Network effects

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pages: 328 words: 84,682

The Business of Platforms: Strategy in the Age of Digital Competition, Innovation, and Power by Michael A. Cusumano, Annabelle Gawer, David B. Yoffie

activist fund / activist shareholder / activist investor, Airbnb, AltaVista, Amazon Web Services, AOL-Time Warner, asset light, augmented reality, autonomous vehicles, barriers to entry, bitcoin, blockchain, business logic, Cambridge Analytica, Chuck Templeton: OpenTable:, cloud computing, collective bargaining, commoditize, CRISPR, crowdsourcing, cryptocurrency, deep learning, Didi Chuxing, distributed ledger, Donald Trump, driverless car, en.wikipedia.org, fake news, Firefox, general purpose technology, gig economy, Google Chrome, GPS: selective availability, Greyball, independent contractor, Internet of things, Jeff Bezos, Jeff Hawkins, John Zimmer (Lyft cofounder), Kevin Roose, Lean Startup, Lyft, machine translation, Mark Zuckerberg, market fundamentalism, Metcalfe’s law, move fast and break things, multi-sided market, Network effects, pattern recognition, platform as a service, Ponzi scheme, recommendation engine, Richard Feynman, ride hailing / ride sharing, Robert Metcalfe, Salesforce, self-driving car, sharing economy, Silicon Valley, Skype, Snapchat, SoftBank, software as a service, sovereign wealth fund, speech recognition, stealth mode startup, Steve Ballmer, Steve Jobs, Steven Levy, subscription business, Susan Wojcicki, TaskRabbit, too big to fail, transaction costs, transport as a service, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, Vision Fund, web application, zero-sum game

We especially build on work originally done on platform market dynamics by Thomas Eisenmann, Geoffrey Parker, and Marshall Van Alstyne.2 Network Effects: Lessons from the Telephone and Yellow Pages Most discussions of platform markets begin with network effects. As a platform acquires more users or complementary innovations like software apps or digital content stores, positive feedback loops (i.e., network effects) emerge and can get stronger with the rising number of users or complements. The network effects make the platform increasingly valuable by attracting increasing numbers of users and complementors. Yet many people do not understand how network effects actually work. For example, even platforms with relatively strong network effects may not dominate their markets or generate much in the way of profits.

And then came a fourth side: content providers, such as online newspapers, magazines, news sites, music sites, and others. (See Figure 1-1.) GENERATE NETWORK EFFECTS Second, as industry platforms connect users to other users or to other market participants, they generate network effects.18 The unique feature of network effects is that the value one user experiences potentially increases as more people or organizations use the same product or service and as more complementary innovations appear.19 Network effects can be strong or weak, positive or negative. When they are strong, the results are nonlinear increases in utility and value.

These examples illustrate why economies of scale are intimately related to network effects. In addition, negative network effects, such as declining user numbers or poor user ratings or too much advertising, can lead to increasingly rapid declines in usage. Friendster and MySpace in social networking as well as Nokia and BlackBerry in smartphones all experienced negative network effects and rapid declines in their businesses. When one side of the market, such as users, attracts another side of the market, such as sellers or developers of complementary products and services, we refer to this type of network effect as “indirect” or “cross-side.”


pages: 302 words: 73,581

Platform Scale: How an Emerging Business Model Helps Startups Build Large Empires With Minimum Investment by Sangeet Paul Choudary

3D printing, Airbnb, Amazon Web Services, barriers to entry, bitcoin, blockchain, business logic, business process, Chuck Templeton: OpenTable:, Clayton Christensen, collaborative economy, commoditize, crowdsourcing, cryptocurrency, data acquisition, data science, fake it until you make it, frictionless, game design, gamification, growth hacking, Hacker News, hive mind, hockey-stick growth, Internet of things, invisible hand, Kickstarter, Lean Startup, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, means of production, multi-sided market, Network effects, new economy, Paul Graham, recommendation engine, ride hailing / ride sharing, Salesforce, search costs, shareholder value, sharing economy, Silicon Valley, Skype, Snapchat, social bookmarking, social graph, social software, software as a service, software is eating the world, Spread Networks laid a new fibre optics cable between New York and Chicago, TaskRabbit, the long tail, the payments system, too big to fail, transport as a service, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, Wave and Pay

Lowering investment ensures higher ROI and greater participation from producers, which ensures that the platform’s core interaction is highly repeatable. 3.4 THE CREATION OF CUMULATIVE VALUE Lock-In For An Opt-In World The power of network effects cannot be disputed. As platforms gather more value through external production, they attract more consumption, which in turn attracts even more production. Network effects guarantee repeatable interactions. Both producers and consumers repeatedly participate on a platform that has strong network effects. Network effects hold the keys to the long-term retention of producers and consumers, which increases the repeatability of the core interaction. But today, the power of the network effect is fading. The network effect isn’t the one-stop solution for repeatable interactions that it once was.

Such use cases are best supported by the platform itself, acting as a producer through a captive base of partner producers. 4.9 DISRUPTING CRAIGSLIST Quality As A Competitive Advantage Question: Why does Craigslist refuse to get disrupted, despite poor user experience and an utter lack of innovation? Answer: Strong Network Effects THREE FACTORS GOVERNING PLATFORM ADOPTION The success of platforms depends on the following three factors: 1.Network Effects. The single most important factor for a platform is its ability to build the network effect. Without a minimum number of buyers and sellers, platforms simply are not valuable enough. With network effects, a platform continues to attract producers and consumers sustainably. 2.Curation Of Content. The platform should have a mechanism for separating signal from noise. Owing to network effects, platforms encourage abundance, and users need a mechanism to sift through the abundance and find the most relevant items.

As noted in the previous chapter, a failure in any one of the four actions – Creation, Curation, Customization, and Consumption – may lead to a failure of the core interaction. When one or more of these actions start to fail with increasing scale, we see the onset of reverse network effects. Network effects make a platform useful as more users use it, however, beyond a certain scale, network effects may work against the platform. Beyond this point, further scale may make the platform less useful for every individual user. At this point, reverse network effects set in. ACCESS, CREATION AND CONNECTION FAILURE Reverse network effects may set in due to failure of access control. New users joining a platform may lower the quality of interactions and increase noise on the platform.


pages: 421 words: 110,406

Platform Revolution: How Networked Markets Are Transforming the Economy--And How to Make Them Work for You by Sangeet Paul Choudary, Marshall W. van Alstyne, Geoffrey G. Parker

3D printing, Affordable Care Act / Obamacare, Airbnb, Alvin Roth, Amazon Mechanical Turk, Amazon Web Services, Andrei Shleifer, Apple's 1984 Super Bowl advert, autonomous vehicles, barriers to entry, Benchmark Capital, big data - Walmart - Pop Tarts, bitcoin, blockchain, business cycle, business logic, business process, buy low sell high, chief data officer, Chuck Templeton: OpenTable:, clean water, cloud computing, connected car, corporate governance, crowdsourcing, data acquisition, data is the new oil, data science, digital map, discounted cash flows, disintermediation, driverless car, Edward Glaeser, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, financial innovation, Free Software Foundation, gigafactory, growth hacking, Haber-Bosch Process, High speed trading, independent contractor, information asymmetry, Internet of things, inventory management, invisible hand, Jean Tirole, Jeff Bezos, jimmy wales, John Markoff, Kevin Roose, Khan Academy, Kickstarter, Lean Startup, Lyft, Marc Andreessen, market design, Max Levchin, Metcalfe’s law, multi-sided market, Network effects, new economy, PalmPilot, payday loans, peer-to-peer lending, Peter Thiel, pets.com, pre–internet, price mechanism, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Metcalfe, Ronald Coase, Salesforce, Satoshi Nakamoto, search costs, self-driving car, shareholder value, sharing economy, side project, Silicon Valley, Skype, smart contracts, smart grid, Snapchat, social bookmarking, social contagion, software is eating the world, Steve Jobs, TaskRabbit, The Chicago School, the long tail, the payments system, Tim Cook: Apple, transaction costs, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, winner-take-all economy, zero-sum game, Zipcar

As we also saw in chapter 2, network effects are the Internet-era source of market power. Thanks to positive network effects, the value created and the profit margins enjoyed by the company both increase as more users join the ecosystem.21 This is why firms with network effects can enjoy a 10x multiple in value relative to other firms that have comparable revenues but lack network effects.22 With their current product focus and business models, Houghton Mifflin Harcourt, NBC, Lexis, and Whirlpool do not have strong network effects. Amazon, Netflix, LegalZoom, and Nest do. Because positive network effects attract more users to whichever platform is larger, they are a second force that is likely to strengthen a market’s winner-take-all tendency.

Negative network effects refers to the possibility that the growth in numbers of a poorly-managed platform community can reduce the value produced for each user. As we’ll see, positive network effects are the main source of value creation and competitive advantage in a platform business. However, network effects can also be negative, and in this chapter we’ll explain how and why negative network effects arise and what platform business managers can do about them. But understanding value creation via positive network effects is the essential first step. FIGURE 2.1. David Sacks’s napkin sketch of Uber’s virtuous cycle. Reprinted by permission. Gurley’s data showed that, by mid-2014, network effects were already beginning to drive Uber’s growth.

Uber, for example, recruits new drivers from among its rider pool, just as Airbnb recruits new hosts from among its guest pool. A scalable business model, frictionless entry, and side switching all serve to lubricate network effects. NEGATIVE NETWORK EFFECTS: THEIR CAUSE AND CURE So far, we’ve been focusing on positive network effects. But the very qualities that lead platform networks to grow so quickly may also lead them to fail quickly. The growth of a network can produce negative network effects that drive away participants, even leading to the death of a platform business. One negative network effect occurs when the growth in numbers that enables more matches between producers and consumers also leads to increasing difficulty, or impossibility, in finding the best match.


pages: 296 words: 66,815

The AI-First Company by Ash Fontana

23andMe, Amazon Mechanical Turk, Amazon Web Services, autonomous vehicles, barriers to entry, blockchain, business intelligence, business process, business process outsourcing, call centre, Charles Babbage, chief data officer, Clayton Christensen, cloud computing, combinatorial explosion, computer vision, crowdsourcing, data acquisition, data science, deep learning, DevOps, en.wikipedia.org, Geoffrey Hinton, independent contractor, industrial robot, inventory management, John Conway, knowledge economy, Kubernetes, Lean Startup, machine readable, minimum viable product, natural language processing, Network effects, optical character recognition, Pareto efficiency, performance metric, price discrimination, recommendation engine, Ronald Coase, Salesforce, single source of truth, software as a service, source of truth, speech recognition, the scientific method, transaction costs, vertical integration, yield management

DLEs combine three types of competitive advantage: scale, processing capabilities, and network effects. Just having a network effect doesn’t mean that a user learns anything. The difference between a network effect and a data network effect is what’s added to the network. With a network effect, something becomes more useful through the addition of communicative nodes to the network, whereas with a data network effect, something’s usefulness is enhanced by the addition of data to the network. What’s more, a network effect’s edges—the lines between nodes—are functional and communicate, as opposed to a data network effect’s edges, which are informational and calculate.

Data generates marginal output when combined with data processing capabilities and data network effects. Data learning effects articulate the value chain around data. Data learning effects are unique. They start with a supply-side competitive advantage that kicks off a demand-side competitive advantage and combines privileged access to a resource with capabilities to transform that resource into something valuable. Data network effects are not like normal network effects. The difference between a network effect and a data network effect is what’s added to the network. With a network effect, edges are functional and communicate.

The distinction between a product with network effects and one without is that the product is more useful because of the network effect. The distinction between a normal network and a data network is that data networks transmit derivatives of data—information—not just data itself. DATA NETWORK EFFECTS DLEs combine economies of scale to data, data processing capabilities, and data network effects. We provide tactics for scaling data assets in Chapter 3, “Getting the Data,” and methods to process that data throughout the book, starting with Chapter 2, “Lean AI.” Now we dive into data network effects. Data network effects come in two forms: entry and next level.


pages: 286 words: 87,401

Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies by Reid Hoffman, Chris Yeh

"Susan Fowler" uber, activist fund / activist shareholder / activist investor, adjacent possible, Airbnb, Amazon Web Services, Andy Rubin, autonomous vehicles, Benchmark Capital, bitcoin, Blitzscaling, blockchain, Bob Noyce, business intelligence, Cambridge Analytica, Chuck Templeton: OpenTable:, cloud computing, CRISPR, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, data science, database schema, DeepMind, Didi Chuxing, discounted cash flows, Elon Musk, fake news, Firefox, Ford Model T, forensic accounting, fulfillment center, Future Shock, George Gilder, global pandemic, Google Hangouts, Google X / Alphabet X, Greyball, growth hacking, high-speed rail, hockey-stick growth, hydraulic fracturing, Hyperloop, initial coin offering, inventory management, Isaac Newton, Jeff Bezos, Joi Ito, Khan Academy, late fees, Lean Startup, Lyft, M-Pesa, Marc Andreessen, Marc Benioff, margin call, Mark Zuckerberg, Max Levchin, minimum viable product, move fast and break things, Network effects, Oculus Rift, oil shale / tar sands, PalmPilot, Paul Buchheit, Paul Graham, Peter Thiel, pre–internet, Quicken Loans, recommendation engine, ride hailing / ride sharing, Salesforce, Sam Altman, Sand Hill Road, Saturday Night Live, self-driving car, shareholder value, sharing economy, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Skype, smart grid, social graph, SoftBank, software as a service, software is eating the world, speech recognition, stem cell, Steve Jobs, subscription business, synthetic biology, Tesla Model S, thinkpad, three-martini lunch, transaction costs, transport as a service, Travis Kalanick, Uber for X, uber lyft, web application, winner-take-all economy, work culture , Y Combinator, yellow journalism

‘Marketplaces have profiles,’ they reason, ‘so if I add profiles, I’ll be adding network effects.’ ” Yet the reality of building network effects is a bit more complicated. Rather than simply imitate specific features, the best blitzscalers study the different types of network effects and design them into their business models. Five Categories of Network Effects On his industrial organization of information technology website, the NYU professor Arun Sundararajan classifies network effects into five broad categories: Direct Network Effects: Increases in usage lead to direct increases in value. (Examples: Facebook, messaging apps like WeChat and WhatsApp) Indirect Network Effects: Increases in usage encourage consumption of complementary goods, which increases the value of the original product.

(Example: within the Microsoft Office suite, Word’s dominance meant that its document file format became the standard; this has allowed it to destroy competitors like WordPerfect and fend off open-source solutions like OpenDocument.) Any of these different network effects can have a major impact; Microsoft’s ability to tap into multiple network effects with Windows and Office contributed greatly to its unprecedentedly durable franchise. Even today, Windows and Office remain dominant in the PC market; it’s simply that other platforms like mobile have achieved similar or greater importance. Network Effects Both Produce and Require Aggressive Growth A key element of leveraging network effects is the aggressive pursuit of network growth and adoption. Because the impact of network effects increases in a superlinear fashion, at lower levels of scale, network effects actually exert downward pressure on user adoption.

So we offered it to companies as an enterprise subscription product, and once we proved that this new model was a source of significant high-gross-margin revenues, we had the confidence to blitzscale. Network Effects The long-term value of LinkedIn was always intended to come from network effects. As a professional social network, LinkedIn leveraged both direct and two-sided network effects, as well as becoming a standard format for presenting one’s professional identity. The direct network effects come from the fact that each additional LinkedIn user makes the network slightly more valuable to all other LinkedIn users. The two-sided network effects occur because more users attract more corporate employers, while more employers increase the value of LinkedIn as a passive job-hunting tool.


pages: 324 words: 89,875

Modern Monopolies: What It Takes to Dominate the 21st Century Economy by Alex Moazed, Nicholas L. Johnson

3D printing, Affordable Care Act / Obamacare, Airbnb, altcoin, Amazon Web Services, Andy Rubin, barriers to entry, basic income, bitcoin, blockchain, book value, Chuck Templeton: OpenTable:, cloud computing, commoditize, connected car, disintermediation, driverless car, fake it until you make it, future of work, gig economy, hockey-stick growth, if you build it, they will come, information asymmetry, Infrastructure as a Service, intangible asset, Internet of things, invisible hand, jimmy wales, John Gruber, Kickstarter, Lean Startup, Lyft, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Marshall McLuhan, means of production, Metcalfe’s law, money market fund, multi-sided market, Network effects, PalmPilot, patent troll, peer-to-peer lending, Peter Thiel, pets.com, platform as a service, power law, QWERTY keyboard, Ray Kurzweil, ride hailing / ride sharing, road to serfdom, Robert Metcalfe, Ronald Coase, Salesforce, self-driving car, sharing economy, Sheryl Sandberg, Silicon Valley, Skype, Snapchat, social graph, software as a service, software is eating the world, source of truth, Startup school, Steve Jobs, TaskRabbit, technological determinism, the medium is the message, transaction costs, transportation-network company, traveling salesman, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, white flight, winner-take-all economy, Y Combinator

This type of network effect is called an indirect network effect or cross-side network effect, where the value delivered to each user in one user group (say, consumers) increases as the number of users in another, interdependent user group (producers) grows. (See Figure 7.2.) Thus, there’s a network effect across two separate user groups. This effect creates a positive feedback loop between both sides of the network. The more producers a platform has, the more valuable that platform becomes to each consumer, and vice versa. As a result, once a network reaches sufficient size, network effects make it much easier for a platform to attract new users of each type and grow the number of transactions.

Monetary Subsidies—Giving money to consumers or producers to incentivize them to join a network, either directly or indirectly. One of the three ways platforms subsidize value for early users. Network Effect—When the behavior of one user has a direct impact on the value that other users will get out of the same service. Network effects can be either positive or negative (see “Reverse Network Effect”). Network Effects Ladder—A framework for understanding how to grow quality systematically as a network expands. The network effects ladder consists of five “rungs:” Connection, Communication, Curation, Collaboration, and Community. Path Dependence—A state that occurs when initial decisions and conditions affect subsequent decisions.

Since most software industries have relatively low barriers to entry—especially today, when startup costs are lower than ever—it’s practically guaranteed that a competitor will come along and offer customers similar software that’s either better or cheaper. That’s where network effects come in. Put very simply, a network effect is present when the behavior of one user has a direct impact on the value that other users will get out of the same service. Network effects make a platform more useful and more valuable as more people use it. We discuss network effects in more detail in chapter 4, but their presence means that when competing with a successful platform, you aren’t competing simply on the strength of your product and its features.


pages: 240 words: 78,436

Open for Business Harnessing the Power of Platform Ecosystems by Lauren Turner Claire, Laure Claire Reillier, Benoit Reillier

Airbnb, Amazon Mechanical Turk, Amazon Web Services, augmented reality, autonomous vehicles, barriers to entry, basic income, benefit corporation, Blitzscaling, blockchain, carbon footprint, Chuck Templeton: OpenTable:, cloud computing, collaborative consumption, commoditize, crowdsourcing, data science, deep learning, Diane Coyle, Didi Chuxing, disintermediation, distributed ledger, driverless car, fake news, fulfillment center, future of work, George Akerlof, independent contractor, intangible asset, Internet of things, Jean Tirole, Jeff Bezos, Kickstarter, knowledge worker, Lean Startup, Lyft, Mark Zuckerberg, market design, Metcalfe’s law, minimum viable product, multi-sided market, Network effects, Paradox of Choice, Paul Graham, peer-to-peer lending, performance metric, Peter Thiel, platform as a service, price discrimination, price elasticity of demand, profit motive, ride hailing / ride sharing, Sam Altman, search costs, self-driving car, seminal paper, shareholder value, sharing economy, Silicon Valley, Skype, smart contracts, Snapchat, software as a service, Steve Jobs, Steve Wozniak, TaskRabbit, the long tail, The Market for Lemons, Tim Cook: Apple, transaction costs, two-sided market, Uber and Lyft, uber lyft, universal basic income, Y Combinator

In certain circumstances, network effects may lead a platform to reach a ‘critical mass’, and even in some markets ‘tip’ to a ‘winner takes all’ natural equilibrium, where a single business ends up serving the entire market. Network effects are not just about the number of platform participants, but about their propensity to interact on the platform as well. Inactive users contribute less to network effects on a platform than active ones that participate frequently. In real life, platforms often benefit from – and have to manage – a combination of different types of network effects. For example, Facebook started with direct network effects since Harvard students found it easier to connect to one another once their entire class had joined.

The number of links in the network increases 34 Economic characteristics of platforms Figure 4.1 Network effects ‘exponentially’, with one, 10 and 66 relationships (and therefore possible connections), respectively.2 The relationship between the value of a network and its size, or between its utility and the numbers of transactions, has been modelled in a number of different contexts to help quantify network effects.3 Network effects can be: (i) Direct: as in telecommunications, where the value of the network increases directly with the numbers of users connected to it. This is also what happens with ‘peer-to-peer’ or social networks, where more users tend to benefit the entire platform. (ii) Indirect: as in operating systems or app stores where the value of the network increases not only with the number of users (direct), but with the number of application developers attracted by the growing user base (indirect effect). Indirect network effects result in positive feedback loops across the platform as more developers creating more apps then attract more users, and more users make the platform more attractive to developers.

Games consoles, operating systems and app stores are typical platforms exhibiting strong indirect network effects. Mature platforms such as Alibaba, eBay or Craigslist benefit from huge indirect network effects. More than 423 million active buyers4 make an average of 58 purchases a year5 on Alibaba; 25 million sellers6 with 1 billion listings attract 164 million active buyers on eBay;7 and Craigslist8 users post well over 80 million classified ads each month. It is worth noting that network effects can also be induced by platforms and maximized or internalized through platform design and governance decisions.


pages: 475 words: 134,707

The Hype Machine: How Social Media Disrupts Our Elections, Our Economy, and Our Health--And How We Must Adapt by Sinan Aral

Airbnb, Albert Einstein, algorithmic bias, AlphaGo, Any sufficiently advanced technology is indistinguishable from magic, AOL-Time Warner, augmented reality, behavioural economics, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, Cambridge Analytica, carbon footprint, Cass Sunstein, computer vision, contact tracing, coronavirus, correlation does not imply causation, COVID-19, crowdsourcing, cryptocurrency, data science, death of newspapers, deep learning, deepfake, digital divide, digital nomad, disinformation, disintermediation, Donald Trump, Drosophila, Edward Snowden, Elon Musk, en.wikipedia.org, end-to-end encryption, Erik Brynjolfsson, experimental subject, facts on the ground, fake news, Filter Bubble, George Floyd, global pandemic, hive mind, illegal immigration, income inequality, Kickstarter, knowledge worker, lockdown, longitudinal study, low skilled workers, Lyft, Mahatma Gandhi, Mark Zuckerberg, Menlo Park, meta-analysis, Metcalfe’s law, mobile money, move fast and break things, multi-sided market, Nate Silver, natural language processing, Neal Stephenson, Network effects, performance metric, phenotype, recommendation engine, Robert Bork, Robert Shiller, Russian election interference, Second Machine Age, seminal paper, sentiment analysis, shareholder value, Sheryl Sandberg, skunkworks, Snapchat, social contagion, social distancing, social graph, social intelligence, social software, social web, statistical model, stem cell, Stephen Hawking, Steve Bannon, Steve Jobs, Steve Jurvetson, surveillance capitalism, Susan Wojcicki, Telecommunications Act of 1996, The Chicago School, the strength of weak ties, The Wisdom of Crowds, theory of mind, TikTok, Tim Cook: Apple, Uber and Lyft, uber lyft, WikiLeaks, work culture , Yogi Berra

Facebook, Twitter, and the rest of the Hype Machine benefit tremendously from direct network effects. They can influence everything from monopoly concentration to innovation in our economy. The inset “Understanding Network Effects” explains how network effects can allow an inferior social media network to dominate a superior entrant and monopolize the market. UNDERSTANDING NETWORK EFFECTS Consider the following example of how network effects can empower an inferior network to dominate higher-quality competitors. Imagine that the value (V) of a social media network is its intrinsic value plus the value of its network effect: V = a + ct Here a is the intrinsic value of the network, without network effects (think of this as the social network’s features, privacy controls, data security, etc.); c is the value of network effects (the additional value that users receive as more of their friends join the network); and t indicates time and also represents the number of people who have joined the network at any moment in time (the number of users on the platform).

The value of joining Beta is still just b, the value of the service itself, because no one has yet joined Beta—it has no network effect. And although we have agreed that Beta, or b, is better than Alpha, or a, it is less valuable than Alpha plus its network effect, or a + ct. So while Beta’s value should increase linearly (as shown in the dotted line in Figure 5.1), fewer people adopt Beta because it has a smaller network effect. In this way, an inferior network (Alpha) can dominate a superior network (Beta) by having a large installed base and thus a large network effect. This is a key concept in ongoing debates about whether Facebook’s monopoly power hurts innovation. Indirect network effects are different.

But for the Hype Machine, the most important type of network effect is also the least known: the local network effect. The term originates from the importance of location to the economic power of network effects. Local network effects are proportional to the geographic proximity of the connections in the network. For example, when a new user in Dallas joins NextDoor, the private social networking service for neighborhoods, it improves the service for other NextDoor users in Dallas, but has little effect on the quality of the service for users in San Francisco. It turns out that, in addition to geographic proximity, local network effects are also driven by social proximity.


pages: 383 words: 81,118

Matchmakers: The New Economics of Multisided Platforms by David S. Evans, Richard Schmalensee

Airbnb, Alvin Roth, Andy Rubin, big-box store, business process, cashless society, Chuck Templeton: OpenTable:, creative destruction, Deng Xiaoping, digital divide, disruptive innovation, if you build it, they will come, information asymmetry, Internet Archive, invention of movable type, invention of the printing press, invention of the telegraph, invention of the telephone, Jean Tirole, John Markoff, Lyft, M-Pesa, market friction, market microstructure, Max Levchin, mobile money, multi-sided market, Network effects, PalmPilot, Productivity paradox, profit maximization, purchasing power parity, QR code, ride hailing / ride sharing, sharing economy, Silicon Valley, Snapchat, Steve Jobs, the long tail, Tim Cook: Apple, transaction costs, two-sided market, Uber for X, uber lyft, ubercab, vertical integration, Victor Gruen, Wayback Machine, winner-take-all economy

As Rochet and Tirole realized in their pioneering paper, “[M]any, if not most markets with network externalities are characterized by the presence of two distinct sides whose ultimate benefit stems from interacting through a common platform.”7 The French economists pointed to the general significance of indirect network effects. A network effect is indirect when the value of a matchmaker to one group of customers depends on how many members of a different group participate. FIGURE 2-1 Mentions of “network effect(s)” and “first-mover advantage,” 1950–2008 Note: Both Ngrams are case-insensitive. The Ngram for “network effect(s)” includes both the singular and plural. The Ngram for “first-mover advantage” includes both the hyphenated and unhyphenated forms. The units for both axes are per 10 million, e.g., a value of 32 for “network effect(s)” indicates that 32 bigrams per 10 million bigrams (two-word phrases) in the Google Book database were “network effects.”

The new economics of multisided platforms has revealed why that, and a lot of other business advice, is often wrong when it comes to most businesses that have what economists call network effects, in which adding customers attracts other customers.2 The Great Network Effects Mistake Economists started the serious study of network effects in the early 1970s. That work gained momentum in the 1980s. By the time entrepreneurs were starting dot-coms in the mid-1990s, there was an extensive academic literature. Business writers had latched onto the concept. Simple versions of network effects seeped into popular writings along with simplistic strategic advice. Unfortunately, right around the time dot-commers in Silicon Valley were being told they should build market share as quickly as possible, Rochet and Tirole in Toulouse were realizing that network effects were much more complicated, and different in practice, than many economists had thought.

There were press reports, unconfirmed, that Sony made large cash payments to Warner Brothers and to Fox Searchlight Pictures, which were reportedly thinking of abandoning Blu-ray.10 It appears that the Blu-ray group used price and other contractual terms more effectively to get both the consumer and content provider sides on board than the HD-DVD group. A better two-sided strategy made the difference. Mastering Multifaceted Network Effects It turns out that networks effects are far more pervasive and complex than economists and business strategists thought they were before 2000. Rochet and Tirole’s deep insight that year was that businesses in a diverse range of industries faced indirect network effects. The way they built their businesses, designed their products, ran their operations, and priced their offerings were heavily influenced by these network effects. These businesses operated multisided platforms. Economists, including ourselves, then started studying how these firms and industries worked in fact.


pages: 141 words: 40,979

The Little Book That Builds Wealth: The Knockout Formula for Finding Great Investments by Pat Dorsey

Airbus A320, barriers to entry, book value, business process, call centre, carbon tax, creative destruction, credit crunch, discounted cash flows, intangible asset, John Bogle, knowledge worker, late fees, low cost airline, Network effects, pets.com, price anchoring, risk tolerance, risk/return, rolodex, search costs, shareholder value, Stewart Brand

But of course, the very nature of the network effect means that there won’t be a very large number of businesses that benefit from it, given the propensity of networks to consolidate around the leader. Let’s put this theory to the test in a simple way by looking at the companies in the Dow Jones Industrial Average and seeing which ones benefit from the network effect. It turns out that only two companies in the Dow derive the bulk of their competitive advantage from the network effect—Amex and Microsoft. We’ve already talked about Amex’s moat, and the way the network effect helps Microsoft is fairly easy to understand as well.

Because the pool of liquidity in IBM shares is not limited to any one exchange, none of them benefits from the network effect nearly as much as futures exchanges do. The lesson here is that for a company to benefit from the network effect, it needs to operate a closed network, and when formerly closed networks open up, the network effect can dissipate in a hurry. It’s a good question to ask whenever you’re evaluating a company that might benefit from network economics: How might that network open up to other participants? Moving on from exchanges to other industries, we also see the network effect at work in lots of other areas of the market. Money-transfer firm Western Union is just one good example, and the value of its network to users is demonstrated by the fact that even though its network is three times larger than that of its closest competitor, Western Union processes about five times as many transactions.

Any potential competitor to Corporate Executive Board would need to replicate this network to successfully compete with the firm, which seems unlikely as long as its network keeps growing. As you can see, the network effect is a pretty powerful competitive advantage. It is not insurmountable, but it’s a tough one for a competitor to crack in most circumstances. This is one moat that is not easy to find, but it’s worth a lot of investigation when you do find it. The Bottom Line 1. A company benefits from the network effect when the value of its product or service increases with the number of users. Credit cards, online auctions, and some financial exchanges are good examples. 2. The network effect is an extremely powerful type of competitive advantage, and it is most often found in businesses based on sharing information or connecting users together.


pages: 387 words: 106,753

Why Startups Fail: A New Roadmap for Entrepreneurial Success by Tom Eisenmann

Airbnb, Atul Gawande, autonomous vehicles, Ben Horowitz, Big Tech, bitcoin, Blitzscaling, blockchain, call centre, carbon footprint, Checklist Manifesto, clean tech, conceptual framework, coronavirus, corporate governance, correlation does not imply causation, COVID-19, crowdsourcing, Daniel Kahneman / Amos Tversky, data science, Dean Kamen, drop ship, Elon Musk, fail fast, fundamental attribution error, gig economy, growth hacking, Hyperloop, income inequality, initial coin offering, inventory management, Iridium satellite, Jeff Bezos, Jeff Hawkins, Larry Ellison, Lean Startup, Lyft, Marc Andreessen, margin call, Mark Zuckerberg, minimum viable product, Network effects, nuclear winter, Oculus Rift, PalmPilot, Paul Graham, performance metric, Peter Pan Syndrome, Peter Thiel, reality distortion field, Richard Thaler, ride hailing / ride sharing, risk/return, Salesforce, Sam Altman, Sand Hill Road, side project, Silicon Valley, Silicon Valley startup, Skype, social graph, software as a service, Solyndra, speech recognition, stealth mode startup, Steve Jobs, TED Talk, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, We wanted flying cars, instead we got 140 characters, WeWork, Y Combinator, young professional, Zenefits

We see this magic at work with companies like Airbnb, American Express, Expedia, Facebook, LinkedIn, Microsoft Windows, Nasdaq, Slack, Sony PlayStation, Tinder, and Zillow. It’s important for entrepreneurs to gauge the strength of network effects for their product, because the stronger network effects are, the faster a startup should attempt to grow. Fortunately, it’s possible to measure network effects quantitatively using a market research technique called conjoint analysis. Conjoint analysis asks respondents—dozens of times—which of two products they prefer, each time varying some of the products’ attributes (e.g., for consumers considering a credit card, the network effect—number of merchants accepting the card—would be considered along with attributes such as the card’s spending limit, emergency assistance features, loyalty program, interest rate, annual fee, etc.).

When that’s true, even if an entrepreneur doesn’t yet feel Ready, Able, or Willing, she must do her best to address the relevant constraints and then try to grow. Three structural attributes of certain business models—powerful network effects, high customer switching costs, and strong economies of scale—impel a startup, along with rivals who share these attributes, to accelerate growth. Network Effects. A product that facilitates interactions between its users has network effects if adding users makes the product more valuable to every user, by providing more potential partners for interactions. For example, the first Skype user couldn’t do anything with the product until a second user came on board.

For example, gamers may prefer to have the same type of console owned by many fellow gamers, so that they can swap games and play each other online: That’s a positive same-side network effect. Conversely, bidders in an eBay auction will wish to see fewer rival bidders on their side of the network. Entrepreneurs have powerful economic incentives to accelerate the growth of products that harness strong positive network effects. Since a product that offers access to a bigger network is more valuable to existing users, it can command a higher price—although price hikes might be deferred, to supercharge expansion. And, because access to a bigger network is also more valuable to potential users, a startup exploiting network effects should see declining customer acquisition costs.


pages: 447 words: 111,991

Exponential: How Accelerating Technology Is Leaving Us Behind and What to Do About It by Azeem Azhar

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 23andMe, 3D printing, A Declaration of the Independence of Cyberspace, Ada Lovelace, additive manufacturing, air traffic controllers' union, Airbnb, algorithmic management, algorithmic trading, Amazon Mechanical Turk, autonomous vehicles, basic income, Berlin Wall, Bernie Sanders, Big Tech, Bletchley Park, Blitzscaling, Boeing 737 MAX, book value, Boris Johnson, Bretton Woods, carbon footprint, Chris Urmson, Citizen Lab, Clayton Christensen, cloud computing, collective bargaining, computer age, computer vision, contact tracing, contact tracing app, coronavirus, COVID-19, creative destruction, crowdsourcing, cryptocurrency, cuban missile crisis, Daniel Kahneman / Amos Tversky, data science, David Graeber, David Ricardo: comparative advantage, decarbonisation, deep learning, deglobalization, deindustrialization, dematerialisation, Demis Hassabis, Diane Coyle, digital map, digital rights, disinformation, Dissolution of the Soviet Union, Donald Trump, Double Irish / Dutch Sandwich, drone strike, Elon Musk, emotional labour, energy security, Fairchild Semiconductor, fake news, Fall of the Berlin Wall, Firefox, Frederick Winslow Taylor, fulfillment center, future of work, Garrett Hardin, gender pay gap, general purpose technology, Geoffrey Hinton, gig economy, global macro, global pandemic, global supply chain, global value chain, global village, GPT-3, Hans Moravec, happiness index / gross national happiness, hiring and firing, hockey-stick growth, ImageNet competition, income inequality, independent contractor, industrial robot, intangible asset, Jane Jacobs, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John Perry Barlow, Just-in-time delivery, Kickstarter, Kiva Systems, knowledge worker, Kodak vs Instagram, Law of Accelerating Returns, lockdown, low skilled workers, lump of labour, Lyft, manufacturing employment, Marc Benioff, Mark Zuckerberg, megacity, Mitch Kapor, Mustafa Suleyman, Network effects, new economy, NSO Group, Ocado, offshore financial centre, OpenAI, PalmPilot, Panopticon Jeremy Bentham, Peter Thiel, Planet Labs, price anchoring, RAND corporation, ransomware, Ray Kurzweil, remote working, RFC: Request For Comment, Richard Florida, ride hailing / ride sharing, Robert Bork, Ronald Coase, Ronald Reagan, Salesforce, Sam Altman, scientific management, Second Machine Age, self-driving car, Shoshana Zuboff, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, software as a service, Steve Ballmer, Steve Jobs, Stuxnet, subscription business, synthetic biology, tacit knowledge, TaskRabbit, tech worker, The Death and Life of Great American Cities, The Future of Employment, The Nature of the Firm, Thomas Malthus, TikTok, Tragedy of the Commons, Turing machine, Uber and Lyft, Uber for X, uber lyft, universal basic income, uranium enrichment, vertical integration, warehouse automation, winner-take-all economy, workplace surveillance , Yom Kippur War

Ltd, 2015) p. 36. 22 The best book on the intangible economy is Jonathan Haskel and Stian Westlake, Capitalism without Capital: The Rise of the Intangible Economy (Princeton, NJ: Princeton University Press, 2018). 23 Intangible Asset Market Value Study, Ocean Tomo <https://www.oceantomo.com/intangible-asset-market-value-study/> [accessed 27 August 2020]. 24 Stian Westlake, quoted in Azeem Azhar, ‘Understanding the Intangible Economy’, Exponential View, 5 July 2019 <https://www.exponentialview.co/p/capitalism-without-capital> [accessed 28 August 2020]. 25 World Intellectual Property Report 2017: Intangible Capital in Global Value Chains (World Intellectual Property Organization, 2017). 26 Barney Pell, personal conversation with the author, June 2015. 27 Matt Turck, ‘The Power of Data Network Effects’, Matt Turck [blog], 2016 <https://mattturck.com/the-power-of-data-network-effects/> [accessed 3 August 2020]. 28 Seyed M. Mirtaheri et al., ‘A Brief History of Web Crawlers’, in CASCON ’13: Proceedings of the 2013 Conference of the Center for Advanced Studies on Collaborative Research (Toronto: IBM Corp., 2013), pp. 40–54. 29 Tim O’Reilly, ‘Network Effects in Data’, O’Reilly Radar, 27 October 2008 <http://radar.oreilly.com/2008/10/network-effects-in-data.html> [accessed 9 December 2020]. 30 West, Scale, p. 393. 31 Author’s analysis of various company disclosures. 32 ‘Amount of Original Content Titles on Netflix 2019’, Statista <https://www.statista.com/statistics/883491/netflix-original-content-titles/> [accessed 30 March 2021]; Gavin Bridge, ‘Netflix Released More Originals in 2019 Than the Entire TV Industry Did in 2005’, Variety, 17 December 2019 <https://variety.com/2019/tv/news/netflix-more-2019-originals-than-entire-tv-industry-in-2005-1203441709/> [accessed 30 March 2021]. 33 W.

But once Microsoft had established dominance in the operating system market, it became increasingly hard to take on. There was a powerful network effect: once everybody else was using Windows, and exchanging Word documents and Excel spreadsheets, it became much easier for you to use them too. The network effect driving Microsoft’s success allowed it to spread inexorably from one market area to the next – first operating systems, then word processors, then spreadsheets. Network effects aren’t just the preserve of profit-seeking firms. Wikipedia, the free online encyclopedia managed by a foundation, also benefits from network externalities.

It is in the consumers’ own interest to join the biggest network – it is there, after all, that they will get the most value. It might not be obvious why these network effects become more pronounced in the Exponential Age. After all, network effects explain much of the pre-exponential world. They were well understood by Theodore Vail, the president of the Bell Telephone Company (the precursor to AT&T), who wrote in 1908: ‘A telephone[’s] value depends on the connection with the other telephone and increases with the number of connections.’15 But the digital technologies of the twenty-first century are better placed to take advantage of network effects than earlier innovations. Why? Because where earlier companies had to go through the cumbersome process of supplying every new customer with a phone, or a fax machine, or some other device, today’s digital giants can rely on their customers already accessing a communication network: the internet.


pages: 554 words: 149,489

The Content Trap: A Strategist's Guide to Digital Change by Bharat Anand

Airbnb, Alan Greenspan, An Inconvenient Truth, AOL-Time Warner, Benjamin Mako Hill, Bernie Sanders, Clayton Christensen, cloud computing, commoditize, correlation does not imply causation, creative destruction, crowdsourcing, death of newspapers, disruptive innovation, Donald Trump, driverless car, electricity market, Eyjafjallajökull, fulfillment center, gamification, Google Glasses, Google X / Alphabet X, information asymmetry, Internet of things, inventory management, Jean Tirole, Jeff Bezos, John Markoff, Just-in-time delivery, Kaizen: continuous improvement, Khan Academy, Kickstarter, late fees, managed futures, Mark Zuckerberg, market design, Minecraft, multi-sided market, Network effects, post-work, price discrimination, publish or perish, QR code, recommendation engine, ride hailing / ride sharing, Salesforce, selection bias, self-driving car, shareholder value, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Skype, social graph, social web, special economic zone, Stephen Hawking, Steve Jobs, Steven Levy, Stuart Kauffman, the long tail, Thomas L Friedman, transaction costs, two-sided market, ubercab, vertical integration, WikiLeaks, winner-take-all economy, zero-sum game

And more applications, in turn, attracted more users—resulting in powerful “indirect” or “cross-side” network effects. Direct network effects arise from connections between similar users. To identify them, simply ask: Does the product’s value to a buyer increase as more people buy and use it? Indirect network effects result from connections between different types of users or suppliers—in this case, customers and app developers. To identify them, ask: Does the value to one type of user increase as the number of suppliers or other types of users rises (see Figure 6)? Figure 6: Direct Versus Indirect Network Effects Indirect networks can be as powerful as direct ones, as shown by classified ads.

But a second challenge can be equally confounding: Once managers are exposed to the idea of network effects, they start seeing them everywhere, even when they don’t exist. Witness Groupon’s attempt to build a global business. For years the company’s founders claimed that it benefited from network effects and would enjoy a winner-take-all dynamic. The more users Groupon had, the likelier merchants were to offer deals, and vice versa— indirect network effects. And because some deals would not be honored unless enough people bought them, there were direct network effects, too. The firm’s early success—Groupon was one of the fastest-growing Internet companies ever—proved it.

By understanding the power of user connections, Schibsted had preserved—actually enhanced—the cash cow that had served its news operations for 150 years. Along the way it had reinvented the company’s culture. Network effects are the most celebrated form of user connections and one of the most studied areas during recent decades. Yet theory lags practice. Carl Shapiro recently told me, “ We are still not sure about many questions concerning network effects and their power: What is the real source of network effects? Can they be neutralized? What are their limits?” That’s where Schibsted’s journey has relevance. In its global expansion, it has pushed the boundaries of nearly every accepted formula for competing in networked markets: It has won even when it was late, remained free even after winning, and recognized that direct user-to-user connections are more viral than business-to-consumer strategies.


pages: 1,535 words: 337,071

Networks, Crowds, and Markets: Reasoning About a Highly Connected World by David Easley, Jon Kleinberg

Albert Einstein, AltaVista, AOL-Time Warner, Apollo 13, classic study, clean water, conceptual framework, Daniel Kahneman / Amos Tversky, Douglas Hofstadter, Dutch auction, Erdős number, experimental subject, first-price auction, fudge factor, Garrett Hardin, George Akerlof, Gerard Salton, Gerard Salton, Gödel, Escher, Bach, incomplete markets, information asymmetry, information retrieval, John Nash: game theory, Kenneth Arrow, longitudinal study, market clearing, market microstructure, moral hazard, Nash equilibrium, Network effects, Pareto efficiency, Paul Erdős, planetary scale, power law, prediction markets, price anchoring, price mechanism, prisoner's dilemma, random walk, recommendation engine, Richard Thaler, Ronald Coase, sealed-bid auction, search engine result page, second-price auction, second-price sealed-bid, seminal paper, Simon Singh, slashdot, social contagion, social web, Steve Jobs, Steve Jurvetson, stochastic process, Ted Nelson, the long tail, The Market for Lemons, the strength of weak ties, The Wisdom of Crowds, trade route, Tragedy of the Commons, transaction costs, two and twenty, ultimatum game, Vannevar Bush, Vickrey auction, Vilfredo Pareto, Yogi Berra, zero-sum game

When there are no network effects at work, we model a consumer’s willingness to pay as being determined entirely by this intrinsic interest. When there are network effects, a consumer’s willingness to pay is determined by two things: • intrinsic interest; and • the number of other people using the good — the larger the user population, the more she is willing to pay. Our study of network effects here can be viewed as an analysis of how things change once this second factor comes into play. To start understanding this issue, we first consider how a market looks when there are no network effects. Reservation Prices.

This is achieved by choosing x to be the equilibrium x∗. Hence the equilibrium quantity x∗ is socially optimal. We now introduce network effects; we’ll see that this causes several important features of the market to change in fundamental ways. 17.2 The Economy with Network Effects In this section, we discuss a model for network effects in the market for a good. We will follow a general approach suggested by Katz, Shapiro, and Varian [231, 362]; see also the writings of Brian Arthur [25, 27] for influential early discussions of these ideas. With network effects, a potential purchaser takes into account both her own reservation price and the total number of users of the good.

This example illustrates the more general principle that for goods with network effects, markets typically provide less of the good than is socially optimal. Network Effects and Competition. Finally, let’s ask what might happen if multiple firms develop competing new products, each of which has its own network effects. For example, we could consider two competing social-networking sites that offer similar services, or two technologies that do essentially the same thing, but where the value of each of these technologies depends on how many people use it. There are a number of classic examples of 536 CHAPTER 17. NETWORK EFFECTS this from technology industries over the last several decades [27].


Virtual Competition by Ariel Ezrachi, Maurice E. Stucke

"World Economic Forum" Davos, Airbnb, Alan Greenspan, Albert Einstein, algorithmic management, algorithmic trading, Arthur D. Levinson, barriers to entry, behavioural economics, cloud computing, collaborative economy, commoditize, confounding variable, corporate governance, crony capitalism, crowdsourcing, Daniel Kahneman / Amos Tversky, David Graeber, deep learning, demand response, Didi Chuxing, digital capitalism, disintermediation, disruptive innovation, double helix, Downton Abbey, driverless car, electricity market, Erik Brynjolfsson, Evgeny Morozov, experimental economics, Firefox, framing effect, Google Chrome, independent contractor, index arbitrage, information asymmetry, interest rate derivative, Internet of things, invisible hand, Jean Tirole, John Markoff, Joseph Schumpeter, Kenneth Arrow, light touch regulation, linked data, loss aversion, Lyft, Mark Zuckerberg, market clearing, market friction, Milgram experiment, multi-sided market, natural language processing, Network effects, new economy, nowcasting, offshore financial centre, pattern recognition, power law, prediction markets, price discrimination, price elasticity of demand, price stability, profit maximization, profit motive, race to the bottom, rent-seeking, Richard Thaler, ride hailing / ride sharing, road to serfdom, Robert Bork, Ronald Reagan, search costs, self-driving car, sharing economy, Silicon Valley, Skype, smart cities, smart meter, Snapchat, social graph, Steve Jobs, sunk-cost fallacy, supply-chain management, telemarketer, The Chicago School, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, Travis Kalanick, turn-by-turn navigation, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, Watson beat the top human players on Jeopardy!, women in the workforce, yield management

We use the word “potential” because sometimes platforms might reduce competition, as we explore next. Network Effects and Market Power Let us now consider how network effects may give rise to market power and create bottlenecks in the online environment. Network effects and market power may influence the comparison intermediates’ incentives and practice. Powerful platforms can distort the information they present us to improve their own profitability. To explain how, we first explain the operation of network effects. Then we illustrate the way in which market power could distort competition and search results online. Network Effects To understand how online platforms can exercise market power, we briefly outline several network effects involving online multisided platforms (such as Google, Bing, price comparison websites, and Facebook).5 Traditional Network Effects.

Network Effects To understand how online platforms can exercise market power, we briefly outline several network effects involving online multisided platforms (such as Google, Bing, price comparison websites, and Facebook).5 Traditional Network Effects. Traditional network effects are observable in social network platforms, where bigger is better. Direct network effects arise when a consumer’s utility from a product increases as others use the product.6 One example is Facebook. As more people use the social network, the more people with whom one can interact, the easier it is to connect with other people, and the greater one’s utility in using Facebook.

Or at times the firms will offer the product or ser vice for “ free,” and the competition will be over extracting wealth through behavioral advertising. Another reason why market power will likely be durable is network effects.14 Operating systems, we saw, are a classic example of network effects: the more people that use the platform, “the more there will be invested in 238 Final Reflections developing products compatible with that platform, which, in turn reinforces the popularity of that platform with users.”15 Thus network effects help insulate Google’s and Apple’s market power over mobile phone operating systems. As The Economist reported, “Alphabet [Google], Facebook and Amazon are not being valued by investors as if they are high risk, but as if their market shares are sustainable and their network effects and accumulation of data will eventually allow them to reap monopoly-style profits.”16 Positive feedback loops and data-driven network effects can play a significant role here.17 The new currency in our Frenemy and behavioral discrimination scenarios is data.


pages: 510 words: 120,048

Who Owns the Future? by Jaron Lanier

3D printing, 4chan, Abraham Maslow, Affordable Care Act / Obamacare, Airbnb, augmented reality, automated trading system, barriers to entry, bitcoin, Black Monday: stock market crash in 1987, book scanning, book value, Burning Man, call centre, carbon credits, carbon footprint, cloud computing, commoditize, company town, computer age, Computer Lib, crowdsourcing, data science, David Brooks, David Graeber, delayed gratification, digital capitalism, digital Maoism, digital rights, Douglas Engelbart, en.wikipedia.org, Everything should be made as simple as possible, facts on the ground, Filter Bubble, financial deregulation, Fractional reserve banking, Francis Fukuyama: the end of history, Garrett Hardin, George Akerlof, global supply chain, global village, Haight Ashbury, hive mind, if you build it, they will come, income inequality, informal economy, information asymmetry, invisible hand, Ivan Sutherland, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Perry Barlow, Kevin Kelly, Khan Academy, Kickstarter, Kodak vs Instagram, life extension, Long Term Capital Management, machine translation, Marc Andreessen, Mark Zuckerberg, meta-analysis, Metcalfe’s law, moral hazard, mutually assured destruction, Neal Stephenson, Network effects, new economy, Norbert Wiener, obamacare, off-the-grid, packet switching, Panopticon Jeremy Bentham, Peter Thiel, place-making, plutocrats, Ponzi scheme, post-oil, pre–internet, Project Xanadu, race to the bottom, Ray Kurzweil, rent-seeking, reversible computing, Richard Feynman, Ronald Reagan, scientific worldview, self-driving car, side project, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Skype, smart meter, stem cell, Steve Jobs, Steve Wozniak, Stewart Brand, synthetic biology, tech billionaire, technological determinism, Ted Nelson, The Market for Lemons, Thomas Malthus, too big to fail, Tragedy of the Commons, trickle-down economics, Turing test, Vannevar Bush, WikiLeaks, zero-sum game

That means value climbs with an insane, ever-increasing pitch as a network grows. The economist W. Brian Arthur pioneered the understanding of economic network effects. To understand how Siren Servers work, it’s useful to divide network effects into those that are “rewarding” and those that are “punishing.” Siren Servers gain dominance through rewarding network effects, but keep dominance through punishing network effects. Here’s a classic example of a rewarding network effect: A cliché in the advertising world is that in the old days you knew you were wasting half of your advertising budget, but you didn’t know which half.

