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Kevin Mitnick: The Hacking Hamburglar

XPRIZE   |   April 15, 2013    1:50 PM ET

<2013-04-15-timcoleman.jpgBy Timothy W. Coleman
Timothy W. Coleman is a DC-based writer and security analyst who has co-founded two technology startup firms. He attended Singularity University's Graduate Studies Program at NASA Ames Research Center and has a Masters of Public and International Affairs in Security and Intelligence Studies and a Masters of Business Administration in Finance.

Kevin Mitnick was once known as the 'World's Most Wanted' social engineer and computer hacker. One doesn't acquire a title like that - nor an accompanying prison sentence - for vanilla exploits. While in Federal custody, authorities even placed Mitnick in solitary confinement; reportedly, he was deemed so dangerous that if allowed access to a telephone he could start a nuclear war by just whistling into it.


From the 1970s up until his last arrest in 1995 Kevin Mitnick skillfully eluded and bypassed corporate security safeguards, penetrating some of the most well-guarded systems, including, amongst countless others, the likes of Sun Microsystems, Digital Equipment Corporation, Motorola, Netcom, and Nokia. He has even had to go on record and deny hacking into the Department of Defense's North American Aerospace Defense Command (NORAD) and wiretapping the Federal Bureau of Investigation.

At a recent app-enabled cloud network performance and security briefing hosted by Citrix and Palo Alto Networks in Washington, DC, Mitnick opened up about his former life and introduced himself to the Washington crowd accordingly.

"I assume there are a lot of Federal agencies here so we may know each other from a past life," Mitnick said in a devious, yet still tempered tone.

With the bylines of "Most Wanted" and "Infamous" and a laundry list of corporate names etched onto his belt of exploits, it'd be fair to assume that Mitnick's hacking masterpiece evolved from one of his more high profile penetrations. That assumption, however, couldn't be further from the truth.

Actually, the seminal stunt of his hacking career is much more puerile but nonetheless humorous. As Mitnick explained, "My favorite hack was actually when I was a kid."

Mitnick hacked the frequency of a local McDonald's drive-through ordering system and took control over the drive-through speaker, relishing the consequential bewilderment of unsuspecting McDonald's employees.

"I would sit across the street from McDonald's and I would take their order and tell them they were the 50th customer so your order is free. Please drive through your order is free," Mitnick reminisced. "People would drive up to the window and I would say, 'Our weight detection system detected your car is a little heavy so we recommend the salad instead of the Big Mac'."

"It got to the point that the manager of the McDonald's was wondering what the heck was going on and he walked outside and looked in the cars and around the parking lot, but he could not see anything because I was across the street. He even walked up to the drive-through speaker and looked at it and then stuck his head inside to see if there was actually someone inside and I yelled, 'What are you looking at?!'"

Mitnick didn't only revel in the joy of trolling individual customer orders, though. He went on to explain, "But my favorite was when the police drove up and I would say, 'Hide the cocaine, hide the cocaine!'" Alas, the theater of the ensuing build-up and moment when the unsuspecting employee met the suspicious glances of the police would befit any comedic late night show.

McDonald's, when reached for comment, was less than amused by Mitnick's claims. As all Fortune 500 companies take hacking very seriously, Danya Proud, Director of Media Relations, McDonald's USA stated, "We are not aware of this matter; however, security of our business, information and systems remains a top priority."

No word yet if McDonald's plans to hire Mitnick to consult on the protection of the integrity of their drive-through ordering process. One can only hope that measures to counter such nefarious hacks have been implemented.

At any length, look across the street if you ever encounter a problem during a wee-hours drive-thru run to Mickey D's. The world's once most wanted and infamous Mitnick may be enjoying a little bit of reflective levity at your expense, especially if you're the 50th customer.

Visit X PRIZE at, follow us on Facebook, Twitter and Google+, and get our Newsletter to stay informed.

This material published courtesy of Singularity University.

The 5 Ways Local Motors Built an Online Community

Peter Diamandis   |   April 10, 2013    8:08 PM ET

In this blog, I'm continuing my conversation with Jay Rogers, CEO and co-founder of Local Motors, the open-source automotive design company. Here, Jay shares how he builds and engages his 30,000-person crowd.

As I've conducted my interviews with crowdsourcing entrepreneurs and experts, it's constantly hit me that your ability to do something big and bold is really a function of the size and quality of your crowd. The questions I'm always fascinated to ask successful crowd-related CEOs are: "How did you do it? How did you recruit, build and engage your crowd?"

In this blog I'll share five specific ways that Local Motors CEO Jay Rogers found to build and engage his crowd of innovative automotive designers.

To recap, Local Motors is a crowdsourced car-design platform that also allows the micro-manufacturing of cars by its members. Local Motors built a community of people who are versed in every critical aspect of engineering: the interior design, the exterior design, the suspension system, and so on. Here are the five ways in which Jay Rogers and his team built their online community.

  1. Create a bold dream that allows for creativity, with a measure of supervision: "Management of open source is definitely a guided endeavor," Jay said. In its early days, Local Motors very closely managed its forum of roughly 1,000 people who were contributing designs. "Basically, whatever was being discussed on our forums was being communicated to the entire membership," Jay said. "However, for it to work, we had to run it as a benevolent tyranny, or benign dictatorship. The reason I say that is that we ultimately had to make a decision about which car we were going to design and produce," he said. Ultimately Jay couldn't allow the discussion to go on forever or diverge in a multitude of directions. As the benign dictator he had to step in and "make the decision that we would take the most-liked designs from the community and produce that car."
  2. Embrace failure. Use it to improve your process: According to Jay, "Failure is as important, or perhaps even more important, than success. Small-scale manufacturing means fail early, fail often. Crowdsourcing means fail early, fail often," he continued. "The important thing is to get something created, see where it breaks, and then fix it. I tell people to build it for manufacture, see if people like it and then if they don't, we can change it." "We've even had failure in how we created our competitions," Jay reflected. "At first Local Motors thought it would attract its teams by approaching design schools. It failed miserably. We had a lot of legal wrangling over design ownership and licensing. So we backed off from that, and found another way."
  3. Use evangelism to create interest in the site. Evangelism is creating enthusiasm among your crowd so that they are eager not only to work with you, but also to tell others about what you do to help build your community. To help create early interest in its platform, Local Motors staff visited sites frequented by designers. "We'd simply say, 'We're going to make a car that you guys design. What do you think?' The important thing is to plant the flag," Jay said, "and tell people what you're going to do. Give a vision and say, 'You're going to make a vehicle on Local Motors and it's going to be awesome, you're going to love it and we're going to be honored to make it.' That was the first community evangelism that we did."
  4. Move people through passion: Passion gets an entrepreneur through the startup days and the enormous efforts it takes to build a business. "If you start with passion, all of the hard days are easier to deal with," Jay said. "You don't know if your idea is going to work, but you just have to stay true to what you wanted to do at the beginning. Getting through the hard times is what you need the passion for and organizing your community is what you need passion for. You have to foster and develop the community and you need passion in order to be able to do that," he said.
  5. Leadership, Organization, Respect and Engagement -- the 4 Key Parameters: Jay told me, "When I'm building a community, I focus on four key organizing principles: Leadership, Organization, Respect and Engagement or LORE." He outlined them:
  • Leadership. This is a bold vision for the community. "Creating a vision is a form of leadership," Jay said. "To lead means to have a vision," which can encompass everything from what your cars should look like to the way the factories are going to be run.
  • Organizing. This means creating a very defined, constrained box within which the community can operate and design. "Most people create better in a box," Jay said. "We had to set the box for the right conditions for successful micro-manufacturing." The Local Motors team learned the importance of creating parameters for engineers and designers. Early on, Jay remembered, "We learned two things: First, every engineer we interviewed said, 'Tell me the parameters of what I'm designing.' Second, everybody in a design school never asked those questions, but said, 'I've some great ideas.' They were more free-flowing with their great ideas and willing to share them under the right conditions."
  • Respect. Respect is about managing that community and keeping people's name on their ideas and on what they create. "You're respecting their work," Jay said. "Your ability to be able to post your work and keep it as your own is critical to the fostering of such a community. Respect is also managing that community actively through the process."
  • Engagement. This is about speaking honestly and openly to the community. "We don't pay money to make people come to do what we do," Jay recounted. "Yes, we need money, such as competition prizes, in order to be able to make them do things. But the most important thing is to actually talk with them. That's what engagement means: Instead of paying you, I'm going to pay you with my time and I'm going to pay you with my building of what you design."

In my next blog, I'm going to continue my conversation with Jay Rogers, and how he manages the competition and design initiatives at Local Motors, plus what's ahead for the site.

NOTE: Over the next year, I'm embarking on a BOLD mission -- to speak to top CEOs and entrepreneurs to find out their secrets to success. My last book Abundance, which hit No. 1 on Amazon, No. 2 on the New York Times and was at the top of Bill Gates' personal reading list, shows us the technologies that empower us to create a world of Abundance over the next 20 to 30 years. BOLD, my next book, will provide you with tools you can use to make your dreams come true and help you solve the world's grand challenges to create a world of Abundance. I'm going to write this book and share it with you every week through a series of blog posts. Each step of the way, I'll ask for your input and feedback. Top contributors will be credited within the book as a special "thank you," and all contributors will be recognized on the forthcoming BOLD book website. To ensure you never miss a message, sign up for my newsletter here.

Exponential Growth in Small Machines - Don't Fear, They're Here to Protect You

XPRIZE   |   March 28, 2013   12:46 PM ET

2013-03-28-george_skidmore.pngBy George Skidmore, Ph.D.
George Skidmore, Ph.D. is a Physicist working in micro machines and nanotechnology. He is Principal Scientist at DRS Technologies. He is also Nanotechnology Track Faculty at Singularity University.

