But I like Twitter. It feeds my need for serendipity and I’ve met interesting people in real life that I would not have met without Twitter.

So let’s examine the idea that Twitter is a way of peering into someone’s brain and learn what they’re thinking about. I decided to sample the last 24 hours of my tweetstream. Last night and today, you would have read about (in alphabetical order):

• ADHD
• Allergies
• Alternative Minimum Tax
• Beaches
• Benghazi
• Bluetooth 4.0
• C.S. Lewis
• Citywide Wi-Fi
• Credit card fraud
• Dementia
• Dunbar’s number
• EU consumer protection
• Geography of innovation
• Georgia economic growth
• Global warming
• Google Glass
• Graf Zeppelin
• Health care policy
• Hemingway
• iPhone peripherals
• IRS
• Kindle books
• National Geographic
• Photography
• Politics
• Poverty
• Rocket engines
• Second Amendment
• Semiconductor manufacturing
• Skynet
• Solar flares
• South America
• Star Trek
• Street festivals
• Transit policy
• Watchmaking

Yeah, that sounds about right.

The speaker was Kevin Mitnick. Some of you will remember his name. In 1995, just as the Internet was breaking into public consciousness, he was the most-wanted computer criminal in the U.S. He was arrested and served five years in Federal prison. He served some of that time in solitary confinement because law enforcement officials convinced a judge that he had the ability to “start a nuclear war by whistling into a pay phone.” A movie about his exploits, Takedown, was released in 2000. Unsurprisingly, he now runs a computer security consulting firm.

Kevin spoke for over two hours on “The Art of Deception.” The core message: as computer security systems have gotten more and more sophisticated, the easiest way to break into a system is to exploit the weakest link — human beings.

While relatively unknown to the general public, the term “social engineering” is widely used within the computer security community to describe the techniques hackers use to deceive a trusted computer user within a company into revealing sensitive information, or trick an unsuspecting target into performing actions that create a security hole.

Mitnick illustrated why a misplaced reliance on security technologies alone, such as firewalls, authentication devices, encryption, and intrusion detection systems are virtually ineffective against a motivated attacker using these techniques. In fact, he stated that when his security company is permitted to use “social engineering” in penetration-testing a company, their success rate is 100%.

One hundred percent.

So, unlike the Hollywood portrayal of hackers, the risk isn’t someone guessing your password; it’s you giving it to them. (Or the Help Desk resetting it, thinking they’re serving a legitimate request.)

One of my favorite quotes was “We can’t go to Windows Update and download a patch for stupidity.”

And it’s not idiotic things like writing down your password and taping it to the bottom of your keyboard (because the bad guys would never look there!). It’s the natural human impulse to try and help others, especially when they’ve done their homework and have a convincing story to tell you. (Kevin is obviously a gifted actor… which is why some of his most successful hacks were done face-to-face or over the phone.)

Just one example: spam an entire company, and monitor for vacation autoreplies. Okay, Pat will be on vacation until next Friday. Use LinkedIn to find Pat’s boss, Michael. Call Michael, hit zero, get transferred to his admin, Tracy. You already know Tracy’s last name and location from the corporate website, and you’ve picked another location in the same organization but a different city. “Hey, Tracy, it’s Kevin, in the Northwoods office. I work for David Lippanzer. Is Pat on vacation already? Darn, she promised to send me the most recent sourcecode file before she left. Do you have it?”

Follow through a few more steps in the script, and nine times out of ten, you’ll have the target document arriving in your email about the time you hang up the phone.

Similarly, try the Help Desk. Call and impersonate someone you’ve researched, and ask for a password reset. There will be a security question. If your research uncovered the answers, proceed. If not, fake an interruption, go do more research, and call back once you know the answer; the question won’t have changed. High school, mother’s maiden name, last four digits of your SSN… all of these are available quickly and easily over the Internet.

(As an aside: Kevin asked for a volunteer to come up from the audience. Given full name, approximate age, and the fact that he lived in Georgia, it took less than three minutes to come up with home address, cellphone number, Georgia driver’s license number, and Social Security Number.)

How about SMS? Do you ever question the Caller ID of an SMS message? What if you got an SMS from your boss, saying “When Kevin calls, email him the new price list. Don’t call back, I’m in a meeting”? Would you do it? He demonstrated exactly that, spoofing phone numbers selected at random from an audience member’s phone.

