Dana Blankenhorn

That 2002 Feeling

The last tech crash began in 2000 and I was in the center of it, a mid-career writer with a specialty called Internet Commerce.

That year saw denial and bargaining.

The next year saw anger and depression.

It was only in 2002 that acceptance came.

We know what followed. Talented programmers worked on open source projects and standards bodies created what became the Cloud. When proprietary advantage became worthless, and there seemed there was nothing to do, people worked together with technical goals in mind rather than just financial ones.

It was a slow build. In 2002 my gross income was zero dollars. In 2003 it was zero dollars. I got interested in what’s now the Machine Internet, which I christened the World of Always On, and in 2004 I finally made a few dollars. The next year I was asked to cover Open Source, and my career took off. For a time.

I’ve mentioned before how, in every photo of a stock market crash the people in it look similar. Similar age, similar backgrounds. They’re different people. Those who watched the 1987 crash were different from those who saw the 2000 crash, different from those who saw 2008, different from those who saw 2022.

ChatGPT

Hate to rain on y’all’s parade but…ChatGPT is not the best thing since sliced bread. It’s not the Macintosh. It’s not the iPhone.

It’s software that translates search requests and results into what seems like plain English. Whether it’s useful depends on the input it gets. Garbage in, garbage out.

That doesn’t mean ChatGPT is Bitcoin or blockchain. It makes search accessible again. But it also makes search messy again. It creates imprecision in a world of 1s and 0s. Not that there’s anything wrong with that. Humans are imprecise. We’re messy. And it is fun to see computer output seem as imprecise and messy as we are.

It’s very easy to get a lie out of ChatGPT. Ask it about a subject where there are lots of lies on the Internet. They will appear in your answer. ChatGPT doesn’t have a filter. Yet.

Tech and its Workers

One of the biggest mistakes I made in my journalism career lay in assuming tech companies would have the back of their workers, because they depend on human talent rather than muscle. (The picture is from a book on computer coding.)

The tech oligarchs who made their piles in the last decade have become just like other oligarchs. No worse, but certainly no better.

The latest round of layoffs is especially egregious. It’s not how many were let go. They were mostly the pandemic overhang, an adjustment as life returns to “normal.” It’s how they were done, and who was targeted. Firing via e-mail? No warning for families or teams? It sends the message that people don’t matter.

To the oligarchs they don’t. Elon Musk, Marc Andreessen, Peter Thiel – they’re one-way guys. They care about themselves, no one else. They don’t really care about technology, or what it can do. All they care about is how much money it is making for them right now.

There was, once, a difference between Wall Street and Silicon Valley. The wealth creation of the last decade eliminated the difference. Wall Street doesn’t care about the long-term, about the need to keep investing in the new across the chasm of a recession, or the talent that is tech’s raw material. It cares about this quarter, about today’s trade.

What’s funny is that the horrors now being visited on the Valley are 10 times worse on Wall Street. Layer after layer of management has been eliminated, as the industry has gone online. More and more of its wealth is in fewer and fewer hands, and those hands care nothing about the people who made the wealth. Just as they don’t care about the technologists of the Valley.

Business Needs Consensus

I have long believed historians misread the Progressive Era.

They see it as a victory for liberal values.

I read it as a victory for business. Which isn’t necessarily a different thing.

Fact is, the business of America is business. America has always been led by a dominant industry. Farming, then cotton, then railroads, then infrastructure, manufacturing, oil, and now technology.

Power flows to the highest-value industry and, when that is supplanted, flows away from it. Just as cotton lost to the railroads in the Civil War, I believe railroads lost to infrastructure in the Progressive Era.

What the great inventions of the late 19^th century – electricity, telephony, and the automobile – required for mass adoption was scaled, organized infrastructure. Having two or more electric utilities, two or more phone companies, or (God forbid) two or more private road networks made no sense. What Wall Street saw in the 1890s was that monopolies created efficiency.

But the monopolies would need the approval of government. The price of government approval, in a democracy, would be regulation, and some means of control over the result.

The Word for 2023 is Efficiency

If you can save costs, in business or consumer markets, you can make money.

This is technology’s big opportunity in 2023.

The cloud has already transformed how people interact. It’s now going to transform how machines interact.

Sensors and network software can be applied everywhere. Thanks to falling chip prices this can now be done cheaply. There is labor available to write the software, build the companies, and reap the rewards.

Consider the water system. Why aren’t sensors monitoring the condition of pipes, warning of potential failures, and identifying leaks the moment they occur? Why are water authorities still depending on people finding cracks in the street with water coming out of them on their own?

2023: Look on the Bright Side

If we’re to get through 2023 alive, we’re going to have to take joy where we find it.

We certainly didn’t find it in journalism this year. Editors on every beat have taken to writing aggressive, clickbait headlines, designed to provoke feelings of anger and depression. They do it because they’re rewarded by the algorithms of a failing Internet business model. They do it to boost traffic.

This is even true on my business beat, where every negative headline has a positive corollary. Rising prices create incentives and profits for producers. Rising interest rates mean savers can finally catch a break. Layoffs create opportunity for other employers while the job market remains tight.

The headlines are misleading because they take just one side. They make it appear the economy and markets are terrible even though the former is not.

The Intranet of Systems

 

A warehouse is a system.

A factory is a system.

A hospital is a system.

The Machine Internet is now ready to take its next step, toward the transformation of systems.

Vendors have been adding intelligence to machines for a decade. My car can now tell me when my tires need air. Many machines can tell their owners when they need preventive maintenance.

An Intranet of Systems would get all the software on these machines working together, the way orchestration software lets a company control its supply chain.

The Time Is Now

Here is what 45 years of studying business cycles has taught me.

Now is the time to work on your next great startup.

Right now. When the whole world is collapsing around us. When old business models are failing. When everyone is worried about their job, or about to lose it.

Look at the opportunities. I detailed them three years ago. The end of oil. The machine Internet. DNA as a programming language.

These boil down to renewable energy, control systems, and medicine.

The Three Big Challenges Boiled Into One

Nearly three years ago, after attending the Heidelberg Laureate Forum honoring great mathematicians and computer experts, I wrote a three part series on the big technologies of this decade:

• The End of Oil 
• The Machine Internet 
• DNA as a Programming Language 

This is a good time to revisit the trends. A recession is also the best time to start a new tech company. Incumbents are faltering and you get a clean sheet of paper to write the future on.

Economic Precipice

Today is the calm before an economic storm.

The Federal Reserve is hiking interest rates to slow inflation. Many commodity prices are already coming down. But if it hikes too fast, economic activity will slow and that will be a recession.

To Nouriel Roubini (right), the economist known as “Dr. Doom,” a recession at this time could quickly become a depression, because public debt remains at historically high levels. If you owe $43 trillion at 1%, it costs $430 billion to carry it for a year. At 3%, it’s $1.3 trillion. Your budget just got broken. That’s his reasoning.

But debt owed to yourself isn’t real. We can print that $1.3 trillion. The risk then is that the dollar falls off a cliff. That’s not happening. If anything, the dollar is too strong. We’re importing deflation. Every western nation, and China, has massive debts.

It’s why the doomsayers were wrong in 2009, and again in 2020. It’s why we couldn’t fight the Trump tax cuts. They didn’t create inflation. They didn’t sink the dollar.