 A guy from Austria, he came all the way to be here today and to give a talk. The title is up here, the winner takes it all, it's about how to apply coding skills. And this makes sense for this course, because the guest actor is in a coding course. So Gerard will give you a little motivation of why you should put in the hard work and learn the code. And without further ado, this is Gerard Herrmann from Austria, also known as the investment punk. Okay, thank you very much for the introduction. Who wants to talk in English and who wants to talk in German? Okay, then we'll do English. Okay, well thank you for the invitation. Yesterday I was at the Frankfurt School where I was introduced that rents are too high in Frankfurt. And I suggested that it was a bit unfitting for a university which is business oriented. But there is one thing which probably will make my life as a land lot easier. Many of you, at least to follow me on social media, know that I collect ugly small apartments that I like to collect them. But what is going to make these things in the future much easier? What is the biggest problem if you have ugly small apartments? What is the biggest problem? Well sometimes, as everyone of you have been on a submarine, an U-boat. My wife once been a submarine in the Kingdom of the Islands. You know, they are sightseeing and the submarine is something special. But in war, a submarine is not something so nice. And if you have a tenant who is a submarine, let's say which doesn't have an official existence, it's very hard to get any money out of them. It means they don't pay. They're just, you have to avoid submarines as tenants. U-boat is made nice meter, to say it in German. Some of these things go a little bit better in German, unfortunately. But so I thought in the future, what I'm doing now to avoid submarines. What I'm doing now, yeah? Yeah, so we check the whole digital footprint of the person and some documents like labor contract, income statement, bank reference letters. But we also check somebody on social media. And if you see someone in the casino, you're in your parting, destroying everything, you might say, stop. But in a few years, I'm sure going to have something else, which is going to make my life much, much easier. And I'm going to talk about this today. Let me ask you a few further questions. What is the best selling engine oil in the Western hemisphere? British Petroleum or Shell or what is the best selling? Okay. Who else is for Shell? Who is for British Petroleum? Who is for Exxon? What is the best selling? Here's Shampoo in the Western Hemisphere. Here's Shampoo. Here's Shell. L'Oreal. Rock the gavel. Okay, L'Oreal, okay. Let me ask you another question. If you're a real estate agent, who is currently your client usually? What is your client? If you're a real estate agent, do you hire yourself? And then who sells the mobile market? Yes? Single person. Yeah, the single person is not only. You're selling yourself to different people. Sometimes, you know, you sell to families and couples. Yeah? Well, investors make about 35% or 30% of the market. People like me. Yes, they exist. But they have more people who look for their own home than investors looking for actually small apartments to rent out. But if I ask you again, let's say if you have a couple as a client, who often makes the decisions? Let's say a couple looking for their apartment, a dream home or single family home, so if there's any home, who is making the decisions? We make the decision. Well, I wouldn't say you're not politically correct. I thought universities are always experts in political correctness. Today, you would say it's a life partner or a life partner to be correct because you have all kinds of different arrangements in today's world, at least in Berlin. I mean, if I would say a woman, I think I would probably in this case already get, you know, prohibited from speaking at the university possibly. We are not in Berlin, unfortunately, but unfortunately in Berlin, it's good for partying, but not for real estate right now. But I always say, this is after Saint-Germain, you know, often the decision making is Schatzi. Ich hab dich lieb. Schatzi, I love you. And I always say, please say, Schatzi, I don't love you. That's much cheaper. Who will be the kind of the real estate agent in 10 years from now, the biggest one? Who will the real estate agent sell to in 10 years? Schatzi or single guys or investors? Who will be the biggest one? I'll give you the answer a little bit later. But things will change very drastically. Let me ask you another question. Who do you think? Who would agree or disagree with this statement? Let's see who would disagree with this statement. Because I think more. Donald Trump in combination with Amazon and perhaps in combination with Facebook and Google as a, let's say, fighters for the free world. Who would agree to this? Donald Trump, Facebook, Google, Amazon as a representative said, fighters for the free world. And who would disagree? Everybody would disagree. Very interesting. Let's start with, let's say, history part of the digital economy. Things which have already happened. Let's start a little bit with the history trip and then we'll start with an experiment. A lot of, I hope, please, if I'm political incorrect, I apologize to anybody. A priori, if you don't like political incorrectness or feel insulted, please, cover your ears and eyes so that you don't see and hear. Also, in Deutsch, if I were to punish someone because of political incorrectness, I would ask you to close your eyes and ears. But I'm sure none of you had this problem. But let's assume, in a virtual world, that you would have this problem. What problem do a lot of people have at