Or the incredibly low-tech route: dumpster diving. Digging in a dumpster is usually not illegal, although it can get awfully messy. (Kevin: “If you find a plastic bag that sloshes, put it aside. Trust me.”) And the first thing to look for is printer paper torn in half or quarters; that means there was something on those pages worth looking at. This is a great way to get internal phone lists, release calendars, and other information that may not be all that sensitive, but can really help building a credible background story when calling for the real target info.

More complicated hacks: sending you a phishing email from Citibank, and listing an 800 number that is similar, but not identical, to the number on the back of your card. If you dial that number, you are connected to the bad guy’s voice-interactive server in the Ukraine… so it calls Citibank, feeds you the prompts, collects the Touch-tone responses from you, and feeds those to Citibank. Classic “man in the middle” attack — and you have no suspicion that you’re actually connected to anyone but Citibank, since you can check your balance, verify your last transactions, or transfer money, and get all the correct responses.

Of course, as soon as you hang up, the bad guy’s server calls Citibank again and, with your stolen credentials, initiates a very different transaction.

How about a $25 box the size of a cellphone charger that you plug into a power outlet at Starbucks? It collects every password and every secure transaction conducted over that Wi-Fi network. And, since it’s $25, you don’t even have any risk of being caught when you go to retrieve it. You plug it in, collect the data remotely, and abandon it to be found by the cleaning crew that night. (Or not.)

There was lots more. (If you found a USB drive labelled “2013 Payroll Info” by the bathroom sink, how many of you would be able to resist putting it in your computer before turning it in to someone? Whoops, a team of Romanian hackers now has complete and total control of your computer. And you’ll never even know it. This is how the Stuxnet virus was spread through tightly-secured nuclear facilities in Iran.)

It was a scary couple of hours. But beyond “Be Alert!”, one key message was “Use technology whenever possible to take decision-making out of your employee’s hands.” Because humans want to help other humans; that’s hardwired into us. And, as a first approximation, we tend to trust complete strangers. (If not, we’d never get through a four-way stop sign alive.) And those natural human instincts are the weak link in modern computer systems.

So if someone who lives in Atlanta is calling Citibank, but the call is being routed through the Ukraine — it’s time to take that call out of the hands of the $12/hour front-line call-center attendant. Kick that one to a supervisor, who should intervene with something like “We have three phone numbers on file for you. May I call you back at one of them and complete this transaction that way?” And that shuts down the attack.

(Incidentally, that sort of alert is one of the capabilities of Pindrop Security, a VentureLab startup that’s now in ATDC.)

The cultural change is that it has to be okay to say no. This will lead to the occasional frustration of a legitimate customer — such as when my wife tries to use online banking from her Brazilian bank account while sitting in Atlanta. But the savings in fraud prevention are worth it.

Y’all are too smart to be taken in by a standard mangled-English phishing email:

You need to Upgrade and expand your webmail quota limit before you can continue to use your email.

Update your email quota limit to 2.6 GB, use the below web link and login your full email address and password.

Failure to do this will result to email deactivation within 24 hours

But the real bad guys are a lot more sophisticated than that, and they may show up in your text messages, as a phone call, or even in person. Start thinking of these social-engineering hacks in your personal life, in your professional life, and in processes of the companies that we work with.

Let’s be careful out there!
 

My rules for Twittering are few: I tweet in basic English. I avoid abbreviations and ChatSpell. I go for complete sentences. I try to make my links worth a click. I am not above snark, no matter what I may have written in the past. I tweet my interests, including science and politics, as well as the movies. I try to keep links to stuff on my own site down to around 5 or 10%. I try to think twice before posting.

Those are good rules, and I try to follow them. You should, too.

Follow me on Twitter at http://www.twitter.com/stephenfleming.

I started reading it, then backed up to the beginning and started taking notes. Brill did a great job of reporting with this piece. You really should read the whole thing, but here are some quotes:

When we debate healthcare policy, we seem to jump right to the issue of who should pay the bills, blowing past what should be the first question: Why exactly are the bills so high?

The health-care-industrial complex spends more than three times [lobbying] what the military-industrial complex spends in Washington.

For every member of Congress, there are more than seven lobbyists working for various parts ot the health care industry.

No hospital’s chargemaster prices are consistent with those of any other hospital, nor do they seem to be based on anything objective—like cost.

Unlike those of almost any other area we can think of, the dynamics of the medical marketplace seem to be such that the advance of technology has made medical care more expensive, not less.