Drawing the line between what we forfeit to calculation and what we reserve for the heroics of free will is the story of our time. CHAPTER 13 Coercion on Autopilot Specialized Network Effects Rewarding and Punishing Network EffectsNetwork effects” are feedback cycles that can make a network become ever more influential or valuable.* A classic example is found in the rise of Facebook. It attracted people because of the people already on it, a little like the old joke about someone being famous for being famous. *Network effects were an obsession for those interested in the pre-digital phone system. They have become an even greater obsession in the age of digital networks.

Developers are motivated to create lots of apps because there are a lot of people using the Apple store. That’s a classical rewarding network effect. For Every Carrot a Stick The most successful Siren Servers also benefit from punishing network effects. These are centered on a fear, risk, or cost that makes “captured” populations think twice if they want to stop engaging with a Siren Server. In Silicon Valley–speak this is also called “stickiness.” Players often can’t take on the burden of escaping the thrall of a Siren Server once a punishing network effect is in place. Remember, Google sells ad placements based on auctions. Imagine once again that you’re an advertiser.


pages: 116 words: 31,356

Platform Capitalism by Nick Srnicek

"World Economic Forum" Davos, 3D printing, additive manufacturing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, Big Tech, Californian Ideology, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, collaborative economy, collective bargaining, data science, deindustrialization, deskilling, Didi Chuxing, digital capitalism, digital divide, disintermediation, driverless car, Ford Model T, future of work, gig economy, independent contractor, Infrastructure as a Service, Internet of things, Jean Tirole, Jeff Bezos, knowledge economy, knowledge worker, liquidity trap, low interest rates, low skilled workers, Lyft, Mark Zuckerberg, means of production, mittelstand, multi-sided market, natural language processing, Network effects, new economy, Oculus Rift, offshore financial centre, pattern recognition, platform as a service, quantitative easing, RFID, ride hailing / ride sharing, Robert Gordon, Salesforce, self-driving car, sharing economy, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, software as a service, surveillance capitalism, TaskRabbit, the built environment, total factor productivity, two-sided market, Uber and Lyft, Uber for X, uber lyft, unconventional monetary instruments, unorthodox policies, vertical integration, warehouse robotics, Zipcar

Will competition survive in the digital era, or are we headed for a new monopoly capitalism? With network effects, a tendency towards monopolisation is built into the DNA of platforms: the more numerous the users who interact on a platform, the more valuable the entire platform becomes for each one of them. Network effects, moreover, tend to mean that early advantages become solidified as permanent positions of industry leadership. Platforms also have a unique ability to link together and consolidate multiple network effects. Uber, for instance, benefits from the network effects of more and more drivers as well as from the network effects of more and more riders.2 Leading platforms tend consciously to perpetuate themselves in other ways as well.

Moreover, the ability to rapidly scale many platform businesses by relying on pre-existing infrastructure and cheap marginal costs means that there are few natural limits to growth. One reason for Uber’s rapid growth, for instance, is that it does not need to build new factories – it just needs to rent more servers. Combined with network effects, this means that platforms can grow very big very quickly. The importance of network effects means that platforms must deploy a range of tactics to ensure that more and more users come on board. For example – and this is the third characteristic – platforms often use cross-subsidisation: one arm of the firm reduces the price of a service or good (even providing it for free), but another arm raises prices in order to make up for these losses.

The challenge of maintaining platforms is, in part, to revise the cross-subsidisation links and the rules of the platform in order to sustain user interest. While network effects strongly support existing platform leaders, these positions are not unassailable. Platforms, in sum, are a new type of firm; they are characterised by providing the infrastructure to intermediate between different user groups, by displaying monopoly tendencies driven by network effects, by employing cross-subsidisation to draw in different user groups, and by having a designed core architecture that governs the interaction possibilities.


pages: 472 words: 117,093

Machine, Platform, Crowd: Harnessing Our Digital Future by Andrew McAfee, Erik Brynjolfsson

"World Economic Forum" Davos, 3D printing, additive manufacturing, AI winter, Airbnb, airline deregulation, airport security, Albert Einstein, algorithmic bias, AlphaGo, Amazon Mechanical Turk, Amazon Web Services, Andy Rubin, AOL-Time Warner, artificial general intelligence, asset light, augmented reality, autism spectrum disorder, autonomous vehicles, backpropagation, backtesting, barriers to entry, behavioural economics, bitcoin, blockchain, blood diamond, British Empire, business cycle, business process, carbon footprint, Cass Sunstein, centralized clearinghouse, Chris Urmson, cloud computing, cognitive bias, commoditize, complexity theory, computer age, creative destruction, CRISPR, crony capitalism, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, data science, Dean Kamen, deep learning, DeepMind, Demis Hassabis, discovery of DNA, disintermediation, disruptive innovation, distributed ledger, double helix, driverless car, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Ethereum, ethereum blockchain, everywhere but in the productivity statistics, Evgeny Morozov, fake news, family office, fiat currency, financial innovation, general purpose technology, Geoffrey Hinton, George Akerlof, global supply chain, Great Leap Forward, Gregor Mendel, Hernando de Soto, hive mind, independent contractor, information asymmetry, Internet of things, inventory management, iterative process, Jean Tirole, Jeff Bezos, Jim Simons, jimmy wales, John Markoff, joint-stock company, Joseph Schumpeter, Kickstarter, Kiva Systems, law of one price, longitudinal study, low interest rates, Lyft, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, Marc Andreessen, Marc Benioff, Mark Zuckerberg, meta-analysis, Mitch Kapor, moral hazard, multi-sided market, Mustafa Suleyman, Myron Scholes, natural language processing, Network effects, new economy, Norbert Wiener, Oculus Rift, PageRank, pattern recognition, peer-to-peer lending, performance metric, plutocrats, precision agriculture, prediction markets, pre–internet, price stability, principal–agent problem, Project Xanadu, radical decentralization, Ray Kurzweil, Renaissance Technologies, Richard Stallman, ride hailing / ride sharing, risk tolerance, Robert Solow, Ronald Coase, Salesforce, Satoshi Nakamoto, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Skype, slashdot, smart contracts, Snapchat, speech recognition, statistical model, Steve Ballmer, Steve Jobs, Steven Pinker, supply-chain management, synthetic biology, tacit knowledge, TaskRabbit, Ted Nelson, TED Talk, the Cathedral and the Bazaar, The Market for Lemons, The Nature of the Firm, the strength of weak ties, Thomas Davenport, Thomas L Friedman, too big to fail, transaction costs, transportation-network company, traveling salesman, Travis Kalanick, Two Sigma, two-sided market, Tyler Cowen, Uber and Lyft, Uber for X, uber lyft, ubercab, Vitalik Buterin, warehouse robotics, Watson beat the top human players on Jeopardy!, winner-take-all economy, yield management, zero day

For the simple reason that many of the people with whom they wanted to exchange messages already used WhatsApp, so they too had to adopt it. This is a clear example of what economists call a “network effect”: the fact that some goods, like WhatsApp, become more valuable to each user as more people use them. The economics of network effects are central to understanding business success in the digital world and were worked out in a series of papers in the 1980s,‡‡ which is, not coincidentally, when modern computer networks and digital software started becoming especially important economically. Network effects are also called demand-side economies of scale,§§ and as the WhatsApp example shows, they can be extremely compelling—so compelling that in 2014, Facebook paid $22 billion to acquire the company.

Uber’s investors are making the bet that the (two-sided) network effects and switching costs are large enough to make it worth investing billions of dollars to encourage adoption of the platform by both riders and drivers. Their strategy is complicated by the fact that geographically distinct markets each have their own local network effects. If you’re hailing a ride in Beijing, it makes little difference if Uber has lots of drivers in New York or New Delhi. The battle isn’t one big winner-take-all contest, but hundreds of separate ones, with only weak network effects across different geographies. They’re winning some and losing others.

At the time, the messaging service had 600 million monthly active users but just 70 employees and was handling 50% more messages every day than the entire global SMS network. To see the importance of network effects, imagine an app, call it “WhatsWrong,” that was identical in all its functionality and user experience design to WhatsApp, except it had zero users. How much do you think Facebook, or anyone else, would pay for WhatsWrong? WhatsApp shows that network effects arise in part because of the choices made by platform creators. If the app’s developers had decided to make their creation easily interoperable with established SMS networks, users of these networks would have switched over to WhatsApp for cost reasons only, if at all.


pages: 375 words: 88,306

The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism by Arun Sundararajan

"World Economic Forum" Davos, additive manufacturing, Airbnb, AltaVista, Amazon Mechanical Turk, asset light, autonomous vehicles, barriers to entry, basic income, benefit corporation, bike sharing, bitcoin, blockchain, book value, Burning Man, call centre, Carl Icahn, collaborative consumption, collaborative economy, collective bargaining, commoditize, commons-based peer production, corporate social responsibility, cryptocurrency, data science, David Graeber, distributed ledger, driverless car, Eben Moglen, employer provided health coverage, Erik Brynjolfsson, Ethereum, ethereum blockchain, Frank Levy and Richard Murnane: The New Division of Labor, future of work, general purpose technology, George Akerlof, gig economy, housing crisis, Howard Rheingold, independent contractor, information asymmetry, Internet of things, inventory management, invisible hand, job automation, job-hopping, John Zimmer (Lyft cofounder), Kickstarter, knowledge worker, Kula ring, Lyft, Marc Andreessen, Mary Meeker, megacity, minimum wage unemployment, moral hazard, moral panic, Network effects, new economy, Oculus Rift, off-the-grid, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, peer-to-peer rental, profit motive, public intellectual, purchasing power parity, race to the bottom, recommendation engine, regulatory arbitrage, rent control, Richard Florida, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Ross Ulbricht, Second Machine Age, self-driving car, sharing economy, Silicon Valley, smart contracts, Snapchat, social software, supply-chain management, TaskRabbit, TED Talk, the long tail, The Nature of the Firm, total factor productivity, transaction costs, transportation-network company, two-sided market, Uber and Lyft, Uber for X, uber lyft, universal basic income, Vitalik Buterin, WeWork, Yochai Benkler, Zipcar

But it’s fascinating: there’s a real chance that the economic models of crowd-based capitalism may actually be able to distribute production across millions of smaller providers without having to sacrifice significantly on the gains from scale that 20th-century organizations enjoyed. In contrast, it seems unequivocally clear that demand-side economies of scale will become more prevalent as crowd-based capitalism gathers steam. A particular kind of network effect—the two-sided network effect—governs many economic aspects of platforms. As Thomas Eisenmann, Geoffrey Parker, and Marshall Van Alstyne explain in an influential Harvard Business Review article: With two-sided network effects, the platform’s value to any given user largely depends on the number of users on the network’s other side. Value grows as the platform matches demand from both sides. For example, video game developers will create games only for platforms that have a critical mass of players, because developers need a large enough customer base to recover their upfront programming costs.

Taaki created DarkMarket following the shuttering of a market called the Silk Road, best known for facilitating the sales of illegal drugs, and whose founder Ross Ulbricht is currently serving a life sentence in a US prison.3 “Like a hydra, those of us in the community that push for individual empowerment are in an arms race to equip the people with the tools needed for the next generation of digital black markets,” Taaki explained to Wired reporter Andy Greenberg in 2014.4 On its website, OpenBazaar commits to “zero fees,” indicating that because there are no parties in the middle of the transactions, there are no fees to pay. As Burnham further clarifies about OpenBazaar in his blog post, “There is no way for a central authority to leverage network effect market power to extract rents from the participants.”5 At a time when most venture capitalists seem to be plowing money into sharing economy platforms that are able to do precisely what Burnham claimed OpenBazaar made impossible (i.e., “leverage network effect market power to extract rents from the participants”), why would a visible and successful venture capitalist like USV want to invest in a company aimed at furthering a technology that is not only, in a sense, “off the grid,” but is also open-source and committed to “zero fees.”

Since the 1980s, however, economists have documented a growing evidence of what Hal Varian and Carl Shapiro christened as demand-side economies of scale—that is, an increase in the value of a product as its usage grows.22 This effect—when more usage of the product by any user increases the product’s value for other users (and sometimes all users)—is also often called a network effect.23 Silicon Valley investors widely covet network effects in a business model since they are often predictive of a “winner take most” market like those enjoyed currently and in the past by Microsoft, Facebook, and other technology titans. Let’s discuss, in sequence, how the move toward crowd-based capitalism might affect each of these kinds of economies of scale.


pages: 180 words: 55,805

The Price of Tomorrow: Why Deflation Is the Key to an Abundant Future by Jeff Booth

3D printing, Abraham Maslow, activist fund / activist shareholder / activist investor, additive manufacturing, AI winter, Airbnb, Albert Einstein, AlphaGo, Amazon Web Services, artificial general intelligence, augmented reality, autonomous vehicles, basic income, bitcoin, blockchain, Bretton Woods, business intelligence, butterfly effect, Charles Babbage, Claude Shannon: information theory, clean water, cloud computing, cognitive bias, collapse of Lehman Brothers, Computing Machinery and Intelligence, corporate raider, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, currency manipulation / currency intervention, dark matter, deep learning, DeepMind, deliberate practice, digital twin, distributed ledger, Donald Trump, Elon Musk, fiat currency, Filter Bubble, financial engineering, full employment, future of work, game design, gamification, general purpose technology, Geoffrey Hinton, Gordon Gekko, Great Leap Forward, Hyman Minsky, hype cycle, income inequality, inflation targeting, information asymmetry, invention of movable type, Isaac Newton, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, John von Neumann, Joseph Schumpeter, late fees, low interest rates, Lyft, Maslow's hierarchy, Milgram experiment, Minsky moment, Modern Monetary Theory, moral hazard, Nelson Mandela, Network effects, Nick Bostrom, oil shock, OpenAI, pattern recognition, Ponzi scheme, quantitative easing, race to the bottom, ride hailing / ride sharing, self-driving car, software as a service, technoutopianism, TED Talk, the long tail, the scientific method, Thomas Bayes, Turing test, Uber and Lyft, uber lyft, universal basic income, winner-take-all economy, X Prize, zero-sum game

Not only that, because of the immense value they bring to their users—their platforms are designed to take advantage of network effects and the data that it brings them—these monopolies are likely to continue to consolidate power. Strong network effects are at the core of every platform business today. In fact, in a recent three-year study by NFX, network effects accounted for 70 percent of the value in technology companies over the last twenty-three years.12 Network effects are very different from the economies of scale which traditionally drove power. Through economies of scale, the bigger a company was, the more buying power and leverage it had to squeeze out competitors. In contrast, a network effect exists when the value of a product or service gives more value to each user as the number of users increases.

With each additional user, the service becomes more valuable to all users, which in turn creates a positive feedback loop of value leading to exponential growth. Designing a platform to take advantage of strong network effects creates lock-in and winner-take-all markets. The Internet itself has one of the strongest network effects, and consequently so do many of the top companies built on it. Ironically, network effects, which were supposed to make the Internet the great equalizer as it redistributed power away from monopolies, have ended up concentrating even more power in the hands of very few. Beyond network effects, every consumer platform gains its power in a similar way. Most people falsely believe that the majority of power is gained through consumers of the platform.

When manufacturers can give a choice of 1) a rides-on-demand service for a monthly fee or 2) an ability, when I purchase, to make extra dollars on my car when I’m not using it by adding my vehicle back to the network, what advantage do Uber and Lyft provide? This would turn car manufacturers into platform companies. A business like this will follow a very similar trajectory to other technology platform businesses, since the new model enjoys network effects. That race is important because density of the network (availability and choice of car types) will be the main consideration to rapid adoption. Like most technology platforms that give rise to network effects, more cars on the platform (in each region) will create more value for consumers, which make it highly likely that the industry consolidates to one major platform winner. It will also change our cities.


pages: 380 words: 109,724

Don't Be Evil: How Big Tech Betrayed Its Founding Principles--And All of US by Rana Foroohar

"Susan Fowler" uber, "World Economic Forum" Davos, accounting loophole / creative accounting, Airbnb, Alan Greenspan, algorithmic bias, algorithmic management, AltaVista, Andy Rubin, autonomous vehicles, banking crisis, barriers to entry, behavioural economics, Bernie Madoff, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, book scanning, Brewster Kahle, Burning Man, call centre, Cambridge Analytica, cashless society, clean tech, cloud computing, cognitive dissonance, Colonization of Mars, computer age, corporate governance, creative destruction, Credit Default Swap, cryptocurrency, data is the new oil, data science, deal flow, death of newspapers, decentralized internet, Deng Xiaoping, digital divide, digital rights, disinformation, disintermediation, don't be evil, Donald Trump, drone strike, Edward Snowden, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Etonian, Evgeny Morozov, fake news, Filter Bubble, financial engineering, future of work, Future Shock, game design, gig economy, global supply chain, Gordon Gekko, Great Leap Forward, greed is good, income inequality, independent contractor, informal economy, information asymmetry, intangible asset, Internet Archive, Internet of things, invisible hand, Jaron Lanier, Jeff Bezos, job automation, job satisfaction, junk bonds, Kenneth Rogoff, life extension, light touch regulation, low interest rates, Lyft, Mark Zuckerberg, Marshall McLuhan, Martin Wolf, Menlo Park, military-industrial complex, move fast and break things, Network effects, new economy, offshore financial centre, PageRank, patent troll, Paul Volcker talking about ATMs, paypal mafia, Peter Thiel, pets.com, price discrimination, profit maximization, race to the bottom, recommendation engine, ride hailing / ride sharing, Robert Bork, Sand Hill Road, search engine result page, self-driving car, shareholder value, sharing economy, Sheryl Sandberg, Shoshana Zuboff, side hustle, Sidewalk Labs, Silicon Valley, Silicon Valley startup, smart cities, Snapchat, SoftBank, South China Sea, sovereign wealth fund, Steve Bannon, Steve Jobs, Steven Levy, stock buybacks, subscription business, supply-chain management, surveillance capitalism, TaskRabbit, tech billionaire, tech worker, TED Talk, Telecommunications Act of 1996, The Chicago School, the long tail, the new new thing, Tim Cook: Apple, too big to fail, Travis Kalanick, trickle-down economics, Uber and Lyft, Uber for X, uber lyft, Upton Sinclair, warehouse robotics, WeWork, WikiLeaks, zero-sum game

Google investor Michael Moritz in particular had become worried that the existing revenue model of licensing search technology to other companies simply wasn’t going to work, calling it “a brutal path.”28 Why try to make money deal by deal, rather than by leveraging the power of big data and advertising? Here again, the network effect was key; more data meant better search results, which meant more advertisers, which meant more traffic clicking through to more ads, which meant more data, and so on. He pushed Google to look closely at GoTo’s technology as a model, and they did. “People started reading about how much money was being brought into various other companies by search advertising, and it was kind of decided that we were leaving money on the table,” noted Ray Sidney, Google employee number five.29 He had a point. The network effect was proving to be formidable. Google had powered 3 million searches a day in August 1999—and by the summer of 2000, that number was up to 18 million.

You need start-ups to do this. But they don’t have scale to compete, and they can’t get the funding to grow,” since nobody will invest in competing technology because the network effects harnessed by the largest players seem too powerful to disrupt.37 How these networks and their disruptive effects work and how they are moving throughout not just consumer technology, but every industry, is the topic of the next chapter. CHAPTER 7 The Network Effect Emails are the gift that keeps on giving. Facebook and Google have tried for years to brand themselves as champions of freedom, democratizers of information, and connectors of the world.

This is a problem, because the network effect really kicks in when a company controls 30 or 40 percent of a given market, which means that the major auto companies of the world would need to team up in order to achieve such a share. Certainly, it would be a big shift for a company to think about its most aggressive competitors as collaborators. Yet it may be the only choice they have. Developing an ecosystem and owning the software and data within it will be the key to success not just in the car business, but in many industries. Neoliberalism on Steroids As powerful as the network effect is, to understand the seemingly unstoppable growth of the platform companies like Google or Facebook, you also have to look at how much the politics of Silicon Valley changed between the era of hippie idealism represented by Steve Jobs, and the libertarian epoch of Peter Thiel and his ilk.


pages: 305 words: 75,697

Cogs and Monsters: What Economics Is, and What It Should Be by Diane Coyle

3D printing, additive manufacturing, Airbnb, Al Roth, Alan Greenspan, algorithmic management, Amazon Web Services, autonomous vehicles, banking crisis, barriers to entry, behavioural economics, Big bang: deregulation of the City of London, biodiversity loss, bitcoin, Black Lives Matter, Boston Dynamics, Bretton Woods, Brexit referendum, business cycle, call centre, Carmen Reinhart, central bank independence, choice architecture, Chuck Templeton: OpenTable:, cloud computing, complexity theory, computer age, conceptual framework, congestion charging, constrained optimization, coronavirus, COVID-19, creative destruction, credit crunch, data science, DeepMind, deglobalization, deindustrialization, Diane Coyle, discounted cash flows, disintermediation, Donald Trump, Edward Glaeser, en.wikipedia.org, endogenous growth, endowment effect, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, Evgeny Morozov, experimental subject, financial deregulation, financial innovation, financial intermediation, Flash crash, framing effect, general purpose technology, George Akerlof, global supply chain, Goodhart's law, Google bus, haute cuisine, High speed trading, hockey-stick growth, Ida Tarbell, information asymmetry, intangible asset, Internet of things, invisible hand, Jaron Lanier, Jean Tirole, job automation, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, knowledge worker, Les Trente Glorieuses, libertarian paternalism, linear programming, lockdown, Long Term Capital Management, loss aversion, low earth orbit, lump of labour, machine readable, market bubble, market design, Menlo Park, millennium bug, Modern Monetary Theory, Mont Pelerin Society, multi-sided market, Myron Scholes, Nash equilibrium, Nate Silver, Network effects, Occupy movement, Pareto efficiency, payday loans, payment for order flow, Phillips curve, post-industrial society, price mechanism, Productivity paradox, quantitative easing, randomized controlled trial, rent control, rent-seeking, ride hailing / ride sharing, road to serfdom, Robert Gordon, Robert Shiller, Robert Solow, Robinhood: mobile stock trading app, Ronald Coase, Ronald Reagan, San Francisco homelessness, savings glut, school vouchers, sharing economy, Silicon Valley, software is eating the world, spectrum auction, statistical model, Steven Pinker, tacit knowledge, The Chicago School, The Future of Employment, The Great Moderation, the map is not the territory, The Rise and Fall of American Growth, the scientific method, The Signal and the Noise by Nate Silver, the strength of weak ties, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Uber for X, urban planning, winner-take-all economy, Winter of Discontent, women in the workforce, Y2K

Superstar features can operate in many digital markets, which have close to zero marginal costs of distribution and are often competing for our attention. They are the first driver of the winner-take-all or winner-take-most patterns so prominent in today’s economy. Another characteristic that tends to encourage concentration in digital markets is labelled ‘indirect network effects’. Network effects are familiar: if you want to make a phone call, then the more other people are on the telephone network the better it is for you. ‘Indirect’ refers to the fact that many digital markets are matching suppliers to consumers, so if for example, you want to hire an AirBnB apartment, the more people supplying the AirBnB apartments the better it is for you.

Now, the ways in which our preferences can be influenced have changed again as social media have become absolutely pervasive. Moreover, network effects mean my utility depends on the choices of others; individual decisions cannot be considered independently. The digital economy raises questions about some of the other key assumptions underlying the standard economics benchmark. For instance, many digital goods are non-rival. Once somebody has written a piece of software or created a data set, many people could use it simultaneously, without wearing it out. Network effects as well as high fixed costs contribute to the presence of increasing returns to scale across much of the economy.

This technical term means there must be either constant or diminishing returns to production: use a bit more of the inputs needed and you get the same (constant) or a little bit less (diminishing) additional output as production expands. Unfortunately, increasing returns to scale or network effects mean the real-life programming problem for socialist calculation involves non-convex constraints. As described in Chapter Five, high fixed costs of starting up and network effects in digital business mean there are often these very large increasing returns to scale. As Shalizi observes: ‘[T]here are no general-purpose algorithms for optimizing under non-convex constraints. Non-convex programming isn’t roughly as tractable as linear programming, it’s generally quite intractable.’


pages: 267 words: 72,552

Reinventing Capitalism in the Age of Big Data by Viktor Mayer-Schönberger, Thomas Ramge

accounting loophole / creative accounting, Air France Flight 447, Airbnb, Alvin Roth, Apollo 11, Atul Gawande, augmented reality, banking crisis, basic income, Bayesian statistics, Bear Stearns, behavioural economics, bitcoin, blockchain, book value, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, Cass Sunstein, centralized clearinghouse, Checklist Manifesto, cloud computing, cognitive bias, cognitive load, conceptual framework, creative destruction, Daniel Kahneman / Amos Tversky, data science, Didi Chuxing, disruptive innovation, Donald Trump, double entry bookkeeping, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Evgeny Morozov, flying shuttle, Ford Model T, Ford paid five dollars a day, Frederick Winslow Taylor, fundamental attribution error, George Akerlof, gig economy, Google Glasses, Higgs boson, information asymmetry, interchangeable parts, invention of the telegraph, inventory management, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, job satisfaction, joint-stock company, Joseph Schumpeter, Kickstarter, knowledge worker, labor-force participation, land reform, Large Hadron Collider, lone genius, low cost airline, low interest rates, Marc Andreessen, market bubble, market design, market fundamentalism, means of production, meta-analysis, Moneyball by Michael Lewis explains big data, multi-sided market, natural language processing, Neil Armstrong, Network effects, Nick Bostrom, Norbert Wiener, offshore financial centre, Parag Khanna, payday loans, peer-to-peer lending, Peter Thiel, Ponzi scheme, prediction markets, price anchoring, price mechanism, purchasing power parity, radical decentralization, random walk, recommendation engine, Richard Thaler, ride hailing / ride sharing, Robinhood: mobile stock trading app, Sam Altman, scientific management, Second Machine Age, self-driving car, Silicon Valley, Silicon Valley startup, six sigma, smart grid, smart meter, Snapchat, statistical model, Steve Jobs, subprime mortgage crisis, Suez canal 1869, tacit knowledge, technoutopianism, The Future of Employment, The Market for Lemons, The Nature of the Firm, transaction costs, universal basic income, vertical integration, William Langewiesche, Y Combinator

It was as if the service got better as people were added to it—even though the service itself did not improve, only the opportunities to use it. Today, this network effect (economists sometimes prefer the term “network externality”) is very familiar to us. It’s what allowed the Internet to dominate the flow of digital information and what has driven the success of social media platforms from Facebook to WeChat to Twitter and Instagram. The network effect also enhances the value of market platforms—from eBay to Alibaba, to ride-hailing companies such as Uber and Didi Chuxing, and from Tinder to peer-lending pioneer Funding Circle—although the exact value a new participant adds depends not only on that person but also on the existing players in the market.

The third effect, though related to scale and network effects, occurs whenever computer systems use feedback data to learn. When we react as Google autocorrects a spelling, our response creates feedback information that improves Google’s spell checker. IBM’s Watson gets better at recognizing skin cancer the more skin cancers it “sees.” The most popular products and services improve the most because they are fed the most data. In such a context, innovation is no longer about breakthrough ideas but rather about collecting the greatest amount of feedback data. The scale effect lowers cost, the network effect expands utility, and the feedback effect improves the product.

Moreover, thanks to the plummeting cost of information processing and storage, especially through cloud computing, the initial investment necessary for start-ups is often much lower than it was in the industrial age. In contrast, network effects remain problematic. Even with a lot of money, start-ups often have great difficulty attracting customers. The only path to success seems to be through innovation: to offer something substantially better than what the incumbent is offering. There’s a robust debate among lawyers and economists as to the extent that innovation offsets the network effect. Some point to the persistence of dominating platforms, such as Microsoft Windows for PC operating systems and Facebook for social media.


pages: 363 words: 109,834

The Crux by Richard Rumelt

activist fund / activist shareholder / activist investor, air gap, Airbnb, AltaVista, AOL-Time Warner, Bayesian statistics, behavioural economics, biodiversity loss, Blue Ocean Strategy, Boeing 737 MAX, Boeing 747, Charles Lindbergh, Clayton Christensen, cloud computing, cognitive bias, commoditize, coronavirus, corporate raider, COVID-19, creative destruction, crossover SUV, Crossrail, deep learning, Deng Xiaoping, diversified portfolio, double entry bookkeeping, drop ship, Elon Musk, en.wikipedia.org, financial engineering, Ford Model T, Herman Kahn, income inequality, index card, Internet of things, Jeff Bezos, Just-in-time delivery, Larry Ellison, linear programming, lockdown, low cost airline, low earth orbit, Lyft, Marc Benioff, Mark Zuckerberg, Masayoshi Son, meta-analysis, Myron Scholes, natural language processing, Neil Armstrong, Network effects, packet switching, PageRank, performance metric, precision agriculture, RAND corporation, ride hailing / ride sharing, Salesforce, San Francisco homelessness, search costs, selection bias, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, Snapchat, social distancing, SoftBank, software as a service, statistical model, Steve Ballmer, Steve Jobs, stochastic process, Teledyne, telemarketer, TSMC, uber lyft, undersea cable, union organizing, vertical integration, WeWork

Just as is the case for simple scale economies, beyond a certain point, factors other than accumulated experience become decisive. NETWORK EFFECTSNetwork effects” is the technical name of the huge “edge” giving us giant tech quasi-monopolies like Microsoft, Google, Facebook, Twitter, and, to some extent, Apple. If you can hook into network effects, you can launch a product or business from nowhere to somewhere in record time. Or, like a young couple who announced a party and no one came, you can fail to catch the network effect and be left in the competitive dust. Whereas economies of scale drive down unit costs, network effects drive up the value of the product. For a network effect to happen, the value of a product or service has to rise as more and more people use it.

Bill Gates railed against the piracy of his product but came to realize that its wide use blocked the purchase of better versions of BASIC by competitors (for example, TDL BASIC). Yes, he didn’t get paid for the copies, but it became the de facto standard for the CP/M systems of the era. In the future, network effects for Microsoft’s Windows and Office products would help make Bill Gates one of the world’s richest people. If you can create a new product with potential network effects, it may zoom (like Zoom) to success in a very short time. Still, the strength of the edge can be cut when there is a change in the underlying system. For example, the first spreadsheet, VisiCalc, was totally dominant on early Apple computers. Then, on the PC, Lotus 1-2-3 replaced it and became dominant.

The powerful positions held by Google, Facebook, Twitter, and other Web-based platforms are some of the strongest network effects seen. This leverage derives from being able to provide users with more tailored content and provide advertisers with a targeted audience and to provide immediate feedback about users’ responses. Facebook’s social network now encompasses 2.5 billion active users. Without a significant change in technology or law, it is very hard to disrupt it. PLATFORMS The most recent explosions of new firms have arisen on “platforms”—businesses with two-sided network effects. A Web-based platform works to serve both buyers and sellers, becoming a marketplace.


pages: 251 words: 80,831

Super Founders: What Data Reveals About Billion-Dollar Startups by Ali Tamaseb

"World Economic Forum" Davos, 23andMe, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, Anne Wojcicki, asset light, barriers to entry, Ben Horowitz, Benchmark Capital, bitcoin, business intelligence, buy and hold, Chris Wanstrath, clean water, cloud computing, coronavirus, corporate governance, correlation does not imply causation, COVID-19, cryptocurrency, data science, discounted cash flows, diversified portfolio, Elon Musk, Fairchild Semiconductor, game design, General Magic , gig economy, high net worth, hiring and firing, index fund, Internet Archive, Jeff Bezos, John Zimmer (Lyft cofounder), Kickstarter, late fees, lockdown, Lyft, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Max Levchin, Mitch Kapor, natural language processing, Network effects, nuclear winter, PageRank, PalmPilot, Parker Conrad, Paul Buchheit, Paul Graham, peer-to-peer lending, Peter Thiel, Planet Labs, power law, QR code, Recombinant DNA, remote working, ride hailing / ride sharing, robotic process automation, rolodex, Ruby on Rails, Salesforce, Sam Altman, Sand Hill Road, self-driving car, shareholder value, sharing economy, side hustle, side project, Silicon Valley, Silicon Valley startup, Skype, Snapchat, SoftBank, software as a service, software is eating the world, sovereign wealth fund, Startup school, Steve Jobs, Steve Wozniak, survivorship bias, TaskRabbit, telepresence, the payments system, TikTok, Tony Fadell, Tony Hsieh, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, ubercab, web application, WeWork, work culture , Y Combinator

Engineering alone, however, is often not enough. Many companies coupled engineering defensibility with other types of moats. About 28 percent of the billion-dollar startups had network effects, meaning that the company becomes better and stronger every time a new user is added. The extreme example of network effects is a company like Facebook, which became the dominant player in social networking because everyone you knew had an account. Fewer than 7 percent of companies in the random group had network-effect defensibility, which indicates the great importance of this type of defensibility. Finally, a smaller group of the billion-dollar companies (about 19 percent) had defensibility based on their brand.

It’s important to note that many in the random group simply had not raised enough money to be able to invest in creating a brand. Startups with engineering defensibility and network effects were more likely to become billion-dollar companies. Note that some startups may have had multiple defensibility factors; hence the numbers in both groups add up to more than 100 percent. NETWORK EFFECTS Keith Rabois, a general partner at Founders Fund, has another way to think about the concept of network effects. He relates it to what he calls “accumulating advantages.” When Rabois hears a pitch, he looks for evidence that the startup can build momentum so that the business is likely to be more successful every day.

“Sometimes you can talk yourself out of an investment if you obsess over defensibility,” he told me. “Accumulating advantages is one layer above network effects. Basically, why is it getting easier? Or how do things get better and better over time?” A number of companies have network effects that are very direct: Twitter, Quora, Reddit, and most other social networks are prime examples. When two of your friends join the network, the network immediately becomes better for you, and this flywheel rotates forever. But network effects can be seen in many other types of businesses, and also in marketplaces. These effects are sometimes so strong that a company can remain a market leader for decades, even with minimal innovation: eBay and Craigslist are examples.


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After the Gig: How the Sharing Economy Got Hijacked and How to Win It Back by Juliet Schor, William Attwood-Charles, Mehmet Cansoy

1960s counterculture, Airbnb, algorithmic management, Amazon Mechanical Turk, American Legislative Exchange Council, back-to-the-land, barriers to entry, bike sharing, Californian Ideology, carbon footprint, clean tech, collaborative consumption, collaborative economy, Community Supported Agriculture, COVID-19, creative destruction, crowdsourcing, deskilling, driverless car, en.wikipedia.org, financial independence, future of work, gentrification, George Gilder, gig economy, global supply chain, global village, haute cuisine, income inequality, independent contractor, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Jean Tirole, Jeff Bezos, jitney, job satisfaction, John Perry Barlow, John Zimmer (Lyft cofounder), Kevin Kelly, Lyft, Marshall McLuhan, Mason jar, mass incarceration, Mitch Kapor, Network effects, new economy, New Urbanism, Occupy movement, peer-to-peer rental, Post-Keynesian economics, precariat, profit maximization, profit motive, race to the bottom, regulatory arbitrage, rent gap, rent-seeking, ride hailing / ride sharing, Ruby on Rails, selection bias, sharing economy, Silicon Valley, Silicon Valley ideology, Skype, smart cities, social distancing, Stewart Brand, TaskRabbit, technological determinism, technoutopianism, Telecommunications Act of 1996, The Nature of the Firm, the payments system, Tragedy of the Commons, transaction costs, transportation-network company, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, urban planning, wage slave, walking around money, Whole Earth Catalog, women in the workforce, working poor, Yochai Benkler, Zipcar

As Uber gets more drivers, it attracts consumers because service is faster, which in turn entices more drivers to join. This “network effect” propels growth. I’ve used the example of Uber because it has advertised its ambitions to be another Amazon, a platform where network effects are substantial.49 But Uber and most other sharing services are face-to-face and local, which means that network effects fall off fairly quickly.50 If there are so many drivers that one is always waiting outside my door, rides become exorbitantly expensive because idling time skyrockets. Skepticism about the strength of network effects leads political economists to focus on another explanation for growth, which is the power platforms have over workers and governments.

Isaac (2019). 50. What is the optimal size for a sharing platform? For platforms with geographic reach, such as virtual labor services, network effects are stronger, and size increases choice. That has to be balanced against monopoly power, which reduces competition and welfare. By contrast, for local services, network effects dissipate more quickly. (See also Sundararajan [2016, 120] for this point.) Studying TaskRabbit, Cullen and Farronato (2018) find that network effects drop off quickly and that doubling the number of transactions results in no efficiency gains. This is likely also true in transportation, which helps to explain why there is more robust competition in the food delivery and ride-hail sectors than lodging.

This is likely also true in transportation, which helps to explain why there is more robust competition in the food delivery and ride-hail sectors than lodging. It’s also one reason we should be skeptical of Uber’s claim that its model is Amazon—a platform where network effects are significant. Where network effects fall off quickly, smaller, local platforms are likely preferable because they avoid the problems associated with bigness, such as excessive market and political power. Furthermore, the argument that consumers need a single platform spanning geographic areas is not correct. All that’s needed is network interoperability, as in highway transponders.


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Nothing But Net by Mark Mahaney

Airbnb, AltaVista, Amazon Web Services, AOL-Time Warner, augmented reality, autonomous vehicles, Big Tech, Black Swan, Burning Man, buy and hold, Cambridge Analytica, Chuck Templeton: OpenTable:, cloud computing, COVID-19, cryptocurrency, discounted cash flows, disintermediation, diversification, don't be evil, Donald Trump, Elon Musk, financial engineering, gamification, gig economy, global pandemic, Google Glasses, Jeff Bezos, John Zimmer (Lyft cofounder), knowledge economy, lockdown, low interest rates, Lyft, Marc Andreessen, Mark Zuckerberg, Mary Meeker, medical malpractice, meme stock, Network effects, PageRank, pets.com, ride hailing / ride sharing, Salesforce, Saturday Night Live, shareholder value, short squeeze, Silicon Valley, Skype, Snapchat, social graph, Steve Jobs, stocks for the long run, subscription business, super pumped, the rule of 72, TikTok, Travis Kalanick, Uber and Lyft, uber lyft

Fourth, scale can help a company tap into network effects. A network effect is the phenomenon by which the value or utility a user derives from a good or service depends on the number of users of compatible products. Kind of like “the more the merrier.” This concept is widely used in tech investment pitches. But frankly, I think it’s one of the least powerful benefits of scale. I learned this the hard way as a Bull who way overstayed my welcome on EBAY shares, even when the company slipped below premium revenue growth levels beginning in 2006. I assumed that its network effects advantages would carry it through to years and years of premium growth.

After all, more buyers on eBay created a bigger market for sellers, which attracted more sellers, which created a bigger market for buyers, which attracted more buyers, and so on. But a superior value proposition and better execution by Amazon blew up those network effects advantages. Facebook as a social network should be a superb beneficiary of network effects, but somehow Instagram rose up to compete with it (leading Facebook to acquire it), and so did Snap, and so did TikTok, and so will another company. Still, although their impact has often been exaggerated, there definitely is something to network effects, with a company like Uber being a good example. In any one geographic area, the more drivers there are for Uber, the greater the value of the service is for riders (e.g., shorter wait times), which begets more riders, which makes the service compelling for more drivers (e.g., shorter wait times).

Large TAMs can help drive growth that can lead to scale, which has intrinsic benefits. There are four specific benefits: experience curves, unit economics advantages, competitive moats, and network effects. With scale come the learning opportunities to operate better/smarter, with scale come the opportunities to operate more cost effectively, with scale comes the opportunity to increase the entry costs for new competition, and with scale comes the opportunity to feed off network effects. These are all different, but they are all benefits from scale. Scale doesn’t just matter. Scale wins. Large TAMs increase the opportunities for companies to tap into these scale benefits.


Super Thinking: The Big Book of Mental Models by Gabriel Weinberg, Lauren McCann

Abraham Maslow, Abraham Wald, affirmative action, Affordable Care Act / Obamacare, Airbnb, Albert Einstein, anti-pattern, Anton Chekhov, Apollo 13, Apple Newton, autonomous vehicles, bank run, barriers to entry, Bayesian statistics, Bernie Madoff, Bernie Sanders, Black Swan, Broken windows theory, business process, butterfly effect, Cal Newport, Clayton Christensen, cognitive dissonance, commoditize, correlation does not imply causation, crowdsourcing, Daniel Kahneman / Amos Tversky, dark pattern, David Attenborough, delayed gratification, deliberate practice, discounted cash flows, disruptive innovation, Donald Trump, Douglas Hofstadter, Dunning–Kruger effect, Edward Lorenz: Chaos theory, Edward Snowden, effective altruism, Elon Musk, en.wikipedia.org, experimental subject, fake news, fear of failure, feminist movement, Filter Bubble, framing effect, friendly fire, fundamental attribution error, Goodhart's law, Gödel, Escher, Bach, heat death of the universe, hindsight bias, housing crisis, if you see hoof prints, think horses—not zebras, Ignaz Semmelweis: hand washing, illegal immigration, imposter syndrome, incognito mode, income inequality, information asymmetry, Isaac Newton, Jeff Bezos, John Nash: game theory, karōshi / gwarosa / guolaosi, lateral thinking, loss aversion, Louis Pasteur, LuLaRoe, Lyft, mail merge, Mark Zuckerberg, meta-analysis, Metcalfe’s law, Milgram experiment, minimum viable product, moral hazard, mutually assured destruction, Nash equilibrium, Network effects, nocebo, nuclear winter, offshore financial centre, p-value, Paradox of Choice, Parkinson's law, Paul Graham, peak oil, Peter Thiel, phenotype, Pierre-Simon Laplace, placebo effect, Potemkin village, power law, precautionary principle, prediction markets, premature optimization, price anchoring, principal–agent problem, publication bias, recommendation engine, remote working, replication crisis, Richard Feynman, Richard Feynman: Challenger O-ring, Richard Thaler, ride hailing / ride sharing, Robert Metcalfe, Ronald Coase, Ronald Reagan, Salesforce, school choice, Schrödinger's Cat, selection bias, Shai Danziger, side project, Silicon Valley, Silicon Valley startup, speech recognition, statistical model, Steve Jobs, Steve Wozniak, Steven Pinker, Streisand effect, sunk-cost fallacy, survivorship bias, systems thinking, The future is already here, The last Blockbuster video rental store is in Bend, Oregon, The Present Situation in Quantum Mechanics, the scientific method, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Tragedy of the Commons, transaction costs, uber lyft, ultimatum game, uranium enrichment, urban planning, vertical integration, Vilfredo Pareto, warehouse robotics, WarGames: Global Thermonuclear War, When a measure becomes a target, wikimedia commons

And knowing that everyone is connected is extremely valuable, which explains why Facebook has such a strong network effect. Critical mass occurs when there are enough nodes present to make a network useful. Amazingly, the fax machine was invented in the 1840s, but people didn’t regularly use it until the 1970s, when there were enough fax machines to reach critical mass. The modern equivalent is internet messaging services: they need to reach critical mass within a community to be useful. Once they pass this tipping point, they can rapidly make their way into the mainstream. Network effects have value beyond communication, however. Many modern systems gain network effects by simply being able to process more data.

Think of how more goods are available on Etsy and eBay when more people are participating on those sites. Network effects apply to person-to-person connections within a community as well. Being part of the right alumni network can help you find the right job or get you answers quickly to esoteric questions. Any time you have nodes in a system participating in some kind of exchange, such as for information or currency, you have the potential for network effects. Once an idea or technology reaches critical mass, whether through network effects or otherwise, it has gained a lot of inertia, and often has a lot of momentum as well.

The lesson here is, when you know that the concept of critical mass applies to your endeavor, you want to pay special attention to it. Just as we suggested questions to ask about tipping points, there are similar questions you can ask about critical mass and network effects: What is the critical mass point for this idea or technology? What needs to happen for it to reach critical mass? Are there network effects or other catalysts that can make reaching critical mass happen sooner? Can I reorganize the system so that critical mass can be reached in a sub-community sooner? It’s important to note that these critical mass models apply in both positive and negative scenarios.


pages: 178 words: 52,637

Quality Investing: Owning the Best Companies for the Long Term by Torkell T. Eide, Lawrence A. Cunningham, Patrick Hargreaves

air freight, Albert Einstein, asset light, backtesting, barriers to entry, buy and hold, carbon tax, cashless society, cloud computing, commoditize, Credit Default Swap, discounted cash flows, discovery of penicillin, endowment effect, global pandemic, haute couture, hindsight bias, legacy carrier, low cost airline, mass affluent, Network effects, oil shale / tar sands, pattern recognition, price elasticity of demand, proprietary trading, shareholder value, smart grid, sovereign wealth fund, supply-chain management, vertical integration

Leading in crop protection, with 20% of the global market and with a strong position in seed technology, Syngenta’s unique portfolio of assets and strong culture of innovation position it well to maintain its attractive and stable long-term returns on capital. Network effects Network effects arise when a system’s value increases as more people use it. In most cases, network effects represent a tangible benefit to customers, as with social media sites. An auction site is a classic example of a business benefiting from network effects. More sellers offering products attract more buyers, which entices more sellers and so on in a compounding circle. Other examples are classified ad forums and stock exchanges.

Internet search is another, though with a twist: the generation of data that enables the refinement of search algorithms keeps drawing in more users who in turn leave more data for endless harvesting and refinement. Ironically, when network effects are too strong, they may backfire. An extremely efficient network can produce monopoly power and government intervention risk rises. As much as network effects are to a consumer’s benefit, a monopoly isn’t. Other stakeholders and users can also turn against a company that is perceived to be too dominant. In the case of online housing portals in the UK, an alliance of real estate agents has coordinated to form a rival, onthemarket.com, to compete against dominant players Rightmove and Zoopla; although the impact of this disruptive new entrant is currently unclear.

In the case of online housing portals in the UK, an alliance of real estate agents has coordinated to form a rival, onthemarket.com, to compete against dominant players Rightmove and Zoopla; although the impact of this disruptive new entrant is currently unclear. Another area of concern is the high pace of innovation in many areas where network effects are particularly prevalent. While it is easy to spot the benefit of network effects, networks face potential disruption that can be sudden and devastating. In social media, Facebook unilaterally killed several network businesses, including MySpace and MSN Chat. Distribution Distribution as a competitive advantage means that a company’s route to consumers is more effective than its rivals’ for an otherwise equivalent product.


pages: 268 words: 76,702

The System: Who Owns the Internet, and How It Owns Us by James Ball

"World Economic Forum" Davos, behavioural economics, Big Tech, Bill Duvall, bitcoin, blockchain, Cambridge Analytica, Chelsea Manning, cryptocurrency, digital divide, don't be evil, Donald Trump, Douglas Engelbart, Edward Snowden, en.wikipedia.org, fake news, financial engineering, Firefox, Frank Gehry, Internet of things, invention of movable type, Jeff Bezos, jimmy wales, John Gilmore, John Perry Barlow, Julian Assange, Kickstarter, Laura Poitras, Leonard Kleinrock, lock screen, Marc Andreessen, Mark Zuckerberg, Menlo Park, military-industrial complex, Minecraft, Mother of all demos, move fast and break things, Network effects, Oculus Rift, packet switching, patent troll, Peter Thiel, pre–internet, ransomware, RFC: Request For Comment, risk tolerance, Ronald Reagan, Rubik’s Cube, self-driving car, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, Skype, Snapchat, Steve Crocker, Stuxnet, surveillance capitalism, systems thinking, The Chicago School, the long tail, undersea cable, uranium enrichment, WikiLeaks, yield management, zero day

– that could easily be much worse for users. In practice, though, network effects go much further than just social networks, and gather power for whoever controls the networks. A pre-internet idea of a network effect can be found in, for example, railways: add an extra stop to an existing railway line, and it helps existing customers, who now have an additional place they can visit, as well as the ones living by the new stop. ‘A network effect is, as you add nodes, which could be railway stops or customers, you create more value for everybody in the system,’ Wenger says. ‘I believe that network effects are one of the defining aspects of the digital age.’

Wenger is essentially saying that in an era of AI, algorithms and machine learning, joined-up data points across a lot of areas have strong network effects, generating much more information and value than used to be the case. This means network effects go far, far beyond social media. ‘The reason I’m saying all of this is because I think when people think of network effects, they often think about it too literally, like in the Twitter-type way. Like I connect with you, the Facebook-type way. Even the internet, or railroad network. But there is a much more profound way in which network effects are deeply baked into the fabric of any production function that’s based on data.’

In other words, he hopes the potential for blockchains to allow databases to be widely distributed, impossible to alter and publicly verifiable, could lead to a change in the power structure of the internet, which hands control to the companies sitting on the most data. This matters because control over databases is even more important than it first appears, he explains, partly because of one of the most discussed phenomena of the online world: network effects. These are most typically discussed, obviously enough, in the context of social networks, as it’s here that their benefits are most immediately apparent. Let’s imagine two social networks which have both been operating in one country for around a year or so. One has about 100,000 users, while the other has close to a million.


pages: 234 words: 67,589

Internet for the People: The Fight for Our Digital Future by Ben Tarnoff

4chan, A Declaration of the Independence of Cyberspace, accounting loophole / creative accounting, Alan Greenspan, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, algorithmic management, AltaVista, Amazon Web Services, barriers to entry, Bernie Sanders, Big Tech, Black Lives Matter, blue-collar work, business logic, call centre, Charles Babbage, cloud computing, computer vision, coronavirus, COVID-19, decentralized internet, deep learning, defund the police, deindustrialization, desegregation, digital divide, disinformation, Edward Snowden, electricity market, fake news, Filter Bubble, financial intermediation, future of work, gamification, General Magic , gig economy, God and Mammon, green new deal, independent contractor, information asymmetry, Internet of things, Jeff Bezos, Jessica Bruder, John Markoff, John Perry Barlow, Kevin Roose, Kickstarter, Leo Hollis, lockdown, lone genius, low interest rates, Lyft, Mark Zuckerberg, means of production, Menlo Park, natural language processing, Network effects, Nicholas Carr, packet switching, PageRank, pattern recognition, pets.com, profit maximization, profit motive, QAnon, recommendation engine, rent-seeking, ride hailing / ride sharing, Sheryl Sandberg, Shoshana Zuboff, side project, Silicon Valley, single-payer health, smart grid, social distancing, Steven Levy, stock buybacks, supply-chain management, surveillance capitalism, techlash, Telecommunications Act of 1996, TikTok, transportation-network company, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, undersea cable, UUNET, vertical integration, Victor Gruen, web application, working poor, Yochai Benkler

This was the first reason for the site’s success: network effects. Network effects occur when a good or service becomes more valuable the more people use it. More people using AuctionWeb meant more items listed for sale, more buyers bidding in auctions, more feedback posted to the forum—in short, a more valuable site. On the web, accommodating this growth was fairly easy: increasing one’s hosting capacity was a simpler and cheaper proposition than the brick-and-mortar equivalent. And doing so was well worth it because, at a certain size, network effects locked in advantages that were hard for a competitor to overcome.

In an era when many dot-coms were selling goods directly—Pets.com paid a fortune on postage to ship pet food to people’s door—Omidyar’s company connected buyers and sellers instead. This enabled it to profit from their transactions while remaining extremely lean. It had no inventory, no warehouses—just a website. But both the benefits of being a middleman and those associated with network effects required a third factor as their enabling condition: a certain kind of sovereignty. The site didn’t just facilitate interactions; it shaped them. It wrote the rules for how people could interact and designed the spaces where they did so. It was not only an intermediary but a legislator and an architect.

