The Square and the Tower: Networks and Power, from the Freemasons to Facebook

I listened to Sam Harris talk to Niall Ferguson yesterday on Sam’s Waking Up podcast.

Niall is a historian, an author, a journalist, and an academic.

He has just published a new book on a topic that is near and dear to me, USV, and many of you; networks and hierarchies, and how these two forms of information flow and management have impacted society over the last five hundred years (or so).

The book is called The Square and the Tower: Networks and Power, from the Freemasons to Facebook.

I bought it for our Kindles today and will get into it asap. But just hearing Niall talk about the ideas in the book tells me that this is going to be an important read for many of us.

We may think that the power of information networks to shape society is a new thing (Facebook, fake news, Trump, etc, etc) but Niall argues that there is nothing new here and these sorts of things have been going on in analog networks for hundreds of years. As Shakespeare said, “what’s past is prologue” and we should learn as much from the past as we can. That’s what historians are for, after all.

I plan on doing that and you may want to join me.

#Current Affairs#Politics#Web/Tech

Comments (Archived):

  1. andyswan

    Sounds like a winner!

    1. Rob Underwood

      It’s a great listen. Most of the Sam Harris stuff is really well done. He never seems to have found his groove with Jordon Peterson, after two tries, and it’s too bad, but otherwise his stuff is worth the time investment.

      1. andyswan

        Jordan is his own groove u just gotta let him roll lol

        1. Rob Underwood

          That’s exactly right. I think that’s why the podcasts with him and Sam have not gone so well.

          1. JamesHRH

            Jordan doesn’t play well with teammates – he’s a binary ball hog. No flow or give and go.You say Incorrect Thing A, JB refutes and buries you with data is his best format.

  2. iggyfanlo

    My ears are burning… I literally listened to the podcast on a long hike this morning… and yes, sounds both highly informative and entertaining

  3. David C. Baker

    Amazon reviewers are not being too kind to this particular work, whatever that means.

    1. fredwilson

      It means read it

  4. Rob Underwood

    I am curious the over/under on how many regulars suggested this podcast to you. I know I was one. Was it over 5?EDIT: If anyone in NYC would like to “book club” this I’m happy to host a couple discussions in NYC, probably in Bk.

    1. fredwilson

      Depends on what counts as a regular 😉

  5. JLM

    .There are two modestly mysterious organizations which shaped the United States starting right before the American Revolution — The Order of Ancient, Free, and Accepted Masons, founded in London in 1717; and, the Society of the Cincinnati, founded in 1783 by former officers of the Continental Army who saw action in the Revolution. Both were all male.Washington, Hamilton, Franklin, Adams, Hancock, and Lt Horse Harry Lee were all Masons. Masons played a huge role in the officer corps of the Continental Army.Washington took the oath of office as the US’ first President on the Bible of St John’s Masonic Lodge No 1 of New York. He was the first master of Alexandria Lodge No 22 which became Alexandria-Washington Lodge No 22.The Society of Cincinnati is inspired by the life of Lucius Quinctius Cincinnatus who was called by Rome at a time of crisis and awarded the powers of Magister Populi, which is to say he was made the dictator to solve the military problem. [Sounds like Geo Washington a bit.]When solved, he relinquished his powers and returned to his farm. That is the model of the SoC – soldiers who would return to serve their country in a time of need.In fact, there are those who say it was a society created to seize control of the country in the event this experiment with democracy did not work. It was also suspect as it was a hereditary society under the rules of primogeniture. This felt like the institution of a royalty and, in fact, it was.Honorary membership has been extended to President, Generals, and the top graduates of the military schools. Though this is not widely reported.President Washington was the initial President General, followed by Alexander Hamilton, followed by Charles Cotesworth Pinckney.The city of Cincinnati was named (actually renamed) in honor of the Society though it was supposed to be a secret. Arthur St Clair was a member and the Governor of the NW Territory.Both of these organizations were “builders”. Both were initially led by Geo Washington.JLMwww.themusingsofthebigredca…

    1. JamesHRH

      Citations?That’s quite the thing.

      1. sigmaalgebra

        Sometimes I give “citations”, and I insist on citations from you, but some people get to use their good name, reputation, and credibility!!!!Uh, that’s something the NYT, WaPo, CNN, and MSNBC have not yet figured out!!!!

      2. JLM

        .WTF, Jimmie, you don’t have the Google on your mo-chine? You don’t get no stinking citations.JLMwww.themusingsofthebigredca…

        1. JamesHRH

          Wanted to see if I could set the precedent, but you figured it out. #NoSurprise.

