Contraptions

Venkatesh Rao

Thinking out loud about the future of the world, as shaped by technological serendipity contraptions.venkateshrao.com

  1. Welcome to the World of Tomorrow

    07/04/2021

    Welcome to the World of Tomorrow

    In this episode of Breaking Smart podcast, I want to explore what it means to say that Covid has accelerated everything. If so, it means we’ve done some time travel relative the old timeline. As the cryogenic lab tech said to Philip J. Fry on Futurama, when he landed in the year 2999, welcome to the world of tomorrow! 1/ Let’s set the stage a bit. We’re now in the early days of post-Covid for at least some people, in some parts of the world. We don’t yet know how costly the endemic management problem will be, in terms of treatment, vaccination, fatality prevention, and surveillance, but it feels like we have one foot out of the tunnel now. 2/ I don’t know about you, but I personally feel a bit like Fry in the pilot of Futurama. Right after he is greeted with “Welcome to the world of tomorrow!” he is assessed to determine what sort of “career chip” should be implanted in him, because in the bureaucratic future, everybody has a career determined for them. 3/ The joke is, he is assessed to be best fit to the job of “delivery boy,” the same job he hated in 1999, so he runs away from the career assessment officer, Leela. As it happens, by the end of the pilot, he ends up a delivery boy anyway, but with an illegal career chip, but is happy about it because he gets to work on a spaceship and has new friends. 4/ I hope to get my vaccine within the next few weeks, and the idea reminds me of the idea of Futurama career chip, including vaccine hesitancy. In many ways, this is not far wrong, what with all the talk of vaccine passports, green zones, and so on your vaccine status might shape your career. Unlike Fry, I don’t want to run from the career chip. I don’t have career chip hesitancy. I’m kinda looking forward to reinventing my life in ways that I didn’t expect to till 2031. 5/ Even the idea of a very bureaucratic future is not wrong. Given the amount of fiscal stimulus, the effects of new geopolitics with China, and vaccine nationalism, the role of states everywhere has become radically stronger. Like it or not, the world of tomorrow has governments everywhere getting more into your business, not less. Not least because governments effectively own a lot of assets through the loans they have provided for bailouts and stimulus. 6/ So the vaccine can be considered philosophically like a career chip for a new life in a future we’ve time traveled to, and are still getting used to. One of the signs for me has been that my Twitter feed, which is my main sense-making media feed these days, feels mis-tuned, and I’m re-tuning it. It feels like wearing glasses with the wrong prescription. Everything is a little blurry and distorted. 7/ Okay, so we’re in the future, and like Fry and other time travelers, one of our first questions should be, what year is it? Obviously, no provable answer is possible to this question, since we can’t actually run a believable no-Covid simulation. The new timeline might not even be comparable at all to the old one, because qualitatively different sets of things are happening or not happening. Maybe we’ve gone sideways rather than leaped forwards. Some parts of the world have definitely gone backwards. 8/ I do think the idea of an acceleration is well-posed though, and that we do overall have a forward acceleration rather than a sideways or backwards leap. I’m just going to propose 2031 as a strawman answer to what year it is, with the caveat that you shouldn’t anchor on it. The point of pretending we’ve time traveled 10 years in 1 year is to break old habits of thought and reorient. So how do we do that? 9/ One way to think of this is as a weighted average of trends by acceleration. So for example, if vaccines jumped ahead 20 years, but other kinds of medicine stayed the same, and public health for pandemics is 50% of all healthcare by cost, then you could say the average leap ahead is 10 years. 10/ But this is kinda silly, like applying a uniform rate of inflation even though your consumption basket may be very different from the consumer price index. In thinking about inflation, you should probably think about inflation in the specific range of goods you consume. So by analogy, in thinking about acceleration, you should think about the specific range of trends you’re riding, or not. A personalized basket of accelerations. 11/ For example, let’s say work-from-home would have progressed at a particular rate, such that we are now where we would have been in 2040 otherwise, which I think is true. What does that mean? Well for me, it doesn’t mean much, since I’ve been working from home since 2009. The big difference for me is actually being unable to work from Starbucks, and whatever acceleration is going to hit cafe culture. 