We interact with the digital world through PCs and smartphone screens. According to Robert Scoble and Shel Israel, renowned authors of the new book “The Fourth Transformation,” that’s about to change dramatically as head-mounted virtual interfaces, powered by A.I., will immerse us in digital worlds. You’ll rethink every part of your digital strategy once you see the world through Scoble and Israel’s virtual reality goggles.

As entrepreneur in residence at Upload VR Scoble travels the world looking for what's happening on the bleeding edge of technology.

He's interviewed thousands of executives and technology innovators and reports what he learns in books ("The Age of Context," a book coauthored with Forbes author Shel Israel, has been released at http://amzn.to/AgeOfContext), YouTube, and many social media sites where he's followed by millions of people. They have worked together on a new book about AR and AI, called "The Fourth Transformation" which you can order here: https://www.amazon.com/Fourth-Transformation-Robert-Scoble/dp/1539894444

Shel Israel is a writer, speaker and an occasional company advisor. He writes and speaks about technology's impact on business and life in books, for Forbes and occasionally for business.

He is co-author with Robert Scoble of Age of Context: Mobile, Sensors, Data & the Future of Privacy [2013] and Naked Conversations: How Blogs are Changing the Way Businesses Talk with Customers [2006]. He has contributed editorially to many publications and sites including Forbes, BusinessWeek, Fast Company and Dow Jones Business.

An accomplished keynote speaker, Israel has addressed business-oriented audiences on six continents on diverse subjects related to how people and businesses respond to technological changes.

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Augmented Reality and Artificial Intelligence

Michael Krigsman: Welcome to Episode #228 of CxOTalk. I’m Michael Krigsman, industry analyst and the host of CxOTalk. We have, again, just another amazing show! We're going to be talking about augmented reality and mixed reality, and virtual reality, and artificial intelligence [with] two people who are among the most expert in the world on these topics.

Before we begin, I want to say “thank you” to Livestream for being a great supporter of CxOTalk. I used to use Google Hangouts, and I hated Google Hangouts because it crashed, and there is no support, and there were bugs, and Livestream saved us. And, if you go to Livestream.com/cxotalk, they’ll give you a discount.

There's a … Hey, guys! Hey, guys! Hang on; hold on; hold on; there's a tweet chat that's going to be taking place right now with the hashtag #cxotalk. And so, without further ado, I want to introduce Robert Scoble and Shel Israel, and Robert Scoble…

Robert Scoble: Yeah!

Michael Krigsman: Right!

Robert Scoble: I thought you were the Amazing Ant-Man! [Laughter]

Michael Krigsman: Alright! So, Robert Scoble. Tell us what you’re wearing!

Robert Scoble: I’m wearing a Microsoft Hololens, which is the first of the mixed reality devices that are going to hit the market, but obviously, this is not yet ready for consumers. It's way too big, way too dorky, and way too expensive. But, it does show you the future, and it's an amazing future; we’ll talk about it.

Yeah, I’m a tech journalist. Siri was launched on that couch back here; I had the first ride in the first test lab in covering Silicon Valley for many years now, and Shel and I have written three books. Each book has predicted a decade-long trend, and this latest book called “The Fourth Transformation” predicts augmented reality is going to change everything. And this week, Snap and Facebook demonstrated that principle pretty well.

Michael Krigsman: Okay, so we’re going to be talking about these things and the latest developments in augmented reality. Shel Israel, you and I have known each other for many years, as I’ve also known Robert. Welcome to CxOTalk! This is your first time here!

Shel Israel: I’ve known you ever since I lost my coat in Boston, Massachusetts and you gave me this beautiful Marmot. And I have to tell you, Mike, after ten years, my friendship with you has outlasted that coat. I’m partners with Robert Scoble and Transformation Group. It’s a new consulting service for large brands, primarily. We’re going to help them make the transformation into mixed reality, and we can use the rest of the show to explain what mixed reality is all about.

Michael Krigsman: Okay, so let’s begin. You guys have written this new book on AI and augmented reality […]. You’ve started a consulting company called the Transformation Group. So, let’s level-set and when you talk about AR, VR, mixed reality, what are we actually talking about?

Robert Scoble: Can I set that up? So, VR, first of all, you're in a black box and you're only seeing virtual things, right? You're not seeing the real world at all. With AR, or augmented reality, you can today use your phone like on Snapchat or on Facebook and aim it at things, and see virtual things on top of the world. Soon, you're going to be wearing glasses, and soon, being in the next three to four years, you're going to see a range of glasses from companies like Apple, Facebook, [Raw Wave], Snap… There are ten under development that Shel and I know about, and we probably don’t know about all of them. That will lock the virtual image to the real world, and let you walk around it. And, that can interact, and that’s really mind-blowing.