night? And in the future, they might even have this problem much more, possibly not. What is one of the biggest problems they have? What biggest problem have the people at night? Yes? Yes, and why can't a lot of people not fall asleep? Yes, partially, but sometimes things are much more natural. Natural drive. People are lonely and people want to have sex. And let's assume you have three platforms to solve your wishes, your desires, or in your natural drive, whatever you want to call it. You have one platform which has one to have XXX.com, and which has 100,000, let's say, members, whatever. We have a second platform which has, I will have, no, I could have, and which has 500,000 members, and the third one has, I will have XXX.com and has a million. Apparently, that's one of the biggest markets online, so it's not justifiably something you should study. And who, if you're in the hypothetical situation that you had this drive at night, which I'm sure none of you ever have had and none of you will ever have, but a lot of people do have, unfortunately, which one of you would choose the platform with 100,000 participants? Which one of you would choose the platform with 500,000 participants? And which one of you would choose the platform with one million participants? Yes, you approved yourself. Something very simple. One of the basic rules of the digital economy. Let's say you own a hotel company, and you want to make 10, let's say, if you have 10 times as many visitors or participants, how much does your revenue increase? If you have 10 times as many people coming, we have P-memberships, advertising, how much is your revenue is going to be? 10 times as many visitors. How much is your revenue going to be? Yeah, approximately 10 times as much. And what is your company value going to be? If you have 10 times as many visitors, 10 times as many people coming, 10 times as much money coming in, what is going to be your company value? What? 10 times as much, and that is absolutely wrong. Well, what is a good bit? That's a British statement, but what is a good bit? Even that is wrong. Very wrong, even. Unfortunately. Because assume you have a hotel company, and if you have a hotel company and you want to make 10 times as much revenue, can you do this with the same amount of hotels or do you need more hotels? Assuming that you do legal stuff, not, you know, let's say, refugees, illegal having 10, refugees in one room, or, you know, or having, you know, let's say, a love house or anything in the hotel. Assuming that you do legal stuff and obey the rules and regulations of the hotel industry and continue to operate the hotel and not abuse it, do you need more than, if you want to make 10 times as much revenue, can you do this with the same amount of hotels? No. You all need how much more hotels? Or nine, 10 times more hotels. And if you have a restaurant chain, a restaurant, and you want to make 10 times as much revenue, do you need more restaurants? No, you also need more pasta, more fish, more wine, more cutlery, more waiters, and more locations because, you know, people cannot sit in their baths, there's limits to the room. So which means if you have 10 times as much revenue in many businesses, you have nine times or 10 times as much cost. So the profit is also 9 or 10 times or 11 times or 12 times higher. But a digital business, do you have a lot more costs with 10 times as many more visitors? You have needs for customer support, somewhere else on web space, a few other things a little bit more, but that's about it. What does it mean for the cash flow or for the profit of the company? What does it mean? If the revenue is 10 times, but the costs only increase by 50%, double, what does it mean for the cash flow of the business? It explodes. And what you have just proved yourself by this experiment is the function of the digital economy. In most classic economic scenarios, let's say there are many market participants, like in hotels or restaurants, you know, the different restaurants, and people go to this one or this one, but in the digital world, it's called winner takes it all. Winner takes it all, means that only the first three get anything from the cake. The second one 30%, the third one 15%, and for all the rest of the market, there's 5% left. The Olympic principle of winner takes it all, and that's how the whole digital economy works. And if you look at it on the global scale, you have companies like Google, Facebook, Airbnb, Uber, Spotify, and the one which are all winner takes it all and which are worth sometimes hundreds of billions or even more than 1,000 billions in dollars which have sometimes a stock market capitalization which is bigger than the GDP of many countries. And that's only going to rise. And even in Germany, if you want to look for a piece of real estate online, which most people do, how many choices do you have? Yeah, it was caught, it was wailed. And perhaps some smaller ones. If you look for a used car, it's the same thing. And if you go dating, you also don't have many choices. What I'm describing is history. We're just talking about companies being worth 1 billion dollars. So 1,000 billion dollars. We are discussing history, economic history. That has already happened. It also has a few things. What would you say if you're a professor here at WHU? Would say he's homeless. Or your banker would say he's homeless. What would you suggest? Would you believe him? What would you say if your professor is homeless? Tell me. You pay a lot of money to the university. What would you say if your professor is homeless? Yeah, but in some places of the world, it's a bit tricky. Because the winner takes it all, principle. Also goes for rents and for real estate and for