      3. Girish Mehta

        Re Cincinnatus. The sack of Rome by Gaul in 390/389 BCE destroyed most primary historical records. As such, what is known about Rome between its founding in 753 BCE and 389 BCE is largely based on legend and reconstruction. This includes the founding date of Rome as April of 753 BCE – which was a reconstruction backwards from 389 BCE based on estimated durations of the reigns of the Seven Kings of Rome, and the durations of the consuls.Cincinattus is believed to have been born in the dying years of the Roman Kingdom and lived most of his life in the Roman Republic.Cincinnatus lived between ~ 519 and 430 BCE. Rome became a republic ~ 509 BCE. Cincinnatus at different times was a consul and a magister populi.How much of the rest of the legend is true will never be known and may not matter.”When the legend becomes fact, print the legend”.

    2. Rick Mason

      If you’re in our nations capital and at all interested in history I recommend visiting the George Washington Masonic National Memorial that tells the history of our first presidents involvement with the Masonic Lodge.I’m not a member but without my dad’s recommendation (he was a lifelong Mason) I’d have totally missed this fascinating museum.

  6. jason wright

    Ferguson is that rare thing, the five hundred year old human being. He sees what we do not see, the continuum, of trends and patterns across the centuries. our new is his old in a different guise. He is the undead.

  7. Vendita Auto

    Reminded me of how much I miss the intellect that was Christopher Hitchens

    1. JoshGrot

      You beat me to it!

  8. JamesHRH

    Kudos to be given publicly for your continued breadth of voices.Not sure how many policy views you would share with Niall.

    1. fredwilson

      More than you think

  9. William Mougayar

    The title reminds me of The Cathedral and the Bazaar. Unusual juxtaposition of words that make you think.

    1. Vasudev Ram

      Reminded me of it too, as soon as I saw the post title. Wouldn’t be surprised if it was intentional. Eric Raymond (Cathedral and Bazaar author) has written some good and in-depth stuff, even though his use of language flourishes can be a little overwhelming. It’s worth handling that for the content.Another good book of his, which I recommend to people now and then, is The Art of Unix Programming [1]. Covers a lot of topics, might call it a compendium.One of my favorite parts of the book is the chapter on the Unix Philosophy, and another is the Rules of programming [2]. He has a list of them, and explains them with examples.…The favorite parts I mentioned are all in Chapter 1 of the book, which you can read here:[1]:…or buy a print copy:.…[2]:Here are the titles of the Rules of programming from his book:Rule of Modularity: Write simple parts connected by clean interfaces.Rule of Clarity: Clarity is better than cleverness.Rule of Composition: Design programs to be connected with other programs.Rule of Separation: Separate policy from mechanism; separate interfaces from engines.Rule of Simplicity: Design for simplicity; add complexity only where you must.Rule of Parsimony: Write a big program only when it is clear by demonstration that nothing else will do.Rule of Transparency: Design for visibility to make inspection and debugging easier.Rule of Robustness: Robustness is the child of transparency and simplicity.Rule of Representation: Fold knowledge into data, so program logic can be stupid and robust.Rule of Least Surprise: In interface design, always do the least surprising thing.Rule of Silence: When a program has nothing surprising to say, it should say nothing.Rule of Repair: Repair what you can — but when you must fail, fail noisily and as soon as possible.Rule of Economy: Programmer time is expensive; conserve it in preference to machine time.Rule of Generation: Avoid hand-hacking; write programs to write programs when you can.Rule of Optimization: Prototype before polishing. Get it working before you optimize it.Rule of Diversity: Distrust all claims for one true way.Rule of Extensibility: Design for the future, because it will be here sooner than you think.And make sure to read this part:Attitude Matters Too:…It’s a good book to read across multiple weekends or to take with you on a vacation.

      1. Vasudev Ram

        And since it is relevant (because a good portion of the book – though not all – is about good practices for writing Unix command-line programs), I’ll also mention an article that I wrote a while ago for IBM developerWorks, on the topic of “Developing a Linux command-line utility”. Here is a link about the article, and a link to the PDF of the article:

      2. Vasudev Ram

        That section of Chapter 1 that I mentioned above – “Attitude Matters Too”, is so good, IMO, that I thought of pasting its (short) content here:[ Attitude Matters TooWhen you see the right thing, do it — this may look like more work in the short term, but it’s the path of least effort in the long run. If you don’t know what the right thing is, do the minimum necessary to get the job done, at least until you figure out what the right thing is.To do the Unix philosophy right, you have to be loyal to excellence. You have to believe that software design is a craft worth all the intelligence, creativity, and passion you can muster. Otherwise you won’t look past the easy, stereotyped ways of approaching design and implementation; you’ll rush into coding when you should be thinking. You’ll carelessly complicate when you should be relentlessly simplifying — and then you’ll wonder why your code bloats and debugging is so hard.To do the Unix philosophy right, you have to value your own time enough never to waste it. If someone has already solved a problem once, don’t let pride or politics suck you into solving it a second time rather than re-using. And never work harder than you have to; work smarter instead, and save the extra effort for when you need it. Lean on your tools and automate everything you can.Software design and implementation should be a joyous art, a kind of high-level play. If this attitude seems preposterous or vaguely embarrassing to you, stop and think; ask yourself what you’ve forgotten. Why do you design software instead of doing something else to make money or pass the time? You must have thought software was worthy of your passion once….To do the Unix philosophy right, you need to have (or recover) that attitude. You need to care. You need to play. You need to be willing to explore.We hope you’ll bring this attitude to the rest of this book. Or, at least, that this book will help you rediscover it. ]

      3. Vasudev Ram

        These from the book are good too:Master Foo and the Unix Zealot:…and (uplink from above one):Appendix D. Rootless RootThe Unix Koans of Master Foo…

      4. William Mougayar

        Wow. Thanks for this wealth of knowledge.

