now we move over to Giorgio, Giorgio Salantes. You want this one or you want the mic? Yes, hello. Good morning. Thank you for having me here. I'm coming from the European Commission. It's the executive arm of the European institutions. And it's a privilege to be in a venue like this. My background, however, is in engineering, so a long time ago I used to also go coding, but I had my shame to say how long time ago. Now, I'm going to give you what the European... I'm going to give you very briefly the timelines and some of the elements regarding budgets and efforts that the Commission is putting behind this initiative. What are we talking about here? We are talking about a new ambitious initiative of the European Commission. In the branch where our work of the European Commission we are funding research, just for having very quick set of who in the room if you can waive received funds from European projects, if you can very quickly to see. Okay? Not so many. That's a good sign. But we hope we hope that with this type of initiatives we will try to attract as many as possible to you. So, I'm not going to say and repeat some of the things that you already know. How important is the internet today and how important is it for the society? We can have if we have a snapshot now we can see that still we are at the infancy we can see new radical functionalities popping in. However, we see also problems popping in. We see fragmentation, we see concentration of power and for the citizens in particular we see some security and privacy concerns. What we will try to do and we will try to put wisely the money we put for research for Europe is try to do something that serves the citizens and for that we ask the question what can we do? And the obvious answer for us is that we defend with our policies European values and we will try to do the same thing with this initiative. So, we will push for the European values with the vehicle of the internet that we are going to develop. So, the trends we see nowadays are trends about having artificial intelligence on the hype which is supported by a plethora of data that is available. I mean, if I make a comparison to when I started my career in the university and I see because I was looking also at artificial intelligence the algorithms have not much much evolved but what has evolved and it is dramatic change is the availability of huge amounts of data for training for example and the connectivity combined with cheap processing power at the edges of the internet. As I said, principles of what we want to have, we want to have an internet which is human centric at the service of the people and of the society and for this we need the help and I will make the point later on we need the help of many disciplines but we will not forget that one of the disciplines that is at the core of the internet is the society that is building the small bits and pieces of the internet. So, another thing is that already we have people, if I can say the dinosaurs that were since the inception and they are still giving their nice guidelines and talks but the other thing that we need if we want to do these changes we need to mobilize the youngest talents that are shaping now the internet and I could not imagine a better venue for doing so to address to this venue here. If I can give you a roadmap how this has evolved so far from our side, what did we do so far? We started with a consultation we try to reach as many as possible and we try to get the feeling what an initiative like this should have as ingredients then the second step is that we launch a study and Michael after me will present some of the wisdom that we got from this study and we started already in our cycle of programs that we have which is the framework programs we start injecting money, asking for calls so already we have the first bits and pieces of what we think will have in the next generation internet how we can support it from the European point of view but the big the big challenge is laying ahead of us and as now I'm talking the European Commission is planning for the multi-annual framework program so where are we going to put the money in Europe in general and in particular where are we going to put the money to support research and more in detail how are we going to do this initiative so one thing that I believe is essential for you as a community I will not bother you with all the mechanics of the course and all this is that we adopt a little bit of different strategy here a typical problem in our program is that from the moment we launch a call for supporting researchers doing whatever kind of research to the moment of the implementation the time was too long and particularly research you cannot do that particularly in research that deals with technological advances like the internet that is evolving really fast the second thing is that we are notorious for our if I can say so bureaucracy and rules which are coming also by control I mean in the beginning when I was outside the commission I would say what is all this bureaucracy now that I enter inside I can see that there is a need also for a budgetary control but this has a problem of delaying things so we adopt a model of cascade funding we call it so what we are going to do is we are going to launch I tell it briefly in simple words we launch a call which gives money to intermediaries that can then cascade this type of funds during the implementation of this program to smaller groups even individuals and then these can do the necessary research for this initiative so one important issue is the cascade funding which I think makes and opens the door for communities that usually are outside so I ask the question who participated so far so it opens the door for communities or for individuals to come in get support and collaborate because it's not only the funding that is important in this sense it's also the collaboration across Europe we hope that's what we support so just to give you very quickly the numbers for the last of this framework program which is ending in 2020 we have put a bet of 50 million euros around and this is in the form of what are called intermediaries where we have two calls and in each call we are going to call three different areas and where intermediaries would get something like seven millions and will then cascade them to people the upcoming call is going to close for the intermediaries is going to