12/ You can measure the importance of a particular acceleration in several ways. Like for WFH, you could talk about commute miles saved, C02 emissions from commute avoided, webcam sales, GDP of commercial vs. home office furniture, traffic at business district vs. entertainment district restaurants, etc. All these would be good macro measures of acceleration. 13/ At a personal level, you could simply think in terms of well-being improvements, and more time created due to not having to commute. The personal acceleration in this case could be an earlier arrival of lifestyle elements that you only expected with retirement, if at all. 14/ Some things are tricky when you talk about accelerations. For example, with a slower rate of shift to WFM, real estate would have evolved in sync, so commercial real estate would have shrunk, while residential square footage would have increased. But this takes time. Time we didn’t spend. So what are the implications of that? 15/ I recall reading somewhere that housing stock takes 70 years to churn, so if we logged 20 years worth of trend time in 1 year, then we have a churn-demand shock worth 1/3 of the total housing stock. Or to put it another way, 1/3 of real estate, both commercial and residential, is now either under distress from underuse or overuse. 16/ By a similar logic, car fleets take about 10-20 years to churn through, depending on the country’s laws about old cars. Public transit projects probably take about the same on average. WFH changed a lot of demand patterns overnight, so now you have idle cars and empty trains, and people rethinking their car situations earlier. 17/ When you look at all these individual accelerations, one thing that you might notice is that we’re talking about something very different from the acceleration due to Moore’s Law, the sort of everything-is-faster megatrend that gave rise to philosophies like accelerationism. 18/ This isn’t that. To the extent that was true, it is still going on. To the extent that was a shaky hypothesis, it still is. What we’re talking about is a different kind of acceleration from a one-time drastic shift, caused by a pandemic shocking the system into a new equilibrium that looks like the future we used to extrapolate. 19/ Let’s talk a bit more about how weird it is that we’ve leaped forward rather than sideways or backwards. A different kind of shock could have easily shifted us sideways into a kind of future we weren’t thinking about, a parallel timeline. Or it could have thrown us back into a more primitive past. But this one uniquely seems to have kicked us forward. Yes we’ve shifted sideways a little bit, and backwards a little bit, but the vector sum of all the accelerations seems to have been a global fast-forwarding effect. 20/ I think this is for two reasons. One, pandemics aren’t black swans. They’re not unknown unknowns. Not only do we have recorded histories of several examples to learn from, we’ve specifically had experts predicting this kind since SARS in 2003, and have even made what are in hindsight fairly realistic movies about it. Global civilization has a lot of cultural memory of pandemics, and ways of responding without being knocked off its historical course. This would not have been true of say an asteroid hitting earth or a major nuclear war. 21/ Second, many of the trends that have accelerated, such as WFH and climate action, were dealing with inertia effects. The pandemic did the equivalent of knocking out some inertia, causing a sudden, jerky leap forward. Kinda like dumping some cargo off an overloaded truck might cause it to leap forward. 22/ I think the right unit of analysis for thinking about acceleration is categories that have necessary, flexible roles in the world, with relatively linear evolution paths, no clear substitutes, and a lot of baggage available to shed. For example, cars, homes and countries. All are entities with steady rates of evolution, and loads of baggage. 23/ For example, cars were already undergoing dual trends of electrification and computerization, and on pre-pandemic timelines automakers were planning to fully transition to EVs in a decade or so. That’s probably accelerated because I suspect people will buy cars sooner now. 24/ EVs should be cheaper in the long run than IC engine cars, but in the short run, cars are actually getting way more expensive due to more compute elements. For example, cheap bumpers are now expensive to replace after an accident because they hold cameras and radars. 25/ So even though we’re probably in the same future qualitatively — more computerization and electrification is still going to happen, we’ve probably accelerated by at least a few years. Some things though, have shifted sideways. The idea of cars as a cloud-like on-demand service might take a hit, and more people might want to own cars. We’ve learned the importance of controlling some of your own physical assets and environments. Those who relied purely on rideshare or transit probably faced more risk last year. 26/ You can do a similar analysis for other stable units of our world. Countries are interesting. I’d say they were weakening