        1. Vasudev Ram

          Welcome 🙂

  10. JoshGrot

    For quite some time, I’ve been a huge fan of Sam Harris and his writings, YouTube speeches, and more recently his podcast: his rational and pithy arguments buttressed what was my then incipient atheism, and his “Waking Up” drew me into mediation (prior to Harris, I hadn’t realized that one could be both an atheist AND spiritually contemplative: silly me) — I find that he’s uniquely willing to entertain ideas and concepts that may not necessarily jibe with his going-in leanings, and will change his POV accordingly (at least on most topics). He’s certainly altered my POV on several topics, including on guns and on Islam.However, at times I wish that he would press his guests more. In this most recent podcast, Ferguson makes cogent and compelling arguments about how the Trump victory may in fact prove to be far better for the progressive/”liberal” cause in the long run than a Hillary victory, as it let steam out of the system and thereby avoided the tumult that may likely have ensued had Trump’s followers not gotten their man in office.Ferguson’s methodological use of counter-factual historical narratives in support of this conjecture is quite intriguing and seemingly on point in this regard: what would have happened if …? seems to be a necessary and often avoided methodological construct by most historians.And yet, it would have been useful if Harris had pressed Ferguson more to “play out the through line” of his counter factual historical narratives. I.e., IF Hillary had won AND IF the angry mob had “revolted,” would we necessarily have been in any worse shape as a society than having a large portion of the populace bathed in regret and despair and hopelessness having ultimately seen Trump as the Emperor without any clothes?In short, while I believe that Ferguson made some compelling arguments, I would have liked Harris to have pressed him more deeply on several of them.That said, I too have the book on Audible and am looking forward to listening to it … but only after I finish my “re-reading” of Christopher Hitchens’ autobiography “Hitch 22.”

  11. jason wright

    Off topic (apologies).For anyone on a tight budget i recommend the Xiaomi Mi A1 (Android One). For the money it’s hard to beat. No NFC.

  12. Tom Labus

    He also took up the daunting task of Kissinger’s official biography part I. Kissinger asked/pursued him to do so. Good review.

    1. JLM

      .That Kissinger book is about a thousand pages. I once threatened my wife I was not leaving the beach until I finished it. It was a very interesting read.I think that Kissinger’s own books – 3 – totalled almost 4000 pages. I haven’t read them all yet.You are a serious reader. Respect.JLMwww.themusingsofthebigredca…

      1. Lawrence Brass

        I can imagine you, stubbornly seated on your beach chair in the dark with a head lamp and Mrs. JLM sleeping in the car. You are very lucky. 🙂

        1. JLM

          .I only read to sundown. Mrs. JLM would be at a restaurant with the kids gorging on seafood.I often read a book a day at the beach. It is my favorite place.JLMwww.themusingsofthebigredca…

          1. sigmaalgebra

            When my wife and I lived in Maryland and I was doing computing and applied math, sometimes we’d gorge on seafood!We’d get baskets of fried scallops with baskets of french fries and wash it down with beer!The French restaurant at the SW corner of Wisconsin and M street used to do a fantastic Homard américain.I got good at a Coquille Saint Jacques à la Parisienne and did a variation with lump back fin crab meat.There was an outrageous sandwich shop Roy’s Place that did, right, outrageous lobster sandwiches.When I went on the low carbohydrate diet, we pigged out on lobster and Porterhouse steaks. Spent money? Yes. Lost weight? No!In some of my work I’d break for dinner at a seafood bar in Silver Spring and pig out on broiled flounder, french fries, coleslaw, and little glasses of beer. Once I was, while eating, reading Blackman and Tukey, The Measurement of Power Spectra, and a guy in a good suit and about 50 sat next to me and right away asked if I was working for the Navy. Ah, that was too close to a Tom Clancy novel, and I said nothing! Nothing wrong with reading flounder and eating Tukey, uh, eating flounder and reading Tukey!!!But there was a lot of good seafood!

          2. Lawrence Brass

            Love the beach too, but can’t read there as I like so much contemplating the sea and enjoying the waves and the sand. The official vacaciones de verano season ends this month down here.