close now in April and from April and onwards those intermediaries are going to inject this seven millions euro that I say gradually we also put some money for support actions that are going to support also the reach out to the communities and also the collaboration of results and also we put some money for international collaboration in particular with the US because we believe that what happens in the internet cannot be stay in the European we initially started we may have also other collaboration in other programs we do so but we started a very close collaboration with the United States so the big bet now is what will happen in the next framework program and this framework program we are talking about an escalation in in terms of budget but I think the most important is the multiplicative effect we expect to have in terms of engagement of people and communities now as I said I showed you the time I showed you the money and now I want to talk about the most important thing which is the people and as I said there are communities that we could reach so far with our programs the researchers, the research institutes but there are communities like this one or like the people who are dealing with civil society the people who are not purely technical I think we are indispensable and necessary for this initiative so the multidisciplinary context of developing this initiative is of prime importance and the most I could say the most interesting thing is that we want we will strive to have the people that are talented that could not find so far through our usual type of funding and support we wish to have them aligned towards the same initiative the initiative as I presented so in the beginning so I would pass the floor now to Michiel there is a simple site where our support action there aggregates all the information and I thank you for your attention ok is this on so I quickly have to switch so now I come from a completely different world in a sense we did this study for the commission I would never ever work with the commission again because I totally hated the way that funding works and I found it to be ineffective and I found it to be a charade however we ran into the right people so I work for a charity called enelnet foundation we've been around since 82 this is Thuis Hage he's really cool and I'm second generation within enelnet but already greybeard so we're in there for a long while so we ran into the commission very early on in this process this first consultation in 2016 and we thought oh my god this is going to be a disaster but we need this money so we assembled the crack team and we set out the work now we're going to talk about initiative like the next generation internet the problem is of course what is that people have a pretty crappy idea of what the internet is to them it's like a box and you just buy a new box and then you start inventing it it's a little, I don't know if people recall this image but you're connected to the internet it works and then you're done just like an old TV this is more like the internet it's really fastly complex and it's not a thing it's a network of independent networks so you can't upgrade them all because they're all different they're not coherent they're owned and operated by different people and there's some glue in there which is shared but this is on the top but those are also operated by different people so there's not a single thing to do and there's people interested in every aspect of it and they're doing whatever they feel like so another important thing is to know is that the internet has had its brain split and this is a I don't know if people know who this is this is Vint Cerf one of the two inventors of the IP protocol and he came to the Netherlands and he had he gave a presentation there at a certain point in time we just invented the internet protocols and then the NSA came to us and said well that's not going to do that's so not going to do we're going to need to invent something else for us but oh by the way don't tell the others so that is a pretty painful thing that's the 70s that is going really back to the roots of the whole thing but if you think about it it's not something you can create a next generation of quite easily but you really want to do and where do you start when you have like the community we have 500 million people in Europe with a big vessel of money we're putting money aside to do this kind of thing but then how do we organize that this can actually work well obviously so we try to drill down a little well it's not going to be the connections they're not the problem the whole physical layer is just that's why we initially believed in the internet because we owned our own infrastructure but now we get into more painful territory we talk about conventions we talk about standards we talk about protocols we talk about how people operate that's a lot steeper to work on and then there's code and there's commodity there's the stuff that people are running that people can download and start using and there's a lot of legacy hardware on it and we have to attach that as well and that includes all of the things that you own including the thing in your basement now changing the core conventions and the core protocols of the internet that is a huge beast of an effort I mean it's bordering on the insane things have never changed before people don't realize this all the other things that are just individual companies with a few big companies doing the same thing it's not still the internet the internet has not done it before the people that have to do it have not done it before and to make it even worse they sort of simultaneously through all three and a half billion of them will have to do it more or less in the same pace because otherwise it's still not going to work all previous internet next generation internet has failed there's even a Wikipedia this ambiguous page for it and that's that so the reality is this is this is a moonshot plus plus effort this is massacre it's the largest and it's the most obscene thing that man has ever created and we want to change it in flight with three and a half billion people on board and I mean even the US alone has 11 billion so we're going to have to hack budget a year just to attack the security of the internet so the political stakes are high economic stakes are high and of course the social stakes are tremendously high now we also have a