Some weeks ago, I can't remember exactly, I was prompted to order George Gilder's Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy. The title alone was enough to pique my interest, the contents make for compelling reading which I devoured over the August holiday weekend. I won't pretend to say that I have fully synthesised all that Giilder has to say, but enough to draw some conclusions.
I'll get to the book in a moment but before doing so, it's important to understand my context. Yours may be different.
For some years, colleagues have been asking where the next breakthrough in enterprise computing is coming from. I've had no real answers. Many of us thought that the rise of cloud computing, presaged as it was by the phenomenal success of Salesforce would encourage entrants in other enterprise fields to enter the fray. Yet, apart from NetSuite and Workday, which have carved out central positions in the panoply of cloud enterprise apps, it is hard to think of other firms that have risen from (almost) nowhere or come out of left field. Colleague Brian Sommer would almost certainly reference C3IoT, Aera, and Uptake but even there, I view those companies as (currently) addressing slices of the enterprise market where others have largely failed rather than introducing dramatically new technology paradigms. (Sorry for using the 'p' word but it fits.)
That's not to say that there are no successors to the enterprise hegemony of Google, IBM, SAP, Microsoft and Oracle, or as I called it back in the day - GISMO. It's just that any successors are lurkers, perhaps hiding in plain sight, but as yet unable to get wider the attention needed to become those defining next-generation businesses.
Instead, we see heady terms like artificial intelligence, machine learning and, more recently blockchain as the headline-grabbing metaphors for the future. Personally, I've been troubled by the frothiness associated with these terms but could not quite put my finger on why. Gilder's book helps answer that question but, as always seems to be the case, poses many more questions. Here's how.
Google running on fumes?
Gilder's central thesis that Google's business model, while seemingly brilliant, is not sustainable. The argument goes like this:
Under Google's guidance, the Internet is not only full of unwanted ads but fraught with bots and malware. Instead of putting power in the hands of individuals, it has become a porous cloud where all the money and power rise to the top.
On a deeper level, the world of Google - its interfaces, its images, its videos, its icons, its philosophy is 2D. Google is not just a company but a system of the world. Its devotees uphold the flat universe theory of materialism: the sufficiency of deterministic chemistry and mathematics. They believe the human mind is a suboptimal product of random evolutionary processes. They believe in the possibility of a silicon brain.
If that thought makes you shudder then it's a short step to accepting Gilder's argument that can be boiled down to this idea: Google represents the apogee of centralization but that it is being challenged by a move towards decentralization that finds its home in the blockchain technology. This has arisen because Gilder believes that the 'free' world of Google has led to a bunch of consequences that are stifling innovation (as evidenced by the paucity of IPOs) and leading to a state of near constant crisis in security. The punchline, therefore, is that:
Security is not a benefit or upgrade that can be applied by adding new layers of passwords, poney-tailed 'swat-teams,' intrusion detection schemes, anti-virus patches, malware prophylactic, and software retro fixes. It is the most basic and indispensable component of any information technology...Of security is not integral to an information technology architecture, that architecture must be replaced.
In Gilder's world, the antidote comes in the form of blockchain derived technologies. He focuses heavily on Ethereum as:
...a new blockchain that could serve as a security and identity substrate for an unlimited range of smart contracts.
If that sounds interesting enough then the book is a worthwhile time investment as it dives deep into this topic.
Crypto as the next gold standard?
Gilder nods in the direction of emergent cryptocurrencies, arguing that cryptocurrencies represent the potential for serving as an antidote to fiat currency failure and a return to what amounts to the gold standard as a stable measure of economic value. The argument posits that this approach supports innovation rather than the current concentration of effort in enrichment through blatant gambling via the proliferation of derivative financial instruments and their like.
It is certainly a potent argument when you consider the billions of dollars that have poured into crypto market-led innovation. Where it is less compelling is in its almost complete lack of discussion around the largely fraudulent world of ICOs. A recent statistic I saw suggests that north of 90% of crypto projects never get past the POC stage, while instances of blatant fraud in ICO issuance has blunted what could otherwise be a viable alternative to traditional VC fundraising. Earlier this year, Techcrunch reported that:
Scam and dead ICOs raised $1 billion in 2017 with 297 questionable startups in the mix.
There are dubious organizations dedicated to “repairing” broken ICOs, including CoinJanitor from Cape Town, but the fly-by-night nature of many of these organizations does not bode well for the industry.