locations. And in Silicon Valley, where the economic power is starting to get close to the whole of Germany, let's say Apple is worth more than all the Ducks companies together to just give you an indication. Let's say apartment prices and rents have become so high that professors, bankers and doctors have only two choices. They either have three choices and they have chosen the third one. Number one, they leave one or two hours away and stay in line and traffic for two hours. That includes Stanford professors and Berkeley professors. Number two, you live in a small American standard apartment which costs $5,000 to $6,000 per rent where you have to put because San Francisco is quite windy. You know a towel at the window that you don't freeze. And if you go outside you might need a gun or a knife because your drug dealer is outside. You have to be a bit careful on what you step and you should also not have flip-flops because if they are needles from drug dealing you know it might be better to have safe shoes. Or the third option is that you are indeed homeless but not quite what you expect as a homeless person but that you live in a luxury motor home which costs about $400,000. That's still about a third of the price of a 50 square meter apartment in the bad neighborhood of San Francisco or Menlo Park. And so today you do have people who are at universities or at banks in programs at Google and Facebook who choose to live in a mobile home like a tour bus because it's simply cheaper and more pleasant than paying totally overpriced rents or apartment prices which you simply can't afford. There was also one guy which was called a guy, you know a handyman, a hand worker who makes about $120,000 but he cannot even afford a studio apartment or one room apartment so he has to live on a houseboat in a legal houseboat and the police want to deport him and then he would be living on the street. That's when it takes it all as it already exists. What would you say if your starting salary is $200,000 or euros, would you say that's a lot of money? Would you be happy with $200,000? Mr. Lompcher would probably say they have to confiscate it, that's evil millionaires steuer, millionaires tax, that's evil but in San Francisco and in Silicon Valley we're eligible for government benefits and housing subsidies which has a consequence that let's say large companies, tech companies, banks universities have a whole department where people stand in line for the program as university teachers bankers and so on to apply for the housing subsidies and other government handouts because you know it's normally reserved for poor people but in San Francisco if you make $200,000 per year you're fucking poor and the prediction is that this amount is going to increase to $500,000 in the next ten years that is when it takes it all as it exists today but we adjusted the beginning and I want to talk with you a little bit about the future who of you thinks an online marketer or somebody who is a good programmer has a safe job if you don't know programming, online marketing you have a normal safe job like one of our online marketers performance marketer gets paid on the gross margin as a dekungsbeitrag he sells seminars and online courses for academy for us and he makes about 5,000 euros per month I'm not his only customer he makes 20,000 per month and he doesn't have a pedigree, he comes from some kind of a small village in Austria and he's not very communicative so he's not very interacting with the team he has some difficulty but he's very good at online marketing but I'm going to tell you his fate could be in danger in a few years and all the guys are good at certain programming things don't be so sure that you're going to bring money in 10 years some of you will make even bigger amounts but a lot of you might have to look for a new job let's go back to the dating world and again let's make a history trip to 2014 in Munich I was at a conference and the founder of Tinder arguably the world's most successful online dating app made a speech and the first part was very simple I'll tell you the first part first and the second part second the first part was you know why we are so successful because on traditional dating platforms people have to read and write and type many people don't want to read and write and type many people cannot even read and write and type but everybody can swipe left is no right is yes it is so fucking simple that even the biggest fall on earth can do it and if you ever build an online business like I have done make sure if you have the biggest fall in your neighbourhood the biggest fall in your friendship amongst your friends give him 5 Jägermeisters and 3 beers and then let him use your website and your app if he can still use it you know it's good if he has troubles go back to the start one more line let's say if people have to put in one more line on the landing page one additional line costs a 30% conversion so we try to collect as little information as possible in the beginning to get the highest conversion we have the data on it so it's quite simple but the Tinder guy in 2014 to which most people didn't listen because they were too drunk from the Munich Oktoberfest Birk didn't quite understand but he said something because probably by far more important but do you know why we are not more successful because people have trouble deciding and they have more trouble making the first step they just say hi or they don't say nothing and then there is no match the ball doesn't fall into the hole the ball fell into the hole but in a few years an algorithm will come which based on your past preferences your digital footprint will make suggestions whom you should date and will take the first