bunch of highly critical users and when you talk about critical users there's different types of critical they're not really critical because they will use anything that's free but they're well they're heavily addicted so it's a tough thing and then on top of that I don't know if people probably know Parker's law of triviality it's from the 50s when you design a nuclear power plant you design a committee you assign a committee to work on that they will end up fighting over the color of the bike shed because that's what everybody understands everybody gets the internet because everybody's modern and has a twitter account so if you're still with me, if you're still not discouraged this is the path that we took without to engage with these folks broken this is the web so we said you can do a next generation if you don't I mean how do you create next generation people you have the current generation people then you put them together and they make next generation people have a lot of fun these people have never been involved with this public funding because of the obnoxiousness the whole process you guys don't want the paperwork but I work for a charity an LNET we give away money to people we do this kind of thing our budgets cannot reach here this is a factor a thousand higher than an LNET can reach and we know because all these people come to us over the years we know we need this money we know there's a huge demand out there for people that can actually do great things but we need these technical experts now we did a workshop during this call to be even more inclusive these are all the tags that we added to the people in that workshop and so this includes also the people that wrote the feminist internet manifesto this also is about whistleblowers this is about all dimensions of the infrastructure because they all need to be in different needs and perspectives interesting the problem is if you have an internet next generation internet plan and you have it all neatly tied up in graphs when you don't have the glue for it if you have separate calls and people will be yelling okay I can do something on transmission protocols or I can do something on secure web standards but if it's not glued together it's going to be a hail shot of efforts it's going to fail oh man this is getting irritating I will have to refresh my browser because that is so irritating okay I'm going to have to wing it here so we have we have images coming up we did this massive scan we worked for months and months we went to all these events from all these organizations there's an end to what people can do so we're just a small team there's a lot of people working on the internet in Europe and we made a huge effort to talk to as many people as we could and if you look at the internet as a safe place where you can just use things do things and party you should think a little of the story about the three pigs there's always a pig with the straw house and he's having a lot of fun that's where we built the internet next to that house and the threat model that we have now the threat model at the time was completely inadequate this is the kind of threat model that we want you will have AI attacks from whatever nation you don't like and they will find every gaping every port that is out there that is vulnerable so you're going to need some pretty fast response time we don't have response time now we have a pretty awful response time if people break something on the internet it takes years to fix it when DNS was broken in 2008 people are still seeing out there DNS servers that don't have DNSSEC IPv6 has been waiting since the previous century it takes ages to put things on the internet so we're very bad at this we're really bad at organizing things because all of your projects they end up I don't know if people know this wonderful site called ripology.org and if you've checked your projects there how well they spread across even across just Linux distros it takes ages and ages we don't have good mechanisms and when you're building a new internet you can't afford not to be connected to everything so we need good engineering practices we need continuous integration we need a lot of the things that just make sense from a software engineering point if you make sense when you're doing a next generation internet we don't have that like I mentioned before we need to stress from the ground up the internet is the the fundamentals of the internet are deeply problematic after snow everybody realizes this so how do we re-engineer this trustworthiness because we can make people trust the internet but that would be disastrous if they trust the thing that isn't trustworthy so we have to earn back this trust and that will take a lot of effort now in the long term we know that for instance DDoS attacks they're simply they cannot be stopped they're designed in a pretty bad way it's a pretty naive idea of how the network should be in the 70s so we need alternative plans there needs to be a plan B and this goes on many different levels this goes from making sure that objects don't have to come from a single server like I just had but they can just be there the frigging image was on my frigging computer but it just wouldn't show how stupid to recognize that it was there so why can't we not have smarter asset distribution to make it less fragile we want anti-fragility now what I mentioned before is the legacy middleware the internet is hostile against itself it's basically whenever you invent new stuff other parts of the internet are saying well but I was created in the 80s and I don't understand so I'll eject this from the internet so stop using whatever you're doing and so for instance even protocols like DNSSEC which are a rescue to an important aspect 10% of the networks have issues with DNSSEC packets so we know that we need to think more clever not just about a solution but about a solution that is able to take care of this legacy situation and that means that we have to understand far better and that takes a lot of money a lot of brain power because thinking of stuff that works is more difficult than thinking of stuff that works in a non-greenfield situation now the user also needs a lot more protection if you go to a store now and you buy a laptop and you go online here you're dead meat how can this be how can this be after we invent protocols that you buy new stuff you go on a public internet and you're taken