“Despite its initial reluctance, the company stepped increasingly into a governance role,” writes Kashkooli. Preserving and increasing profitability required managing people’s behavior, whether through the code that steered them through the site or the user agreements that governed their activities on it. These three elements—sovereign, middleman, and maker of network effects—formed a powerful synthesis. Through them, the fusion of the market and the community would be achieved, and a surge of revenue unlocked. At a time when most dot-coms failed to turn a profit, eBay did so easily. When the crash of 2000–2001 hit, it survived with few bruises. And in the aftermath of the crash, as an embattled industry, under pressure from investors, tried to reinvent itself, the ideas that it came up with had much in common with those that had formed the basis for eBay’s early success.


pages: 193 words: 47,808

The Flat White Economy by Douglas McWilliams

access to a mobile phone, banking crisis, Big bang: deregulation of the City of London, bonus culture, Boris Johnson, Chuck Templeton: OpenTable:, clean tech, cloud computing, computer age, correlation coefficient, Crossrail, Edward Glaeser, en.wikipedia.org, Erik Brynjolfsson, eurozone crisis, George Gilder, hiring and firing, income inequality, informal economy, Kickstarter, knowledge economy, loadsamoney, low skilled workers, mass immigration, Metcalfe’s law, military-industrial complex, Network effects, new economy, offshore financial centre, Pareto efficiency, Peter Thiel, Productivity paradox, Robert Metcalfe, Robert Solow, Shenzhen special economic zone , Silicon Valley, smart cities, special economic zone, Steve Jobs, vertical integration, working-age population, zero-sum game

The other economic factor that affected the timing with which the digital economy bore fruit is its sensitivity to network effects. Network effects are a phenomenon common to communications systems. Essentially, the value of a network to an individual participant in that network increases with the number of participants in it. So a single telephone is of no use on its own – it only gains some value when there is a second phone. And as the value of each phone increases, the more phones tend to become available to contact on the network, until there are so many other connections that the value of an additional connection is negligible. Network effects were first developed as a concept by the President of Bell Telephones in making his case for a monopoly in 1908, but the ideas were developed and refined in the 1980s and 1990s.

This idea was vigorously promoted by the economic guru George Gilder2 during the 1990s. Where there are network effects, investment typically doesn’t take place until there is a critical mass of potential users. Network effects tend to cause investment to be held back in a similar fashion to supereconomies of scale, although in the case of the latter, the tendency to delay investment is moderated by the possibility of gaining first-mover advantage. It is the combination of supereconomies of scale and network effects that meant that the economic exploitation of the digital technologies took place on a different, tardier timetable than that which had been predicted by those who only understood the technological issues.3 Online retail and marketing Internet usage in most Western economies really took off during the first decade of the 21st century.

Over 300 languages are spoken in London schools”. Not only did London have a long-established skill base in advertising and marketing, but it had a massive supply of diverse and creative young people, many of them looking for work. Once the impediments of those supereconomies of scale and the network effects described earlier had been overcome, and once online retail and marketing began to take off, London was in prime position towards the end of the 21st century’s first decade. It all percolated together and hey presto, we had the Flat White Economy. CHAPTER 3 What is the Flat White Economy and where is it based?


pages: 444 words: 130,646

Twitter and Tear Gas: The Power and Fragility of Networked Protest by Zeynep Tufekci

"Hurricane Katrina" Superdome, 4chan, active measures, Affordable Care Act / Obamacare, algorithmic bias, AltaVista, Alvin Toffler, Andy Carvin, anti-communist, Bernie Sanders, Black Lives Matter, bread and circuses, British Empire, citizen journalism, collective bargaining, conceptual framework, context collapse, crowdsourcing, digital divide, disinformation, Donald Trump, Edward Snowden, end-to-end encryption, Evgeny Morozov, fake news, feminist movement, Ferguson, Missouri, Filter Bubble, Future Shock, gentrification, Howard Rheingold, income inequality, index card, interchangeable parts, invention of movable type, invention of writing, John Gilmore, John Perry Barlow, loose coupling, Mahatma Gandhi, Mark Zuckerberg, Menlo Park, Mikhail Gorbachev, moral hazard, moral panic, Naomi Klein, Network effects, new economy, obamacare, Occupy movement, offshore financial centre, pre–internet, race to the bottom, RAND corporation, real-name policy, ride hailing / ride sharing, Rosa Parks, sharing economy, Silicon Valley, Skype, Snapchat, Streisand effect, the strength of weak ties, The Structural Transformation of the Public Sphere, The Theory of the Leisure Class by Thorstein Veblen, Thorstein Veblen, Twitter Arab Spring, We are the 99%, WikiLeaks, Yochai Benkler

Google’s new method of ranking web pages was clearly superior to the earlier competitors. Network effects may not mean that the very first companies to enter a new and rapidly growing market and achieve sizable growth will necessarily be the ones to emerge as dominant once the market has matured and growth has slowed. But at that point, whichever companies are dominant will be very difficult for competitors to unseat. Network effects are certainly apparent in the dynamics we see currently in the use of, for example, Facebook, Google, and eBay. Beyond network effects, the costs of entry into these markets have also become high because of the data these companies have amassed.

This is one reason some nations, like China, have never allowed Facebook to become established, and likely will not do so unless Facebook succumbs to draconian measures of control, censorship, and turning over of user information to the government.31 Additionally, these internet platforms harness the power of network effects—the more people who use them, the more useful they are to more people. With so many people already on Facebook, there are huge incentives for new people to get on Facebook even if they dislike some of its policies or features. Network effects also create a twist for activists who find themselves compelled to use whatever the dominant platform may be, even if they are uncomfortable with it. A perfect social media platform without users is worthless for activism.

Think of a telephone that could talk only to telephones made by the same company: what good is a wonderful telephone if you cannot call anyone with it? You would want to get the one most of your friends used even if you liked another company’s model better. When network effects operate, potential alternatives are less useful simply because fewer people use them. Thus a platform that achieves early success can become dominant as more and more people flock to it. Network effects limit competition and thus the ability of the market to impose constraints on a dominant platform. This advantage is operative for Facebook (where most people know that their friends and family will have accounts) and Google (users provide it with data and resources to make its search better, and advertisers pay to advertise on Google knowing that it is where people will search, hence Google has even more money available to improve its products).


The Internet Trap: How the Digital Economy Builds Monopolies and Undermines Democracy by Matthew Hindman

A Declaration of the Independence of Cyberspace, accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, AltaVista, Amazon Web Services, barriers to entry, Benjamin Mako Hill, bounce rate, business logic, Cambridge Analytica, cloud computing, computer vision, creative destruction, crowdsourcing, David Ricardo: comparative advantage, death of newspapers, deep learning, DeepMind, digital divide, discovery of DNA, disinformation, Donald Trump, fake news, fault tolerance, Filter Bubble, Firefox, future of journalism, Ida Tarbell, incognito mode, informal economy, information retrieval, invention of the telescope, Jeff Bezos, John Perry Barlow, John von Neumann, Joseph Schumpeter, lake wobegon effect, large denomination, longitudinal study, loose coupling, machine translation, Marc Andreessen, Mark Zuckerberg, Metcalfe’s law, natural language processing, Netflix Prize, Network effects, New Economic Geography, New Journalism, pattern recognition, peer-to-peer, Pepsi Challenge, performance metric, power law, price discrimination, recommendation engine, Robert Metcalfe, search costs, selection bias, Silicon Valley, Skype, sparse data, speech recognition, Stewart Brand, surveillance capitalism, technoutopianism, Ted Nelson, The Chicago School, the long tail, The Soul of a New Machine, Thomas Malthus, web application, Whole Earth Catalog, Yochai Benkler

There is increasing acknowledgment that internet services can follow the same pattern as the telephone system, especially for sites that depend on communication between users.4 Facebook and Twitter, for instance, are useful only if other people use them. Network effects make it difficult to compete with established players. Many other microblogging sites have tried to compete with Twitter, but none has been able to reach critical mass.5 Acknowledgment of network effects is a welcome change from the rigid (though still common) belief that the internet is a leveling force. Unfortunately, talk about network effects has come with two common misunderstandings. First, “network effects” is often, and inaccurately, used as a synonym for all economies of scale.6 Not every size advantage is a network effect. A 18 • Chapter 2 social network with no users is useless, while a search engine or an online app like Google Docs might still be valuable even before becoming popular.

Its value depends on the connection with the other telephone—and increases with the number of connections.3 In a wave of advertising at&t declared its commitment to “one system, one policy, universal service.” The campaign was a success, and it turned at&t from one of America’s most reviled companies into a well-liked, government-regulated monopolist. The telephone system thus has become the canonical example of network effects or (more formally) positive network externalities. Such effects arise when the value of a good or service depends strongly on whether others use it too. Network effects are also referred to as “demand-side economies of scale.” Even if per-customer costs stay steady, the product becomes more valuable as more people join the network. There is increasing acknowledgment that internet services can follow the same pattern as the telephone system, especially for sites that depend on communication between users.4 Facebook and Twitter, for instance, are useful only if other people use them.

In celebrating the profusion of citizen blogs, we must also understand why the vast majority are abandoned and unread. The centripetal forces deserve just as much attention as the centrifugal ones do. So the body of this book begins by documenting the other half of the story. Chapter 2 details how large internet firms can take advantage of a host of economies of scale, even beyond simple network effects. As a group, large sites load faster. They are prettier and more usable. They have more content updated more frequently. They rank higher in search results. They have established brands, and visitors are more practiced in navigating them. They are more efficient platforms for advertising. There 8 • Chapter 1 is substantial evidence that each of these factors, individually, serves to concentrate traffic.


pages: 218 words: 44,364

The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations by Ori Brafman, Rod A. Beckstrom

Atahualpa, barriers to entry, Burning Man, creative destruction, disintermediation, experimental economics, Firefox, Francisco Pizarro, jimmy wales, Kibera, Lao Tzu, Network effects, peer-to-peer, pez dispenser, shareholder value, Silicon Valley, Skype, The Wisdom of Crowds, union organizing

How hard is it to start an online classified ad site? Not very. Size matters. The small rule. RULE 2: The Network Effect The network effect is the increase in the overall value of the network with the addition of each new member. Each additional telephone or fax machine makes all the other phones or fax machines in the world more worthwhile. Historically, creating the network effect could be tough. The fax network had to be built one expensive fax machine at a time. Starfish organizations, however, are particularly well positioned to take advantage of the network effect. For some of the most successful starfish organizations, like Skype and craigslist, it costs absolutely nothing to add a new customer.

For some of the most successful starfish organizations, like Skype and craigslist, it costs absolutely nothing to add a new customer. While it used to cost millions or billions to create a significant network effect, for many starfish organizations the cost has gone down to zero. Often without spending a dime, starfish organizations create communities where each new member adds value to the larger THE NEW WORLD network. With every new eMule user, there's more music to be shared. Every new site on the World Wide Web makes the whole network richer with information. Companies like eBay have used the network effect not only to survive but to thrive: buyers and sellers have stayed loyal to the site because of the value of network.

Likewise, sellers with established positive ratings on eBay had a huge incentive to stay on the site rather than go elsewhere and start anew. For one thing, they were able to fetch premium prices based on their established reputations. They also had an incentive to stay where the buyers were. In addition, eBay benefited from what's called the "network effect." Say there's only one telephone in the world. It's not going to be worth much, right? After all, who are you going to call? But when there are two telephones, their value goes up dramatically. Each additional telephone adds value to the overall phone system. Likewise, eBay's network becomes more valuable with each new user rating.


pages: 207 words: 59,298

The Gig Economy: A Critical Introduction by Jamie Woodcock, Mark Graham

Airbnb, algorithmic management, Amazon Mechanical Turk, autonomous vehicles, barriers to entry, British Empire, business process, business process outsourcing, Californian Ideology, call centre, collective bargaining, commoditize, corporate social responsibility, crowdsourcing, data science, David Graeber, deindustrialization, Didi Chuxing, digital divide, disintermediation, emotional labour, en.wikipedia.org, full employment, future of work, gamification, gender pay gap, gig economy, global value chain, Greyball, independent contractor, informal economy, information asymmetry, inventory management, Jaron Lanier, Jeff Bezos, job automation, knowledge economy, low interest rates, Lyft, mass immigration, means of production, Network effects, new economy, Panopticon Jeremy Bentham, planetary scale, precariat, rent-seeking, RFID, ride hailing / ride sharing, Ronald Reagan, scientific management, self-driving car, sentiment analysis, sharing economy, Silicon Valley, Silicon Valley ideology, TaskRabbit, The Future of Employment, transaction costs, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, union organizing, women in the workforce, working poor, young professional

The organization of the platform means that they are particularly reliant on network effects. The more workers and users on the platform, the greater the benefits of participating (Srnicek, 2017: 45). Conversely, if there is significant competition between platforms in any particular sector, those network effects are diminished. For instance, multiple taxi apps in a city will fragment both the driver and customer base, increasing waiting times and reducing the ease of access. Many platforms have been able to achieve these network effects relatively easily because of their relatively rapid expansion. In the case of Uber, there is no need for the platform itself to buy new cars.

It provides ‘tools to bring together the supply of, and demand for, labour’ (Graham and Woodcock, 2018: 242), including the app, digital infrastructure and algorithms for managing the work. As Nick Srnicek (2017: 48) has argued: Platforms, in sum, are a new type of firm; they are characterized by providing the infrastructure to intermediate between different user groups, by displaying monopoly tendencies driven by network effects, by employing cross-subsidization to draw in different user groups, and by having designed a core architecture that governs the interaction possibilities. Platforms have become central to our social activities. They bring together users, capture and monetize data, as well as needing to scale to be effective.

In this context, the platform is a digital environment upon which other software can be run. In organizational terms, Nick Srnicek (2017: 48) argues that: Platforms, in sum, are a new type of firm; they are characterized by providing the infrastructure to intermediate between different user groups, by displaying monopoly tendencies driven by network effects, by employing cross-subsidization to draw in different user groups, and by having a designed core architecture that governs the interaction possibilities. For the gig economy, as we have written elsewhere, ‘the common feature of all digital labour platforms is that they offer tools to bring together the supply of, and demand for, labour’ (Graham and Woodcock, 2018: 242).


pages: 185 words: 43,609

Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel, Blake Masters

Airbnb, Alan Greenspan, Albert Einstein, Andrew Wiles, Andy Kessler, Berlin Wall, clean tech, cloud computing, crony capitalism, discounted cash flows, diversified portfolio, do well by doing good, don't be evil, Elon Musk, eurozone crisis, Fairchild Semiconductor, heat death of the universe, income inequality, Jeff Bezos, Larry Ellison, Lean Startup, life extension, lone genius, Long Term Capital Management, Lyft, Marc Andreessen, Mark Zuckerberg, Max Levchin, minimum viable product, Nate Silver, Network effects, new economy, Nick Bostrom, PalmPilot, paypal mafia, Peter Thiel, pets.com, power law, profit motive, Ralph Waldo Emerson, Ray Kurzweil, self-driving car, shareholder value, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Singularitarianism, software is eating the world, Solyndra, Steve Jobs, strong AI, Suez canal 1869, tech worker, Ted Kaczynski, Tesla Model S, uber lyft, Vilfredo Pareto, working poor

Design improvements are hard to measure, but it seems clear that Apple improved on anything that had come before by at least an order of magnitude: tablets went from unusable to useful. 2. Network Effects Network effects make a product more useful as more people use it. For example, if all your friends are on Facebook, it makes sense for you to join Facebook, too. Unilaterally choosing a different social network would only make you an eccentric. Network effects can be powerful, but you’ll never reap them unless your product is valuable to its very first users when the network is necessarily small. For example, in 1960 a quixotic company called Xanadu set out to build a two-way communication network between all computers—a sort of early, synchronous version of the World Wide Web.

Numbers alone won’t tell you the answer; instead you must think critically about the qualitative characteristics of your business. CHARACTERISTICS OF MONOPOLY What does a company with large cash flows far into the future look like? Every monopoly is unique, but they usually share some combination of the following characteristics: proprietary technology, network effects, economies of scale, and branding. This isn’t a list of boxes to check as you build your business—there’s no shortcut to monopoly. However, analyzing your business according to these characteristics can help you think about how to make it durable. 1. Proprietary Technology Proprietary technology is the most substantive advantage a company can have because it makes your product difficult or impossible to replicate.

After more than three decades of futile effort, Xanadu folded just as the web was becoming commonplace. Their technology probably would have worked at scale, but it could have worked only at scale: it required every computer to join the network at the same time, and that was never going to happen. Paradoxically, then, network effects businesses must start with especially small markets. Facebook started with just Harvard students—Mark Zuckerberg’s first product was designed to get all his classmates signed up, not to attract all people of Earth. This is why successful network businesses rarely get started by MBA types: the initial markets are so small that they often don’t even appear to be business opportunities at all. 3.


pages: 222 words: 70,132

Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy by Jonathan Taplin

"Friedman doctrine" OR "shareholder theory", "there is no alternative" (TINA), 1960s counterculture, affirmative action, Affordable Care Act / Obamacare, Airbnb, AlphaGo, Amazon Mechanical Turk, American Legislative Exchange Council, AOL-Time Warner, Apple's 1984 Super Bowl advert, back-to-the-land, barriers to entry, basic income, battle of ideas, big data - Walmart - Pop Tarts, Big Tech, bitcoin, Brewster Kahle, Buckminster Fuller, Burning Man, Clayton Christensen, Cody Wilson, commoditize, content marketing, creative destruction, crony capitalism, crowdsourcing, data is the new oil, data science, David Brooks, David Graeber, decentralized internet, don't be evil, Donald Trump, Douglas Engelbart, Douglas Engelbart, Dynabook, Edward Snowden, Elon Musk, equal pay for equal work, Erik Brynjolfsson, Fairchild Semiconductor, fake news, future of journalism, future of work, George Akerlof, George Gilder, Golden age of television, Google bus, Hacker Ethic, Herbert Marcuse, Howard Rheingold, income inequality, informal economy, information asymmetry, information retrieval, Internet Archive, Internet of things, invisible hand, Jacob Silverman, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Maynard Keynes: technological unemployment, John Perry Barlow, John von Neumann, Joseph Schumpeter, Kevin Kelly, Kickstarter, labor-force participation, Larry Ellison, life extension, Marc Andreessen, Mark Zuckerberg, Max Levchin, Menlo Park, Metcalfe’s law, military-industrial complex, Mother of all demos, move fast and break things, natural language processing, Network effects, new economy, Norbert Wiener, offshore financial centre, packet switching, PalmPilot, Paul Graham, paypal mafia, Peter Thiel, plutocrats, pre–internet, Ray Kurzweil, reality distortion field, recommendation engine, rent-seeking, revision control, Robert Bork, Robert Gordon, Robert Metcalfe, Ronald Reagan, Ross Ulbricht, Sam Altman, Sand Hill Road, secular stagnation, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Skinner box, smart grid, Snapchat, Social Justice Warrior, software is eating the world, Steve Bannon, Steve Jobs, Stewart Brand, tech billionaire, techno-determinism, technoutopianism, TED Talk, The Chicago School, the long tail, The Market for Lemons, The Rise and Fall of American Growth, Tim Cook: Apple, trade route, Tragedy of the Commons, transfer pricing, Travis Kalanick, trickle-down economics, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, unpaid internship, vertical integration, We are as Gods, We wanted flying cars, instead we got 140 characters, web application, Whole Earth Catalog, winner-take-all economy, women in the workforce, Y Combinator, you are the product

Thiel says, “It’s always a red flag when entrepreneurs talk about getting 1% of a $100 billion market.” He wanted to invest in monopolies, not competitive businesses. 2. Build businesses that have “network effects.” Thiel’s first two major investments, PayPal and Facebook, both benefit from having millions of users who want to connect with each other. When PayPal was just a payment system for Palm Pilot, it was a failure. As soon as it became the standard payment system for eBay, it got the network-effect wind at its back. 3. Economies of scale are critical. Google is pretty much unassailable in search-engine advertising because it has huge economies of scale.

Google is pretty much unassailable in search-engine advertising because it has huge economies of scale. This leads to the conclusion that there will be very few winners in each sector of tech. The combination of scale and network effects makes it very hard to dislodge the winners, especially if you are in a business like tech, which is so lightly regulated. 4. Branding becomes critical. The brand becomes a promise of value to consumers. Apple gets superior margins because of its brand promise for quality and elegant design. The brand promise also helps you defend yourself against government intrusion. Google’s original “Don’t be evil” brand promise gave them a patina of social entrepreneurship that helps protect them from accusations of monopoly power tactics.

Google’s original “Don’t be evil” brand promise gave them a patina of social entrepreneurship that helps protect them from accusations of monopoly power tactics. As John Seely Brown has pointed out, the end of the decentralized Web that Engelbart and the PARC visionaries had imagined occurs at this point, when “we moved from products to platforms, which let the network effect play out in a hub and spoke model.” From this point on the economies of scale enjoyed by a platform whose users are measured in the billions becomes the ultimate metric for success. Thiel understood this, and from PayPal, the original founding group began to spread through Silicon Valley after eBay’s $1 billion acquisition of the company.


pages: 326 words: 91,532

The Pay Off: How Changing the Way We Pay Changes Everything by Gottfried Leibbrandt, Natasha de Teran

"World Economic Forum" Davos, Alan Greenspan, Ayatollah Khomeini, bank run, banking crisis, banks create money, Bear Stearns, Big Tech, bitcoin, blockchain, call centre, cashless society, Clayton Christensen, cloud computing, coronavirus, COVID-19, Credit Default Swap, cross-border payments, cryptocurrency, David Graeber, Donald Trump, Edward Snowden, Ethereum, ethereum blockchain, financial exclusion, global pandemic, global reserve currency, illegal immigration, information asymmetry, initial coin offering, interest rate swap, Internet of things, Irish bank strikes, Julian Assange, large denomination, light touch regulation, lockdown, low interest rates, M-Pesa, machine readable, Money creation, money: store of value / unit of account / medium of exchange, move fast and break things, Network effects, Northern Rock, off grid, offshore financial centre, payday loans, post-industrial society, printed gun, QR code, RAND corporation, ransomware, Real Time Gross Settlement, reserve currency, Rishi Sunak, Silicon Valley, Silicon Valley startup, Skype, smart contracts, sovereign wealth fund, special drawing rights, tech billionaire, the payments system, too big to fail, transaction costs, WikiLeaks, you are the product

Why would Ant, a company that would otherwise seem perfectly positioned to wipe out traditional money transfers altogether, be willing to pay so much for this mostly analogue operation, a distant number two to Western Union? Its network – and a base of customers habituated to using it – was the real draw. Once established, networks can become extremely powerful and difficult to dislodge. Scientific research into network effects has yielded several nonobvious and non-intuitive insights, such as the fact that the best standard doesn’t always win. And, indeed, network effects make a ‘winner-takes-all’ situation possible: the largest network becomes inherently more attractive to almost all potential users than any other, even if its features are less appealing. Bear this in mind the next time you pay for something: every individual choice we make feeds into the strength of one payment network and potentially weakens another.

(For those interested in trains, the last broad-gauge train to Bristol was the Flying Dutchman, which hit the buffers for the final time on 29 May 1892; its replacement, the 11:45 from Paddington, left the following day on a standard gauge and undistinguished by any name.) Brunel’s standard fell victim to what are known as ‘network effects’. This term derives from the observation that the ‘value’ of a network depends on the number of users. The cost of the first telephones and fax machines may have been high, but their value was limited because there was nobody to call or send faxes to. Their value increased as a growing number of people started to use telephones and fax machines.

In an economic sense, payment mechanisms behave like these networks: the benefit of any form of payment to each individual depends on how many other users adopt it. The value of a card depends on where you can use it. Cheques are useful (in America) because they are accepted, there are legal frameworks governing them and – just as crucially – they are part of the culture. Network effects are everywhere in payment systems – so much so that you could write a full PhD thesis about it.6 The first thing to know about payment networks is that they are difficult to establish. They need a certain critical mass before they become viable – but once established, they have huge value. It’s a ‘chicken-and-egg’ problem: merchants will install terminals only if their customers have cards, and customers will get cards only if they can use them at merchants.


pages: 457 words: 125,329

Value of Everything: An Antidote to Chaos The by Mariana Mazzucato

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Alan Greenspan, bank run, banks create money, Basel III, behavioural economics, Berlin Wall, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, business cycle, butterfly effect, buy and hold, Buy land – they’re not making it any more, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, carried interest, clean tech, Corn Laws, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, debt deflation, European colonialism, Evgeny Morozov, fear of failure, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, full employment, G4S, George Akerlof, Glass-Steagall Act, Google Hangouts, Growth in a Time of Debt, high net worth, Hyman Minsky, income inequality, independent contractor, index fund, informal economy, interest rate derivative, Internet of things, invisible hand, John Bogle, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour market flexibility, laissez-faire capitalism, light touch regulation, liquidity trap, London Interbank Offered Rate, low interest rates, margin call, Mark Zuckerberg, market bubble, means of production, military-industrial complex, Minsky moment, Money creation, money market fund, negative equity, Network effects, new economy, Northern Rock, obamacare, offshore financial centre, Pareto efficiency, patent troll, Paul Samuelson, peer-to-peer lending, Peter Thiel, Post-Keynesian economics, profit maximization, proprietary trading, quantitative easing, quantitative trading / quantitative finance, QWERTY keyboard, rent control, rent-seeking, Robert Solow, Sand Hill Road, shareholder value, sharing economy, short selling, Silicon Valley, Simon Kuznets, smart meter, Social Responsibility of Business Is to Increase Its Profits, software patent, Solyndra, stem cell, Steve Jobs, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, transaction costs, two and twenty, two-sided market, very high income, Vilfredo Pareto, wealth creators, Works Progress Administration, you are the product, zero-sum game

Evgeny Morozov, ‘Where Uber and Amazon rule: welcome to the world of the platform', the Guardian, 7 June 2015: http://www.theguardian.com/technology/2015/jun/07/facebook-uber-amazon-platform-economy 68. https://www.bloomberg.com/news/articles/2017-02-28/in-video-uber-ceo-argues-with-driver-over-falling-fares 69. http://fortune.com/2016/10/20/uber-app-riders/ 70. A useful distinction can be made between direct and indirect network effects. When a higher number of participants increases the benefit to each individual member - as in the case of Facebook - the effect is direct. Where, instead, a higher number of members (for example, buyers) increases the convenience of using the platform, not for the members but for another group (for example, the sellers), we talk of indirect network effects. 71. Source: Statista database (www.statista.com), and http://uk.businessinsider.com/facebook-and-google-winners-of-digital-advertising-2016-6?

Financialization of the Real Economy The Buy-back Blowback Maximizing Shareholder Value The Retreat of ‘Patient' Capital Short-Termism and Unproductive Investment Financialization and Inequality From Maximizing Shareholder Value to Stakeholder Value 7. Extracting Value through the Innovation Economy Stories about Value Creation Where Does Innovation Come From? Financing Innovation Patented Value Extraction Unproductive Entrepreneurship Pricing Pharmaceuticals Network Effects and First-mover Advantages Creating and Extracting Digital Value Sharing Risks and Rewards 8. Undervaluing the Public Sector The Myths of Austerity Government Value in the History of Economic Thought Keynes and Counter-cyclical Government Government in the National Accounts Public Choice Theory: Rationalizing Privatization and Outsourcing Regaining Confidence and Setting Missions Public and Private Just Deserts From Public Goods to Public Value 9.

The con around drug pricing has created a constant battle between government-funded healthcare systems (where they exist), private and public insurance programmes, and the big pharmaceutical firms. Only by debunking the ideas about value underpinning these drugs can a long-lasting solution be found which results in access to genuinely affordable drugs. NETWORK EFFECTS AND FIRST-MOVER ADVANTAGES I have looked at how innovation, something inherently uncertain and cumulative, is financed, and at the dynamics of that finance. We have also explored how the risks and rewards of innovation have been shared problematically, with medical drugs being the most severe case in point.


pages: 396 words: 113,613

Chokepoint Capitalism by Rebecca Giblin, Cory Doctorow

Aaron Swartz, AltaVista, barriers to entry, Berlin Wall, Bernie Sanders, Big Tech, big-box store, Black Lives Matter, book value, collective bargaining, commoditize, coronavirus, corporate personhood, corporate raider, COVID-19, disintermediation, distributed generation, Fairchild Semiconductor, fake news, Filter Bubble, financial engineering, Firefox, forensic accounting, full employment, gender pay gap, George Akerlof, George Floyd, gig economy, Golden age of television, Google bus, greed is good, green new deal, high-speed rail, Hush-A-Phone, independent contractor, index fund, information asymmetry, Jeff Bezos, John Gruber, Kickstarter, laissez-faire capitalism, low interest rates, Lyft, Mark Zuckerberg, means of production, microplastics / micro fibres, Modern Monetary Theory, moral hazard, multi-sided market, Naomi Klein, Network effects, New Journalism, passive income, peak TV, Peter Thiel, precision agriculture, regulatory arbitrage, remote working, rent-seeking, ride hailing / ride sharing, Robert Bork, Saturday Night Live, shareholder value, sharing economy, Silicon Valley, SoftBank, sovereign wealth fund, Steve Jobs, Steven Levy, stock buybacks, surveillance capitalism, Susan Wojcicki, tech bro, tech worker, The Chicago School, The Wealth of Nations by Adam Smith, TikTok, time value of money, transaction costs, trickle-down economics, Turing complete, Uber and Lyft, uber lyft, union organizing, Vanguard fund, vertical integration, WeWork

Data moats arise where companies use information they’ve collected over time to give them an advantage over rivals. Network effect moats take advantage of the phenomenon whereby some products and services get more valuable as more people use them. A phone network is the classic example: it’s useless if only one person has access, because there’s no one to call, but its value increases rapidly with each new subscriber. Powerful businesses typically have multiple moats. Facebook, for example, combines tremendously strong network effects (thanks to its almost three billion monthly active users) with a data advantage (the dossiers it has collected on you from its years-long surveillance are valued more by advertisers than anything a start-up could offer) and high switching costs (the fact that leaving makes it harder to communicate with your family, community, and friends).

Facebook, for example, combines tremendously strong network effects (thanks to its almost three billion monthly active users) with a data advantage (the dossiers it has collected on you from its years-long surveillance are valued more by advertisers than anything a start-up could offer) and high switching costs (the fact that leaving makes it harder to communicate with your family, community, and friends). Google has a similar armory, but it doesn’t want you to think it’s relying on moats at all. That’s why it has a blanket ban on its staff using phrases like “network effects” and “barriers to entry.”20 Amazon is the master of moats, which it uses to ensure customers and suppliers are thoroughly cemented in. It attributes its success to its “flywheel.” Flywheels are heavy revolving wheels, used in machines to increase momentum. Because they’re so heavy, it takes a lot to get them spinning, but once they’re going, it also takes a lot to stop them.

We focus on the most successful value extractors—Amazon for books, Google and Facebook for news, YouTube for online video, iHeartMedia for radio, Live Nation for ticketing and live events, the Big Three record labels and Spotify for streaming, the Big Three Hollywood talent agencies for screenwriting and Apple and Google for everything mobile. Each of these corporations has its own anticompetitive flywheel, designed to create chokepoints enabling them to capture an undue share of value. Their tools differ—with a reliance on combinations of network effects, licensing mazes, regulatory capture, horizontal and vertical integration, high switching costs, self-preferencing, and the industrial aggregation of copyrights—but they all seek to achieve the same things: to lock in users, lock in suppliers, make markets hostile to new entrants, and, ultimately, use the resulting lack of choice to force workers and suppliers to accept unsustainably low prices.


pages: 382 words: 105,819

Zucked: Waking Up to the Facebook Catastrophe by Roger McNamee

"Susan Fowler" uber, "World Economic Forum" Davos, 4chan, Albert Einstein, algorithmic trading, AltaVista, Amazon Web Services, Andy Rubin, barriers to entry, Bernie Sanders, Big Tech, Bill Atkinson, Black Lives Matter, Boycotts of Israel, Brexit referendum, Cambridge Analytica, carbon credits, Cass Sunstein, cloud computing, computer age, cross-subsidies, dark pattern, data is the new oil, data science, disinformation, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, Electric Kool-Aid Acid Test, Elon Musk, fake news, false flag, Filter Bubble, game design, growth hacking, Ian Bogost, income inequality, information security, Internet of things, It's morning again in America, Jaron Lanier, Jeff Bezos, John Markoff, laissez-faire capitalism, Lean Startup, light touch regulation, Lyft, machine readable, Marc Andreessen, Marc Benioff, Mark Zuckerberg, market bubble, Max Levchin, Menlo Park, messenger bag, Metcalfe’s law, minimum viable product, Mother of all demos, move fast and break things, Network effects, One Laptop per Child (OLPC), PalmPilot, paypal mafia, Peter Thiel, pets.com, post-work, profit maximization, profit motive, race to the bottom, recommendation engine, Robert Mercer, Ronald Reagan, Russian election interference, Sand Hill Road, self-driving car, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Skype, Snapchat, social graph, software is eating the world, Stephen Hawking, Steve Bannon, Steve Jobs, Steven Levy, Stewart Brand, subscription business, TED Talk, The Chicago School, The future is already here, Tim Cook: Apple, two-sided market, Uber and Lyft, Uber for X, uber lyft, Upton Sinclair, vertical integration, WikiLeaks, Yom Kippur War

Google, Facebook, and others also broke the mold by adopting advertising business models, which meant their products were free to use, eliminating another form of friction and protecting them from antitrust regulation. They rode the wave of wired broadband adoption and then 4G mobile to achieve global scale in what seemed like the blink of an eye. Their products enjoyed network effects, which occur when the value of a product increases as you add users to the network. Network effects were supposed to benefit users. In the cases of Facebook and Google, that was true for a time, but eventually the value increase shifted decisively to the benefit of owners of the network, creating insurmountable barriers to entry. Facebook and Google, as well as Amazon, quickly amassed economic power on a scale not seen since the days of Standard Oil one hundred years earlier.

Facebook and Google, as well as Amazon, quickly amassed economic power on a scale not seen since the days of Standard Oil one hundred years earlier. In an essay on Medium, the venture capitalist James Currier pointed out that the key to success in the internet platform business is network effects and Facebook enjoyed more of them than any other company in history. He said, “To date, we’ve actually identified that Facebook has built no less than six of the thirteen known network effects to create defensibility and value, like a castle with six concentric layers of walls. Facebook’s walls grow higher all the time, and on top of them Facebook has fortified itself with all three of the other known defensibilities in the internet age: brand, scale, and embedding.”

Both Google and Facebook subvert the intent of privacy efforts like Europe’s GDPR with option-dialogue boxes designed to prevent users from taking advantage of their new rights. Facebook remains a threat to innovation. The company enjoys all the privileges of a monopoly. It has network effects on top of network effects, protective moats outside of protective moats, with scale advantages that make life miserable for Snapchat, to say nothing of every startup that wants to innovate in social. Regulation can influence Facebook’s behavior, but the problems are features of Facebook’s business model and probably beyond the reach of all but the most onerous regulation.


pages: 348 words: 97,277

The Truth Machine: The Blockchain and the Future of Everything by Paul Vigna, Michael J. Casey

3D printing, additive manufacturing, Airbnb, altcoin, Amazon Web Services, barriers to entry, basic income, Berlin Wall, Bernie Madoff, Big Tech, bitcoin, blockchain, blood diamond, Blythe Masters, business process, buy and hold, carbon credits, carbon footprint, cashless society, circular economy, cloud computing, computer age, computerized trading, conceptual framework, content marketing, Credit Default Swap, cross-border payments, crowdsourcing, cryptocurrency, cyber-physical system, decentralized internet, dematerialisation, disinformation, disintermediation, distributed ledger, Donald Trump, double entry bookkeeping, Dunbar number, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, failed state, fake news, fault tolerance, fiat currency, financial engineering, financial innovation, financial intermediation, Garrett Hardin, global supply chain, Hernando de Soto, hive mind, informal economy, information security, initial coin offering, intangible asset, Internet of things, Joi Ito, Kickstarter, linked data, litecoin, longitudinal study, Lyft, M-Pesa, Marc Andreessen, market clearing, mobile money, money: store of value / unit of account / medium of exchange, Network effects, off grid, pets.com, post-truth, prediction markets, pre–internet, price mechanism, profit maximization, profit motive, Project Xanadu, ransomware, rent-seeking, RFID, ride hailing / ride sharing, Ross Ulbricht, Satoshi Nakamoto, self-driving car, sharing economy, Silicon Valley, smart contracts, smart meter, Snapchat, social web, software is eating the world, supply-chain management, Ted Nelson, the market place, too big to fail, trade route, Tragedy of the Commons, transaction costs, Travis Kalanick, Turing complete, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, universal basic income, Vitalik Buterin, web of trust, work culture , zero-sum game

In the case of BATs, the attention metrics captured by the browser dictate who gets tokens and how many, putting a more meaningful market value on attention than can be achieved with traditional money. The idea is that if Brave is successful, the BATs’ price will rise, which will in turn encourage more and more people to join the community and abide by its good-behavior-inducing rules. It aims for a network effect, one that feeds a virtuous circle of better-aligned incentives and rewards within the online content market. Network effects like these are a critical source of market power for many companies in the digital economy. Amazon, Alibaba, Uber, and other digital behemoths all depend on them—on how widely an idea is adopted and reinforced in a positive feedback loop.

Silicon Valley’s anti-establishment coders hadn’t reckoned with the challenge of trust and how society traditionally turns to centralized institutions to deal with that. That failure was clear in the subsequent Internet 2.0 phase, which unlocked the power of social networks but also allowed first-mover companies to turn network effects into entrenched monopoly power. These included social media giants like Facebook and Twitter and e-marketplace success stories of the “sharing economy” such as Uber and Airbnb. Blockchain technologies, as well as other ideas contained in this Internet 3.0 phase, aim to do away with these intermediaries altogether, letting people forge their own bonds of trust to build social networks and business arrangements on their own terms.

But, inevitably, the added transaction costs translated into barriers to entry that helped the largest incumbents ward off competitors, limiting innovation and denying billions of financially excluded people the opportunity to fully exploit the Internet’s many possibilities for advancement. It’s how we’ve ended up with Internet monopolies. Those with first-mover advantages have not only enjoyed the benefits of network effects; they’ve been indirectly protected by the hefty transaction costs that competitors face in trying to grow to the same scale. In a very tangible way, then, the high cost of trust management has fed the economic conditions that allow the likes of Amazon, Netflix, Google, and Facebook to keep squashing competitors.


pages: 151 words: 39,757

Ten Arguments for Deleting Your Social Media Accounts Right Now by Jaron Lanier

4chan, Abraham Maslow, basic income, Big Tech, Black Lives Matter, Cambridge Analytica, cloud computing, context collapse, corporate governance, data science, disinformation, Donald Trump, en.wikipedia.org, fake news, Filter Bubble, gig economy, Internet of things, Jaron Lanier, life extension, Mark Zuckerberg, market bubble, Milgram experiment, move fast and break things, Network effects, peak TV, ransomware, Ray Kurzweil, recommendation engine, Silicon Valley, Skinner box, Snapchat, Stanford prison experiment, stem cell, Steve Jobs, Ted Nelson, theory of mind, WikiLeaks, you are the product, zero-sum game

It’s hard to quit a particular social network and go to a different one, because everyone you know is already on the first one. It’s effectively impossible for everyone in a society to back up all their data, move simultaneously, and restore their memories at the same time. Effects of this kind are called network effects or lock-ins. They’re hard to avoid on digital networks. Originally, many of us who worked on scaling the internet16 hoped that the thing that would bring people together—that would gain network effect and lock-in—would be the internet itself. But there was a libertarian wind blowing, so we left out many key functions. The internet in itself didn’t include a mechanism for personal identity, for instance.

The unplanned nature of the transformation from advertising to direct behavior modification caused an explosive amplification of negativity in human affairs. We’ll return to the higher potency of negative emotions in behavior modification many times as we explore the personal, political, economic, social, and cultural effects of social media. ADDICTION, MEET NETWORK EFFECT Addiction is a big part of the reason why so many of us accept being spied on and manipulated by our information technology, but it’s not the only reason. Digital networks genuinely deliver value to us. They allow for great efficiencies and convenience. That’s why so many of us worked so hard to make them possible.

Everyone knew that these functions and many others would be needed. We figured it would be wiser to let entrepreneurs fill in the blanks than to leave that task to government. What we didn’t consider was that fundamental digital needs like the ones I just listed would lead to new kinds of massive monopolies because of network effects and lock-in. We foolishly laid the foundations for global monopolies. We did their hardest work for them. More precisely, since you’re the product, not the customer of social media, the proper word is “monopsonies.”17 Our early libertarian idealism resulted in gargantuan, global data monopsonies.


pages: 346 words: 89,180

Capitalism Without Capital: The Rise of the Intangible Economy by Jonathan Haskel, Stian Westlake

23andMe, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, Albert Einstein, Alvin Toffler, Andrei Shleifer, bank run, banking crisis, Bernie Sanders, Big Tech, book value, Brexit referendum, business climate, business process, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, cloud computing, cognitive bias, computer age, congestion pricing, corporate governance, corporate raider, correlation does not imply causation, creative destruction, dark matter, Diane Coyle, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, Edward Glaeser, Elon Musk, endogenous growth, Erik Brynjolfsson, everywhere but in the productivity statistics, Fellow of the Royal Society, financial engineering, financial innovation, full employment, fundamental attribution error, future of work, gentrification, gigafactory, Gini coefficient, Hernando de Soto, hiring and firing, income inequality, index card, indoor plumbing, intangible asset, Internet of things, Jane Jacobs, Jaron Lanier, Jeremy Corbyn, job automation, Kanban, Kenneth Arrow, Kickstarter, knowledge economy, knowledge worker, laissez-faire capitalism, liquidity trap, low interest rates, low skilled workers, Marc Andreessen, Mother of all demos, Network effects, new economy, Ocado, open economy, patent troll, paypal mafia, Peter Thiel, pets.com, place-making, post-industrial society, private spaceflight, Productivity paradox, quantitative hedge fund, rent-seeking, revision control, Richard Florida, ride hailing / ride sharing, Robert Gordon, Robert Solow, Ronald Coase, Sand Hill Road, Second Machine Age, secular stagnation, self-driving car, shareholder value, sharing economy, Silicon Valley, six sigma, Skype, software patent, sovereign wealth fund, spinning jenny, Steve Jobs, sunk-cost fallacy, survivorship bias, tacit knowledge, tech billionaire, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Tim Cook: Apple, total factor productivity, TSMC, Tyler Cowen, Tyler Cowen: Great Stagnation, urban planning, Vanguard fund, walkable city, X Prize, zero-sum game

While rivalry might then be the economic primitive behind scalability, we shall use scalability for mnemonic convenience.2 Scalability becomes supercharged with “network effects.” A network effect exists when assets become more valuable the more of them exist. Network effects can be found among both tangible and intangible assets. So, for example, telephones or fax machines are much more valuable when almost everyone has them. Indeed, the current digital tech revolution has drawn people’s attention to the potential network effects of physical assets, mobile phones and networked computers being prime examples. But if we look closer, it’s really the intangible investments of the current wave of digital technologies where the big network effects are. The network of Uber drivers and AirBnB hosts and Instagram users (all organizational development investments) or the power of HTML and the innumerable standards the Web is based on (variously, investments in software, design, and organizational development) are intangibles, not tangibles.

As we have seen, Les Mills International had to adopt a very different business model from traditional gym businesses in order to grow to the size it did. The emphasis on network effects is an insight of Thiel’s that suggests that governments might become more important to company success in the future. One of Peter Thiel’s PayPal cofounders, Elon Musk, is currently involved in what might become one of the ultimate network businesses: self-driving, battery-powered cars. The network effect would be familiar to any nineteenth-century entrepreneur. Horses and carts needed a gigantic network of stables to feed and water the horses and repair the carts.

Starbucks has been able to leverage an effective brand, operating processes, and supply chains to allow it to spread across the world. Google, Microsoft, and Facebook need relatively few tangible assets compared to the manufacturing giants of yesteryear. They can scale their intangible-asset bundle or software and reputation and so get very big. This type of scalability is, of course, enhanced by network effects.3 Second, with the prospects of such large markets, more and more firms will be encouraged to try their luck in these markets. They face a hard choice, for although the prospective market might be large, encouraging them to have a go, competition might be very tough, thereby discouraging them.


pages: 169 words: 56,250

Startup Communities: Building an Entrepreneurial Ecosystem in Your City by Brad Feld

barriers to entry, clean tech, cloud computing, corporate social responsibility, deal flow, fail fast, G4S, Grace Hopper, job satisfaction, Kickstarter, Lean Startup, Marc Benioff, minimum viable product, Network effects, paypal mafia, Peter Thiel, place-making, pre–internet, Richard Florida, Ruby on Rails, Salesforce, Silicon Valley, Silicon Valley startup, smart cities, SoftBank, software as a service, Steve Jobs, text mining, vertical integration, Y Combinator, zero-sum game, Zipcar

This provides direct economic benefit to companies located within a startup community. Another economic concept, network effects, explains why geographic concentration yields further advantage. Network effects operate in systems where the addition of a member to a network enhances value for existing users. The Internet, Facebook, and Twitter are examples in which network effects operate powerfully. These services may have some value to you if there are just 100 other users. However, these networks are immensely more useful if there are 100 million other users that you can connect with. Startup communities similarly feature strong network effects. For example, an area with 10 great programmers provides a valuable pool of labor talent for a startup.

For example, an area with 10 great programmers provides a valuable pool of labor talent for a startup. However, an additional 1,000 amazing programmers in the same area is vastly more valuable to startups, especially if programmers share best practices with other programmers, inspire one another, or start new companies. External economies of scale lower certain costs; meanwhile, network effects make co-location more valuable. The second explanation of startup communities, horizontal networks, comes from sociology. In her PhD work at MIT, AnnaLee Saxenian (currently Dean of the UC Berkeley School of Information) noticed that external economies do not fully explain the development and adaptation of startup communities.

External economies alone did not provide an answer. Saxenian set out to resolve the puzzle of why Silicon Valley far outpaced Route 128 from the mid-1980s to mid-1990s. Saxenian persuasively argues that a culture of openness and information exchange fueled Silicon Valley’s ascent over Route 128. This argument is tied to network effects, which are better leveraged by a community with a culture of information sharing across companies and industries. Saxenian observed that the porous boundaries between Silicon Valley companies, such as Sun Microsystems and HP, stood in stark contrast to the closed-loop and autarkic companies of Route 128, such as DEC and Apollo.


pages: 270 words: 79,180

The Middleman Economy: How Brokers, Agents, Dealers, and Everyday Matchmakers Create Value and Profit by Marina Krakovsky

Affordable Care Act / Obamacare, Airbnb, Al Roth, Ben Horowitz, Benchmark Capital, Black Swan, buy low sell high, Chuck Templeton: OpenTable:, Credit Default Swap, cross-subsidies, crowdsourcing, deal flow, disintermediation, diversified portfolio, experimental economics, George Akerlof, Goldman Sachs: Vampire Squid, income inequality, index fund, information asymmetry, Jean Tirole, Joan Didion, John Zimmer (Lyft cofounder), Kenneth Arrow, Lean Startup, Lyft, Marc Andreessen, Mark Zuckerberg, market microstructure, Martin Wolf, McMansion, Menlo Park, Metcalfe’s law, moral hazard, multi-sided market, Network effects, patent troll, Paul Graham, Peter Thiel, pez dispenser, power law, real-name policy, ride hailing / ride sharing, Robert Metcalfe, Sand Hill Road, search costs, seminal paper, sharing economy, Silicon Valley, social graph, supply-chain management, TaskRabbit, the long tail, The Market for Lemons, the strength of weak ties, too big to fail, trade route, transaction costs, two-sided market, Uber for X, uber lyft, ultimatum game, Y Combinator

Because buyers usually want to be where sellers are, and sellers usually want to be where buyers are, a two-sided network with an abundance of participants on one side tends to attract more comers on the other side. In the language of economics—and increasingly of tech investors—two-sided markets usually create “indirect network effects.”36 As one side grows, the network becomes more attractive to the other side, and as the other side grows, it attracts more users who want to connect with that side. This positive feedback loop promotes rapid growth once you reach critical mass. That’s why tech investors love network effects. But this same growth curve means two-sided markets are extremely hard to get off the ground, as Thiers found out firsthand: how do you get a sitter to sign up for a service that doesn’t have a single parent, and likewise, how do you get a parent to sign up for a service that has no sitters?

So Templeton and his team had a strong incentive to create rules to minimize no-shows. Rules for proper behavior are a crucial element of any middleman business that hopes to attract enough partners on both sides. In writing about SitterCity in the Bridge chapter, I pointed out that two-sided markets benefit from network effects, whereby buyers want to be where sellers are and sellers want to be where buyers are. But network effects aren’t just about quantity (the more the merrier)—usually, buyers care about the quality of sellers, too, and sellers care something about the quality of buyers.10 If you go on a dating site or a singles event, for example, you don’t just care about how many potential partners there will be, but also whether they’re the sort of people you want to meet.

Brian Arthur, “Increasing Returns and the New World of Business,” Harvard Business Review 74, no. 4 (July/August 1996): 100–109. 36.These are called “indirect” because they refer to what is happening on the other side; direct network effects occur if users care how many other users are on the same side as they are. In addition, not all two-sided markets produce positive indirect network effects, and growth on one side can actually be a turnoff to the other side. For example, advertisers want to be where many readers in their target audience are, but readers aren’t nearly as eager to see ads, so a media company can often attract a larger audience if it doesn’t show ads.


pages: 461 words: 106,027

Zero to Sold: How to Start, Run, and Sell a Bootstrapped Business by Arvid Kahl

business logic, business process, centre right, Chuck Templeton: OpenTable:, cognitive load, content marketing, continuous integration, coronavirus, COVID-19, crowdsourcing, domain-specific language, financial independence, functional programming, Google Chrome, hockey-stick growth, if you build it, they will come, information asymmetry, information retrieval, inventory management, Jeff Bezos, job automation, Kanban, Kubernetes, machine readable, minimum viable product, Network effects, performance metric, post-work, premature optimization, risk tolerance, Ruby on Rails, sentiment analysis, side hustle, Silicon Valley, single source of truth, software as a service, solopreneur, source of truth, statistical model, subscription business, sunk-cost fallacy, supply-chain management, the long tail, trickle-down economics, value engineering, web application

If sharing a link could make other people think we’re cheap, we’d instead not share it. Conversely, a referral system will work best for these reasons: Network effects: Customers stand to gain something from another user joining the service. Reputation gain: Customers can show their peers that they are experts in their industry. Way above the bottom line: Customers can show that they are doing well using your service. For FeedbackPanda, we had a powerful network effect built into the product: our customers could share their feedback templates with each other. That meant that every new customer might bring fresh content that the existing customers could use immediately.

Even a harmless remark can cause them to be at high alert, and it will be impossible to make a case for whatever you're selling if your prospect is skeptical of your honesty and reliability. Let people find your service; don't force it on them. Leave traces by providing valuable content; don't throw yourself at your niche audience with discounts and savings. Tribal Network Effects The network effects in tribal communities are powerful, as people share a large number of commonalities. When you reach out with a question, you can be sure that you will receive an avalanche of responses. They may be very different, as a tribe is not homogenous. But they will all be aimed at accomplishing a shared desire, a common goal.