I mean, with the HoloLens, you can have aliens coming out of your walls, and they’re putting holes in your real wall. You’re seeing the real wall, but it looks like there’s an alien coming through it. And it’s like, mind-blowing what this technology does for education, for retail, for all sorts of things.

Michael Krigsman: Shel Israel, why does this all matter? What are the implications?

Shel Israel: Well, that gets to the core of the Fourth Transformation. I’m not going to walk through the whole thing, but in the First Transformation, we started with putting words into PCs, on knowledge worker desktops, in the form of personal computers. Then, we went to point-and-click with the McIntosh, and that meant everyone could use these desktop things. Then, we went to touch and mobility, and that brought us into what is now this third transformation where anyone is using digital technology everywhere. Now, we’re going to go to a system which is much more intimate than what we have with phones. We’re going to have things in a few years that look like glasses I’m wearing. And, they are going to allow us to do all the things that I had just named: MR, AR, VR; and we’re not going to look freakish, and we’re not going to be tethered to anything.

This means that the customer experience in stores is going to be changed because they can do things in 3D. They will walk into stores, be at home, and have an immersive experience with the product. This means that surgeons can get assistance while wearing headsets. It means that anatomy students will be doing virtual surgeries in headsets, rather than with frozen cadavers. Every single place we look will be virtual teachers in China, at least; students will learn what looks like what the Civil War was like not be memorizing the name of a battle and by dates, but by actually getting to Gettysburg and getting the full impact of what a bloody war is like.

Wherever you look, whatever you do, it’s going to be enhanced with mixed reality technologies.

Michael Krigsman: And Robert, you are out seeing these companies. You’ve been traveling around the world, and tell us what are some of the really fascinating examples that you’ve seen, and who is doing this really well?

Robert Scoble: Well, it goes way back. In 2011, I did I think the first interview for our book, and that was with Metaio in Germany. And, they sent me monsters on the sides of skyscrapers with a standard camera. And we still haven't seen that ship, and that company, and so I expect when Apple comes down this road, we're going to see stuff like that in its mixed reality strategy that it's developing. And, it's quite an expensive strategy because [since] Steve Jobs, they've been working on this for seven years and they still haven't shipped product yet, which shows the kind of investment that it takes not just to do it at Apple but even at Meta. I did an interview this week at Meta, which is one of the first mixed reality glasses companies that Shel and I have interviewed, and they’ve been doing it for five years, and their product is still not to where a consumer can wear it and use it all day long.

Michael Krigsman: Why are these products so expensive to develop?

Shel Israel: Well, she has formative products through history of very expensive to develop. I remember when Windows came out, Bill Gates said that the first version of Windows, the first copy, cost over a billion dollars. The second one cost seventy-five cents. This is still in the hardware phase. We are now looking at state-of-the-art stuff which will soon acquaint [people to] things to look at in computer museums in Boston and San Jose. And we will end up wearing something that costs under 200 bucks, I would imagine, which does infinitely more than we can imagine today; the same way our smartphones do infinitely more than mainframes did 50 years earlier - except, the transformation isn't going to take 50 years, it's going take less than 10 for sure; maybe 5, maybe less, because so much money from so many great companies is going into this technology. So, right now, it looks to us like it's all moving in slow motion. But when you think of the technology going into this, the things that have never been done before that can now be done – the changes from what we saw a year ago, at South by Southwest to where we are now, this is a marvel.

You know, the thing, Robert, that I just made fun of, was a marvel when it first came out, but now just about everybody that I know that wears it, that loves it, talks about their frustration with it because it's heavy; it's cumbersome; it's got a limited field of view. There are so many problems being solved at such a rapid rate. When you're a consumer, you're trying to figure out what technologies you should use the next quarter in the enterprise, or for a brand, then it seems very clumsy. This is the fastest technology revolution of the four of them, by orders of magnitude.

Robert Scoble: You asked why does this cost so much to build. Let’s talk about the six technologies that are on this thing, right?

Shel Israel: Yeah.

Robert Scoble: Sensors that are seen around the world, that is billions of dollars for R&D, right? IM-Sense was bought by Apple. Google Tango is doing the same kinds of research, Meta is doing the same kind of … Everybody who wants to build a mixed reality glass has to build sensors to see the world in 3D and bring it into the glass. Then, you talk about the connectivity that you're going to need, right? Because with mixed reality glasses, you get as many TV screens around you as you want. So imagine being able to watch CNN here; here, ESPN is playing; and over here, you can watch your security cameras from your business; and over here, you can watch Amazon servers; and over here, you can watch Facebook. You just look around, you have dozens of screens all around you, and you don't have to buy more if you want more screens.