steps for you and we'll be sure we're going to be much, much more successful and the dating experience will be much, much more fulfilling and Tinder already has such functions I don't know who of you honestly has used Tinder okay, a few some of you are probably not honest I mean my secretary found her boyfriend on Tinder I have had a few dates quite well on Tinder I have one again next weekend but I have also used Tinder to sell I had even membership and I even found one a real estate developer she needed some money and we wrote on Tinder and I started to get the money to raise money for her and we also advertise on Tinder better than CNN for example but again what the guy said has already become reality because you have so-called Tinder top picks where Tinder already suggests whom you should date but again that's only the beginning and one of my advisors was just in Las Vegas on the SES sphere discussed a few things he found out I was in Davos at the same time also found a few things I want to talk about this are you ready let's say I come to a new city and I want to go to a good restaurant I don't like do I like to go to McDonald's or Burger King no, except if I want to have something to throw at stupid tenants or stupid employees or stupid students or if I want to sign a rental agreement with McDonald's then I would probably go there but not to consume food so it would probably be not an ideal choice but what do I do today I either call my secretary select me the best restaurant in the city or I look on Google and if a restaurant has a three star rating and it says the steak is like concrete an hour for your food would my secretary choose it for me if let's say I cannot find if the restaurant is open would I go there or not if I don't find the opening times I wouldn't go there if I don't find if it's difficult to load the home page and it takes half an hour I probably wouldn't go there if I cannot see the menu what is on the menu to eat three star Michelin restaurants as it's common that you don't see the menu I wouldn't go there so what I do or my secretary does is check out the digital footprint the digital visiting card your digital business card for the best restaurant in town the same thing if I go to a doctor I want the fast service I'm an ideal client I want fast service I don't want to wait and I don't care how much it costs so is she going to go to a doctor whom you see on social media with a bottle drink, drink probably not and the same thing if I have a stomach problem and you want to go to see a doctor on Instagram or Facebook you see a picture of a doctor with a big hamburger I might also not go to see him so that's what you currently do about your digital business card who of you checks your digital business card at least once a month we have already checked our digital visiting card once a month at least nobody says it's not very good like everybody who comes into my office whether it's for private or business purposes somebody checks the digital footprint of the person very detailed everybody who wants to get an apartment from us checks the digital footprint very detailed and once I have a banker friend who also finances some of my apartments in Austria my small real estate with a little hole and she once had a client and I told her look on social media for the banker said it was something very new but on social media because she said I wasn't sure because she said he needed more money to renovate his apartment or his villa but I wasn't so sure you always saw pictures of casino gambling and the reason why I wanted the money is to gamble and luckily we prevented the bank from giving the loan to the gambler because they wouldn't have seen the money anymore because it would have been out in the casinos but in a few years it's going to be slightly different if I sit at my Tesla the Tesla will already know what kind of preferences I have based on my digital footprint and they will send me to the best restaurant or Google will automatically know based on my time schedule when I'm in the city and when I want to have lunch and they will already know that I like for example so what all lobster salad or you know and they will automatically send me to the restaurant based on my digital footprint but they will not will they send me to the McDonald's they will not pay the million no Tesla or Google or Facebook will not send me to McDonald's because they know I don't like it I want trust their algorithms but they will probably send me to a very good restaurant which has to oversold or so on but will sell me to the best restaurant no they will send me to the objectively subjectively best restaurant to the restaurant which fits my preference is multiplied by an algorithm who pays the most and understands online sales to the algorithm best who pays the most for me being a client so subjectively objective best of all they will multiply my data with a algorithm and we pay the most and I also have an answer for you who is going to be the client of the real estate agent or the asset manager or the banker or the fitness trainer it's not going to be Schatzi I love you it's also not going to be Schatzi I love you it's also not going to be a single person but it's going to be Apple, Google, Facebook Amazon or perhaps a few other digital companies which are currently in the making they are going to be the biggest clients because in a few years the algorithm will make much more of your decisions today in online marketing you have to answer three questions correctly then you are going to sell the most don't make me ask don't make me wait and don't make me think the algorithm will solve all of it you don't have to wait you don't have to ask you don't have to think the algorithm