Who is this for?
- Founders. QR codes have yet to truly catch on in the US, despite being commonplace in China. That’s changing as the coronavirus encourages contactless interactions. Startups may form around this new behavior, and existing businesses may wish to update their practices in a bid to keep up.
- Investors. The “mirrorworld” has been described as the “next big tech platform.” There’s reason to believe that QR codes are bringing us closer to that Augmented Reality universe. In this article, we identify a few winners of the shift.
- Learners. What’s the story behind the monochromatic grid we’ve become used to seeing? What future does it portend? The curious-minded among you might find the QR code’s origin story intriguing, as well as finding potential applications a fun thought-experiment.
Hara Masahiro looked out the window, turning the same problem over again in his mind.
Why couldn’t he solve it?
He’d come so far. To fail now...well, it was a heartbreaking thought. The city passed the grey, drab window of his commuter train, pulling him back toward the office and another day of studying the odd speckle of black and white to which he’d devoted himself.
Perhaps he reflected on the question of speed as he swung through Kariya, a city along Japan’s eastern coast. It had certainly been nagging him. How could he get the scanner to recognize his strange little barcode? It worked, he reminded himself, just not at the quickness needed.
And, then — Archimedes tumbling into a bathtub, Newton examining the offending apple, sleeping Kekulé startled by the structure of benzene in a dream — a flash of insight. As Masahiro meditated on slowness and moved at pace, he glanced out of the window, again. A skyscraper hulked above the rest of Kariya, stark and defined against the horizon.
That was it.
In the quarter-century since Masahiro’s eureka moment, his innovation attracted little interest in the US. That’s changing. As the world shifts towards contactless interactions, Masahiro’s modernization of the barcode is gaining popularity and relevance. In time, it may serve to transition us toward a new reality: a fractal, digital “mirrorworld,” sitting on top of our own.
A multi-dimensional history
Dimensionality is at the heart of the QR story.
In 1994, Denso Wave, an automotive components manufacturer spun-out of Toyota, had a serious problem. As different parts moved through their supply chain, employees were required to scan barcodes plastering the side of the box. But as products grew more complex, the information Denso sought to relay exceeded the data storage capacity of a single barcode. The result was an increasing number of barcodes adorning products, meaning that instead of scanning just one barcode, employees had to register five or six. A bottleneck formed.
This was the issue Denso management tasked Masahiro with solving: improving the traditional barcode’s data storage capabilities. It didn’t take him long to have his first brainwave.
The problem was one of dimensions. The classic barcode, devised in the US, was a one-dimensional cipher — a scanner read only the black and white pattern along a single axis. What would it mean to add a second one? Wouldn’t that allow the code to hold more information? American inventors had devised early prototypes already, but none with the distinctive square, grid-pattern designed by Masahiro.
By opening up a second front, Masahiro increased the number of “characters” (integers, for example) stored. Traditional barcodes held 20 characters; Masahiro’s dual-axis invention held over 7,000. His two-dimensional pattern had solved the data storage issue, but he wasn’t in the clear yet.
First, he worried most about the stability of his as-of-yet unnamed barcode. What would happen if the pattern was damaged? If it was bent or torn or warped by moisture? Would it still scan?
Over a round of Go — the strategy game fittingly involving black and white blots over a grid — Masahiro believed he found his answer. Though players were supposed to place their pieces perfectly at a line’s intersection, in practice, they often slipped into space. And yet, humans had no trouble in determining their position. He was buoyed to find the same was true when the scanner skimmed his code — even when damaged, it was reliably readable.
The more significant problems were speed and noise. Scanners could recognize two-dimensional codes but did so slowly. Furthermore, when placed in context — embedded in written materials or positioned next to other symbols — Masahiro found the scanners failed altogether, unable to detect where text ended and code began.
On the ride to the office, he found his solution.
The skyscrapers of Kariya stood out so clearly, so recognizably against the rest of the cityscape. That was what he needed, he realized: clear borders, a sense of shape, an observable identity. Shortly afterward, Masahiro added the characteristic blocks now synonymous with the code: stark boxes in three corners. It seems no coincidence that they look most like a high-rise, viewed from above.
Once hamstrung by slowness, Masahiro’s invention would be defined by speed, conveying thousands of characters in the fraction of a second. The “quick response” or “QR” code was born.