But, to serve all those screens with hi-res 4K or 8K video, or eventually even more in the future, you’re going to need a lot of bandwidth, and that’s 5G. 5G brings 35 gigabits per seconds down to the glasses, but we don't yet have 5G and we're going to … And, Verizon has to re-do the architecture on a city, because the cell tower needs to be a kilometer and a half from you or closer, and that's not true with today's cell technology. You can be 15 kilometers away. So, they need to put a lot more cell towers into a city and they put fiber into each one of those antennas, so it's going to bring us 5G. That's coming this year, right? Verizon is turning on the first 11 cities this year. And that's really […]

You go through the GPU; the GPU is needed to display the polygon. So, when you are seeing virtual things in VR or AR, you're seeing millions of little polygons or little triangles that are underneath what you're seeing; and you'll need a better GPU to process more of those. So, if you want to increase the resolution or increase the frame rates, or increase the experience of being immersed in the media, you need more GPU; or, you need to do a lot of trickery with […] rendering. And you look at the R&D budgets of NVidia, and AMD, and Qualcomm, and [Mallway], and other companies that are building these chips; they are spending billions of dollars per quarter in R&D.

Then you keep looking around; there are companies that are building eye sensors. GoogleBot, Eyefluence that’s in our book, Facebook product company called Eye Tribe; there is lots of money spent on that, and particularly in the new user interfaces that you’re experiencing when you get a glass like this. They’re investing that.

Shel Israel: Just …

Robert Scoble: You just keep moving down the stack. The whole thing is just really expensive, and there are ten companies building these glasses, and they’re all building their own infrastructure. And the infrastructure… Apple’s building a CDN, so think about putting a  server near you so you have low-latency VR; you can play football with your friends over the internet, right? That requires a CDN that’s really a massive new expenditure for Apple and other companies, yeah? Yes, Shel?

Shel Israel: Yeah, I’m sorry. Just an example: Everybody’s looking at the mass acceptance, but there are all these verticals that require remarkably new technology. MindMaze is a company that we wrote about in the book. It has 1.2 billion dollars in investment money. What they're doing with this money is creating a virtual reality headset to cure schizophrenia; to treat and help people recover from a stroke; to treat Parkinson's … There are five or six really complex ailments that they're addressing and finding success with. To do this, they're creating a net that goes over the head, contains 32 sensors that are reading directly from the brain; it is using the patient's brain to move objects; to make somebody whose arm has been cut off believe that arm is still there to eliminate the pain.

Every single thing I mentioned is something that's never been done in history. They've been working on this stuff for four years. They're burning a lot of money, but when you consider what they're working on, they will probably have cured, I'm guessing, schizophrenia in the next four or five years, that's kind of remarkable. When you think of the billions of dollars that we'll save, the pain and suffering that will be reduced, the investment that is going in here is enormous, but the return is even greater – far greater. And, the time to make this stuff may seem very long, but when you think about what they're doing, it's rather short.

Michael Krigsman: So, the sense that I have is there is this enormous promise, and the ability to change fields, as diverse as medicine, learning, training, in profound ways; and yet, at the same time, in order for this promise to be realized, there needs to be a massive investment in infrastructure; in wireless connectivity.

Robert Scoble: Let's talk about one that you're going to hear a lot more about: Facebook was the first one to use this term on stage in a big way; in a big, company way. And that's "SLAM." And so, what we're building as an artificial copy …

Shel Israel: What does SLAM stand for, Robert?

Robert Scoble: Simultaneous Location And Mapping; which means we're building a 3D map of the world, and it's not a map like Google Maps, where there is just a line in the middle of the street, but it's capturing the entire street in 3D. And, we're not just going to capture the street, we're going to capture every surface in the world with these glasses, and build a massive database. How big is that database going to be? Petabytes or Exabytes? How massive [an] amount of server space just to keep a 3D copy of the world at some resolution? You know, let's say a millimeter per pixel or voxel resolution around you? That's a huge amount of data, and that's a billion dollars right there just in a data center to start with. It might be three or four billion, once you are done, and certainly, you are going to have to change those machines out like you do with cloud computing machines at Amazon, for instance. And so, that's, right there, that’s a billion dollars, minimum.

And, Uber’s building one of those copies, Mercedes is building one of those copies, Google already built one of those copies, Apple’s building one of those copies, Facebook is working on this, right? That’s what they were showing off when they said, “Oh, you can lock virtual things onto your tabletop. That’s using SLAM; the phone instantly builds a point-cloud and then a 3D model of the world, and then starts doing AI to figure out how to lock things properly to the surfaces in your room. And that’s going to be something that over the next 18 months, you’re going to see a lot more of; because right now, we haven’t seen any of the really good AI that recognizes the objects in your room, but that’s coming, and that’s coming big time according to Google because they’re going to use the data that they built off the self-driving cars to bring to our glasses. And how many objects in the street does the Google self-driving car or now Waymo, recognize the hundreds of thousands of things, right? Because it needs to see a stop sign or a stop light and know what to do! And, the glasses are going to do the same thing. When you walk around, it’s going to tell you stuff about the world that you’re looking at.

