Black swans and Silicon Valley, or the unimaginable impact of the network
There's a fascinating hour on Talk of the Nation today with Nassim Nicholas Taleb, author of The Black Swan: The Impact of the Highly Improbable. (Look for audio around 3 today.)
In his book he explains what a black swan is and how it should lead us to rethink what history is and how we understand the development and predictability of technological breakthroughs. Basically, there certain discoveries or events that are so far out of what is known about the world that they or their impacts are unpredictable. The term comes from Capt. Cook's discovery of a black swan in Australia, after millenia of Westerners believing there were only white swans. No one thought to ask the question, could there be other colors - swans were simply white.
When it comes to technology, Taleb points to three inventions as black swans - highly improbable impacts that were completely unpredictable - the Internet, the PC and the laser. Basically, how do you get from a DARPA network to MySpace, the iPod and YouTube? If you were downloading .aiff files from Compuserve in the 1980s could you have predicted Napster, the iPod or Internet radio?
More to the point, is there anything really important in this world where somebody who was there could say, yes, I predicted that. Or is everything that has major impacts - positive or negative - essentially unpredictable. It's a weakness of our human natures, Taleb says, that we try to reduce the highly improbable, random-access, nature of the world into some very linear logic sequences.
The problem is that we teach our kids, yes, the world is sensible. World War One, for example, is taught as the very predictable and perhaps unavoidable result of decades of European tension, that when Europe was loaded with the fuel of tension, the spark of a meaningless assassination was enough to erupt the powderkeg. Ah, the student says, it all makes sense.
Only it doesn't. Because there are many periods of high tension that don't result in war. There are many successful inventions that don't take off and change the world.
Taleb divides the world into two domains - Mediocristan and Extremistan. In Extremistan, black swans have power. There are no natural limits by which unpredictability will be constrained. Silicon Valley is surely Extremistan. No limits to wealth, no limits to the impact that may be created by one technology, one company, one entrepreneur. And the black swans all swim upstream. But despite Taleb's thinking here, the impact of black swans are not all beneficial.
Valley successes have huge network impacts. The success of Google networks out across a myriad of companies, it impacts individuals, it changes competitors' business plans, it creates a surge in acquisitions, spreading more wealth and more opportunities for further investment. And if you bet wrong, so what? You're gonna bet 10 grand, 100 grand, a million? A million can turn into a billion around here pretty damn fast. Unlike Wall Street, of which it was said, "I made $8 million in eight years and I lost it all in eight seconds."
But that brings me to newspapers. While in the early days of ARPAnet no one would have predicted, you know, real-time traffic updates displayed in full-color cellphones, by the same token no one predicted the death of newspapers. Yet here we are, right on the cusp. A whole range of damage and benefits have resulted from the development of the Net and it could have gone in any number of possible ways and it still will.
On the show Taleb called dentistry a Mediocristan profession, as opposed to venture capitalism. It's a self-limiting universe, dentistry. You have to be there to drill the teeth, you can only drill so many teeth a day and you can't outsource it to India. You can't make a billion dollars as a dentist and you're not going to go broke (unless you molest your patients or something.)
It strikes me, then, that the impact of the Internet and other "disruptive" technologies is that they convert Mediocristan into Extremistan. Want a stable life? No big riches and you'll always have a job? You could do worse than journalism. Or, actually, you could. Because online journalism is, it turns out, an exercise in entrepreneurism with the possibilities of investment and acquisitions or a scramble to pay the bills and a visit to a bankruptcy lawyer.
So, that's what I get out of black swans and computer technology. One by one, limits and safety nets are being removed. Extreme possibilities replace stability and safety. And the domains in which things are no longer predictable and in which the world fundamentally changes grow exponentially.