We built the business as if we were to eventually sell it, even though that was never our goal. The only goal we set was to help teachers do their jobs better and pay our bills. We had noticed that teachers loved to share, so we added a collaboration system where they could help each other out by sharing their templates. All of a sudden, we had a product that developed a strong network effect overnight. And that feature made the business grow beyond our wildest expectations. Every day, new teachers would sign up, and since we provided a service that solved their problems well, we had incredibly high retention and conversion rates. For many of our customers, teaching from home was a side hustle.


pages: 255 words: 76,495

The Facebook era: tapping online social networks to build better products, reach new audiences, and sell more stuff by Clara Shih

Benchmark Capital, business process, call centre, Clayton Christensen, cloud computing, commoditize, conceptual framework, corporate governance, crowdsourcing, glass ceiling, jimmy wales, Marc Benioff, Mark Zuckerberg, Metcalfe’s law, Network effects, pets.com, pre–internet, rolodex, Salesforce, Savings and loan crisis, semantic web, sentiment analysis, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, social graph, social web, software as a service, tacit knowledge, Tony Hsieh, web application

The ease of sending and viewing messages and the pervasiveness of the delivery technology can make or break a viral campaign. For example, you would not get very far disseminating a message by fax in a country where most people don’t have fax machines—it wouldn’t matter that you had a sticky idea. Delivery is where Facebook excels. Virality depends on network effects, and social networking sites amplify network effects. Online social networking offers an ideal communication environment for sending and receiving viral messages. There are four reasons, explained in the following list—widespread adoption, broadcast format, connections across networks, and longer message life: • Widespread adoption.

The online social graph is becoming better integrated with other emerging technologies, such as video and mobile. First, there appears to be a consolidation of social networking services. This is thanks in part to standardization initiatives, such as OpenSocial, but also owes largely to the network effects governing online social sites. Network effects mean large sites get larger and small sites get smaller much more quickly. Therefore we should expect that over the next several years, clear winners and losers will emerge. Second, social networking services are becoming more technologically sophisticated. As compelling and revolutionary as the early days of the social networking revolution have been, the interaction possibilities on sites like Facebook and LinkedIn have been limited at best, largely around asynchronous, low-fidelity communication.

Second printing April 2009 From the Library of Kerri Ross To my parents James and Sophia Shih, my brother Vic, and to finding the American Dream From the Library of Kerri Ross vi Th e Fa ce b o o k E ra Contents Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ix Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xii About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xiv Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Why You’re Reading This Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Welcome to the Facebook Era How to Use This Book Part I: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 A Brief History of Social Media 1 The Fourth Revolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Mainframe Computing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 The PC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 The World Wide Web . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 The Online Social Graph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Empowering the End User 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 The Evolution of Digital Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Storage and Creation Media Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 The Future: Social Filtering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 Why Facebook Is Different . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 Social Network Ecosystems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 What the Social Graph Means for Digital Media . . . . . . . . . . . . . . . . . . . . . . . . . . .42 3 Social Capital from Networking Online . . . . . . . . . . . . . . . . . . . . . . . . . . .43 Establishing a New Category of Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44 Online Interactions Supplement Offline Networking The Flattening Effect . . . . . . . . . . . . . . . . . . . .50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52 Creating New Value from Network Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52 Blurring the Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 From the Library of Kerri Ross Co n te n t s Part II: vii Transforming the Way We Do Business 4 Social Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61 Transforming the Sales Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62 The Need for Multiple Network Structures CRM—The First Social Network?


pages: 292 words: 85,151

Exponential Organizations: Why New Organizations Are Ten Times Better, Faster, and Cheaper Than Yours (And What to Do About It) by Salim Ismail, Yuri van Geest

23andMe, 3D printing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, anti-fragile, augmented reality, autonomous vehicles, Baxter: Rethink Robotics, behavioural economics, Ben Horowitz, bike sharing, bioinformatics, bitcoin, Black Swan, blockchain, Blue Ocean Strategy, book value, Burning Man, business intelligence, business process, call centre, chief data officer, Chris Wanstrath, circular economy, Clayton Christensen, clean water, cloud computing, cognitive bias, collaborative consumption, collaborative economy, commoditize, corporate social responsibility, cross-subsidies, crowdsourcing, cryptocurrency, dark matter, data science, Dean Kamen, deep learning, DeepMind, dematerialisation, discounted cash flows, disruptive innovation, distributed ledger, driverless car, Edward Snowden, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, fail fast, game design, gamification, Google Glasses, Google Hangouts, Google X / Alphabet X, gravity well, hiring and firing, holacracy, Hyperloop, industrial robot, Innovator's Dilemma, intangible asset, Internet of things, Iridium satellite, Isaac Newton, Jeff Bezos, Joi Ito, Kevin Kelly, Kickstarter, knowledge worker, Kodak vs Instagram, Law of Accelerating Returns, Lean Startup, life extension, lifelogging, loose coupling, loss aversion, low earth orbit, Lyft, Marc Andreessen, Mark Zuckerberg, market design, Max Levchin, means of production, Michael Milken, minimum viable product, natural language processing, Netflix Prize, NetJets, Network effects, new economy, Oculus Rift, offshore financial centre, PageRank, pattern recognition, Paul Graham, paypal mafia, peer-to-peer, peer-to-peer model, Peter H. Diamandis: Planetary Resources, Peter Thiel, Planet Labs, prediction markets, profit motive, publish or perish, radical decentralization, Ray Kurzweil, recommendation engine, RFID, ride hailing / ride sharing, risk tolerance, Ronald Coase, Rutger Bregman, Salesforce, Second Machine Age, self-driving car, sharing economy, Silicon Valley, skunkworks, Skype, smart contracts, Snapchat, social software, software is eating the world, SpaceShipOne, speech recognition, stealth mode startup, Stephen Hawking, Steve Jobs, Steve Jurvetson, subscription business, supply-chain management, synthetic biology, TaskRabbit, TED Talk, telepresence, telepresence robot, the long tail, Tony Hsieh, transaction costs, Travis Kalanick, Tyler Cowen, Tyler Cowen: Great Stagnation, uber lyft, urban planning, Virgin Galactic, WikiLeaks, winner-take-all economy, X Prize, Y Combinator, zero-sum game

We can’t emphasize the following strongly enough: the world that is emerging is very different from the one we’ve known. Power is becoming easier to acquire but harder to keep. Thanks to strong viral and social network effects that allow startups to scale rapidly, it is now easier than ever before to start new companies and disrupt industries. But when it comes to social networks, the reverse is also true. Facebook, for example, is an incumbent, and its network effects and lock-in make it hard to usurp—underscoring the great advantage a platform has over a product or service. In her book, The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business, Rita Gunther McGrath illustrates that we can only obtain what she calls Transient Competitive Advantages via platforms and purpose, community, and culture.

Key attributes of Engagement include: Ranking transparency Self-efficacy (sense of control, agency and impact) Peer pressure (social comparison) Eliciting positive rather than negative emotions to drive long-term behavioral change Instant feedback (short feedback cycles) Clear, authentic rules, goals and rewards (only reward outputs, not inputs) Virtual currencies or points Properly implemented, Engagement creates network effects and positive feedback loops with extraordinary reach. The biggest impact of engagement techniques is on customers and the entire external ecosystem. However, these techniques can also be used internally with employees to boost collaboration, innovation and loyalty. For the Millennial generation, gaming is a way of life.

Indeed, what might seem like the least serious tool in a company’s user and employee engagement program often proves to be one of its most powerful in terms of finding and training the individuals it needs to reach the next level. Although a comparatively minor issue as far as traditional enterprises are concerned, engagement proves to be critical for ExOs. It is a key element for scaling the organization into the community and crowd and for creating external network effects. No matter how promising its product or premise, unless an ExO is able to optimize the engagement of its community and crowd, it will wither and fade. Why Important? Dependencies or Prerequisites • Increases loyalty • Amplifies ideation • Converts crowd to community • Leverages marketing • Enables play and learning • Provides digital feedback loop with users • MTP • Clear, fair and consistent rules without conflicts of interest Passion and Purpose.


pages: 304 words: 80,143

The Autonomous Revolution: Reclaiming the Future We’ve Sold to Machines by William Davidow, Michael Malone

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, agricultural Revolution, Airbnb, AlphaGo, American Society of Civil Engineers: Report Card, Automated Insights, autonomous vehicles, basic income, benefit corporation, bitcoin, blockchain, blue-collar work, Bob Noyce, business process, call centre, Cambridge Analytica, cashless society, citizen journalism, Clayton Christensen, collaborative consumption, collaborative economy, collective bargaining, creative destruction, crowdsourcing, cryptocurrency, deep learning, DeepMind, disintermediation, disruptive innovation, distributed ledger, en.wikipedia.org, Erik Brynjolfsson, fake news, Filter Bubble, Ford Model T, Francis Fukuyama: the end of history, general purpose technology, Geoffrey West, Santa Fe Institute, gig economy, Gini coefficient, high-speed rail, holacracy, Hyperloop, income inequality, industrial robot, Internet of things, invention of agriculture, invention of movable type, invention of the printing press, invisible hand, Jane Jacobs, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, license plate recognition, low interest rates, Lyft, Mark Zuckerberg, mass immigration, Network effects, new economy, peer-to-peer lending, QWERTY keyboard, ransomware, Richard Florida, Robert Gordon, robo advisor, Ronald Reagan, Second Machine Age, self-driving car, sharing economy, Shoshana Zuboff, Silicon Valley, Simon Kuznets, Skinner box, Snapchat, speech recognition, streetcar suburb, Stuxnet, surveillance capitalism, synthetic biology, TaskRabbit, The Death and Life of Great American Cities, The Rise and Fall of American Growth, the scientific method, trade route, Turing test, two and twenty, Uber and Lyft, uber lyft, universal basic income, uranium enrichment, urban planning, vertical integration, warehouse automation, zero day, zero-sum game, Zipcar

One could go on, but it is safe to say that the monopolies arising in our phase-changed world are no better-behaved than the trusts that arose in John D. Rockefeller’s time. A phenomenon called “network effects” has been powering monopolies in the virtual world. The term refers to the fact that, as networks add nodes, their power increases. These effects have been with us for a very long time—since long before the Internet. Coauthor William Davidow was first introduced to network effects when he was eight years old and his mother told him stories about her own childhood in Reading, Pennsylvania. Three telephone companies served the city.

If you were on one network, you could not talk with someone who subscribed to another. Ultimately, one network got ahead in the number of subscribers, and pretty soon, if you wanted to talk with most of your friends, you had to be on that network. In short, network effects occur because each new user added increases the value of the network to other users. Network effects powered Microsoft’s dominance in personal computer applications. As more and more people used its Word program to generate documents, it became easier and easier to exchange documents with others. As a result, it became more desirable to be a Word user.

At that point, authors, most of whom are already struggling, might have to supplement their income by flipping burgers. One of the most concerning aspects of platforms is that they, too, are linked together by network effects. If you control a mobile platform, it gives you the leverage to control a payments platform that uses it. In the case of Amazon, control of a retail platform sets the company up to control a delivery platform. Smaller businesses that might have been successful if those network effects were weaker get sucked up in the vortex. In many cases, the entrepreneurs of smaller companies feel that if they do not let themselves be acquired, the giant suitor will develop its own competing application and drive them out of business.


pages: 161 words: 44,488

The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology by William Mougayar

Airbnb, airport security, Albert Einstein, altcoin, Amazon Web Services, bitcoin, Black Swan, blockchain, business logic, business process, centralized clearinghouse, Clayton Christensen, cloud computing, cryptocurrency, decentralized internet, disintermediation, distributed ledger, Edward Snowden, en.wikipedia.org, Ethereum, ethereum blockchain, fault tolerance, fiat currency, fixed income, Ford Model T, global value chain, Innovator's Dilemma, Internet of things, Kevin Kelly, Kickstarter, market clearing, Network effects, new economy, peer-to-peer, peer-to-peer lending, prediction markets, pull request, QR code, ride hailing / ride sharing, Satoshi Nakamoto, sharing economy, smart contracts, social web, software as a service, too big to fail, Turing complete, Vitalik Buterin, web application, Yochai Benkler

Decentralization boosts capitalism by creating new layers of work production and value creation. It is granted that a blockchain will move value. But go further and start imagining multiple blockchains interacting with one another, all of them trading value with one another, and you will be led to a composite of network effects, potentially more significant than the previous generation of network effects. It will be the equivalent of a huge overlay of decentralized services that are open and accessible to anyone. Maybe the blockchain will lead us to the not-so utopian view of Nobel Prize winner, economist, and philosopher, Friedrich Hayek. He believed that the path to a functioning economy—or society—was decentralization, and asserted that a decentralized economy complements the dispersed nature of information spread throughout society.1 WHAT HAPPENED TO THE DECENTRALIZED INTERNET?

Consolidation around a single market leader would, in fact, make these industries more efficient. But neither the competitors of the likely leader nor antitrust regulators are willing to accept that outcome, leading to a stalemate. Until now. With the advent of decentralized databases that can technologically replicate the network effect gains of a single monopoly, everyone can join and align for their benefit, without actually creating a monopoly with all the negative consequences that it brings. This is the story that arguably drives the interest in consortium chains in finance, blockchain applications in the supply chain industry, and blockchain-based identity systems.

Bitcoin: A Peer-to-Peer Electronic Cash System, https://bitcoin.org/en/bitcoin-paper. 2. Bitcoin “maximalism” refers to the opinion that solely supports Bitcoin at the expense of all other blockchain or cryptocurrency related projects, because maximalists believe we only a need a single blockchain, and single currency in order to achieve desired network effects benefits. 3. The Untapped Potential of Corporate Narratives. http://edgeperspectives.typepad.com/edge_perspectives/2013/10/the-untapped-potential-of-corporate-narratives.html. 4. Myerson, Roger B. (1991). Game Theory: Analysis of Conflict, Harvard University Press. 5. Leslie Lamport, Robert Shostak, and Marshall Pease, The Byzantine Generals Problem. http://research.microsoft.com/en-us/um/people/lamport/pubs/byz.pdf. 6.


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Humans as a Service: The Promise and Perils of Work in the Gig Economy by Jeremias Prassl

3D printing, Affordable Care Act / Obamacare, Airbnb, algorithmic management, Amazon Mechanical Turk, Andrei Shleifer, asset light, autonomous vehicles, barriers to entry, call centre, cashless society, Clayton Christensen, collaborative consumption, collaborative economy, collective bargaining, creative destruction, crowdsourcing, death from overwork, Didi Chuxing, disruptive innovation, Donald Trump, driverless car, Erik Brynjolfsson, full employment, future of work, George Akerlof, gig economy, global supply chain, Greyball, hiring and firing, income inequality, independent contractor, information asymmetry, invisible hand, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Roose, Kickstarter, low skilled workers, Lyft, machine readable, Mahatma Gandhi, Mark Zuckerberg, market friction, means of production, moral hazard, Network effects, new economy, obamacare, pattern recognition, platform as a service, Productivity paradox, race to the bottom, regulatory arbitrage, remote working, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Rosa Parks, scientific management, Second Machine Age, secular stagnation, self-driving car, shareholder value, sharing economy, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Simon Singh, software as a service, Steve Jobs, TaskRabbit, TechCrunch disrupt, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, transaction costs, transportation-network company, Travis Kalanick, two tier labour market, two-sided market, Uber and Lyft, Uber for X, uber lyft, union organizing, warehouse automation, work culture , working-age population

Indeed, from egregious undercutting tactics based on promotional give- aways to turning a blind eye to exploitative labour practices thanks to the * * * The Economics of the Gig Economy 23 cheap funding of aggressive lobbying campaigns aimed at changing legal frameworks or the reckless flooding of the market with huge amounts of spare capacity, none of it would be possible without access to cheap financing.42 If Kaminska is correct, we are still left with one final question: assuming that the rapid growth of gig-economy platforms has really been fuelled by little more than a combination of regulatory arbitrage and cheap venture capital, why are savvy investors competing to invest? What is behind their willing- ness to burn unprecedented amounts of cash? Network Effects and Monopoly Power It is common for start-up businesses to lose money early on, of course—not least by subsidizing products so as to gain market share. This is particularly important in industries in which investors hope to harness so-called net- work effects—that is, where all users of a particular service gain if additional consumers adopt it.43 Think about the growth of a ride-sharing platform in a new city, for example.

It is unsurprising that gig-economy platforms will often try to kick-start this process by investing significant amounts of cash in subsidies for drivers as well as passengers. Hubert Horan, however, is sceptical that this is the entire story. Cash burn, he suggests, is not merely about harnessing network effects, but rather a step in platforms’ quest for monopoly power. Focusing once more on Uber as the most pointed example, he explains the links: [M]ost critically, the staggering $13 billion in cash its investors provided is consistent with the magnitude of funding required to subsidize the many years of predatory competition required to drive out more efficient incumbents.

Given Uber’s growth to date, investor expectations that monopoly rents justifies the current level of subsidies and financial risks appears quite plausible.44 * * * 24 Work on Demand This account stands in stark contrast with the idea that the rise of gig- economy platforms will lead to increased competition, with lower prices and higher quality as the result: in the expensive pursuit of network effects, some platforms’ goal may well be to smother competition, rather than to encourage it. Individual operators will always vary in the extent to which their busi- ness model combines the factors thus set out. Whichever way we approach the question, however, the underlying economics don’t appear to stack up—a quandary to which we return in the final chapter.


pages: 370 words: 105,085

Joel on Software by Joel Spolsky

AltaVista, AOL-Time Warner, Apple Newton, barriers to entry, Beos Apple "Steve Jobs" next macos , business logic, c2.com, commoditize, Dennis Ritchie, General Magic , George Gilder, index card, Jeff Bezos, knowledge worker, machine readable, Metcalfe's law, Mitch Kapor, Multics, Network effects, new economy, off-by-one error, PageRank, PalmPilot, Paul Graham, pneumatic tube, profit motive, reality distortion field, Robert X Cringely, shareholder value, Silicon Valley, Silicon Valley startup, SimCity, six sigma, slashdot, Steve Ballmer, Steve Jobs, the scientific method, thinkpad, VA Linux, web application

And Ben & Jerry's grew to be a fabulous business, even though it's not like you couldn't get ice cream before they came along. It's not impossible to displace a competitor, if that's what you want to do. (I'll talk about how to do that in the next chapters.) Another question about displacing competitors has to do with network effects and lock-in: Ben & Jerry's Amazon No network effect, weak customer lock-in Strong network effect, strong customer lock-in A network effect is a situation where the more customers you have, the more customers you will get. It's based on Metcalfe's Law:1 The value of a network is equal to the number of users squared. A good example is eBay. If you want to sell your old Patek Philippe watch, you're going to get a better price on eBay, because there are more buyers there.

If you want to buy a Patek Philippe watch, you're going to look on eBay, because there are more sellers there. Another extremely strong network effect is created by proprietary chat systems like ICQ or AOL Instant Messenger. If you want to chat with people, you have to go where they are, and ICQ and AOL have the most people by far. Chances are, your friends are using one of those services, not one of the smaller ones like MSN Instant Messenger. With all of Microsoft's muscle, money, and marketing skill, they are just not going to be able to break into auctions or instant messaging, because the network effects there are so strong. __________ 1. See www.mgt.smsu.edu/mgt487/mgtissue/newstrat/metcalfe.htm.

But when the three months are up, if you don't want to continue with the service, you have no choice but to contact every single bill provider and ask them to change the billing address back to your house. The sheer chore of doing this is likely to prevent you from switching away from PayMyBills.com—better just to let them keep sucking $8.95 out of your bank account every month. Gotcha! If you are going into a business that has natural network effects and lock-in, and there are no established competitors, then you better use the Amazon model, or somebody else will, and you simply won't be able to get a toehold. Quick case study. In 1998, AOL was spending massively to grow at a rate of a million customers every five weeks. AOL has nice features, like chat rooms and instant messaging, that provide stealth lock-in.


pages: 935 words: 197,338

The Power Law: Venture Capital and the Making of the New Future by Sebastian Mallaby

"Susan Fowler" uber, 23andMe, 90 percent rule, Adam Neumann (WeWork), adjacent possible, Airbnb, Apple II, barriers to entry, Ben Horowitz, Benchmark Capital, Big Tech, bike sharing, Black Lives Matter, Blitzscaling, Bob Noyce, book value, business process, charter city, Chuck Templeton: OpenTable:, Clayton Christensen, clean tech, cloud computing, cognitive bias, collapse of Lehman Brothers, Colonization of Mars, computer vision, coronavirus, corporate governance, COVID-19, cryptocurrency, deal flow, Didi Chuxing, digital map, discounted cash flows, disruptive innovation, Donald Trump, Douglas Engelbart, driverless car, Dutch auction, Dynabook, Elon Musk, Fairchild Semiconductor, fake news, family office, financial engineering, future of work, game design, George Gilder, Greyball, guns versus butter model, Hacker Ethic, Henry Singleton, hiring and firing, Hyperloop, income inequality, industrial cluster, intangible asset, iterative process, Jeff Bezos, John Markoff, junk bonds, Kickstarter, knowledge economy, lateral thinking, liberal capitalism, Louis Pasteur, low interest rates, Lyft, Marc Andreessen, Mark Zuckerberg, market bubble, Marshall McLuhan, Mary Meeker, Masayoshi Son, Max Levchin, Metcalfe’s law, Michael Milken, microdosing, military-industrial complex, Mitch Kapor, mortgage debt, move fast and break things, Network effects, oil shock, PalmPilot, pattern recognition, Paul Graham, paypal mafia, Peter Thiel, plant based meat, plutocrats, power law, pre–internet, price mechanism, price stability, proprietary trading, prudent man rule, quantitative easing, radical decentralization, Recombinant DNA, remote working, ride hailing / ride sharing, risk tolerance, risk/return, Robert Metcalfe, ROLM, rolodex, Ronald Coase, Salesforce, Sam Altman, Sand Hill Road, self-driving car, shareholder value, side project, Silicon Valley, Silicon Valley startup, Skype, smart grid, SoftBank, software is eating the world, sovereign wealth fund, Startup school, Steve Jobs, Steve Wozniak, Steven Levy, super pumped, superconnector, survivorship bias, tech worker, Teledyne, the long tail, the new new thing, the strength of weak ties, TikTok, Travis Kalanick, two and twenty, Uber and Lyft, Uber for X, uber lyft, urban decay, UUNET, vertical integration, Vilfredo Pareto, Vision Fund, wealth creators, WeWork, William Shockley: the traitorous eight, Y Combinator, Zenefits

“This guy is good people,” he kept thinking.[57] Besides, as a VC who had backed both retail guys and software guys, Kagle had an edge. Retail businesses were all about connecting with customers, and treating the customers as a community was a fine way to go about this. Software businesses had long understood the power of network effects, and Omidyar’s “community” was maybe just a cozy term for what a software guy would call a “network.” Network effects explained why Netscape had minted money for John Doerr. They explained why eBay was exploding. eBay’s growth rate also impressed the other Benchmark partners. “When companies grow exponentially, they don’t suddenly stop,” Andy Rachleff observed later, adding that it is the “second derivative”—the changes in the rate of growth of a company’s sales—that really tell a venture investor whether to back it.[58] And so, with the support of his colleagues, Kagle offered to invest $6.7 million in eBay, valuing the company at about $20 million.

WeWork was not a company but a “platform.” WeWork would benefit from “network effects.” WeWork was a “first mover,” a “thriving ecosystem,” “digitally enhanced,” and “scalable.”[19] To observers who were not inclined to think too critically, perhaps this sounded persuasive: after all, Silicon Valley behemoths from Google to Facebook had pumped themselves up to a commanding size before they had worried about profits. But the truth was that there was nothing particularly digital about an office-rental company, and the alleged network effects were weak, at best.[20] Adding WeWork tenants on New York’s Park Avenue would not improve the experience of WeWork tenants on nearby Fifth Avenue.

And although he doubted that the $3.5 billion would be used wisely, of course there was a chance that he was wrong. This humongous new war chest would empower Uber to buy more market share, and in a global blitzscaling war the biggest spender stood to win a prize of unimaginable value. Weighing his belief in corporate governance against his respect for network effects, Gurley wavered—perhaps Kalanick was right to call him Chicken Little? “We all believe in network effects, but has anyone been willing to lose $2 billion to $3 billion to stay at the table?” Gurley mused. “You could have invited Warren Buffett and Jack Welch and whoever else to join the Uber board, and they wouldn’t have known what to do.”[67] Deciding there was no way to derail Kalanick, Gurley assented to the Saudi investment, swallowing the poison pill of the three extra board seats.


pages: 344 words: 96,020

Hacking Growth: How Today's Fastest-Growing Companies Drive Breakout Success by Sean Ellis, Morgan Brown

Airbnb, Amazon Web Services, barriers to entry, behavioural economics, Ben Horowitz, bounce rate, business intelligence, business process, content marketing, correlation does not imply causation, crowdsourcing, dark pattern, data science, DevOps, disruptive innovation, Elon Musk, game design, gamification, Google Glasses, growth hacking, Internet of things, inventory management, iterative process, Jeff Bezos, Khan Academy, Kickstarter, Lean Startup, Lyft, Mark Zuckerberg, market design, minimum viable product, multi-armed bandit, Network effects, Paul Graham, Peter Thiel, Ponzi scheme, recommendation engine, ride hailing / ride sharing, Salesforce, Sheryl Sandberg, side project, Silicon Valley, Silicon Valley startup, Skype, Snapchat, software as a service, Steve Jobs, Steve Jurvetson, subscription business, TED Talk, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, working poor, Y Combinator, young professional

The negative press and bad feelings these kinds of tricks stir up can even be enough to torpedo the best products—we’ve seen it happen. Here are a number of best practices for experimenting with creating loops that will help you avoid such pitfalls. CONSIDER THE POTENTIAL TO TAP NETWORK EFFECTS The best loops are ones in which users are motivated to help sign up more users because doing so will improve their own experience of the product, such as with Facebook or LinkedIn. Network effect products have a great natural advantage with viral growth for this reason; they get better the more people are using them, so people are inclined to urge others to come on board. Social networks and messaging apps are obvious examples, as are big marketplaces that connect buyers directly with sellers, like eBay and Etsy, because more people using the site quite simply means: more potential customers for me as a seller and selection for me as a buyer.

But many companies have some degree of network effect potential that they can and should tap, even if it’s not obvious on the surface. For example, with Dropbox, the more files I have stored, the more likely I will invite people to join Dropbox to collaborate on them, while the more people I know who use Dropbox, the easier file sharing is going to be. That’s why doing the legwork to learn about how your customers use your product and where potential loops can be created and optimized is essential for tapping into viral growth driven through network effects. Eventbrite is a company that has created a powerful viral loop by tapping its network effect potential.

This tool tripled the number of auctions using PayPal on eBay and ignited its viral growth on the platform.4 LinkedIn, which had struggled to gain traction in its first year, saw their growth begin to skyrocket in late 2003, when the engineering team worked out an ingenious way for members to painlessly upload and invite their email contacts stored in their Outlook address book, kicking network effects growth into high gear.5 And in each of these cases, growth was achieved not with traditional advertising, but rather with a dash of programming smarts and on a shoestring budget. Approaches like these to building, growing, and retaining a customer base that relied not on traditional marketing plans, a pricey launch, and a big ad spend, but rather on harnessing software development to build marketing into products themselves, were proving both extraordinarily powerful and incredibly cost effective.


pages: 190 words: 53,409

Success and Luck: Good Fortune and the Myth of Meritocracy by Robert H. Frank

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Alan Greenspan, Amazon Mechanical Turk, American Society of Civil Engineers: Report Card, attribution theory, availability heuristic, behavioural economics, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, carried interest, Daniel Kahneman / Amos Tversky, David Brooks, deliberate practice, en.wikipedia.org, endowment effect, experimental subject, framing effect, full employment, Gary Kildall, high-speed rail, hindsight bias, If something cannot go on forever, it will stop - Herbert Stein's Law, income inequality, invisible hand, labor-force participation, lake wobegon effect, loss aversion, low interest rates, meritocracy, minimum wage unemployment, Network effects, Paradox of Choice, Paul Samuelson, Report Card for America’s Infrastructure, Richard Thaler, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Rory Sutherland, selection bias, side project, sovereign wealth fund, Steve Jobs, the long tail, The Wealth of Nations by Adam Smith, Tim Cook: Apple, ultimatum game, Vincenzo Peruggia: Mona Lisa, winner-take-all economy

Once Microsoft’s Windows graphical user interface reached parity with earlier rival Apple’s Macintosh, the numerical superiority of Windows users became a decisive advantage. Software developers concentrated their efforts on the Windows platform because more users meant more sales. And the greater availability of software titles, in turn, lured still more users to Windows, creating a positive feedback loop in the form of a network effect that drove Apple to the brink of bankruptcy. Network effects sometimes permit one firm’s ephemeral advantage to defeat a rival’s otherwise superior offering, as apparently happened in the battle between Betamax and VHS several decades ago. In the late 1980s, I purchased my first video cassette recorder, one of the last in my circle of friends to do so.

Lower shipping costs, coupled with falling trade barriers, have made it easier than ever to serve buyers everywhere. The upshot is that if an economic opportunity arises anywhere in the networked world, ambitious entrepreneurs are quickly able to discover and exploit it. Modern communications technology has also reinforced powerful network effects that have increased the rewards to top performers. Those effects helped explain the growing dominance of the Windows PC platform during the late 1980s. Once Microsoft’s Windows graphical user interface reached parity with earlier rival Apple’s Macintosh, the numerical superiority of Windows users became a decisive advantage.

But that worked only if both households used the same format, so here was an additional positive feedback loop that reinforced the reasons for choosing VHS. In the meantime, Sony had managed to extend Betamax recording times. But by then the downward spiral was well underway, and Betamax was doomed. Network effects merit special emphasis because they are perhaps the most important source of randomness in high-stakes winner-take-all contests. One reason for reading a book or seeing a film is to enjoy the experience of discussing it with others. Opportunities for such exchanges are of course more numerous when you read best-selling titles or watch popular films.


pages: 675 words: 141,667

Open Standards and the Digital Age: History, Ideology, and Networks (Cambridge Studies in the Emergence of Global Enterprise) by Andrew L. Russell

Aaron Swartz, American ideology, animal electricity, barriers to entry, borderless world, Californian Ideology, Charles Babbage, Chelsea Manning, Compatible Time-Sharing System, computer age, Computer Lib, creative destruction, digital divide, disruptive innovation, Donald Davies, Dr. Strangelove, Edward Snowden, Evgeny Morozov, Frederick Winslow Taylor, Hacker Ethic, Herbert Marcuse, Howard Rheingold, Hush-A-Phone, interchangeable parts, invisible hand, Ivan Sutherland, John Markoff, John Perry Barlow, Joseph Schumpeter, Leonard Kleinrock, Lewis Mumford, means of production, Menlo Park, Network effects, new economy, Norbert Wiener, open economy, OSI model, packet switching, pre–internet, radical decentralization, RAND corporation, RFC: Request For Comment, Richard Stallman, Ronald Coase, Ronald Reagan, scientific management, Silicon Valley, Steve Crocker, Steven Levy, Stewart Brand, systems thinking, technological determinism, technoutopianism, Ted Nelson, The Nature of the Firm, Thomas L Friedman, Thorstein Veblen, transaction costs, vertical integration, web of trust, work culture

Of these three categories, my primary focus in here is the third category: the creation of compatibility standards for communication networks. Scholars who have studied the interconnection of various components of communication networks often use three concepts – infrastructure, platforms, and network effects – to describe the important role of standards that enable compatibility and interoperability. The utility of these concepts lies in their connotations of stability, support, and external benefits that standards can generate. They emphasize the potential for a heap of standardized components to combine into a cohesive and flexible network that can, in turn, sustain more complex social and economic activity.43 The second fundamental question posed above – who makes standards?

Russell, “Industrial Legislatures: The American System of Standardization,” in International Standardization as a Strategic Tool (Geneva: International Electrotechnical Commission, 2006). 43 National Telecommunications and Information Administration, The National Information Infrastructure: An Agenda for Action (1993), http://www.ibiblio.org/nii (accessed January 4, 2012); Michael L. Katz and Carl Shapiro, “Systems Competition and Network Effects,” The Journal of Economic Perspectives 8 (1994): 93–115; Richard R. John, “Recasting the Information Infrastructure for the Industrial Age,” in Alfred D. Chandler, Jr. and James Cortada, eds., A Nation Transformed by Information: How Information Has Shaped the United States from Colonial Times to the Present (New York: Oxford University Press, 2000); Philip J.

These committees were important in their own era because they maintained fluidity in the dynamic industrial economy of the late nineteenth century: by defining standards, they facilitated the existence of multiple sources of supply and thus provided a means for small- and medium-sized industrial firms to avoid the specter of monopoly. As subsequent chapters in this book will show, these committees were also important in later eras because they created institutional and ideological precedents that computer and telecommunications engineers used in the latter decades of the twentieth century as they, too, sought to generate network effects and a competitive market structure. The history of industrial standards in the late nineteenth century, and my specific claim that the production of these standards fits within a conceptual middle ground between markets and hierarchies, might strike some readers as something of a detour from the gradual evolution of communication technologies of the digital age.


pages: 230 words: 76,655

Choose Yourself! by James Altucher

Airbnb, Albert Einstein, Bernie Madoff, bitcoin, cashless society, cognitive bias, dark matter, digital rights, do what you love, Elon Musk, estate planning, John Bogle, junk bonds, Mark Zuckerberg, mirror neurons, money market fund, Network effects, new economy, PageRank, passive income, pattern recognition, payday loans, Peter Thiel, Ponzi scheme, Rodney Brooks, rolodex, Salesforce, Saturday Night Live, sharing economy, short selling, side project, Silicon Valley, Skype, software as a service, Steve Jobs, superconnector, Uber for X, Vanguard fund, Virgin Galactic, Y2K, Zipcar

Franchising an idea makes something scalable. Having one physical location makes it not scalable. * * * Network Effect The more people who use a service, the more valuable it is. It’s not a business, but e-mail has the network effect going for it. The more people who signed up for e-mail, the more valuable it was that you also had to sign up for e-mail in order to communicate with everyone. Facebook and PayPal, as you may now have guessed, had the network effect. Domino’s, believe it or not, had the network effect. Where would you rather order from—the same place all your friends’ trust, or some random place that nobody has ever used before?

Why You Have to Quit Your Job This Year Be an Idea Machine How to Sell Anything How to Convince Anyone of Anything in Sixty Seconds Once the Ideas Get Rolling…: Ten Things You Need to Know about Leading Sharing Ideas: Being a Great Public Speaker Discussing Ideas: How to Negotiate with Anyone Using Ideas to Connect People: Building a Permission Network Developing Habits for Abundance Getting Rid of Your Excuses Why To-Do Lists Don’t Work * * * Part 2: Making Money in the Twenty-First Century Trends: The Power to See Things Differently Than Everyone Else Trend #1: Biotech Trend #2: Healthcare Trend #3: Observation Trend #4: The Temp Workforce Trend #5: Robotics Trend #6: Chemistry Trend #7: Financial Technology Lessons I Learned from Building a Business A Cheat-Sheet for Starting and Building a Business Why I Want My Kids to Know Who the Mysterious S. J. Scott Is Compound Interest and Compound Abundance But How Do You Value a Company? The Zero To One Approach Monopoly Scalability Network Effect Brand Demographics The Three D’s Model The Three P’s Model * * * Part 3: Keep and Grow the Money You Make The Myths We’ve All Been Told How to Avoid The Great Financial Scam of the Twenty-First Century Stop Paying Your Debts The Ultimate Guide To Investing The Ten Most Important Rules You Need to Know about Investing What Do I Do with My Own Money?

He highlights the four qualities of a good business—but it’s important to note that he’s not valuing a business. His goal is to make a great business—not just a great business but also a world-changing business. And there’s almost no way to value a world-changing business. It can be priceless. Thiel’s four attributes for a good business are monopoly, scalability, network effect, and brand. * * * Monopoly This one is a funny one because technically the word monopoly stirs up negative feelings of antitrust legislation, the government stepping in, anti-competition, AT&T in the ’80s, Microsoft in the ’90s, price manipulation, and even anti-capitalism. The genius of Peter’s perspective, however, is that it’s the exact opposite.


pages: 333 words: 76,990

The Long Good Buy: Analysing Cycles in Markets by Peter Oppenheimer

Alan Greenspan, asset allocation, banking crisis, banks create money, barriers to entry, behavioural economics, benefit corporation, Berlin Wall, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, book value, Bretton Woods, business cycle, buy and hold, Cass Sunstein, central bank independence, collective bargaining, computer age, credit crunch, data science, debt deflation, decarbonisation, diversification, dividend-yielding stocks, equity premium, equity risk premium, Fall of the Berlin Wall, financial engineering, financial innovation, fixed income, Flash crash, foreign exchange controls, forward guidance, Francis Fukuyama: the end of history, general purpose technology, gentrification, geopolitical risk, George Akerlof, Glass-Steagall Act, household responsibility system, housing crisis, index fund, invention of the printing press, inverted yield curve, Isaac Newton, James Watt: steam engine, Japanese asset price bubble, joint-stock company, Joseph Schumpeter, Kickstarter, Kondratiev cycle, liberal capitalism, light touch regulation, liquidity trap, Live Aid, low interest rates, market bubble, Mikhail Gorbachev, mortgage debt, negative equity, Network effects, new economy, Nikolai Kondratiev, Nixon shock, Nixon triggered the end of the Bretton Woods system, oil shock, open economy, Phillips curve, price stability, private sector deleveraging, Productivity paradox, quantitative easing, railway mania, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Solow, Ronald Reagan, Savings and loan crisis, savings glut, secular stagnation, Shenzhen special economic zone , Simon Kuznets, South Sea Bubble, special economic zone, stocks for the long run, tail risk, Tax Reform Act of 1986, technology bubble, The Great Moderation, too big to fail, total factor productivity, trade route, tulip mania, yield curve

In this context, it makes sense that the digital revolution has not yet boosted productivity.11 New technologies often have huge potential for productivity growth but can be difficult to adopt efficiently until there is a reorganisation in the manufacturing process and, in many cases, there exists a global standard in the technology. At the same time, the requirement to build out the full network effects can slow the initial penetration and therefore the productivity boost. The use of the steam engine, and coal for smelting, was also subject to these network effects. Coal transport was eventually a major boost to growth and productivity but could not be fully adopted until transport networks were in place. Equally, the large fixed costs of investment could be recouped only when enough new users had switched to the new power source.

A recent study by data scientists found that, in a sample of 51 major innovations introduced between 1825 and 2000, bubbles in equity prices were evident in 73% of the cases. They also found that the magnitude of these bubbles increases with the radicalness of innovations, with their potential to generate indirect network effects and with their public visibility at the time of commercialisation.12 Although it is not obvious that innovation was a trigger in the case of the tulip mania, it could be argued that it was important in the financial bubbles of the South Sea Company in Great Britain and the Mississippi Company in France in 1720.

The Railway Revolution and Connected Infrastructure Other parallels with the current wave of innovations can be found in the Industrial Revolution, when technology was again at the heart of growth. Many of these technologies developed from each other and even relied on each other, just as smartphones today rely on the internet, and vice versa. The network effect of innovation proved pivotal both following the invention of the printing press and during the railway revolution. During the Industrial Revolution, much of the opportunity was spurred by the extraordinary success and growth of railways. In 1830, England had 98 miles of railway track; by 1840 this had grown to about 1,500 miles, and by 1849 about 6,000 miles of track linked all of its major cities.3 Cheap money and a new (revolutionary) technology attracted a surge in investment, which, in turn, had knock-on effects for the growth in the number of factories, urbanisation and the emergence of new retail markets, all of which was not an obvious consequence at the time.


pages: 217 words: 63,287

The Participation Revolution: How to Ride the Waves of Change in a Terrifyingly Turbulent World by Neil Gibb

Abraham Maslow, Adam Neumann (WeWork), Airbnb, Albert Einstein, blockchain, Buckminster Fuller, call centre, carbon footprint, Clayton Christensen, collapse of Lehman Brothers, corporate social responsibility, creative destruction, crowdsourcing, data science, Didi Chuxing, disruptive innovation, Donald Trump, gentrification, gig economy, iterative process, Jeremy Corbyn, job automation, Joseph Schumpeter, Khan Academy, Kibera, Kodak vs Instagram, Mark Zuckerberg, Menlo Park, Minecraft, mirror neurons, Network effects, new economy, performance metric, ride hailing / ride sharing, shareholder value, side project, Silicon Valley, Silicon Valley startup, Skype, Snapchat, Steve Jobs, Susan Wojcicki, the scientific method, Thomas Kuhn: the structure of scientific revolutions, trade route, urban renewal, WeWork

They are a huge community of fans, who all share their love and passion for the music with one another. Because every fan is free to contribute and take part, information and ideas spread out fan-to-fan rather than from some central hub. This creates a self-generating and ever-expanding network, in which every node is active. This network effect gives it the ability to grow and spread with a dynamic similar to that of a biological virus. What makes the viral nature of networks of fans so virulent is their fidelity. Fans don’t just randomly pass stuff on. They are discerning, thoughtful and caring. They trust those they receive from and direct to other like-minded people.

It was an impressive surge, but a combination of easy access, no cost, and novelty meant that many apps initially spread rapidly, only to fall out of favour when the next shiny new thing emerged. What kicked Instagram beyond fad, though, was when its developers added the ability to tag images in early 2011. This was when the retroviral network effect kicked in. Biological retroviruses are malignant in nature – HIV being the highest-profile example. They negatively affect their recipients, often severely compromising them. But social retroviruses spread because they are altruistic – they positively change the lives of their hosts. Hashtags meant that users could connect and build relationships based around shared interests.

Mirror neurons explain why the combination of GoPro’s “point-of-view” camera and easy-to-use software was so successful – GoPro didn’t just allow those involved in extreme pursuits to participate more fully, it allowed the brains of those viewing it to have the experience of participating too. In an industry sector dominated by electrical giants, and with digital video cameras, seemingly in every shape, size, and price bracket, already available, the retroviral network effect kicked in. GoPro videos started to clock up millions of views on YouTube, and as they did, surfers and mountain bikers started to rethink what they might do for those who now had the experience of travelling with them rather than watching from a distance – it became about sharing the rush, not the spectacle.


pages: 567 words: 122,311

Lean Analytics: Use Data to Build a Better Startup Faster by Alistair Croll, Benjamin Yoskovitz

Airbnb, Amazon Mechanical Turk, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, barriers to entry, Bay Area Rapid Transit, Ben Horowitz, bounce rate, business intelligence, call centre, cloud computing, cognitive bias, commoditize, constrained optimization, data science, digital rights, en.wikipedia.org, Firefox, Frederick Winslow Taylor, frictionless, frictionless market, game design, gamification, Google X / Alphabet X, growth hacking, hockey-stick growth, Infrastructure as a Service, Internet of things, inventory management, Kickstarter, lateral thinking, Lean Startup, lifelogging, longitudinal study, Marshall McLuhan, minimum viable product, Network effects, PalmPilot, pattern recognition, Paul Graham, performance metric, place-making, platform as a service, power law, price elasticity of demand, reality distortion field, recommendation engine, ride hailing / ride sharing, rolodex, Salesforce, sentiment analysis, skunkworks, Skype, social graph, social software, software as a service, Steve Jobs, subscription business, telemarketer, the long tail, transaction costs, two-sided market, Uber for X, web application, Y Combinator

Businesses that can grow revenues while incremental costs stay still or decline have the potential to grow massively overnight. There are inherent network effects in the model. The phone system is the classic example of a business with a network effect: the more people who use it, the more useful it becomes. Network-effect businesses are wonderful, but they often have a two-edged sword: it’s great when you have 10 million users, but you may be deluding yourself about how easily users will adopt the product or service, and it’s hard to test the basic value with a small market at first. You need a plan for getting to the point where the network effects kick in and become obvious. You have several ways to monetize.

But as Internet giants like Google, Amazon, and Facebook have shown, parts of the Web are dystopian. Two-sided marketplaces are subject to strong network effects—the more inventory they have to offer, the more useful they become. A marketplace with no inventory, on the other hand, is useless. Successful two-sided marketplaces find a way to artificially populate either the buyer or the seller side early on. As a particular niche matures, this network effect means there will be a few dominant players—as is the case with Airbnb, VRBO, and a few others in the rental property space. Fraud and trust are the other big issues for such marketplaces.

Today, 1 million users is the benchmark, but it’s quickly going to 10 million. That’s a lot of users. Certain categories of product, such as social networks and e-commerce, are ossifying, with a few gigantic players competing and leaving little room for upstarts. Second, many consumer applications rely on network effects. The more users, the more value created for everyone. Nobody wants to use the telephone when they’re the only one with a telephone. Location-based applications typically require lots of scale, as do most marketplaces and user-generated content businesses, so that there are enough transactions and discussions to make things interesting.


pages: 398 words: 108,889

The Paypal Wars: Battles With Ebay, the Media, the Mafia, and the Rest of Planet Earth by Eric M. Jackson

bank run, business process, call centre, creative destruction, disintermediation, Elon Musk, index fund, Internet Archive, iterative process, Joseph Schumpeter, market design, Max Levchin, Menlo Park, Metcalfe’s law, money market fund, moral hazard, Multics, Neal Stephenson, Network effects, new economy, offshore financial centre, PalmPilot, Peter Thiel, Robert Metcalfe, Sand Hill Road, shareholder value, Silicon Valley, Silicon Valley startup, telemarketer, The Chicago School, the new new thing, Turing test

If nothing else, Yahoo’s collapse provided some insight into the relative strength of PayPal and eBay’s network effects. PayPal’s payments network was strong enough to survive the forced upgrade process, although our competitor did make up some ground by undercutting our pricing. EBay’s older auctions network, though, was far more powerful. It allowed Whitman to raise prices and still grow following the introduction of a minor fee system from Yahoo. PayPal may have enjoyed a modest network effect, but by banishing Yahoo auctions eBay had gone one step further and established itself as a person-to-person marketplace monopolist.

PayPal had a race on its hands, and it became clear there would be no prize for second place. Peter Thiel often claimed that growth was the most critical objective for a business like Confinity. Our CEO maintained that creating a successful payments service could only happen if we achieved something called a network effect. An interactive, inter-connected system, he explained, could exist only if it conferred value on the people who voluntarily chose to join it. The more people participating in it, the more beneficial the network would become since all the members could interact together. Hence a large, established network is very valuable to enter and very costly to leave; in essence it locks in its members and prevents would-be competitors from getting off the ground.

Luke went on to explain that since dotBank and X.com were now competing with Confinity, Peter and the management team believed that we needed to find the fastest way possible to scale up PayPal’s customer base. If we could increase our number of accounts to reach critical mass before our competitors, the resulting network effect would freeze out any opponents. Potential users would not waste time signing up for multiple accounts with different payment services if PayPal were ubiquitous. But if we failed and another service outpaced us, then there probably would be nothing we could do to catch up. Although stopping short of defining how many users constituted critical mass, the management team did agree that customer acquisition had to take on a higher importance than profitability in the short run.


pages: 661 words: 185,701

The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance by Eswar S. Prasad

access to a mobile phone, Adam Neumann (WeWork), Airbnb, algorithmic trading, altcoin, bank run, barriers to entry, Bear Stearns, Ben Bernanke: helicopter money, Bernie Madoff, Big Tech, bitcoin, Bitcoin Ponzi scheme, Bletchley Park, blockchain, Bretton Woods, business intelligence, buy and hold, capital controls, carbon footprint, cashless society, central bank independence, cloud computing, coronavirus, COVID-19, Credit Default Swap, cross-border payments, cryptocurrency, deglobalization, democratizing finance, disintermediation, distributed ledger, diversified portfolio, Dogecoin, Donald Trump, Elon Musk, Ethereum, ethereum blockchain, eurozone crisis, fault tolerance, fiat currency, financial engineering, financial independence, financial innovation, financial intermediation, Flash crash, floating exchange rates, full employment, gamification, gig economy, Glass-Steagall Act, global reserve currency, index fund, inflation targeting, informal economy, information asymmetry, initial coin offering, Internet Archive, Jeff Bezos, Kenneth Rogoff, Kickstarter, light touch regulation, liquidity trap, litecoin, lockdown, loose coupling, low interest rates, Lyft, M-Pesa, machine readable, Mark Zuckerberg, Masayoshi Son, mobile money, Money creation, money market fund, money: store of value / unit of account / medium of exchange, Network effects, new economy, offshore financial centre, open economy, opioid epidemic / opioid crisis, PalmPilot, passive investing, payday loans, peer-to-peer, peer-to-peer lending, Peter Thiel, Ponzi scheme, price anchoring, profit motive, QR code, quantitative easing, quantum cryptography, RAND corporation, random walk, Real Time Gross Settlement, regulatory arbitrage, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, risk/return, Robinhood: mobile stock trading app, robo advisor, Ross Ulbricht, Salesforce, Satoshi Nakamoto, seigniorage, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, smart contracts, SoftBank, special drawing rights, the payments system, too big to fail, transaction costs, uber lyft, unbanked and underbanked, underbanked, Vision Fund, Vitalik Buterin, Wayback Machine, WeWork, wikimedia commons, Y Combinator, zero-sum game

These factors reduce the costs of entry for new firms and products in addition to erasing some of the advantages of established firms such as experienced staff, expertise, deep pockets, and name recognition. Technology also helps overcome one of the major barriers to rapid change from the user perspective—network effects, which in this context refers to the convenience of adopting a payment method or service that is already in widespread use, rather than switching to a new alternative. Installing a payment app on one’s smartphone is relatively easy, although network effects might then appear in a different form. In China, as we will see, two digital payment platforms have grown dominant, making it difficult for new entrants with promising innovations to crack the market.

Thus, the implications for income and wealth inequality—which have risen sharply in many countries, fomenting political and social tensions—are far from obvious. While new technologies hold out the promise of democratizing and decentralizing finance—eroding the advantages of larger institutions and countries and thereby leveling the playing field—they could just as well end up having the opposite effect. Consider network effects, the phenomenon that adoption of a technology or service by more people increases its value, causing even more people to use it and creating a feedback loop that makes it dominant and less vulnerable to competition (think Facebook and Google). Despite the lower barriers to entry, the power of technology could lead to further concentration of market power among some payment systems and financial services providers.