“We use the CT scan because it’s a great [legal] defense. We can’t be sued for doing too much.”

And some no doubt claim they are ordering more tests to avoid being sued when it is actually an excuse for hiking profits.

Hurricane Sandy is costing $60 billion to clean up. We spend nearly that much on health care every week.

[Hospitals] have become entities akin to low-risk, must-have public utilities that nonetheless pay their operators as if they were high-risk entrepreneurs. As with the local electric company, customers must have the product and can’t go elsewhere to buy it… But unlike with the electric company, no regulator caps hospital profits.

In health care, being nonprofit produces more profit.

60% of the personal bankruptcy filings each year are related to medical bills.

25% of Americans surveyed said they or a household member have skipped a recommended medical test or treatment because of the cost.

Pharmaceutical and medical-device companies routinely insert clauses in their sales contracts prohibiting hospitals from sharing information about what they pay and the discounts they receive.

Patients don’t typically know that they are in a negotiation when they enter the hospital, nor do hospitals let them know that.

The dose of Rituxan cost as little as $300 to make, test, package, and ship, whereupon the hospital sold it for $13,702.

Give a doctor the choice between a $5 silk stitch and a $400 staple to close up an incision, and he’ll choose the $5 stitch, right? Maybe… Traditionally, knowing the costs hasn’t been part of many doctors’ medical consciousness.

People, especially relatively wealthy people, always think they have good insurance until they see they don’t.

Of New York City’s 18 largest private employers, eight are hospitals and four are banks.

More than $280 billion will be spent this year on prescription drugs in the U.S. If we paid what other countries did for the same products, we would save about $94 billion a year. The pharmaceutical industry’s common explanation for the price difference is that U.S. profits subsidize the research and development of trailblazing drugs that are developed in the U.S. and then marketed around the world. Apart from the question of whether a country with a health-care-spending crisis should subsidize the rest of the developed world—not to mention the question of who signed Americans up for that mission—there’s the fact that the companies’ math doesn’t add up.

As a perpetual gift to the pharmaceutical companies… Congress has continually prohibited the Centers for Medicare and Medicaid Services from negotiating prices with drugmakers.

Where Medicare has been allowed to conduct a competitive-bidding pilot program, it has produced savings of 40%.

In 1965, the House Ways and Means Committee predicted that the program would cost $12 billion in 1990. Its actual cost by then was $110 billion. It is likely to be nearly $600 billion this year.

One of the benefits attending physicans get from many hospitals is the opportunity to cruise the halls and go into a Medicare patient’s room and rack up a few dollars. In some places, it’s a Monday morning tradition. You go see the people who came in over the weekend.

The best way to both lower the deficit and help save money for patients would be to bring near seniors into the Medicare system before they reach 65… if that logic applies to 64-year-olds, then it would seem to apply even more readily to healthier 40-year-olds or 18-year-olds. This is the single-payer approach favored by liberals and used by most developed countries.

Unless you are protected by Medicare, the health care market is not a market at all. It’s a crapshoot. People fare differently according to circumstances they can neither control nor predict.

This is not about interfering in a free market. It’s about facing the reality that our largest consumer product by far—one-fifth of our economy—does not operate in a free market.

Trial lawyers who make their bread and butter from civil suits have been the Democrat’s biggest financial backer for decades. Republicans are right when they argue that tort reform is overdue.

There is little in Obamacare that addresses the core issue or jeopardizes the paydays of those thriving in a market that doesn’t work. In fact, by bringing so many new customers into that market by mandating that they get health insurance and then providing taxpayer support to pay their insurance premiums, Obamacare enriches them. That, of course, is why the bill was able to get through Congress.

Obamacare does some good work around the edges… But none of it is a path to bending the health care cost curve.

Put simply, with Obamacare we’ve changed the rules related to who pays for what, but we haven’t done much to change the prices we pay.

We’ve allowed the lobbyists and allies to divert us from the obvious and only issue: “All the prices are too damn high.”

I don’t agree with Brill’s politics nor with all his recommendations. If given a clean sheet of paper, I don’t think I would come up with single-payer (“Medicare for everyone”) as my recommendation. But we don’t have a clean sheet of paper. We’re locked in a system that makes some players very very wealthy, and makes many individuals poorer, sicker, or dead. We have to break the gridlock both as a matter of ethics and as a matter of national security.