  13. kidmercury

    kooks will know the CIA (in many ways the successor to the freemasons and other secret societies going back to ancient egypt) is the ultimate network operator.a great that talks about old school networks is the keystone advantage by marco iansiti. it’s a great, great book, but not on kindle 🙁

    1. JLM

      .The CIA is both a centralized (“Central” Intelligence Agency) and a decentralized network. Be a guy in the field and get caught. Good luck.It is designed to break the laws of every country in the world except for the USA and they are developing some very bad habits as it relates to the US.There is a Deep State within the Agency which operates at the top of the management food stack and below the political appointees which is answerable to nobody.The guys to keep an eye on are the NSA.Just imagine what they are really doing when you realize that a lot of their tech talent is in their twenties, has access to every single bit of communication in the world, and has unlimited Cray computer support. What could possibly go wrong?JLMwww.themusingsofthebigredca…

      1. sigmaalgebra

        Yes, for the NSA, I like the remark, IIRC, from the movie The Big Short from a relatively paranoid character “The NSA has a budget of $50 billion a year and can listen to millions of phone calls at once. You think they don’t use it?”I don’t know about the numbers, but the ending question is pertinent!

    2. MercurialAndDelusional

      The comparison above appears to be inane and delusional.The CIA is a type of state-sanctioned secret police which I guess all but the tiniest and weakest countries seem to invariably have. A central government without secret police unnecessarily makes itself vulnerable. Secret police, like all police, need to be vigilantly supervised and often severely reprimanded even for seemingly minor infractions lest they become a “law unto themselves” who engage in heinous and savage brutality. Throughout history and even up until today, most secret police who I have read about seem to be “law unto themselves” who engage in heinous and savage brutality.The Freemasons are pagans (and therefore wicked) but they are not state-sanctioned secret police. Not even close.Why not argue little girls are like the CIA because they tend to keep secrets? Or that Freemasons are like lifeguards because they are both people?

      1. kidmercury

        thank you for your comment. notice i didn’t say the CIA was “like” the freemasons, though that is certainly true. i said the CIA was the *successor* to the freemasons. the CIA stems from the office of strategic services, which was founded by president franklin roosevelt, who was a freemason. roosevelt appointed bill donovan to the lead the agency, who was a knight of malta — an organization masonic traditions. trace it backwards and forwards, and you’ll see more of the same.

  14. Feargal Ó'Madagáín

    Book is absolutely fascinating. It’s an amazing set of anecdotes about how some networks have impacted society and how such networks have operated. But as most of NF’s work – he basically over applies his chosen heuristic and ends up either over generalizing or saying nothing really interesting. NF does both, over generalizing by drawing too rigid a distinction between networks and hierarchies and focusing too much on politics, and by the end of it, it’s not really clear what his point is, or why he wrote the book. This doesn’t take away for the richness of the anecdotes and personalities, which he’s always great atIt’s a missed opportunity, as a bunch of really interesting voices (Tyler Cowen and others) are beginning to apply network theory more broadly to figure out what makes the node/edge connections of something like silicon valley work to create unique sub-cultures. I would be really interesting in exploring whether what we call American exceptionalism (in the economic sense) is really a combination of massive supply side and demand side economies of scale occurring simultaneously thanks to the unique combinations of people, capital, resources and connections in the past century. If this cld be proven, it might even have a more predictive effect on business and economic cycles – and might explain why China is suddenly closing the gap so rapidly on the US tech industry for instance. Definitely a topic to be explored in much more detail – just don’t expect to get the answer from Ferguson

    1. David C. Baker

      Yeah, that’s what I meant by the mixed Amazon reviews. Seems like the book is good…but could have been so much better.

    2. JLM

      .One of the reasons why China is “closing the gap so rapidly” is because of state sponsored tech espionage together with wholesale misappropriation of patented tech driven by state support.JLMwww.themusingsofthebigredca…

      1. Feargal Ó'Madagáín

        Which lowers the transaction cost within the innovation process thereby allowing a network to achieve supply side economies of scale. They can then launch platforms / AIs knowing with current market conditions they have demand side economies of scale. No comment on ethics of it – just feel there is value in understanding the (almost certainly underrated) aspects of network theory here. (Espionage networks being an obviously critical node in the tapestry in your example)

        1. JLM

          .Espionage is always cheaper and quicker if it works.JLMwww.themusingsofthebigredca…

          1. Feargal Ó'Madagáín

            Sure but it doesn’t produce anything of economic value without other important networked elements in place (talent, capital, distribution, assets, a market etc.)

          2. JLM

            .One has to assume that some great portion of those elements were in place to have identified the target in the first place.Much of what espionage seeks is what they cannot do themselves, e.g. the atomic bomb and the Russians. There is also a lot of stuff the other side didn’t know existed until they stole it.JLMwww.themusingsofthebigredca…

          3. Feargal Ó'Madagáín

            Why does one has to assume that? Espionage and/or ideas are not the unit of analysis in my hypothesis. The point is whether you can quantify the scaleable units you require in a node, and map the intensity of edges/connections to come to a better empirical understanding of business / economic cycles. Clearly an espionage node is one relevant component, but China has currently got a hugely vibrant diversity in creative nodes. And is becoming a hyper-networked society with large number of edges connecting these nodes. My question is whether this framework helps us understand China’s growth in tech better than “they stole it” or “its because they have a huge market”. Not to say that either isn’t true – but if “why China and why now” has more similarities than once thought with “why Silicon Valley and why then” that would be an enormously valuable piece of information.