This episode is analyzed in greater detail in Chapter 9, where I examine how governments and central banks around the world are balancing the trade-offs between the benefits and risks of Fintech. The suitable role the government ought to play is indeed a complex matter. In some advanced countries, including the United States, regulation has tended to protect incumbents and limit competition in various parts of the economy. Network effects and outdated antitrust regulations enabled the ascendancy of the Big Tech firms—Amazon, Apple, Facebook, Google—that dominate their respective spaces and gobble up any competitors they cannot squash. The US financial sector does not suffer from such extreme concentration, although the United States certainly has a handful of major banks and payment providers.


pages: 302 words: 95,965

How to Be the Startup Hero: A Guide and Textbook for Entrepreneurs and Aspiring Entrepreneurs by Tim Draper

3D printing, Airbnb, Apple's 1984 Super Bowl advert, augmented reality, autonomous vehicles, basic income, Berlin Wall, bitcoin, blockchain, Buckminster Fuller, business climate, carried interest, connected car, CRISPR, crowdsourcing, cryptocurrency, deal flow, Deng Xiaoping, discounted cash flows, disintermediation, Donald Trump, Elon Musk, Ethereum, ethereum blockchain, fake news, family office, fiat currency, frictionless, frictionless market, growth hacking, high net worth, hiring and firing, initial coin offering, Jeff Bezos, Kickstarter, Larry Ellison, low earth orbit, Lyft, Mahatma Gandhi, Marc Benioff, Mark Zuckerberg, Menlo Park, Metcalfe's law, Metcalfe’s law, Michael Milken, Mikhail Gorbachev, Minecraft, Moneyball by Michael Lewis explains big data, Nelson Mandela, Network effects, peer-to-peer, Peter Thiel, pez dispenser, Ralph Waldo Emerson, risk tolerance, Robert Metcalfe, Ronald Reagan, Rosa Parks, Salesforce, Sand Hill Road, school choice, school vouchers, self-driving car, sharing economy, Sheryl Sandberg, short selling, Silicon Valley, Skype, smart contracts, Snapchat, sovereign wealth fund, stealth mode startup, stem cell, Steve Jobs, Steve Jurvetson, Tesla Model S, Twitter Arab Spring, Uber for X, uber lyft, universal basic income, women in the workforce, Y Combinator, zero-sum game

Kik and Tango are two services that allow people to get free video calls, but any call that is made on those platforms adds a new customer to Kik or Tango. If you provide these companies with your contacts, their user base spreads, but you can more easily reach your friends. These viral marketing approaches induce “network effects.” One of the greatest network effects is described through Bitcoin. Bitcoin is nothing if no one uses it or values it (as is true with any currency), but as more people adopt Bitcoin as a way of transmitting funds, the more people recognize its value and its value rises. Metcalfe’s Law states that the value of a communications network is proportional to the square of the number of connected users of the system (n^2).

Since we had so many firsts in the venture capital business, our competitors often had to play catch up. In many geographies, we were the only one the entrepreneurs would think to go to, so we had no competition there. If you are first in your industry, you can also define that industry, leading to better long-term positioning and network effects that give you an edge. Be a leader. Decision Making I learned a lot about group decision making. As we grew the team at Draper Fisher Jurvetson (DFJ), we found that it became harder and harder to make decisions to invest in unusual and innovative companies because what one partner saw, other partners may not envision.

It took many years for the Internet to become mainstream, but when it did, it transformed industries. HTTP was the first real working protocol, so people standardized on it even though there were more elegant solutions, just as people today are frustrated with the limitations of Bitcoin but have made it a standard because of all the network effects around the early winner. The US was wise to leave the Internet unregulated and free because all the Internet entrepreneurs created startups in the US, and the economy around the Internet blossomed. Keeping its regulatory hands light should help innovators stay in the US. At this writing, the Commodities Futures Trade Board (CFTB) and the Securities and Exchange Commission (SEC) are both taking a wait-and-see attitude as they approach the burgeoning virtual market.


pages: 281 words: 95,852

The Googlization of Everything: by Siva Vaidhyanathan

"Friedman doctrine" OR "shareholder theory", 1960s counterculture, activist fund / activist shareholder / activist investor, AltaVista, barriers to entry, Berlin Wall, borderless world, Burning Man, Cass Sunstein, choice architecture, cloud computing, commons-based peer production, computer age, corporate social responsibility, correlation does not imply causation, creative destruction, data acquisition, death of newspapers, digital divide, digital rights, don't be evil, Firefox, Francis Fukuyama: the end of history, full text search, global pandemic, global village, Google Earth, Great Leap Forward, Howard Rheingold, Ian Bogost, independent contractor, informal economy, information retrieval, John Markoff, Joseph Schumpeter, Kevin Kelly, knowledge worker, libertarian paternalism, market fundamentalism, Marshall McLuhan, means of production, Mikhail Gorbachev, moral panic, Naomi Klein, Network effects, new economy, Nicholas Carr, PageRank, Panopticon Jeremy Bentham, pirate software, radical decentralization, Ray Kurzweil, Richard Thaler, Ronald Reagan, side project, Silicon Valley, Silicon Valley ideology, single-payer health, Skype, Social Responsibility of Business Is to Increase Its Profits, social web, Steven Levy, Stewart Brand, technological determinism, technoutopianism, the long tail, The Nature of the Firm, The Structural Transformation of the Public Sphere, Thorstein Veblen, Tyler Cowen, urban decay, web application, Yochai Benkler, zero-sum game

Google’s argument also ignores the “network effect” in communication markets: a service increases in value as more people use it.15 A telephone that is connected to only one other person has very limited value compared with one connected to 250 million people. YouTube is more valuable as a video platform because it attracts more contributors and viewers than any other comparable service. The more users it attracts, the more value each user derives from using it, and thus the more users it continues to attract. Network effects tend toward standardization and thus potential monopoly. The network effect for most of Google’s services is not the same exponential effect we saw with the proliferation of the telephone or fax machine.

If only one person in the world used Gmail, it would still be valuable to her, because it can work well with every other standard e-mail interface. But if only a few people used Google for Web searching, 20 R END E R UNTO CAESA R Google would not have the data it needs to improve the search experience. Google is better because it’s bigger, and it’s bigger because it’s better. This is an arithmetic, rather than geometric, network effect, but it matters nonetheless. Opting out or switching away from Google services degrades one’s ability to use the Web. It may seem as if I’m arguing that Google is a monopoly and needs to be treated as such, broken up using the antimonopoly legislation and regulations developed over the late nineteenth and early twentieth centuries.

Although Google’s contextual advertising and instant auctions often serve the interests of small firms, its freedom to set such rates at any level it desires allows it to crowd out some of the small firms that have grown to depend on Google for their most valuable advertising outlets—including small firms that are Google’s potential competitors. That’s mean, but it’s not illegal. If Google’s adver- REN D E R UNTO CA ESA R 29 tising dominance and revenues are a legal problem at all, it’s because of a touchy issue called cross-subsidization. Google can use its prominence in people’s lives—the network effect— and its surplus revenues to support its other ventures—its online document business, for example, which is likely to lose trivial money for the company. This process is not yet a direct threat to Microsoft, which can withstand a few thousand customers sneaking off to the “cloud” instead of using Word on their own laptops.


pages: 463 words: 105,197

Radical Markets: Uprooting Capitalism and Democracy for a Just Society by Eric Posner, E. Weyl

3D printing, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, anti-communist, augmented reality, basic income, Berlin Wall, Bernie Sanders, Big Tech, Branko Milanovic, business process, buy and hold, carbon footprint, Cass Sunstein, Clayton Christensen, cloud computing, collective bargaining, commoditize, congestion pricing, Corn Laws, corporate governance, crowdsourcing, cryptocurrency, data science, deep learning, DeepMind, Donald Trump, Elon Musk, endowment effect, Erik Brynjolfsson, Ethereum, feminist movement, financial deregulation, Francis Fukuyama: the end of history, full employment, gamification, Garrett Hardin, George Akerlof, global macro, global supply chain, guest worker program, hydraulic fracturing, Hyperloop, illegal immigration, immigration reform, income inequality, income per capita, index fund, informal economy, information asymmetry, invisible hand, Jane Jacobs, Jaron Lanier, Jean Tirole, Jeremy Corbyn, Joseph Schumpeter, Kenneth Arrow, labor-force participation, laissez-faire capitalism, Landlord’s Game, liberal capitalism, low skilled workers, Lyft, market bubble, market design, market friction, market fundamentalism, mass immigration, negative equity, Network effects, obamacare, offshore financial centre, open borders, Pareto efficiency, passive investing, patent troll, Paul Samuelson, performance metric, plutocrats, pre–internet, radical decentralization, random walk, randomized controlled trial, Ray Kurzweil, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Ronald Coase, Rory Sutherland, search costs, Second Machine Age, second-price auction, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, special economic zone, spectrum auction, speech recognition, statistical model, stem cell, telepresence, Thales and the olive presses, Thales of Miletus, The Death and Life of Great American Cities, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, trickle-down economics, Tyler Cowen, Uber and Lyft, uber lyft, universal basic income, urban planning, Vanguard fund, vertical integration, women in the workforce, Zipcar

Internet companies relentlessly pursued users under the banner “usage, revenues later” (a “backronym” for “url”). While partly driven by the dot-com stock market bubble, this strategy was also influenced by the dominant position Microsoft had established by offering its operating system at relatively low cost and in a form compatible with many hardware platforms. The “network effects” created by this strategy were widely viewed as placing Microsoft in a position to reap enormous rewards.9 This encouraged many venture capitalists to fund services that rapidly enlarged their user base even if their business model was unclear. As the bursting of the tech bubble cooled this euphoria, emerging tech giants like Google had to find a way to make money from their user base.

In short, the siren servers have occupied the central piece of real estate in a “digital commons” that has room for only a few players, and their interests are now opposed to paying technoserfs who are at present voluntarily tilling this land. Beyond the market structure and the nature of AI technology, the nature of social media makes these sites particularly resistant to competition. Most users want to be part of a social network that includes all of their friends. These network effects can make it difficult for competitors to enter the market unless they have enough financial backing to subsidize users for years—and the social norms around money not changing hands makes even that strategy challenging to pull off. Many social scientists have also argued that siren servers use techniques similar to those employed by casinos to make their content addictive.35 Together these properties raise the power of siren servers to lock users into patterns that may not serve their long-term interests.

Without some way to keep track of users, which would necessarily impose further burdens on the users themselves, paying for data could easily be exploited. The last three factors we highlight are mostly reasons that treating data as labor might also be socially undesirable. We believe these factors would be outweighed by the benefits in the medium term. However, when these factors are combined with siren servers’ monopsony power, network effects, and interests in manipulating user psychology, it is unsurprising that siren servers have not yet undertaken this ambitious transition. On the other hand, it is possible that siren servers that are poorer in data, such as Amazon, Apple, and Microsoft, could have both the scale to make competition possible and the incentive to break up this unproductive monopsony.


pages: 417 words: 97,577

The Myth of Capitalism: Monopolies and the Death of Competition by Jonathan Tepper

"Friedman doctrine" OR "shareholder theory", Affordable Care Act / Obamacare, air freight, Airbnb, airline deregulation, Alan Greenspan, bank run, barriers to entry, Berlin Wall, Bernie Sanders, Big Tech, big-box store, Bob Noyce, Boston Dynamics, business cycle, Capital in the Twenty-First Century by Thomas Piketty, citizen journalism, Clayton Christensen, collapse of Lehman Brothers, collective bargaining, compensation consultant, computer age, Cornelius Vanderbilt, corporate raider, creative destruction, Credit Default Swap, crony capitalism, diversification, don't be evil, Donald Trump, Double Irish / Dutch Sandwich, Dunbar number, Edward Snowden, Elon Musk, en.wikipedia.org, eurozone crisis, Fairchild Semiconductor, Fall of the Berlin Wall, family office, financial innovation, full employment, gentrification, German hyperinflation, gig economy, Gini coefficient, Goldman Sachs: Vampire Squid, Google bus, Google Chrome, Gordon Gekko, Herbert Marcuse, income inequality, independent contractor, index fund, Innovator's Dilemma, intangible asset, invisible hand, Jeff Bezos, Jeremy Corbyn, Jevons paradox, John Nash: game theory, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Rogoff, late capitalism, London Interbank Offered Rate, low skilled workers, Mark Zuckerberg, Martin Wolf, Maslow's hierarchy, means of production, merger arbitrage, Metcalfe's law, multi-sided market, mutually assured destruction, Nash equilibrium, Network effects, new economy, Northern Rock, offshore financial centre, opioid epidemic / opioid crisis, passive investing, patent troll, Peter Thiel, plutocrats, prediction markets, prisoner's dilemma, proprietary trading, race to the bottom, rent-seeking, road to serfdom, Robert Bork, Ronald Reagan, Sam Peltzman, secular stagnation, shareholder value, Sheryl Sandberg, Silicon Valley, Silicon Valley billionaire, Skype, Snapchat, Social Responsibility of Business Is to Increase Its Profits, SoftBank, Steve Jobs, stock buybacks, tech billionaire, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, undersea cable, Vanguard fund, vertical integration, very high income, wikimedia commons, William Shockley: the traitorous eight, you are the product, zero-sum game

Libraries of books at business schools are devoted to explaining different kinds of moats. Investors search for companies that achieve such scale that they become the “Low-Cost Producer.” Investors try to find firms with “High Switching Costs” that lock clients into a relationship. They try to find businesses with “Network Effects” where you win by being the only system people can use to call or pay each other, for example. They also look for industries with “Intangible Assets” such as patents that keep your competitors out by law. In the medical industry, in particular, patents allow companies to charge astronomic prices because, by law, no other companies can compete with them while they hold a patent.

For example, the latest Boeing 787 costs over $200 million and has parts from 45 separate companies.37 For other industries, the scale of research and development is now so great that no startup could ever compete. For example, given the complexity of microchips few companies can spend what Intel does. Intel's latest chip will have the equivalent of over 100 billion synapses.38 And finally, for some businesses network effects create winner-takes-all outcomes that favor vast size. In social networks, everyone wants to be on the network with the highest number of users, which is why Facebook has over two billion users. Yet not all industries fall into these categories. When it comes to productivity, small is often good.

The more people search on Google, the better the company gets at understanding what users are searching for and the better searching becomes. The more people search, the more likely advertisers will flock to Google, and the more revenue that is generated. The more advertisers there are, the more efficient ad auctions become. Most of the tech monopolies are known as “platform” companies with strong network effects: Google, Facebook, Amazon, Uber. What these companies have in common is that they all connect members of one group, like vacationers looking for rooms to rent, with another group, like landlords with spare rooms. Traditional manufacturing businesses, for instance, buy raw materials, make products, and sell those to customers.


pages: 278 words: 83,468

The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries

3D printing, barriers to entry, Benchmark Capital, call centre, Clayton Christensen, clean tech, clean water, cloud computing, commoditize, Computer Numeric Control, continuous integration, corporate governance, disruptive innovation, experimental subject, Ford Model T, Frederick Winslow Taylor, hockey-stick growth, Kanban, Lean Startup, Marc Andreessen, Mark Zuckerberg, Metcalfe’s law, minimum viable product, Mitch Kapor, Network effects, payday loans, Peter Thiel, pets.com, Ponzi scheme, pull request, reality distortion field, risk tolerance, scientific management, selection bias, Silicon Valley, Silicon Valley startup, six sigma, skunkworks, social bookmarking, stealth mode startup, Steve Jobs, the scientific method, Toyota Production System, transaction costs

By contrast, a marketplace company that matches buyers and sellers such as eBay will have a different growth model. Its success depends primarily on the network effects that make it the premier destination for both buyers and sellers to transact business. Sellers want the marketplace with the highest number of potential customers. Buyers want the marketplace with the most competition among sellers, which leads to the greatest availability of products and the lowest prices. (In economics, this sometimes is called supply-side increasing returns and demand-side increasing returns.) For this kind of startup, the important thing to measure is that the network effects are working, as evidenced by the high retention rate of new buyers and sellers.

However, the majority of the customers who were using IM products were not paying for the privilege. Instead, large media and portal companies such as AOL, Microsoft, and Yahoo! operated their IM networks as a loss leader for other services while making modest amounts of money through advertising. IM is an example of a market that involves strong network effects. Like most communication networks, IM is thought to follow Metcalfe’s law: the value of a network as a whole is proportional to the square of the number of participants. In other words, the more people in the network, the more valuable the network. This makes intuitive sense: the value to each participant is driven primarily by how many other people he or she can communicate with.

The top three networks controlled more than 80 percent of the overall usage and were in the process of consolidating their gains in market share at the expense of a number of smaller players.2 The common wisdom was that it was more or less impossible to bring a new IM network to market without spending an extraordinary amount of money on marketing. The reason for that wisdom is simple. Because of the power of network effects, IM products have high switching costs. To switch from one network to another, customers would have to convince their friends and colleagues to switch with them. This extra work for customers creates a barrier to entry in the IM market: with all consumers locked in to an incumbent’s product, there are no customers left with whom to establish a beachhead.


pages: 482 words: 125,973

Competition Demystified by Bruce C. Greenwald

additive manufacturing, airline deregulation, AltaVista, AOL-Time Warner, asset allocation, barriers to entry, book value, business cycle, creative destruction, cross-subsidies, deindustrialization, discounted cash flows, diversified portfolio, Do you want to sell sugared water for the rest of your life?, Everything should be made as simple as possible, fault tolerance, intangible asset, John Nash: game theory, Nash equilibrium, Network effects, new economy, oil shock, packet switching, PalmPilot, Pepsi Challenge, pets.com, price discrimination, price stability, revenue passenger mile, search costs, selective serotonin reuptake inhibitor (SSRI), shareholder value, Silicon Valley, six sigma, Steve Jobs, transaction costs, vertical integration, warehouse automation, yield management, zero-sum game

When the applications involved are critical to the company’s operations—order entry, inventory, invoicing and shipping, patient records, or bank transactions—few want to abandon a functioning system, even for one that promises vast increases in productivity, if it holds the threat of terminating the business through systemic failure, the ultimate “killer app.” These costs are reinforced by network effects. If your computer system must work compatibly with others, then it is difficult to change to an alternative when others do not, even if the alternative is in some ways superior. The move will be costly, to ensure continued compatibility, and perhaps disastrous if the new system cannot be meshed with the existing one.

Its economies of scale are vast, since writing standard programs is almost entirely a fixed-cost business. With its enormous customer base, Microsoft has been able to throw years of program writing into any project it thinks important and still end up spending less per unit sold than its competitors. Finally, there is the network effect, the fact that the value of the product to the user depends on how many other people also use it. A competitor to Microsoft in both the operating system and applications software businesses is at a huge disadvantage, no matter the quality of its offerings. TABLE 4.1 Microsoft’s returns on investment, 2002 ($ billion) Cash at end of year $ 38.6 Debt $ 0 Equity $ 52.2 Capital—cash $ 13.6 Net income $ 7.8 Earnings on cash $ 1.2 Earnings on software $ 6.6 Total return on capital 15.0% Return on capital invested in software 48.8% Apple has been competing against Microsoft since IBM introduced the PC in 1981.

Its research and development spending has always been larger on an absolute basis, while smaller as a percentage of sales, than AMD’s. In 1988 through 1990, for example, Intel spent twice as many dollars on R&D as AMD, but only two-thirds as much per dollar of sales (twelve cents versus eighteen cents). Network effects enhance both customer captivity and economies of scale. For programmers, computer designers, and typists in large firms, costs are reduced when users have to learn and interact only with the single software system that others are also using. The many PC manufacturers, each perpetually introducing new models, also benefit in cost, speed, and mutual compatibility by having a single chip standard on which to work.


pages: 416 words: 108,370

Hit Makers: The Science of Popularity in an Age of Distraction by Derek Thompson

Airbnb, Albert Einstein, Alexey Pajitnov wrote Tetris, always be closing, augmented reality, Clayton Christensen, data science, Donald Trump, Downton Abbey, Ford Model T, full employment, game design, Golden age of television, Gordon Gekko, hindsight bias, hype cycle, indoor plumbing, industrial cluster, information trail, invention of the printing press, invention of the telegraph, Jeff Bezos, John Snow's cholera map, Kevin Roose, Kodak vs Instagram, linear programming, lock screen, Lyft, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, Mary Meeker, Menlo Park, Metcalfe’s law, Minecraft, Nate Silver, Network effects, Nicholas Carr, out of africa, planned obsolescence, power law, prosperity theology / prosperity gospel / gospel of success, randomized controlled trial, recommendation engine, Robert Gordon, Ronald Reagan, Savings and loan crisis, Silicon Valley, Skype, Snapchat, social contagion, statistical model, Steve Ballmer, Steve Jobs, Steven Levy, Steven Pinker, subscription business, TED Talk, telemarketer, the medium is the message, The Rise and Fall of American Growth, Tyler Cowen, Uber and Lyft, Uber for X, uber lyft, Vilfredo Pareto, Vincenzo Peruggia: Mona Lisa, women in the workforce

Privately, they tend to share small troubles. Publicly, they want to be interesting. Privately, they want to be understood. The science of network effects says that, as a network grows, it becomes exponentially more valuable to each user. But if larger networks reward preening messages, this might turn off audiences seeking the intimate authenticity that tends to come from less crowded conversations—one to five, or even one to one. For those who want to avoid a deluge of self-congratulation, there is something like an “anti–network effect” in which large social networks become cloyingly self-congratulatory. One common criticism of Facebook and Instagram is that users make their lives look so fantastic that our own appears bleak by comparison.

On Reddit, each piece of content is two parts: a headline and an article link. Users can promote links with “upvotes” or register their dissatisfaction with “downvotes.” Several years ago, a team of computer science researchers at Stanford University submitted and resubmitted thousands of images to Reddit with different headlines and controlled for network effects to see if the Reddit community had a clear preference for certain titles. They wanted to understand a question that I think about all the time: What makes a great headline? In my time at The Atlantic, I’ve developed, refined, discarded, and revived countless pet theories about what makes a perfect headline.

That gives companies a dependable revenue stream and offers creators a bit of slack. There is a third dimension to giving people what they want beyond stated preferences (what I say I want) and revealed preferences (what I do). Those are latent preferences: what I don’t even know I want. Facebook observes several network effects that are too complicated to ask someone in a survey. For example, users never ask to see notifications of other people making new friends on Facebook. But “friending stories”—notifications that two people have become friends—have a contagious effect. When people see friendships forming, they’re more likely to add friends themselves, which creates more connections, which means more content, which makes News Feed a better experience for people.


pages: 288 words: 64,771

The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality by Brink Lindsey

Airbnb, Asian financial crisis, bank run, barriers to entry, Bernie Sanders, Build a better mousetrap, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, Cass Sunstein, collective bargaining, creative destruction, Credit Default Swap, crony capitalism, Daniel Kahneman / Amos Tversky, David Brooks, diversified portfolio, Donald Trump, Edward Glaeser, endogenous growth, experimental economics, experimental subject, facts on the ground, financial engineering, financial innovation, financial intermediation, financial repression, hiring and firing, Home mortgage interest deduction, housing crisis, income inequality, informal economy, information asymmetry, intangible asset, inventory management, invisible hand, Jones Act, Joseph Schumpeter, Kenneth Rogoff, Kevin Kelly, knowledge worker, labor-force participation, Long Term Capital Management, low skilled workers, Lyft, Mark Zuckerberg, market fundamentalism, mass immigration, mass incarceration, medical malpractice, Menlo Park, moral hazard, mortgage debt, Network effects, patent troll, plutocrats, principal–agent problem, regulatory arbitrage, rent control, rent-seeking, ride hailing / ride sharing, Robert Metcalfe, Robert Solow, Ronald Reagan, Savings and loan crisis, Silicon Valley, Silicon Valley ideology, smart cities, software patent, subscription business, tail risk, tech bro, too big to fail, total factor productivity, trade liberalization, tragedy of the anticommons, Tragedy of the Commons, transaction costs, tulip mania, Tyler Cowen, Uber and Lyft, uber lyft, Washington Consensus, white picket fence, winner-take-all economy, women in the workforce

Drug makers (through patent protection) and healthcare professionals (through occupational licensing) have exaggerated their gains from this rising demand by using the political process to constrict supply. In the rapidly growing information technology sector, the presence of strong network effects in information technology guarantees that some industries will feature “winner take all” markets with high levels of concentration. Lobbyists for strong copyright and patent protection for software have further amplified this dynamic by fortifying the winners’ market power with additional barriers to entry. Meanwhile, network effects have also led to geographic concentration, as highly skilled knowledge workers are increasingly congregating together in “human capital hubs.”

Mass immigration expands the ranks of low-skill workers even as demand for them has flagged. People increasingly marry within their social class, reducing the marital pathway to social mobility. The factors contributing to outsized gains at the very top are similarly diverse. They include the rise of “winner-take-all” markets produced by information technology’s network effects as well as globalization’s expansion of relevant market size; a huge run-up in stock prices; continuing growth in the size of big corporations (which has helped to fuel rising CEO pay); and a big drop in the top income tax rate (which has facilitated the use of high compensation as a strategy for attracting top managers, professionals, and executives).

The larger the sales volume, the more sales there are over which fixed costs can be spread and for which the unit costs of production will be lower. For pharmaceuticals, these scale economies are amplified by the high upfront costs of securing FDA approval; for software, they are ramped up by network effects (software used by many people can be much more valuable than software used by only a few). These factors push in the direction of high levels of inter-firm inequality within these industries; in other words, high levels of concentration in which a few firms account for the vast bulk of sales and profits.


pages: 265 words: 69,310

What's Yours Is Mine: Against the Sharing Economy by Tom Slee

4chan, Airbnb, Amazon Mechanical Turk, asset-backed security, barriers to entry, Benchmark Capital, benefit corporation, Berlin Wall, big-box store, bike sharing, bitcoin, blockchain, Californian Ideology, citizen journalism, collaborative consumption, commons-based peer production, congestion charging, Credit Default Swap, crowdsourcing, data acquisition, data science, David Brooks, democratizing finance, do well by doing good, don't be evil, Dr. Strangelove, emotional labour, Evgeny Morozov, gentrification, gig economy, Hacker Ethic, impact investing, income inequality, independent contractor, informal economy, invisible hand, Jacob Appelbaum, Jane Jacobs, Jeff Bezos, John Zimmer (Lyft cofounder), Kevin Roose, Khan Academy, Kibera, Kickstarter, license plate recognition, Lyft, machine readable, Marc Andreessen, Mark Zuckerberg, Max Levchin, move fast and break things, natural language processing, Netflix Prize, Network effects, new economy, Occupy movement, openstreetmap, Paul Graham, peer-to-peer, peer-to-peer lending, Peter Thiel, pre–internet, principal–agent problem, profit motive, race to the bottom, Ray Kurzweil, recommendation engine, rent control, ride hailing / ride sharing, sharing economy, Silicon Valley, Snapchat, software is eating the world, South of Market, San Francisco, TaskRabbit, TED Talk, the Cathedral and the Bazaar, the long tail, The Nature of the Firm, Thomas L Friedman, transportation-network company, Travis Kalanick, Tyler Cowen, Uber and Lyft, Uber for X, uber lyft, ultimatum game, urban planning, WeWork, WikiLeaks, winner-take-all economy, Y Combinator, Yochai Benkler, Zipcar

The markets are likely to be oligopolistic, consisting of a few, big firms, each with significant market power. For several years Apple’s iPod and Google’s YouTube had no serious competitors. Many of the sources of increasing returns for digital marketplaces are lumped under the term “network effects”: each new user of a service makes that service more valuable. Social media companies obviously benefit from network effects: you join the social media platform where the people you want to meet hang out. But there are other, less obvious forms of increasing returns: Google learns from every search carried out on its platform and so has a continuing advantage over its rivals (such as they are); advertisers want to be on the search engine that most people frequent, so the leading search engine will attract the most advertising money to feed its further growth.

But there are other, less obvious forms of increasing returns: Google learns from every search carried out on its platform and so has a continuing advantage over its rivals (such as they are); advertisers want to be on the search engine that most people frequent, so the leading search engine will attract the most advertising money to feed its further growth. Other network effects are familiar from the brick-and-mortar world: a successful corporate brand can communicate familiarity and dependability and so grow faster. Or, as is the case with Amazon, a growing business provides money that can be re-invested in building more efficient infrastructure, driving the next cycle of competitive advantage. Not that network effects continue without limit. New technologies do come along to challenge existing ones such as music streaming companies challenging Apple’s iTunes Store.

So Snapchat and Instagram become the social networks for the next generation, and new entrants (Yoho, Whisper, WhatsApp, Kik) try to create new identities that will appeal to a new demographic. Faced with generational changes in tastes, the best thing that this generation’s company can do is sometimes to buy its challengers, as Facebook has done by buying Instagram and WhatsApp. Network effects are not unique to the Internet, but the Internet provides an environment in which they can become particularly powerful. For one thing, they are not obviously limited by national borders in the way that, for example, phone networks are. Successful companies can become international without leaving home: without even trying, Google can serve up search results to Australians as easily as to Californians; the technical challenge of streaming a movie to Paris is not much different to streaming it to New York.


pages: 330 words: 91,805

Peers Inc: How People and Platforms Are Inventing the Collaborative Economy and Reinventing Capitalism by Robin Chase

Airbnb, Amazon Web Services, Andy Kessler, Anthropocene, Apollo 13, banking crisis, barriers to entry, basic income, Benevolent Dictator For Life (BDFL), bike sharing, bitcoin, blockchain, Burning Man, business climate, call centre, car-free, carbon tax, circular economy, cloud computing, collaborative consumption, collaborative economy, collective bargaining, commoditize, congestion charging, creative destruction, crowdsourcing, cryptocurrency, data science, deal flow, decarbonisation, different worldview, do-ocracy, don't be evil, Donald Shoup, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, Eyjafjallajökull, Ferguson, Missouri, Firefox, Free Software Foundation, frictionless, Gini coefficient, GPS: selective availability, high-speed rail, hive mind, income inequality, independent contractor, index fund, informal economy, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Jane Jacobs, Jeff Bezos, jimmy wales, job satisfaction, Kickstarter, Kinder Surprise, language acquisition, Larry Ellison, Lean Startup, low interest rates, Lyft, machine readable, means of production, megacity, Minecraft, minimum viable product, Network effects, new economy, Oculus Rift, off-the-grid, openstreetmap, optical character recognition, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, Post-Keynesian economics, Richard Stallman, ride hailing / ride sharing, Ronald Coase, Ronald Reagan, Salesforce, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, self-driving car, shareholder value, sharing economy, Silicon Valley, six sigma, Skype, smart cities, smart grid, Snapchat, sovereign wealth fund, Steve Crocker, Steve Jobs, Steven Levy, TaskRabbit, The Death and Life of Great American Cities, The Future of Employment, the long tail, The Nature of the Firm, Tragedy of the Commons, transaction costs, Turing test, turn-by-turn navigation, Uber and Lyft, uber lyft, vertical integration, Zipcar

But some platforms for participation deliver infrastructure and significant network effects. In other words, the value of the service goes up the more people participate. Zipcar, for example, is useful if there is just one car parked near your house, but when people in another city make it possible for you to rent cars there too, there is added value to you, albeit a marginal one. For BlaBlaCar, on the other hand, all the value is derived from network effects: Ridesharing only works when lots of people are participating. These network effects are powerful and can make it very hard for a new entrant to enter the market and go up against an established company with a very large network.

When you can connect and share assets, people, and ideas, everything changes, not just how you rent a car. Google, eBay, Facebook, OKCupid, YouTube, Waze, Airbnb, WhatsApp, Duolingo—all are part of this transformation of capitalism. Web 2.0, the sharing economy, crowdsourcing, collaborative production, collaborative consumption, and network effects are simply terms we’ve created along the way in an effort to capture what is going on. Attributing all this to “the Internet” misses the building blocks and therefore the ability to replicate this type of activity in a more controlled way. There is one structure that underlies all these—excess capacity + a platform for participation + diverse peers—and it is fundamentally changing the way we work, build businesses, and shape economies.

And, it learns. If managed correctly, it becomes a recursive learning machine that just gets more effective with every measured mistake. This is what I’ve called miracle #2, exponential learning. As the platform starts to really perform, the tendency is for larger platforms to eat smaller ones because of network effects: We all want to use the short-term rental service with the broadest possible range of rooms advertised, or be on the social network that has most of our friends on it. The winners keep winning and tend to wind up with monopolistic power. She continues: It soon grows beyond replacement. Just look at how even after [Microsoft] management wasted billions of dollars on Bing, it is still failing against [Google], while [Google] never even missed a quarter.


How to Stand Up to a Dictator by Maria Ressa

2021 United States Capitol attack, activist lawyer, affirmative action, Affordable Care Act / Obamacare, airport security, anti-communist, Asian financial crisis, Big Tech, Brexit referendum, business process, business process outsourcing, call centre, Cambridge Analytica, citizen journalism, cognitive bias, colonial rule, commoditize, contact tracing, coronavirus, COVID-19, crowdsourcing, delayed gratification, disinformation, Donald Trump, fake news, future of journalism, iterative process, James Bridle, Kevin Roose, lockdown, lone genius, Mahatma Gandhi, Mark Zuckerberg, Marshall McLuhan, Menlo Park, Milgram experiment, move fast and break things, natural language processing, Nelson Mandela, Network effects, obamacare, performance metric, QAnon, recommendation engine, Sheryl Sandberg, Shoshana Zuboff, Silicon Valley, Steven Levy, surveillance capitalism, the medium is the message, The Wisdom of Crowds, TikTok, Twitter Arab Spring, work culture

In July 2010, a survey by the trusted polling institution Pulse Asia showed the full impact of our “Ako ang Simula,” or “I am the beginning,” campaign: Filipinos had reached the highest level of optimism nationwide since the Pulse Asia surveys had begun in 1999, with 53 percent of people feeling optimistic and only 11 percent pessimistic, the lowest the group had recorded. The survey also confirmed a boost in our network’s credibility ratings, putting ABS-CBN first in all of the Philippines. Our plan had worked. It worked, that is, until the old-style network effect—the power of the country’s largest media organization—was turned upside down by technology’s own, far more powerful network effects. ABS-CBN taught me the best and the worst of Filipino culture—the kindness and loyalty, the tendency toward patronage—and helped lay the groundwork for how I handle Rappler today. For six years at ABS-CBN News and Current Affairs, we turned things around.

Dedication For journalists and citizens who #HoldTheLine Contents Cover Title Page Dedication Foreword by Amal Clooney Prologue: The Invisible Atom Bomb: Live in the (Present) Moment (of the Past) Part I: Homecoming: Power, the Press, and the Philippines, 1963–2004 Chapter 1: The Golden Rule: Make the Choice to Learn Chapter 2: The Honor Code: Draw the Line Chapter 3: The Speed of Trust: Be Vulnerable Chapter 4: The Mission of Journalism: Be Honest Part II: The Rise of Facebook, Rappler, and the Internet’s Black Hole, 2005–2017 Chapter 5: The Network Effect: Hitting the Tipping Point Chapter 6: Creating Ripples of Change: Build a Team Chapter 7: How Friends of Friends Brought Democracy Down: Think Slow, Not Fast Chapter 8: How the Rule of Law Crumbled from Within: Silence Is Complicity Part III: Crackdown: Arrests, Elections, and the Fight for Our Future, 2018–Present Chapter 9: Surviving a Thousand Cuts: Believe in the Good Chapter 10: Don’t Become a Monster to Fight a Monster: Embrace Your Fear Chapter 11: Hold the Line: What Doesn’t Kill You Makes You Stronger Chapter 12: Why Fascism Is Winning: Collaborate, Collaborate, Collaborate Epilogue 2021 Nobel Peace Prize Laureates Maria Ressa and Dmitry Muratov’s 10-Point Plan to Address the Information Crisis Acknowledgments Notes About the Author Copyright About the Publisher Foreword When you think of a superhero, you may not imagine a five-foot-two-inch woman with a pen in her hand.

I was ready to experiment with the ideas I believed in. I wanted to build my vision for journalism, a news organization in the Philippines so strong and committed to the truth that no government could dream of touching it. Part II The Rise of Facebook, Rappler, and the Internet’s Black Hole 2005–2017 Chapter 5 The Network Effect Hitting the Tipping Point At ABS-CBN, May 2010 When I took over ABS-CBN News, I was given the freedom and resources to create something new, a vision of how a country’s largest network could help in nation-building. I believe now that the steps we took to change ABS-CBN’s values, culture, and content in the early twenty-first century offer clues for how the media can help rebuild democracy around the world.


pages: 484 words: 114,613

No Filter: The Inside Story of Instagram by Sarah Frier

Airbnb, Amazon Web Services, Benchmark Capital, blockchain, Blue Bottle Coffee, Cambridge Analytica, Clayton Christensen, cloud computing, cryptocurrency, data science, disinformation, Donald Trump, Elon Musk, end-to-end encryption, fake news, Frank Gehry, growth hacking, Jeff Bezos, Marc Andreessen, Mark Zuckerberg, Menlo Park, Minecraft, move fast and break things, Network effects, new economy, Oculus Rift, Peter Thiel, ride hailing / ride sharing, Sheryl Sandberg, side project, Silicon Valley, Silicon Valley startup, Snapchat, Steve Jobs, TaskRabbit, TikTok, Tony Hsieh, Travis Kalanick, ubercab, Zipcar

Any fast-growing social media product was a threat to Facebook’s network effect and the time users spent there. It was Facebook’s job to not let anyone else catch up; Zuckerberg had instilled this value in his employees by ending all staff meetings with an unambiguous rallying cry: “Domination!” There were signs Instagram was achieving a winner-take-all effect. Its growth was accelerating. At the time of the acquisition, the company had 30 million users. By the middle of the summer, it had more than 50 million. The Office of Fair Trading’s report says nothing about network effects, indicating that Facebook didn’t fully explain its logic behind the deal.

He worked with Guy Oseary, Madonna’s manager, to sort through all the opportunities, and ended up giving money to dozens of companies—not just in social media—including Uber, Airbnb, Spotify, and Instagram competitor Path. “Whenever there was a new type of experience for consumers, there would be like three companies doing the same thing,” he remembers. There were several versions of Instagram, Pinterest, and Uber. “Who would get traction first? And then the network effect would take all.” To know if Instagram was a fad or a lasting network, Kutcher and Oseary looked at data that showed users were spending more and more time there, building a habit. “It’s a competition for attention,” Kutcher explained. “Everybody learned that from Facebook and Twitter.” Oseary and Kutcher struggled to get a meeting.

PicPlz, the app that Systrom and Krieger were so determined to beat after Andreessen Horowitz’s investment in 2010, had shut down in July 2012 and wasn’t even mentioned. The regulators were shortsightedly looking at the current marketplace and ignoring what Facebook and Instagram had the potential to be in a few years or even months. The real value of Facebook and Instagram was in their network effects—the momentum they gained as more people joined. Even if someone enjoyed using an Instagram competitor like Path more, if their friends weren’t on it, they wouldn’t stay. (Path shut down in 2018 after selling to a South Korean company, Daum Kakao, three years before.) Zuckerberg understood that the hardest part of creating a business would be creating a new habit for users and a group they all wanted to spend time with.


pages: 170 words: 49,193

The People vs Tech: How the Internet Is Killing Democracy (And How We Save It) by Jamie Bartlett

Ada Lovelace, Airbnb, AlphaGo, Amazon Mechanical Turk, Andrew Keen, autonomous vehicles, barriers to entry, basic income, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, blockchain, Boris Johnson, Californian Ideology, Cambridge Analytica, central bank independence, Chelsea Manning, cloud computing, computer vision, creative destruction, cryptocurrency, Daniel Kahneman / Amos Tversky, data science, deep learning, DeepMind, disinformation, Dominic Cummings, Donald Trump, driverless car, Edward Snowden, Elon Musk, Evgeny Morozov, fake news, Filter Bubble, future of work, general purpose technology, gig economy, global village, Google bus, Hans Moravec, hive mind, Howard Rheingold, information retrieval, initial coin offering, Internet of things, Jeff Bezos, Jeremy Corbyn, job automation, John Gilmore, John Maynard Keynes: technological unemployment, John Perry Barlow, Julian Assange, manufacturing employment, Mark Zuckerberg, Marshall McLuhan, Menlo Park, meta-analysis, mittelstand, move fast and break things, Network effects, Nicholas Carr, Nick Bostrom, off grid, Panopticon Jeremy Bentham, payday loans, Peter Thiel, post-truth, prediction markets, QR code, ransomware, Ray Kurzweil, recommendation engine, Renaissance Technologies, ride hailing / ride sharing, Robert Mercer, Ross Ulbricht, Sam Altman, Satoshi Nakamoto, Second Machine Age, sharing economy, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Silicon Valley startup, smart cities, smart contracts, smart meter, Snapchat, Stanford prison experiment, Steve Bannon, Steve Jobs, Steven Levy, strong AI, surveillance capitalism, TaskRabbit, tech worker, technological singularity, technoutopianism, Ted Kaczynski, TED Talk, the long tail, the medium is the message, the scientific method, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, too big to fail, ultimatum game, universal basic income, WikiLeaks, World Values Survey, Y Combinator, you are the product

In small, local markets, there can be lots of best taxi services, best bookstores or best record shops. But, with digital markets, you only need one. Why would I use the quite good local taxi firm when I can use brilliant Uber? Humans are bad at understanding the power of these network effects, because we tend to think in linear form, whereas networks can grow exponentially. And so we are stunned every time a new billion-dollar mega-corporation appears almost overnight. Network effects are so powerful because they are self-reinforcing. The more users Uber has, the more drivers (and data) it attracts, and the better service it can offer, which means it gets more users, which means it continues to grow.

They are products of completely different eras and run according to different rules and principles. The machinery of democracy was built during a time of nation-states, hierarchies, deference and industrialised economies. The fundamental features of digital tech are at odds with this model: non-geographical, decentralised, data-driven, subject to network effects and exponential growth. Put simply: democracy wasn’t designed for this. That’s not really anyone’s fault, not even Mark Zuckerberg’s. I’m hardly alone in thinking this, by the way. Many early digital pioneers saw how what they called ‘cyberspace’ was mismatched with the physical world, too.

It seems obvious now that the nature of digital technology makes monopolies more rather than less likely. The most important reason for this is the effect of networks. If you join Facebook, your friends will be more likely to join too, which in turn makes their friends more likely to join. When everything is connected, such network effects can spread further, and far more quickly. It is such a powerful force that the biggest problem faced by Facebook today is that it’s running out of humans to connect. The same thing happens with online markets. When I was young, I bought my music at a nearby record shop, where my choices were constrained by geography and limited information.


pages: 533

Future Politics: Living Together in a World Transformed by Tech by Jamie Susskind

3D printing, additive manufacturing, affirmative action, agricultural Revolution, Airbnb, airport security, algorithmic bias, AlphaGo, Amazon Robotics, Andrew Keen, Apollo Guidance Computer, artificial general intelligence, augmented reality, automated trading system, autonomous vehicles, basic income, Bertrand Russell: In Praise of Idleness, Big Tech, bitcoin, Bletchley Park, blockchain, Boeing 747, brain emulation, Brexit referendum, British Empire, business process, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, cashless society, Cass Sunstein, cellular automata, Citizen Lab, cloud computing, commons-based peer production, computer age, computer vision, continuation of politics by other means, correlation does not imply causation, CRISPR, crowdsourcing, cryptocurrency, data science, deep learning, DeepMind, digital divide, digital map, disinformation, distributed ledger, Donald Trump, driverless car, easy for humans, difficult for computers, Edward Snowden, Elon Musk, en.wikipedia.org, end-to-end encryption, Erik Brynjolfsson, Ethereum, ethereum blockchain, Evgeny Morozov, fake news, Filter Bubble, future of work, Future Shock, Gabriella Coleman, Google bus, Google X / Alphabet X, Googley, industrial robot, informal economy, intangible asset, Internet of things, invention of the printing press, invention of writing, Isaac Newton, Jaron Lanier, John Markoff, Joseph Schumpeter, Kevin Kelly, knowledge economy, Large Hadron Collider, Lewis Mumford, lifelogging, machine translation, Metcalfe’s law, mittelstand, more computing power than Apollo, move fast and break things, natural language processing, Neil Armstrong, Network effects, new economy, Nick Bostrom, night-watchman state, Oculus Rift, Panopticon Jeremy Bentham, pattern recognition, payday loans, Philippa Foot, post-truth, power law, price discrimination, price mechanism, RAND corporation, ransomware, Ray Kurzweil, Richard Stallman, ride hailing / ride sharing, road to serfdom, Robert Mercer, Satoshi Nakamoto, Second Machine Age, selection bias, self-driving car, sexual politics, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, smart contracts, Snapchat, speech recognition, Steve Bannon, Steve Jobs, Steve Wozniak, Steven Levy, tech bro, technological determinism, technological singularity, technological solutionism, the built environment, the Cathedral and the Bazaar, The Structural Transformation of the Public Sphere, The Wisdom of Crowds, Thomas L Friedman, Tragedy of the Commons, trolley problem, universal basic income, urban planning, Watson beat the top human players on Jeopardy!, work culture , working-age population, Yochai Benkler

I do not know if these firms will dominate the economy of the digital lifeworld as they do today’s. But there are structural reasons why digital technology is likely to facilitate the concentration of more and more wealth in the hands of fewer and fewer people and corporations. Probably the most important, besides automation, is the network effect. The economy is increasingly interconnected in a web of overlapping networks, which have a number of important characteristics. Firstly, they are generally united by standards: shared rules or practices that set the rules of cooperation among members. Secondly, the more people adopt a given standard (by joining the network and abiding by its rules) the more valuable that standard becomes.28 Metcalfe’s Law holds that the value of a network increases exponentially with the number of nodes attached: doubling the number of nodes means quadrupling the value, and so on.

If you can get out ahead of the competition, every additional user/member will contribute to the acceleration of growth—and before long it’ll be too late for others to catch up. An upstart rival to Facebook may offer superior functionality but it’ll be worthless as a social network if it doesn’t reach a critical mass of members. The big tech firms mentioned above have all benefitted from the network effect. As soon as Microsoft Windows became the standard operating system for personal computers, it was always going to take decades for other firms to establish a rival standard. OUP CORRECTED PROOF – FINAL, 26/05/18, SPi РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Wealth Cyclone 321 Facebook sits at the apex of the social network it provides (often called a ‘platform’), setting the standards in the code that constitutes the platform.

Lanier’s point may remind you of the discussion of bots and democracy in chapter thirteen. If deliberation takes place over an open network and one group brings a horde of powerful AI bots to argue their case, then they’ll end up dominating the discussion. It’s like bringing a gun to a knife-fight. The network effect, and the ability to dominate a network using powerful digital technology, partly explain why tech and finance have grown more than any other sector since the 1980s, rising from about 10 per cent to 40 per cent of market capitalization.31 OUP CORRECTED PROOF – FINAL, 26/05/18, SPi РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 322 FUTURE POLITICS Whether you own the platform or dominate the network, the point is the same: in an increasingly networked economy, those with the most productive digital technologies will do better and better.


pages: 1,239 words: 163,625

The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated by Gautam Baid

Abraham Maslow, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, Albert Einstein, Alvin Toffler, Andrei Shleifer, asset allocation, Atul Gawande, availability heuristic, backtesting, barriers to entry, beat the dealer, Benoit Mandelbrot, Bernie Madoff, bitcoin, Black Swan, book value, business process, buy and hold, Cal Newport, Cass Sunstein, Checklist Manifesto, Clayton Christensen, cognitive dissonance, collapse of Lehman Brothers, commoditize, corporate governance, correlation does not imply causation, creative destruction, cryptocurrency, Daniel Kahneman / Amos Tversky, deep learning, delayed gratification, deliberate practice, discounted cash flows, disintermediation, disruptive innovation, Dissolution of the Soviet Union, diversification, diversified portfolio, dividend-yielding stocks, do what you love, Dunning–Kruger effect, Edward Thorp, Elon Musk, equity risk premium, Everything should be made as simple as possible, fear index, financial independence, financial innovation, fixed income, follow your passion, framing effect, George Santayana, Hans Rosling, hedonic treadmill, Henry Singleton, hindsight bias, Hyman Minsky, index fund, intangible asset, invention of the wheel, invisible hand, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, Jeff Bezos, John Bogle, Joseph Schumpeter, junk bonds, Kaizen: continuous improvement, Kickstarter, knowledge economy, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, low interest rates, Mahatma Gandhi, mandelbrot fractal, margin call, Mark Zuckerberg, Market Wizards by Jack D. Schwager, Masayoshi Son, mental accounting, Milgram experiment, moral hazard, Nate Silver, Network effects, Nicholas Carr, offshore financial centre, oil shock, passive income, passive investing, pattern recognition, Peter Thiel, Ponzi scheme, power law, price anchoring, quantitative trading / quantitative finance, Ralph Waldo Emerson, Ray Kurzweil, Reminiscences of a Stock Operator, reserve currency, Richard Feynman, Richard Thaler, risk free rate, risk-adjusted returns, Robert Shiller, Savings and loan crisis, search costs, shareholder value, six sigma, software as a service, software is eating the world, South Sea Bubble, special economic zone, Stanford marshmallow experiment, Steve Jobs, Steven Levy, Steven Pinker, stocks for the long run, subscription business, sunk-cost fallacy, systems thinking, tail risk, Teledyne, the market place, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, time value of money, transaction costs, tulip mania, Upton Sinclair, Walter Mischel, wealth creators, Yogi Berra, zero-sum game

This kind of business actually becomes stronger as it grows and displays accelerating fundamental momentum. Look at Airbnb’s strong two-sided network as an example of a business model that greatly benefits from positive feedback loops (figure 22.1). FIGURE 22.1 The strong network effect enjoyed by Airbnb. Source: “Airbnb TWOS: Network Effects,” SlideShare, March 7, 2016, https://www.slideshare.net/a16z/network-effects-59206938/34-AirbnbT_W_O_S_I. Low-Cost Advantages Low-cost advantages stem from various sources, including process, scale, niche, and interrelatedness. Process. Advantage accrues when a company creates a cheaper way to deliver a product, which cannot be replicated easily, as with Inditex, GEICO, or Southwest Airlines.

These costs tend to be associated with critical products (such as Oracle’s SAP software) that are so tightly integrated with the customer’s business processes that it would be too disruptive and costly to switch vendors, or with products that have high benefit-to-cost ratios (such as Moody’s). Network Effects The network effect advantage comes from providing a product or service that increases in value as the number of users expands, as with Airbnb, Visa, Uber, or the National Stock Exchange of India. This functions as a strong moat as long as pricing power is not abused and the user experience does not degrade.

Only a few rare businesses enjoy excess returns for many years by creating structural competitive advantages or economic moats. An extended period of excess returns increases business value. Competitive advantages stem from various sources, including intangible assets, such as brands, patents, and licenses; switching costs; network effects; or low-cost advantages. Intangible Assets Some brands are ubiquitous and widely trusted. Think Budweiser, Tide, and Maggi. They lower search costs for consumers and offer psychological advantages. They make prospective customers switch from a system 2 type of slow, reasoned, reflective thinking to a system 1 type of fast, automatic, reflexive thinking through mental association and Pavlovian conditioning.


pages: 505 words: 161,581

The Founders: The Story of Paypal and the Entrepreneurs Who Shaped Silicon Valley by Jimmy Soni

activist fund / activist shareholder / activist investor, Ada Lovelace, AltaVista, Apple Newton, barriers to entry, Big Tech, bitcoin, Blitzscaling, book value, business logic, butterfly effect, call centre, Carl Icahn, Claude Shannon: information theory, cloud computing, Colonization of Mars, Computing Machinery and Intelligence, corporate governance, COVID-19, crack epidemic, cryptocurrency, currency manipulation / currency intervention, digital map, disinformation, disintermediation, drop ship, dumpster diving, Elon Musk, Fairchild Semiconductor, fear of failure, fixed income, General Magic , general-purpose programming language, Glass-Steagall Act, global macro, global pandemic, income inequality, index card, index fund, information security, intangible asset, Internet Archive, iterative process, Jeff Bezos, Jeff Hawkins, John Markoff, Kwajalein Atoll, Lyft, Marc Andreessen, Mark Zuckerberg, Mary Meeker, Max Levchin, Menlo Park, Metcalfe’s law, mobile money, money market fund, multilevel marketing, mutually assured destruction, natural language processing, Network effects, off-the-grid, optical character recognition, PalmPilot, pattern recognition, paypal mafia, Peter Thiel, pets.com, Potemkin village, public intellectual, publish or perish, Richard Feynman, road to serfdom, Robert Metcalfe, Robert X Cringely, rolodex, Sand Hill Road, Satoshi Nakamoto, seigniorage, shareholder value, side hustle, Silicon Valley, Silicon Valley startup, slashdot, SoftBank, software as a service, Startup school, Steve Ballmer, Steve Jobs, Steve Jurvetson, Steve Wozniak, technoutopianism, the payments system, transaction costs, Turing test, uber lyft, Vanguard fund, winner-take-all economy, Y Combinator, Y2K

The product spec made a business case for X-Click, too. It would fuel PayPal’s virality, bringing its products to websites everywhere, and dial up PayPal’s network effects. Other “tightly integrated payment competitors like eBay/Billpoint, Yahoo/dotBank, and Amazon 1-Click/zShops” would remain so focused on home turf payments that they’d miss PayPal’s spread across the web. The document pushed a familiar refrain about time to market. “Speed is of the essence for three reasons,” the spec noted: The product’s inherent network effects meant the first mover will have a tremendous advantage. Every day we have the market to ourselves is an irreplaceable chance to build an insuperable lead.