A shapeshifting innovation
The flexibility of QR codes owes much to Masahiro’s generosity. Recognizing the industry-reforming potential of his creation, he and Denso Wave exercised limited patent rights. That decision allowed for widespread adoption and creative deployment.
But even Masahiro did not expect his code to fulfill the uses it does today, reaching acceptance among consumers, “It was widely used by general users, which I did not expect. It was used as a payment method. It was completely unexpected.”
The QR code is a shape-shifter, a jack-of-many trades. Scan the monochrome box and engage with a number of possibilities: the prompting of a URL or vCard, the revelation of a message or image, the scanning of a ticket, the movement of data.
Food and textile companies use the technology to offer visibility into their supply chain, game designers use them as extra-dimensional puzzles, marketers brandish them as eye-catching gimmicks — a shadowy portal to a free Whopper, for example — and social media platforms offer them as a shortcut to exchanging contact information. Google once trialled the technology as an alternative to passwords. And, of course, as alluded to in Masahiro’s statement of disbelief, QR codes have become synonymous with digital payments.
Two weeks ago, we released our coverage of Ant Group, the financial behemoth spawned by Jack Ma. As it happens, Ant and Alibaba were critical to spreading the gospel of the QR code. With low credit-card adoption in China, Ma saw an opportunity to leverage the comparatively common mobile phone as a means of transaction. His Alipay app, founded in 2003, offered QR scanning, a function copied by domestic adversary, WeChat. That proved popular. Today, QR code scanning accounts for the majority of digital payments in the country.
Since then, payment systems outside of the People’s Republic have taken similar steps. M-Pesa — available in Kenya, South Africa, Afghanistan, and four other markets — has added QR scanning to their traditional text-payment method. Venmo, the scrubby-but-popular PayPal property, has done the same stateside.
Perhaps the QR code would have remained on the same trajectory in the US — steadily making inroads without fanfare — had the coronavirus not arrived. The appearance of a virus spread by touch has proven a boon. Governments now use QR codes for contact-tracing, most notably in Australia. They’ve also increased in commercial appeal. While business usage initially slowed — lockdown meant significantly fewer visitors to establishments using the technology — the reaction since has been remarkable. Egoditor, a company providing QR generation technology, reported a 25x increase in restaurant customers post-outbreak, along with a 7x uptick among hotels. Consumers are also presumed to be scanning at a higher rate. In the ten-block cube of Brooklyn I usually occupy, QR codes have replaced menus at almost all my regular haunts.
Perhaps we will look at this period as a mirage — QR codes shimmering with relevance before disappearing into the haze of other usurped innovations. Or maybe it is something more serious: a permanent shift toward the camera as the mode of inquiry and discovery.
The Camera is the browser
In 2010, 350 billion digital photos were taken. In 2020, we will capture 1.4 trillion. Of the top-ten free apps on the App Store, five treat the camera as the central object. Two others (Facebook and Messenger) rely on the content produced by cameras, though less directly.
The reality is that our lives are increasingly experienced and mediated through the lens of a camera. Its prominent position on smartphones, usually accessible from the lock screen with a single swipe, speaks to its importance.
But while the camera became the de facto method for content creation long-ago, for capturing reality, it has never served as the best method for interrogating it. To pull up information about the monument you’re standing in front of, you navigate to Google and ask a question. To see how well-regarded the restaurant you just passed is, you visit Maps, or Yelp. Whatever the destination, the method of excursion is the same: language entered into search; the navigation of cyber-reality.
QR codes change that proposition, situating this process in physical-reality. Appending data to tangible objects — hard-linking digital and real — adds a new informational layer to reality, accessible and searchable via an optical lens. The result is the camera becomes the browser, and the world becomes the web. Or, something materially more like it — a corpus of changing, fluid data, queryable by a machine.
Why does this matter?
Because it brings a fundamental renegotiation of spatial concepts, and the relationships between individual and object, object and world, viewer and viewed. Which is to say that when viewed through the lens of a camera, the world changes.
What does a city become? What about a store?
In her seminal essay, “On Photography,” Susan Sontag explains, “Cameras miniaturize experience.”
We might quibble with that. When paired with QR codes, cameras both miniaturize and enlarge experience and space. A grocery store can occupy an empty wall instead of an empty streetfront. Aisles are replaced with pictures and codes, the journey from bread to milk to cheese maneuvered with the camera’s movement.