          4. Feargal Ó'Madagáín

            And by the way -network theory might also be a useful way to analyse espionage networks themselves. You could say that the success or otherwise of such a network is to create as many strong edges to as many information nodes as possible. With the major tension being that the more edges you form the higher the systemic risk. In both cases, its just an attempt to insert network theory into the conversation – as I think it’s been sorely neglected (and that Ferguson’s book does disappointingly little to address that)

          5. sigmaalgebra

            I question if “network theory” amounts to anything.There is quite a lot of applied math for graphs and networks. So, we can do a lot of optimization with (A) maximum matching, (B) the Ford-Fulkerson max flow, min cut theorem, (C) network shortest path, Dikjstra, Bellman, (D) the network simplex algorithm from Dantzig and Cunningham for least cost capacitated network flows, (E) the traveling salesman problem and its connection with the question P v NP, (F) 0-1 integer linear programming set covering for many optimization problems on networks, e.g., scheduling the fleet at FedEx, (G) minimum spanning tree, etc. But I don’t see this applied math as at all connected with the networks from Ferguson.E.g., just a quick scan of some of my bookshelves showsMokhtar S. Bazaraa and John J. Jarvis, Linear Programming and Network Flows, ISBN 0-471-06015-1, John Wiley and Sons, New York.Ravindra K. Ahuja, Thomas L. Magnanti, James B. Orlin Network Flows: Theory, Algorithms, and Applications, ISBN 0-13-617549-X, Prentice Hall, New Jersey.J. L. Kennington and R. V. Helgason, Algorithms for Network Programming, ISBN 0-471-06016-X, Wiley-Interscience.Handbooks in Operations Research and Management Science, 7: Network Models, Edited by M. O. Ball, T. L. Magnanti, C. L. Monma, G. L. Nemhauser, ISBN: 0-444-89292-3, Elsevier, Amsterdam.Dimitri P. Bertsekas, Linear Network Optimization: Algorithms and Codes, ISBN 0-262-02334-2, MIT Press, Cambridge, MA.R. T. Rockafellar, Network Flows and Monotropic Optimization, ISBN 1-886529-06-X, Athena Scientific, Belmont, Massachusetts.Robert Endre Tarjan, Data Structures and Network Algorithms, ISBN 0-89871-187-8, SIAM, Philadelphia.William H. Cunningham and John G. Klincewicz, “On Cycling in the Network Simplex Algorithm”, Mathematical Programming, Volume 26, pages 182-189, North Holland.and still I don’t see a “network theory” anything like in the Ferguson materials.E.g., what are the better results from that “network theory”?It’s not promising for Ferguson to build a theory on top of some “network theory” that does not exist.

          6. Feargal Ó'Madagáín

            Your bookshelf is indeed mightily impressive. Not really talking about the applied math here – but probably useful to factor in. Referring more to work done recently by Tyler Cowen and others on how creative monocultures arise and how edges between them can create network effects – demand / supply side economies of scale that affect transaction costs (and their concomitant effects on business cycles). Trad understandings of the mechanics of this have tended to focus on political or cultural theories of determinism (not unlike your read on China). it’s only very recently that we understand how demand / supply side network effects work in unison with each other. I was hoping Ferguson would look at whether you cld empirically demonstrate these mechanics – and he doesn’t really. You can make as many arguments as you like about anything you like. I don’t disagree with any of it – I’m just interested in someone empirically exploring whether the way we analyse Google / Facebook / Uber has more to say about economic history that previous scholars have thought (tending to focus on individual rather than networked power structures). This has been my only point from the start – and while your thoughts on China and applied math, are interesting they are very much beside the point. Your points around centralisation of resources being a problem is obviously right (as are your remarks on capital accumulation on Vanderbilt et al)- but what about the mechanics? i.e. does modularity / diversity of capital / innovation centers have more value to an economic cycle than centralization of resource in central hubs like NY? Does Silicon Valley’s centralization and continued globalization have positive or negative predictive effects on its success? How can you , with public policy, preserve the uniqueness of creative centers, while ensuring innovation can be spread throughout wider society etc etc. Lots and lots of people are asking related questions with respect to digital platforms (some call it network theory – but couldn’t care less about the labels), but very few are asking whether similar effects happen, and generate powerful reactions, outside of the digital world. Ferguson skirts around asking similar questions but doesn’t address them head on. Which given his excellent research is a missed opportunity