    15 min
  2. 12/03/2021

    Demiurgical Businesses

    In today’s episode of the Breaking Smart podcast, I want to discuss a concept I call demiurgical businesses that I think goes beyond the 3 kinds you may be familiar with: lifestyle, customer-driven, and product-driven. 1/ In the discourse around tech, both on the tech side and the techlash side, you’ll often hear the term “real problems” which should make you wonder what “unreal” problems are. 2/ When the term is used, it’s usually used by socially conscious people, whether builders or critics, who use “real problems” as the notional antithesis of whatever is behind what they see as bad, misplaced entrepreneurial priorities. Today it is NFTs, ten years ago it was apps. 3/ The term “real problem” is misleading because even though people who use the term will offer some cliched examples like climate tech or world hunger, the point of the term is to point at the thing being criticized, not the thing being aspired to. 4/ But if you take real and unreal seriously, you actually get an actually interesting train of thought. Usually, the thing being criticized is an example of a thing that doesn’t seem to solve any problem, whether real or made up. 5/ If you ask, “what problem does it solve?” about the thing being criticized, you’ll find that the people building it can’t even supply a bad, disingenuous, or morally indefensible answer. 6/ For example, if I answer the question, “what real problem does space exploration solve?” with “it helps discover better cancer drugs through zero-gravity biochemistry experiments,” you know that’s b******t. It is obviously a rationalization. It’s both a bad answer and a disingenuous one. If you claim it is a real answer, you’re either stupid or lying. I discussed the real answer for that a couple of weeks ago. 7/ For a morally indefensible example, let’s say I build luxury yachts with built-in torture chambers. The answer to “what real problem does it solve” would be, “the problem dictators have of partying and torturing their enemies at the same time.” Now that’s a bad and morally indefensible answer, but it is actually a real answer that points to a real problem that a real person has, just not a very pleasant kind of person. I’d want such a yacht if I was an evil dictator. 8/ If you think about it, there is no such thing as an unreal problem. If it can be posed as a problem at all, it’s real. You just may not share the motives or values of the person who wants to solve it. 9/ Or to put it more simply, the idea of a “real problem” is actually an expression of identity. Evangelizing “real problems” is a way to do identity politics by indirect means. The problem you choose reveals who you are, what values you prioritize, and what identity you’re attached to. 10/ An easy way to see this is to notice that “real problems” are actually a generalization of “customer-driven.” A real problem points to a real person who already has that problem — namely a customer. Whether it is hungry children or evil dictators. 11/ It might be quite abstract — for example, the “customer” for climate tech is people who believe in climate change and also believe it’s good to ensure the survival of as many humans and animals as possible, and will vote for politicians who will make policies in favor of that. But it’s still a direct equation between being customer-driven and focusing on “real problems.” 12/ I’ll even go further and say that all identities are in fact customer identities. So identity politics is actually customer politics. The only reason to have a stable identity is if you want to acquire something through it, whether it is through participation in family, community, the market, or politics. So things like race and ideology are customer identities just like preferring vanilla over chocolate ice cream is a customer identity. You buy things through those identities, even if it isn’t with money. 13/ If you’re familiar with the idea from Peter Drucker that the purpose of a business is to create a customer, this equivalence between “real problems” and pre-existing identities should be a red-flag for you. It means you’re talking about a world where innovation gets reduced to exceptional customer service through incremental improvements. 14/ So let’s ask again, what is the actual logical opposite of a “real problem?” We’ve already seen that “unreal problem” goes nowhere, and that “real” is just indirectly about affirming an identity, possibly while criticizing other identities. 15/ Here is my proposal: the opposite of a “solution to a real problem” — real to anybody, whether you think they are good or evil — is a “reality transformer.” Instead of solving a problem within reality as currently defined, in relation to a particular identity-based point of view, you make something that creates a new reality, forcing people to create new identities in relation to it. 16/ Twitter is my favorite example of a reality transformation business, or what I call a demiurgical business. Nobody asked for it, and even 14 years later it is unclear what problem it solves, and for whom. It was built because it was possible to build, and it ended up transforming reality for everybody. Now people have “real problems” within the expanded Twitter reality, such as being able to edit tweets. 17/ I used to think of this point of view as simply being “product-driven” instead of “customer driven” — see the potential within a new technological capability and work to realize it in a way that creates a new kind of customer, ie. catalyzes new identities in the market. I wrote a popular article about this in 2014, called Product-Driven vs. Customer-Driven, but that article now feels incomplete to me. 18/ The thing is, though product-driven businesses are in general more powerful than customer-driven things, most product-driven businesses are also often degenerate customer-driven things in disguise, where the customer is the entrepreneur. So you could call it entrepreneur-driven. 19/ An entrepreneur-driven business solves the problem of affirming the hardened, often narcissistic identity of the entrepreneur as the only real customer. They may want to put a dent in the universe, but typically they don’t want to put even a scratch on themselves. They want to transform without being transformed. Everything else is a side-effect. 20/ The side-effect is usually what we call product-driven: it creates a customer rather than serving an existing market. But the most important customer, the entrepreneur, remains unchanged. 21/ In my experience, I’d say about 90% of entrepreneurs are customer-driven. They build boring businesses that solve an existing problem for an existing customer, and make themselves and some others rich. About 9% are entrepreneur-driven: they work to validate the identity of the entrepreneur, and might distort reality for everybody else except the entrepreneur, via a reality-distortion product. That leaves the last 1%. 22/ This last 1% is what I think of as the truly powerful things. They transform reality for everybody, including for the person making it, forcing everybody to forge new identities. They transcend the product-driven vs. customer-driven dichotomy. Twitter is an example of this kind of business. It may have under-performed as a business compared to entrepreneur-driven businesses like Apple, Amazon, and Facebook, but it transformed reality more powerfully. 23/ It feels wrong to call the creators of such products mere entrepreneurs, since they are typically not about merely building a successful business or even validating their own identity. They act in the role of what the Greeks and gnostics called a demiurge. Not quite a god, and not quite human. Agents of transformation who are themselves part of the transformation process and subject to it. 24/ Demiurgical businesses tend to be far more powerful than either customer-driven or product-driven businesses, even when they make less money. The limiting factor for customer driven businesses is existing identities in the market that can be served. The limiting factor for product-driven businesses is the existing identity of the entrepreneur that must be affirmed. But a demiurgical business essentially has no limits besides the laws of nature. 25/ Demiurgical businesses often convey the impression of having escaped the control of their creators. I once described Twitter as occupying a business space that is too big to nail, a play on “too big to fail.” Just too large for any one business to fully occupy, and beyond the ability of any human CEO to govern. It’s not that the founders of Twitter were significantly less capable than those of Amazon, Apple, Facebook, or Google. It is that Twitter opened up a transformed reality that was too big to nail. 26/ In my experience, it’s definitely not the case that people who build demiurgical businesses are somehow more evolved or enlightened than regular entrepreneurs. Often, they are just as narcissistic and driven to validate their own fixed identity as product or customer-driven entrepreneurs. What happens is something like a natural accident. They stumble on an idea that is too powerful to be limited by their own identity. They have no choice in the matter. The thing they unleash transforms them, whether they want be transformed or not. 27/ You can reduce this whole idea to a 2x2: if the producer, or entrepreneur changes but the consumer doesn’t, you essentially have a lifestyle business. If neither changes, you have a commodity customer-driven business. If the consumer is transformed, but the producer is not, you have a product-driven business. If both are transformed, you have a demiurgical business. 28/ Personally, I like demiurgical businesses the most. They have the most powerful effects on our world, and are the only kind of business that can brea