Small machines are ubiquitous. They've proliferated exponentially for forty years and are now all around us. Since new technology can be scary, especially small machine technologies that human eyes can't see, I'm writing to tell their story. They've been here protecting us, we use them for fun and games; and we expect them to have a continued bright future. From their beginning as air bag collisions sensors for protecting, to smartphone motion games they're moving into health and activity monitors. They've recently become a $10B market across their myriad uses.

The first small machine most of us knew was here to protect us from a specific kind of accident. This machine is a collision sensor, which knew in a split second to activate your automobile air bag and cushion the impact of your collision with the inside of the car. But small machines have proliferated since then. They are still in your automobile, doing the collision sensing for air bag deployment and several other things. But they are now capable of more subtle motion sensing. So we should be clear about what they are and what they do. Because there are going to be more of them, perhaps a great many more of them coming onto the scene. They are repeating their history with more ways to protect us, and are getting more fun. But let's learn what they are first.

Alongside the development of silicon computer chips (integrated circuits to many of us) there was a companion revolution. It happened right alongside, but with much less fanfare. Silicon isn't just a wonder material for building electronic circuits, it's a pretty good mechanical material too. While most people are familiar with Moore's Law and its consequences for more and better digital computing: personal computers, cell phones, tablets. You should become familiar with the companion revolution in the mechanical uses of silicon. There isn't a separate law for micro machine, there is just a borrowing of Moore's Law and its application to micro machine sensors and actuators.

Let us define micro machine as a small machine built using integrated circuit technology. This is our working definition where small indicates that is has features too small for the unaided human eye to see. This definition best encompasses what micro machines are and why they're important. Researchers in the field use the acronym MEMS, for micro-electro-mechanical systems. This is perfectly adequate for what micro machines are. But it misses why they are proliferating. They are not proliferating because they are small, they are proliferating because they can borrow an existing manufacturing infrastructure. They can catch a ride on the train that is Moore's law for proliferating digital computing. They can borrow the materials, manufacturing tools, knowledge, people, and markets to expand the utility of silicon chips. The International Technology Roadmap for Semiconductors agrees with their importance and now includes them under the banner of "More than Moore". Which fits our definition well - build something more than computers in a silicon chip and extend this manufacturing infrastructure to be more than Moore's law. Small machines do this by borrowing all the attributes of silicon chip making and applying them to the mechanical world.

And proliferation of this technology has been big, let's constrain our discussion to motion sensing and see how it has grown exponentially. The original micro machine motion sensor, technically known as an accelerometer, was introduced for air-bag deployment in 1991. Today motion sensing has progressed to being three-axes of acceleration, and three axis of rotation (technically called gyroscopes). If you own a modern smart phone, you are aware that tilting or shaking it causes it to respond. It is sensing all that motion using small machines. The first mass-consumer use of motion sensing came twelve years later in 2006, and was entirely for fun and games, in the Wii remote controller from Nintendo. Video bowling, tennis, and others provided many hours of entertainment and activity in homes. The trend continued when motion sensors were introduced by Apple into the iPhone, combined with smartphones and tablets, this has brought motion games to near a billion people. And just recently bringing MEMS annual revenue at STMicroelectronics to over $1B.

But what comes next? Following its own history, there's more product introductions for fun and games. Backyard and junior athletes should check out Infomotion ( who is bringing athletic motion sensing into the real world. They are embedding a basketball with motion sensing. It records the motion of the ball to help an aspiring athlete objectively make the perfect shot everytime. Basketballs are just the start: they are promising soccer, volleyball, hockey, and football next. If you're more interested in your own body motion during sports, you can wear an instrumented suit from XSENS ( and be training like an Olympic athlete.

But how are motion sensors proliferating to protecting us. At the intersection of sports and protection is Ridell, who is now selling football helmets instrumented with motion sensors to monitor, record, and lessen the deleterious effects of repeated collisions to the head. This will protect athletes of all ages.

I am now protecting my health with motion sensors. I'm wearing one of many available motion sensors which count steps and climbed stairs during my regular work day at the office, and during my work out runs. These are available from a number of companies in a number of form factors: on a belt clip or in the pocket from Fitbit and Withings, armbands from BodyBugg, and even Google has jumped in with a pair of shoes. Please note these are activity sensors for now. Real healthcare will take more time, including FDA approval. But micro machines have more to offer: pressure, chemical, gas , radiation, and heat sensors; if its worth sensing, someone is thinking about how to sense it with a small machine. And if it can be built small, using an integrated circuit process, it can be made cheaply and scaled to quantities of millions. It's a compelling way to make small machines, which is why you're about to have many more of them, whether you see them coming or not.

Visit X PRIZE at, follow us on Facebook, Twitter and Google+, and get our Newsletter to stay informed.

This material published courtesy of Singularity University.

Can You Even Crowdsource the Design of a Car?

Peter Diamandis   |   March 27, 2013    2:14 PM ET

In this blog, I'm introducing you to Jay Rogers, CEO and co-founder of Local Motors, an open-source automotive design company that uses the power of the crowd to innovate a 100-year-old industry.

My personal fascination with the power of the crowd has been growing: Exactly what can a "crowd" accomplish? We know crowds can raise billions of dollars, create Wikipedia, and even design and build small autonomous drones. But how about something large and complex like designing a new car, and maybe someday even a spaceship?

You can imagine my enthusiasm when I met and interviewed Local Motors CEO Jay Rogers at Singularity University, where he filled me in on the remarkable ability of the crowd to reinvent the design and manufacture of cars.

Local Motors currently engages a crowd of more than 30,000 members who are passionate, knowledgeable and capable of automotive design. This could not have existed before the exponential tools and technologies that allow virtual communities to come together to share, manipulate and visualize large data files. Local Motors takes something traditional -- old-fashioned craftsmanship -- and brings it into the new millennium.

In Local Motors, Jay Rogers has drawn on the creative power of a global community of car lovers, designers and innovators to revolutionize automotive design (and product design in general). The company co-creates autos, as well as automotive parts and other products such as sneakers. It is best known for its Rally Fighter off-road race vehicle, which also happens to be street legal.

Jay has a fascinating and rich background. He served for six years in the United States Marine Corps, where he was an Infantry Company Commander. Next he worked as a consultant for McKinsey & Co., then at a startup medical device company in the People's Republic of China. He is a graduate of Princeton University's Woodrow Wilson School of Public and International Affairs, and holds an MBA from Harvard Business School.

To begin our interview, I asked Jay about the origin of Local Motors. "I always thought I would be building cars," he said. "But unfortunately I found that there was no place in the traditional university system for building cars and my dream, early on, never materialized. Then, while I was at Harvard for business school I met two professors who opened my eyes to what was possible: Karim Lakhani and Eric Von Hippel." Lakhami taught Jay about open-source innovation and Von Hippel taught him about the democratization of innovation. Von Hippel taught Jay that end-users, rather than manufacturers, drive innovation. Jay became fascinated with the notion of taking consumer-derived ideas and putting those things forward as future products.

The next pivotal moment in Jay's road to Local Motors was the day that he was introduced to the Threadless co-founders. "When I met Jake Nickell and Jacob DeHart, their model of creating an online community to design and market T-shirts completely inspired me," he said. "These guys set out with the goal of figuring out a better way to make people want to buy an individual shirt. They figured out that if the shirt is attractive enough, it's not about how little it costs, it's more about how unique it is, and can I own a part of that scarcity."

Effectively, Threadless is a site for crowdsourcing the design, marketing, production and purchase of T-shirts. "Modeled much on Threadless, Local Motors is a marriage of two concepts. It's about the personalized, crowd-powered design of automotive ideas, as well as the local, small-scale manufacturing of those unique concepts," Jay continued.

When I asked Jay what made Local Motors succeed, he provide three key touchstones that have driven him:

  1. 1. Don't be hampered by antiquated production models: "It's incredible," began Jay, "how hampered the traditional auto manufacturers are by antiquated approaches. Many of America's most advanced plants still using approaches that would be familiar to Henry Ford. For example, I went on tour of a Dearborn truck plant, part of a new Ford complex. It was completely empty. I asked, 'What's going on?' It turned out to be the year-end changeover," which can last between a day and a month -- during which time the union workers cannot do anything. By contrast, the electronics and the software in cars can be changed in a day." Jay lamented how certain union regulations and physical production cycles can cause such inefficiencies.
  2. 2. Learn how to be profitable even for small-production runs of unique "kit cars": "One of the keys to Local Motors' success was figuring out how make things at a low tooling cost, and making money even for low production runs. I was first inspired by this approach when I visited Factory Five Racing, an automobile company that designs and manufactures assembly kits for cars," remembered Jay. "Factory Five had sold 2,000 cars a year and was profitable even with small-batch, homemade cars."
  3. 3. Help people live their dream: More than 80 percent of the people who study automotive design do not work in the field. "The administrator of a famous design school astonished me with the stats," said Jay. "The dirty secret is that only 17 percent of the design students who dream about designing cars will get a job in the automotive industry. My favorite story involves a graduate from one of the better design schools in France who was unable to find work with a car company and ended up playing Santa Claus at a mall in France, and then got a job at a slaughterhouse. This man kept in touch with automotive design through the Local Motors site, and eventually, a Local Motors community evangelist got in touch with him and offered him the opportunity to design a car. We help people live their dreams."

Local Motors, through its online global network, represents the chance of fulfilled dreams for designers who would otherwise not have this opportunity. "My message has always been that if you think you can build a complex cyber-mechanical system, you can probably do it better with a large group of people who you plant a flag, give them a vision, organize them, respect them and engage them and then together you'll chase your dreams. That's what we do."

In my next blog, I'm going to look at how Jay was able to build this remarkable community at Local Motors, the crowd's involvement in design, and the use of competitions to drive innovation and foster fellowship.