does the thinking for you and your biggest kind as a business person is most likely at least in the B2C segment Amazon, Facebook, Google Apple and a few other digital companies they will make the buying decisions on the behalf of most individuals and that's why you have to learn how the future works because Amazon, Facebook, Google all are fighting now to get into the home to get everywhere and I gave you another question which you also answered unfortunately not correctly which is the biggest in the western hemisphere which is the most sold motor oil or the most sold oil it is simply wrong consider the following what is the most sold hair gel engine oil it's not data but the best model will still need engine oil and I will still need some hair gel if I go for a date my hair stands usually quite well you know but if I go for a nice date ranged on Tinder I might still need some hair gel but if I say Alexa please bring me some hair gel which hair gel is it going to bring me Amazon hair gel and if I want a battery if I ask for an engine oil it's going to bring me an Amazon engine oil if I ask for a shell engine oil a Duracell battery or a L'Oréal hair gel a Duracell battery or a Shell motor oil but how many people are going to ask not I want a motor oil for my Aston Martin I want a specific Shell motor oil for the Aston Martin who would just say I want engine oil now and who would say I want a Shell engine oil let's say whatever but probably for the Aston Martin because it doesn't make much difference and that even means that a large companies like Boxter & Gamble, like Duracell like many other consumer products companies are going to get into big big trouble because completely there is already Amazon but that's just the start because so far the algorithm is still quite stupid it's not totally stupid because when I asked him Alexa, why is Amazon a monopoly or why doesn't Amazon pay any taxes it turns off it doesn't answer in many cases it says I don't know the answer but on these things it just simply turns off so it's not quite as stupid anymore but in a few years and it's not very far anymore we are talking quite a few years these algorithms are going to become extremely smart and dominate everything and change the way the business world I told you in the beginning the current form of the digital business world is winner takes it all but in a few years it's not going to be winner takes it all but winner takes it all exponential to winner takes it all and you're not going to have companies that cost 1,000 billion dollars but 10,000 billion dollars or 50,000 billion dollars it's just a question of another 5 to 10 years and these are going to be the companies which do something very specific which we are going to talk about right now who of you would like to you have two choices you have one of the WHO is a very good university for party I think you are in big competition with European business school in Austria but I do have to say that sometimes we have quite slightly better slightly and you have a choice you can either go to one of the the best WHO party of the year including full champagne whatever you want to drink full budget or you can have dinner with an old 81 year mathematician professor who has a long beard it looks like a garden zwerg I don't know the translation in English unfortunately which one would go to the WHO party all champagne all drinks inclusive and he would like to have dinner with the 81 year old mathematician with a long beard the problem is he is so bored at 81 that he also writes with the vertical papers but that's only his part time job his other job is a little bit more specific he is the founder and major shareholder major decision maker of renaissance capital the biggest most successful hedge fund in the world which has netted him an income of about 30 billion dollars and another 30 billion dollars in trust on the Bahamas he is a good friend and competitor called Ray Dalio from Bridgewater Ray Dalio is also a famous also has made the books principles which we also applied to our company and big debt crisis also I would highly recommend to read it's very good reading indeed and a reporter asked him Ray and James why are fucking so more 10 times more successful than all the other hedge fund managers all the other hedge fund managers are only billionaires but you have 30 billion why are you so rich and Mr Simmons answered the old mess of a petition it's a very simple answer all hedge funds use algorithms but we do something slightly different we just own the algorithms we program them and we monitor and control them but we do not interfere with the algorithm and all other hedge fund managers still think they are smarter and interfere with the algorithm that's the slight difference 20 times more successful than most other hedge funds last time I said keep it in your mind have it tattooed in your mind we own the algorithms we control them we program them but we do not interfere anymore keep this into your brain because it's going to be part of your future Mr Simmons the old mess of a petition also had he also happened to be his CEO his name was Robert Robert Mörzstein he also had a daughter called Rebecca and they didn't like Obama's politics and they thought let's play some politics and with a 28-year-old gay Canadian guy with pink hair they set up a company called Cambridge Analytica which took various algorithms, Facebook data and you know send every voter what he wanted to hear a liberal voter in New Hampshire was just the primary season this end will have responsible gum control and we'll make sure that all qualified people can enter the United States and in rural Texas or Mississippi we will say we'll make sure every American has 10 