The truth, which isn’t linear

My friend Dave just published a new book, and it’s become my favorite entrepreneurship reading in a while. The one that previously held the distinction had been Ben Horowitz’s Hard Thing About Hard Things, which told of the experiences of the “wartime CEO”, drawing contrast to the “peacetime” variety.

Dave Balter’s book, resembling the other in its honesty, transparency, and attention to the human factor, may be understood as the perspective of the CEO in hybrid state – which is perhaps to say, peacetime on the surface while war is raging down below. And maybe that is after all the truth behind all startups. Nowadays, perhaps, this relevance extends much farther out than that.

The title grabs you right away – it grabbed me in any case – with its refreshing candor. Both the title and the book could only be the product of one who’s been there, many times.

Between the front page and final sentences that relate the author’s encounter with a prospective hire, “[w]ith so much thankfulness for [a near-death] experience [that he described] – and so much humility – that he was hired on the spot”, the essay collection brings together a series of reflections from the trenches, from the road, from the office and the home, alone and in the company of assorted others: teammates, investors, board members, competitors, customers, distantly back or in a recent moment, always right there in the thick of it.

In a post ahead of the book’s publication – Why My New Book is Destined to Fail – the author explains his intention and guards against an anticipated reaction from some readers. Many will wonder about the scope of an essay collection that doesn’t run a conventional narrative thread. “Often times that thread is thin,” he says. “Only upon reflection does the silk shed its translucence, becoming visible in the light of day. Sometimes it takes years for that to happen. Sometimes it never does. But, taken as a whole,” he says, “[such] books convey countless meanings.”

Taken as a whole, the seemingly unthreaded mix is truer, by far, to the entrepreneurial experience than any linearly standard version can convey. With a beginning, a middle, and an end, a book about entrepreneurship might in fact miss the point entirely; or, if not the point, then certainly the truth.

The Humility Imperative.

New verticals and horizontals

As is by now well known, the economic age we’re in isn’t defined by its tech/mobility/cloud/data/AI/robots/connectivity, at least not in terms of isolated pieces, but by the aggregation of these things and others to form a simpler and more comprehensive designation: the digitally networked age. For proof, one only has to look to market leadership for guidance, those which have deepened, widened, grown – consistently and dominant – for all of the past decade.

Accepting this to be the case, and going with the age’s stated definition, the lens through which we may assess strategic actions, splits or combinations is similarly one of network rules, parameters and vision. We can look at forms of product distribution, the processing of information, fund flows, and other basic elements of modern economics, as network forms that all evolve and dynamically flow to change the living body of the network’s interlinked topology. It is a continuous, self-energizing phenomenon – always on its way, never arrived – the way that any living body is characterized by the same.

In the case of enterprise expansions or retreats, defenses of attacks, friendships and enmities, the underlying network fundamentals map out a vertical and horizontal structure that is much like the verticals and horizontals of any other time: the former is a build or takedown of the integrated stack, the latter is a widening or narrowing of scope.

An offering that supplements the core is in this illustration vertical, and one that enters a new field is horizontal. What makes these movements more complex and interesting now than in the past (now in the digitally networked age), is the positioning of the competing networks relative to one another: a dance of sorts, a play that tests the limits and the balances of power on the stage.

With the above as a translator application – there are others – to make sense of enterprise directions, here are selected headlines from the recent news…

The consequence and its intentions

The line that separates intended and unintended consequences is only as clear as the intentions and the consequences are. Both forms of clarity ought to ideally be satisfied for the cause-effect of actions and reactions to flow as though in controlled lab conditions. But there is no lab per se in economics, it’s all an open field of influence and noise that makes the separating line in question rigorously delicate.

There are plenty of intentions, goodness knows – some clear, many approximately so, and some just vague and loose enough to be distorted – the lot of them could probably be plotted on a chart that would describe a bell-curve, where the horizontal axis runs the clarity continuum. The same type of statistical representation could probably be drawn for consequence, and in both cases the little subsets that are close enough to clarity may or may not overlap with one another in the underlying data set.

Which is to say, the ideal case of perfect clarity – in both intention and desired outcome – is theoretically, and very likely, minuscule. The vast majority, the dominant activity by far, is thus a matter of degree, a question only of how unclear or how far from perfection is the particular case, as measured by the combined consequence and its original intention.

The market is a voting mechanism, it is said, that bases its decisions on perceptions shaped by much of the above. Whether the market is right or wrong – and it is strictly speaking almost always wrong, as evidenced by perpetual price movement – is additionally complicated by the interconnection between its individual subjects: companies, industries, financial instruments, trends, themes and etc..

The degree of uncertainty, the magnitude of imperfection as contemplated in the (un)intended consequence environment described, is the degree of risk, on one hand, and optionality, on the other. Many refer to the latter as opportunity, but the choice of words can be deceptive – diminishing, as it does, the element of chance in the equation.

At the levels down below the market and the big economy – the micro levels of the enterprise, technology, product, customer base, social group, and individual – which are all influenced by and also shape the macro picture, the described elements are more or less the same. There is an important difference though, I believe, in that the macro set tends to be more aware of these things than the micro set tends to be. This is an added element of risk (and all of its assorted flip-sides) because the macro is almost always a diversified portfolio, while the micro almost never is.

Might as well

Sometimes – even if this is not one such – there are few things (but there are some) that can do to lift your spirits like our favorite ‘70s dance band can. It doesn’t any harm, however, to look.

Even if this isn’t a time like that.