NOTE: Over the next year, I'm embarking on a BOLD mission -- to speak to top CEOs and entrepreneurs to find out their secrets to success. My last book Abundance, which hit No. 1 on Amazon, No. 2 on the New York Times and was at the top of Bill Gates' personal reading list, shows us the technologies that empower us to create a world of Abundance over the next 20 to 30 years. BOLD, my next book, will provide you with tools you can use to make your dreams come true and help you solve the world's grand challenges to create a world of Abundance. I'm going to write this book and share it with you every week through a series of blog posts. Each step of the way, I'll ask for your input and feedback. Top contributors will be credited within the book as a special "thank you," and all contributors will be recognized on the forthcoming BOLD book website. To ensure you never miss a message, sign up for my newsletter here.

Silicon Valley Discriminates Against Women But There is Hope

XPRIZE   |   March 22, 2013    2:33 PM ET

Vivek.jpgBy Vivek Wadhwa
Vice President of Academics and Innovation, Singularity University.

Visit any company in the Valley, and you'll see that it resembles the United Nations.  At the Google cafeteria, they always serve Indian, Chinese, and Mexican food; hamburgers and hotdogs are nowhere to be found.  Indeed, my research team documented that 52% of startups in Silicon Valley during the recent tech boom were founded by immigrants--like me.  So I used to call Silicon Valley the world's greatest meritocracy.


This was before I moved to the Valley and my wife pointed out something strange: that practically all of the people at Silicon Valley's big networking events were male.  They were mostly white, Indian, or Chinese.  Women, blacks, and Hispanics were nowhere to be found.  When I analyzed company founder data from the Kauffman Foundation, I was shocked to learn that only 3% of the tech firms were founded by women.  When I looked at the executive teams of the Valley's top tech firms, with a couple of notable exceptions, I couldn't find any women technology heads.  Even the management team of Apple didn't have a single woman in it.  And I learned that virtually all of Silicon Valley's venture-capital firms are male dominated--the few women whom you find there are in either marketing or human resources.  Indeed, of the 89 VCs on the 2009 TheFunded list of top VCs, only one was a woman.

So I was wrong; this is no meritocracy.

Since then, I have researched this topic in greater depth.  When I analyzed data from my own studies on entrepreneurship, I was surprised to learn that there is virtually no difference in motivation between men and women entrepreneurs.  Women start companies for the same reasons as men: because they want to build wealth and capitalize on business ideas; like the startup-company culture; and are tired of working for others.  Women entrepreneurs are as highly educated as their male counterparts, have the same early interest in starting their own business, and learn the same valuable lessons from their work experience and from prior successes and failures.

This raised the question:  are women less competent as entrepreneurs than men are?  Are they not cut out for the rough-and-tumble world of entrepreneurship?  The answer turned out to be none of this.  An analysis performed by the Kauffman Foundation showed that women are more capital-efficient than men.  Babson's Global Entrepreneurship Monitor found  that women-led high-tech startups have lower failure rates than those led by men.  Other research has shown that venture-backed companies run by women have annual revenues 12 percent higher than those by men and that organizations that are the most inclusive of women in top management positions achieve a 35% higher return on equity and 34% higher total return to shareholders.

Could the education of women be the problem?  Not according to data from the National Science Foundation.  Girls now match boys in mathematical achievement.  In the U.S., 140 women enroll in higher education for every 100 men who do.  Women earn more than 50 percent of all bachelor's and master's degrees, and nearly 50 percent of all doctorates.  Women's participation in business and MBA programs has grown more than five-fold since the 1970s, and the increase in the number of engineering degrees granted to women is almost tenfold.

This shows that there isn't a fundamental problem, and that things are moving in the right direction.  I have also interviewed about 300 women in tech over the past three years, and my research team at Stanford University recently completed a survey of more than 500 women founders.  We are still analyzing the complex findings (and will likely publish a paper in summer).  At a glance, though, the new research shows a distinct change in attitudes over time.  Women are becoming more confident and assertive, and they are helping each other.  Men are also beginning to mentor and coach women.

That's not all.  Many technologies are now advancing exponentially.  We all know how computing is advancing--our computers get more powerful every year as prices drop.  The same is happening in fields such as robotics, AI, 3D printing, nanomaterials, medicine, and synthetic biology. This is making it possible for small teams to do what was once possible only for governments and large corporations to do: solve big problems.  Starting exponential companies requires relatively small amounts of money, and entrepreneurs with cross-disciplinary knowledge and skills have the advantage.  This plays to the strengths of women: they are in the catbird seat for the new era of innovation.

To encourage, inspire, and educate women to become engineers, scientists, and entrepreneurs and help solve humanity's grand challenges, I am myself taking advantage of an exponential technology: crowdsourcing.  I plan to harness the genius of the crowd to produce a book about women at the frontier of technology.  Along with journalist and author Farai Chediya and my lead researcher Neesha Bapat, we are planning to ask hundreds--possibly thousands--of women to co-author this book with us.  We will presell the book on a crowdfunding site such as Indiegogo and donate all of the profits to fund the tuition of women through the Graduate Studies Program at Singularity University and to support women-led startups coming out of this program.  This is a 10-week program designed for leaders who want to build innovative solutions to global grand challenges.

So Silicon Valley may not have been the perfect meritocracy, but there is hope that it will soon be, and that our women may save the world.

Visit X PRIZE at, follow us on Facebook, Twitter and Google+, and get our Newsletter to stay informed.

This material published courtesy of Singularity University.

TopCoder's 5 Steps to Building a Global Workforce Community

Peter Diamandis   |   March 20, 2013    1:04 PM ET

In this blog, I'm continuing my conversation with TopCoder founder Jack Hughes, who gives us the steps that TopCoder took to build its community.

In my previous two posts about the open-innovation platform TopCoder, I introduced you to its methods. Now I want to explore how TopCoder engages with its vast network across the globe.

"It's phenomenal what you get out of the community: how smart they are, how dedicated they are, how interested they are in either a client success or TopCoder success or each other's success," founder Jack Hughes told me. "They will be competing one minute and sharing notes about who won, then what's the next step. It's and incredible environment."

To recap briefly, TopCoder is the world's largest platform for digital open innovation, whose 445,000-plus members around the world compete to develop lines of code in return for prizes and recognition, resulting in great efficiencies of time and cost.

"Competition just happens to be the thing that first engaged our community," Jack said. "There are many other aspects to TopCoder in terms of collaboration, in terms of how we go about business models, in terms of what our future is and what we think is many social aspects to TopCoder. TopCoder is a big deal with our community not because of the money in it or even because of the sponsors that are out there, or the fact that they can find a job out of it. But because they want to get together, because of the physical place where they can get together," he said.

"The primary reason people hire us is not so much the money-saving, although it's important," Jack said. "What they're trying to do is shorten that cycle to get innovative processes done."

For TopCoder's community, the project is the attractive thing: solving something people can be proud of before their peers. "TopCoder takes a big thing, breaks into many pieces and then aligns all of the aspects that have to be designed - construction, analytics, quality assurance, review. That all happens through the community," Jack said.

"Some folks are really good at finding bugs and they'll come in and they'll just do that. Some folks are really good at fixing bugs; they'll come in and just do that. Some people are really good at software design and will do that. Some people want to learn how to do software design, so they'll come in. They might have been fixing bugs yesterday and today they want to learn software design, so they'll come in and start competing in that. Not so much for the money - they don't think they can win at first - but what they're going to get is tremendous amount of feedback about how well they do it," he said.

"Most of TopCoder's productive capability is not from people doing it full-time," Jack said, although a small segment works that way. "There is always a large segment that does it part-time. They're entrepreneurs in their own way. They're creating things for other people. They have a huge affinity for helping a startup or helping small business that are trying to figure out a way to connect better with customers and bring some ability to it. And now, they can do it at a price point that's reachable."

Jack outlined five steps that TopCoder used to build and engage its community:

  1. Actively design and build the community, and start small. "The advice I would give," Jack said, "is that anyone who thinks that community is just going to find them and come to them is just wrong. You have to find and engage them."
  2. 2. Go out to universities and spread the word. "In the beginning we were literally stuffing posters into round tubes, mailing them to schools and saying that we were running competitions," Jack said. "Those went to MIT, Stanford, Carnegie Mellon, all the usual. We then followed that up with actual visits to schools, where we would go into the school and hold the competition. The prizes would be beer and pizza. Doing that brought together cores of people who said, 'This is really cool and I want to keep doing it.' Then it went very viral, very quickly. We found that the university system was where people were most likely to talk about new things, new ideas, try new things, new ideas and it certainly worked in our case."
  3. 3. Work with a partner to broaden your reach. Sun Microsystems sponsored TopCoder at one point and helped promote it. "Sun was looking at how we were attracting the community, and these were very highly skilled developers, the sort of everybody was looking for," Jack said. "Sun showed a way to get its product line into these folks' heads very early in their careers, whether they were going to go into a bank and do the analytics work or they were going to go and work for NASA and do engineering, whatever. Sun wanted to have that exposure to that group of people, even though it was relatively smaller at that time. I give Sun a lot of credit for doing that, for sort of going after that community as we had started the format."
  4. 4. Encourage sharing, references and further participation. TopCoder created a member referral program, especially in large tournaments. "We would deviate the prize money so that if you referred a member who won, then you would get some sort of a tip for referring that member," Jack said. "For a time we had incentives, and TopCoder is all about incentive systems and motivation systems. But the referral system was one of the ones to make it even more viral then already it was."
  5. 5. Be authentic to your vision, and always involve the community. "Communities are good in everything," Jack said. "They're good at solving a particular problem. They're also really good at sniffing out authenticity. So if you're unauthentic, you figure that out fast. Authenticity was one of the first things that we put up when we started the community. We set out saying that we intend to make money. We found just by saying that rather than being sly about it made a huge difference," Jack said.

