Along with “software is eating the world”, “data is the new oil” has become one of the key chakras of our age of algorithms and AI. In recent cycles however, cynics and skeptics have started taking pot shots at it – amongst others, Chaos Monkey author Antonio Garcia Martinez recently dismissed the entire concept in Wired magazine.
“DITNO” captured the digiterati’s imagination because of its elegance and simplicity. And its kernel of truth. Data is undeniably at the heart of Facebook’s and Google’s rise. Its importance becomes clearer as data regulation becomes part of the global political debate.
But the cynics have a point. Beyond the usual candidates – the FAANG vendors – it is hard to point out exactly where data is becoming monetarily valuable.
To look at these two very different perspectives and to answer the simple question “is data the new oil or not?”, I want to offer another viewpoint – by placing this debate in the context of the oil that was oil before data became the new oil. Namely oil. I want to do this for three reasons;
1) this week’s drone attack on Saudi Arabian oil fields – and the international geo-political response – have shown, yet again, how central oil production remains to the world
2) I’ll be in the middle east next week speaking at Cognizant Community in Dubai
3) I’ve been reading A Golden Dream: The Miracle of Kuwait by Ralph Hewins to understand a little bit more about the place that I was born.
Data may be important in our modern world but the US Secretary of State doesn’t jump on Air Force Two and head to Silicon Valley at a moment’s notice to meet with the FAANG leaders when there’s a little glitch in the data supply chain, as Mike Pompeo has done this week in heading to Riyadh. With a billion cars clogging the planet’s roads (many of them seemingly in Toronto this week between me and the airport), keeping the oil flowing is high on the “to-do” list of the most important people in the world. (Keeping the traffic flowing, less so). We may like to think that we’re heading to a post-oil paradigm – with Greta Thunberg at the helm, literally – but, for better or worse, oil will continue to be the world’s most valuable resource, certainly for the rest of my natural days.
Part of the cynicism and skepticism that’s beginning to emerge around DITNO is that whilst conceptually, many people understand what that phrase means, far fewer have been able to act on it, and monetize data (either directly or indirectly) in a meaningful way. The DITNO memo has been received, but people know that Secretary Pompeo isn’t going to jump on a plane to talk to them anytime soon.
Hmmm, maybe data isn’t that important after all, they’re thinking …
“Oh well. Good. Back to business as usual”.
This is where A Golden Dream comes in …
Reading about the history of oil exploration/production you realize that a) it’s a tough business and b) it took an awfully long time for oil to become the commodity it is. Far longer than most people appreciate. And the journey was far harder. As early as the first century A.D., the Chinese were using crude oil as an energy source. In the middle east, the streets of Baghdad (along with many other places) had long been known to be “paved with tar”, as oil seeped up through the sand. In more modern times, the first mass market refineries were established in the mid 1850’s in Romania, Canada, and America. From seeing oil, to understanding its potential, to being able to commercially profit from it took hundreds of years of genius, effort, blood, sweat, tears, and money, from millions of people.
British mathematician, Clive Humby, came up with DITNO 13 years ago …
Folks, we need to show a little bit more patience, and grit, than that, surely …
The first concessions for commercial drilling in Kuwait were issued to Anglo-Persian (the forerunner of British Petroleum) and the Gulf Corporation in 1934. Their 50-50 joint venture, the Kuwait Oil Company – the organization that my Mum and Dad worked for – was created that year, and the first well came online in 1936.
As Ralph Hewins outlines (in incredible detail), the process of even getting to that point – i.e. just getting a well dug and in production – was winding and tortuous, involving a back story featuring the East India Company, the first world war, the collapse of Ottoman Empire, the establishment of territorial boundaries in the boundaryless desert, and of actual countries from amongst nomadic tribes. And then gentlemanly (but cut throat) jockeying between Yanks and Brits as to how commercial concessions were going to be distributed.
In the late 1930’s, with world war again imminent, the rush to control the production and distribution of oil became existential. The battles of Tobruk and El Alamein were about dominance in Africa and safeguarding the southern flank of Europe, but were as much about securing the flow of the oil that powered Monty’s M3A5 tanks in Egypt and Libya and thousands more beyond.
Job done, the post war period saw the real birth of the oil business.
And the real birth of me.
In 1950, after winning the war, and then spending time in occupied Germany as the allied regional commander of the Harz mountains region, Major Arthur Pring, 37 years old and not sure what to do next, took a position in the finance department of the KOC in Ahmadi, Kuwait. A couple of years later, a 26-year-old nurse from Scotland showed up as matron in the local cottage hospital. Then, in short order, Andrew, Humphrey, and Benjamin Pring were born.
While my brothers and I took turns at playing Monty and Roy Rogers, and our mother whipped the local nursing staff into shape, our father counted the pounds and dinnars that were suddenly flooding the KOC’s treasury. From a pre-industrial economy, Kuwait developed at breakneck speed to become the holder of the world’s highest valued unit of currency.
But that exponential acceleration came on the back of huge investment to build infrastructure that enabled that monetization. From seismic exploration, to test wells, to production wells, to refineries, to distribution pipes, to loading ports, to offloading ports, to retail distribution, to retailing itself – all of these pieces of the oil industry jigsaw puzzle were put in place, piece by piece over decades, under highly competitive market conditions.
Ahmadi, Kuwait 1960. Photo credit – Arthur Pring
In the 56 years since I was born in the little hospital that my Mum went to work in, trillions and trillions of dollars have been invested in creating the infrastructure that every one of us rely on (and take for granted) when we go to our local gas/petrol station, and stand there gawping at the TMZ segment playing on the little screen above the pump. Gee, those Kardashians …
In the data business, we’re at about the point where the oil business was in the early 1950’s when my parents sat on boxes of bananas on a Douglas DC-3 flight to the middle east that had two overnight stops along the way. We’re at the point where they ended their journey at a small tent city, in the middle of nowhere, and looked at their fellow travelers, and said, “what the h-ll have we done?” We’re at the point where their friends, back at home, looked at their friends and said, “what the h-ll have they done?”.
We are – in short – at the early stages of a business that has a long way to go. A business that will require brave pioneers. And tons of cash. A business that will break lots of people, and companies, and carries no guarantees. A business that is dangerous, dirty, often far from glamorous, and most definitely not for the faint hearted. But a business that is the future of your work.
So, if you find yourself wondering whether data is rather than the new oil, just data, think again. Refresh your memory of the creation of the oil business, and of all it took to get it this far. And realize that ahead of you is the work of creating value from data, in the way that my Dad and millions of other people created value from oil. Not easy, full of risk, but oh, the rewards! Maybe a fortune that will buy you a palace. Or maybe just a pretty young lass from Dundee and three fine wee bairns.
Whatever the scale of your reward, rewards there most certainly are. And to turn away from the data business, now, on the cusp of it becoming real business – the future of your business no less – would be akin to getting back on the DC-3 in 1952 and missing the biggest bonanza of the 20th century.
Ahmadi, Kuwait 1953. Photo credit – Arthur Pring
Data is the new oil – making money from it though will be as hard as making money from oil was ... in the beginning.
Patience, grit, vision, required.
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