For various historical reasons, the United States has converged onto a healthcare system that is uniquely bad among industrialized nations. (Please: before you start throwing “best healthcare system in the world” at me, read the article. And maybe travel a bit, too. Yes, you can get superb care in the United States. But we can’t afford to continue delivering it at these costs.)

And those of you who know my raving-libertarian streak will understand how offended I am, politically and philosophically, by anything that looks like “socialized medicine” (another epithet that has lost meaning through repetition).

Think how badly our system must be broken for someone like me to say that “Yes, single-payer wouldn’t be perfect, but it would be better than what we have now.”

Think about it.

President Peterson speaks at the opening of the Panasonic Automotive Systems office at Tech Square, adjacent to Georgia Tech's campus, on 2 November 2012.

PAS is the part of Panasonic that builds everything from dashboard infotainment systems to security sensors to batteries and more… basically, anything electronic that goes in a car. (Which, today, is a lot.)

PAS America is headquartered in Peachtree City; they employ 330 people there, and have for years. For most of those years, they assembled and sold systems designed in Osaka. But the Japanese parent company wants to tie their designs closer to the market — both consumer and OEM manufacturers. Which means they needed to recruit designers and development engineers to Peachtree City. Their plan was to localize product planning, strategy, R&D, design engineering, product testing, and validation.

Which was a problem.

Peachtree City is a wonderful suburb, as Chris Downing will be the first to tell you. But it’s optimized for a certain type of resident: married couples, probably with a kid or two, and a desire to have a nice single-family home with a bit of property around it. It’s not the ideal target for 20-somethings who’d rather ride bicycles than golf carts, and who’d rather hit the Earl in East Atlanta than the T.G.I. Friday’s by the mall.

Panasonic found that it was basically impossible to recruit the “creative class” talent they needed to Peachtree City. They realized they were going to have to open a new location. So they launched a nationwide site selection effort. They predicted they’d wind up with their new “innovation center” somewhere like San Francisco or Manhattan, or maybe a college town like Ann Arbor.

They didn’t realize what was happening in Midtown Atlanta.

Thanks to some alert work by the Metro Atlanta Chamber of Commerce, the state Department of Economic Development, our very own Greg King, and many others, the Panasonic executives were shown the activity in Midtown: The high-density live/work/play environment that’s so attractive to the creative class. The commitment to sustainable development, surrounded by the walkable/bikable BeltLine. The buzz of entrepreneurial startups as well as established companies like Turner and Google.

Then there were the young people who are attracted to Atlanta for college. Georgia Tech students are exactly what Panasonic is looking for — smart, hard-working, and willing to get their hands dirty. Whether as interns, or co-ops, or post-degree hires, multinationals like Panasonic have an insatiable demand for talent.

And, much as I bleed white-and-gold, it’s more than just Georgia Tech. How many of you realize that Atlanta is one of the top college towns in the country? We’re either #6 or #7 when ranked by the number of students enrolled, or number of bachelor’s degrees (or higher) awarded per year, or percentage of the population with bachelor’s degrees, or university research expenditures. Dallas would kill to have our universities. Heck, we have almost as many students enrolled as Austin and RTP combined!

(Did you know any of that? We can’t market our way out of a wet paper sack, but that’s a different issue…)

Panasonic’s internal strategy to promote innovation includes six tactics:

• Locate where innovation is already occurring.
• Establish an open collaborative workspace.
• Place people from different roles into close proximity.
• Place junior and senior people into close proximity.
• Convene innovation events and discussions.
• Regularly stir the pot (move people around).

Centergy turns out to be the perfect place to do that. So, earlier this year, Panasonic rebuilt and occupied a suite on the 10th floor. They currently have 40 full-time employees there, plus co-ops and interns. It will grow.

They’re not a tenant of ours (we only manage the first five floors), but they’re good neighbors. There are more companies who’d like to do the same thing. GE Energy is already on the 4th floor, as are our Korean partners. We’ve had requests from brand-name technology companies from four continents plus Silicon Valley. They’re not asking for 4,000 sq. ft. suites… they’re asking for floors. Multiple floors. And Centergy is full!

Clearly, we need another building!

Working on it. (Two different ways. Stay tuned.) But our ten-year-old vision of building a hub of economic activity in Midtown Atlanta has come true with a vengeance, and EI2 is at the middle of it all. Now we need to nurture it and not let it get scattered to the four winds.

This is going to be fun!

(Click photo to embiggen.)