"We're moving much more to a knowledge-based economy globally. We're moving to where the value content of the product or service is in its innovation capabilities, in its ability to help make its customer more competitive, faster, more efficient," Jack said. "That takes knowledge and knowledge is never going to be owned by anybody. You build knowledge not by direct financial capital as you did in appointment. It's by education, it's by teaching, it's by learning, it's by constantly moving yourself forward. Because of the Internet, people have access to those resources much more quickly. It starts to shift the weight back to individuals."

In my next blog, I'm going to continue exploring how Local Motors has revolutionized automotive design, through relying on the inspiration of the crowd.

NOTE: Over the next year, I'm embarking on a BOLD mission -- to speak to top CEOs and entrepreneurs to find out their secrets to success. My last book Abundance, which hit No. 1 on Amazon, No. 2 on the New York Times and was at the top of Bill Gates' personal reading list, shows us the technologies that empower us to create a world of Abundance over the next 20 to 30 years. BOLD, my next book, will provide you with tools you can use to make your dreams come true and help you solve the world's grand challenges to create a world of Abundance. I'm going to write this book and share it with you every week through a series of blog posts. Each step of the way, I'll ask for your input and feedback. Top contributors will be credited within the book as a special "thank you," and all contributors will be recognized on the forthcoming BOLD book website. To ensure you never miss a message, sign up for my newsletter here.

Want to Innovate? Break Your Routine.

XPRIZE   |   March 19, 2013   12:53 PM ET

2013-03-19-Matt_Hudson.jpg By Matt Hudson
Matt Hudson, PhD is a chemical engineer working for Shell Aviation Technology who recently interned at the X PRIZE Foundation through Shell Gamechanger.

I believe that innovation cannot be taught or forced from anyone. It must come naturally and does so as part of a certain lifestyle.

This became clear to me recently when I was given an opportunity to experience a work environment outside of my day-to-day routine and join the guys and gals at the X PRIZE Foundation offices in LA.

My normal day job is as a scientist for Shell's Aviation Technology team in Houston, Texas, which is by no means a run-of-the-mill boring job! I'm involved in a range of interesting projects and from day to day I can be working on aircraft engine oils and hydraulic fluids for high-tech jets to researching what makes the whitest, brightest smoke for stunt aircraft at air shows!

However, last year Shell's Gamechanger group offered up the prospect to work with the X PRIZE Foundation and I was lucky enough to be awarded this amazing opportunity. During my time at X PRIZE I saw innovation in a new light and I'd like to share this with you.

It first happened when I realized that just by being in the X PRIZE offices near Los Angeles, I felt I had more freedom to think. When presented with problems, I found it easier to find solutions I wouldn't normally consider. But why? The X PRIZE offices don't appear that much different from any other offices I've been in (although they do have some great models of spacecraft!).

The answer to my conundrum hit me one day in the large X PRIZE kitchen area.

The X PRIZE kitchen offers a vast choice of food for staffers, including candy and snacks, healthy foods, fruit and enough drinks to open a juice bar down on the beach! It's restocked weekly by the pallet-load, with new selections each time. Thus, whenever I visited the kitchen, I could try something new. And that was it: I realized that every day in that office was different from the one before. Not only were my food options different, so was my office location, my route to work (normally because I got lost on route from my hotel, but it still counts!) my co-workers, even our meetings, one of which was held outdoors by a fountain.

These things made my normal life at home in Houston--based on my own "comfort-zone" routines--seem rhythmic and monotonous. How many of you have your favorite breakfast food, or daily snack you just can't do without, or have almost the same thing every day for lunch? I realized that although my job is varied, my life style was not...

Get up
   Drive same route to work
     Attend same weekly meetings
        Coffee break at the same time
         Lunch - same place, same sandwich
           Drive home

I realized that when I get into my comfort zone routine and go through the same cycle each day, it's hard to break out of the rhythm of doing everything straight down the line and only seeing one outcome for each problem; the one everyone else can also see as everyone's thinking along the same routine lines.

How can you expect to think 'outside of the box' if you are living inside a 'box'? If you are going to be truly innovative and think beyond standard ideas you need to break out of that cycle, lose the regularity, mix things up a bit and get your mind and body used to the unconventional, every day.

There are many opportunities for me to break out of my daily work cycle at Shell. These include Shell's Hunters Network, for example, a group I've joined that "hunts" new technologies and ideas (not deer!). I also help run Shell's Project Better World, a conservation and sustainable-development organization that deploys hundreds of employee volunteers around the globe annually to support exciting conservation projects.

A senior Shell leader had recently called with an opportunity to take part in Project Better World, a "hidden gem" of personal development. Now at first this seemed very strange to me... why would a manager recommend that his staff leave their jobs for two weeks to take part in research in rainforest soil erosion in Borneo! But now I understand and his view highlights my point: The experience puts people outside their comfort zones and allows them to develop new skills and explore their professional and personal limits. When they return to their jobs, they can apply what they've learned in ways that may not have occurred to them, and view projects from a new perspective.

To be sure, not everyone can embark on a life-changing expedition, eat a different lunch each day or even hold group meetings around a fountain. Still, in our typical 9-to-5 environments, why not try to break the monotony caused by the normal human condition that embraces the familiar?

How can you think outside the box if you live entirely inside a box? To be truly innovative and to think beyond standard solutions, it's necessary to break out of that cycle, lose the regularity, mix things up and get your mind and body used to the unconventional, every day. The question is, how do you inspire yourself and your team to leave that comfort zone and live for true innovation?

Visit X PRIZE at, follow us on Facebook, Twitter and Google+, and get our Newsletter to stay informed.

This blog post is brought to you by Shell, our Exploration Prize Group sponsor.

Crowd Control: TopCoder's 3 Steps to Building Community

Peter Diamandis   |   March 14, 2013    2:16 PM ET

In this blog, I'm talking with entrepreneur Jack Hughes, founder of the open-innovation platform TopCoder, which brings together specialists from around the world to work on projects that end up costing far less than if these projects were done in-house.

TopCoder is a remarkable platform that connects corporations, organizations and government agencies with a worldwide talent pool to create digital products. It hosts online contests to design, and even to build, these solutions. I and my colleagues at X PRIZE Foundation have used TopCoder, and have found, like everyone else, that TopCoder's global community of more than 450,000 technology and design specialists can find solutions to a wide range of problems at a fraction of the cost and time.

TopCoder is basically the world's biggest talent pool. It breaks projects down into atomized pieces of work, each of which is turned into a competition. Specialists within the TopCoder community deliver solutions for each piece. In effect, people who individually excel in everything from concepts to data analysis, design work on aspects of a bigger project. It's a great crowdsourcing model.

I spoke with founder Jack Hughes, who filled me in on TopCoder's humble beginnings at a picnic table, and the way the company approaches its innovative contest-driven, gamified, crowdsourcing solutions.

The impetus behind TopCoder was, as often is the case with drivers of innovation, Jack and his colleagues' inability to hire qualified people. "A great developer, a great creative person is a difficult thing to find," he said. "So we were sort of just iterating through different ideas on how to make the reach better in terms of identifying folks, and one of the concepts we came up with was if we start, we were doing a lot of ad hoc contests internally, because great developers love to compete."

This was back in 2000. Having sold their software development company, Jack and his partners, who included his brother Rob Hughes, "started to think about what to do next," he explained. "We started to think about building a community of developers online. That was the inception."

The early contests the team created offered a little bit of money, "just to make it interesting," Jack said, "but mostly they were for pride. Developers are very closely related to other intellectual disciplines, such as chess. So we fashioned a rating system around developers and to measure skill in a particular discipline. That drove a lot of the interest -- being able to get rated." This branded rating actually drove the community to TopCoder.

At first, these were predominantly problems created for non-commercial purposes. "We want whoever can optimize and schedule an algorithm, network an algorithm to pick up notes and pick up the fastest path, in a particular network of notes, edges, so things that would be applied to graphics would be applied to anything that's a complex math problem.

"It was basically a massive multiplayer game of coding. So they would all see the problem statement at the same time, they could open it, when they opened it a clock would start to ticking down, so they would get points associated with how quickly they submit it and then how accurate their code was."

The initial community was a few hundred developers. Then Sun Microsystems came on as a sponsor in 2002-2003, and TopCoder got a big spike in membership from that and began to branch out into commercial work.

Here are three things TopCoder did to build its community:

1. Make it clear up front what the aim of the company is. Stay true to your authentic vision. "Whatever you're doing it for and why you want a particular group or sets of groups of people around you, stay true to that and it will work out for you," Jack said. "I wouldn't say we had a formalized mission statement at the beginning of TopCoder, but we did have a founder's letter that every member saw. To this day I think we adhere to it and we've since expanded the definition of it," he said. "We felt that developers, people who create, are the center of everything. So how we connect those folks, how we facilitate their creativity, is what the business is always about," Jack said.

"There are plenty of mistakes we made. But a mistake we haven't made yet is to ignore the community. If you look at our early communications with community, they look very similar to today. Some of them literally say, 'Without our community we don't exist.'

"It is very difficult to live by that," Jack explained. "It's very easy to start thinking that there are other ways you can get things done, that there are mechanisms by which you sort of use the community. We would say that this isn't about using the community. It's about being part of one. If we lose that focus, I would say that's when we lose it," he said.

"I think communities may be harder to do now. We predated Facebook; we predated a lot of social networking, a lot of community-based business models. There's money in it now. You're going to have people chasing the money. I don't think there is anything wrong with people making money. But at TopCoder we hold true to that and everything else will get sorted out. I think that's little bit harder to do nowadays because building the community is going to be ramping it up to whatever size, doing whatever. The advice I would give is don't do that."

2. Competition drives commitment to the community -- it's competitive as well as collaborative. "Competition just happens to be the thing that first engaged our community," Jack said. "There are many other aspects to TopCoder in terms of collaboration, in terms of how we go about business models, in terms of what our future is and what we think is many social aspects to TopCoder," he added. "TopCoder opens the big deal with our community, not because of the money they win in it, or even because of the sponsors that are out there or the fact that they can find a job out of it. No, it's because they want to get together, because of the physical place where they can get together."