guns and we'll make sure that we pick the biggest wall on Earth bigger than the Chinese wall and the Berlin wall together every voter gets exactly what he wants to hear and the Brexit let's say was a pre-dinner course and Trump the election probably is going to be in the second term was the main course algorithms have started to make politics but again that's just the beginning because in a few years it's not inconceivable that if you ask Alexa or Tinder or whomever you can ask what should I buy and say well buy an Amazon battery I'll send you the battery or there will be a default option and it will also send you this to you automatically but they could also ask you whom should I vote for and Alexa or Google based on your preferences the best candidate for you would be whatever you choose whatever is based on your preferences and perhaps there will also be a default option which also say should I automatically vote for you and perhaps there will be more default option which only I'm not going to say should I vote for you it will automatically do it and you just might have the possibility of turning the default option off that's just a slight difference but this could change the way the democracy works this could easily change the way that a few algorithms the guys who control the algorithm program them and monitor them decide who is the next president of the United States of America the next German chancellor the next British prime minister the next French president later I ask you another question you have the option to have two fridges one fridge is really cool whenever you go out come home Friday night and you have guests it has enough beer and vodka whatever you want to drink who would love such a fridge everything what you want you never have to go to a supermarket everything is there you know party vodka beer wine champagne whatever you want who wants this and you see me a little bit more so just a guest so you want a little bit extra it's available or two there's another fridge on the side which you can also order the fridge is somewhat different because it says when you want the water beer no you didn't move enough you're too fat you didn't exercise your cholesterol is too high and it will just put into your fridge a banana and a yogurt you are this fridge you can only choose one I will come later to these two fridges but think about this experiment it would be quite nice to have everything I'm personally not so sure which one I would like because both fridges come with some kind of side effect yes, both fridges stand for something which I come to momentarily but we'll go back again just recently a simple thing I went to my apartment in Vienna with my Tesla and there's a one-way street and I went under the one-way street and a car came driving into me and I blowed the horn and it says are you stupid why do you drive into me didn't you see it's a one-way street and the guy said Google said I should drive this way yes I will tell people how to let's say in a young country they don't have data on how to get it I don't know let me make an experiment what is 28x28 what is 28x28 28x28 what is 5% of 120,000 5% of 120,000 guys the elitist university studying computer programming guys what? 5% easy 5% of 120,000 what is that? 12,000 oh my god 6,000 but I think you have proven the experiment that the existence of calculating tools starting with calculators which I had in high school and today mobile phones, Apple eye watches and anything else people have stopped learning how to calculate I mean it still helps in the real estate business because if you negotiate with somebody and you are quick in your head it can give you some advantages if the other guy is slow and you are much faster can also as an investment banker sell companies or do finance things and you are much quicker calculating than the other guys you have some advantages admittedly but considering that you are one of the elitist most elitist universities in Germany and study programming so something which requires a bit of a mathematical brain it's a shame that doing these simple things causes big problems I mean it's not an it's always the case with my own company my secretary often makes stupid mistakes and I always call and say what did you calculate? I don't know the computer said whatever and the same thing is that the algorithm Google already navigates you you don't need to know how to navigate 20 years ago when I started living in Boston in Harvard in the New York City musical or you had to look otherwise you couldn't go to a WTOB that was it you had to look at the street map that was all existed so when I took a drive to New York City from Boston I had a old Volvo from my friend I had to study the map and then I had to remember which way in New York to go because otherwise I would have ended up in Harlem or the Bronx recent years and the real estate has changed but at those times it looked like it was old you had to drive be careful where you drove but today Google does everything for you but in a few years the algorithm will take away most people's thinking and I give you an example from a party where I recently was recently was in a party and a lot of the guys were in the bathroom it was locked they wanted to pee they wanted to pee but it was unfortunately not possible because the bathroom was locked and there were chemical experiments being done in the bathroom I hope you know what I suggest with this but at least there was a chemical laboratory on some people in the bathroom so I had to go outside to take a piss and the horse dog followed me and I played with him and 20 minutes afterwards I played with this little doggy and they went in and the door to the bathroom the chemical laboratory opened