Michael Krigsman: What’s the timeframe for all of this? It seems like it must be years away, still.

Robert Scoble: Umm, Apple is going to announce something this year. We’ll see how aggressive they are, but I bet they’re going to be very aggressive particularly since Facebook is such an aggressive […] for this AR world. The big companies are going to keep trying to outdo each other. The question is when do we get glasses? Certainly within the next two years. Within the next two years, we’re going to see ten glasses get unleashed from a variety of different companies; maybe three years, if you want to include more players; but Apple’s coming within two years. So within two years, me and Shel are wearing little Apple glasses that might have a limited field of view; we don’t know; we don’t know how good their optics are. And then you’re going to see a lot of others…

Shel Israel: But, however good they are, there will be like nothing that’s ever been experienced before.

Robert Scoble: It’s true. Everybody who plays with my HoloLens is just absolutely floored by how amazing it is to have computing on all the surfaces of your house, you know? It just …

Shel Israel: You need to picture another factor; we’re talking all about the technology, but let’s switch over to the humans for a while, because right now, we sit around, we can say “I was there when the Commodore Pat was blah, blah, blah…” Right now, the starting point for coming generations is that old thing called the Smartphone. That’s the starting point. We have kids using Minecraft, who are learning to code before kindergarten. They’re learning to share. They’re learning to … When they want to learn something, they don't go to teachers or parents, or handbooks, they go to YouTube. So, we have a culture whose expectation, as they grow up, will be to use VR and AR in their work, as they shop, for their entertainment. Everything that they do, they're going to expect VR and AR rather than …

My generation started off with typewriters and carbon paper, and can you imagine being a recent grad sitting down at an office and being handed and Underwood manual typewriter and whiteout today? That's what's going to happen if you hand somebody ten years from today, a recent graduate, a smartphone, they're going to say "What is this? My grandmother used this!" So, you need to look at not only the evolution of the technology but generations that are rising; which is a great term, Robert, for you to talk about the zero-learning-curve generation that you discovered.

Robert Scoble: Yeah. You know, in fact, one of our pieces of advice to brands who are seeing that this world is starting to come at them, and they’re starting to wonder what they should be doing about it, particularly when Facebook is doing it. If you don’t pay attention to what Facebook’s doing with augmented reality for brands, it’s pretty stunning. So, my advice is to get VR today, because there are not enough experiences on augmented reality to really have a good experience. And, you need to start building and understanding how to build for VR, because that’s going to teach you how to think; how your engineering and strategy teams should be thinking in 3D; and starting to think about the next world.

Shel Israel: I have to stick in the commercial pitch: This is why we started Transformation Group. We don't think there are too many decision makers in high-level brand seats feeling the great pain of an unfulfilled demand for mixed reality technologies.

Robert Scoble: Yeah.

Shel Israel: But the thing is going to come sooner that people realize. And, it is very important for brands to stay a little ahead of their customers, a little ahead of their competitors, and certainly, far enough ahead that no young entrepreneur says, “Ha! I see an opportunity to unseat a big taxi company or Sears Roebuck of today.”

If companies sit and wait for the best cases to come out, it means that somebody will have beaten them to the page. And what the race is really for is the next generation of customers.

Michael Krigsman: And obviously, you guys feel that this is going to just explode in popularity and adoption in the world in the next three years, four years, what’s the time frame?

Robert Scoble: Yeah…

Shel Israel: … Go ahead, Robert!

Robert Scoble: It's now! This week, Facebook and Snap laid out really expansive strategies for this. And if you're not paying attention to that, you're going to get slammed every month because over the next 24 months, you're going to see ten glasses come out; and big companies come out with major new strategies around this. Apple is the one that I'm looking at the most, and Tim Cook has been out there talking about AR for a year now. Now, we have a question. Does he ship this year, does he ship next year, does he ship in 2019, but certainly by 2019, everybody is in the game! So if you're running a business, you have to start thinking about how your customers in three years are going to experience your business as they walk in, or as they call you from this mixed reality world and what their experience expectation is going to be.

Shel Israel: “Explosion” is a funny word, Michael. I think it’s more like when Ethernet came in. Bob Metcalfe used to say, for the first year in a row to the seventh year in a row, “This is will be the year of the network.” No one really knows when the year of the network was. No one really knows what moment the smartphone replaced the laptop. This is going to be more like a river flowing; very, very quickly. And, if you just start getting your arms around this now, if you’re trying something out; when this is already happening, you have a very long learning curve. What you’re doing is transforming the way businesses operate, the way they deal with partners, customers, marketing, everything; and there is a lot to learn. And if you start waiting to see what the other guys are doing, then you’re going to be a laggard to market, you’re going to be in the same position as Kmart or JC Penney. You know?