3. Validation points are important. Sun Microsystems came in as a sponsor that helped take TopCoder to the next level. "Sponsorship in our case was a validation point." Jack said. "Making sure that you're engaging the community and listening to the community and letting them help you form your business model is important. When we went to commercialize TopCoder, we didn't do it for a number of years after we had started it. We started to think about very different models in different ways to do that. We could have done a matching service, we could have done a matching developer to a customer; we didn't do that. We decided to use the competitive/collaborative regime to engage members in actually building the product," he said.

"We felt that was the right thing for this particular community. At that point the community was probably 25,000 people. So there were a lot of people to be able to talk to. What we have found, and what we live by is this: We look at TopCoder as an inverted pyramid. The company exists to support the community. The community exists to support our customers and to support each other."

In my next blog, I'm going to continue exploring the remarkable processes of TopCoder, how it works with its customers, how its process evolved and how it's able to achieve such exponential economies of time and scale for its clients.

NOTE: Over the next year, I'm embarking on a BOLD mission -- to speak to top CEOs and entrepreneurs to find out their secrets to success. My last book Abundance, which hit No. 1 on Amazon, No. 2 on the New York Times and was at the top of Bill Gates' personal reading list, shows us the technologies that empower us to create a world of Abundance over the next 20 to 30 years. BOLD, my next book, will provide you with tools you can use to make your dreams come true and help you solve the world's grand challenges to create a world of Abundance. I'm going to write this book and share it with you every week through a series of blog posts. Each step of the way, I'll ask for your input and feedback. Top contributors will be credited within the book as a special "thank you," and all contributors will be recognized on the forthcoming BOLD book website. To ensure you never miss a message, sign up for my newsletter here.

Can a Cyborg Treat Us Before We Fall Sick?

XPRIZE   |   March 12, 2013    2:17 PM ET

By Praveen Suthrum
Praveen Suthrum is an alumnus of Singularity University and co-founder of NextServices.

Even now I can see Dr. Hingorani telling my mother that her boy has chronic hypertension and feel the embarrassment of seeing tears well up in her eyes.  More than 16 years have passed since but I can't help feeling oddly satisfied with that episode.  Getting diagnosed early has helped me manage my condition well and do things that I really want to do - even trek up to the Everest Base Camp.  Most people are not this lucky.  We visit a doctor when something feels wrong.  We routinely receive care too late - millions die because of delayed diagnosis.  Future of healthcare delivery flips this equation.  Can we be treated before we fall sick?


Symptoms are body's beepers to let us know that it's not happy.  But before our skin shows a rash or we feel dizzy, there are signs brewing under the surface.  Awareness of microbes that occupy 90% of the body can alert us before our abdomen hurts.  Larry Smarr (read The Patient of the Future) identified presence of Crohn's disease from his microbiome while doctors missed the diagnosis.  Discovering messages from our genetic code can reveal camouflaged diseases.  At age 4, Nic Volker became the first human whose life was saved by sequencing DNA.

Imaging studies, body activity, sleep and other indicators reveal more and more clues.  To translate this varied data into meaningful diagnosis, we need a mechanism that tracks, stores, and continuously monitors body's information.  Today's electronic health records (EHRs) are systems for storing medical data at a gross level - vital signs, medications, lab results and so on.  They can be extended to assist doctors in managing entire patient conditions by connecting the dots and deciphering what our body is trying to tell us.

When we think about medicine evolving as a data science, three shifts in healthcare become apparent.  First, monitoring ailments becomes longitudinal and not based on staggered episodes of care.  Second, a doctor may not need to physically examine a patient to comprehend her condition.  Third, comparisons among patients can scale across time and locations.  These evolving changes require us to adapt our thinking on how we access and deliver care.

When we think of EHRs as hubs that interconnect patients and doctors, we visualize a system where medical information actively flows back and forth.  Aided with artificial intelligence tools such as IBM's Watson, a health record can synthesize data into a contextual guide at the point of care.  Viewing a patient's record, a physician will then be able to ask targeted questions - for example, how did we treat young female patients from southern India with cystic fibrosis gene mutation and family history of pancreatitis during the last 10 years?

But it is not going to be easy to visualize complex data from EHRs without newer interfaces.  With head-up displays, such as Google Glass, physicians can simplify what they review during patient encounters.  Such wearable computers combine physical reality with augmented video, text or other types of data to provide a distinct interactive experience.  To examine a patient's heart, the doctor sees imaging information of blood flow overlaid on the body.  She zooms-in, asking for data from a recent lipid profile.  Zooming-out, she views a wall on which historical graphs of cholesterol and body mass index are projected.  She may even meet her patients virtually.

I worry whenever I visit doctors.  Knowing medicine's transitional state, I'll never know whether my doctors know what they don't know.  I wonder if I would eventually be comfortable being examined by medical cyborgs.  I don't know that yet.  But whatever the evolution, the same few suggestions continue to do the rounds: eat right, exercise more, drop stress and allow the body to do its thing.

Visit X PRIZE at, follow us on Facebook, Twitter and Google+, and get our Newsletter to stay informed.

This material published courtesy of Singularity University.

Silicon Valley's Secrets Disclosed

Peter Diamandis   |   March 12, 2013    1:33 PM ET

In this blog, I'm continuing my talk with entrepreneur Philip Rosedale, who explains the "secret sauce" of Silicon Valley -- unveiling why Silicon Valley is such a hotbed of entrepreneurship.

I was interviewing Philip Rosedale, creator of the platforms Second Life and Coffee and Power, at Singularity University when he asked such a powerful and provocative question, that it launched me into a brand-new conversation with him. It is so important that I'm dedicating this entire blog to his answers.

His question: "Why does Silicon Valley have more successful software startups than anywhere else in the world? Are people just smarter here?"

After a short pause, Rosedale continued: "I don't really believe that entrepreneurs are smarter in Silicon Valley, that we were genetically different or anything. San Francisco's a tremendous melting pot of people from different areas. But I have been struck by the observation that in other countries the rate of success is much lower and that there's a very low degree of sharing of ideas."

"In Silicon Valley, you might think that people's willingness and desire to exchange little pieces of information about what they're doing carries more risk than benefit," Rosedale said. "But if you added up their interactions overall, you'd see that there is a huge benefit to exchanging ideas. Ultimately it fuels more innovation and productivity here in Silicon Valley, in San Francisco, than anywhere else in the world," he said.

In other parts of the world, Rosedale believes, "this lack of sharing might be driven simply by the fact that there aren't enough people of the same ilk. There aren't enough technical people running into each other in coffee shops colliding, if you will," he said. "But culturally, just about everywhere other than in Northern California, people are very unwilling to share information with each other."

"I've thought about that a lot," Rosedale said. "As Second Life became famous, I got to travel around the world. Being an entrepreneur and an engineering person I was really interested in that fundamental question, which always struck me as a kind of funny cocktail-party conversation, since I don't mind not pissing people off. When I was bored at cocktail parties, if I was in Europe, I'd bring out the question, 'Why is it that you Europeans basically make no software and you're all smarter than us?' In Europe people are incredibly smart. They're super effective. They can do all kinds of cool stuff. Why is that happening? And same thing in Asia," he said.

"And then, moreover, in the United States, it's not the whole United States that makes software -- it's just right here in Silicon Valley," Rosedale said. "There's really a lot more software that's made here than anywhere else in the world. Why is that?"

Rosedale went on. "I had to give a talk at a great conference, called Big Omaha, which is a big get-together of entrepreneurs and mostly software tech people in Omaha, Nebraska. It gathers together people from that part of the country -- Omaha, Des Moines -- and I did this graph where I took Google Maps and I drew these circles, which were the area where 100,000 people lived superimposed on a map of each of these areas," Rosedale said.

"I did Des Moines and I did Omaha and I did New York, Los Angeles, San Francisco and other places. On the map was a random scatter chart of red dots, and each red dot was a technical co-founder," he said. "We got that data from LinkedIn. Now, LinkedIn has searches where you can basically ask how many people in an area say something on their résumé like 'technical founder,' 'co-founder.' So you can count how many technical founders are in that area per 100,000 residents. And guess what? In Omaha and in most cities in the United States, that number is somewhere between 20 and 30 per 100,000 people," he said.

"In New York the number is 51, but in San Francisco the number is about 340. It's the classic thing we all look forward together here: It's an order of magnitude higher. And the scatter chart looks like a shotgun shell loaded onto a map of San Francisco," Rosedale said. "The point I was trying to make with the map was that if you're going to work on a software project, it's going to fail. The probability of startups succeeding is 10 percent, unless pigs fly and some statistics are radically changed," he said.

"Your project is going to fail with a 90 percent change of probability," Rosedale said. "It's going to fail in about one year. So now the question is: what happens next? The graph pretty well illustrates it visually. As I said, out there in Omaha you're not going to live through the winter. You're 24 years old. You saved up a little bit of money. You're not going to make it. You're going to have to go back and live at home or something, which is pretty depressing. In San Francisco, you're going to get another job in two weeks because it's an order of magnitude difference," Rosedale said. "You're going to walk into a bar in the Mission in San Francisco and you're going to run into the person who's either going to hire you, co-found something with you next, or fund you."

Because of this density of founders in Silicon Valley, people feel safe to try all sorts of projects, because if they fail they can move on to the next project. In fact, in Silicon Valley, people value failure as having trained them in that experience. "We're culturally tolerant of it," Rosedale said. "We have an amazing tolerance of it. It's not so much that the Bay Area breeds or attracts people who are uniquely insane, who are willing to take on this level of risk. It's actually that, for the most part, for even the craziest among us, even if these really crazy ideas fail, you know you're not going to starve to death. You're not going to be completely desolate."