* * * By that December, Confinity was processing a growing number of eBay transactions. “We had an early lead,” Confinity cofounder Ken Howery remembered. By launching first and reaping the rewards, Confinity proved Musk’s intuition correct: in the era’s overheated start-up environment, time to market was critical. And even more so for payments firms. “Network effects trump everything else,” Howery explained, alluding to the economics principle developed to explain the growth of the telephone in the early 1900s. Each new telephone added to the network increased the value of every other telephone on it and grew the incentives for non–telephone owners to buy one.

On paper and in the press, X.com appeared to have much going for it: a team of talented technologists, a fast-growing base of nearly half a million users, and leadership that included the former CEO of Intuit and an entrepreneur boasting a nine-figure exit from his last start-up. Thanks to its merger, the companies could make a powerful pitch: in neutralizing their former foremost competitor, wedding together their user bases, and leveraging network effects, the combined company could capture the entire online payments market. Even as merger terms were being finalized, Bill Harris instructed Levchin to tell Yahoo that its deal-making with both companies was now off. “The biggest thing was the creation of a unified front,” Levchin explained to a Stanford audience years later.


pages: 25 words: 5,789

Data for the Public Good by Alex Howard

"World Economic Forum" Davos, 23andMe, Atul Gawande, Cass Sunstein, cloud computing, crowdsourcing, data science, Hernando de Soto, Internet of things, Kickstarter, lifelogging, machine readable, Network effects, openstreetmap, Silicon Valley, slashdot, social intelligence, social software, social web, web application

“Data is useful when it’s integrated with other stuff that does useful jobs for doctors, patients and consumers.” What Lies Ahead There are four trends that warrant special attention as we look to the future of data for public good: civic network effects, hybridized data models, personal data ownership and smart disclosure. Civic Network Effects Community is a key ingredient in successful open government data initiatives. It’s not enough to simply release data and hope that venture capitalists and developers magically become aware of the opportunity to put it to work. Marketing open government data is what repeatedly brought federal Chief Technology Officer Aneesh Chopra and Park out to Silicon Valley, New York City and other business and tech hubs.


pages: 238 words: 73,824

Makers by Chris Anderson

3D printing, Airbnb, Any sufficiently advanced technology is indistinguishable from magic, Apple II, autonomous vehicles, barriers to entry, Buckminster Fuller, Build a better mousetrap, business process, carbon tax, commoditize, company town, Computer Numeric Control, crowdsourcing, dark matter, David Ricardo: comparative advantage, deal flow, death of newspapers, dematerialisation, digital capitalism, DIY culture, drop ship, Elon Musk, factory automation, Firefox, Ford Model T, future of work, global supply chain, global village, hockey-stick growth, hype cycle, IKEA effect, industrial robot, interchangeable parts, Internet of things, inventory management, James Hargreaves, James Watt: steam engine, Jeff Bezos, job automation, Joseph Schumpeter, Kickstarter, Lean Startup, manufacturing employment, Mark Zuckerberg, means of production, Menlo Park, Neal Stephenson, Network effects, planned obsolescence, private spaceflight, profit maximization, QR code, race to the bottom, Richard Feynman, Ronald Coase, Rubik’s Cube, Scaled Composites, self-driving car, Sheryl Sandberg, side project, Silicon Valley, Silicon Valley startup, Skype, slashdot, South of Market, San Francisco, SpaceShipOne, spinning jenny, Startup school, stem cell, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, supply-chain management, the long tail, The Nature of the Firm, The Wealth of Nations by Adam Smith, TikTok, Tragedy of the Commons, transaction costs, trickle-down economics, vertical integration, Virgin Galactic, Whole Earth Catalog, X Prize, Y Combinator

By simply bringing the Web’s culture and collaboration to the process of making, they’re combining to build something on a scale we’ve never seen from DIY before. What the Web taught us was the power of “network effects”: when you connect people and ideas, they grow. It’s a virtual circle—more people combined create more value, which in turn attracts even more people, and so on. That’s what has driven the ascent of Facebook, Twitter, and practically every other successful company online today. What Makers are doing is taking the DIY movement online—“making in public”—which introduces network effects on a massive scale. In short, the Maker Movement shares three characteristics, all of which, I’d argue, are transformative: 1.

We’ve been profitable from the first year (it’s actually not that hard in the hardware business—just charge more than your costs!), but try to reinvest as much of the profits as possible into building new factory lines. Because we’re online, we’re global from the start and tend to grow more quickly than traditional manufacturing companies because of the network effects of online word of mouth. But because we’re making hardware, which costs money and takes time to make, we don’t show the hockey-stick exponential growth curve of the hottest Web companies. So, as a business, we’re a hybrid: the simple business model and cash-flow advantages of traditional manufacturing, with the marketing and reach advantages of a Web company.

Think of the tens of thousands of apps that support and reinforce Android, an open (mostly) mobile operating system. Or the hundreds of plug-ins and utilities designed to work with WordPress, the open-source blogging platform. In each case, openness built a constituency for the product’s continued success. The fact that others could copy it didn’t matter, because all that goodwill had created a network effect that was far harder to copy than simply code. But what if someone wants to rip us off anyway? Well, it depends on what you mean by “rip us off.” If someone else decides to use our files, make no significant modifications or improvements, and just manufacture them and compete with us, they’ll have do so much more cheaply than we can to get traction in the marketplace.


pages: 241 words: 81,805

The Rise of Carry: The Dangerous Consequences of Volatility Suppression and the New Financial Order of Decaying Growth and Recurring Crisis by Tim Lee, Jamie Lee, Kevin Coldiron

active measures, Alan Greenspan, Asian financial crisis, asset-backed security, backtesting, bank run, Bear Stearns, Bernie Madoff, Bretton Woods, business cycle, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, collapse of Lehman Brothers, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, currency risk, debt deflation, disinformation, distributed ledger, diversification, financial engineering, financial intermediation, Flash crash, global reserve currency, implied volatility, income inequality, inflation targeting, junk bonds, labor-force participation, Long Term Capital Management, low interest rates, Lyft, margin call, market bubble, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, negative equity, Network effects, Ponzi scheme, proprietary trading, public intellectual, purchasing power parity, quantitative easing, random walk, rent-seeking, reserve currency, rising living standards, risk free rate, risk/return, sharing economy, short selling, short squeeze, sovereign wealth fund, stock buybacks, tail risk, TikTok, Uber and Lyft, uber lyft, yield curve

If Facebook is ever dethroned (and in time it will be), it will not be by another social network of the same kind, but by something entirely new that makes social networks of that kind irrelevant—which is to say, it will be disrupted. Network effects, and therefore cumulative advantage, are especially prominent in communications technologies and technological standards. Microsoft Office may be possible (just about) to dethrone—but only ever by a competitor that also could manipulate the .xls file format, which dom- 186 THE RISE OF CARRY inates global business. Financial instruments, too, can be viewed as communications standards that have network effects. As mentioned in Chapter 10, while the centrality of the S&P 500 to global markets today is quite reasonable, it was not predestined and may not be eternal.

But for a period, these established stars can be objectively worse—less attractive, less motivated, delivering a less good performance—than the talented nobodies who are next in line behind them, and yet it will still be rational for the director and producer to prefer to hire the stars. This is what celebrity means. That is what cumulative advantage means. Another example is that of network effects and lock-in in business, economics, and technology: the competition between VHS and Betamax, or between Facebook and Myspace and Friendster, or between Uber and Lyft. Betamax is often considered to have been a better technology, but it lost. Today, a direct competitor to Facebook could never succeed, no matter how much better its technology or design or business plan—because the appeal of a social network is the users who are already there, and those users are on Facebook.

Another example, the murkiest but likely the most significant in our daily lives, is the natural formation of social hierarchies in animals: a big dog will Carry Is Synonymous with Power 187 slink away fearfully from a small dog who outranks it, and the fact that it could easily take the small dog in a fight does not even occur to it. As with celebrity, or network effects, social hierarchies in animals are not imaginary but are perpetuated by genuine social realities. Namely, the fact that the hierarchy is stable at all implies that all its members will act together to support it. The big dog slinks away not because it fears the small dog but because it fears the wrath of the whole pack (although surely it is unconscious of this).


pages: 357 words: 99,684

Why It's Still Kicking Off Everywhere: The New Global Revolutions by Paul Mason

anti-globalists, back-to-the-land, balance sheet recession, bank run, banking crisis, Berlin Wall, business cycle, capital controls, capitalist realism, centre right, Chekhov's gun, citizen journalism, collapse of Lehman Brothers, collective bargaining, creative destruction, credit crunch, Credit Default Swap, currency manipulation / currency intervention, currency peg, disinformation, do-ocracy, eurozone crisis, Fall of the Berlin Wall, floating exchange rates, foreign exchange controls, Francis Fukuyama: the end of history, full employment, ghettoisation, illegal immigration, informal economy, land tenure, Leo Hollis, low skilled workers, mass immigration, means of production, megacity, Mohammed Bouazizi, Naomi Klein, Network effects, New Journalism, Occupy movement, price stability, quantitative easing, race to the bottom, rising living standards, short selling, Slavoj Žižek, Stewart Brand, strikebreaker, union organizing, We are the 99%, Whole Earth Catalog, WikiLeaks, Winter of Discontent, women in the workforce, working poor, working-age population, young professional

The network’s basic law was explained by Bell Telephone boss Theodore Vail as early as 1908: the more people who use the network, the more useful it becomes to each user. This is known as the ‘network effect’: what it describes is the creation, out of two people’s interaction, of a ‘third thing’ which comes for free. Because network theory originated in the boardroom, this ‘third thing’ has tended to be identified in terms of economic value. But, in recent years, it has become clear it can provide much more than that. There’s another difference: when it was first theorized by Vail’s technologists, the ‘network effect’ seemed like a by-product, a happy accident. Today we are conscious users and promoters of the network effect. Everyone who uses information technology understands that they are—whether at work, on Facebook, on eBay or in a multiplayer game—a ‘node’ on a network: not a foot-soldier, not a bystander, not a leader, but a multitasking version of all three.

Nowadays, many of us have a very clear understanding of all this. The result is that, in the past ten years, the ‘network effect’ has blasted its way out of corporate economics and into sociology. The most obvious impact has been on the media and ideology. Long before people started using Twitter to foment social unrest, mainstream journalists noticed—to their dismay—that the size of one’s public persona or pay cheque carried no guarantee of popularity online. People’s status rises and falls with the reliability and truthfulness of what they contribute. This is a classic network effect—but it is not measurable as profit and loss. If you look at the full suite of information tools that were employed to spread the revolutions of 2009–11, it goes like this: Facebook is used to form groups, covert and overt—in order to establish those strong but flexible connections.

I. 46 Len-len 193–96, 209 Liberal Democrats 43–44, 46 liberalizers 31 Libya 25, 31, 119; National Transitional Council 178 Life and Fate (Grossman) 129 Lilico, Andrew 121 link-shorteners 75 Linux 139–40 @littlemisswilde 41–42, 44, 45, 135–36, 138 living conditions, urban slums 196–99 London: anti-capitalist demonstrations 33; arrests 61–62; Day X, 24 November 2010 41–42, 46–48; the Dubstep Rebellion 48–52; Fortnum & Mason 60–61; HM Revenue and Customs building 51; Hyde Park 60; Millbank riot 42–44; Millbank Tower 43; Museum Tavern 1; National Gallery teach-in 53, 53–54; Oxford Circus 60; Palladium Theatre 51; Parliament Square 49, 51, 52–53; Piccadilly Circus 58; police–student confrontation 50–51; Regent Street 58; Ritz Hotel 60; Tate Modern 53; trade-union demonstration, March 2011 57–61; Trafalgar Square 47; Victoria Street 50; Victorinox 59 London School of Oriental and African Studies, occupation of 44–46 López, Fernando 166–67, 170 Lopez, Gina 200–2 Lopez Inc. 200–2 Loubere, Leo 174 Loukanikos (riot dog) 94, 96 L’Ouverture, Toussaint 149 LulzSec 151 McIntyre, Jody 51 McPherson, James 182 Madison, Wisconsin revolt 184–87 Madrid 33 Mahalla uprising, 2008 10, 71 Maher, Ahmed 83 Mahfouz, Asmaa, @AsmaaMahfouz 11, 177 Mahmoud (Zamalek Sporting Club ultra) 16–17 Makati, Manila 204–6 malnutrition 9 Mandelson, Peter 17, 26, 114 Manila 33; Estero de Paco 200–2; Estero de San Miguel 196–99; Makati 204–6; waterways 200–2 manipulated consciousness 29–30 Manufacturing Consent (Chomsky and Herman) 28–29 Mao Tse Tung 46 Marxism 141–45 Marx, Karl 46, 141–45, 174, 187, 188–89, 190, 192 Masai with a mobile, the 133–34 Masoud, Tarek 27 Masry Shebin El-Kom textile factory 22–23 mass culture 29–30 Matrix, The (film) 29 Meadows, Alfie 51 media, the 28–29 @mehri912 34 Meltdown (Mason) 31–32 memes 75, 150–52, 152 Merkel, Angela 96, 98, 99, 112 Michas, Takis 103 Middle East: balance of power 178; Facebook usage 135; failure of specialist to understand 25–27 Milburn, Alan 114 Miliband, Ed 58, 60, 188 Millbank riot 42–44 Millennium Challenge 2002 82–83 Miller, Henry 128 misery 209 mobile telephony 75–76, 133–34 modernism 28 mortgage-backed securities 106–8 Moses, Jonathan 48 Mousavi, Mir-Hossein 33–34 movement without a name 66 Mubarak, Alaa 17–18 Mubarak, Gamal 8, 10, 17–18, 26 Mubarak, Hosni 9, 10, 14, 15, 18–19, 19–20, 26, 31 Murdoch, Rupert 31, 106, 148–49 Muslim Brotherhood 21, 177 NAFTA 166–67 Napoleon III 172, 191 Nasser, Gamal Abdel 19 National Gallery teach-in 53, 53–54 nationalism 124 Native Americans 162, 163 Negri, Toni 42 Netanyahu, Binyamin 180 network animals 147 networked individualism 130, 130–33, 141 networked protests 81–82, 85 networked revolution, the 79–85; erosion of power relations 80–81; informal hierarchies 83; networked protests 81–82; network relationships 81; swarm tactics 82–83 network effect, the 2, 74–75, 77; erosion of power relations 80–81; strength 83; usefulness 84 network relationships 81 Nevins, Allan 182 New Journalism 3 News Corporation 148—49 News of the World 49; phone hacking scandal 61, 148–49 New Unrest, social roots of 65–66, 85; demographics of revolt 66–73; information tools 75–76; the networked revolution 79–85; organizational format 77–78; technology and 74–79; the urban poor 70–72 New York Times 170 1984 (Orwell) 30, 129 Nomadic Hive Manifesto, The 53–54 @norashalaby 13 North Africa: demographics of revolt 66; students and the urban poor 71 Obama, Barack 72, 116–18, 120, 122, 162, 167, 170, 180, 183, 187 OccupiedLondon blog 88–89 Occupy Wall Street movement, the 139, 144, 187, 210 Office for National Statistics 115 Ogden-Nussbaum, Anna, @eponymousthing 184 Oklahoma 153, 153–56 Oldouz84 36, 37 Olives, Monchet 202–4 online popularity 75 On the Jewish Question (Marx) 143 Open Source software 139–40 Operation Cast Lead 33 organizational format, changing forms of 77–78 Organisation of Labour, The (Blanc) 187 organized labour 71–72, 143 Ortiz, Roseangel 161 Orwell, George 30, 129, 208, 210 Owen, Robert 142 Palafox, Felino 204–5 Palamiotou, Anna 97 Palestine 25, 121, 179, 180 Palin, Sarah 181, 182 PAME (Greek trade union) 90 Papaconstantinou, George 91, 97 Papandreou, George 88, 96 Papayiannidis, Antonis 103 Paris 39; 1968 riots 46; revolution of 1848 171, 172 Paris Commune, the 1, 72–73, 84, 132 PASOK 89, 91, 98, 99 Paulson, Hank 110 Petrache, Ruben 203–4 Philippines: Calauan, Laguna Province 202–4; Estero de Paco, Manila 200–2; Estero de San Miguel, Manila 196–99, 205–6, 206–9; Gapan City 193–96; Makati, Manila 204–6; New People’s Army 203 Philippines Housing Development Corporation 198 philosophy 29 phone hacking scandal 61, 148–49 Picasso, Pablo 127, 128, 132 Pimco 170 Poland 172 police car protester (USA) 4 Policy Exchange think tank 55 political mainstream, youth disengagement from 89–90 popular culture 65, 176 Porter, Brett 154, 155, 156 Port Huron Statement, the 129–30, 145 Portugal 92, 112, 188 postmodernism 28 poverty 121–22, 210, 211 Powell, Walter 77 power, refusal to engage with 3 power relations, erosion of 80–81 Procter & Gamble 23 propaganda of the deed 62 property 48 property bubble collapse 106–8 protectionism 124 protest, changing forms of 54–57 pro-Western dictators, support for 31 Prussia 191 Puente 165 Putnam, Robert 134 Quantitative Easing II 120–23 radicalization 33, 37, 47–48 radical journalists 149 Ramírez, Leticia 165 Real Estate Tax Authority Workers (Egypt) 19 Really Free School, the 1–2 @rebeldog_ath 96 reciprocity 77 Reed Elsevier 146 Reider, Dimi 179 Research and Destroy group 38–39 revolt, demographics of 66, 66–73 revolutionary wave 65 revolution, definition 79–80 revolutions: 1848 171–73, 173–75, 191, 192; 1917 173; 1968 173; 1989 173 Reynalds, Jeremy 159–60, 162–63 rice crops 195 Riches, Jessica, @littlemisswilde 41–42, 44, 45, 135–36, 138 Rimbaud, Arthur 132 River Warriors 201 Roads to Freedom (Sartre) 129 Road to Wigan Pier, The (Orwell) 208 Romer, Christina 117 Roosevelt, Franklin D. 169–70 Rove, Karl 30–31, 32 Rowan, Rory 54 Said, Edward 26–27 Said, Khaled 11, 148 @Sandmonkey 13 Sandra (Joy Junction resident) 160 Santa Cruz, University of California 37–39 Sarkozy, Nicolas 91–92, 98 @sarrahsworld 11–12, 14, 135 Sartre, Jean-Paul 129 Saudi Arabia 121 savings, and investment 107 Savio, Mario 4 SB1070 (USA) 164, 165–66, 166–67 self-esteem, and consumption 80–81 self-interest 111 self-reliance 68 self, the, social networks impact on 136–38 Sennett, Richard 68, 80–81, 131 Sentimental Education (Flaubert) 171 el-Shaar, Mahmoud 22 Shafiq, Mohammed 20–22 Shalit, Gilad 179 shared community 84 Sharp, Gene 83 Sharpton, Al 184 Shirky, Clay 138, 139, 140, 146 Sinclair, Cameron 199, 208 Sioras, Dr Ilias 90–91 Situationist movement 46–47 Situationist Taliban 1 slum-dwellers 68; numbers 198 social capital 134 social democracy 145 social housing 199 Socialist International 19–20 social justice 177, 191, 192, 209, 210 social media 7, 74–75, 77; collective mental arena 137; lack of control 37; power of 34–35; role of 56; and the spread of ideas 151 social micro-history 173 social networks 77, 82; impact of 147; impact on activism 138–41; and the self 136–38 social-republicanism 187 solidaristic slum, the 207 Solidarity 42 ‘Solidarity Forever’ (song) 42 Soviet Union 28 Spain 66, 104, 105, 188 Spanish Civil War 209–10 species-being 143 @spitzenprodukte (art activist) 1 spontaneous horizontalists 44–46 spontaneous replication 55 Starbucks Kids 79 Steinbeck, John 153, 155, 159, 163, 164, 169 Stephenson, Paul 52 Stiglitz, Joseph 118 Strategy Guide (Sharp) 83 Strauss-Kahn, Dominique 188 strongman threat, the 177–78 student occupations 37–39, 44–46, 53, 53–54 students: economic attack on 38; expectations 67–68; population 70 Sudan 25 Suez Canal Port Authority 19 Supreme Council of the Armed Forces (SCAF) (Egypt) 18, 20 surveillance 148 swarm tactics 82–83 swine flu epidemic 9 Switzerland 123 syndicalism 175–76 synthesis, lack of 57 Syria 25 tactics 54–57 Tahrir Square, Cairo 6, 69, 89, 139; chants 191, 211; Day of Rage, 28 May 15–17; demonstration, 25 January 10–14; numbers 13; Twitter feeds 13; volunteer medics 20–22 Taine, Hippolyte 73 Tantawi, General 19 Tarnac Nine, the 189 Tea Party, the 117–18, 124–25, 180–81 tear gas 93–94, 100–1 technology 65, 66, 74–79, 85, 133–36, 138–39; and the 1848 revolutions 173–74 Tehran, Twitter Revolution 34–37 teleology 131, 152 Tent City jail, Arizona 164–67 Territorial Support Group 50 Thatcher, Margaret 106 @3arabawy 10, 22, 71 Third Way, the 31 Time magazine 36 Tim (human rights activist) 1–2 Tim (Joy Junction resident) 160 Tocqueville, Alexis de 192 totalitarianism 147–48 toxic debt 110–11 trade wars 122, 124–25 transnational culture 69 Transparency International 119 Trichet, Jean-Claude 112 Truman Show, The (film) 29 trust 57 Tunisia: Army 178; economic growth 119; inflation 121; organized workforce 72; revolution 10, 11, 25–26; unemployment 119 Turkle, Sherry 136 Twitpic 75 Twitter and tweets 3, 74, 137–38; #wiunion 184, 185; @Ghonim 13; @mehri912 34; @norashalaby 13; @rebeldog_ath 96; @Sandmonkey 13; Egyptian revolution 13, 14; importance of 135–36; Iranian revolution and 33–37; Madison, Wisconsin revolt 184; news dissemination 75; real-time organization 75; reciprocity 77; user numbers 135; virtual meetings 45 Twitter Revolution, Iran 33–37, 78, 178 Ukraine 177–78 UK Uncut 54–57, 58, 61 ultra-social relations 138 unemployment: America 159–63; Egypt 119; Spain 105; Tunisia 119; youth 66, 105, 119–20 UN-Habitat 199 Unison 57 United Nations, The Challenge of Slums 198–99 United States of America: agriculture 154–56; Albuquerque 159, 159–63; Arizona 164–67, 183; armed struggle 181–83; Bakersfield, California 168–70; budget cuts 156, 161, 167, 170; California 168–70; campus revolts, 1964 4; Canadian River 159; cattle prices 156; collapse of bipartisan politics 116–19; culture wars 179, 180–84; current-account deficit 107; debt 118; deportations 166; devaluation 123; Dodd–Frank Act 167; the Dust Bowl 154–55; economic decline 183–84; economic growth 170; Federal budget 156, 161; fiscal management 183; fiscal stimulus 117–18; fruit pickers 169; hamburger trade 156; healthcare bill 180, 183; homeless children 160; homelessness 159–63; Indiana 116–17, 125; Interstate 40 157, 170; job market 161; Joy Junction, Albuquerque 159–63; Madison, Wisconsin revolt 184–87; minimum wage workers 158; the Mogollon Rim 163; motels 157–58, 162–63; the New Deal 169–70; Oklahoma 153, 153–56; Phoenix, Arizona 164–67; police car protester 4; political breakdown, 1850s 182–83; property bubble 106–8; Quantitative Easing II 120–23; radical blogosphere 184; the religious right 118; repossessions 168; Route 66 157–59; San Joaquin valley 169; SB1070 164, 165–66, 166–67; State Department 178; states’ rights 183; student occupation movement 37–39; the Tea Party 117–18, 124–25, 180–81, 186; Tent City jail, Arizona 164–67; Tucson, Arizona 182; undocumented migrants 164–67; unemployment 159–63; wages 108; war spending 162; welfare benefits 162, 170 Unite Union 55 university fees 44, 47, 50, 54 urban poor 70–72 urban slums 191; Calauan, Laguna Province 202–4; clearance policies 198–99; education levels 207; Estero de Paco, Manila 200–2; Estero de San Miguel, Manila 196–99, 205–6, 206–9; Gapan City, Philippines 193–96; improvement policies 199, 205–6; internet access 207; labour force 208; living conditions 196–99; Moqattam, Cairo 6–10; population numbers 198 Vail, Theodore 74 Vanderboegh, Mike 181 Van Riper, Lieutenant General Paul 82 Venizelos, Evangelos 97–98 Vietnam War 129 virtual meetings 45 virtual societies 134 Vodafone 54–55 Vradis, Antonis 87–89 wages 108, 112 Walker, Scott 184 Walorski, Jackie 116–17 Walt, Stephen M. 26 war, threat of 178 Warwick University, Economics Conference 67–68 Washington Times 35 Wasim (Masry Shebin El-Kom delegate) 23 water supplies 194 wave creation 78 wealth, monopolization of 108 We Are Social 148 Weeks, Lin, @weeks89 184 Wellman, Barry 130 Wertheim, Margaret 136 White House, the 92 ‘Why the Tunisian revolution won’t spread’ (Walt) 26 WikiLeaks 140 Wikipedia 46, 140 wikis 140–41 #wiunion 184, 185 Wobblies 176 Women’s liberation 132 Woods, Alan 33 Woollard, Edward 43 working class 68, 71–72, 79–80, 145; culture 72; revolutions, 1848 172–73 World of Yesterday, The (Zweig) 128 World Trade Organization 122 Yemen 25, 119, 121 youth 68; alienation 62; British 41–42, 44, 53–54; culture 70; disconnected 190; disengagement from political mainstream 89–90; radicalization 33, 37, 47–48; unemployment 66, 119–20 YouTube 75; Egyptian revolution on 11, 14, 15; Iranian revolution on 34, 35 Zamalek Sporting Club, ultras 16–17 Zapatistas 1 Zekry, Musa 5–6, 7, 23–24 Zola, Emil 191 Zweig, Stefan 128, 132–33, 152, 176 Copyright This revised and updated second edition first published by Verso 2013 First published by Verso 2012 © Paul Mason 2012, 2013 All rights reserved The moral rights of the author have been asserted Verso UK: 6 Meard Street, London W1F 0EG US: 20 Jay Street, Suite 1010, Brooklyn, NY 11201 www.versobooks.com Verso is the imprint of New Left Books ISBN: 978-1-781-68245-6 (e-book) British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for this book is available from the Library of Congress Typeset in Fournier by MJ Gavan, Truro, Cornwall Printed by ScandBook AB, Sweden


pages: 444 words: 124,631

Buy Now, Pay Later: The Extraordinary Story of Afterpay by Jonathan Shapiro, James Eyers

Airbnb, Alan Greenspan, Apple Newton, bank run, barriers to entry, Big Tech, Black Lives Matter, blockchain, book value, British Empire, clockwatching, cloud computing, collapse of Lehman Brothers, computer age, coronavirus, corporate governance, corporate raider, COVID-19, cryptocurrency, delayed gratification, diversification, Dogecoin, Donald Trump, Elon Musk, financial deregulation, George Floyd, greed is good, growth hacking, index fund, Jones Act, Kickstarter, late fees, light touch regulation, lockdown, low interest rates, managed futures, Max Levchin, meme stock, Mount Scopus, Network effects, new economy, passive investing, payday loans, paypal mafia, Peter Thiel, pre–internet, Rainbow capitalism, regulatory arbitrage, retail therapy, ride hailing / ride sharing, Robinhood: mobile stock trading app, rolodex, Salesforce, short selling, short squeeze, side hustle, Silicon Valley, Snapchat, SoftBank, sovereign wealth fund, tech bro, technology bubble, the payments system, TikTok, too big to fail, transaction costs, Vanguard fund

Was Afterpay the next REA? That depended on who you asked. REA, Amazon and Google were indeed platforms that had economies of scale, argued fund manager Investors Mutual. Once the platform was built, the cost of adding a new user was zero. That meant profit margins were consistently high, while the network effect, as the company’s size and reach became self-perpetuating, made it harder for competitors to overtake it, making it even more valuable. But Investors Mutual took the view that Afterpay was a consumer finance company that required capital to grow, and that capital would come at a cost to present-day shareholders as it issued more shares or raised more debt.

Prunty and his co-founder at QVG, Tony Waters, had first heard of Afterpay while they were at Ausbil Investment Management, a large fund manager based in Sydney. A young building and materials analyst, Sarah Lau, kept seeing the Afterpay logo when she was searching for clothes online. She tried it and liked it, and bought some shares for her personal account. In Lau’s view, there was some sort of powerful network effect at play. Prunty and Waters had tended to avoid investing in consumer finance companies during their small-cap investing career, and felt it was wrong to define Afterpay in this way. Yes, they were extending finance for a margin. But in one sense Afterpay was the perfect growth stock. The key to the success of a platform company—of any start-up, for that matter—is to acquire as many customers as quickly and as cost-effectively as possible.

Among them was Investors Mutual’s Marc Whittaker. As he saw it, digital platform companies such as eBay and Google were attractive to investors because of their strong economies of scale: once these platforms are built, the cost of adding a new user to the platform is near zero, which means that its operating margins are very high. ‘This network effect gives these platforms real barriers to entry,’ Whittaker said. ‘In contrast, Afterpay is a consumer finance company that requires capital to grow. In the past 14 months alone, Afterpay has raised more than $450 million in a mixture of debt and equity. This has been done in part to fund the company’s entry into the US and UK markets.


pages: 365 words: 56,751

Cryptoeconomics: Fundamental Principles of Bitcoin by Eric Voskuil, James Chiang, Amir Taaki

bank run, banks create money, bitcoin, blockchain, break the buck, cashless society, cognitive dissonance, cryptocurrency, delayed gratification, en.wikipedia.org, foreign exchange controls, Fractional reserve banking, Free Software Foundation, global reserve currency, Joseph Schumpeter, market clearing, Metcalfe’s law, Money creation, money market fund, Network effects, peer-to-peer, price stability, reserve currency, risk free rate, seigniorage, smart contracts, social graph, time value of money, Turing test, zero day, zero-sum game

ISBN: 978-1-7350608-1-1 Contents Title Page Copyright Author Editor & Illustrator Acknowledgements Foreword Preface Introduction SECURITY MODEL Axiom of Resistance Censorship Resistance Property Centralization Risk Cockroach Fallacy Consensus Property Cryptodynamic Principles Custodial Risk Principle Hearn Error Hoarding Fallacy Jurisdictional Arbitrage Fallacy Other Means Principle Patent Resistance Principle Permissionless Principle Prisoner’s Dilemma Fallacy Private Key Fallacy Proof of Work Fallacy Public Data Principle Qualitative Security Model Risk Sharing Principle Social Network Principle Threat Level Paradox Value Proposition STATISM Fedcoin Objectives Inflationary Quality Fallacy Reservation Principle Reserve Currency Fallacy State Banking Principle Mining ASIC Monopoly Fallacy Balance of Power Fallacy Byproduct Mining Fallacy Causation Fallacy Decoupled Mining Fallacy Dedicated Cost Principle Efficiency Paradox Empty Block Fallacy Energy Exhaustion Fallacy Energy Store Fallacy Energy Waste Fallacy Fee Recovery Fallacy Halving Fallacy Impotent Mining Fallacy Miner Business Model Pooling Pressure Risk Proximity Premium Flaw Relay Fallacy Selfish Mining Fallacy Side Fee Fallacy Spam Misnomer Variance Discount Flaw Zero Sum Property ALTERNATIVES Bitcoin Labels Blockchain Fallacy Brand Arrogation Consolidation Principle Dumping Fallacy Fragmentation Principle Genetic Purity Fallacy Hybrid Mining Fallacy Maximalism Definition Network Effect Fallacy Proof of Cost Fallacy Proof of Memory Façade Proof of Stake Fallacy Replay Protection Fallacy Shitcoin Definition Split Credit Expansion Fallacy Split Speculator Dilemma ECONOMICS Credit Expansion Fallacy Depreciation Principle Expression Principle Full Reserve Fallacy Inflation Principle Labor and Leisure Production and Consumption Pure Bank Savings Relation Speculative Consumption Subjective Inflation Principle Time Preference Fallacy MONEY Collectible Tautology Debt Loop Fallacy Ideal Money Fallacy Inflation Fallacy Money Taxonomy Regression Fallacy Reserve Definition Risk Free Return Fallacy Thin Air Fallacy Unlendable Money Fallacy PRICE Lunar Fallacy Price Estimation Scarcity Fallacy Stability Property Stock to Flow Fallacy SCALABILITY Auditability Fallacy Scalability Principle Substitution Principle Utility Threshold Property Glossary of Terms Author Eric Voskuil Eric Voskuil is a major contributor to Libbitcoin [1] , a free and open source high performance Bitcoin developer toolkit.

In other words the effect is proportional to each of the coins in the split. This factor relates to the particulars of a given split, not to splitting in general. Therefore a split produces both a shift and reduction of utility, in proportion to the relative sizes of the resulting economies. The Network Effect Fallacy [464] explains why the reduction is not quadratic in nature, as sometimes assumed. While it may appear that in the shift someone has “taken” value from the original coin, that value has actually “left” to form the split coin. In other words merchants are masters of the value that they provide to a money.

Maximalism is distinct from shitcoin awareness in that it is characterized by promotion of one Bitcoin over all others. Proponents often express the contradictory theory that no other coin could be competitive with their preferred coin. If this was the case there would be no reason to advocate for a single coin. Network Effect Fallacy There is a theory that the utility created by an economy varies with the square of the number of its merchants , assuming each merchant offers the same value of goods or services for sale in the one coin . The theory is an application of Metcalfe’s Law [477] . This implies that an even split of the economy reduces combined utility by half.


pages: 308 words: 85,880

How to Fix the Future: Staying Human in the Digital Age by Andrew Keen

"World Economic Forum" Davos, 23andMe, Ada Lovelace, Affordable Care Act / Obamacare, Airbnb, Albert Einstein, AlphaGo, Andrew Keen, Apple's 1984 Super Bowl advert, augmented reality, autonomous vehicles, basic income, Bernie Sanders, Big Tech, bitcoin, Black Swan, blockchain, Brewster Kahle, British Empire, carbon tax, Charles Babbage, computer age, Cornelius Vanderbilt, creative destruction, crowdsourcing, data is the new oil, death from overwork, DeepMind, Demis Hassabis, Didi Chuxing, digital capitalism, digital map, digital rights, disinformation, don't be evil, Donald Trump, driverless car, Edward Snowden, Elon Musk, Erik Brynjolfsson, European colonialism, fake news, Filter Bubble, Firefox, fulfillment center, full employment, future of work, gig economy, global village, income inequality, independent contractor, informal economy, Internet Archive, Internet of things, invisible hand, Isaac Newton, James Watt: steam engine, Jane Jacobs, Jaron Lanier, Jeff Bezos, jimmy wales, job automation, Joi Ito, Kevin Kelly, knowledge economy, Lyft, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Marshall McLuhan, Menlo Park, Mitch Kapor, move fast and break things, Network effects, new economy, Nicholas Carr, Norbert Wiener, OpenAI, Parag Khanna, peer-to-peer, Peter Thiel, plutocrats, post-truth, postindustrial economy, precariat, Ralph Nader, Ray Kurzweil, Recombinant DNA, rent-seeking, ride hailing / ride sharing, Rutger Bregman, Salesforce, Sam Altman, Sand Hill Road, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Silicon Valley startup, Skype, smart cities, Snapchat, social graph, software is eating the world, Stephen Hawking, Steve Jobs, Steve Wozniak, subscription business, surveillance capitalism, Susan Wojcicki, tech baron, tech billionaire, tech worker, technological determinism, technoutopianism, The Future of Employment, the High Line, the new new thing, Thomas L Friedman, Tim Cook: Apple, Travis Kalanick, Triangle Shirtwaist Factory, Uber and Lyft, Uber for X, uber lyft, universal basic income, Unsafe at Any Speed, Upton Sinclair, urban planning, WikiLeaks, winner-take-all economy, Y Combinator, Yogi Berra, Zipcar

But in contrast with Kahle’s and Zuckerman’s hopeful visions of what a new internet might look like, all the talk in Berlin is about a new digital world, a real betaland, that is actually coming into existence. Burnham’s keynote address, “The Unraveling of Network Effects and Data Lock-Ins,” is focused on the way in which the latest digital technology is turning the digital clock back to a more innovative age. “Network effects” and “data lock-ins” are the very forces that have transformed the open web of the mid-nineties into what Tim Berners-Lee bemoans as data “silos”—winner-take-all intermediaries like Amazon, YouTube, and Uber. And their “unraveling,” according to Burnham, is happening because new technologies like blockchain and other “web protocols” are making these intermediaries—which he describes as “centralized data managing services”—redundant.

But just as we now think about those times of mass exploitation and addiction with shame and horror, so—by the beginning of the twenty-second century—our great-grandchildren will look back at our own times with the same mixture of bemusement and disgust. We are back in a world of rampant addiction, exploitation, lack of accountability, irresponsibility, and inequality. Today, the network effect of a mostly unregulated market has created tech companies of such astonishing power and wealth that they have become what the Oxford University historian Timothy Garton Ash calls “private superpowers.”3 Today we are all living under the big data spotlight of a surveillance economy in which we are incessantly watched by these corporate behemoths.

And if this twenty-first-century city is to be habitable, he said, then these platform owners need to take responsibility for the impact of their products on their users. Can the Internet Save the World? In The Internet Is Not the Answer, I argued that the digital revolution, combined with the network effect of a winner-take-all economy, has created a Big Tech concentration of power that dwarfs Big Banks, Big Oil, or Big Pharma in its size and significance. It’s a much more lavish meal than just Facebook swallowing journalism, I suggested. Corporations like Google and Facebook were once known, rather quaintly, as “internet” companies.


Remix: Making Art and Commerce Thrive in the Hybrid Economy by Lawrence Lessig

Aaron Swartz, Amazon Web Services, Andrew Keen, Benjamin Mako Hill, Berlin Wall, Bernie Sanders, Brewster Kahle, carbon tax, Cass Sunstein, collaborative editing, commoditize, disintermediation, don't be evil, Erik Brynjolfsson, folksonomy, Free Software Foundation, Internet Archive, invisible hand, Jeff Bezos, jimmy wales, John Perry Barlow, Joi Ito, Kevin Kelly, Larry Wall, late fees, Mark Shuttleworth, Netflix Prize, Network effects, new economy, optical character recognition, PageRank, peer-to-peer, recommendation engine, revision control, Richard Stallman, Ronald Coase, Saturday Night Live, search costs, SETI@home, sharing economy, Silicon Valley, Skype, slashdot, Steve Jobs, the long tail, The Nature of the Firm, thinkpad, transaction costs, VA Linux, Wayback Machine, yellow journalism, Yochai Benkler

Or is it simply a by-product of people’s desire for cheap calls? I suggest the latter, making this too a thin sharing economy. • Think finally of AOL’s IM network. The value of that network increases for everyone. This is a consequence of network effects: the more who join, the more valuable the resource is for everyone. There are many contexts in which this network effect is true. Think, for example, about the English language. Every time someone in China struggles to learn English or a school in India continues to push English as a primary language, all of us English speakers benefit. But 80706 i-xxiv 001-328 r4nk.indd 153 8/12/08 1:55:26 AM REMI X 154 in neither of these cases—with AOL or English—are people joining the movement because it is a movement.

But 80706 i-xxiv 001-328 r4nk.indd 153 8/12/08 1:55:26 AM REMI X 154 in neither of these cases—with AOL or English—are people joining the movement because it is a movement. People join because it gives them something they want. In each case, there is a resource that is shared among everyone within the community—information about the market, computer resources to make VOIP work better, the network effect from a popular network. That resource is shared independent of price. But in none of these cases is it realistic to imagine people joining or participating in these networks for thee-regarding reasons. These are me-regarding communities. They are thin sharing economies. By contrast, in a thick sharing economy, motivations are more complex.

There’s a trust-building exercise there that doesn’t traditionally happen, because companies are inherently private because historically, competition was the first order of concern of companies. Therefore privacy [or secrecy], for the purpose of giving you a leg up on your competitors, has always been a kind of a central building block of corporate behavior. And, in a world where openness and network effects are likely to decide the winner, you now have to break down that perception. You want to build a company whose first value is not privacy but, instead, disclosure. Some companies go even further. Brewster Kahle describes the decision of the search company Alexa. [W]e wanted to build a new-generation search engine, which is sort of what Alexa and the Internet Archive strove to do in ’96.


pages: 401 words: 109,892

The Great Reversal: How America Gave Up on Free Markets by Thomas Philippon

airline deregulation, Amazon Mechanical Turk, Amazon Web Services, Andrei Shleifer, barriers to entry, Big Tech, bitcoin, blockchain, book value, business cycle, business process, buy and hold, Cambridge Analytica, carbon tax, Carmen Reinhart, carried interest, central bank independence, commoditize, crack epidemic, cross-subsidies, disruptive innovation, Donald Trump, driverless car, Erik Brynjolfsson, eurozone crisis, financial deregulation, financial innovation, financial intermediation, flag carrier, Ford Model T, gig economy, Glass-Steagall Act, income inequality, income per capita, index fund, intangible asset, inventory management, Jean Tirole, Jeff Bezos, Kenneth Rogoff, labor-force participation, law of one price, liquidity trap, low cost airline, manufacturing employment, Mark Zuckerberg, market bubble, minimum wage unemployment, money market fund, moral hazard, natural language processing, Network effects, new economy, offshore financial centre, opioid epidemic / opioid crisis, Pareto efficiency, patent troll, Paul Samuelson, price discrimination, profit maximization, purchasing power parity, QWERTY keyboard, rent-seeking, ride hailing / ride sharing, risk-adjusted returns, Robert Bork, Robert Gordon, robo advisor, Ronald Reagan, search costs, Second Machine Age, self-driving car, Silicon Valley, Snapchat, spinning jenny, statistical model, Steve Jobs, stock buybacks, supply-chain management, Telecommunications Act of 1996, The Chicago School, the payments system, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, transaction costs, Travis Kalanick, vertical integration, Vilfredo Pareto, warehouse automation, zero-sum game

The attractive feature of a theory of intangible assets is that it can explain concentration both through increasing productivity (superstar firms) and through decreasing domestic competition since intangible assets can create barriers to entry. To test this idea, we will look carefully at intangible investments across firms and industries in Chapter 5. Network effects and increasing differences in the productivity of information technology could also increase the efficient scale of operation of the top firms, leading to higher concentration. Persistence of Market Shares Economists who specialize in industrial organization and antitrust rightfully complain about the use of industry-level HHIs to measure concentration.

Finance will teach us that efficiency and complexity are not the same thing and that deregulation is easier said than done. Health care will teach us how oligopolies can spread from one side of an industry to another. Finally, the internet giants are particularly relevant because they are often presented as examples of efficient concentration driven by “network” effects. While there is some truth to this argument, it is widely overrated. The data will also teach us that the stars of today may be no match for the stars of yesterday. This sounds like fun, at least to me … but then again, I am an economist. CHAPTER 11 Why Are Bankers Paid So Much? I would rather see Finance less proud and Industry more content.

Companies lobby to convince policy makers to lift an existing burden or to prevent them from imposing a new one. We’re going to start with an issue that is relevant to all corporations: taxes. Then we are going to focus on one particular benefit that tech companies currently enjoy: massive concentration and network effects. We’ll also consider one burden they are anxious to avoid: new privacy protections for their users. Do the GAFAMs Pay Their Taxes? No, the GAFAMs don’t really pay their fair share of taxes, but to be honest, neither do the other global firms. All top companies have been paying fewer taxes over time.


pages: 455 words: 133,322

The Facebook Effect by David Kirkpatrick

"World Economic Forum" Davos, Andy Kessler, AOL-Time Warner, Benchmark Capital, billion-dollar mistake, Burning Man, delayed gratification, demand response, don't be evil, global village, happiness index / gross national happiness, Howard Rheingold, Jeff Bezos, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Marshall McLuhan, Max Levchin, Menlo Park, Network effects, Peter Thiel, rolodex, Salesforce, Sand Hill Road, sharing economy, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Skype, social graph, social software, social web, SoftBank, Startup school, Steve Ballmer, Steve Jobs, Stewart Brand, the payments system, The Wealth of Nations by Adam Smith, UUNET, Whole Earth Review, winner-take-all economy, Y Combinator, Yochai Benkler

They loved to talk about how Thefacebook showed what economists call “network effects.” And it did, just as have many of the great communications and software innovations of the last hundred years. A product or service is said to have a network effect when its value grows greater to all users each time one new user joins. Since every incremental user thus in effect strengthens the service, growth tends to lead to more growth, in a virtuous cycle. That was surely the case with Thefacebook, just as it was with instant messaging, AOL, the Internet itself, and even the telephone. Businesses or technologies with network effects tend to grow steadily and to have a durable market presence.

But the reason it’s funny is that it evokes a surprising truth. Zuckerberg realized a long time ago that most users are not going to take the time to create multiple profiles for themselves on multiple social networks. He also knew from his endless bull sessions at Harvard and in Palo Alto about “network effects” that once consolidation begins on a communications platform it can accelerate and become a winner-take-all market. People will join and use the communications tool that the largest number of other people already use. He therefore made it a goal to create a tool not for the United States but for the world.

Just two days after the Stream API announcement, I had dinner in New York with Sean Parker, who spent a good portion of our time together that night denouncing it. “It’s the greatest strategic gamble the company has ever made and will ever make,” he said in his intense rapid cadence. “Opening the stream to the world has the possibility of breaking the company’s network effect. As a closed network the switching costs are incredibly high and everybody’s forced to play in Facebook’s sandbox. But when you open the stream to the world you open the possibility of better Facebook clients that can process all the same data that Facebook itself can.” These words were still ringing in my ears a week later when I sat alone with Zuckerberg for a long interview in a corner conference room near his desk in Palo Alto.


pages: 614 words: 168,545

Rentier Capitalism: Who Owns the Economy, and Who Pays for It? by Brett Christophers

"World Economic Forum" Davos, accounting loophole / creative accounting, Airbnb, Amazon Web Services, barriers to entry, Big bang: deregulation of the City of London, Big Tech, book value, Boris Johnson, Bretton Woods, Brexit referendum, British Empire, business process, business process outsourcing, Buy land – they’re not making it any more, call centre, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cloud computing, collective bargaining, congestion charging, corporate governance, data is not the new oil, David Graeber, DeepMind, deindustrialization, Diane Coyle, digital capitalism, disintermediation, diversification, diversified portfolio, Donald Trump, Downton Abbey, electricity market, Etonian, European colonialism, financial deregulation, financial innovation, financial intermediation, G4S, gig economy, Gini coefficient, Goldman Sachs: Vampire Squid, greed is good, green new deal, haute couture, high net worth, housing crisis, income inequality, independent contractor, intangible asset, Internet of things, Jeff Bezos, Jeremy Corbyn, Joseph Schumpeter, Kickstarter, land bank, land reform, land value tax, light touch regulation, low interest rates, Lyft, manufacturing employment, market clearing, Martin Wolf, means of production, moral hazard, mortgage debt, Network effects, new economy, North Sea oil, offshore financial centre, oil shale / tar sands, oil shock, patent troll, pattern recognition, peak oil, Piper Alpha, post-Fordism, post-war consensus, precariat, price discrimination, price mechanism, profit maximization, proprietary trading, quantitative easing, race to the bottom, remunicipalization, rent control, rent gap, rent-seeking, ride hailing / ride sharing, Right to Buy, risk free rate, Ronald Coase, Rutger Bregman, sharing economy, short selling, Silicon Valley, software patent, subscription business, surveillance capitalism, TaskRabbit, tech bro, The Nature of the Firm, transaction costs, Uber for X, uber lyft, vertical integration, very high income, wage slave, We are all Keynesians now, wealth creators, winner-take-all economy, working-age population, yield curve, you are the product

The first concerns so-called network effects, or network externalities. Martin Sandbu offers a typically clear description: ‘Search engines, social media and shopping, matching or selection platforms all can perform their functions better the more people use the service. That makes it hard for new challengers to compete.’46 With every new user, the platform becomes both more valuable to its existing users and more attractive to further prospective users, in a virtuous circle that intrinsically locks competitors out. Jason Furman and his colleagues usefully distinguish between what they call ‘direct’ network effects, where all categories of user can benefit from growth in users, and ‘indirect’ network effects, which occur ‘when the benefits to users on one side of a platform market increase with the number of users on the other side of the market’.

The report is not only borderline economically illiterate, containing such inherently contradictory statements as: ‘We find that dynamic competition can produce positive competitive outcomes, despite a lack of obvious competition’; many of its central assertions about the competition consequences of key economic dynamics in the platform milieu – such as, ‘We find evidence that network effects, which might otherwise act as a barrier to entry, encourage dynamic competition’ – go against all accepted economic wisdom on the subject.38 As in all forms of rentierism – at least as defined in this book – there are vital issues of monopoly power at stake in the platform space, and especially the digital-platform space.