so of course this takes a lot of stuff we've lost control of the browser I think everybody can see that this is advertising companies running the show this is no longer serving the interest of the user so why don't we make public money to be used for that purpose another important thing is I don't know how many people are here mining bitcoin and together with all the other people producing I think the 19th country when it comes to electrical power already and that's with 300,000 payments or 400,000 payments a day that's nothing there are supermarkets in my city that have that traffic volume and that is the 19th pollutant in electricity used on the planet if people are going to go that way and people are proposing blockchain like solutions we're going to have to do a lot better and so this is something that again you want people to look into you want people to have time to spend on this now if people are supposed to be going away from the big monopolies where are they going to go I mean if there's no road and if there's no destination there's no way that they even can get away so you need to regard the openness of the internet by making sure that there's no monopolies and if people need stuff then it needs to be available just like the email is available or the web is available anybody can use it this is the process that I explained so we had this we talked to all these communities we analyzed what they said we met up with a lot of experts even further breakdown and what we then did is to recommend to the commission three different topics first we extracted a vision for this because the vision is where it starts the vision is there can be many visions for instance there was a for the previous decades it was a vision Europe should have its own Google's Europe should have its own Amazon's the big companies look alike that is that is not a good idea that is never going to cut it so we start with a vision and this vision basically revolves around a very few simple principles it is legible but I actually extracted it in a bigger size now if you agree that the idea of the next generation isn't profit but that it should be an area that brings out the best in all of us then this inclusiveness and diversity are a real problem because that is not what the world is heading for we are not heading towards an inclusive system if you work at a few big companies you can invent the future and if not you are basically your fringe activity the second thing that is the basic we want everybody to be on board but the second thing is we want the internet to actually be very resilient because if you think about it you are going to put things inside your heart and it is actually going to grow you are going to put it in space and you can't touch it you are going to put it in the roads and imagine that the spectrum meltdown would happen with stuff inside your heart or inside a road there are reasons to minimize the attack surface and that happens at the protocol there the next thing is of course we need this component we need everything to be trustworthy because if you couldn't trust your own spine people may have seen this Bruce Willis film where there is a spy inside one of his teeth and he has to get it out of his own if you can't trust your own internet you have to be able to trust it we said it is a decentralized infrastructure so it is yours so you should be able to trust it you should know and understand what is in there and the third thing everybody should be able to innovate on top of it you can't innovate on top of Twitter you can create an app that uses its API but you cannot build a new business model on top of a company like that so this is our call to action now where to start the first thing that we recommend to the commission is say first we need to clean up our act we need to secure the parameter we need to make sure that we at least have a minimum amount of ground that we know we can trust that's really the first thing if we don't have that you only have 5.4 million to spend on each of these three topics this is well spent on people just taking a clear look at the internet the second thing is okay if people if we want people to be free to innovate they have to be able to get their social graph out they have to be able to get their data out and they need to be able to take it somewhere just like if I don't like Gmail I can set up my own email server if I don't like many other services on the internet the popular ones the Instagrams the signals the Facebook where am I going to go if I don't agree with that company that runs it where am I going to go so we need to create open source alternatives for these services and make sure that the data can be ported and the third one that we recommend is renovation of architecture so this is a long term thing it's we know that the first proposals to re-engineer the internet were from already from the 80s none of them have succeeded so it takes a long long time to even get something done so we need that kind of work that long term work to start right now now where does this community come in okay we know and we understand that you guys you will have bread to eat I mean that's not a problem and you don't need the paperwork from the commission however the interesting thing is the paperwork from the commission will go and you actually we will need that work and you will really need to collaborate and do stuff in a more structured way if we're going to fly to the moon if that is actually the kind of level of ambition that we have it's not going to cut it from a technical point of view to do everything in separation to scratch your own itches all the time the internet is actually eating the world it's eating society it's determining how people interact with each other I mean Trump versus when President Trump a Trump's account was taken down on Twitter by some engineer that felt like it and there was no way no way that would happen to a state organization because you could put stuff in place because that is the same account that that guy threatens to foreign heads of state with so that's a pretty strange thing to happen we need society needs an internet that it trusts and if we want to launch this thing we're going to have to collaborate and we have to nurture the right and ethical technologies and well the commission is continuously being pestered by people from industry and citizens saying why don't we have all these big companies