Rosedale put it another way: "We huddle. We're herd animals. We come here and we seek each other's warmth and that works. We're also, I believe, safe here. When you're safe, it makes your more open and friendly. When you're open and friendly, you share things with each other, like how to set up a server or how to get somebody who knows a lot of social media marketing stuff or how to find a developer. You share that information freely with each other," he said.

"Even if you don't share very much -- and my hypothesis from studying this behaviorally is that actually we don't do that much here -- but that little bit that we do share in Silicon Valley adds up to a lot," Rosedale said. "If you have a good idea in Lisbon, Portugal, if you have a good idea in Paris, France, you hide it from everyone else, right? You hide it from everyone else because it's a precious gem and if that idea works, you'll be successful. So what's happening in San Francisco is, you have these strange confluences of people driven by the fact that people are both engaging in lot of projects and then willing to share and talk about them," he said.

The implications of that have powered his new business.

"One of the things I'm fascinated by is the question of whether with Coffee and Power ([the name of Philip's newest company] we could build an app that will get you to do that anywhere." Rosedale said. "Could we get people to connect at this level even in Omaha?" In other words, due to the density, or lack of it, in places such as Omaha, you're looking to connect but not only with 20 people within its population of 100,000 -- with Coffee and Power you're connected to thousands of people around the world. "On top of that," Rosedale said, "what if I can make it so that the 50 people at a time who are looking for team members in Omaha can find them? You can kind of see them if they're near you. You can shrink the geography," he said.

"I think the most important thing is not just finding them or talking to them. It's not enough actually to break the ice, but what if you could see a bunch of little short statements about what they were doing yesterday and what they're doing right now?"

In my next blog, I'll talk to the CEO of TopCoder -- the newest way to write software fast and cheap.

NOTE: Over the next year, I'm embarking on a BOLD mission -- to speak to top CEOs and entrepreneurs to find out their secrets to success. My last book Abundance, which hit No. 1 on Amazon, No. 2 on the New York Times and was at the top of Bill Gates' personal reading list, shows us the technologies that empower us to create a world of Abundance over the next 20 to 30 years. BOLD, my next book, will provide you with tools you can use to make your dreams come true and help you solve the world's grand challenges to create a world of Abundance. I'm going to write this book and share it with you every week through a series of blog posts. Each step of the way, I'll ask for your input and feedback. Top contributors will be credited within the book as a special "thank you," and all contributors will be recognized on the forthcoming BOLD book website. To ensure you never miss a message, sign up for my newsletter here.

Creating a Company Without Employees: Philip Rosedale on Coffee and Power and the Future of Entrepreneurship

Peter Diamandis   |   March 8, 2013    1:42 PM ET

In this blog, I'm continuing my conversation with Philip Rosedale, founder of Second Life -- and his newest company Coffee and Power. Here, Philip explores his belief in the new way of employment, the new virtual company and what he learned in the process of creating new ways of doing business and finding work.

In my next interview with Philip, he gave me a glimpse of his newest startup, called Coffee and Power, as well as his vision of the future of companies. A future where workers were far more independent and far more efficient. I asked him to talk about the origin of Coffee and Power, the origin of its name and where he thought this latest venture would take him.

"When my co-founder Ryan Downe and I started this new company, we wanted to explore some of these ideas around how people worked together and how to make that more efficient. We hung out for a year or so in coffee shops. We told ourselves that we were not going to get an office, that we were going to operate completely virtually, through a series of face-to-face interactions in transient locations like coffee shops, now co-working locations," Rosedale said. "One day, Ryan turned to me and said, 'All we need to do this is coffee and power,' and the power meant a place to plug in your laptop. We were so struck by that name that it ultimately became the name of the whole thing," he said.

"The vision of Coffee and Power really is to build a set of tools that allows people to work together more effectively using the same sort of techniques that we pioneered inside Second Life. Those are things like getting people to be granular and transparent about what their work achievements are -- even if they're telling them to people who aren't their peers in their organization but are people whom they may someday work with," he said.

Rosedale had been inspired by work done in the 1930s by Nobel laureate Ronald Coase (now 102 years old), author of an influential book, The Nature of the Firm, that contends that market forces regulate everything. "Coase asked and answered a provocative question back in the 1930s: 'If markets are the most effective way of doing things, why are there companies at all?' And what he got the Nobel Prize for was his largely correct answer, which postulates: The reason is because there's cost in negotiating with someone, in other words, transactional costs," Rosedale said. If you remove the overhead associated with those costs, and allow people themselves to price the work they do, and to create a system where everyone evaluates you in an open and transparent manner, then everything changes.

In outlining his thinking process behind Coffee and Power, and during its realization, Rosedale came up with seven essential assumptions or predictions about the future of companies and the future of employment. These ideas are key to the future of what I call an "exponential organization":

1. Work will consist of projects broken down into pieces bid on by individuals: "If you have to argue about salary or if you have to argue about the price of building a marketing program, it becomes inefficient because we're wasting time arguing and not working together," Rosedale said. "What Ronald Coase said was that, economically and mathematically, the reason companies exist is because there are a lot of negotiating costs associated with working together. If the technology changes to make it easier for negotiating and knowing what the work product is, and knowing how people are performing, and it becomes easier to do things in smaller and smaller chunks and with more granularity and with less hassle, the nature of firms and the structure of firms will probably change," he said. "Obviously, they will go down in size and the relationships will become much more transactional. So," Rosedale said, "my belief became that the future of work will be some sort of a situation in which many more people will contribute to projects in much smaller chunks," he said.

2. People will no longer be tied to one company. "People won't necessarily think of themselves as being employed by a single company," Rosedale said. "They won't necessarily work at one company for 10 years; they might work at it for 10 months or even 10 days. They will be profoundly transparent with everybody else about what they're doing. The feedback gained from everyone will be a primary way of measuring them or even paying them for what they do. The companies of the future will be these aggregations of people who work together not necessarily because they're working for one person or on one project, but because they're somehow useful to each other at a high level."

3. Workers will set the price for the work they do. "The first thing we did when we started Coffee and Power was, rather than hiring anybody, we made a big Google spreadsheet and we set it public," Rosedale said. "We said on each line of the spreadsheet what we needed to get done -- find a lawyer or make a logo or write the first little chunk of code -- if anybody out there could help us with this they could put their name next to it, get it done and keep us updated. Then when something got done, we sent them money via PayPal. What matters most isn't that you can set the price. No, it's the fact that you're setting the price in an environment in which that spreadsheet is public. I'm giving you the pen. You put whatever you want on the wall, we'll pay you," he said.

"It worked great. Having people set their own prices on things actually works fine, provided it's done transparently."

4. The savings in costs and time can be extraordinary by opening it to the crowd. "We created Coffee and Power in about nine months," Rosedale said, "at a cost below $200,000. Five years ago if you had built a typical Web tool type of thing, you would have spent $3 million doing that. So this was a lot cheaper -- and a lot better. Most of the work was done by about 100 people. If you graph their contributions, it was the classic Internet long tail where there were like five people who were more or less making full salaries from us, from all over the world," he said.

5. The team evaluates the team. Old-style management is irrelevant. A huge amount of energy and effort go into human resources overhead, which is inefficient, as well as politicizing (especially when it comes to evaluations and bonuses). "Think how unbelievably amazing your company is culturally if you don't have to evaluate people using the management team," Rosedale said. "Instead, you get people to share information about what they're doing, and then to recognize each other for their achievements in a way that creates a kind of a modern version of the résumé," he said. "It's a kind of a feedback loop around progress that encourages people to keep going, that better values their contributions to each other and then causes them -- and this is the magic of Coffee and Power -- to more effectively engage serendipitously with people who may give them their next job."

6. Collective management will build companies -- not top-down decision-making. "That idea of using the crowd or using collective judgment or wisdom was a matter of necessity," Rosedale said. "My fascination with the area of collective management and my desire to help people work together better and faster, originated from my feeling as an engineer that Second Life was going to be complicated to manage in a really top-down, centralized fashion," he said. "I was struck by the thought that we're reaching a point where the scale and complexity of the things we're building exceeds our capability as individuals to do planning around them," he said.

"Even I, with all my passion and reasonable intelligence around this subject, I don't think I'm smart enough to just tell everybody what to do," Rosedale said. "From the very beginning, I said I wanted to do something a little different. I wanted to be a lot more loosely joined in how I manage this as a company, or as a technical leader," he said. "I want to try having a lot more transparency, a higher degree of trust -- as opposed to just upfront planning. I wanted to figure out how to get us all to work together, to collectively manage each other," he said.

7. Future companies will be smaller and more nimble. "The reason that we built things as big top-down companies in the past was because the difficulty of negotiating with people around their contributions was actually very high," Rosedale said. "As technology changes, and the cost of those interactions grows, it follows naturally that companies are going to become smaller, faster and work together in ways that frankly, I think, won't look much like the companies we have today," he said. "I don't think the companies we will have in 10 years will be structured in a way that will even allow your eye to draw analogies with the companies we have today. When we talk about the Google of the future, I just don't even think the words we're using today will fit very well because the mechanism will be so different."

In my next blog, I'm going to continue my talk with Philip Rosedale of Second Life and Coffee & Power, who explains the "secret sauce" of Silicon Valley - and why it's such a hotbed of entrepreneurship.

NOTE: Over the next year, I'm embarking on a BOLD mission -- to speak to top CEOs and entrepreneurs to find out their secrets to success. My last book Abundance, which hit No. 1 on Amazon, No. 2 on the New York Times and was at the top of Bill Gates' personal reading list, shows us the technologies that empower us to create a world of Abundance over the next 20 to 30 years. BOLD, my next book, will provide you with tools you can use to make your dreams come true and help you solve the world's grand challenges to create a world of Abundance. I'm going to write this book and share it with you every week through a series of blog posts. Each step of the way, I'll ask for your input and feedback. Top contributors will be credited within the book as a special "thank you," and all contributors will be recognized on the forthcoming BOLD book website. To ensure you never miss a message, sign up for my newsletter here.