    15 min
  3. 20/02/2021

    Mars and the Meaning of Money

    Space exploration has an unusual side effect: giving us a sense of the value of money on earth. 1/ The Perseverance rover, shown touching down on Mars in the photo below, cost about $2.2 billion to design and build, and about $243 million to launch on an Atlas rocket. 2/ Now that it is on the ground, if all goes well, and it is able to operate, it will cost another $300 million to operate for two years. So that’s at least $2.7 billion overall, or about 54,000 bitcoins. Hopefully more, if the mission gets extended. 3/ For those who don’t track this stuff, it is the fifth Mars rover, not counting the early Viking missions in the 70s which were not rovers. The previous ones were Sojourner, Spirit, Opportunity, and Curiosity. 4/ Perseverance is very much like Curiosity — about the size of an SUV, and powered by an MMRTG — Multi-Mission Radioisotope Thermoelectric Generator. By contrast, Sojourner in 1997 was about the size of a lawnmower, and the MERS were about the size of golfcarts. 5/ Probably the most charismatically interesting thing about Perseverance is that it is carrying a drone helicopter called the Ingenuity, which will be a genuinely fascinating thing if it works. An aircraft on another planet — one with 1/6 the gravity, and about 0.6% the atmospheric density. 6/ So how should you think about the value of the Perseverance mission? Some people who are space-exploration positive are still kinda defensive about such things and try to make up rationalizations like R&D benefits for problems here on earth. 7/ I think this is not even wrong. When someone asks why we spend money on Mars missions when there are starving children on earth, the answer is neither to make up specious theories of how space science can lead to life-saving medicines on earth, nor to walk away saying values are different, but to talk about how money works. 8/ Money is the largest-scale coordination mechanism we have for negotiating differences in values of things, and is what allows us to define what the word “we” means. Its design has to accommodate everything humans might disagree about. Money that cannot value space exploration or art cannot value medicines or food very well either. 9/ So I think the simplest mental model is as a civilizational art project. 2.7 billion is about 0.013% of the GDP of the United States. This is actually pretty cheap by civilizational artwork standards. 10/ For comparison, at the height of the Mughal empire, the Taj Mahal cost about a billion of today’s dollars, and a double digit percentage of the empire’s GDP at the time. Possibly as high as 20-25%. According to some historians, it contributed to the bankruptcy and decline of the empire. 11/ A good question about civilizational art projects is — who is the art project for. Whether you’re talking medieval monuments or Mars rovers, it is easy to figure out who the artwork is by, but it’s not always easy to figure out who it is for. 12/ Pre-modern civilizational art projects were generally monuments to the narcissism of emperors and religious leaders. To get people to accept the fiscal burden to undertake them, you had to make up myths and religions. 13/ There is some of that in modern space programs. We still quote Kennedy’s speech about getting to the moon. But even the most powerful modern cults of personality, whether you’re talking Kennedy or Trump or Xi Jinpeng, pale in comparison to the cults of old monarchies and religions. 14/ Presidents get to bask in the reflected glory of space programs a little bit, but ultimately, they ultimately get only a small slice of the attention. If you add up all the attention we give to astronauts and Nasa, and the people who work on missions, you still get a big deficit. You’re left asking, who exactly asked for this? 15/ It’s not even national pride really. Space programs in the 1950s were strongly linked to national industrial bases, but today, a modern space program, even the US space program, sources talent, materials and technologies from all over the world. 16/ For example, NASA has been promoting a PR video around the rover showing immigrants from all over the world who have worked on it. And on a material level, the rover uses many components from outside the US. For example, the motors used on the rover are made by a Swiss company called Maxon. 17/ So as an art project, I think it makes most sense to think of space programs as art projects by and for global economic systems. They represent an economic system as an emergent entity admiring itself in the mirror. In the case of NASA missions, it is the Western economy. In the case of China, it is the Chinese economy. 18/ What they do is help calibrate what an economic system is capable of, when stretched to its limits, and how it compares to competing systems. And this, I think, is not just valuable, it is functionally necessary. Any kind of economic system can only work if it constantly tests the limits of its ability to price things against competing systems. 19/ A functional economic system isn’t about judging human choices and preferences, but to price them. Everything from cancer drugs and aid to disaster zones to climate change and space programs to luxury yachts and obscene extravagances by rich celebrities. If humans are capable of it, a real economic system should be able to put a price on it. 20/ One of the reasons cryptocurrencies aren’t taken seriously yet is that the economic system they represent is restricted to a very small set of activities. It hasn’t been calibrated against a large enough scope of activities. The equivalent of space programs for the cryptoeconomy is games on the Ethereum blockchain like CryptoKitties or the recent innovations in NFTs (non-fungible tokens). It has a long way to go. 21/ Many people want to translate their political and ideological interests into economic terms. They want to somehow design an economic system that makes, for example, Mars missions so expensive we don’t do them, and saving lives so cheap, we never fail save them. But this is fundamentally wrong-headed. 22/ If you can’t come to terms with the diversity and variety of things humans want and value, and are willing to work for, you will want to design economic models to coerce them to act differently. This is a version of what statisticians call the bias-variance tradeoff, which I’m using as a metaphor here. The more you try to bias an economic system to do certain things, the more you’ll narrow the overall range of things it can do. 23/ If you think people suck, and try to make an economy that prevents them from sucking, you’ll either oppress people, or create an economy that sucks, or most likely, both. The only way we know to avoid that is to keep recalibrating the scope of the economy — the things it is capable of pricing, at the weirdest extremes, without unraveling entirely. 24/ In other words, if the economy does things you think are horrible, and refuses to do things you think are necessary, you don’t have a problem with the economy. You have a problem with people, and you’re not willing to cop to the desire for coercive control. 25/ Yes the economy has lots of distortions, but it had even worse distortions in the past when it was the plaything of emperors building monuments to their own grief. To make the economy better you have to remove distortions, not add them. And the only way we know to do that is to constantly calibrate by letting it do weird things so it can look at itself in the mirror. So that’s it for this free podcast edition. I’ll see you next week with another subscriber post. Get full access to Contraptions at contraptions.venkateshrao.com/subscribe