I joined a delegation that included representatives from Atlanta manufacturing companies, software companies, and a law firm. The Chamber had spent a lot of time setting up meetings for all of us, so we wound up with a pretty densely-packed week. This was my fifth trip to Brazil (the second representing Georgia Tech), so I wound up with an entirely-unjustified reputation as an expert on the local business, government, and academic situation.

If you read the papers, you know Brazil is booming. You can read the stats elsewhere: #6 economy in the world (just passed Great Britain). A strong currency. Land area bigger than the lower 48 states. A population equal to ours in 1970. Seemingly boundless natural resources. And, oh, they just struck oil. Enough oil to make them potentially the world’s largest producer (outstripping the Middle East) by mid-century.

And not nearly enough engineers. The whole country only graduates 30,000 engineers per year. They need at least twice that many. They plan to grow engineering matriculation dramatically but—as our friends in Athens are learning—one does not simply walk into creating a new undergraduate engineering program. It’s expensive and time-consuming.

So I was there wearing two hats: One representing all of Georgia Tech, where I mostly talked about education, and one representing EI2, where I mostly talked about collaborative research and innovation policy. There are significant opportunities for us in both areas.

Wearing my education hat, I was pleased to learn about Brazil’s new “Science Without Borders” program: a nationwide scholarship (tuition, travel, and stipend) to send 100,000 STEM undergraduates to universities abroad over the next three years. That’s an amazingly ambitious goal, and it will lead to excellent global connections for the next generation of Brazilian business leaders. Georgia Tech currently only has a few dozen undergraduates from Brazil; SWB should increase that by an order of magnitude.

Wearing my economic development hat, I met with three large companies: Embraer, Vale, and Petrobras. In each case, they’re wrestling with significant technology challenges in areas where Georgia Tech is strong: Advanced materials. Logistics. Simulation. Information security. Or, as a senior executive from Embraer’s R&D division told me, “we’re interested in everything!”

Georgia Tech has a strong history of hosting research collaborations with industrial partners. At Centergy, we have three in the building right now: GE Energy, Panasonic, and a Korean consortium. Is it possible to have similar collaborations with Brazilian companies? Of course. We’ll start small, but the potential is huge.

I also met with representatives from the University of Campinas and the São Paulo state research agency, modeled on the U.S. National Science Foundation. Both Unicamp and FAPESP have a strong focus on commercialization of research… just as we do with VentureLab and I-Corps. We’ve learned a lot that we could share with them. We just have to figure out a way to get paid.

There’s money available. I mentioned that Brazil has struck oil. It’s a lot of oil… But it’s hard to get to. 200 miles offshore and under five miles of salt, rock, and seawater. Just to focus on one of countless details: that’s beyond the round-trip range of helicopters. What does it do to your logistics plan if you now have to stage aviation fuel on your deep-sea oil rig?

To their credit, Brazil has decided not to simply lease the fields to BP and Shell and collect royalties… They’re going to get the oil themselves. That means working backwards from the drill rig through the logistics chain through the universities and all the way back to K-12. They plan to invest $300 billion over the next ten years. (By comparison, in current dollars, that’s equal to THREE Apollo projects.) Think back to what Apollo meant for the U.S. back in the 1960s. Now multiply by three.

That means a lot of engineers. A lot of research. A lot of cross-border collaborations.

And, quite likely, the first 21st-century superpower.

Collaboration between Georgia Tech and Brazil will mature over many years… but the possibilities are endless. They’re in our hemisphere, Delta has non-stops from Atlanta to multiple Brazilian cities, and most U.S. universities are single-mindedly fixated on Asia. We have the potential to be one of the key collaborators for the country’s best companies and universities.

At our last quarterly meeting, David Bridges prepared a map showing all the countries around the world where EI2 has current clients or collaborations. I’m expecting us to add some dots in Brazil soon.

And if you know an undergraduate or high school senior, feel free to pass along my standard advice nowadays: “Study engineering, learn Portuguese, and move to Rio. You won’t regret it!”

Cissa and I have been doing some housecleaning for the holidays, and I found a copy of the inaugural edition of the now-defunct Digital South magazine, published in early 1997. I scanned about a dozen pages into a PDF (linked to the image above), but read these excerpts:

Nobody is suggesting that this region will replace Silicon Valley, which still gets the lion’s share of VC dollars — 25 percent of the approximately $10 billion invested last year, according to the PW survey and Coopers & Lybrand’s annual Money Tree Report. Silicon Valley’s technology culture and lifestyle — spawned by 40 years of technological innovation and still growing — is unlikely to be duplicated in any other part of this country, despite the hopes of Chamber of Commerce types through the South who, regardless of location, have begun calling their markets “Silicon Beach,” “Silicon Bay,” or “Silicon anything.”