Forget The Sequester: Entrepreneurs Are Saving The Future

XPRIZE   |   March 7, 2013    4:52 PM ET

Vivek.jpgBy Vivek Wadhwa
Vice President of Academics and Innovation, Singularity University.

Imagine a world with unlimited food, water, and energy--in which we prevent disease rather than cure it and in which our lifespans increase along with our wisdom and knowledge.  This is what entrepreneurs are making possible. They are leveraging rapidly advancing technologies in a wide range of fields to do what only governments and big labs could do before: solve humanity's grand challenges. They are creating technologies that will allow us to go from battling over scarce resources to debating how we share and distribute the bounty that we create.

In his New York Times bestseller, Abundance, XPrize and Singularity University founder Peter Diamandis tells the story of how aluminum went from a rare metal to something we wrap our food in.  When the king of Siam hosted Napoleon III in the 1840s, writes Diamandis, the people working for Napoleon were served with silver utensils; those working for the king received gold; the king himself got aluminum--the rarest metal at the time. Aluminum was so valuable because it was extremely difficult to extract from bauxite--though it is one of the most abundant elements on Earth. And then electrolysis technology was invented--which used electricity to liberate aluminum from bauxite. It made aluminum inexpensive. 

It isn't just aluminum that has become abundant.  So have electrical power, refrigeration, television, telephones, cars, and air conditioning.  Two hundred years ago, kings and queens didn't have these luxuries; today, even many people who are classified as poor in the U.S. do.  This prosperity has not reached most of the developing world--yet. But the proliferation of mobile phones shows what is possible.  Within 10 years, their numbers have gone from zero to nearly 1 billion in both India and China.  Even the poorest villagers own them.  Mobile phones changed the lives of millions of families who were cut off from each when they went to cities to work and they transformed society.

We are also making headway in solving the global water crisis.  Waterborne viruses are responsible for the majority of disease in the developing world.  There are predictions that countries such as India, China, and parts of the Middle East will run out of water and that wars will break out over supplies.  This seems paradoxical: 71% of the earth's surface is water, and sanitizing and converting seawater is as simple as boiling it and condensing the vapor.  The problem is the cost of energy--it is prohibitively expensive to do this in quantity.

Two exciting solutions to the water problem are already working and ready to scale.

The first is a product by Dean Kamen called Slingshot.  Kamen is the inventor of the Segway personal transporter, an insulin pump, and many other breakthroughs.  Slingshot is a vapor-compression water-purification machine that can produce about 30 liters of 100% pure distilled water per hour using the same power as a hair dryer consumes.  It can transform dirty water from any source: rivers, oceans, and even raw sewage.  Slingshot has been under development for more than a decade and was recently tested by Coca-Cola in five towns in Ghana for six months.  The devices worked flawlessly.

Kamen told me that he expects that Slingshot will cost less than $2000 when mass produced and will not require any maintenance or servicing for seven years.  One device will produce enough clean water to support a village of 300 people.  Coca Cola plans to test it in dozens of locations this year and will expects to roll it out on a larger scale next year. I hope that other organizations will also license the technology from Kamen and alleviate worldwide disease and suffering.

Another amazing product, by Alfredo Zolezzi of Chile Advanced Innovation Center, is a Plasma Water Sanitation System that can sanitize 35 liters of water in five minutes at a cost per liter of less than 1/8 of a (U.S.) cent. This works by injecting water into a reaction chamber, where it achieves plasma state through a high-intensity electrical field. The microbiological content of the water is eliminated by electroporation, oxidation, ionization, UV and IR radiation and shockwaves. This technology won't remove impurities like salt, arsenic, and heavy metals from water, but will kill bacteria. The system has been in operation for more than two years in a slum in Santiago, Chile.  The inhabitants told me that not one person had gotten sick since they started using it--in stark contrast to how it used to be.

Zolezzi's device has been successfully tested by various labs in Chile and is being tested in collaboration with the National Science Foundation (NSF) to determine its conformance to EPA guidelines. Zolezzi expects that mass-produced units which cost $500 will be able to sanitize up to 2500 liters per day, and smaller units, which cost $200 will be able to process 1000 liters or more. He says he is in discussions with several large corporations for the mass production and distribution of the technology pending the NSF validation.

Every month, we read about advancements in energy technologies.  Despite all the negative press about solar, the price of solar panels (per watt) was 97.2 percent lower in 2012 than in 1975--and the downward trend is continuing.  At these rates, within a decade, solar energy will cost much less than what we pay to our utility companies--which produce electricity from fossil fuels.  Solar will achieve what is called "grid parity" in Europe and other parts of the world even sooner than in the U.S.

Last month, the most exciting news was from UCLA, where a small team of researchers developed a micro-scale graphene-based supercapacitor that can charge and discharge a hundred to a thousand times faster than current batteries.  This could make it possible to fully charge your laptop in seconds and your electric car in a couple of minutes.

When we have unlimited clean water and unlimited renewable energy, we can produce unlimited amounts of food.  Singapore is already growing food in vertical farms. A Silicon Valley company called Hampton Creek Foods is producing an egg substitute made from plants. Another startup, Modern Meadow, is using tissue-engineering technique to produce in-vitro leather and meat--without requiring the raising, slaughtering, and transporting animals.   With methods such as these, we will need less--not more--land to feed the world's population.

Discovery, application, and invention are also occurring in medicine, 3D printing, artificial intelligence, robotics, and many other fields that will change our lives and transform entire industries.  I have described some of these in this TedX talk and in these articles.

So while Washington DC fights its mindless battles over taxes and budgets, entrepreneurs are busy solving problems. They don't care about sequesters and fiscal cliffs, they just want government to remove barriers such as immigration that prevent them from developing their technologies, and to leave them alone.

Visit X PRIZE at, follow us on Facebook, Twitter and Google+, and get our Newsletter to stay informed.

This material published courtesy of Singularity University.

Second Life: How a Virtual World Became a Reality

Peter Diamandis   |   March 7, 2013    3:40 PM ET

In this blog, I'm introducing you to the work of Philip Rosedale, who set out on a very bold mission to create a virtual world accessible to the masses. How does one even think about doing something on this scale? What are the lessons learned? Enjoy!

I caught up with Philip Rosedale, the creator of Second Life, a brilliant entrepreneur and a close friend, at Singularity University. Philip is one of the most expansive thinkers I know, with a passion for creating communities and motivating people to be effective and powerful entrepreneurs.

As a reader of this blog you already know my passion for "origin stories" for people's companies, so finding out how and why Rosedale started one of the most ambitious Internet companies of the last decade was a real treat for me.

"I started doing electronics when I was a little kid, in the 5th or 6th grade, buying computer parts at a swap meet and writing my first programs," Philip told me. "Simple things just blew my mind with respect to the sort of infinite simulation or combinatorial possibility inside the computer. My personal obsession from my childhood was that I just wanted to recreate reality inside the computer and then go in there," Rosedale said.

Rosedale had studied physics at college and after graduation set out as an entrepreneur. "I had started a small company doing database inventory control, and decided to move the business up to San Francisco," he said. "My timing for landing in Silicon Valley, at the center of the Internet, was perfect."

"At that time I told my friends that I was eventually going to build a virtual world, but the systems weren't up to speed," continued Rosedale. "There was insufficient bandwidth and no 3D, even on desktop computers," Rosedale said. "So I decided that I was going to have to lay low and work on something else entrepreneurial with this Internet 'thing' while I waited for the future to catch up," Rosedale said.

Like anyone inspired by a bold idea, Rosedale had the confidence that he could eventually make it happen: "I was just so insanely motivated to build that place that I could see in my head." He remained on high alert waiting for the signal that would allow him to take action and move ahead.

That signal came while Rosedale was working at Real Networks in Seattle -- the Internet software company behind such companies as RealAudio, RealVideo, RealPlayer and RealDownloader. (Rosedale actually created Real Video.) While there he met Mitch Kapor, the founder of Lotus 1-2-3 and Lotus Notes who later went on to become kind of a benefactor behind Second Life.

"It was the availability of broadband over DSL that re-launched my quest for creating my 3D virtual world," said Rosedale. "When that bandwidth became available to the home, I was like, 'Oh my God, I can do it -- I can build Second Life!' You get that moment when you just feel like it can be done or, at least, it's not too crazy to try and do it. In the next couple of weeks I packed up from Seattle and came back to San Francisco and started Second Life," Rosedale said.

I asked Rosedale how he had raised money for such a crazy idea. His answer: "I didn't." Rosedale had made enough money when Real Networks went public that he was able to invest about $1 million of his own money in getting Second Life started.

"Unfortunately, even with my $1 million it wasn't fundable," he said. "If you have an idea as crazy and bold as Second Life I can guarantee you one thing: those traditional venture capitalists that are loaded with billions of dollars are not waiting to fund ideas like this," he said.

Still, he convinced a few forward-thinkers (Mitch Kapor among them) to help fund Second Life, and now, some dozen years later, Second Life has more than 20 million registered users and remains a success. "The company's about 175 employees in size today," Philip said, "and it's very profitable because those users on Second Life are able to do really cool things with it and they're able to get value out of it. In turn, Second Life as a company is able to share in some of that as revenue. The GDP of Second Life today is somewhere between $600 million and $700 million a year in transactions between people. Most of those transactions are things like users building and selling clothing, furniture design, to other users -- essentially people building a virtual world and then selling that virtual world to themselves."

I asked Rosedale to summarize his lessons learned from creating Second Life. If you were advising an entrepreneur who wanted to do something as big and bold as Second Life, what are your top five pieces of advice -- what to do and what not to do? Here are his answers:

1. Have real passion. "If a crystal ball told you that this was going to be huge and have a big impact on the world, but that in the end you would not make much money, would you still want to work on it? If no, stop," said Rosedale.