There’s something subtly profound about this possibility and what it might do for how we interact with existing advertisements. When viewed through a camera, QR codes make everything purchasable — instantly — collapsing the space between impulse and action. Today, there is still some agency in the process: we remove the phone from our pocket and open the camera. If we accept the notion that smart-glasses will usurp the smartphone, we should get used to the idea that the choice will vanish. We will move through the world continually communicating with our environs via our camera, plucking pieces of information from the walls, harvesting data from the floor. Soon, this may not be done through QR codes at all but something subtler, even invisible to our eyes, but with greater data-density. It’s in this way the world expands and deepens and fragments.
“You take delight not in a city's seven or seventy wonders, but in the answer it gives to a question of yours.”
That quote comes from the uncategorizable Invisible Cities of Italo Calvino. It may also foreshadow our coming reality and the winners it will birth. In a world awash with information, with questions, who is best-suited to provide answers?
The Portal War
In his piece, “AR Will Spark the Next Big Tech Platform…” Kevin Kelly describes the “mirrorworld.”
The mirrorworld doesn’t yet fully exist, but it is coming. Someday soon, every place and thing in the real world—every street, lamppost, building, and room—will have its full-size digital twin in the mirrorworld. For now, only tiny patches of the mirrorworld are visible through AR headsets. Piece by piece, these virtual fragments are being stitched together to form a shared, persistent place that will parallel the real world.
Is this what QR codes will hasten?
In many respects, Kelly’s construction appears as the inevitable conclusion of the QR-codification of physical objects: a multi-dimensional environment entirely viewed through glasses, mediated by cameras, and infinitely browsable and searchable.
It would also seem to invalidate them. Once the world is successfully “uploaded,” when every object is reliably categorized and geo-tagged, will we need Masahiro’s invention?
As with so many other inventions, QR codes may become best known as a transitional innovation — latches fastening digital to physical — before drifting into obsolescence. That is not to say they aren’t important. Indeed, recognizing the prize on the other end — “the next big platform” — only sharpens their significance.
This is to say that the fight to be the default QR reader is a world war disguised as a backyard boxing match. It may look like Big Tech is battling to become a modern-day barcode scanner; in fact, they’re jostling to establish themselves as the portal to another world.
Apple is the obvious place to begin. With both hardware and software, they’re well equipped to offer access to a fractal world and have it sync with a broader ecosystem. Interestingly, the company just recently seems to have woken up to the possibilities QR codes foreshadow. Only in 2017 did the company add native QR scanning to its camera app, removing a significant impediment to adoption. Before that juncture, iPhone users had to download a separate app just to scan. In time, there’s no reason why Apple can’t press their advantage further, particularly with Apple Glasses expected in the next year or two. You can easily imagine how the company might leverage QR adoption to their benefit: using it as an opportunity to upsell other products, or upstream competition. Paying via QR code at a coffee shop, for example, might prompt a vibrant CTA to apply for an Apple credit card, while passing a Spotify code might invoke a special offer for an Apple Music subscription.
Google and Microsoft, though technologically capable of producing a competitor, have focused augmented reality efforts on enterprise customers. (Google’s summer purchase of North, a maker of AR glasses for consumers, may alter this in the future.) Facebook, meanwhile, has struggled to land a hardware hit. Oculus is likely of limited value here, and though technologically impressive, consumers have viewed video-conferencing product Portal with appropriate skepticism.
That leaves Snap as perhaps the obvious consumer alternative. The company has been openly influenced by WeChat, purchasing “Scan,” a popular QR reading app, for $54 million to beef up its abilities and create Snaptags, a homespun QR code alternative. Thanks to its experimentation with hardware via Spectacles, Snap seems to have an advantage over Facebook and Instagram.
Perhaps more importantly, Snap prioritizes the frequency of communication over the polish of output, meaning users have more reasons to interact with the app and develop a habit of viewing the physical world through their camera. (In his excellent piece, “Oh Snap!” Packy McCormick makes a strong case for how the company might leverage its AR and hardware capabilities to serve as the portal to the “mirrorworld.”)
Other winners in a fractal world
In the shadow of these giants, other opportunities remain. The best will find a high-frequency activity improved by QR scanning and build around it.
This is the playbook leveraged by Asian financial businesses. By using QR codes, companies like Ant and WeChat have become the default tools for payment. Subsequently, these companies use that high-touch, habitual relationship to sell other products.