and the dogs started screaming because it didn't smell it smelled very strangely and I said to the guys why are you so stupid, why are you doing this even a little doggy doesn't like it he screams like if he's on a plane which lands and he said look your life is cool you come with your fast car and go home and we'll be by ourselves in a different world but all that is going to be possible in a few years in Silicon Valley when I was last time at Singularity University the two are not quite ready in one year they're going to be ready they're going to be integrated in your normal classes and it's going to be like a combination of augmented and virtual reality and augmented reality the virtual reality is going to be a lot better what happens if you drive in the rain with a Ferrari in Switzerland or an Aston Martin, what happens you drive, you know you have to be careful that you don't skid you know sometimes you have to have a glass near you, you know because in British and Italian cars tend to leak, especially in convertibles sometimes you need a hair dryer to dry it out and in Switzerland you go to fast, what happens what happens when you're in Switzerland so fast not just expensive there's a car you go to jail the car goes to jail and you go to jail you know one of my the friend of one of my colleagues he once was caught on radar with 180 kilometers he luckily left Switzerland but he dares not to go back to the country because he would go one year to jail and the fine would be about 250,000 Swiss francs but in a virtual world if you drive 180 kilometers you're the Swiss Alps and drive away from the police car and tell that police guy fuck you you know you don't go to jail, there's going to be some music and it's going to be applause and they're going to encourage you as an algorithm to buy some more today on Mottball I once took a race which was called Mottball it's like Gumball from London to Ibiza I went with a Tesla and I told the guys go slow but one guy in Switzerland he didn't just go slow he was very stupid he came with an Audi RS4 which was not licensed for having 700 horsepower and they took him to jail and they had 22 points against him they wanted five year jail time for violating speed limits excessive driving insulting the government the police having an illegal car having drugs driving under the influence of drugs having alcohol and they wanted a total of 1.25 million Swiss francs of fines confiscation of the car and for him it's partner two years jail time and for him five years jail time and even for me they stopped me with the Tesla because I was going 80 before because for some reason the road was a little bit down and they had put me down 80 or 82 and they stopped me and they said 80 francs and I said but they were cheap and they paid 10.000 or 100.000 francs we already had 25 vehicles and today we didn't have any but it's a virtual world and I know this is going to happen you just have fun and drive away from the police and so it's most likely that the majority of people are going to beam yourself in this world and the big danger is that most people as they have stopped learning how to calculate or how not to navigate will stop learning how to decide and the algorithm will make the decisions which insurance policy you buy which apartment you buy to which doctor you go to which restaurant you go and you're going to have sex and whom you're going to vote for it's all going to be done automatically and the digital avatar which is already functioning in some ways is going to be your most important personal connection in the post-industrial world the number of people whom you can trust has already decreased from about 3.2 to 1.9 it's expected to grow down to 1.5 or 1.4 as it is already in post-industrialist societies like in Tokyo, in Seoul in Hong Kong or in New York City and the human interaction is going to be replaced by digital avatar the digital avatar is going to start quite simple instead of calling my secretary I'm going to talk into my mobile phone I want the rest of it it's already going to automatically send me the doctor or automatically arrange a date if it already knows in which window I am and look for apartments automatically and suggest insurance agents to do and perhaps it will have a default option where it already does it automatically so I don't have to do anything anymore but it's also going to entertain me it's going to fulfill my sexual desires whatever it may be and if I'm lonely it's going to make me laugh if I'm sad it's also going to make me laugh and it's going to be my most trusted advisor and it's going to have so much data that's the combination of what today your parents, your grandparents your kids all your friends all the people you know you plus everything what Google, Amazon, Apple, Facebook and so on know of you today will be much less the digital avatar is going to know of you already four location points of a person are sufficient with 80% likelihood to figure out which person it is four points selected at random if you have four billion data points on each person on movement, on payment on sleeping patterns on medical information on travel patterns on stuff on brain waves the algorithm can do almost unlimited things and this is not only we're not talking about fantasy world we're talking the next few years the prototype is already going to be there and the avatar is going to be much better because my secretary sometimes is sick sometimes she is careless recently she booked a flight to Frankfurt and cost me 600 euros I was never going to book a flight to Frankfurt it's always going to choose the cheapest flight make sure that I sit in front on the aisle arrange everything including that my car drives me to the