          7. sigmaalgebra

            ForYour bookshelf is indeed mightily impressive. Not really talking about the applied math here – but probably useful to factor in. my point was just that even with that collection of booksI don’t see a “network theory” anything like in the Ferguson materials. For using some of those books, I wouldn’t want to prescribe a cure before I diagnose the disease or recommend a solution before I understand the problem.Forsome call it network theory – but couldn’t care less about the labels good, we have Darwin’s theory of evolution and Einstein’s theory of relativity so let’s set aside the “network theory” Ferguson mentions and, instead, just look at the actual issues.The situation is similar for “game theory” where people are not talking about the von Neumann and Morgenstern saddle point result or Nash’s result or, really, anything in (my bookshelf again)Guillermo Owen, Game Theory, W. B. Saunders, Philadelphia, PA.T. Parthasarathy and T. E. S. Raghavan, Some Topics in Two-Person Games, ISBN 0-444-00059-3, American Elsevier, New York.Avner Friedman, Differential Games, ISBN 0-471-28049-6, John Wiley & Sons, New York.Okay, I’ll guess: The more relevant “creative monocultures” are (A) information technology venture funding on Sand Hill Road in Silicon Valley and (B) the financial investment community of Wall Street.Then, maybe an issue is, the information technology industry is selling their equity to the financial industry. Then either side can be either monolithic or diverse from a “network”. And the issue is, what happens? So, the usual economic theory approach would look for a saddle point, that is, where the seller does X and the buyer does Y, and with Y fixed X is optimal for the seller, for X fixed Y is optimal for the buyer, and the pair X, Y is the only such pair, or some such.Then if make the options for X and Y easy enough to analyze, make some assumptions about well behaved supply and demand curves, consider your “transaction costs”, and draw enough from, say,T. Parthasarathy and T. E. S. Raghavan,e.g., maybe Nash’s result or some of the saddle point results, e.g., the one by Sion, then might be able to get some results.Maybe a result would be that under somewhat realistic assumptions, each side moves to a “monoculture”. That result, then, would be a “network effect” from the network of two nodes, one node on Sand Hill Road and the other on Wall Street.Then argue that for the side buying the equity, currently really it is more diverse than just Wall Street but also includes private equity investors and also the usual suspects — pension funds, hedge funds, insurance companies, sovereign wealth funds, family offices — for the venture firm limited partners.On the side selling the equity, information technology, it’s not all on Sand Hill Road but is also in Los Angeles, Boulder, Chicago, Boston, NYC, etc.So, the “technology”, e.g., Skype, role would be that for one of these sides to be more “monolithic” they no longer need to be monolithic in their geography and, instead, can be scattered all over the US, Japan, China, Europe, etc.So, let’s try to see: WWII got a lot going in military radar and sonar. AT&T did the transistor. The Cold War pushed hard on much more in radar and sonar and electronics more generally. Dean Terman at Stanford welcomed such activity. So, there on or just outside the Stanford campus, US aerospace (e.g., US DoD, NASA, CIA, NSA) pumped in big bucks. When Shockley wanted to go into business, he found, IRCC, funding there in Silicon Valley. With Intel, electronics went digital, and US aerospace liked that, also.Then the venture capital idea got going right there next to Stanford funding startups getting aerospace business. Steve Blank has explained a lot of this.By now, some of the Sand Hill Road firms have good track records with their limited partners. So, likely Doerr from KPCB and Moritz from Sequoia could any day call up their happier limited partners and raise a new $1 billion fund, ah, live a little, call it $2 billion, and might as soon as they thought that they had enough good deals to give a good return on investment (ROI) for $2 billion.So, Stanford, Doerr, and Moritz are not much interested in moving full time to beautiful scenery in Jackson Hole, the coast of Maine, the mountains of Colorado, a place on the shore of Puget Sound to watch the killer whales, the canyons of NYC, Shenandoah Valley, etc. So, Silicon Valley is stuck there on Sand Hill Road.But for the “technology” question, does it really matter much if KPCB and Sequoia are stuck on Sand Hill Road? Maybe not very much.And since Silicon Valley real estate prices are absurdly high, the company founders can want to move to lower cost of real estate and living.There is a general phenomenon in such cases of optimal decision making: The decisions typically do not have to vary continuously as the parameters of the problem vary continuously. Indeed, the situation is much worse than that: In relevant parts of optimization applied math, it can be a struggle even to show that the decisions are even Lebesgue measurable functions of continuous variations in the problem parameters. Such arguments can be based on obscure ideas in measurable selection, and sometimes we partly give up and assume just countably infinitely many candidate decisions.All that technical stuff aside, the real world result is that as the problem parameters vary in small ways, the resulting optimal decisions can vary in large ways. E.g., there can be four “network” decisions, go with the node in Seattle, the one in Silicon Valley, the one in NYC, or the one in Atlanta, and in the case of near ties the optimal decision can jump among all four from just arbitrarily small changes in the problem parameters.In simple terms, in reality, in cases of near ties, it can be essentially impossible to predict what the decisions will be. This can be true even if the overall macro economic outcomes are quite insensitive to these parameter variations.To get very serious about being faithful to reality, we should consider decisions over time under uncertainty. There we are into stochastic optimal control, and generally that’s more difficult.Right, back to a little from my bookshelf:E. B. Dynkin and A. A. Yushkevich, Controlled Markov Processes, ISBN 0-387-90387-9, Springer-Verlag, Berlin.Wendell H. Fleming and Raymond W. Rishel, Deterministic and Stochastic Optimal Control, ISBN 0-387-90155-8, Springer-Verlag, Berlin.Sorry, guys, it’s not AI or ML!!!If with some reasonable data can find a saddlepoint, then with, say, some sensitivity work might get some results of value in practice.A saddlepoint sounds important, but there is some work that says that real economic processes, that in principle have saddlepoints, can take a long time to get there.Again, due to the instability of decisions X and Y in terms of problem parameters as above, the results for, say, ROI might be of more interest than the specific values of X and Y.For some candidate values of Y, might be able to get some information on candidate best values for X and, then, the ROI.To some extent the math would be a way to find out what to do if had a lot more data than have any hope of having.Still, such an investigation might yield some useful qualitative insights. So, might find some parameters that strongly drive the situation and maybe make ties in the decisions for both X and Y less likely. So, if are a seller, might identify the parameters that help/hurt ROI and then for each of those in the real world try to adjust those to get more ROI. Here the information on the parameters would be mostly just qualitative, e.g., for each of the parameter knobs, which way to turn them.