    11 min
  4. 23/01/2021

    Anti-Network Effects

    In this first 2021 episode of the Breaking Smart podcast, I want to talk about something that’s been on my mind a lot lately that I call anti-network effects. 1/ As I am recording this, governments around the world are working out the logistics problems of distributing billions of vaccine doses. It feels like a symbol of the times we are entering into, times that I think will be defined by anti-network effects. 2/ Vaccinations and mask-wearing are examples of anti-network effects. I’ll define these as effects that can slow down, regulate, arrest, or reverse the operation of network effects, and which might themselves be network effects. 3/ For almost 50 years, since the invention of the PC, the world has been riding one network effect after the other, all of which ride on top of the infrastructural network effect of the internet. 4/ To review, a network effect is when the power of a system grows faster than its size. The original form was called the fax-machine effect. One person with a fax machine is useless. Two people is one connection, three people is 3 potential connections, 4 is 6, and in general n nodes is n(n-1)/2 unique connections. So the power of the network grows as the square of its size. 5/ Network effects in computing infrastructure are deeply connected to Moore’s Law. When computers get cheaper, network nodes get cheaper too, and more things can get attached to computers, and then to each other via the network. 6/ This leads to a double effect. Every 18-36 months, the density of transistors doubles. This makes the cheapest computers based on the cheapest chips much cheaper, and what’s more, this allows whole new classes of even cheaper computer to be invented ever decade or so. So one compounding effect rides another. That’s how we we went from mainframes to Raspberry Pis, and from an internet of 2 computers to an internet of billions. 7/ There’s in fact a third effect. If computers get more powerful at a steady geometric rate, and industrial mass production lag is minimal, then the rate at which the network can grow is itself a function of network size. You don’t have to add 1 node at a time, you can bulk-add n nodes. 8/ Everybody with a home computer already had an internet connection, so with a router, everybody can add a wifi connected device at the same time. With software it’s even easier: everybody with a phone can download an app at nearly the same time, creating near-instantaneous soft networks. 9/ We’ve been riding this triple-punch meta-network effect for nearly 50 years. You’ve got Moore’s law, the basic network effect of devices, and then the network-size-proportionate growth effect. And for people about my age and younger, our entire lives have been spent on this ride. To the point where it is second nature. 10/ This is actually pretty unnatural. Think about the classic brainteaser to teach exponential or geometric thinking. If a lily plant doubles in size every day and on the 30th day covers the whole pond, when did it cover half the pond? 11/ The answer is of course, the day before, on the 29th day, and to people like us, this barely even counts as a brainteaser. In fact, for kids today, I suspect the expected wrong answer, which is the 15th day, will feel unintuitive. They deal with fewer important things that work that way. 12/ There’s a lot more to say about network effects and various formulations like Metcalfe’s Law and Reed’s Law, but we’ve been doing that for my whole life, so enough said. I’ll just add one more point: network effects are pretty dumb. I mean even viruses and lily plants on ponds can embody them. 13/ This is in general not true of anti-network effects. While some anti-network effects are themselves driven by network effects, most work on other principles. So let’s take an inventory. 14/ The first kind of anti-network effect is self-limitation, when a network effect self-neutralizes. For example, once you have had Covid, reinfections are unlikely and you’re immune for a while. This is why you get an S-curve ending in a plateau, though a lot of people have to die along the way. 15/ Then there are anti-network effects that are themselves network effects, but distinct from the original one. Like the idea of wearing a mask spread pretty fast. Faster than the virus itself. The production of masks also spread via network effect. Some people saw others making masks and started imitating their behaviors. 16/ But many important things are not driven by network effects. Like when non-trivial habits have to be adopted. For example, disinfection and washing hands are behaviors that took a really long time to spread, and are still not universal more than a century after germ theory. 17/ Atul Gawande wrote a great essay called Sharing Slow Ideas in the New Yorker in 2013, that talked about innovations that are like this. That don’t spread like wildfire via network effects, but require pretty painful and slow diffusion via deliberate efforts. 18/ The reason slow-spreading non-network effects can sometimes still beat fast-spreading network effects is that they can be governed more intelligently. They are not as dumb as network effects. 19/ For example, it would be nice if we had a really dumb kind of network-effect vaccine that could be transmitted by a cough, via some sort of good virus that can fight the bad virus. Then the two network effects could race each other in a pretty dumb way. Explosion and counter-explosion. 20/ Unfortunately we don’t know how to make that kind of vaccine, that spreads via a network effect. Good things seem to spread slower than bad things in general. Brandolini’s b******t asymmetry principle is an example: it takes an order of magnitude more effort to refute b******t than it takes to produce it. 22/ The kind we do know how to make have to be slowly scaled in production, painfully distributed and administered by a small group of trained people. The only reason it has a chance is that we don’t have to be random. 23/ So that’s why governments are being deliberate and strategic in the order in which they vaccinate people. Of course you can be too careful. New York was criticized for expecting senior citizens to complete a complex form with 50 questions and multiple attachments to get vaccinated, and most efforts have now gone much simpler. Still, unlike the virus spread, it’s not dumb or near-random. 24/ You see the effect in computers too. In cyber-warfare, you don’t attempt to shut down the enemy’s capabilities by knocking out random computers in their network. You target key chokepoint routers or undersea cables. If you are an authoritarian government, you install firewall technology at the network edges. So those are anti-network effects that win by being topologically intelligent. 25/ There is a broader theme here: network effects are dumb, indiscriminate and very, very fast. They rely on abundance and target rich-environments. They think one step ahead in time, and one step around in space. But for those very reasons they are also very fragile. They can run out of raw material and starve. They can run into boundaries. They can even be slowed by simple ideas like six-feet separation. 26/ Anti-network effects sometimes incorporate network effects of their own, but are generally more deliberate, intelligent, and actively governed. They are designed with scarcity in mind and are not so easy to starve out. They have long horizons and think many steps ahead in time, and can be spatially intelligent across entire topologies. 27/ They need all these abilities because otherwise network effects have incredible advantages. Anti-network effects are like the tortoise that can eventually catch up with the hare. But because they lack exponentially increasing impact, they need other features to spread. 28/ Things can get worse though. There are network effects that also benefit from intelligence. Well-designed computer viruses are an example. They don’t spread indiscriminately. They can carry a payload of navigational intelligence in space and time and spread very intelligently. This is why countering clever computer viruses is so hard. 29/ There’s one more important class of anti-network effects we haven’t talked about, namely in information flows. After the January 6th storming of the Capitol, we saw how an anti-network effect operated with kinda stunning speed. 30/ The highlights, as you know, were that Donald Trump was suspended from major social media platforms, and Parler was suddenly cut off at the knees by major infrastructure providers. A good reminder that when the topology of a network effect is fragile — in this case the Trump influence network with Trump himself as a single point of failure — what takes years to build up can take minutes to shut down. 31/ That raises other issues I won’t get into, but here I just want to note that the anti-network effect here — simply cutting off a major source of disinformation and noise — was both easy and instantaneously effective. If you’re on Twitter, you’ve probably noticed how much drama has been cut out overnight. 32/ I want to round out this set of examples with another big important class of network effects and their anti-network effects: markets and regulation. Markets are generally based on network effects. Everything from price information to manufacturing capacity to early adoption tends to have a network effect in it. The economy grows via network effects, which is why critics compare it to cancers and viruses. 33/ Anti-network effects in the economy on the other hand, are slower and more deliberate. Anti-trust mechanisms are like taking out a major node once it reaches a certain scale. Monopolies are a special case. In network theory terms, they are a single node cut point, where for example, removing a producer entirely disconnects demand and supply. 34/ The broader theme I’m getting at here is that after 50 ye