We think, in retail, it's very interesting. Home Depot has long been perceived as the technology leader in its category. And what's going on now is Lowes has come out with a holodeck for kitchen redesign, they're selling Tango technology phones from Lenovo, not as phones, but as home improvement tools, where $500 to save you the cost of making a mistake in remodeling your house isn't that expensive.

So, there is an example of where I think one company that is perceived as the follower is going to become a leader. And, I don’t think there’s any way that Home Depot today can adjust course and catch up because Lowes has been at it for two years.

Michael Krigsman: And we have a comment from Twitter. Jay Ferro, who is a prominent CIO and has been a healthcare CIO makes the comment that he sees huge applicability in healthcare for both patients and providers, as well as construction, security, and others. So, maybe can you talk about the healthcare applications of AR, VR, and mixed reality?

Robert Scoble: Umm, yeah. Pfizer sees it as a drug, and they are already doing studies along the lines of what Shel talked about earlier. They’re studying it for use in Alzheimer’s, ADHD, autism, depression, and physical pain, among other things. So, first of all, putting light in your eyes; turns out it’s a brain hack and it can affect your brain; it can change your brain. And we are already seeing examples of this in studies. The University of Washington studied burn victims, and they put VR on the burn victims and compared their responses to pain via VR versus morphine, and they found VR is way more effective at solving burns that have pain than morphine.

Shel Israel: It may be just as addictive, but it doesn’t have the side effects of that addiction.

Robert Scoble: And morphine and opiates take you down a path of if you go all the way down the path, you end up with heroin. This is one of the reasons we have a huge heroin problem in America. And we’re killing people; a lot of people in this addiction. And, if we can stop that, or cut that down by moving some of these things away from opiates, and into using light in your eyes to affect your brain, that’s really a big deal.

Where else are we going to go with this? The doctors are going to wear it. I just had my eyes scanned in 3D; that’s the first time. Just last Saturday, I had my first 3D eye scan done, so now the doctor’s going to be able to walk around the surface of my eye in 3D with her glasses.

Shel Israel: A couple of more … in this area, because I think health and healthcare is one of the places that is going to be … For me, it’s remarkable because we’ve written three books and health was always a laggard. They were busy thinking about, “Maybe, we won’t have to carry around our records in manila folders from one doctor to the other,” and now suddenly, they’re the leading edge. Outside of Boston, at Duson, a company that has designed 3D modeling for Tesla and Boeing, they’ve developed a 3D heart, which is a thousand times bigger than a real heart; a much larger [heart]. Doctors can go there with a 3D model of a patient’s heart where they can’t find the problem, and tour; take a 3D tour of a heart and see what the affliction in their patients’ heart is by seeing what a perfectly healthy heart will look like.

In Case Western, they are using HoloLens to teach med students anatomy so that they don’t have to cut up cadavers, which I think I might have mentioned before. Every aspect of healthcare is working that way. And, we’re just beginning.

One of the possible dangers of all of this is one of the sources of miracles. VR and AR impact how the human brain works. It can make pain go away. We don't know what the lasting effects are; we don't know what is going to happen when millions of people start having their brain somewhat adjusted by this stuff; but in terms of health, it can only help.

Michael Krigsman: But when you say it makes pain go away, you have to elaborate on that because what that implies is that VR and AR operate on centers in the brain that are related to things like pain but that are very different mechanisms than when we take drugs. And so, I’m skeptical. So, tell us…

Robert Scoble: There’s an eye doctor in South Africa Sherylle Calder. She runs EyeGen.com, and she works with professional athletes. And all she does it put light into their eyes, and she fixes them. She took the worst rider on the South African cycling team […] per race, he played with her app for ten minutes a day for six months, and now he’s best on the team at that task. And, she has dozens of examples of this.

It shows how deeply hack-able our brains are, and how little we really know about the brain, but we’re doing a lot of research. MindMaze is one. Elon Musk just announced that he’s doing brain research because he knows that you’re going to interface with things with your brain. Facebook just announced the same thing; that they’re doing brain research because they think you can think a post and have it appear, or something else, right?

Shel Israel: Drugs have been hacking brains for a very long time. Psychedelic drugs, you know, we all can talk about acid or LSD, but it goes back hundreds of years when natives have been using mescalito in the desert as the Don Juan books told us about. We have been using drugs to alter sections of the brain for a very long time. We have been concerned about the side effects of that. Robert talked about morphine to heroin. There are countless  - not countless – I have seen reports about what has happened to veterans who became addicted to drugs when they were being treated for pain and suffered a battle wound. And, they become homeless guys in the street with heroin addiction, because their brain never got out of the addiction.