Economic data

As if it isn’t enough that Economics as a discipline is all tangled up and circular, always as if deeper in the hole it has itself created. As if that isn’t enough to bring out the mystery and excitement of this sort-of-art and sort-of-science but really neither one. In addition, there is the shaky ground of the very information that is underlying, on which models are constructed and which adds to the adventure in unbounded ways.

I’ve wondered about the data behind employment trends before, and I keep wondering about it. While the updates keep updating, the gap that puzzles me remains. Maybe the puzzle is my own, I’m sure the specialists have it all figured out and reconciled. I’m sure it’s as precise as algebra, and only subject to interpretation. Which is where I stumble.

Here goes my mental block again…

Exhibit A
Exhibit B

If you add up the big bars in Exhibit A (initial weekly claims) and compare the ballpark figure to the latest total in Exhibit B (continuing claims), you may conclude that more than half of those who filed initial claims in the past months have returned to work. All while the noted new-claim bars each week stay elevated and stubborn, unprecedentedly almost.

First off, the two results seem somehow contradictory, and secondly, they don’t quite reconcile to common sense. If the shutting down of a giant economy can lead to the loss of more than 40 million jobs at once, and then with upkeep, how (when?) has that shock reversed concurrently to the tune of half?

No doubt, there is an economic explanation. Perhaps it’s rooted in the “seasonal adjustment” noted in the fine print of the graphs, perhaps it’s in the difference between the data sources, some based on agency statistics and others on surveys of some kind? (Do people still respond to those? Like Nielsen television ratings back when there wasn’t a digital connection?) Perhaps. Or maybe it’s all really as accurate as a clock. That seems like the most likely possibility, in light of market scrutiny at every single moment.

But either way, perhaps it doesn’t matter. If the vocabulary and the grammar are accepted, the language is the language that is and should be used. It’s important for there to be a way to tell the time and be in sync for our appointments, as much as we may secretly question the schedule.

Mixing up the signals

In anticipation of what might be coming up if certain trends continue…

… it is now suggested that the banks should save…

… which may offset the signal of low rates on market calculations…

… because no rate is low enough when funds stop flowing, or high enough when savers need to save.

Convergence, platforms and new market color (cont’d)

The new Stratechery essay on the evolution of Apple computing is a great history lesson in the evolution of digital networks. The same principles and patterns that we associate with other network systems – the forms and value of engagement, the clusters that grow or sometimes dissolve, the community behavior that shapes the network system overall and leads to outcomes that lead to other outcomes as the network profile and its set of links and possibilities perpetually change their shape – are seen in the evolving architecture and resulting marketplace of Apple’s ecosystem.

The End of OS X

An interesting aside in Ben Thompson’s essay is a hat-tip to Paul Graham, commenting on hackers and their interests of the period, whatever these may be, as a leading indicator of the network’s future patterns:

The context of Graham’s comment was his perspective on Apple’s stock value, shaped by network engagement as he saw it. Wittingly or not, the observation was way ahead of its time. I posted something yesterday about this same subject more or less: Convergence, platforms and new market color.

Convergence, platforms and new market color

The categories on which we continue to insist make little sense and getting littler with time. We still insist on calling them consumer, industrial, financial, telecom and so on. We also call one isolated category tech, as though the notion can be isolated still, like it was (arguably) before becoming universally adopted.

We need such guideposts to stay organized and clear in our perspective(s), but there comes a point where the method turns against us on account of unreality…

WSJ

… because, when everything is tech, and when so-called Big Tech is by extension into everything, the lines of demarcation get all blurry and confused, the reference points to which we are accustomed become faded, the competitive landscape turns into a tangled web… gradually, gradually, and then of a sudden.

It’s gotten to the point, perhaps, where rather than evaluating stocks and assets on a standard model that narrowly compares each to others in its increasingly artificial category, we recognize now that Big Tech (a misnomer, really, these are the Big Platforms) is now the standard by which others can be universally assessed.

The exercise may not be formulaically financial, necessarily, as much as strategically diagnostic, though these things tend to be connected. The Big Platforms, to begin with, are made of multiple dimensions, network entanglements, and effects. These, once a certain depth is reached, become too deep to fail, (unless by legislated disentangling, as is now apparently considered with much effort and confusion).

Secondly – a broader, more impactful aspect of all this from an economic vantage point – is the theme of industry convergence that these platform companies represent. Media, finance, healthcare, commerce, transportation, even manufacture, are all represented here, and other categories also that are transformationally underway (e.g., robotics, virtual reality, symbiotics).

We once went through a major phase, some decades back, of big conglomeration. It was the time when synergy became a common term and when some big conglomerates became the standard-bearers. After a while the trend reversed and there were spinoffs and divestments and restructurings, and the word synergy went out of style as much of its luster faded.

This time is different. It really is. The fundamentals are inherently created now, and the strategic expansions referenced are following their natural progression. As much as software is eating the world, the new analysis and study is network science.

Aesthetics and returns

“The number of true theorems is, I believe, infinite. And the number of definitions that one can make is infinite. All these things are out there, but on the other hand, you don’t know this, there’s no book of all these things, because there’s an infinite number of possible theorems and definitions. The key in doing mathematics is to find a good definition, a definition that will get you somewhere, that will unify perhaps other things, and so on, that’s a creative act. It’s a creative act to find something interesting in an infinite field, in an infinite collection of things. It’s out there, but you have to find it, and have good taste… in finding something that will really go somewhere.”

“The word beauty permeates mathematics. There’s an aesthetic to it, and that’s why we use that word.”

From this, the segue into finance is the concept of compound interest, the “eighth wonder of the world” according to another mathematician.

“Our research goes on all the time,” he says, before the cigarette gets lit.