Ordering food at a restaurant could be another viable focus. While most are likely to use the default camera app to summon up their local bistro’s menu, a focused product could attract users by improving the reading experience, pulling in reviews from other sites, and rendering AR images of dishes. Those kinds of additional features might justify a standalone app.
QR code infrastructure may represent another promising area. If QR codes continue their infiltration, both new and existing apps may want to add scanning capabilities to bolster existing functions. A maps app might want to display a specific train’s route and timing once the user scans a code outside the station. A travel app might allow users to scan monuments for historical detail. A medical booking platform might enable essential information to be passed through a scan, rather than requiring lengthy paper submissions. High-quality APIs that improved scanning and information rendering within a camera interface could serve these new customers.
Such a tool would create space for other innovations. Not all would be desirable. Consumer data is one such opportunity: a unified backend could aggregate location and consumption information, revealing where users travelled, what they found interesting, where and when they made a purchase. Bend the mind a little further, and you can imagine a QR code ad network being built on the back of this. When scanned by a particular infrastructure, a commercial is served along with the information stored in the code. A similar process could be used to offer discounts and upsells, perhaps even in response to user behavior or data.
As adoption increases, there will be room for companies that organize the chaos. Once a sufficient ubiquity is reached, we will need to categorize, curate, and filter QR codes. The first of these products might look a lot like Pocket, just for the physical world. We may wish to store a list of books we want to read, the people we’ve met, or the discounts we’ve earned by visiting certain locations.
Once we enter the always-on reality of AR glasses, filtering will become more important. Users will want to decide which companies’ offers appear automatically, which they never want to hear from, and which should manifest conditionally. We will need a sort of AdBlock for our eyes. This, in turn, will yield other applications. You can imagine a nutritional company that rewards users for turning on Sweetgreen QR messaging but blocks Dunkin’ Donuts. Just as easily, you can envision a podcast network that monetizes with hyper-personalized ads (i.e., you glanced at the QR in Macy’s, we’ll serve a commercial sometime during your next Joe Rogan episode).
As with every platform shift, new winners will be born. The possibilities — the realities — are endless.
The past few years have been described as the “post-truth” era. As each individual cultivates a unique stream of information — drawing from friends on social media, favored news sites, and trusted pundits — society has found it hard to agree on the most basic subjects. Truth has, paradoxically, become a matter of perspective.
In time, we may see reality the same way. There is something reassuring in knowing that if you and I are standing next to each other on the same street, we will almost certainly agree on what we see. A green car passes, we concur. A Starbucks sits on the corner, door reliably opening and closing. A man drops his bag, bends, and picks it up. We feel the rattle of the train beneath our feet. Reality, a base layer of it, is indisputable to anyone of sound mind and easy for different parties to agree upon. Indeed, in some respect, that is what makes reality what it is — confirmation by multiple parties.
But just as the balkanization of information has challenged our acceptance of “truth,” a “mirrorworld,” as advanced by QR codes, may threaten our notions of “reality.” As the two of us stand next to each other in the future, each wearing our own glasses, what do we see? My lenses, calibrated to my tastes and interests, pluck a code from the Starbucks window and manifest a mermaid that swims down the middle of the asphalt, singing a ditty of discount lattes. Yours alights on a subway station sign, pulling a billboard of delays and works-in-progress down, in front of your eyes. We both see the green car, but across its chassis, I see a scene from the newest Amazon Prime series while you see a diapered baby happily crawling. The man’s bag has an affiliate code pinned to its side — with my ad-blocker on, I see nothing while you swat an image of it out of view.
Which of us sees reality? What does the word mean now?
On the ride to the office, Masahiro looked to the city to answer his question. In the decisive, inarguable scale of the skyscraper, he found it. He solved his puzzle and gave the world the QR code. There’s some irony that his creation, which serves to hasp the infinite world of the web to our finite dimensions, might change that view. Someday soon, when we look out of the window, we won’t see buildings or trees, sky or skyscrapers, but a vibrant, personal reality swimming with information; each one of us falling out of the world and into our singular dreams.
The Generalist’s work is provided for informational purposes only and should not be construed as legal, business, investment, or tax advice. You should always do your own research and consult advisors on these subjects. Our work may feature entities in which Generalist Capital, LLC or the author has invested.