But venture capitalists and others say the South is reaching critical mass. It has taken 20 or more years, but the ingredients needed to seed and start a technology business — money, ideas, infrastructure and management — are increasingly available in this region.

Last year, for example, about 60 percent of all venture investments went to locales outside Silicon Valley and New England, the country’s other traditional venture market. And, barring unforeseen circumstances such as a contraction of capital overall, geographical diversity in investing is likely to continue.

“As long as venture capitalists continue to get good overall returns, they will be more willing to invest in non-traditional geographic areas,” says Kurt Waiden, national director of the Price Waterhouse survey. “There’s every indication that this trend will continue into 1997,” says James D. Atwell, director of Cooper’s Money Tree Report.

No doubt this new-found interest in the South reflects the fact that record amounts of venture capital are being raised. In short, there’s simply more money out there looking for a home.

“Silicon Valley has evolved to the point where there is too much capital chasing too few good deals,” says Gene Riechers, a managing director at Friedman, Billings, Ramsey & Co., an Arlington, Va., investment banking firm. “The Southeast has the opposite problem.”

The South also has lower business costs, a generally favorable tax and regulatory climate and warm weather, which “will continue to attract people and businesses,” the study says.

The quality of business plans coming across the desks of VCs also is improving. That’s because the region has acquired a heightened awareness of the need to school younger entrepreneurs in building a good business plan. Also, more educational institutions or entrepreneurial clubs are explaining the nuts and bolts of venture investing and providing entrepreneurs with the opportunity to network with service providers such as lawyers, accountants, investment bankers and others.

When it comes to deciding where to base a start-up, advances in networking and communications technologies — essentially the growth of the Internet — pretty much have leveled the playing field.

In a speech last February to Red Herring’s Venture Market South in Atlanta, which drew nearly 500 VCs, bankers and technology executives, Fleming made precisely that point. “As predicted for years in science fiction, the Internet explodes the tyranny of geography. They say that on the Internet, no one knows you’re a dog. Well, no one knows you’re a Southerner, either!”

All joking aside, Fleming added: “A Web surfer doesn’t care where you’re located. He just cares that you have a fast server, a high-bandwidth pipe to the Net and a site that’s worth his time. Our lonely basement hacker can’t compete with Intel on microprocessors … but he can compete against the whole world with a new Java applet.”

The VC made one more point worth repeating here. “This is not a zero-sum game. Silicon Valley doesn’t need to lose in order for the South to win,” Fleming told the gathering. “We believe we have some unique strengths, but our success won’t take place in a vacuum. Just as the rising tide floats all boats, we believe that the new digital economy will flourish everywhere — not just in traditional high-tech strongholds.”

Wow. Heard any of this recently? With a light copyedit to update some numbers, you could run the same article today, sixteen years later.

There are some great ideas floating around Atlanta on how to improve our entrepreneurial ecosystem. I have some myself. But it’s worth paying attention to a little bit of the history.

(And I’m only scratching the surface! Someday, Leland Strange and Bill Goodhew and John Imlay and Ben Dyer and Dennis Hayes need to sit down and write a book on Atlanta’s first high-tech ecosystem, which took off like a rocket in the late 1970s and crashed to Earth in the mid-1980s. I want to buy the first copy!)

I was able to spend part of two days last week with Rich de Millo, former Dean of the College of Computing, and now the director of Georgia Tech’s Center for 21st Century Universities.< !—more—> He spoke at Homecoming to a packed house of GT alumni about his new book “Abelard to Apple: The Fate of American Colleges and Universities.” I took notes, and want to share some of his thoughts (and mine) with you.

The MOOCs are coming!

An acronym only a computer hacker could love: Massively Open Online Course. This is not your father’s Distance Learning. How massive? Well, there are 130,000 living Georgia Tech alumni. In the last month, we have registered another 121,000 students for our first six MOOCs to be offered on the Coursera platform.

Now, is taking “Health Informatics in the Cloud” from our very own Mark Braunstein going to be as effective online as in the classroom? We’ll know in a few months. And I expect it will always be better to be one of forty people in a room with Mark Braunstein than to be one of 10,000 MOOC participants.

But.