ICO-funded startups currently use multi-level marketing tactics to build their business. Instead they should take a page from the the Kickstarter and Indiegogo framework. These crowd-funding platforms have made trust an art. By creating collateral that defines the team, the project, the risks and the future of the idea, you can easily build businesses even without much funding. Unfortunately, the lock-ups and pricing scams the current ICO market uses to incite greed rather than rational thinking are hurting the industry more than helping.
Similarly, while promoting the idea of a return to the equivalent of the gold standard, Gilder correctly points up economic deficiencies in cryptocurrencies as a measure of value but without spelling out exactly how this works going forward. Instead, Gilder satisfies himself with this triumphal statement:
The empire might think that Satoshi (inventor of the blockchain based bitcoin) and his followers are on shaky ground, but the emperors and their courtiers should look to their $280 trillion tower of debt, which is beginning to teeter. Their own fortunes may go down with it Government and investors everywhere should welcome the explosion of creativity in crypto, preparing a new financial system of the world for the moment when the fiat currency pinata bursts at last.
OK - so what next? This is the point where Gilder launches into economic theory and arguments about the nature of money and value, using those arguments to point up what he terms the 'bitcoin flaw' in presuming it has the characteristics of the gold standard.
What I missed in comparing bitcoin and gold was that bitcoin is the transaction medium itself rather than a stable metric for the valuation of fiat monies. For gold, transactions are incidental; for bitcoin, transactions are the key point. Bitcoin, unlike gold, must, therefore, increase in either volume or value if the system is to succeed.
I have no dog in any economic argument since to me, economics has been a pseudo-science since forever that seems to require frequent reinvention when the theory of the month/year/decade turns out to herald (yet another) false dawn in explaining where we're at.
Even with his long history of being considered a Silicon Valley sage and economist Gilder submits that he is unclear where this argument goes as it relates to the specificity of cryptocurrencies as a fresh metaphor for the measurement of economic value. Instead, Gilder hopes that the vast amount of experimentation will, somehow, 'work it all out.'
I hope he is right but I suspect that it will be a long, winding road with many potholes along the way. I note, for instance, the newfound crypto religion by the likes of JP Morgan, having previously and very publicly denigrated the topic as 'fraud.' One has to wonder with some degree of skepticism whether this will lead to better, cheaper financial services or is a front to perpetuate the past.
Any book review can only scratch the surface and as I look at my already dog-eared copy, I see I've bookmarked numerous pages for further reflection and study. It is that kind of book. Not quite an academic treatise but weighty enough to get you thinking. Also, Gilder's frequent references to the investing activities and thoughtstream from uber-investor Peter Thiel should give you context for the general line of thinking.
Life After Google should be required reading for anyone contemplating future technology investments. You don't have to agree with all that Gilder proposes to recognize the logic pervading his theory that Google (along with Facebook and Amazon) are sucking dry the well of innovation that has been a trademark quality of the Silicon Valley.
Whether the blockchain is 'the answer' as he suggests is an as yet to be proved idea. I see the attractiveness of viewing the blockchain as serving the role of a foundation to solving for the ongoing security issues that seem to pop up almost daily. Only last week, I read: The Untold Story of NotPetya, the Most Devastating Cyberattack in History. If you've not pored over its voluminous explanation of how a malicious piece of software knocked out systems on a global scale costing an estimated $10 billion (yes, that's BILLION) in global damages, then I urge you to do so. Would blockchain enabled systems avoid this catastrophic activity? I don't know and Gilder doesn't really shed enough light on that element of the story to allow for an objective assessment.
What the book does, however, is shine a bright light on the myth that Google is invincible and that its machine led programmatic ideology is not a road to expanding human potential but a dead end whose sole aim is to aggregate and advertise. It, therefore, follows that on its own, our media obsession with all things AI as a pathway to some sort of technologically enabled Valhalla is equally flawed. I get that because, despite the many and relentless stories of amazing discovery, some of which turn out to be illusory, I still can't get Google (or any other adtech for that matter) to deliver what it promises - relevant ads that capture my random and changing needs in the moment of need.
The closest we've come is Amazon, which as Gilder correctly points out, succeeds by operating its own walled garden in which it assumes that my interests are predicated on what I last searched for inside its vast network. And let's not talk about the uber walled garden of Facebook, which has rapidly gone from darling to pariah as it seeks to both understand and fix its nightmare privacy issues.
Even so, and despite making a good, if an incomplete case for the blockchain as a foundational technology, we should not be too quick to ascribe magical powers to the blockchain. Concerns over scalability, for example, or the instant kiss of death arising from ICO fraud cannot be ignored. However, it would be disingenuous to write off the many nascent innovations swirling around the blockchain economy as the playground showcase for madcap ideas that have found currency (sic) in the all too eager search for the Next Big Thing.