in Europe we're a failure we've created packet switching we've created the web, we've created Linux and then we don't have any of these unicorn companies why, why well this is a cuckoo I don't know if people know how that works but if you get ousted of the net all the time because it's an unfair competition and you keep on nurturing the whole system without giving it a second thought if there are too many cuckoos and they're very successful they start consulting business they start houses they start bed and breakfast places put your eggs in and then it's kind of easy to spot it out I mean the real internet is open and the real internet is owned by everybody and if it's not that internet then certainly we can recognize this and we hope that the European commission when they get that billion euros to do stuff they will actually see it that is our funding that is your funding and my eyes opened two years ago when I went to this workshop and there were ten experts and there were no people from the internet world so this was this is your lunch being eaten by people that claim to be you this is actors that try to do the innovation theater and that has to stop so the simple thing is as Sergio has explained it's going to take a little while because we're going to find people that do the awful paperwork for you and then it should be able to get money for the cool stuff and the good stuff that you want to do with very little effort because that's the pledge that they're trying to make and society has paid up the money it's your money it's 500 million Europeans counting on this to happen let's say that everybody puts aside two euros it's more or less the order of magnitude it sounds like a tiny amount but we can actually do amazing things with it I know because I know that people that work for NLNet they sometimes get paid a thousand euros a month to work tirelessly on mind-numbing beautiful technology I know there's a lot of needs and we can scale this up and we need to reinvent this internet because if we don't reinvent it it's maybe lasting for another thousand years and this is not a hyperbowl it's fossilizing really really fast the ossification of the internet is a real problem because if everybody is on it and everybody has a legacy on it it's decades old who's going to change it so with that I leave the floor to Marietje Schaake she's from the European Parliament and she's the one that gets thrown into her lap good morning everybody some ladies, many gentlemen how are you? so in my work as a member of the European Parliament I focus a lot on the question of how to preserve and make more robust the rule of law in an online world some of the areas I work on are trade, foreign policy technology, subjects, digital rights worked on that neutrality we just passed a resolution in the European Parliament that will make it harder to export and to use the surveillance systems to dictatorships where they might be used to violate people's human rights oh thank you and I think that's important for this community we put in a caution to avoid that security researchers and pen testers would be negatively impacted and we call for delisting of export controls encryption software so hopefully well I see it's getting you awake I think it stays that way anyway last week I was in Davos at the World Economic Forum and I can hardly think of a bigger difference between this room and that community of people but what was striking and what I took with me from Davos is actually very interesting that there was a very clear tone of concern about where digitization is heading tectopia was definitely over and the notion that we should put people first, human beings first was a core notion that came across in many of the sessions and it's one that resonates with me deeply and I also thought it was remarkable that Marc Benioff the CEO of Salesforce was actually calling out other CEOs for having failed to take their responsibility in leading big technology companies and essentially called for regulation to safeguard the public interest now why do I say all this one because I thought it was interesting but two because I believe that there is a momentum a momentum building up where there is more attention for the potential negative fallout of privatization of the web everywhere I think one of the deep challenges that we face is that digitization often means privatization and I don't think it serves public interest sufficiently in fact I heard someone from Facebook saying you know what we do at Facebook we are a privately managed public space that certainly raised my eyebrows I don't agree with this obviously I think Facebook is a privately managed private online space and it's especially a profit seeking company which you know it's fine but let's not confuse things how deep the public impact of the behavior of private companies can be and so in thinking about the next generation internet I believe we should really focus on strengthening the public core of the open internet keeping the internet open of course in the first place it's a challenge enough as it is emphasizing how universal rights apply to all of the people all of the time and to see how democracy can be strengthened online I don't think we can overestimate the threats by top down models whether they are authoritarian governance models or profit models that increasingly impact all of us online so when you're building the next generation internet I encourage you to think about governance it is very very important what values you stick in the front and to see what impact it has in the end so again I would really invite you and I hope you will consider strengthening the rule of law online think about values and not just efficiency and speed or I think in this community is not so important but in many other places not just think about profit I would also want to place a bit of a critical note and invite you to be inclusive within your own communities I mean we live in bubbles too much I believe it's very popular to say look politicians don't understand anything about technology and I'm the first one to admit that that's probably true the pace of change of technology is very very rapid there's usually only a subset of politicians deciding on any given topic anyway so you cannot possibly reflect every politician to know everything about every topic what is helpful though is to reach those people that have the most responsibility