I expect that being one of those 10,000 MOOC participants will still be a very effective learning experience. It will probably be more effective than taking a course with the same title from a $50/hour adjunct professor at a second- or third-tier university. And it will definitely be more effective than being stuck with the course catalog of your local community college that doesn’t offer an equivalent course at all.

And that changes the world.

De Millo points out that the U.S. went through a huge period of experimentation with the number, size, and types of universities in the period between the Civil War and World War I. We created literally hundreds of universities from raw dirt… sometimes, lots of raw dirt (see the history of land grant universities). (Georgia Tech was founded in the middle of this period.) And then we stopped.

We didn’t stop sending kids to college, of course. We sent more and more and more. The “hockey stick” below is amazing. But we stopped innovating in what a college or university should look like: Big lecture halls for freshmen, smaller classrooms for upper-level courses, a four-year race to a bachelor’s degree, then another more leisurely pursuit of a graduate degree, all overseen absentmindedly by the “sage on the stage” with a blackboard and a piece of chalk. (An iPad with an LCD projector is nothing more than a high-tech blackboard.)

By any measurement — enrollment, debt, opportunity cost, public confidence in the value of a degree — higher education has been on an unsustainable path for at least 40 years. And now, higher ed looks like the next wheezing obsolescent industry to be utterly transformed by the Internet.

Suddenly, traditional universities are not the only game in town. We saw the first rumblings with the popularity of DeVry, Strayer, and the University of Phoenix. But those for-profit entities, while making portions of their content available online, still have campuses… and still charge tens of thousands of dollars for a degree.

Now, with MOOCs, a university-level education is available for free. Often taught by the very best professors in the world. And, to misquote Mark Twain, the difference between the best professor and a mediocre professor is like the difference between the lightning and a lightning bug.

With everyone in the English-speaking world able to put content online (check out the completely unaccredited Khan Academy), it’s going to be a crowded market. In a crowded market, you need a compelling product or a compelling price or a great brand. Most universities have none of the above. (Georgia Tech is lucky — I’d argue that we have all three. But what about East Wherever State U.?)

A lot of universities are going to go out of business. And they should.

Universities are a Failed Model

The great expansion of American universities coincided with the Gilded Age of American industrialization. It’s not a coincidence that two of the buildings on Georgia Tech’s historic campus are named after Andrew Carnegie (steel) and Solomon Guggenheim (mining). Nor that two of our national rivals are Carnegie-Mellon and Stanford (railroads). The Industrial Revolution created unprecedented wealth in America, and the beneficiaries contributed a lot of it to the new universities.

These philanthropists had made a lot of money with factories. And, by osmosis, the American university began to resemble a factory. Not physically, of course — although you might think differently when the Georgia Tech steam whistle blows to mark the changing of classes! But universities standardized on batch processes (a new batch of freshmen every fall), mass production (the same sequence of required courses for each student in a given major), quality maintained by inspection (exams), and a big reject pile (students who failed their exams, or who gave up, or who were deterred from even entering).

Ask any member of the MEP program here in EI2 and you’ll find that trying to achieve quality through inspecting the end product is a lousy way to run a process. Quality begins at the design and specification phase, with multiple layers of feedback loops all the way through to the finished product. And that’s where MOOCs re-enter the picture.

Feedback Loops

What’s the feedback loop for a modern university? Students graduate. Employers notice that they’re missing certain skills, so they implement remedial on-the-job training. The employers complain to the university’s upper management. Messages drift down to academic departments on a multi-year schedule based on the appointment of new deans and school chairs. Occasionally, there is a curricular spasm designed to make the degree more “relevant.” But “it’s easier to change the course of history than it is to change a course in history.”* Years later, after mossbacked professors retire, the curriculum changes. By which time the demands of industry have changed. And so it goes.

Sebastian Thrun, the world-renowned computer scientist best known for designing Google’s self-driving car, launched one of the world’s first MOOCs from his position on Stanford’s faculty one year ago. 160,000 students worldwide enrolled. And feedback loops emerged. When students were having difficulty with a particular approach, the online tools let Thrun understand the gaps and make adjustments within a week. Not years.

Feedback loops matter.

Lots of people talk about MOOCs the way they used to talk about “distance learning” — basically a way to cut costs and deliver education to those who can’t afford it. That will happen, but that’s not the point. With feedback loops and competition for student attention, MOOCs will evolve through a brutally Darwinian process. The best courses and instructors will attract more students. The not-so-good will wither away. There will be a relentless downward pressure on prices but an upward pressure on quality. Thrun has even gone so far as to say that there will only need to be 10 universities in the world.