Now, we can do this without the medication. It may have the same or different impact on the human brain. We do know there are at least four companies who are talking about replacing morphine and other opiates in surgery. This sounds, to me, like cause for optimism because of the dangers of opiates, particularly in teenagers. There are reports, I think, Robert, you’re the source of that; reports on teenagers having surgery, becoming addicted to morphine and other opiates. This may not happen with AR and VR, and I can’t tell you what will or will not happen, because it’s all too new, but it certainly sounds better to me.

You know, if I had a choice putting on a VR headset, and swimming around with the seahorses of the Great Barrier Reef while they’re doing open heart surgery, rather than risking my life with vapors going up my nostrils, I would pick the glasses and the Great Barrier Reef.

Michael Krigsman: Are you aware of any medical research studies that are using AR, VR, and mixed reality in controlled studies? Has that happened yet?

Robert Scoble: University of Washington; and if you search "VR pain," you'll find it. Vrpain.com.

Michael Krigsman: What about the artificial intelligence aspect? We have a comment from Arsalan Khan on Twitter, who says these technologies can also create biases and perhaps make us more lonely through technology. And, the whole bias question brings up …

Robert Scoble: I don’t buy the loneliness at all. If you play with Facebook spaces that just got released this week, you can do incredible things with people over the internet, and now start thinking about making that mixed reality where you’re walking around and you can play Frisbee with your best friend, or you can work on a work project in 3D all standing around a table without leaving my bedroom here. That’s incredible! And, people have been saying that this stuff is kind of desensitizing people. I just don’t buy that. I’ve been watching a lot of people play VR and UploadVR. I had an Oculus for a year. I wore a Google Glass for a year before that. I’ve been studying this for a while, and I just don’t see any signs of that.

There will be downsides, and in our book, we have lots of examples of downsides.

Shel Israel: One chapter in the book is called “What could possibly go wrong?”

Robert Scoble: A lot of things. Just watch Blackberry, and you see the downsides of technology.

Shel Israel: You know, right now, we're sitting here and I see these three boxes. I see four boxes. One is a black box that just says your name in it. But, picture, in the future; we're located remotely from each other but we're all sitting in each other's rooms talking to each other. I might punch Robert in the shoulder and he feels the impact through that haptic technology.

You know, I can toss a Frisbee over to you, Mike, and you can retrieve it and toss it over to Robert, and we see the Frisbee coming at us. So now we can play … We can be social with people all over the world. Take something like Minecraft, which is teaching kids who are completely apathetic to global politics, which makes me envious of them, they’re sharing code with kids in countries that we’re in hostile relationships with. You know, you can find people like yourself all over the world. You can play with them, you can study with them, you can adventure with them; you can zap aliens with them; you can zap each other with them; you can play ping-pong Frisbee, and this is just the beginning.

Ten years ago, we had the horrors of Web X, which was a miracle at the time, and all the fourteen steps to get in and out of it. And now, we just click. And look how far we've gone since Google +, which you made fun of at the beginning of this program. Think about where we're going to be two years from today when the screen's gone. We're just sitting here. We're not wearing headphones, we're just looking at each other. It's funny, I just started looking at you in my room. But that's what it's going to be like. Every phone conversation; I know phone conversations are getting outdated, but every phone conversation is going to be without a screen separating this. We're going to be there. We're going to be socializing with each other. And the issue of place becomes almost totally irrelevant but almost irrelevant. More irrelevant.

Michael Krigsman: We have really just a few minutes left. This conversation has gone by so fast and I wish we had another hour, but we have not spoken about the AI, the artificial intelligence connection, and so please, bring that in. Where does that fit?

Robert Scoble: When your glasses sense the world in 3D, it sees planes like your wall, your ceiling, your table, your floor. But it doesn't know really anything about those planes, and the AI is going to recognize all the objects in your world including the planes, right, so that it will really know that is is the floor. And when it knows that, then you can have artificial things moving around your world, because it's going to know every surface. So aliens could come out of the walls if you want that; you could have assistants sitting on your table helping you do things; you can have a Spongebob jumping around back here, or something like that. But, you're starting to see tastes of this with the new Snapchat and Facebook functionalities where they are augmenting your face or augmenting the world and putting things onto the world, right?

The world is stupid today. Five years from now, the world is going to be really smart. These glasses are going to know everything about things that it’s seeing, because this is how the self-driving car sees the world, and these are the systems that are going to be put in place to see this stuff.

Michael Krigsman: Or a surgeon in the middle of surgery. I mean, incredible!