2. Don't raise very much money. "If your idea is really big, too much money will probably increase the risk of failure," continued Rosedale. "Because there are many more ways to spend money to fail than win."

3. Encourage people other than yourself to take genuine risk by your side. "Don't shoulder the burden of proof alone."

4. If the idea is really new and unique and big, other people will all think it is bad and is going to fail. "You will have to do it against the best advice of others -- see point #1."

5. Be good to people, both inside and outside the company. "Being bad is stressful and will occupy your mind. If you are working on something really amazing," Rosedale reflected, "you will need that focus for the product and the company, not for worrying about people you've screwed."

In my next blog, I'm going to continue my talk with Philip Rosedale, and detail his beliefs regarding the future of entrepreneurship and the workforce.

NOTE: Over the next year, I'm embarking on a BOLD mission -- to speak to top CEOs and entrepreneurs to find out their secrets to success. My last book Abundance, which hit No. 1 on Amazon, No. 2 on the New York Times and was at the top of Bill Gates' personal reading list, shows us the technologies that empower us to create a world of Abundance over the next 20 to 30 years. BOLD, my next book, will provide you with tools you can use to make your dreams come true and help you solve the world's grand challenges to create a world of Abundance. I'm going to write this book and share it with you every week through a series of blog posts. Each step of the way, I'll ask for your input and feedback. Top contributors will be credited within the book as a special "thank you," and all contributors will be recognized on the forthcoming BOLD book website. To ensure you never miss a message, sign up for my newsletter here.

5 Steps to Cutting Costs Through Open Source: DIY Drones

Peter Diamandis   |   March 6, 2013    5:53 PM ET

In this blog, I'm continuing my exploration of what Chris Anderson's company DIY Drones has done in using open-source methods to create products that are exponentially less expensive to make.

After more than a decade as the editor of Wired magazine, Chris Anderson started the company of his dreams -- a robotics manufacturing company called 3D Robotics, to produce the autonomous flying vehicles coming out of DIY Drones. When it came time to choose a co-founder and the CEO for his company, Chris didn't go with an MIT Ph.D. or a Stanford professor. Instead, Anderson chose Jordi Muñoz, a 19-year-old high school student living in Tijuana, Mexico. How and why Anderson choose Muñoz is the opening theme of this blog. A subject I find fascinating and one that's important for you to understand.

"If I had used the traditional construct for hiring when looking for someone to be co-founder and CEO of 3D Robotics," Chris Anderson told me, "I probably would have gone to Stanford or MIT to look for people who had on their résumés the words 'drone' or maybe 'company' or possibly 'college degree,' maybe even 'graduate degree.' Instead, I ended up with a teenage high school student from Mexico. Now, it turns out that this teen, Jordi Muñoz, was the perfect person for the job. This job didn't require a Ph.D.-quality drone engineer. The job involved creating an open-source robotics company in an unexplored space using low-cost resources and built on community participation. The people who went to MIT and Stanford are probably genius, but they probably didn't know all those things."

Today Jordi is a 26-year-old high school graduate living in San Diego, serving as CEO of a multimillion-dollar company. How he was hired, and the success of his role as CEO, reinforces the notion that the community brings the right person to the company. The community also brings a network of people who want to work for the company during their spare time, evening and weekends. These individuals aren't motivated by the money; instead, they are doing it out of interest for the product being developed. These are people Chris could never afford to pay.

"Today, we have people who work for Apple, who are designing the iPhone by day and drones by night," Chris said. "We have people who work for Google. We have people who work for NASA by day. By night they put in often as many hours working on our projects. We could not afford to hire them. They told me they're unhireable. It's weird: 'You can't pay us to work for you. However, we'll work for you for free.' That is a great concept. So, why do they do it? Is it generosity? No. Is it altruism? No. It's enlightened self-interest -- because they have a passion that for whatever reason isn't tapped by their day job. And they've always wanted to do this."

When Anderson started 3D Robotics, he looked at the Raven, a small military UAV made by AeroVironment, and wondered how he could take out at least 90 percent of the cost of creating it (or something very like it).

"I'm not sure we were even smart enough to know that such economies were possible," Chris said. "We hadn't actually seen a Raven or known its capabilities until a bit later. But at the end of the day, we took two to three orders of magnitude out of the price in military technology. Undercutting military procurement economics turns out to be not so hard."

The military-grade UAV purchased by the Defense Department cost it between $300,000 to $400,000 for the full system. Chris' company ended up building what's known as a Quadcopter, similar to a Raven in overall capabilities, that costs about $300, or basically 1 percent of the cost of a similar UAV such as the Raven.

The secret was the community, and the use of open-sourcing.

During a recent trip to the EAA's (Experimental Aircraft Association) Oshkosh AirVenture air show in Oshkosh, Wisconsin, Anderson found a whole host of eager hobbyists and enthusiasts interested in working on fun and innovative aerospace-related projects. "The world's garages are full of people with lot of energy and passion, working on great ideas. What they need most is a better mechanism for collaboration," he said.

"The real magic happens when you combine the kind of collaboration we enable at DIY Drones with what's going on in electronics," Anderson said, "with super-powerful chips and processors available for the hobbyist at a fraction of the cost of only a few years ago. The recognition that we have infinite processing, infinite sensing, wireless imaging at consumer electronics economies of scale -- which is to say, cheap and available and easy to use -- that's the big breakthrough here. We've got a hammer that combines open-source innovation plus smartphone integration. So let's start hitting things with a hammer." Anderson plans to take on a number of other aerospace hardware projects where his approach can "demonetize" the cost, reducing it by 99 percent or more.

I asked Anderson to outline how a community can reduce the cost of product development by one or two orders of magnitude -- what are the advantages and pitfalls. Here's Anderson's list of five areas to keep in mind.

  • Don't charge for intellectual property. Making things open-source brings the cost down. Effectively the participants contribute their ideas and labor for free, and what you pay for is the hardware. "In electronics there's what is called the bill of materials, which is the fundamental cost of the components," Anderson explained. "Then there's the final cost of the product. For something like military electronics for military autopilot, the bill of materials might be $100 and the autopilot, essentially the software, might cost $10,000." Anderson continued, "There is a huge difference between the cost and the price. That difference is mostly labor in the form of R&D and intellectual property, plus the cost of doing business in the form of legal costs, sales cost and profit. The alternative, what we use with our open-source approach of DIY Drones and 3D Robotics, is to price the final products at 2.6 times the bill of materials. That 2.6 number is a 140 percent margin for the wholesaler -- that's the people who make it -- and another 40 percent margin for the retailer. That's the distributors who ultimately sell. That's fair. You can build a business on a 40 percent margin."

  • Be prepared to be ripped off. "The Chinese cloned us in seven days, Chris said. "We put in tens of thousands of dollars of our own R&D cost (R&D cost is not zero, but is still a lot lower than the military invests in it). We did all the work and then they just took our files and cloned us."

  • Despite theft from some quarters, the crowd will make your product better. "Along with cloning, though, what's going to happen is someone else is going to take your files and say, 'I could have done that better,'" Chris said. "And they're going to modify it and they're going to do a derivative design and then they're going to either sell that or send it back and say, 'You should do this instead.' That's what's great."

  • Open-source leads to regulatory breaks. Many people who try to do big bold things in the world find out it's not about the money or the technology: It's about the regulatory hurdles that will try and stop you. "If you are Lockheed Martin or Boeing or anybody else and you want to create an autopilot, first of all you have to get it certified, you have to go through this long approval process, through the military procurement chain," Chris said. "You're not allowed to test it in the air unless you have an approval from the FAA -- which governs unmanned vehicle use in the national aerospace. If, on the other hand, you're a kid, an amateur, there's an exemption for you and you can fly it in the park all day. Amateur use, i.e., non-commercial use, is a kind of safe zone. By and large, open-source qualifies as public domain, so the active technology being created free by the Internet and shared by the Internet means it's exempted." Chris Anderson went on to explain how this is also true for State Department ITAR regulations and even FCC regulations.

  • By giving it away for free, liability issues evaporate. "It turns out if you're shipping to end users, to consumers, you have to get FCC certification," Chris said. "If you're shipping to developers, you don't. It's the last person who touches the product before it ends up in a blister pack that has to get it certified. As long as you're shipping to other DIYers, you're exempt from that. Open-source is a get-out-of-jail-free card for the gnarly barriers to entry that have slowed innovation so far," Chris said. "By the way, big military industrial companies love regulation. The more rules, the better, because they've got an army of lawyers."

Basically, Chris said, open-source hardware is the "hammer" to break open innovation of all sorts. "Right now the technology is available. You can do it. With this hammer called open-source hardware, people are going to reverse engineer things. What's going to happen is that the first one is going to suck. But it was open and DIY, and that's cool enough. The next one's going to suck less. They're going to find a way to do something totally cool and cheap."

In my next blog, I'm going to introduce you to my friend Philip Rosedale, a brilliant entrepreneur and the creator of Second Life, who has come up with ways for entrepreneurs to change the way people think about barriers and to change the they think about work.

NOTE: Over the next year, I'm embarking on a BOLD mission -- to speak to top CEOs and entrepreneurs to find out their secrets to success. My last book Abundance, which hit No. 1 on Amazon, No. 2 on the New York Times and was at the top of Bill Gates' personal reading list, shows us the technologies that empower us to create a world of Abundance over the next 20 to 30 years. BOLD, my next book, will provide you with tools you can use to make your dreams come true and help you solve the world's grand challenges to create a world of Abundance. I'm going to write this book and share it with you every week through a series of blog posts. Each step of the way, I'll ask for your input and feedback. Top contributors will be credited within the book as a special "thank you," and all contributors will be recognized on the forthcoming BOLD book website. To ensure you never miss a message, sign up for my newsletter here.