      2. Twain Twain

        @JLM:disqus — That is NOT the case. The Chinese have had a tradition of 1st principles invention since long before the Greeks and pragmatic, holistic frameworks of reasoning much more advanced than the Greeks.*…Chinese physicists in 1950s won the Nobel in Physics for breakthrough ideas that were directly based on the Chinese philosophy that traces back to 1000-800 BC, a full 500+ years BEFORE the Greeks and Western thinking.Moreover, the latest advances the Chinese have made in Quantum computing is original work and not a copy.The West likes to laud the “Enlightenment” but, in fact, a number of the key ideas and logic basis from Descartes and Leibniz are precisely why the US has divisive democracy and tech that’s binary, “mindless” and damaging to democracy — to the extent that not even the Head of Machine Learning at Google Deepmind is aware of how tech got to binary classifications and how to solve for it.https://uploads.disquscdn.c…@fredwilson:disqus — Confucius said: “Study the past, if you would divine (define) the future.”If Silicon Valley knew their Da Vinci, they’d have seen their “town square” and tower problems long before Ferguson’s book. https://uploads.disquscdn.c…Unfortunately, there are very few founders-engineers in the Valley who know their art and philosophy and apply it to solve tech problems.Moreover, very few people are aware that the polarization mechanisms have their roots in Aristotle’s dualist logic.Stephen Cave of Cambridge University: “The late Australian philosopher and conservationist Val Plumwood has argued that the giants of Greek philosophy set up a series of linked dualisms that continue to inform our thought. Opposing categories such as intelligent/stupid, rational/emotional and mind/body are linked, implicitly or explicitly, to others such as male/female, civilised/primitive, and human/animal. These dualisms aren’t value-neutral, but fall within a broader dualism, as Aristotle makes clear: that of dominant/subordinate or master/slave. Together, they make relationships of domination, such as patriarchy or slavery, appear to be part of the natural order of things.”When we look at the UX mechanisms, the data is collected in a polarized, self-biasing way.Swipe left — swipe rightVote down — vote upThat’s also in the AI algorithms => mindless AI.Ergo, why I had to invent or we’ll all stay stuck in the polar, biased, mindless paradigm of these networks.

        1. PhilipSugar

          Doing business in China and having Chinese friends, I can say it is complex.It is what JLM says espionage that is closing the gap? Or that there is not a huge amount of talent there? No. There is a ton of talent. I don’t think there is enough technical talent in the U.S. to build the iPhone. Not design (that is not saying China can’t but we have enough talent), but technical talent to build and then you have labor and facilities to make it happen.I also think there are a ton of great woman engineers there as well. Now I had a discussion with “Helen’s Mom” a first generation engineer here along with “Lucas Mom” same. They were really having a hard time deciding if they would let their kids apply to the Cab Calloway School for the Arts because for them it was always get a technical degree and you can hit middle class. That is going to change BTW if they are any barometer.But do I think if you send your stuff to get made in China it is going to get ripped off in ways that would be illegal in the U.S.? Hell yes.Do we get to operate and sell there like Chinese do here? Hell no.Now then the question is who’s fault is that?Let’s take an example you sent your earbud designs to China, and on the second shift your technology is used to make a knockoff. Is it?1. Your fault. You made the decision2. You were forced to make the decision because others do and you have to.3. Government fault for bad trade agreementsThat is a hard question.