for changes in the field that you care about and if I change around this assumption I think it is safe to say that a lot of techies geeks, programmers know little to nothing about lawmaking and politics and maybe we should both change maybe we should both be more interested in the other it's very easy to say it's maybe even funny to say that politicians don't understand anything but there are still decision makers and I would suggest that tone really matters saying we think your bureaucratic machine we really don't like you but we like your money I don't know how many people would like to spend their Saturday morning talking about that sort of proposition perhaps it is better to think in terms of solutions and understand that maybe governments in Europe are not perfect European Commission is not perfect governments of our member states are not perfect certainly members of European Parliament are not perfect but maybe actually these people are the best we have they are elected by all of you they also represent your opinion at least hopefully some of them do and so I think it is good to work with them because who else who else besides civil society is protecting the public interest online so in closing even though individuals have been hugely empowered by the use of technology and there is still a lot of promise that has not been manifested and I really hope we can do it together governments and what they do still matters states and what they do still matters they can do a lot of harm but they can also do some good and I think that the EU is in a unique position increasingly think about some of the steps that have been taken on the European level recently we have seen the general data protection regulation we have enshrined net neutrality into EU law competition authorities are finding big tech companies when they are violating competition law as they do with other companies and so the notion that the EU is increasingly a norm setter in the digital space I believe is something that is very essential and that we should all use the EU is increasingly more credible especially compared to the United States unfortunately and compared to regimes where it is not the voice of the people that determines who governs I also think what is quite fundamental that is really in our DNA in Europe is that there is still quite a profound understanding that people deserve to be protected from government too and that is something that we need to underline in everything we do so when we when we go on in tackling new challenges like algorithmic accountability or ethics in artificial intelligence the security of the internet of things et cetera et cetera I think you all can help shape that process I hope you will be invited and participate in shaping the next generation internet not so much by by staying in your own world but really reaching out to others and making sure that this is an inclusive as possible discussion that embraces the public interest of the public internet and manages it in a way that benefits all of the people anywhere in the world, thank you so much we have a few minutes for questions please raise your hand if you have a question hey can I go ahead with a question first of all I want to congratulate you for reaching out and bridging the gaps between our communities I think that's very important as you mentioned and I definitely share some of your concerns about where our digital society is heading but you mentioned some things on how regulation is evolving and my concern is that the more regulation we put, the more we look out the small guys that are trying to build out solutions companies and there's already a lot of regulatory hurdles in European Union because we have so many different countries where people have to basically be careful with all the legislation in these different countries how are we going to be able to regulate the big guys but at the same time make sure that the small people don't have these hurdles to pass through like GDPR while it's good at the same time it's so difficult for small companies to be compliant with it thank you I hope everyone can still hear because it's a kind of challenging setup with people changing rooms and asking questions at the same time but I understood your question clearly so I think indeed creating a level playing field where there can be fair competition and where there can be access and ability to comply for everyone is a key task for us but I wouldn't look at regulation in black and white terms I mean if you think about net neutrality it is deliberately designed to protect smaller startups, individual internet users from the overreach by the huge tech giants and it's it depends on what kind of regulation you're talking about that may have unintended negative consequences for SMEs small and medium size enterprises and I hear you very clearly we must be very careful for that but unfortunately the excuse of a negative impact for SMEs is also often used to stop better principle protection from taking place so for example when I was working on preventing the export of surveillance systems to dictatorships the argument against any regulation I heard most was well it's going to be impossible for the SMEs so it's very good to target exactly what is the problem with smaller players and I agree that it's a legitimate concern instead of making it a sort of blanket argument that can also be abused that would be my reply but I principally agree with what you're saying it's something to be very careful about can I continue on because I'm a bit puzzled between the second and the third presentation I heard something talking about internet of the people and then I hear someone saying that he wants to change the fundamental really no clue what it practically means but what I know is that there is already a lot of people and a lot of communities that are engaged in a lot of amazing projects and that it's not through a directive approach of changing the fundamentals of things that you will embed the people into transforming practices transforming structures and transforming users so the people to be starting from the communities that are already at work and they need to be as diverse as not only technical so this is exactly what we're planning to go with the grain of development to go with the grain of bottom-up innovation rather than to do top-down hyperscaling projects that fail to fund the communities that actually do it