If the cover of The Economist is any indication of public sentiment – and it often is – many are speculating that innovation is dead. Two separate articles – “Has the ideas machine broken down?” and “The great innovation debate” – suggest doom and gloom. The cover “Will we ever invent anything useful again?” suggests the hope we placed on technology was misguided and that in fact, we have not produced anything as useful as a toilet in decades.
Peter Thiel, whom many would call an innovation expert (founder of PayPal, one of the earliest investors in Facebook, venture capitalist, and entrepreneur), dismissively says of this generation’s inventors: “We wanted flying cars, instead we got 140 characters.”
He may have a point about some industries. The advances in transportation speed achieved in the 1970s have not been matched since.
And yet… is our vision of progress limited to the hopes of early science fiction films? Is a flying car the answer to America’s economic problems?
The New Innovation Goal Is Efficiency
I think in general, there’s a shift toward innovation in services and improved efficiency. Efficiency comes in many forms: speed, health, cost reduction, error reduction. We should look to make better what has come before. Seek betterment, and economic growth will follow.
A picture of the Maverick flying car in development by I-TEC. (Photo credit: Wikipedia)
The Economist cover story concedes that while growth is not at the same levels of the past, we’re still in the early days of this new technological phase. Technology’s true impact may not yet be evident. After all, it was decades before the global trade benefited from steel and diesel, and developments from the late 19th century drove growth well into the 1970s.
It takes time to fully realize the potential of various innovations.
Bad Use Of Good Technology
Take financial services technology for example. The innovation in trading has been enormous. Financial institutions have gotten so good at trading; they can catch a buying trend milliseconds before it happens and profit off the inflated price. Individuals can now partake in stock picking and active trading alongside the pros. Costs are lower across all investing platforms – index fund costs are lower, liquid funds help to minimize spread of stocks, and commission and trading costs have significantly dropped. Investing in the stock market is more accessible to more people than ever before.
But as individuals, we’re no better off. High frequency trading has introduced more volatility into the market; individuals make poor choices because they are ill informed or under stress; returns suffer because people trade too much or they try to time the market.
This bad use of good technology compelled us to found Betterment, our investing service focused on helping people reach their goals as efficiently as possible. We invest all of our customers in a widely diversified portfolio; our sophisticated technology provides advice unique to each individual’s goals; and we automate smart financial behavior. Technology diversifies every single dollar that comes in, rebalances every account we have in a tax efficient way, and reinvests dividends. Technology ensures it happens, no matter what happens.
It’s no flying car, but it’ll help you save for one when it comes on the market.