          1. Twain Twain

            There are those in the Valley who also readily steal the ideas, designs and prototypes of others. Ask women how many times their hard work has been appropriated and not credited by a schmucky guy.See also the Uber vs Google case wrt self-driving car technology.It is complex. The Chinese, the Americans and the Europeans all have cases of industrial espionage and theft.My comment was only to add perspective that there is work by the Chinese which is original and from a different scientific and philosophical basis than the West’s.Silicon Valley has copied Chinese business models too so this is a two-way issue.*…*

          2. PhilipSugar

            Not debating any of those points. Everyone says they get copied.Frankly with exceptions it is outworked or out hustledI would also say it is not a gender issue

    3. sigmaalgebra

      I would be really interesting in exploring whether what we call American exceptionalism (in the economic sense) is really a combination of massive supply side and demand side economies of scale occurring simultaneously thanks to the unique combinations of people, capital, resources and connections in the past century.We have to speak only comparatively: Among countries, in the last century the US was especially fertile ground for business, industry, and capital. There were lots of land and natural resources. There were lots of jobs for labor without much in smarts or education, and immigration provided a lot of such labor at low rates. Capital got away with lots of monopolistic behavior, stock market scams, environmental disasters, horrible working and living conditions for the workers, etc.So, capital reinvested, and then, IIRC, on about 1942 in deciding to attack Midway, Admiral Yamamoto was able to observe “I have traveled widely in America, my friends. Their industrial capacity is awesome.”So, Ford, Sloan, Carnegie, Rockefeller, Morgan, Vanderbilt, etc. were able to accumulate a lot of capital, do big things, e.g., fund GE based on the work of Steinmetz, Edison, etc., and accumulate still more capital. Thus, by 1942, Yamamoto was correct. Soon in Europe General Bradley was able to conclude that America’s war fighting resources were, IIRC, “inexhaustible”.If this cld be proven, it might even have a more predictive effect on business and economic cycles – and might explain why China is suddenly closing the gap so rapidly on the US tech industry for instance. Long a major problem with Communism was the problem of central planning. Due to lack of real competition in politics, management, planning, too much corruption, lack of incentives, etc. the workers concluded “They pretend to pay us, and we pretend to work.”.For military efforts, the Russian Soviets ran a “command economy” and got big things done, but there was the remark, “Do you know what it cost?”. Well, for having a high standard of living, or even competing with the US in industrial capacity, the cost was too high.Apparently a turning point for China was the remark “I don’t care if the cat is black or white as long as it catches mice.”.Well, apparently by being less rigid on the central planning, China has been able to “catch mice”.It may be that soon economic growth in China will suffer from the old “lack of real competition in politics, management, planning, too much corruption, lack of incentives”, etc.By analogy, even the biggest tree grows from only a tiny seed. The seed is not sufficient for such a tree, but it is necessary. For economic development, such seeds are necessary but come essentially only from the motivated minds of just one or at most only a few people.It’s standard, back to “The Little Red Hen” in Mother Goose: For such seeds, only the minds that create them can have much faith in them. So, such minds need the freedom, resources, and incentives to have their seeds germinate and grow. One party states, dictatorships, and Communism stand to have problems getting the necessary seeds created and germinated.

  15. falicon

    This was already queued up as my next listen in Audible…so good timing! 😉

  16. BrightShinyObjects

    Fred is off to chase the latest bright shiny object. Why not study ancient wisdom instead?

    1. Vendita Auto

      Nothing ancient about wisdom

  17. jason wright

    I wouldn’t touch MIUI. Android One is Xiaomi’s opportunity to do the right thing.

  18. JamesHRH

    Listened in back ground mode to first 45 mins or so.Basically, my take away was that human nature has a glitch, in that people constantly think the next big technical innovation will change human nature…only to find out that Luther’s printed bible led to strife and the rise of witchcraft, etc……Not sure if that humanistic belief in technology is a feature or a bug.

    1. sigmaalgebra

      “Humanistic belief” is a feature, much of what is special about Western Civilization, but something of an unrequited love, a continual frustration, always at risk, but, still, in Western Civilization, if only for its roots in self-interest and anxiety, continuing.The humanists are on to a good thing, first cut nearly irrational, but good as a “social contract”.Due to what first cut seems irrational, they grasp at any more rational support and, then, misapply “technology”.

  19. awaldstein

    Purchased.Stack of must reads is getting large enough that I need a few days in a hammock in Tulum to make it through them.

  20. sigmaalgebra

    Tribes don’t scale and, instead, fracture into competing, smaller tribes.

  21. WA

    San Harris’s podcasts should be required listening…ok…self required. Brain food buffet – every show…

  22. Jordan Jackson

    “The truth is in books, its not online” off the cuff the autodidact in me agrees with this, but after about 8 seconds of thought I become skeptical. What are your thoughts?

  23. jason wright

    which Kindle model are you using?