Robert Scoble: Well, you know, I’m thinking just the mixed reality stuff. The surgeon’s going to have a robotic surgery machine that’s going to be training on his or her work, and it is going to assist that surgeon in doing sutures, for instance, or doing whatever they need to do; scoping your knee, or whatever. The doctors are training the machines to do the work [laughter]. So that’s a huge trend that’s bigger than just the few minutes that we have.

Shel Israel: One more thing about remote surgery, which is if you’re in a tent in a battlefield and suddenly you have to do an emergency heart valve replacement, somebody at John Hopkins can be watching this surgery over your shoulder and say “Aah! Not that one!”

Robert Scoble: Yeah.

Shel Israel: .. and save lives that way.

The possibilities are great, and that is the same application as an oil rig worker being trained in a corporate headquarters what to do when a fire breaks out in the North Sea or the Gulf of Mexico, as we've experienced in this country.

Michael Krigsman: I mean, clearly my mind has certainly been opened hugely. So we have really just about three minutes left, and in our last couple of minutes, what advice do you have for brands? I mean, you alluded to some things earlier. What should brands be doing today in order to make sure that they are ready?

Robert Scoble: The problem for brands is when they don't know how to dream about a world [where] that's coming really fast. That's very different to today's world. And so, you need to start getting into VR or getting a HoloLens and start really thinking through strategically how your business is going to be changed by these technologies. Sephora, for instance, already is doing augmented reality signs in the stores, and they're already building augmented reality into their Apple app to augment makeup onto your face, so you could try out pink lipstick, for instance, on the Sephora app on the iPhone or on the Android. And they're already playing with this. So when the glasses come along, they're already going to have their engineering teams geared up, and they're already going to have a good idea of how they’re going to build things, and they’re going to be able to build it iteratively and nicely, right?

And now, a Unity developer is fairly cheap, and in a year, a Unity developer is going to cost three times more than it does today. So if you convince a Unity developer to come and join your team today, you’re going to get them cheaper and cheaper. Then, you will in a year because Apple and Facebook and Google and Snap are going to really wake everybody up. If that’s the lesson this week, companies need to wake up to the fact that this stuff is becoming real, and really fast. And you need to get into it.

Shel Israel: I just want to end with just a touch of shameless self-promotion; that Robert and I are offering educational workshops to brands to understand what is going on now, to see how other companies in their fields are starting to use this and help them understand that they need to pay attention now. They don’t need to move now, they don’t have to start offering headsets when you walk through the door, but we can help them understand what is happening that is relevant to them, not this quarter but maybe eight quarters down the line.

Robert Scoble: You also … One really deep change, because your brand is going to be sprayed onto the world, right? You’re going to walk into a hotel in five years, and the hotel is going to be augmented. Disneyland is going to be augmented. They’re already working on it, right? So, their customers are going to walk in with Apple, or Facebook, or Google Glasses, or Snap Glasses, and things are going to be augmented in the park when you walk around.

So, you are going to have to build a new kind of team that hasn't existed, and is a cultural review team, because you're going to make mistakes in this new world that are cultural. You might piss off Trump supporters, for instance; well, that's a lot of people to piss off. So, you've got to run a diverse team of people through your software the same way you run a diverse group of people through, to make sure you don't have bugs and crashes; to make sure you don't make cultural mistakes; make sure there are no Nazi symbols on the walls anywhere ... That's not through the design process. This stuff happens, but you need to have a team to work on this.

So, that’s the kind of strategic thinking that I’m starting to think that companies need. But, they aren’t investing in this because they haven’t even started thinking about it yet. The first stage is you have got to get into VR or into the HoloLens and really start playing around; and understand how fast this market is moving, because it is moving ferociously fast, now.

Michael Krigsman: Okay. We're out of time, however, we've got two great questions on Twitter. So let me ask them just in turn, and if you can give a sort of a Tweet-sized response to questions that probably deserve an hour apiece… okay?

First one is from Ian Gertler, and he is asking, "What about Internet of Things? Where does that fit?"

Robert Scoble: These are the user interface for Internet of Things, for Smart Cities, for your drones, for your robots, for your Uber car, for everything. That’s why the title of our books says, “It will change everything, and we are not kidding about that.

Michael Krigsman: Shel, you were going to add something quick?

Shel Israel: Robert’s answer was pretty good, actually. But, this is where the humans meet the sensors. This is all this Internet of Things; it has no value unless we interact with it and that’s how we’re going to be doing it.

Michael Krigsman: Okay, I love it. “How the humans meet the sensors” The new user interface for IoT.

And then, finally, we have a question from Curran Danison, and I hope I pronounced your name right and if you haven’t I apologize; who is saying, “The impact of these new realities on education and also higher education, and also timing.”