Jason Furman and his colleagues usefully distinguish between what they call ‘direct’ network effects, where all categories of user can benefit from growth in users, and ‘indirect’ network effects, which occur ‘when the benefits to users on one side of a platform market increase with the number of users on the other side of the market’. Platforms in which such indirect effects are prominent include online marketplaces and advertising-based attention platforms.47 The second factor underpinning monopolistic tendencies in digital platform markets is economies of scale, where the often high up-front fixed costs of creating a service contrast with ‘low or near-zero marginal costs of additional users’.


pages: 492 words: 118,882

The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory by Kariappa Bheemaiah

"World Economic Forum" Davos, accounting loophole / creative accounting, Ada Lovelace, Adam Curtis, Airbnb, Alan Greenspan, algorithmic trading, asset allocation, autonomous vehicles, balance sheet recession, bank run, banks create money, Basel III, basic income, behavioural economics, Ben Bernanke: helicopter money, bitcoin, Bletchley Park, blockchain, Bretton Woods, Brexit referendum, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, cashless society, cellular automata, central bank independence, Charles Babbage, Claude Shannon: information theory, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, complexity theory, constrained optimization, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, crowdsourcing, cryptocurrency, data science, David Graeber, deep learning, deskilling, Diane Coyle, discrete time, disruptive innovation, distributed ledger, diversification, double entry bookkeeping, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, financial intermediation, Flash crash, floating exchange rates, Fractional reserve banking, full employment, George Akerlof, Glass-Steagall Act, Higgs boson, illegal immigration, income inequality, income per capita, inflation targeting, information asymmetry, interest rate derivative, inventory management, invisible hand, John Maynard Keynes: technological unemployment, John von Neumann, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, knowledge economy, large denomination, Large Hadron Collider, Lewis Mumford, liquidity trap, London Whale, low interest rates, low skilled workers, M-Pesa, machine readable, Marc Andreessen, market bubble, market fundamentalism, Mexican peso crisis / tequila crisis, Michael Milken, MITM: man-in-the-middle, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, natural language processing, Network effects, new economy, Nikolai Kondratiev, offshore financial centre, packet switching, Pareto efficiency, pattern recognition, peer-to-peer lending, Ponzi scheme, power law, precariat, pre–internet, price mechanism, price stability, private sector deleveraging, profit maximization, QR code, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, Real Time Gross Settlement, rent control, rent-seeking, robo advisor, Satoshi Nakamoto, Satyajit Das, Savings and loan crisis, savings glut, seigniorage, seminal paper, Silicon Valley, Skype, smart contracts, software as a service, software is eating the world, speech recognition, statistical model, Stephen Hawking, Stuart Kauffman, supply-chain management, technology bubble, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Nature of the Firm, the payments system, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, trade liberalization, transaction costs, Turing machine, Turing test, universal basic income, Vitalik Buterin, Von Neumann architecture, Washington Consensus

Almost every operation including fundraising, recruiting, engineering, systems operations, product development, customer service, marketing, inbound deal processing, and deal closing is done in code. Of the 22 personnel, 16 are coders or have coding experience. (Slayton, 2014). As digitization leads to massive increases in efficiency and network effects, markets are getting more Schumpeterian in the sense that those market players who are capable of digitizing business models are capable of overtaking existing incumbents and gaining larger portions of market share. In The Wealth of Nations, Adam Smith famously said that the division of labor is limited by the extent of the market.

However, as a large number of the processes are still manual in nature, there are a spate of platforms that provide individual solutions but with low interoperability. This lack of interoperability reduces transparency, creates a higher risk of fraud and higher fees, and does not allow for the development of network effects that can transform the industry. In order to respond to these limitations , an increasing number of institutions have opted for the use of open account transactions, where the exporter supplies the goods and the importer pays for them on reception or based on pre-agreed payment conditions. In recent times, open trade accounting has become increasingly popular and currently makes up 90% of global trade (Euro Banking Association, 2016).

As the shift from letters of credit to open account transaction continues, this digitization has led to the creation of new trade instruments (such as the Bank Payment Obligation4), digital trade documents (such as essDOCS 5 /Bolero) and new ERP’s (SWIFT MT7986). In spite of these changes, the complexity of regulation from border to border has meant that the interoperability problem still remains an issue and large-scale network effects remain elusive. Banks have adapted by providing online portals which allows their clients to replace paper documentation flows with digital data flows and provide added value services such as invoice matching, forecasting, and balance sheet and cash flow analysis. But even these changes have been insufficient in addressing the problem.


pages: 290 words: 87,549

The Airbnb Story: How Three Ordinary Guys Disrupted an Industry, Made Billions...and Created Plenty of Controversy by Leigh Gallagher

Abraham Maslow, Airbnb, Amazon Web Services, barriers to entry, Ben Horowitz, Bernie Sanders, Blitzscaling, cloud computing, crowdsourcing, data science, don't be evil, Donald Trump, East Village, Elon Musk, fixed-gear, gentrification, geopolitical risk, growth hacking, Hacker News, hockey-stick growth, housing crisis, iterative process, Jeff Bezos, John Zimmer (Lyft cofounder), Jony Ive, Justin.tv, Lyft, Marc Andreessen, Marc Benioff, Mark Zuckerberg, medical residency, Menlo Park, Network effects, Paul Buchheit, Paul Graham, performance metric, Peter Thiel, RFID, Salesforce, Sam Altman, Sand Hill Road, Saturday Night Live, sharing economy, Sheryl Sandberg, side project, Silicon Valley, Silicon Valley startup, South of Market, San Francisco, Startup school, Steve Jobs, TaskRabbit, TED Talk, the payments system, Tony Hsieh, traumatic brain injury, Travis Kalanick, uber lyft, Y Combinator, yield management

The 3 percent host-booking fee basically covers payment processing only; if anything, Airbnb subsidizes hosts with not just the fee but also its free-professional-photography policy and many other forms of coddling, from mailing out free mugs to featuring stories about some of the hosts on its website to flying certain hosts to its occasional launch events and annual conventions. Airbnb’s business is fundamentally about leveraging a network effect: the more people who list on Airbnb, the more inherently attractive the platform becomes to anyone who wants to travel, because there are more choices; and the more people who travel, the more appealing it becomes for people to list on it, because there are more customers. In Airbnb’s case, because its product is travel and the very act of using it involves moving from point A to point B, it is a global network effect enabled by fast and cheap cross-pollination: when a traveler from France uses Airbnb in New York, he or she is more likely to go back to France and consider hosting, or to talk up the company to his or her friends, sparking awareness and ultimately leading to more listing activity in that market.

Maples did not invest. The founders had another problem leading up to the DNC, which was supply: no one wanted to list his or her home if no one else was going to book it; and with few homes listed, no one would use the site. They weren’t going to be able to get off the ground, let alone trigger any kind of “network effect,” where the more people use something, the more valuable it becomes—leading even more people to use it. Their preliminary outreach showed them people either didn’t want to rent their homes or thought they were being asked to participate in some kind of weird social experiment. Chesky may not always have known what angels or slide decks were, but he and his cofounders always had a very good instinct for using the media, and, much like that first October weekend, they knew that success or failure lay in their ability to drum up news coverage.

This is a big difference between Airbnb and, say, Uber, which has to physically launch each new market with a heavy investment of fresh marketing, employees, and other resources. The vast majority of Airbnb’s growth, both travelers and listings, has come through these travel patterns and this global network effect. You can look at Airbnb’s size and scale in a number of ways. The easiest is those 140 million “guest arrivals” since its inception. Its 3 million active listings—80 percent of which are outside North America—makes Airbnb the largest provider of accommodations in the world, bigger than any hotel chain.


pages: 339 words: 88,732

The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson, Andrew McAfee

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, access to a mobile phone, additive manufacturing, Airbnb, Alan Greenspan, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, American Society of Civil Engineers: Report Card, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, barriers to entry, basic income, Baxter: Rethink Robotics, Boston Dynamics, British Empire, business cycle, business intelligence, business process, call centre, carbon tax, Charles Lindbergh, Chuck Templeton: OpenTable:, clean water, combinatorial explosion, computer age, computer vision, congestion charging, congestion pricing, corporate governance, cotton gin, creative destruction, crowdsourcing, data science, David Ricardo: comparative advantage, digital map, driverless car, employer provided health coverage, en.wikipedia.org, Erik Brynjolfsson, factory automation, Fairchild Semiconductor, falling living standards, Filter Bubble, first square of the chessboard / second half of the chessboard, Frank Levy and Richard Murnane: The New Division of Labor, Freestyle chess, full employment, G4S, game design, general purpose technology, global village, GPS: selective availability, Hans Moravec, happiness index / gross national happiness, illegal immigration, immigration reform, income inequality, income per capita, indoor plumbing, industrial robot, informal economy, intangible asset, inventory management, James Watt: steam engine, Jeff Bezos, Jevons paradox, jimmy wales, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Khan Academy, Kiva Systems, knowledge worker, Kodak vs Instagram, law of one price, low skilled workers, Lyft, Mahatma Gandhi, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Mars Rover, mass immigration, means of production, Narrative Science, Nate Silver, natural language processing, Network effects, new economy, New Urbanism, Nicholas Carr, Occupy movement, oil shale / tar sands, oil shock, One Laptop per Child (OLPC), pattern recognition, Paul Samuelson, payday loans, post-work, power law, price stability, Productivity paradox, profit maximization, Ralph Nader, Ray Kurzweil, recommendation engine, Report Card for America’s Infrastructure, Robert Gordon, Robert Solow, Rodney Brooks, Ronald Reagan, search costs, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Simon Kuznets, six sigma, Skype, software patent, sovereign wealth fund, speech recognition, statistical model, Steve Jobs, Steven Pinker, Stuxnet, supply-chain management, TaskRabbit, technological singularity, telepresence, The Bell Curve by Richard Herrnstein and Charles Murray, the Cathedral and the Bazaar, the long tail, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, Vernor Vinge, warehouse robotics, Watson beat the top human players on Jeopardy!, winner-take-all economy, Y2K

Just as low marginal costs create economies of scale on the production side, networks can create ‘demand side economies of scale’ that economists sometimes call network effects. We see them at work when users prefer products or services that other people are flocking to. If your friends keep in touch via Facebook, that makes Facebook more attractive to you, too. If you then join Facebook, the site becomes more valuable to your friends as well. Sometimes network effects are indirect. You can make a phone call equally well to someone using an iPhone or an Android phone. But the total number of users on a given platform influences app developers: the bigger network of users will tend to attract more developers, or encourage app developers to invest more in a given platform.

If Andy wants to drive to Erik’s at 8:45 a.m. on a Tuesday, Waze is not going to put him on the highway. It’s going to keep him on surface streets where traffic is comparatively light at that hour. That Waze gets more useful to all of its members as it gets more members is a classic example of what economists call a network effect—a situation where the value of a resource for each of its users increases with each additional user. And the number of Wazers, as they’re called, is increasing quickly. In July of 2012 the company reported that it had doubled its user base to twenty million people in the previous six months.3 This community had collectively driven more than 3.2 billion miles and had typed in many thousands of updates about accidents, sudden traffic jams, police speed traps, road closings, new freeway exits and entrances, cheap gas, and other items of interest to their fellow drivers.

Thus, your benefits from buying one or the other will be affected by the number of other users who buy the same product. When Apple’s app ecosystem is strong, buyers will want to buy into that platform, attracting even more developers. But the opposite dynamic can unravel a dominant standard, as it almost did for the Apple Macintosh platform in the mid-1990s. Like low marginal costs, network effects can create both winner-take-all markets and high turbulence.18 The Social Acceptability of Superstars In addition to the technical changes that have increased digitization, telecommunication, networks, and other factors that create superstar products and companies, there are more aspects at work in boosting superstar compensation for individuals.


pages: 299 words: 92,782

The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing by Michael J. Mauboussin

Amazon Mechanical Turk, Atul Gawande, Benoit Mandelbrot, Black Swan, Boeing 747, Checklist Manifesto, Clayton Christensen, cognitive bias, commoditize, Daniel Kahneman / Amos Tversky, David Brooks, deliberate practice, disruptive innovation, Emanuel Derman, fundamental attribution error, Gary Kildall, Gini coefficient, hindsight bias, hiring and firing, income inequality, Innovator's Dilemma, John Bogle, Long Term Capital Management, loss aversion, Menlo Park, mental accounting, moral hazard, Network effects, power law, prisoner's dilemma, random walk, Richard Thaler, risk-adjusted returns, shareholder value, Simon Singh, six sigma, Steven Pinker, transaction costs, winner-take-all economy, zero-sum game, Zipf's Law

The rich get richer, and the poor get poorer.16 The effect of increasing returns is especially pronounced when it is accompanied by high up-front costs followed by low incremental costs and by network effects, where the value of a product or service increases as more people use it. Microsoft's strength in personal computer operating systems neatly demonstrates high up-front costs, network effects, and increasing returns. The first version of Microsoft Windows had a high up-front cost. It took substantial time and money to develop. But the cost of creating additional copies was extremely low—the price of a floppy disk, which was how software was distributed at the time. Network effects were strong for operating systems and related computer programs, because the de facto standard ensured that people could exchange files.

As simple as this example appears, it can work with assumptions that are only modestly more realistic as a model for the adoption of innovations (the iPad), for fads (South Beach Diet), for fashions (yoga clothes), and for the spread of disease (the flu). Once an innovation reaches a certain level of popularity, its success is virtually assured. By the same token, great innovations can fail because the domino effect doesn't kick in.15 In economics, the lopsided outcomes are frequently the result of increasing returns and network effects. Much of conventional economic theory is based on diminishing returns. If the demand for a commodity exceeds supply, prices will rise, and whoever makes that product will earn more money. Those high profits will attract competitors, who will increase production and effectively push prices back down.

People wanted a product that was widely used because that made it more valuable to them. That resulted in what's known as demand-side economies of scale, where more value for the consumer leads to more demand for the software and, ultimately, more profit for the producer. Add together the economics of software and network effects, and the result is increasing returns. Profitability soars for the winner, creating a level of success that is all out of proportion to the differences between the various products when competition began. The point of reviewing these mechanisms is to show that they are sensitive to initial conditions, frequently undergo critical transitions, and can lead to skewed results.


pages: 237 words: 67,154

Ours to Hack and to Own: The Rise of Platform Cooperativism, a New Vision for the Future of Work and a Fairer Internet by Trebor Scholz, Nathan Schneider

1960s counterculture, activist fund / activist shareholder / activist investor, Airbnb, Amazon Mechanical Turk, Anthropocene, barriers to entry, basic income, benefit corporation, Big Tech, bitcoin, blockchain, Build a better mousetrap, Burning Man, business logic, capital controls, circular economy, citizen journalism, collaborative economy, collaborative editing, collective bargaining, commoditize, commons-based peer production, conceptual framework, content marketing, crowdsourcing, cryptocurrency, data science, Debian, decentralized internet, deskilling, disintermediation, distributed ledger, driverless car, emotional labour, end-to-end encryption, Ethereum, ethereum blockchain, food desert, future of work, gig economy, Google bus, hiring and firing, holacracy, income inequality, independent contractor, information asymmetry, Internet of things, Jacob Appelbaum, Jeff Bezos, job automation, Julian Assange, Kickstarter, lake wobegon effect, low skilled workers, Lyft, Mark Zuckerberg, means of production, minimum viable product, moral hazard, Network effects, new economy, offshore financial centre, openstreetmap, peer-to-peer, planned obsolescence, post-work, profit maximization, race to the bottom, radical decentralization, remunicipalization, ride hailing / ride sharing, Rochdale Principles, SETI@home, shareholder value, sharing economy, Shoshana Zuboff, Silicon Valley, smart cities, smart contracts, Snapchat, surveillance capitalism, TaskRabbit, technological solutionism, technoutopianism, transaction costs, Travis Kalanick, Tyler Cowen, Uber for X, uber lyft, union organizing, universal basic income, Vitalik Buterin, W. E. B. Du Bois, Whole Earth Catalog, WikiLeaks, women in the workforce, workplace surveillance , Yochai Benkler, Zipcar

The flagship of cooperatives, Mondragon, is a network of co-ops that employed 74,061 people in 2013. But in the United States, despite its dominance in areas like orange juice production, the cooperative model has been faced with many challenges, including competition with multinational corporate giants, public awareness, self-exploitation, and the network effect. So, it is essential for platform co-ops to study the communities they’d like to serve and get their value proposition right. In opposition to the black-box systems of the Snowden-era Internet, these platforms need to distinguish themselves by making their data flows transparent. They need to show where the data about customers and workers are stored, to whom they are sold, and for what purpose.

Funding is necessary, but restrictions have terrible side-effects, including blocking sharing, discouraging derivative work, and excluding people—ultimately, limiting the work’s value. Snowdrift.coop is developing a platform to fund creative projects without artificial restrictions such as those listed above. Our matching pledge creates a network effect: each patron’s monthly donation to their favorite projects is based on others joining them, such as a pledge of $1 for every 1,000 patrons. This flexible approach minimizes risk and maximizes collective impact. As a multi-stakeholder co-op, we propose three member classes: the worker class made of employees of the platform itself; the project class made up of those funding their creative work; the general class made up of users who only donate.

Point-to-point urban transportation is a fairly uniform service in an industry with a limited amount of competition. Once the technology associated with “e-hail” and logistics is commoditized, which it will be, the economic fundamentals for the emergence of a platform cooperative would appear to be in place. More important, the network effects associated with ridesharing are geographically concentrated. Thus, unlike platforms such as eBay and Facebook, the barriers to entry posed by an incumbent platform may not be onerous. True, passengers gravitate toward the platforms with more drivers, and vice versa. However, these effects are localized.


pages: 527 words: 147,690

Terms of Service: Social Media and the Price of Constant Connection by Jacob Silverman

"World Economic Forum" Davos, 23andMe, 4chan, A Declaration of the Independence of Cyberspace, Aaron Swartz, Airbnb, airport security, Amazon Mechanical Turk, augmented reality, basic income, Big Tech, Brian Krebs, California gold rush, Californian Ideology, call centre, cloud computing, cognitive dissonance, commoditize, company town, context collapse, correlation does not imply causation, Credit Default Swap, crowdsourcing, data science, deep learning, digital capitalism, disinformation, don't be evil, driverless car, drone strike, Edward Snowden, Evgeny Morozov, fake it until you make it, feminist movement, Filter Bubble, Firefox, Flash crash, game design, global village, Google Chrome, Google Glasses, Higgs boson, hive mind, Ian Bogost, income inequality, independent contractor, informal economy, information retrieval, Internet of things, Jacob Silverman, Jaron Lanier, jimmy wales, John Perry Barlow, Kevin Kelly, Kevin Roose, Kickstarter, knowledge economy, knowledge worker, Larry Ellison, late capitalism, Laura Poitras, license plate recognition, life extension, lifelogging, lock screen, Lyft, machine readable, Mark Zuckerberg, Mars Rover, Marshall McLuhan, mass incarceration, meta-analysis, Minecraft, move fast and break things, national security letter, Network effects, new economy, Nicholas Carr, Occupy movement, off-the-grid, optical character recognition, payday loans, Peter Thiel, planned obsolescence, postindustrial economy, prediction markets, pre–internet, price discrimination, price stability, profit motive, quantitative hedge fund, race to the bottom, Ray Kurzweil, real-name policy, recommendation engine, rent control, rent stabilization, RFID, ride hailing / ride sharing, Salesforce, self-driving car, sentiment analysis, shareholder value, sharing economy, Sheryl Sandberg, Silicon Valley, Silicon Valley ideology, Snapchat, social bookmarking, social graph, social intelligence, social web, sorting algorithm, Steve Ballmer, Steve Jobs, Steven Levy, systems thinking, TaskRabbit, technological determinism, technological solutionism, technoutopianism, TED Talk, telemarketer, transportation-network company, Travis Kalanick, Turing test, Uber and Lyft, Uber for X, uber lyft, universal basic income, unpaid internship, women in the workforce, Y Combinator, yottabyte, you are the product, Zipcar

Google+ offered a familiar shape and central input for the kind of scattered but all-encompassing data collection that Google had been doing for years. Both aesthetically and in terms of privacy features (its “Circles,” which allowed users to tailor their updates to narrow audiences, was soon copied by Facebook), Google+ seemed a worthy social network on its own. But Facebook had network effects on its side—who would join Google+ if it seemed like an also-ran where nobody wanted to hang out? Google then had a challenge: how to get the hundreds of millions of people using its other products, like Search, Gmail, Docs, and YouTube, to embrace Google+. And it was a problem they desperately needed to solve, since Facebook’s huge, active membership and its use of Like buttons and other tracking tools meant that it had a glut of information that advertisers wanted.

If it’s so easy to become cynical about social media, to see amid the occasionally illuminating exchanges or the harvesting of interesting links (which themselves come in bunches, in great indigestible numbers of browser tabs) that we are part of an unconquerable system, why go on? One answer is that it’s a by-product of the network effect: the more people who are part of a network, the more one’s experience can seem impoverished by being left out. Everyone else is doing it. A billion people on Facebook, hundreds of millions scattered between these other networks—who wants to be on the outside? Who wants to miss a birthday, a friend’s big news, a chance to sign up for Spotify, or the latest bit of juicy social intelligence?

A welter of data, some of it structured by us, is produced, and this has value. Yes, this work is often voluntary. You put in what you want, and if you don’t like that Facebook is profiting off of your relationships and communication with friends and your very identity, then you can quit. But the flip side of network effects—of a network rising in value and utility as more people join it—is that there can be a real social cost to opting out. And professional cost, too. Engagement in social media and other digital products has become required for many white-collar jobs, representing another way in which the work/life divide is broken down.


pages: 138 words: 40,787

The Silent Intelligence: The Internet of Things by Daniel Kellmereit, Daniel Obodovski

Airbnb, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, barriers to entry, business intelligence, call centre, Clayton Christensen, cloud computing, commoditize, connected car, crowdsourcing, data acquisition, driverless car, en.wikipedia.org, Erik Brynjolfsson, first square of the chessboard, first square of the chessboard / second half of the chessboard, Freestyle chess, Google X / Alphabet X, Internet of things, lifelogging, Metcalfe’s law, Network effects, Paul Graham, Ray Kurzweil, RFID, Robert Metcalfe, Salesforce, self-driving car, Silicon Valley, smart cities, smart grid, software as a service, Steve Jobs, The future is already here, the long tail, Tony Fadell, vertical integration, web application, Y Combinator, yield management

Finally, there is another important factor, which is the network effect. This tends to show exponential growth once you have a critical mass of intelligent items and connected items that are talking to one another. The law that affects this development is Metcalfe’s Law,32 which states that the value of a network is proportional to the square of the number of connected users of the system. This law is applicable not only to telecommunications networks and social networks, but also to connected things, like M2M nodes. Assuming such a network effect will take place, one can assume it will create huge value for the ecosystem.

This market always reminds us of the mobile phone industry in the early days and the fragmentation issues that there were for a number of years. If a couple of players are able to design application platforms that allow for easy and cost-effective development and deployment of applications, these platforms would be able to benefit from massive network effects, like the ones we have seen around mobile platforms starting in 2006. Also, data analysis and workflow optimization will be an interesting growth market going forward. Because these markets are still immature at this point, companies that are able to become central market players will have a very attractive position.


pages: 179 words: 42,081

DeFi and the Future of Finance by Campbell R. Harvey, Ashwin Ramachandran, Joey Santoro, Vitalik Buterin, Fred Ehrsam

activist fund / activist shareholder / activist investor, bank run, barriers to entry, bitcoin, blockchain, collateralized debt obligation, crowdsourcing, cryptocurrency, David Graeber, Ethereum, ethereum blockchain, fault tolerance, fiat currency, fixed income, Future Shock, initial coin offering, Jane Street, margin call, money: store of value / unit of account / medium of exchange, Network effects, non-fungible token, passive income, peer-to-peer, prediction markets, rent-seeking, RFID, risk tolerance, Robinhood: mobile stock trading app, Satoshi Nakamoto, seigniorage, smart contracts, transaction costs, Vitalik Buterin, yield curve, zero-coupon bond

This is a technology of inclusion whereby anyone can pay the flat fee to use and benefit from the innovations of DeFi. DeFi is fundamentally a competitive marketplace of decentralized financial applications that function as various financial “primitives” such as exchange, save, lend, and tokenize. These applications benefit from the network effects of combining and recombining DeFi products and attracting increasingly more market share from the traditional financial ecosystem. Our book details the problems that DeFi solves: centralized control, limited access, inefficiency, lack of interoperability, and opacity. We then describe the current and rapidly growing DeFi landscape and present a vision of the future opportunities that DeFi unlocks.

Anyone can simply pay the flat fee to use the contract and benefit from the innovations of DeFi. We will discuss smart contract platforms and dApps in more depth in Chapter 3. DeFi is fundamentally a competitive marketplace of financial dApps that function as various financial “primitives” such as exchange, lend, and tokenize. They benefit from the network effects of combining and recombining DeFi products and attracting increasingly more market share from the traditional financial ecosystem. Our goal in this book is to give an overview of the problems that DeFi solves, describe the current and rapidly growing DeFi landscape, and present a vision of the future opportunities that DeFi unlocks.

The initial cryptocurrency model is the Bitcoin blockchain, which functions almost exclusively as a payment network, with the capabilities of storing and transacting bitcoins across the globe in real time with no intermediaries or censorship. This is powerful value proposition gives bitcoin its value. Even though its network effects are strong, some competitors in the cryptocurrency space offer enhanced functionality. THE SMART CONTRACT PLATFORM A crucial ingredient of DeFi is a smart contract platform, which goes beyond a simple payments network such as Bitcoin and enhances the chain's capabilities. Ethereum is the primary example.


pages: 476 words: 125,219

Digital Disconnect: How Capitalism Is Turning the Internet Against Democracy by Robert W. McChesney

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, access to a mobile phone, Alan Greenspan, Albert Einstein, American Legislative Exchange Council, American Society of Civil Engineers: Report Card, AOL-Time Warner, Automated Insights, barriers to entry, Berlin Wall, Big Tech, business cycle, Cass Sunstein, citizen journalism, classic study, cloud computing, collaborative consumption, collective bargaining, company town, creative destruction, crony capitalism, David Brooks, death of newspapers, declining real wages, digital capitalism, digital divide, disinformation, Double Irish / Dutch Sandwich, Dr. Strangelove, Erik Brynjolfsson, Evgeny Morozov, failed state, fake news, Filter Bubble, fulfillment center, full employment, future of journalism, George Gilder, Gini coefficient, Google Earth, income inequality, informal economy, intangible asset, invention of agriculture, invisible hand, Jaron Lanier, Jeff Bezos, jimmy wales, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Perry Barlow, Joseph Schumpeter, Julian Assange, Kickstarter, Mark Zuckerberg, Marshall McLuhan, means of production, Metcalfe’s law, military-industrial complex, mutually assured destruction, national security letter, Nelson Mandela, Network effects, new economy, New Journalism, Nicholas Carr, Occupy movement, ocean acidification, offshore financial centre, patent troll, Peter Thiel, plutocrats, post scarcity, Post-Keynesian economics, power law, price mechanism, profit maximization, profit motive, public intellectual, QWERTY keyboard, Ralph Nader, Richard Stallman, road to serfdom, Robert Metcalfe, Saturday Night Live, sentiment analysis, Silicon Valley, Silicon Valley billionaire, single-payer health, Skype, spectrum auction, Steve Jobs, Steve Wozniak, Steven Levy, Steven Pinker, Stewart Brand, technological determinism, Telecommunications Act of 1996, the long tail, the medium is the message, The Spirit Level, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transfer pricing, Upton Sinclair, WikiLeaks, winner-take-all economy, yellow journalism, Yochai Benkler

Wired’s Anderson puts the matter succinctly: “Monopolies are actually even more likely in highly networked markets like the online world. The dark side of network effects is that rich nodes get richer. Metcalfe’s law, which states that the value of a network increases in proportion to the square of connections, creates winner-take-all markets, where the gap between the number one and number two players is typically large and growing.”12 Bob Metcalfe, inventor of the Ethernet protocol that wires computers together, regarded the network effect as so prevalent that he formulated the law that goes by his name: the usefulness of a network increases at an accelerating rate as you add each new person to it.13 Google search is an example; the quality of its algorithm improves with more users, leaving other search engines with a less effective and attractive product.

The paradox is striking, because scarcity on the Internet has to be created and hence is artificial. As Wired editor Chris Anderson puts it, “Artificial scarcity is the natural goal of the profit-seeking.”10 There are a few closely related explanations. First and most important, the Internet exhibits what economists term network effects, meaning that just about everyone gains by sharing use of a single service or resource. Information networks, in particular, generate demand-side economies of scale, related to the capture of customers, as opposed to supply-side economies of scale (prevalent in traditional oligopolistic industry) related to reduction in costs as scale goes up.11 The largest firm in an industry increases its attractiveness to consumers by an order of magnitude as it gets a greater market share, and makes it almost impossible for competitors with declining shares to remain attractive or competitive.

Pulse aggregates other firms’ news and makes its money working with advertisers and merchants. It is moving into “branded-content advertising,” by which ads get slotted next to appropriate stories for individualized users. The outstanding question is whether Pulse will generate a workable business model and then can establish a monopoly position due to its scale and network effects, like Twitter. By 2012 it moved aggressively to provide local news—with the ability to place advertising in real time that addresses one’s exact location—and become a global operation; the service is already available in eight languages. Pulse does not generate original news, and its founders concede that they don’t know much about journalism.86 Nor do any of the other mobile aggregators generate any original journalism,87 but some of their revenues will probably end up in the hands of other news media and may eventually contribute to paying actual journalists.


pages: 468 words: 124,573

How to Build a Billion Dollar App: Discover the Secrets of the Most Successful Entrepreneurs of Our Time by George Berkowski

Airbnb, Amazon Web Services, Andy Rubin, barriers to entry, Black Swan, business intelligence, call centre, crowdsourcing, deal flow, Dennis Tito, disruptive innovation, Dunbar number, en.wikipedia.org, game design, Google Glasses, Google Hangouts, Google X / Alphabet X, growth hacking, iterative process, Jeff Bezos, Jony Ive, Kickstarter, knowledge worker, Lean Startup, loose coupling, Marc Andreessen, Mark Zuckerberg, Mary Meeker, minimum viable product, MITM: man-in-the-middle, move fast and break things, Network effects, Oculus Rift, Paul Graham, QR code, Ruby on Rails, Salesforce, self-driving car, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Skype, Snapchat, social graph, SoftBank, software as a service, software is eating the world, Steve Jobs, Steven Levy, subscription business, TechCrunch disrupt, Travis Kalanick, two-pizza team, ubercab, Y Combinator

These companies constantly seek a new way to delight users more, become even more sticky or launch inventive ways to make it easier for users to spend more money. At scale, the product challenge is slightly different. It’s not just about launching ‘simple’ features. Real product innovation involves taking advantage of the scale you already have, of leveraging network effects to become even more powerful. Network effects are massive: passengers use Uber because it has more cars than the competitors; drivers work for Uber because it has more passengers than the other apps. It’s a system that feeds off itself, one that reinforces itself. Merchants use the Square register app because it’s simple, beautiful and gives them the ability to process credit cards.

According to Harvard University professors Diana Tamir and Jason Mitchell, sharing information about ourselves is intrinsically rewarding and gives us a few squirts of dopamine every time we do it.14 When coming up with your big idea or big problem to solve, think about whether it is inherently social, or whether it could be made social, thus rendering it a lot more disruptive and a lot more powerful. People love to share rich content – such as photos, news and magazine articles – and this builds very strong network effects. A great example is Instagram. One of the main ways it drove growth from the very first day was by allowing users to simultaneously share their photos on Facebook and Twitter from the moment the photo was taken using the Instagram app. This massively increased the reach of the new app to big social networks – with very compelling photo content.

But it did have a basic user registration function, allowed you to add friends, and also allowed you to send messages to those friends that disappeared after 10 seconds. The app was very much an MVP, a minimum viable product. They invited a bunch of college and high school students to use it, and they invited their friends. Their user-acquisition metric was self-sustaining (because of the inherent network effect of users inviting their friends). Their user activation (effectively creating an account) converted at close to 100 per cent because it was a super-simple registration (just a user name and password). Their retention started growing as users began messaging one another and sending snaps (or photos), and their referral metric was off the charts because it was baked into the app (the app works better when you invite more friends to it).


pages: 349 words: 98,309

Hustle and Gig: Struggling and Surviving in the Sharing Economy by Alexandrea J. Ravenelle

active transport: walking or cycling, Affordable Care Act / Obamacare, air traffic controllers' union, Airbnb, Amazon Mechanical Turk, barriers to entry, basic income, Broken windows theory, call centre, Capital in the Twenty-First Century by Thomas Piketty, cashless society, Clayton Christensen, clean water, collaborative consumption, collective bargaining, company town, creative destruction, crowdsourcing, digital divide, disruptive innovation, Downton Abbey, East Village, Erik Brynjolfsson, full employment, future of work, gentrification, gig economy, Howard Zinn, income inequality, independent contractor, informal economy, job automation, John Zimmer (Lyft cofounder), low skilled workers, Lyft, minimum wage unemployment, Mitch Kapor, Network effects, new economy, New Urbanism, obamacare, Panopticon Jeremy Bentham, passive income, peer-to-peer, peer-to-peer model, performance metric, precariat, rent control, rent stabilization, ride hailing / ride sharing, Ronald Reagan, scientific management, sharing economy, side hustle, Silicon Valley, strikebreaker, TaskRabbit, TED Talk, telemarketer, the payments system, The Theory of the Leisure Class by Thorstein Veblen, Tim Cook: Apple, transaction costs, Travis Kalanick, Triangle Shirtwaist Factory, Uber and Lyft, Uber for X, uber lyft, ubercab, universal basic income, Upton Sinclair, urban planning, vertical integration, very high income, white flight, working poor, Zipcar

That doesn’t seem like an issue unless you’re invested in a fax machine company or are wedded to your fax, for whatever reason. When other people stop using faxes, your fax machine stops being useful. McAfee and Brynjolfsson note that “economics of network effects are central to understanding business success in the digital world,” and they use the example of WhatsApp to illustrate network effects. They explain that as WhatsApp became more popular, users of regular text messages (SMS) felt left out and increasingly turned to the app: “As more and more of them did this, the network effects grew stronger. Computer pioneer Mitch Kapor observed that ‘architecture is politics.’ With platforms, it’s also economics.”29 But the idea that, for platforms, architecture can be economics might not be a good thing.

Or the proliferation of outsourcing—of hiring others to do everything from walking dogs to cleaning homes to grocery shopping and chauffeuring—may further increase the “commodification of intimate life” and lead to additional pressure to make enough to pay for market services.28 Hiring workers off of platforms risks creating platform monopolies. As noted by Andrew McAfee and Erik Brynjolfsson, when more and more people use a platform or tool, a “network effect” arises, which is economist speak for the idea that certain goods become more valuable as more and more people use them. The most frequently given example is that of a fax machine. If only one person has a fax machine, it’s not very useful. But as more and more people get fax machines, the tools become increasingly useful.

See also criminal activity legislative issues, 51–53, 52fig. 8 Lepore, Jill, 208 Levin, Sam, 123 Levin, Stephen, 51 licensing requirements, 2, 222–23n64 LinkedIn, 30, 114, 170 low capital-barriers, 42–43, 43tab. 1 Lowell, Massachusetts, 66–67, 70 low skill-barriers, 42–43, 43tab. 1, 160 low-skill work, 41 Ludlow Massacre, 69 Lyft: bathroom use, 88; comparison to, 32–33, 75, 185; competition with, 78; criminal activity and, 143–47; employee monitoring, 204; general liability insurance, 110; high capital-barrier, 43tab. 1, 167; lawsuits by workers against, 38; low skill-barrier, 43tab. 1; LyftLine, 105; Lyft worker, 2–3; payment rate changes, 75; Peers.com and, 72; safety issues, 101–4, 113; as sharing economy company, 26; start-up expenses, 2; Uber comparison, 33; usage by race, 194; worker-client sexual interactions, 133 Lyman, Stanford, 124 MacArthur Foundation, 62, 224n1 makerspaces, 9, 27, 31 Makespace, 190 Managed by Q, 190, 207 manual labor, 41 marketing: Airbnb, 160; image and, 30; by Kitchensurfing, 57; Kitchensurfing, 160; Kitchensurfing and, 163–64; as peer-to-peer connection, 21; of self, 181 marketplace model: Kitchensurfing as, 57, 58; Upwork (oDesk/Elance-oDesk), 204 Mayo, Elton, 178 McAfee, Andrew, 17, 162, 186 McDonald’s, 88, 106, 185, 208 McKinsey Global Institute, 194 Meat Inspection Act of 1906, 93 Mechanical Turk, 73 Meelen, Toon, 28fig. 2 #MeToo movement, 23 Migrant and Seasonal Agricultural Worker Protection Act, 196 millennials: defined, 219n14; Great Recession and, 10; sharing economy and, 23–24; technology and, 10; unemployment rate, 10 Minieri, Alexandra, 127 minimum wage, 38, 71, 225n23 mining industry, 68–69 Mohrer, Josh, 184 muckrakers, 93 multiple jobs: overview, 3, 8, 15–16; effects of, 14; statistics on, 176 Munchery, 110, 190 Muscarella, Chris, 58 Muslims, discrimination against, 170 MyClean, 109, 172, 189–90, 191, 192, 207 National Guard, 69 National Labor Relations Act of 1935. See Wagner Act of 1935 National Labor Relations Board, 70, 89 Neighborgoods, 26 Neighborrow, 26 network effect, 17 Newcomer, Eric, 73 New Deal, 92, 227n8 Newmark, Craig, 26 New York Communities for Change and Real Affordability for All, 41 New York Times, 39–40, 69 Nickel and Dimed: On (Not) Getting By in America (Ehrenreich), 24, 91 Nnaemeka, C.Z., 231n4 Norén, Laura, 228n30 Novogratz, Michael, 76 Occupational Safety and Health Administration: overview, 22; driver homicide victim rate, 101; report on job injuries, 36 oDesk, 204 Omidyar, Pierre, 26 on-call services, 55 on-call taxi service, 26.


pages: 303 words: 100,516

Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork by Reeves Wiedeman

Adam Neumann (WeWork), Airbnb, asset light, barriers to entry, Black Lives Matter, Blitzscaling, Burning Man, call centre, carbon footprint, company town, coronavirus, corporate governance, COVID-19, cryptocurrency, digital nomad, do what you love, Donald Trump, driverless car, dumpster diving, East Village, eat what you kill, Elon Musk, Erlich Bachman, fake news, fear of failure, Gavin Belson, Gordon Gekko, housing crisis, index fund, Jeff Bezos, low interest rates, Lyft, Marc Benioff, margin call, Mark Zuckerberg, Masayoshi Son, Maui Hawaii, medical residency, Menlo Park, microapartment, mortgage debt, Network effects, new economy, prosperity theology / prosperity gospel / gospel of success, reality distortion field, ride hailing / ride sharing, Salesforce, Sand Hill Road, sharing economy, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Skype, Snapchat, SoftBank, software as a service, sovereign wealth fund, starchitect, stealth mode startup, Steve Jobs, Steve Wozniak, subscription business, TechCrunch disrupt, the High Line, Tim Cook: Apple, too big to fail, Travis Kalanick, Uber for X, uber lyft, Vision Fund, WeWork, zero-sum game

Businesses with such valuations, he said, needed network effects that allowed them to easily acquire customers. They also needed a “moat,” as Warren Buffett put it, to prevent competitors from pillaging their castle. The last internet bubble had given rise to a rash of companies that generated what he called “profitless prosperity” as they sold goods and services for less than they were worth to build market share. Some, like Amazon, had pulled off the trick; many more had burned millions of dollars only to be long forgotten. No one had yet tried to claim that real estate might be subject to network effects or that you could build a moat in a business where even the largest players control only a fraction of a percentage of the market.

“Until today, we were a boutique office space,” Adam said. “Starting tomorrow, we’re going to be the world’s first ‘physical social network.’” WeWork’s business didn’t seem to share much with the tech companies taking off in the Mission or Menlo Park. The empires of the 2010s—Facebook, Twitter, Uber, Airbnb—were being built on “platforms” with “network effects” that made them more and more valuable with each user that signed up; WeWork leased office space in half a dozen buildings to people who paid rent. But Miguel and Adam had been talking about the networking aspect of WeWork since the beginning, a decade after Miguel had missed the social revolution with English, baby!

Adam was trying to position WeWork in similarly ambitious terms. “We are not competing with other coworking spaces,” he said. “We are competing with offices—and that is a $15⁠ trillion asset class in the U.S.” Globally, the real estate market was closer to $200 trillion. Real estate is a fragmented business, with none of the network effects that allowed tech companies to devour entire industries. Even the world’s largest real estate firms control a fraction of 1 percent of the market. But venture capitalists weren’t looking for ceilings; they wanted B’s, baby. What if WeWork could break that mold? A global brand known for providing the kinds of offices that people actually wanted to work in had huge potential alongside anonymous building operators like Brookfield and Vornado.


pages: 273 words: 72,024

Bitcoin for the Befuddled by Conrad Barski

Airbnb, AltaVista, altcoin, bitcoin, blockchain, buttonwood tree, cryptocurrency, Debian, en.wikipedia.org, Ethereum, ethereum blockchain, fiat currency, Isaac Newton, MITM: man-in-the-middle, money: store of value / unit of account / medium of exchange, Network effects, node package manager, p-value, peer-to-peer, price discovery process, QR code, radical decentralization, Satoshi Nakamoto, self-driving car, SETI@home, software as a service, the payments system, Yogi Berra

Of course, we have no way of knowing what fantastic features a new currency would need such that it could supplant Bitcoin. However, three main reasons exist to believe that Bitcoin may be able survive the onslaught of newcomers: network effects, the nature of cryptocurrency volatility, and the recent development of cryptocurrency-pegging technology. The network effect is the simple concept that people want to use a currency only if other people will accept it as payment. The more users a currency has, the more useful it is. This creates a natural barrier for the adoption of new currencies (and certainly has hindered the adoption of Bitcoin relative to traditional currencies in its first few years).

If Bitcoin volatility continues to decrease, this trend may give Bitcoin a significant advantage over future cryptocurrencies: Because Bitcoin is guaranteed to be the oldest cryptocurrency, new currencies might be unable to catch up in this “volatility race,” and Bitcoin will always remain less volatile than upstarts. If Bitcoin maintains advantages in terms of network effects and volatility, it may make sense for new cryptocurrencies to use pegging to link themselves to the Bitcoin network instead of trying to replace the Bitcoin network entirely. Recently, two well-known cryptocurrency developers and entrepreneurs, Adam Back and Austin Hill, have suggested that the value of new cryptocurrencies could be directly linked one-to-one with the value of a bitcoin by using cryptography to allow coins to “ jump” between block-chains using clever algorithms.

program, 217–218, 220–222 hello-money starter project creating, 228–229 declarations, 231 hook for detecting money arrival, 234 running and testing, 235–236 writing code, 230–235 hierarchical deterministic wallets, 190 Hill, Austin, 120 history of Bitcoin, 112–116 homebrew (command-line tool), 219 hosted wallets online services, 36 vs. personal wallets, 34–35 hot storage, 47 vs. cold storage, 33–34 hot wallets, personal, 37–38 human-readable Bitcoin addresses, 10n hybrid wallets, 187 I illegal activity, Bitcoin and, 124 impedance mismatch, 57 importing private key, 17, 39, 193, 194–195, 237 installing SPV wallets vs. full wallets, 193 integer factorization, 131 Internet bubble, 120 InterruptedException exception type, 239 irreversibility, of transactions, 25–26, 56 superiority of, 57 J Java, 226 initializing objects, 231–233 installing, 226–227 java.io.File class, 231 Java JDK (Java Development Kit), 226 java.matho.BigInteger class, 231 JavaScript, 213–223 preparing machine for, 218–219 writing Bitcoin program in, 217–218 jelly-filled donut incident, 141–156 JSON-RPC API (JavaScript Object Notation - Remote Protocol Call), 222 limitations of writing Bitcoin programs using, 223 JSON-RPC protocol, 214 K Kaminsky, Dan, 118 Keynesian economics, 126 Kienzle, Jörg, 110–111 Koblitz curve, 151 Kraken, 64 Krugman, Paul, 117 L Landauer limit, 157 laptops, private keys on, 44 ledger, 11 length extension, 171n liability, for stolen bitcoins, 34 lightweight wallets, 192 limit orders, 66 Linux installing Git, 227 installing Maven, 227 OpenJDK version of Java, 227 setting up Bitcoin Core server, 219 live Bitcoin exchanges, 71 LocalBitcoins.com, 67, 68 escrow service, 70 M Mac OS installing Git, 227 installing Maven, 227 setting up Bitcoin Core server, 219 man-in-the-middle attacks, 216 market orders, 65–66 MasterCard, 112 master private key, 188 master public key, 188 generating Bitcoin address with, 190 Maven empty starter project created with, 228 installing, 227 mBTC (millibitcoins), 9 MD5 (message digest algorithm), 132 meeting places, for Bitcoin transactions, 68 MemoryBlockStore function (bitcoinJ), 237 merchant services, 214 Merkle trees, 192 mesh networks, 169 message digest algorithm (MD5), 132 microbitcoins (µBTC), 9 middleman, buying bitcoins from, 52–57 Miller-Rabin primality test, 90 millibitcoins (mBTC), 9 mining, 5, 20, 26–27, 96, 99, 161–180 in 2030, 201–202 decentralization of, 179–180 difficulty of, 173 distributing new currency with, 167–168 hardware, 174–175 2030 requirements, 202 energy efficiency of, 178 profitability threshold curves for comparing, 179 need for, 162–168 nodes, 170 pooled, 175–176 practicality, 50 preventing attacks with, 166–167 process for, 168–176 for profit, 176–177 proof-of-work in, 138–139 solving a block, 171 modular arithmetic, 131n “m of n” private key, 42 money laundering, 112–113 Moore’s law, 179n Moxie Jean, 67 Multibit, 38 multi-signature addresses, and fragmented private keys, 41–42 multi-signature transactions, 57, 69–70 mvn install command, 230 My Wallet Service, 37 N Nakamoto, Satoshi, 3, 110, 211 identity, 113 last comment, 114 white paper on Bitcoin, 112 network effect, 120 NetworkParameters structure, 232 newbiecoins.com, 13 newly minted bitcoins, 26–27 Newton, Isaac, Principia, 210–211 node-bitcoin, installing, 218 Node.js library, 217, 221 installing, 218 Node Package Manager, 218 nodes broadcast only, 169 full, 191 relay, 170 nominal deflation, 126 nonprofit organizations, accepting bitcoins, 18 NXT, 125 O off-chain transactions, 201 offline transaction signing, 40–41 onCoinsReceived function, 234–235 online wallet services hosted, 36 personal, 34, 37 Oracle Corporation, 226 orders, placing to buy bitcoins, 65 order of curve, elliptic curve cryptography, 152–153 orphaned blocks, 24–25 P paper money, color copiers as threat, 110 paper wallets, 39 encrypted, 39–40 passwords, 14, 40 for brain wallet, 45 function of, 40 loss of, 37 Peercoin, 125 PeerGroup object, 233–234, 240 peer-to-peer architecture, 119 pegging, 120 pending transaction, 18 Perrig, Adrian, 110–111 personal wallets vs. hosted wallet, 34–35 hot storage, 37–38 online services, 37 person-to-person bitcoin purchases, 52, 67–71 point multiplication, 150, 158–159 point-of-sale terminals, watch-only wallet for, 187 polling, Bitcoin programming, 223 pom.xml file, 229, 236–237 pooled mining, 175–176 portability, of currency, 117 Preneel, Bart, 140 price discovery process, 120 privacy, 11n and criminals, 124 multiple addresses and, 12 private currencies, 2 private key, 11–12, 150 compromise of, 41 extra protection for, 139 fragmented, and multi-signature addresses, 41–42 generating, 37 importing, 237 master, 188 memorizing, 45 parable on, 141–145 reversing function of, 136 security for, 39, 186 signing transaction with, 156 SPV wallets vs. full wallets, 194 storing, 33 profit, mining for, 176–177 programming languages, for Bitcoin network connection, 225–226 proof-of-stake, 125 proof-of-work, 125, 166 and blockchain, 165 in mining, 138–139 protecting bitcoins, 61.


pages: 1,136 words: 73,489

Working in Public: The Making and Maintenance of Open Source Software by Nadia Eghbal

Amazon Web Services, Apollo 11, barriers to entry, Benevolent Dictator For Life (BDFL), Big Tech, bitcoin, Clayton Christensen, cloud computing, commoditize, commons-based peer production, context collapse, continuous integration, crowdsourcing, cryptocurrency, David Heinemeier Hansson, death of newspapers, Debian, disruptive innovation, Dunbar number, en.wikipedia.org, eternal september, Ethereum, Firefox, Free Software Foundation, Guido van Rossum, Hacker Ethic, Hacker News, Induced demand, informal economy, information security, Jane Jacobs, Jean Tirole, Kevin Kelly, Kickstarter, Kubernetes, leftpad, Mark Zuckerberg, Menlo Park, Neal Stephenson, Network effects, node package manager, Norbert Wiener, pirate software, pull request, RFC: Request For Comment, Richard Stallman, Ronald Coase, Ruby on Rails, side project, Silicon Valley, Snapchat, social graph, software as a service, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, tacit knowledge, the Cathedral and the Bazaar, The Death and Life of Great American Cities, The Nature of the Firm, TikTok, Tragedy of the Commons, transaction costs, two-sided market, urban planning, web application, wikimedia commons, Yochai Benkler, Zimmermann PGP

This affords creators an enormous degree of freedom and helps perpetuate the renaissance of ideas that is already well underway. We don’t have all the answers yet, but I’m hoping this book helps point us toward the right questions. * Another way of describing this pattern is through negative cross-side network effects. Cross-side network effects describe how value is created between two groups of users: in this case, creators and their users. Ideally, the network creates positive cross-side effects, where the presence of more creators and users is mutually beneficial. But too many users can also create a negative cross-side effect, which reduces value to the creator

If software consumption were truly zero marginal cost, it would be just as easy for anyone else to maintain their own version of GitHub as it is for GitHub itself. But it’s far more efficient for a single platform to manage the code, security, infrastructure, support, and whatever else comes with maintaining a software product. Developers use GitHub over GitLab not just for the network effects but also for the former’s security and reliability. The same goes for why someone would use a Google product, like Gmail or Google Docs, over that of a startup. It costs money and manpower to do these things well. Finally, there are marginal costs associated with the developer tools used to maintain software.

Micropayments make the transaction about content, rather than about creators, but because there is so much freely available, highly substitutable content they create decision fatigue for consumers.362 Subscription models can operate like a freemium model, but they get even more interesting as a two-sided market. In a freemium model, a creator gives away some of their content for free, but restricts other content to those with paid subscriptions. The free content helps creators grow their reputation via public network effects. In a two-sided market, paying subscribers subsidize all of the content for nonpaying readers, under the assumption that creators aren’t actually selling content but a sense of membership and identity. Instead of charging, say, all 100,000 readers ten cents to read an article, creators can instead give away the article for free, but charge 1,000 extra-dedicated subscribers ten dollars per year.


pages: 600 words: 72,502

When More Is Not Better: Overcoming America's Obsession With Economic Efficiency by Roger L. Martin

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, autism spectrum disorder, banking crisis, Black Monday: stock market crash in 1987, butterfly effect, call centre, cloud computing, complexity theory, coronavirus, COVID-19, David Ricardo: comparative advantage, do what you love, Edward Lorenz: Chaos theory, financial engineering, Frederick Winslow Taylor, Glass-Steagall Act, High speed trading, income inequality, industrial cluster, inflation targeting, Internet of things, invisible hand, Lean Startup, low interest rates, Lyft, Mark Zuckerberg, means of production, Network effects, new economy, obamacare, open economy, Phillips curve, Pluto: dwarf planet, power law, Renaissance Technologies, Richard Florida, Ronald Reagan, scientific management, shareholder value, Silicon Valley, Snapchat, Spread Networks laid a new fibre optics cable between New York and Chicago, Tax Reform Act of 1986, The future is already here, the map is not the territory, The Wealth of Nations by Adam Smith, Tobin tax, Toyota Production System, transaction costs, trickle-down economics, two-sided market, uber lyft, very high income, Vilfredo Pareto, zero-sum game

Unfortunately, it is very tempting for consumers—arguably efficient for them—to focus on a single, familiar provider. Switching to an alternative can be painful and annoying. And there are, of course, the much discussed network effects in the modern economy. It makes lots of sense to use Facebook for your social networking, because everybody else with whom you would like to network is on Facebook, or to pick Instagram over Snapchat, because Instagram is integrated with its giant social-media owner, Facebook. These network effects are not just found in the online world. There is a benefit to you of buying the leading brand in categories like beer, laundry detergents, and athletic shoes, because the leading brand is most likely to be in stock at whatever retailers you visit (whether physical or online).