    15 min
  5. 25/12/2020

    Complete 2020 Roundup

    Well, I guess 2020 is a wrap. I’m going to do a quick round-up of everything I published on Breaking Smart this year, and try to tease out the larger themes, but obviously no look back at the year can begin without acknowledging the 800lb virus in the room. To quote J. Peterman on Seinfeld, in the episode where he takes back the reins of his company from Elaine after she mismanages it during his absence, kudos to all of us on a job…done. It’s a reference I’ve used before, in my 2018 annual roundup, but this time, I am really feeling it. Whatever our personal successes or failures, as a species, the highlight of our collective performance is probably that we made it through the year without either sliding into apocalypse or going insane. Well, most of us. As of this writing, 1.75m people are dead from Covid, and will not be seeing 2021. Against that backdrop, the best thing I can say about my writing and podcasting is that I continued doing it all, and that you guys continued to pay some attention. On to the roundup. It looks like we’re finishing the year pretty strong on this list, with just over 10,000 subscribers, and just over 500 paying subscribers. I published 10 podcast episodes (free, with accompanying transcripts), 8 one-off essays, and 11 chapters or essays across 3 serialized projects. Let’s take a look. Podcast Episodes (free) * Beyond Optimism and Pessimism * Defaults and Defaults * How, What, and Where to Build * The Medieval Future of Management * From Story to Setting * Big Moods, Little Moods * The Next Experiments in Elitism * The State of Business Play * Fifth-Generation Management * Involvement Capitalism One-off Essays (paywalled) * Life Go Brr * Reimagining Publics * Post-Covid Circularity * A Bad Prequel * Tunnelhead * Notes on Textual Capital * In the Wake of the Eighties * Darker Things The Great Weirding (paywalled) * Into the Weirding: Part 1, Part 2 * Control Failure: Part 1, Part 2 After Westphalia (subscribers only) * After Westphalia: Introduction * The Descent of the Public The Clockless Clock (paywalled) * Chapter 1: Pandemic Time, Pandemic Time -2 (abridged free version in Noema) * Chapter 2: Indoors in Time * Chapter 3: Operating in Time, Operating in Time -2 This would count as a productive year if it were any other year besides 2020, but obviously, against the backdrop of everything going on, it feels marginal at best. Still, thank you all for reading and listening, and here’s to the light at the end of the tunnel that we will hopefully emerge into sometime next year. I’m not going to wish you Happy Holidays or Happy New Year, since I personally find it kinda unseemly to even attempt to be festive this year, but I do wish you some productive introspection and contemplation, and perhaps a brief personal break from the bleakness. I’ll see you again in January 2021. Have a good week. Get full access to Contraptions at contraptions.venkateshrao.com/subscribe