airport automatically I don't have to wait for the driver for the driver to fall asleep so I will probably choose it also medical data I don't know if you realize it but on Monday I had operation on my teeth it was not so pleasant have you realized that I have an operation on my teeth you know but there was already modern technology because let's say the machine took the scan and the digital print already printed my teeth while the dentist treated them and everything went almost semi-automatically already and normally I have a second watch I have one real watch and a data collecting watch everything from sleeping patterns and let's say stress levels and piles and everything and sooner or later you're going to have a medical data set you can predict diseases and prevent diseases so it's going to be quite useful so even people like myself are going to use it but most people are going to totally and absolutely give up all the decision power to the algorithm and I give you already two examples in the states it's already common that an algorithm makes a recommendation for sentencing for a criminal in court the judge still has to make the final ruling but the algorithm suggests for drunk driving because it's the third time this guy goes to jail for two years and six months in 99.2% of the cases the judge follows the algorithm and if the guy who goes to jail asks the judge why did you do this the answer is because the algorithm said so he doesn't say anything why? the algorithm said 99.2% and think about it, if you go out at night if you're 10 people and you say where do we go out partying at night what do most people say they say you you say most people cannot decide anyway and it would be a pleasant thing if the algorithm will make the decision do you still remember the question I asked you about the fridges with the kühlschränke the fridges represent two different systems which are currently fighting for world domination Europe is only a spectator from history unfortunately Germany especially but this is the first the first one is manufactured in the United States you know Trump and his colleagues are shareholders and it's sold by Amazon and it always motivates you to buy a little bit more to consume a little bit more to get whatever you want or whatever the algorithm thinks you want and it will make your desires to consume more that's the American capitalist individual individualistic individualistic fridge that's the first one but it comes with a side note it manipulates you and makes you addicted to always want more and to feed the system and makes a big company even bigger and richer that's made in the United States America the Amazon fridge the second fridge is manufactured by Alibaba and sold by Alibaba it's monitored by the Chinese communist party and whenever you think of wanting a beer it automatically sends a message to the government and says this guy could want a beer he's not acting in the interest of the country and if you actually order a beer you might already get a visit from the Chinese states police asking you if you're an alcoholic and they will already increase your insurance premiums and if you ever would think or even consider thinking that Xi Jinping is not the best man on earth and not the best president a god like figure who can never make mistakes in his life and the communist party is the best of all parties of the brightest the biggest of the biggest then a few guys from the Chinese military are going to come and arrest you or kill you that's a side effect of this fridge and if you're like me who would probably end every speech Xi Jinping is the brightest man on earth let us pray for Xi Jinping and his brightness and his intelligence and his wisdom and his intelligence and his brain and his intelligence but if we think internally we'd be different they would send a whole army to me because it's very dangerous and they would put me in jail immediately and today in the world we see a fight between these 2 systems the fight is seen with, for example, companies like Huay but also between Amazon and Alibaba was. People arrested for it. And in the end, one of these guys is going to win. And it's going to be the guys who are best at controlling the algorithms, owning them, and programming things. And who do not have to interfere, like Mr. Simmons and Mr. Ray Dalio. And what I would like to wish you is that you belong to the guys who always keep your own thinking, who do not let the computer and the algorithm and the people who all program it and control it take over your brain and your thinking. If you do this, your future will be very bright because there are tons of opportunities. And there are all the tons of things which require a lot of ethical understanding and ethical questions. But if you belong to the guys who let the algorithm take over your brain, you're going to belong to the masses. In the past, they always said the world is divided between half and half-nots, between rich and poor. That's going to increase. The world is also going to be divided between people who are digital literate and digital illiterate. But the biggest gap ever will be between the people who let their brain be taken over by the algorithm. And the people will still make their own decisions and take their own fate into their own hands. And that is called freedom. And I can tell you one thing, freedom is still the best thing. It's the best thing of being rich. It's the best thing of being smart. And I wish you both, that you both stay rich and smart and honest. Because the future needs people who are honest, who have the right ethical standards, and who put their foot on the accelerator, and not the algorithm does it, you do it yourself. Thank you very much. Best regards.