I disagree — national and regional pride will still play a part — but my opinion isn’t important. What’s important is that the best universities in the world are stepping up to try to improve the quality of education by leveraging these new tools. The leaders are arguably Stanford, Harvard, and MIT. But Georgia Tech is a fast follower, and I wouldn’t be surprised if we break into the lead. Stay tuned.

Who Pays For All This?

The current view of MOOCs is that they’re free to anyone with a web browser and an Internet connection. And I think that will continue to be true. But there’s a difference between learning the material and having someone else believe that you’ve learned the material. So there will be a role for testing and certification services. Instead of spending four years on a particular college campus, you may spend four years (or six… or two) collecting “badges” that certify your mastery of certain material.

Will the accreditation bodies accept this? Will anyone care if they don’t?

And the certification service (maybe Georgia Tech, maybe Kaplan) has an interesting new line of business — selling contact information for the best students to employers. The recruiting business is about to get kicked in the head.

Students who can afford it may want to spend a couple of years on campus, if only for social reasons. But if the average undergraduate chose to spend two years in residence rather than four, Georgia Tech could double enrollment without building a single new classroom or dormitory. That’s interesting.

And will they still think of themselves as Georgia Tech alumni? What does that mean to our philanthropic development programs?

May You Live in Interesting Times

In EI2, we’ve seen thousands of clients in dozens of industries disrupted by sudden technological change. First it was textiles. Then light manufacturing. Then heavy manufacturing. Then computer programming. Then design and consulting work. In every case, technology enabled brutal worldwide competition, and the inefficient were decimated or worse.

Now it’s higher education’s turn. And it couldn’t come a moment too soon. De Millo ended his talk with the statement that “If you started with a clean sheet of paper and tried to design an environment that would blunt creativity, destroy enthusiasm, and limit learning, you’d probably come up with what we have today.”

We can do better. And we can save money in the process. No one has asked EI2 to apply value stream mapping to a undergraduate curriculum — yet. Don’t be surprised if it happens soon.

I’m a big believer in prizes!

The Federal government has recently embraced prizes as a tool to encourage innovation… and cities are embracing prizes to foster new ideas among inventors, artists, and others. They’re a great way to maximize the return for minimal dollars… attractive in tight budget periods!

Next Wednesday, 3 October 2012, the Georgia Tech Science, Technology, and Innovation Policy (STIP) program will be presenting a panel discussion on prizes as an economic development tool. We are expecting Thomas Guevara, Deputy Assistant Secretary for Regional Affairs in the U.S. Department of Commerce, as well as Eloisa Klementich from Invest Atlanta. They’ll be talking about current and planned examples of prizes to spur local economic development. (I’ll be moderating.)

This should be a great discussion, and it’s free to the public. Please join us in the Hodges Room (Centergy Building, 75 Fifth Street NW, Atlanta) from 12:30 to 2:00 If you have questions, contact Lynn Willingham.

Thanks to our co-sponsors, the Federal Reserve Bank of Atlanta and the Georgia Economic Developers Association.

It’s World Space Week! And to celebrate, some Georgia Tech students and friends are sponsoring SpaceUp Atlanta on Saturday, October 6, 2012. You should come!

SpaceUp is an “unconference” like BarCamp. That means it is a participant-driven event where the attendees come armed with topics they want to talk about, and we all decide collectively on the day’s agenda. Various SpaceUps have sprouted across the nation and even crossed borders and oceans into Canada and Europe. America’s progress into space requires wider public understanding and support. Georgia Tech is doing our part by supporting this SpaceUp Conference to promote a grassroots space community in Atlanta and its surroundings.

Everyone who attends SpaceUp is encouraged to give a talk, moderate a panel, or start a discussion. We hope to gather students, teachers, professionals, and enthusiasts in the greater Atlanta region to foster a grassroots space community. Here’s a partial list of the topics so far. Most of the topics would be accessible to an interested middle-school or high-school student, so bring yours (or a friend’s)!

Register on Eventbrite for $20 in advance through Wednesday, or pay $30 cash-only at the door. Registration includes lunch, snacks, a SpaceUp Atlanta 2012 patch and logo stickers.

Location

GTRI Conference Center
250 14th Street, NW
Atlanta, Georgia 30318

9:30 am to 6:00 pm, Saturday, October 6th.

Follow @SpaceUpATL on Twitter!