Robert Scoble: Yeah, that one definitely does require an hour! Caterpillar is using augmented reality glasses to teach people how to fix million dollar tractors. This is the best education technology humans have ever invented. We can teach people how to do new things in real-time while they’re doing them, and that is incredible. And, we’re going to see a huge, new revolution in education.

Shel Israel: In every aspect of learning, just my tweetside to that would be the virtual teachers in China. As much as they try to have good birth control practices, they can't produce teachers fast enough to keep up with students. So now, they're experimenting with a game company in a classroom where kids wear glasses and they customize their teachers. It can be an old teacher, a young teacher; a teacher watches the student and teachers as the pace where a student learns. The teacher gets bored, the teacher, the virtual teacher creates a pop quiz right there.

This allows every pupil, for better or worse, to have a customized education at that pupil's ability to learn; no faster, no slower. And you can't do that in a classroom.

Michael Krigsman: All right. We are out of time. And, still, there's one last point that I just want to… Robert, you predicted six-eight months ago. You were the first person that I saw who predicted that Apple is going to make some type of announcement with AR and VR.

Robert Scoble: Yep. Absolutely. They’re coming out… I believe they’re building a massive strategy. It comes from Steve Jobs; they did the first patent back in 2007, but the real patent for the iPhone with a 3D sensor would pass through augmented reality was done in 2011. So, they’ve been working on this for a long time, buying tons of companies; all of that’s going to come out this year by the end of September in their new headquarters. And we’ll see when we actually get these products; but they’re going to explain that there’s a new Apple here, and you’ve got to get on board with the new 3D map they’re building, and the new CDN, the new Siri, the new iPhones that are going to do mixed reality; the new glasses that are under development; we’ll see if those come out at this announcement. I would assume they will.

And if they don’t, you’re seeing Facebook announce big announcements this week, and you can see; well, Zuckerberg told me personally that he’s aiming at mixed reality glasses. He sees that as the big prize now, and he just bought a micro-LED company to build optics for glasses, right? So, he’s not playing around. Apple’s not playing around. Google has invested half a billion dollars in Magic Leap and they’re building their own teams. So they’re not playing around. Microsoft spent, I don’t know, many billions of dollars already on HoloLens, and has a thousand people working on the next version. So, on and on and on.

Shel Israel: So, if you bet against what we’re betting on, then you’re betting against the best and brightest technology companies in the world, and the best and brightest new developers in the world. But, then again, Sears bet against social media.

Michael Krigsman: Alright. And, I’ve learned a lot. I’ll just tell you we have another question on Twitter, and I don’t think we have the time to answer it but it’s a really great one. And, Bob Resselman says, “I need to ask; what is the effect of virtual reality on intimacy between humans? Parent-to-child, dating and marriage behavior?”

Robert Scoble: It's gonna change it. I have a friend who already has had sex while wearing a VR headset, so… That's a whole ‘nother topic and not one that Shel and I are particularly adept on! [Laughter] But, that will be something that you’re going to discuss at South by South West for my age.

Shel Israel: My Twitter answer to that is we will see, and we’ll see sooner. Not later.

Robert Scoble: Yup.

Michael Krigsman: You …

Shel Israel: Well, I’ll add one thing. If you’re a teenager and you’re shy with girls, you can create a virtual girl to your liking, and you can have sex with it.

Robert Scoble; [Laughter]

Shel Israel: Do you want me to continue?

Robert Scoble: No! [Laughter]

Shel Israel: Everybody prefers this system. I don't know what happens to the human race because we're not going to be reproducing very much.

Michael Krigsman: We’ve moved from the sublime to the ridiculous.

Shel Israel: He asked!

Robert Scoble: Well, it’s not ridiculous, Michael! CNN has a program called “Mostly Human” already, and they found somebody who fell in love with their sex robot. So there is a change here, but it’s not for your show. [Laughter]

Michael Krigsman: Yeah, falling in love with your sex robot. Alright.

On that note, what an interesting CxOTalk this has been. We’ve been speaking with Robert Scoble, and with Shel Israel, who are two of the most knowledgeable people on the planet on the subjects of augmented reality, virtual reality, mixed reality, the connection to artificial intelligence. Their book is “The Fourth Transformation,” and their new consulting business; they work for brands, teaching brands how to do this stuff, is the Transformation Group. Gentlemen, thank you so much for being here! Robert Scoble, and Shel Israel; and everybody, next week we have an amazing show. We will be speaking together with the Chief Privacy Officer from Cisco Systems, and she will be joined by the Chief Information Officer of the Federal Communications Commission. And we will be talking about privacy and AI in this new world.

Thanks, everybody. And thanks to Livestream. Have a great one. Bye-bye!