    10 min
  6. 05/12/2020

    Involvement Capitalism

    Welcome back. The Breaking Smart newsletter and podcast is starting up again after a very refreshing 6-week break. I want to kick off the post-break programming with a podcast on a big question: if we are headed at least partially towards a post-scarcity world, as we seem to be, does it look more like the Star Trek universe, or the universe in Iain M. Banks Culture novels? Both are varieties of something I call involvement capitalism, which I think it’s going to emerge in the next decade one way or the other. The choices we make in the next few years will determine which flavor we end up with. 1/ Over my break, I had a chance to unplug from weekly writing, and reflect on the broader theme of this mailing list, while watching the news. In case you forgot my tagline for breaking smart, this broader theme is serendipity through technology, and in the last few years, that has been a murky theme to think about. Is it the best of times or worst of times? Hard to tell. 2/ I unplugged from writing, but not from media consumption. As you might know I don’t believe in that, especially when historic news is unfolding, and the last six weeks have of course been extra historic. Very much in the “weeks when decades happen” category, so I was very plugged in. 3/ The US elections happened, a second or third wave of the pandemic kicked off (depending on where you live), and multiple vaccines passed early trials, in the process pioneering a whole new class of mRNA vaccines. 4/ Closer to our own set of usual topics, bitcoin neared its historic all-time highs, a DeepMind AI sort of solved the protein-folding problem, SpaceX launched its first operational crewed mission, and also launched its beta Starlink broadband services. 5/ There was a small detail in that last news item that’s my jumping-off point for today. The Terms of Service for Starlink require you to agree that Mars is going to be a free planet, outside the jurisdiction of Earth governments, which is an interesting move with real consequences. 6/ The thing is, if SpaceX’s plans continue to succeed, they may put a Starlink constellation around Mars and offer very cheap launch services to Mars, which would lead to a broad-based democratized Mars access at least for rovers and robots, with low-cost communications once your rover is on Mars. 7/ Even if human settlement does not follow, we are on the cusp of creating at least a robotic telepresence society on Mars. And if you read between the lines of the Starlink ToS, SpaceX hopes to keep that presence an open, anarcho-capitalist zone of sociopolitical experimentation. 8/ What might that look like? Well, there are two precedents to consider, one fictional, one factual. The factual one is the current state of Earth oceans, which are essentially an outlaw zone. I highly recommend William Langewiesche’s brilliant 2005 book, The Outlaw Sea, for a deep look at how the world of oceans works. Shipping, piracy, law on the seas, ship-breaking, all sorts of cool stuff. 9/ The fictional one is the post-scarcity anarchist civilization called the Culture, in Iain M. Banks’ novels. We know SpaceX is inspired by that since they name their barges after Culture space ships: their current fleet of 3 comprises the drone ships Of Course I Still Love You, Just Read the Instructions, and A Shortfall of Gravitas. 10/ The two together paint a consistent portrait. The Outlaw Sea kinda does look like the fictional universe of Culture books, especially the margins of the civilization, where the Culture’s Special Circumstances agents, a sort of CIA, interfere in less advanced civilizations. 11/ The fictional plots of Culture books very much resemble British and American interventionist global foreign policy, enforced by naval power projected across the world’s outlaw seas, and directed at less-developed countries, over the last two centuries. Internally, the Culture is quite different from Britain or the US, but you could say developed US-UK societies are as close to the Culture as real earth societies get. 12/ So this brings me to the idea of Involvement Capitalism. I got the idea for the name from the Culture books, where the multiple species that engage with the Culture are called Involved species, which I think is a very powerful concept. I define it as capitalism based on money as a way to engage more deeply rather than disengage from society. So the opposite of f**k-you money. More like hello-world money. 13/ The core idea in the Culture books is that despite its post-scarcity abundance, the AIs and biological species of the Culture don’t retreat from the universe into either pure hedonism or spiritual retirement. They stay engaged, both with each other, and with less developed civilizations. They never stop experimenting, learning, growing, and interfering in the affairs of the universe. They are involved the way annoying parents are involved in their children’s lives. 14/ The Culture is both like and unlike the Star Trek Federation, which is also a post-scarcity society built around powerful spaceships and a multi-species civilization. While both are left-leaning, powerful, and militarist without admitting it, the Culture is what you might call a neoliberal anarchy with no real rules, unlike Star Trek, which is a benevolent paternalist civilization that takes its rules very seriously, closer to LBJ’s Great Society model if that had actually worked out. 15/ You could say the Culture is like the Star Trek Federation, except with AI Minds in place of charismatic captains, and no Prime Directive, only a history of interference and consequences to guide individual choices, and social consequences for making good or bad decisions as individuals. For example, there is a norm but not a rule against reading the minds of humans, and a ship that violates that law is ostracized and given a pejorative nickname. 16/ Star Trek captains try to avoid mistakes, and when they do make mistakes it’s a rare crisis. First do no harm, like doctors. Culture Minds try to learn from mistakes and come out net positive and win-win long term, but in the short term they are willing to play pretty dirty. Mistakes are not exceptional. It’s a startuppy fail-fast world with consequences. This is a pretty powerful attitude. Great power, great responsibility sort of thing. 17/ Not only are you willing to take risks, you are willing to take risks on behalf of others. They are willing both to commit sins, and then ask for forgiveness and atone for the sins, a kind of ask for forgiveness not permission culture, which is a very different, and in my view, much more alive posture. 18/ Compared to the Culture, the Star Trek Federation has what Bruce Sterling called an acting dead posture. Or equivalently, to use terminology coined by Samo Burja, the Culture is a live player civilization, while the Star Trek Federation is a dead player civilization. 19/ The Culture society reminds me of Hannah Arendt’s definition of a free public as one where freedom is experienced through involvement in mutuality, not going off by yourself with f**k-you money, and the moral universe is based on the risky posture of making mistakes driven by curiosity and growth motives, and then seeking forgiveness, rather than trying to avoid mistakes. 20/ Now the interesting thing is that both Star Trek Federation and Culture lack a meaningful scarcity-based capitalism based on money. The Star Trek has replicator credits, but they’re not really that important. They deal with lesser species like the Ferengi, which do have a concept of money in the form of latinum plates. There’s a good book about the Star Trek economy called Trekonomics, by Manu Saadia by the way. 21/ Within the Culture, again there’s no money. But sometimes there are fads and fashions that create money-like dynamics. Like in Look to Windward, where there is some trading based on scarce concert tickets. But again, for the Culture, money only comes into play when dealing with less advanced cultures. So overall, both the Federation and the Culture not just post-scarcity, but post-capitalist. 22/ Let’s connect all that up to the current state of the world. The interesting thing is that despite all the political strife and pandemic-related troubles and deaths, we are actually starting to hit post-scarcity dynamics for real. Money is rapidly losing all its traditional meanings, and behaving in new ways we don’t really understand yet. One obvious sign of that is that service economy workers are in the deepest s**t ever, while anyone holding stocks has been doing great. So there’s a dissonance there that’s going to get sorted out, and it’s probably going to get ugly. 23/ Governments across the world have taken fiscal measures that look like close to free money. Especially if you’re in an industry like airlines, hotels, or restaurants, money is now a weird new kind of government action. It doesn’t mean what it used to. We’ve also been able to throw massive resources at vaccine development and not just develop them in record time, but do so with an entirely new method, and with higher effectiveness. And chances are it will be distributed nearly free around the world. Amazing compared to past pandemics. 24/ Even better, despite the strongest efforts of the fossil fuel lobby, the renewables economy has continued to develop strongly through the pandemic, and energy is getting closer to free. And by that I mean really free, after factoring in the cost of externalities like pollution and carbon. That’s worth a bit of a bunnytrail. 25/ There’s a famous paper by Nobel laureate William Nordhaus, Do Real-Output and Real-Wage Measures Capture Reality? The History of Lighting Suggests Not, analyzing the cost of artificial lighting measured in human labor hours that has some interesting implications. 26/ Nordhaus shows that between prehistoric times and campfires, and modern compact fluorescent lamps (w

    26 min
  7. 25/09/2020

    Fifth-Generation Management

    In today’s episode, I want to talk about an idea I call fifth-generation management. 1/ Fifth-generation management is an emerging style of management we don’t know much about because it doesn’t actually exist yet. But it is guaranteed to emerge post-Covid because historically, big sharp disruptions have reliably triggered discontinuous changes in management culture, and it is already clear that this one is doing that. 2/ The idea of generations in management, in the form I’m going to lay it out, is causally related to the idea of generations of warfare, and in particular the idea that contemporary styles of warfare strongly shape future styles of management. So if there are generations in warfare, they are going to cause generations in management. Military ideas are not the only cause of course, but I’m going to argue that historically they’ve been the strongest one. Strong enough to almost be determinative. During WW2 for instance, business and military culture became almost the same thing for a few years. 3/ This is not a universally popular idea because a significant number people find even the business-as-war metaphor distasteful, let alone the suggestion that military culture directly shapes business culture, or worst of all, that it is in fact the dominant source of business thinking. But personally, I’ll admit I’m enough of both a military nerd and a management nerd that I actually find the connection stimulating rather than depressing to think about. And I have a little bit of history here, my research during my PhD and postdoc fifteen-twenty years ago was on military command and control models, and a lot of my consulting work draws from that experience. 4/ For better or worse, the connection between military and business evolution happens to be historically solid, and seems set to remain true. In the past this was much stronger, due to a large number of men serving in wars and then entering business, and business being male-dominated. Today, the coupling mainly has to do with relative rates of technology adoption in military vs business evolution, and to a lesser extent, shared exogenous events affecting both military and business affairs. 5/ Before we get into it, a couple of caveats. First, as with any clean, linear, sequential or cyclic model applied to a messy branching, evolutionary reality, you have to apply it very tastefully. You have to think like a historical artisan, matching up the conceptual boundaries of a constructivist notion you’re working with to real history. And where they don’t line up, actual historical events should shape your thinking rather than the abstract idea of one sequence of generations driving another. Second caveat, don’t make the mistake of thinking that each generation fully displaces the previous one in either military or business. Instead, it adds a new layer, and the older layer simply gets confined to a small zone of the action. Generations accumulate like geological layers, they don’t displace each other. 6/ To understand the management version, we have to understand the military version first. The idea of generations of warfare was popularized by William S. Lind, who coined the term fourth-generation warfare around 1980. It became the dominant style in actual warfare after the Iraq War, which was probably the last major third-generation war. 7/ I have illustrated the generations in the lower half of the diagram. The story basically starts with the Peace of Westphalia in 1648, after the Thirty Years War. The first generation lasted almost 150 years. The second generation lasted about 100 years from 1815 to 1915, the third about 65 years from 1938 to 2003. The fourth, I will argue, only lasted about 15 years, from 2003 to 2020, and Covid will trigger a shift to a fifth generation. 8/ The first generation was based on final abandonment of medieval warfare, and relied on early smooth-bore muskets. It utilized uniformed, paid armies fighting for nations rather than feudal lords, or mercenary companies. It involved what is known as line-and-column warfare. Think of armies marching in long columns towards strategic targets. Maybe a little large-scale maneuvering and flanking, but lacking the communications and intelligence capabilities to do more. 9/ The second generation stretches roughly a century from the end of the Napoleonic wars, around 1815 to World War I. It was based on the development of rifled breech-loading guns, interchangeable parts, and early electronic communications with the telegraph. Technology improved steadily so that WW1 was quite different from say the war of Mexican independence. But the broad style is what’s known as attrition warfare between roughly evenly matched forces in numerical and materiel terms. Armies bogged down in trenches or extended sieges. In second generation warfare, usually the side with the greater economic resources eventually prevails, as in the US Civil War. 10/ Third-generation warfare was developed primarily by the German military in the interwar period, and is what is usually called Blitzkrieg in the historical case, or maneuver warfare in more modern terminology. It makes use of fast-moving mechanized infantry, tanks, and sophisticated local communications to move very fast behind enemy lines, maneuver and reorient rapidly in response to changing situations, and collapse the enemy from the inside. 11/ This is the style that was developed and refined by John Boyd, and is roughly what lasted all the way through the Iraq War. In third-generation warfare, often an asymmetrically smaller and technologically primitive force can beat a larger, technologically superior force. This is the style that is based on the OODA loop, which we talk about a lot. 12/ This asymmetric outcome potential often creates a conundrum around how to establish the peace after the victory, because economic superiority may not line up with military superiority. In the case of WW2, eventually the Allies got better at maneuver warfare, the Germans got worse and backslid into 2nd generation to some extent, and economic superiority prevailed. And after the war, the Allies won the peace with the Marshall Plan, which was second-generation peace thinking. So in a way WW2 was actually a Generation 2.5 war. 13/ Third-generation warfare is also what is sometimes called total war, where you fight with unsentimental professional skill to win. It’s not about honor or fair-play, and deceit, cunning, and cheating are considered legitimate. This means it can get really ugly by design. In older styles of warfare, you would have a collapse of honor norms like “giving quarter,” but for third-generation warfare, which is an extremely rational kind of warfare, you had to have things like the United Nations laws and the idea of war crimes and trials. Because everything from gas chambers to concentration camps is otherwise on the table. 14/ Now fourth-generation warfare is best defined not by how war is fought, but by who fights the war. In some ways the Vietnam War for the US, and the Afghanistan War for the Soviet Union, were both early fourth-generation wars. But proper fourth-generation warfare requires non-state actors who can operate with near capability parity on many fronts, which requires the internet and cellphones. It also often has non-state actors with more legitimacy than mere third-generation terrorist groups, and state actors that have much less legitimacy than they used to in the past. In a way, the Peace of Westphalia made states the legitimate combatants, and the Great Weirding is reversing that legitimacy after almost 400 years. 15/ Of course, as we’ve all learned by now, fourth-generation warfare, since about 2003, also means dank memes, influence operations, fake news, and disruption of political processes, especially democratic ones like elections, using social media. A good example is modern conflict like Syria involves both state forces, in this case Syria and Russia, as well as ISIS and a people’s resistance. Or Ukraine. It is what is sometimes called hybrid or nonlinear war, and Russia has been the leading practitioner of it. Arguably, the West has been subject to a fourth-generation war attack for four years from Russia. 16/ And of course this mix has always been present in warfare in some form, but what distinguishes 4th-generation warfare is that guerrilla goals shape the conflict via leveraged high-tech digital means, instead of just being subject to first, second, or third generation logic, or limited to violent terror tactics. This also means guerrilla goals become top-level political goals, instead of being subsidiary to the goals of a sponsor state. Guerrilla goals are what Henry Kissinger described with his famous line: “The conventional army loses if it does not win. The guerrilla wins if he does not lose.” 17/ In other words, fourth-generation warfare brings guerrilla goals to the political table directly. It is not total war, but what I call infinite war: it brings infinite-game war goals, into the picture, the goal being to continue the game rather than win it (infinite game in the sense of James Carse). It’s a true fourth-generation war if at least one top-level combatant is fighting with the guerrilla goal of simply staying in the game, rather than trying to win formally in the sense of a declared war, getting the opponent to surrender, and doing so without a state sponsor. Sometimes of course, the guerrilla actually wins in a conventional sense, in which case they often struggle to transition from a stateless actor to a state actor, as with the Taliban. 18/ Okay, now that we have our four generations lined up, let’s talk about how that connects to generations of business management. To do that, I want to talk about an episode you may have heard of, called the Millennium War Games, but you probably haven’t heard anything like my spin on it. 19/ Briefly, the Millennium War Games

    34 min

About

Thinking out loud about the future of the world, as shaped by technological serendipity contraptions.venkateshrao.com