In 1978 the one hundred most profitable US firms earned 48 percent of the profits of all publicly traded companies combined, but by 2015 the figure had nearly doubled, to 84 percent.13 The success stories of the so-called new-economy companies are in some measure responsible. The dynamics of platform businesses, where competitive advantages often derive from network effects, very quickly convert random distributions into Pareto ones, as Instagram did with fame sorting. But Pareto distributions are also common in traditional industries. Consider the American waste-management industry. At one time there were thousands of little waste-management companies—garbage collectors—across the country.

See North American Free Trade Agreement NASCAR, 102 National Football League (NFL), 144–145 National Rifle Association (NRA), 197 natural systems achieving balance in, 97–114 adaptivity of, 103–106 complexity of, 100–103 continuous adaptation in, 82–83 dynamic interactions in, 80–81 features of, 80–84, 100 relationship between inputs and outputs in, 81–82 stability of, 84 structure of, 106–113 sum of parts and, 80–81 US economy as, 77–94 NCLB. See No Child Left Behind Act neoclassical Keynesian economics, 23–24, 25 Nestlé, 192 Net Promoter Score (NPS), 28, 29, 48 network effects, 191–192 New Deal, 12, 107, 159 new-economy companies, 71 New England Complex Systems Institute, 177 New York Stock Exchange (NYSE), 64, 88–91, 92, 93 Nicomachean Ethics (Aristotle), 183 1970s, 5–12, 24 No Child Left Behind Act (NCLB), 29–30, 45, 49 nonreductionist thinking, 118–119 normal distributions, 33–38 North American Free Trade Agreement (NAFTA), 66, 150 Norton, David, 129 NYSE.


The Smartphone Society by Nicole Aschoff

"Susan Fowler" uber, 4chan, A Declaration of the Independence of Cyberspace, Airbnb, algorithmic bias, algorithmic management, Amazon Web Services, artificial general intelligence, autonomous vehicles, barriers to entry, Bay Area Rapid Transit, Bernie Sanders, Big Tech, Black Lives Matter, blockchain, carbon footprint, Carl Icahn, Cass Sunstein, citizen journalism, cloud computing, correlation does not imply causation, crony capitalism, crowdsourcing, cryptocurrency, data science, deep learning, DeepMind, degrowth, Demis Hassabis, deplatforming, deskilling, digital capitalism, digital divide, do what you love, don't be evil, Donald Trump, Downton Abbey, Edward Snowden, Elon Musk, Evgeny Morozov, fake news, feminist movement, Ferguson, Missouri, Filter Bubble, financial independence, future of work, gamification, gig economy, global value chain, Google Chrome, Google Earth, Googley, green new deal, housing crisis, income inequality, independent contractor, Jaron Lanier, Jeff Bezos, Jessica Bruder, job automation, John Perry Barlow, knowledge economy, late capitalism, low interest rates, Lyft, M-Pesa, Mark Zuckerberg, minimum wage unemployment, mobile money, moral panic, move fast and break things, Naomi Klein, Network effects, new economy, Nicholas Carr, Nomadland, occupational segregation, Occupy movement, off-the-grid, offshore financial centre, opioid epidemic / opioid crisis, PageRank, Patri Friedman, peer-to-peer, Peter Thiel, pets.com, planned obsolescence, quantitative easing, Ralph Waldo Emerson, RAND corporation, Ray Kurzweil, RFID, Richard Stallman, ride hailing / ride sharing, Rodney Brooks, Ronald Reagan, Salesforce, Second Machine Age, self-driving car, shareholder value, sharing economy, Sheryl Sandberg, Shoshana Zuboff, Sidewalk Labs, Silicon Valley, single-payer health, Skype, Snapchat, SoftBank, statistical model, Steve Bannon, Steve Jobs, surveillance capitalism, TaskRabbit, tech worker, technological determinism, TED Talk, the scientific method, The Structural Transformation of the Public Sphere, TikTok, transcontinental railway, transportation-network company, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, upwardly mobile, Vision Fund, W. E. B. Du Bois, wages for housework, warehouse robotics, WikiLeaks, women in the workforce, yottabyte

Instead of the tired conventional model, with individual firms competing for customers, platform enthusiasts say we are witnessing the emergence of a new, seemingly “flatter,” more participatory model whereby customers engage directly with each other through an architecture designed for connection. This focus on connection, combined with our ease of connection, thanks to our smartphones, has generated unprecedented “network effects”: the more people connected to a network or platform, the more powerful, useful, and profitable that network or platform will become. The result is the formation of “natural” and essentially harmless monopolies. According to this line of argument, if we try to regulate these (harmless) monopolies, we’ll destroy the network effects. We’ll kill the goose.20 Besides, who cares if these companies are dominant? They are for the people! Jeff Bezos, Amazon’s founder and chief executive, put his shareholders on notice in a 1997 letter that the company would “focus relentlessly on our customers” and market leadership over “short-term profitability.”

Meritocracy and the dream of entrepreneurship—the republican ideal of free labor, free soil, of escaping the wage relation—are reborn. Our phones aren’t just resurrecting the American dream for users. They’re also resurrecting it for companies and investors. Start-ups and unicorns, many of whom have never earned a dime in profit, craft stories of warp-speed growth rooted in network effects and low marginal costs of distribution. They promise to remake markets and reengineer society through mobile tech and killer apps and venture capitalists are enthralled. They could be getting a piece of the next Facebook, the next Slack (a popular workflow platform), the next Uber. Individual investors such as Carl Icahn, venture capital firms such as Andreessen Horowitz, and funds such as Softbank’s Vision Fund and the Collaborative Fund have dumped hundreds of billions of dollars into tech start-ups over the past decade.

., 37, 39, 41, 44, 54 Mori, 61–62 MoveOn.org, 91 M-pesa mobile money transfer system, 6 MSD (Marjorie Stoneman Douglas) High School, 90 mSpy, 25 Mubarak, Hosni, 92, 94, 97 Muflahi, Abdullah, 20 multitier subcontracting, 31 Munro, Alice, 62–63 Musk, Elon, 126 Myanmar, 42, 50, 94 National Highway Traffic Safety Administration, 157 National Hispanic Media Coalition, 55 National Justice Project (Australia), 21 National Labor Relations Board, 153 National Policy Institute, 105–6 National Security Agency (NSA), 80, 81, 95 NationBuilder, 93–94 neoliberalism: and capitalism, 69, 102, 112–13, 117–18, 144–45; and economic crisis, 99–100, 176n30; and feminism, 107; and new titans, 54 Nepal, 94 network(s), 61, 143 “network effects,” 44 “network society,” 121 #NeverAgain movement, 90, 110 New America, 56 New Center, 45–46 “New Economy,” 121 news: fake, 50–51, 56 news cycle, 89 newspapers, 50–52 news sources, 50–52 New York Taxi Workers Alliance, 146, 153, 178–79n5 Nichols, Synead, 89–90 Nigeria, politics in, 97 Nixon, Richard, 88 Noah, Trevor, 110 Noble, Dylan, 19–20 Nobu Malibu, 62 #NotOkay, 108 NSA (National Security Agency), 80, 81, 95 Obama, Barack, 6, 44, 55, 92, 106 obsolescence, built-in, 82 Ocasio-Cortez, Alexandria, 104, 112, 152, 179n22 Occupy movement, 102–3, 104 Oculus, 41 OKCupid, 23, 24 O’Neill, Caitlin, 56 online dating, 23–27, 35 online search, 52 Open Markets Institute, 150 Open Sesame, 10 Operation Haymaker, 95–96 O’Reilly, Holly Figueroa, 93 O’Rourke, Beto, 92 outrage politics, 109 outsourcing, 146 ownership of our own data, 135–36, 156 Oxford, Kelly, 60, 108 Pacific Railroad Act (1862), 80 Page, Larry, 38, 39, 41, 54, 119–20, 124 PageRank, 52 Palantir, 81 para-social interactions with celebrities, 65 parental limitation, 8 Parkland, Florida, 90 Patriot Act, 81 payment systems, mobile, 4, 5, 6, 10 PayPal, 44 peer-to-peer networks, 120 Pelosi, Nancy, 56 performance: politics as, 109, 111; social media as, 63, 64, 68 permatemps, 46, 47 personal information: ownership of, 135–36, 156; sharing on social media of, 60– 61 personalization, 53 personal narratives, 115–16 philanthropy, 56–57 Philippines, 90–91 “phone boss,” 69 Physician Women for Democratic Principles, 89 “pickers,” 33, 46 Pickersgill, Eric, 7 Pinterest, 60, 64, 69 PlentyOfFish, 24 polarization, in politics, 111 police: surveillance by, 96–97, 137–38, 176n28; violence against blacks by, 17–23, 35, 89–90, 100–102, 111, 169n6, 169n13 political advertising, 149 political movements, 97, 102, 111–12 political organizing, 91 political parties, 93–94 politics, 87–113; algorithms and filter bubbles in, 109–10; Black Lives Matter in, 89–90, 100–102, 111; bots in, 109; censorship in, 95; Dakota Access Pipeline Protests in, 103–4, 110; decentralization in, 101–2; digital-analog model in, 104, 110–12, 162; economic crisis in, 98–100; feminist movement in, 107–8; finding our voice in, 108–13; geo-, 95–96, 144; government tracking in, 94– 95; gun violence in, 90, 91, 110, 111; modern-day revolt in, 100–108; neoliberal, 99–100, 112–13; Occupy movement in, 102–3; outrage, 109; outside of US, 93–94; as performance, 109, 111; as personal, 88–100; polarization in, 111; political movements in, 97, 102; political parties in, 93– 94; protests in, 89–90, 92, 95, 100–104; slacktivism in, 111; social media use by candidates in, 103–5; social media use by people in power in, 87–88, 92– 93; Sunrise Movement in, 103–4; surveillance by law enforcement in, 96–97, 176n28; Syrian War in, 90; virality in, 81; voter outreach in, 89; white supremacy in, 35, 105–7 poor communities, internet access for, 149–50 Posner, Eric A., 135 poverty, 12–13 power, in cognitive mapping, 145 power inequalities, 137–38 predictive modeling, 77 print magazines, 172n40 PRISM program, 81 privacy, 69–72, 137–38, 150–51, 156 “privacy tools,” 71 private sphere, commodification of, 144 producers vs. consumers, 28–29 profit, frontiers of, 72–79, 85–86 proponents, 9–12 ProPublica, 48, 106, 149, 153 protests, 89–90, 92, 95, 100–104 Proud Boys movement, 106 public opinion, molding of, 55 Pulitzer, Joseph, 50 “push” notifications, 84 racism, 17–23, 35, 169n6, 169n13 RAM (Rise Above Movement), 106–7 rare metals, 82, 83 Reagan, Ronald, 43 real estate market, effect of high-tech company location in, 48–49 “real life,” digital life vs., 68 recommender algorithm, 67 Reddit, 24 redlining, digital, 29 regulation of monopolies, 43–46 reinforcement learning, 157 Rekognition software, 149 relationships, expectations and norms about, 24–25 religious beliefs, tech-based, 123 remote medicine, 10 rents, 48 research funding, 55 retreat from technology, 132–35 Reynolds, Diamond “Lavish,” 20, 35 Rice, Tamir, 18 “right to repair,” 155 right-wing movements, 105–7 Rise Above Movement (RAM), 106–7 rituals, on social media, 61 Robbin, Jonathan, 77 robots, 128, 131 Rockefeller, Jay, 77 Rockefeller, John D., 37, 54, 57 Rongwen, Zhuang, 94 Roosevelt, Franklin Delano, 88 Rousseff, Dilma, 97 Rudder, Christian, 23 rural areas: internet access for, 29, 149–50 Salesforce: employees organizing at, 148; immoral projects at, 154 Sandberg, Sheryl, 107 Sanders, Bernie, 103–5, 110 Santana, Feidin, 19, 20 Santelli, Rick, 105 Saudi Arabia, censorship in, 95 Scavino, Dan, 88 Schifter, Doug, 127 Schillinger, Klemens, 8 Schneier, Bruce, 135 Schrems, Max, 151 science fiction, 126 Scott, Walter, 19, 20 scraping, 71 Seamless, 30 search algorithms, 51–52, 53 Seasteading Institute, 124 Seinfeld, Jerry, 110 self-esteem, 65 selfies, 59–60 selfish behavior, 138–39, 154–56 self-monitoring tools, 69 service jobs, 33–34 Seth, Jodi, 56 sexism, 23–27, 35 sexting, 25–27, 35 sexual division of labor, 74–75 sexual harassment, 25, 27, 126–27 sexuality, 23–27, 35 sexual violence, 25 shareholder value society, 98 sharing on social media, 60–61, 84 Sharpton, Al, 102 shopping, mobile, 31–32 short message service (SMS), 6 Sidewalk Labs, 41 Sierra Club, 157 signals intelligence, 95–96 “silent spring,” 7 Silicon Valley, 115–41; distrust of, 125–31; and government control, 124; and spirit of capitalism, 115–25; taking back control from, 131–41 Silicon Valley Rising (SVR), 147 Sina Weibo (China), 94 Singh, Jagmeet, 93–94 the Singularity, 123 skeptics, 7–8 Skype, 81 slacktivism, 111 Slager, Michael, 19 Slutwalks, 108 smartness, 9 smartphone(s): demographics of, 3, 4; vs.


pages: 140 words: 91,067

Money, Real Quick: The Story of M-PESA by Tonny K. Omwansa, Nicholas P. Sullivan, The Guardian

Blue Ocean Strategy, BRICs, business process, business process outsourcing, call centre, cashless society, cloud computing, creative destruction, crowdsourcing, delayed gratification, dematerialisation, democratizing finance, digital divide, disruptive innovation, end-to-end encryption, financial exclusion, financial innovation, financial intermediation, income per capita, Kibera, Kickstarter, M-Pesa, microcredit, mobile money, Network effects, new economy, reserve currency, Salesforce, Silicon Valley, software as a service, tontine, transaction costs

In retrospect, analysts can tick off a litany of reasons for its success: Vodafone’s determination to reframe the business opportunity based on customer feedback during the pilot; natural urban-rural remittance patterns; the high cost of existing money******ebook converter DEMO Watermarks******* transfer options; Safaricom’s dominant market share and its all-out marketing blitz; the enterprising nature of Kenyans in building out an agent network and adopting new applications for M-PESA; a Central Bank that watched carefully but did not stifle innovation; and supportive senior management at Safaricom. M-PESA was brilliantly deployed, and sped from pilot to rollout to scale. M-PESA was a pure mobile play, not hindered by a complex relationship with a bank, the Achilles heel of many other mobile money implementations. Mobile money, like mobile telephony itself, is dependent on achieving a network effect. For the mobile operator, maintaining a system that does not scale is prohibitively expensive—which is why banks have not served the rural poor for centuries! Mobile operators depend on millions of small transactions. Without that, mobile money is merely an annoying diversion from the core business of providing voice and text (SMS) capability.

“A large investment in marketing sends a signal to potential users of commitment: This service is here to stay, and so you can count on more and more people joining the network in the future,” notes the GSMA Development Fund’s Mobile Money for the Unbanked, in its 2011 Annual Report. “Second, making a big splash in a shorter time period makes more sense than investing the same amount of money into a longer, lower intensity campaign. This is an axiom in marketing that is even more important when network effects are at play because the goal is to bring lots of customers onto the platform in a short period of time, minimizing the period during which the small number of registered users makes joining seems relatively unattractive to everyone else.” “If you do a pilot with 100 people and it is working, there is no need to expand the pilot to 1,000 people,” says consultant Ignacio Mas.

Vodacom Tanzania’s market share of roughly 40% is far below Safaricom’s 80% in Kenya, and it has half as many subscribers (10 million versus 20 million). Since Vodacom launched, three competitors have joined the fray—Bharti Airtel, Tigo (Millicom) and Zantel (Etisalat). Combined, these factors make it more difficult to develop a strong network effect. Nonetheless, Vodacom has garnered 7 million subscribers in three years, although these are automatic signups with a SIM purchase, and the numbers of active users is said to be less than 2 million. “I wish it was as easy as putting up a billboard in every dusty village in Tanzania,” says Jacques Voogt, Head of Vodafone M-PESA in Tanzania.


pages: 80 words: 21,077

Stake Hodler Capitalism: Blockchain and DeFi by Amr Hazem Wahba Metwaly

altcoin, Amazon Web Services, bitcoin, blockchain, business process, congestion charging, COVID-19, crowdsourcing, cryptocurrency, Ethereum, ethereum blockchain, fiat currency, information security, Internet of things, Network effects, non-fungible token, passive income, prediction markets, price stability, Satoshi Nakamoto, seigniorage, Skype, smart contracts, underbanked, Vitalik Buterin

Thousands of developers create new applications every day, and the greatest value lies in smart contracts that create additional networking effects. One of the widely adopted programming languages for smart contracts on Ethereum Blockchain is called Solidity. Solidity allows the creation of advanced smart contracts containing all the necessary logic for the DeFi applications. Besides, Ethereum has the most developed system amongst smart contract platforms, with an increasing number of developers building and creating new applications every day and the most value locked in a smart contract, creating an additional network effect. This is perfect because Ethereum’s platform for smart contracts gives more room for flexibility, and it instantly performs transactions if specific conditions are met.


pages: 305 words: 79,303

The Four: How Amazon, Apple, Facebook, and Google Divided and Conquered the World by Scott Galloway

"Susan Fowler" uber, activist fund / activist shareholder / activist investor, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, Amazon Robotics, Amazon Web Services, Apple II, autonomous vehicles, barriers to entry, Ben Horowitz, Bernie Sanders, Big Tech, big-box store, Bob Noyce, Brewster Kahle, business intelligence, California gold rush, Cambridge Analytica, cloud computing, Comet Ping Pong, commoditize, cuban missile crisis, David Brooks, Didi Chuxing, digital divide, disintermediation, don't be evil, Donald Trump, Elon Musk, fake news, follow your passion, fulfillment center, future of journalism, future of work, global supply chain, Google Earth, Google Glasses, Google X / Alphabet X, Hacker Conference 1984, Internet Archive, invisible hand, Jeff Bezos, Jony Ive, Khan Academy, Kiva Systems, longitudinal study, Lyft, Mark Zuckerberg, meta-analysis, Network effects, new economy, obamacare, Oculus Rift, offshore financial centre, passive income, Peter Thiel, profit motive, race to the bottom, RAND corporation, ride hailing / ride sharing, risk tolerance, Robert Mercer, Robert Shiller, Search for Extraterrestrial Intelligence, self-driving car, sentiment analysis, shareholder value, Sheryl Sandberg, Silicon Valley, Snapchat, software is eating the world, speech recognition, Stephen Hawking, Steve Ballmer, Steve Bannon, Steve Jobs, Steve Wozniak, Stewart Brand, supercomputer in your pocket, Tesla Model S, the long tail, Tim Cook: Apple, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, undersea cable, vertical integration, warehouse automation, warehouse robotics, Wayback Machine, Whole Earth Catalog, winner-take-all economy, working poor, you are the product, young professional

Malcolm Gladwell, the Jesus of business books, highlights the parable of David and Goliath to make the key point: don’t fight on other people’s terms. In other words, once you’ve made the jump to light speed as a tech firm, you need to immunize yourself from the same conquering weapons your army levied on the befuddled prey. There are several obvious examples: network effects (everyone is on Facebook because . . . everyone’s on Facebook); IP protection (every firm in tech over $10 billion is suing, and being sued by, every other $10 billion tech firm), and developing an industry standard—monopoly—ecosystem (typing this on Word because I have no choice). However, I’d argue that digging deeper moats is the real key to long-term success.

They use the peanut-butter-and-chocolate combination of receptors (users) and intelligence (algorithms that track usage to improve the offering). This is tantamount to a car that becomes more valuable with mileage. We now have a Benjamin Button class of products that age in reverse. Wearing your Nikes makes them less valuable. But posting to Facebook that you are wearing Nikes makes the network more valuable. This is referred to as “network effects” or “agility.” Not only do users make the network more powerful (everyone being on Facebook), but also when you turn on Waze, the service gets better for everyone, as it can geolocate you and calibrate traffic patterns. Where should you work or invest? Simple: Benjamin Buttons. Look back at the graph.

The smart choice: break the law. Chapter 7 Business and the Body IN THEIR BESTSELLING BOOKS, Ben Horowitz, Peter Thiel, Eric Schmidt, Salim Ismaiel, and others argue that extraordinary business success requires scaling at low cost, achieved by leveraging cloud computing, virtualization, and network effects to achieve a 10x productivity improvement over the competition.1 But that explanation ignores a deeper dimension that has nothing to do with technology. From the perspective of evolutionary psychology, all successful businesses appeal to one of three areas of the body—the brain, the heart, or the genitals.


pages: 294 words: 82,438

Simple Rules: How to Thrive in a Complex World by Donald Sull, Kathleen M. Eisenhardt

Affordable Care Act / Obamacare, Airbnb, Apollo 13, asset allocation, Atul Gawande, barriers to entry, Basel III, behavioural economics, Berlin Wall, carbon footprint, Checklist Manifesto, complexity theory, Craig Reynolds: boids flock, Credit Default Swap, Daniel Kahneman / Amos Tversky, democratizing finance, diversification, drone strike, en.wikipedia.org, European colonialism, Exxon Valdez, facts on the ground, Fall of the Berlin Wall, Glass-Steagall Act, Golden age of television, haute cuisine, invention of the printing press, Isaac Newton, Kickstarter, late fees, Lean Startup, Louis Pasteur, Lyft, machine translation, Moneyball by Michael Lewis explains big data, Nate Silver, Network effects, obamacare, Paul Graham, performance metric, price anchoring, RAND corporation, risk/return, Saturday Night Live, seminal paper, sharing economy, Silicon Valley, Startup school, statistical model, Steve Jobs, TaskRabbit, The Signal and the Noise by Nate Silver, transportation-network company, two-sided market, Wall-E, web application, Y Combinator, Zipcar

And growing matters, because these companies face what are known as network effects—in other words, the positively reinforcing cycle in which more buyers attract more sellers and vice versa. Network effects can create exploding growth for the first company or two in a market sector, but they can also make success impossible for later and slower ones. For Airbnb to succeed, the company needed lots of good hosts to attract guests, and lots of good guests to attract hosts. The challenge was to get this chicken-and-egg cycle of network effects going. Joe and Brian brought in Nate Blecharczyk (Joe’s former roommate) as the company’s technical founder.

., [>], [>], [>] Montsma, Sandrine, [>] Moss, Brandon, [>] “myth of requisite complexity,” [>]–[>], [>]–[>] Nader, Eduardo, [>] Nansen, Fridtjof, [>] Napoleon, [>] National Academy of Sciences, [>] National Oceanic and Atmospheric Agency. See NOAA whale-watching rules development natural selection and simple rules, [>]–[>] negotiating agreements, [>]–[>], [>]–[>] Netflix breaking rules/House of Cards, [>]–[>] data and, [>], [>] development/rules, [>]–[>], [>] human resource policy and, [>] network effects, [>]–[>] New York Times, [>] Newton, Sir Isaac, [>]–[>], [>] NOAA whale-watching rules development economics/whales decline, [>]–[>] negotiation approach and, [>]–[>], [>] n southern resident killer whales and, [>]–[>] whale-protecting rule, [>], [>]–[>] n Norgay, Tenzing, [>] Oakland Athletics/rule breaking, [>]–[>] Obama, Barack, [>]–[>] Okhuysen, Gerardo, [>]–[>] 1/N principle/Talmudic advice, [>]–[>], [>] n Oslejs, Janis Primekss/concrete and, [>]–[>], [>], [>]–[>] simple rules program, [>]–[>] overfitting, [>]–[>], [>]–[>] n Papinian, [>], [>] n Pasteur, Louis, [>] Paul III (pope), [>] PayPal, [>] Perlow, Leslie, [>], [>] personal issues/simple rules bottlenecks and, [>]–[>] charisma example, [>]–[>] crafting simple rules/research, [>]–[>] depression management example, [>]–[>] dieting example, [>], [>], [>], [>] measuring impact and, [>] moving needles and, [>]–[>], [>] n negotiating rules, [>]–[>] online dating example, [>]–[>] Pixar, [>]–[>], [>] n platitudes vs. rules, [>], [>], [>], [>] poker players/rules examples, [>]–[>] Pollan, Michael, [>], [>], [>] Primekss concrete, [>]–[>], [>], [>]–[>] printing press invention/significance, [>] prioritizing rules description, [>], [>] overview/examples, [>]–[>], [>]–[>] prison and bail decisions, [>], [>] problem types, [>]–[>] process rules description, [>] See also coordination rules; how-to rules; timing rules property rights, [>] rail system (Brazil), [>]–[>] rail system development (Tokyo), [>]–[>] Reynolds, Craig, [>]–[>] Rockefeller Foundation, [>] Rogers, Kenny, [>] Rome (ancient), [>]–[>] Rothschild, Nathan Mayer, [>]–[>] rule breaking California’s climate/gardening (Emily), [>]–[>] Netflix/House of Cards, [>]–[>] Oakland Athletics, [>]–[>] Scott vs.


pages: 301 words: 85,263

New Dark Age: Technology and the End of the Future by James Bridle

AI winter, Airbnb, Alfred Russel Wallace, AlphaGo, Anthropocene, Automated Insights, autonomous vehicles, back-to-the-land, Benoit Mandelbrot, Bernie Sanders, bitcoin, Boeing 747, British Empire, Brownian motion, Buckminster Fuller, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, coastline paradox / Richardson effect, cognitive bias, cognitive dissonance, combinatorial explosion, computer vision, congestion charging, cryptocurrency, data is the new oil, disinformation, Donald Trump, Douglas Engelbart, Douglas Engelbart, Douglas Hofstadter, Dr. Strangelove, drone strike, Edward Snowden, Eyjafjallajökull, Fairchild Semiconductor, fake news, fear of failure, Flash crash, fulfillment center, Google Earth, Greyball, Haber-Bosch Process, Higgs boson, hive mind, income inequality, informal economy, Internet of things, Isaac Newton, ITER tokamak, James Bridle, John von Neumann, Julian Assange, Kickstarter, Kim Stanley Robinson, Large Hadron Collider, late capitalism, Laura Poitras, Leo Hollis, lone genius, machine translation, mandelbrot fractal, meta-analysis, Minecraft, mutually assured destruction, natural language processing, Network effects, oil shock, p-value, pattern recognition, peak oil, recommendation engine, road to serfdom, Robert Mercer, Ronald Reagan, security theater, self-driving car, Seymour Hersh, Silicon Valley, Silicon Valley ideology, Skype, social graph, sorting algorithm, South China Sea, speech recognition, Spread Networks laid a new fibre optics cable between New York and Chicago, stem cell, Stuxnet, technoutopianism, the built environment, the scientific method, Uber for X, undersea cable, University of East Anglia, uranium enrichment, Vannevar Bush, warehouse robotics, WikiLeaks

Hwang and Stapel, while outliers, might embody one of the reasons articles in the most prominent journals are more likely to be retracted: they’re written by the scientists making the biggest claims, under the most professional and societal pressure. But such frauds are also being revealed by a series of connected, network effects: the increasing openness of scientific practice, the application of technology to the analysis of scientific publications, and the increasing willingness of other scientists – particularly junior ones – to challenge results. As more and more scientific papers become available to wider and wider communities through open access programmes and online distribution, more and more of them come under increased scrutiny.

There is no safety net for those whose skills are rendered obsolete by machines; and even those who programme the machines are not immune. As the capabilities of machines increase, more and more professions are under attack, with artificial intelligence augmenting the process. The internet itself helps shape this path to inequality, as network effects and the global availability of services produces a winner-takes-all marketplace, from social networks and search engines to grocery stores and taxi companies. The complaint of the Right against communism – that we’d all have to buy our goods from a single state supplier – has been supplanted by the necessity of buying everything from Amazon.

Or perhaps the flash crash in reality looks exactly like everything we are experiencing right now: rising economic inequality, the breakdown of the nation-state and the militarisation of borders, totalising global surveillance and the curtailment of individual freedoms, the triumph of transnational corporations and neurocognitive capitalism, the rise of far-right groups and nativist ideologies, and the utter degradation of the natural environment. None of these are the direct result of novel technologies, but all of them are the product of a general inability to perceive the wider, networked effects of individual and corporate actions accelerated by opaque, technologically augmented complexity. Acceleration itself is one of the bywords of the age. In the last couple of decades, a variety of theorists have put forward versions of accelerationist thought, advocating that technological processes perceived to be damaging society should not be opposed, but should be sped up – either to be commandeered and repurposed for socially beneficial ends, or simply to destroy the current order.


pages: 361 words: 81,068

The Internet Is Not the Answer by Andrew Keen

"World Economic Forum" Davos, 3D printing, A Declaration of the Independence of Cyberspace, Airbnb, AltaVista, Andrew Keen, AOL-Time Warner, augmented reality, Bay Area Rapid Transit, Berlin Wall, Big Tech, bitcoin, Black Swan, Bob Geldof, Boston Dynamics, Burning Man, Cass Sunstein, Charles Babbage, citizen journalism, Clayton Christensen, clean water, cloud computing, collective bargaining, Colonization of Mars, computer age, connected car, creative destruction, cuban missile crisis, data science, David Brooks, decentralized internet, DeepMind, digital capitalism, disintermediation, disruptive innovation, Donald Davies, Downton Abbey, Dr. Strangelove, driverless car, Edward Snowden, Elon Musk, Erik Brynjolfsson, fail fast, Fall of the Berlin Wall, Filter Bubble, Francis Fukuyama: the end of history, Frank Gehry, Frederick Winslow Taylor, frictionless, fulfillment center, full employment, future of work, gentrification, gig economy, global village, Google bus, Google Glasses, Hacker Ethic, happiness index / gross national happiness, holacracy, income inequality, index card, informal economy, information trail, Innovator's Dilemma, Internet of things, Isaac Newton, Jaron Lanier, Jeff Bezos, job automation, John Perry Barlow, Joi Ito, Joseph Schumpeter, Julian Assange, Kevin Kelly, Kevin Roose, Kickstarter, Kiva Systems, Kodak vs Instagram, Lean Startup, libertarian paternalism, lifelogging, Lyft, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, Martin Wolf, Mary Meeker, Metcalfe’s law, military-industrial complex, move fast and break things, Nate Silver, Neil Armstrong, Nelson Mandela, Network effects, new economy, Nicholas Carr, nonsequential writing, Norbert Wiener, Norman Mailer, Occupy movement, packet switching, PageRank, Panopticon Jeremy Bentham, Patri Friedman, Paul Graham, peer-to-peer, peer-to-peer rental, Peter Thiel, plutocrats, Potemkin village, power law, precariat, pre–internet, printed gun, Project Xanadu, RAND corporation, Ray Kurzweil, reality distortion field, ride hailing / ride sharing, Robert Metcalfe, Robert Solow, San Francisco homelessness, scientific management, Second Machine Age, self-driving car, sharing economy, Sheryl Sandberg, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Skype, smart cities, Snapchat, social web, South of Market, San Francisco, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, subscription business, TaskRabbit, tech bro, tech worker, TechCrunch disrupt, Ted Nelson, telemarketer, The future is already here, The Future of Employment, the long tail, the medium is the message, the new new thing, Thomas L Friedman, Travis Kalanick, Twitter Arab Spring, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber for X, uber lyft, urban planning, Vannevar Bush, warehouse robotics, Whole Earth Catalog, WikiLeaks, winner-take-all economy, work culture , working poor, Y Combinator

This was followed by Friendster in 2002 and then, in 2003, by the Los Angeles–based MySpace, a social network with a music and Hollywood focus that, at its 2008 peak, when it was acquired by News Corporation for $580 million, had 75.9 million members.86 But Facebook, which until September 2006 was exclusively made up of high school and university students, offered a less cluttered and more intuitive interface than MySpace. So, having opened its doors to the world outside of schools and universities, the so-called Mark Zuckerberg Production quickly became the Internet’s largest social network, amassing 100 million members by August 2008. And then the network effect, that positive feedback loop that makes the Internet such a classic winner-take-all market, kicked in. By February 2010, the Facebook community had grown to 400 million members, who spent 8 billion minutes each day on a network already operating in 75 different languages.87 Facebook had become the world’s second most popular Internet site after Google, a position that it’s maintained ever since.

Writing in the New York Times to explain “why Bitcoin matters,” Marc Andreessen—who now is the managing partner of Andreessen Horowitz, a $4 billion Silicon Valley venture fund with $50 million invested in Bitcoin-based startups like the virtual wallet Coinbase—argues that this new digital money represents “a classic network effect, a positive feedback loop.” As with the Web, Andreessen says, the more people who use the new currency, “the more valuable Bitcoin is for the people who use it.”107 “A mysterious new technology emerges, seemingly out of nowhere, but actually the result of two decades of intense research and development by nearly anonymous researchers,” writes Andreessen, predicting the historical significance of this networked currency.

As with the Web, Andreessen says, the more people who use the new currency, “the more valuable Bitcoin is for the people who use it.”107 “A mysterious new technology emerges, seemingly out of nowhere, but actually the result of two decades of intense research and development by nearly anonymous researchers,” writes Andreessen, predicting the historical significance of this networked currency. “What technology am I talking about? Personal computers in 1975, the Internet in 1993, and—I believe—Bitcoin in 2014.”108 What Silicon Valley euphemistically calls the “sharing economy” is a preview of this distributed capitalism system powered by the network effect of positive feedback loops. Investors like Andreessen see the Internet—a supposedly hyperefficient, “frictionless” platform for buyers and sellers—as an upgrade to the structural inefficiencies of the top-down twentieth-century economy. Along with peer-to-peer currencies like Bitcoin, the new distributed model offers crowdfunding networks like the John Doerr investment Indiegogo, which enable anyone to raise money for an idea.


pages: 297 words: 83,651

The Twittering Machine by Richard Seymour

4chan, anti-communist, augmented reality, behavioural economics, Bernie Sanders, Big Tech, Black Lives Matter, Cal Newport, Californian Ideology, Cass Sunstein, Chelsea Manning, citizen journalism, classic study, colonial rule, Comet Ping Pong, correlation does not imply causation, credit crunch, crisis actor, crowdsourcing, dark triade / dark tetrad, disinformation, don't be evil, Donald Trump, Elon Musk, Erik Brynjolfsson, Evgeny Morozov, fake news, false flag, Filter Bubble, Gabriella Coleman, gamification, Google Chrome, Google Earth, hive mind, informal economy, Internet of things, invention of movable type, invention of writing, James Bridle, Jaron Lanier, Jeremy Corbyn, Jon Ronson, Jony Ive, Kevin Kelly, Kevin Roose, knowledge economy, late capitalism, Lewis Mumford, liberal capitalism, Mark Zuckerberg, Marshall McLuhan, meta-analysis, Mohammed Bouazizi, moral panic, move fast and break things, Network effects, new economy, packet switching, patent troll, Philip Mirowski, post scarcity, post-industrial society, post-truth, RAND corporation, Rat Park, rent-seeking, replication crisis, sentiment analysis, Shoshana Zuboff, Silicon Valley, Silicon Valley ideology, Skinner box, smart cities, Snapchat, Social Justice Warrior, Steve Bannon, Steve Jobs, Stewart Brand, Stuxnet, surveillance capitalism, TaskRabbit, technological determinism, technoutopianism, TED Talk, the scientific method, Tim Cook: Apple, Timothy McVeigh, Twitter Arab Spring, undersea cable, upwardly mobile, white flight, Whole Earth Catalog, WikiLeaks

The bait is that we are interacting with other people: our friends, professional colleagues, celebrities, politicians, royals, terrorists, porn actors – anyone we like. We are not interacting with them, however, but with the machine. We write to it, and it passes on the message for us, after keeping a record of the data. The machine benefits from the ‘network effect’: the more people write to it, the more benefits it can offer, until it becomes a disadvantage not to be part of it. Part of what? The world’s first ever public, live, collective, open-ended writing project. A virtual laboratory. An addiction machine, which deploys crude techniques of manipulation redolent of the ‘Skinner Box’ created by behaviourist B.

But one of Twitter’s early founders, Noah Glass, put his finger on another dimension: people would use social networking to make them feel less alone.7 Whatever was happening to them – an earthquake, redundancy, divorce, a frightening news item or just boredom – there would always be someone to talk to. Where society was missing, the network would substitute. These pleasures are redoubled by the ‘network effect’. The more people use it, the more valuable it is to each user. Zuckerberg understood, early on, that this was how he would build his site. As he told the university newspaper The Harvard Crimson, ‘The nature of the site is that each user’s experience improves if they can get their friends to join it.’8 Other colleges quickly signed up.

Seppukoo.com allowed users to create ‘last words’, which would be automatically sent to their friends, and created a memorial page in their name before permanently deleting their account. Suicidemachine.org deleted all friends and information, replaced the user’s profile picture with a noose icon and added the user to a group called ‘Social Media Suiciders’. Since the platforms benefit from the ‘network effect’ – the more people are connected, the more valuable it is – this would have been a catastrophic reversal. Both websites were subject to cease and desist letters from Facebook’s lawyers, and were duly forced to stop offering the service to Facebook’s users. Social industry platform protocols are carefully designed to discourage disconnection, since it is a threat to their very existence.


pages: 327 words: 84,627

The Green New Deal: Why the Fossil Fuel Civilization Will Collapse by 2028, and the Bold Economic Plan to Save Life on Earth by Jeremy Rifkin

"World Economic Forum" Davos, 1919 Motor Transport Corps convoy, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, American Society of Civil Engineers: Report Card, autonomous vehicles, Bernie Sanders, Big Tech, bike sharing, blockchain, book value, borderless world, business cycle, business process, carbon footprint, carbon tax, circular economy, collective bargaining, corporate governance, corporate social responsibility, creative destruction, decarbonisation, digital rights, do well by doing good, electricity market, en.wikipedia.org, energy transition, failed state, general purpose technology, ghettoisation, green new deal, Greta Thunberg, high-speed rail, hydrogen economy, impact investing, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, it's over 9,000, Joseph Schumpeter, means of production, megacity, megaproject, military-industrial complex, Network effects, new economy, off grid, off-the-grid, oil shale / tar sands, peak oil, planetary scale, prudent man rule, remunicipalization, renewable energy credits, rewilding, Ronald Reagan, shareholder value, sharing economy, Sidewalk Labs, Silicon Valley, Skype, smart cities, smart grid, sovereign wealth fund, Steven Levy, subprime mortgage crisis, the built environment, The Wealth of Nations by Adam Smith, Tim Cook: Apple, trade route, union organizing, urban planning, vertical integration, warehouse automation, women in the workforce, zero-sum game

Currently, the accumulated wealth of the eight richest individuals in the world equals the total wealth of half of the human beings living on the planet—3.5 billion people.28 Conversely, the Third Industrial Revolution infrastructure is engineered to be distributed, open, and transparent, to achieve network effects, and it scales laterally, allowing billions of people to engage directly with each other both virtually and physically at very low fixed costs and near-zero marginal cost in localities and regions that stretch around the world. All they need is a smartphone and an internet connection to give them instant access to Big Data and a global network of millions of other businesses and their websites.

Even if it were, any such effort would fail if localities, regions, and countries along the Belt and Road were to exercise caution at the get-go and ensure that the build-out of the infrastructure and its subsequent ownership and management within their jurisdictions were under their various governments’ strict control. Then, too, we need to remember that the very nature of the Third Industrial Revolution digital infrastructure favors distributed rather than centralized control, and, to achieve network effects, it works best if the networks are open and transparent rather than closed and proprietary, and scale laterally rather than vertically to optimize aggregate efficiencies and circularity. The engineered platforms favor flexibility and redundancy, the two key elements in establishing regional resilience in a climate change world.

As described early on, the Third Industrial Revolution infrastructure comes with a different design and engineering construction. The platform is weighted toward being distributed in operation rather than centralized, and the system itself is optimized if it remains open and transparent to create the network effect rather than being closed off in intellectual property. Last, the distributed open and transparent nature of the system is most efficient and productive if its operations are laterally scaled rather than vertically integrated. Giant internet companies, early on, seized hold of many of the platforms in vertically scaled global monopolies, but that is not likely to last, because they ultimately cannot compete with the millions of high-tech small- and medium-sized enterprises blockchained across competencies and operating in cooperatives overseen by commons governance.


pages: 403 words: 111,119

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth

"Friedman doctrine" OR "shareholder theory", 3D printing, Alan Greenspan, Alvin Toffler, Anthropocene, Asian financial crisis, bank run, basic income, battle of ideas, behavioural economics, benefit corporation, Berlin Wall, biodiversity loss, bitcoin, blockchain, Branko Milanovic, Bretton Woods, Buckminster Fuller, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Cass Sunstein, choice architecture, circular economy, clean water, cognitive bias, collapse of Lehman Brothers, complexity theory, creative destruction, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, degrowth, dematerialisation, disruptive innovation, Douglas Engelbart, Douglas Engelbart, Easter island, en.wikipedia.org, energy transition, Erik Brynjolfsson, Ethereum, ethereum blockchain, Eugene Fama: efficient market hypothesis, experimental economics, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, Financial Instability Hypothesis, full employment, Future Shock, Garrett Hardin, Glass-Steagall Act, global supply chain, global village, Henri Poincaré, hiring and firing, Howard Zinn, Hyman Minsky, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of writing, invisible hand, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kickstarter, land reform, land value tax, Landlord’s Game, loss aversion, low interest rates, low skilled workers, M-Pesa, Mahatma Gandhi, market fundamentalism, Martin Wolf, means of production, megacity, Minsky moment, mobile money, Money creation, Mont Pelerin Society, Myron Scholes, neoliberal agenda, Network effects, Occupy movement, ocean acidification, off grid, offshore financial centre, oil shale / tar sands, out of africa, Paul Samuelson, peer-to-peer, planetary scale, price mechanism, quantitative easing, randomized controlled trial, retail therapy, Richard Thaler, Robert Solow, Ronald Reagan, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Simon Kuznets, smart cities, smart meter, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, statistical model, Steve Ballmer, systems thinking, TED Talk, The Chicago School, The Great Moderation, the map is not the territory, the market place, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, Torches of Freedom, Tragedy of the Commons, trickle-down economics, ultimatum game, universal basic income, Upton Sinclair, Vilfredo Pareto, wikimedia commons

Likewise, when the UK reality TV star Jade Goody went public with her diagnosis of cervical cancer in 2009, there was a 43% increase in women making appointments to be tested.61 Those cases acted as warnings, but network effects can inspire too. Thanks to the courageous stance of the Pakistani educational activist Malala Yousafzai, millions of girls worldwide have been inspired by ‘the Malala effect’ to demand and cherish their right to an education. Such effects work on a local scale too. Researchers in West Bengal, India found that when women started being appointed to lead village councils for the first time, local teenage girls began to have higher aspirations for their education and themselves, as did their parents. No prices, no payments, just pride.62 Nudges and network effects often work because they tap into underlying norms and values – such as duty, respect and care – and those values can be activated directly.

Economists have traditionally sought to change people’s behaviour by changing the relative price of things, be it through a tax on sugar or a discount on solar panels. But such price signals often fail to achieve their expected results, Ormerod points out, because they can be drowned out by far stronger network effects, thanks to social norms and expectations of what others in the network are doing.35 At the same time, it may be possible to harness such interdependence for behavioural change, as we will see. From calculating to approximating Homo sapiens clearly can’t match the infallibility of rational economic man.

In the streets of Copenhagen, Hansen and his students handed out sweets to passers-by and documented how many of the wrappers ended up on the pavement, in bins, or in other people’s bike baskets. They then painted green footprints leading up to the rubbish bins and found that littering fell by 46%. No need for fines or rewards to encourage compliance: the little green footprints artfully amplified an existing social norm.60 Network effects also influence social behaviour, as illustrated by the power of a prominent example. In October 2011, Brazil’s former president Lula da Silva went public with news of his throat cancer, saying he believed it was due to smoking cigarettes. Over the following four weeks, there was a national surge in Google searches for information about quitting smoking – far greater than similar searches made on World No Tobacco Day or even on New Year’s Day, when resolutions to quit are common.


pages: 397 words: 112,034

What's Next?: Unconventional Wisdom on the Future of the World Economy by David Hale, Lyric Hughes Hale

"World Economic Forum" Davos, affirmative action, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Berlin Wall, biodiversity loss, Black Swan, Bretton Woods, business cycle, capital controls, carbon credits, carbon tax, Cass Sunstein, central bank independence, classic study, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, currency risk, Daniel Kahneman / Amos Tversky, debt deflation, declining real wages, deindustrialization, diversification, energy security, Erik Brynjolfsson, Fall of the Berlin Wall, financial engineering, financial innovation, floating exchange rates, foreign exchange controls, full employment, Gini coefficient, Glass-Steagall Act, global macro, global reserve currency, global village, high net worth, high-speed rail, Home mortgage interest deduction, housing crisis, index fund, inflation targeting, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), inverted yield curve, invisible hand, Just-in-time delivery, Kenneth Rogoff, Long Term Capital Management, low interest rates, Mahatma Gandhi, Martin Wolf, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, military-industrial complex, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage tax deduction, Network effects, new economy, Nicholas Carr, oil shale / tar sands, oil shock, open economy, passive investing, payday loans, peak oil, Ponzi scheme, post-oil, precautionary principle, price stability, private sector deleveraging, proprietary trading, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, rent-seeking, reserve currency, Richard Thaler, risk/return, Robert Shiller, Ronald Reagan, Savings and loan crisis, sovereign wealth fund, special drawing rights, subprime mortgage crisis, technology bubble, The Great Moderation, Thomas Kuhn: the structure of scientific revolutions, Tobin tax, too big to fail, total factor productivity, trade liberalization, Tragedy of the Commons, Washington Consensus, Westphalian system, WikiLeaks, women in the workforce, yield curve

He then analyzes the prerequisites to be a reserve currency in the modern era. They are that the currency be widely available outside its home economy, that it be fully convertible, that it be supported by a large economy, and that it have a developed financial system. When these factors converge, they generate network effects in which the greater the number of people that are using the currency, the more beneficial it becomes for the users, and the more dominant it becomes. He thinks that the euro is not fully competitive with the dollar because there is no market for European government debt. Instead, investors have to choose between the debts of individual nation-states, of which the largest debtor is Italy.

In short, US dollar security markets are highly convenient for individual, corporate, and official or government users around the world. These attributes largely explain the role of the US currency as the primary vehicle for holding foreign exchange reserves, as the most widely traded currency in international private trade and capital transactions, and as the leading currency in global foreign exchange transactions. 9. Network effects. As explained earlier, the US dollar did not start out as the world’s reserve currency. Much as English did not intentionally become the world’s most widely spoken language, the dollar did not become the world’s leading reserve currency by deliberate policy. The supremacy of the dollar is, like the supremacy of the English language, the result of gradual usage and experience.

Consequently, the US dollar deposit, loan, and funding markets outside the United States are far larger than those of any other currency traded outside its home borders; this effectively underwrites the continued financing of trade and capital transactions in dollars around the world. To undermine these network effects and simultaneously create a truly viable alternative reserve currency would therefore require both a dramatic shock to the dollar and the ready availability of a realistic alternative. However, a major erosion of any of the nine conditions listed above could undermine confidence in the US dollar, threatening its role as a currency for international transactions and as a reserve currency.


pages: 482 words: 117,962

Exceptional People: How Migration Shaped Our World and Will Define Our Future by Ian Goldin, Geoffrey Cameron, Meera Balarajan

Admiral Zheng, agricultural Revolution, barriers to entry, Berlin Wall, Branko Milanovic, British Empire, conceptual framework, creative destruction, demographic transition, Deng Xiaoping, endogenous growth, failed state, Fall of the Berlin Wall, Gini coefficient, global pandemic, global supply chain, guest worker program, illegal immigration, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), job automation, Joseph Schumpeter, knowledge economy, labor-force participation, labour mobility, language acquisition, Lao Tzu, life extension, longitudinal study, low skilled workers, low-wage service sector, machine readable, Malacca Straits, mass immigration, microcredit, Nelson Mandela, Network effects, new economy, New Urbanism, old age dependency ratio, open borders, out of africa, price mechanism, purchasing power parity, Richard Florida, selection bias, Silicon Valley, Silicon Valley startup, Skype, social distancing, spice trade, trade route, transaction costs, transatlantic slave trade, women in the workforce, working-age population

Immigration to the United States for selected years, 1900-1933 (thousands) Figure 3.2. Total number of Koreans in Japan, 1900-1944 (millions) Figure 3.3. European Immigrants into Argentina and Brazil after World War II (thousands) Figure 4.1. The relationship between socio-economic development and migration Figure 4.2. Network effects of migration to a particular country Figure 4.3. Age structure in Republic of Korea in 1960, 2000, and 2040 (projected) Figure 5.1. Patterns of global migration Figure 5.2. Low-skill migrants in Gulf Cooperation Council Countries Figure 5.3. The European Union, 2009 Figure 5.4. Propensity to migrate from A8 countries to the UK, 2005 Figure 5.5.

Their economic situation may become more precarious, leading some individuals to assume the costs and risks of migration.39 In the first phase in the migration process, micro-level determinants may be particularly important; those willing to shoulder more risk (“pioneer” or “bridgehead” migrants) will seek out opportunities to migrate overseas.40 The movement of the first groups of migrants produces a “herd effect”: a stream of migrants emerges between a source country, undergoing economic development, and a destination country with higher wages. This migration stream eventually becomes self-sustaining, and as migrants maintain contact with family and friends at home, they create a “network effect” that increases the rate of migration even further. Networks relay information and resources that lower the risks for others to migrate, and a migration channel is opened up between source and destination locations through these networks. The continued movement of people through this channel strengthens the network and expands the number of people and locations it connects together.

Over time and as migrant communities grow, networks can diminish in their significance as the connection between settled migrants and new arrivals from “home” weakens. Networks may eventually be used to discourage further migration if competition for migrant jobs in the destination country becomes more severe (see figure 4.2).41 Figure 4.2. Network effects of migration to a particular country. Adapted from Hein de Haas. 2009. Migration System Formation and Decline: A Theoretical Inquiry into the Self-Perpetuating and Self-Undermining Dynamics of Migration Processes. IMI Working Paper Series. Oxford: International Migration Institute, University of Oxford, p. 24, figure 3.


pages: 523 words: 111,615

The Economics of Enough: How to Run the Economy as if the Future Matters by Diane Coyle

accounting loophole / creative accounting, affirmative action, Alan Greenspan, An Inconvenient Truth, bank run, banking crisis, behavioural economics, Berlin Wall, bonus culture, Branko Milanovic, BRICs, business cycle, call centre, carbon tax, Cass Sunstein, central bank independence, classic study, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation does not imply causation, Credit Default Swap, deindustrialization, demographic transition, Diane Coyle, different worldview, disintermediation, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Financial Instability Hypothesis, Francis Fukuyama: the end of history, general purpose technology, George Akerlof, Gini coefficient, global supply chain, Gordon Gekko, greed is good, happiness index / gross national happiness, hedonic treadmill, Hyman Minsky, If something cannot go on forever, it will stop - Herbert Stein's Law, illegal immigration, income inequality, income per capita, industrial cluster, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jane Jacobs, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, light touch regulation, low skilled workers, market bubble, market design, market fundamentalism, megacity, Network effects, new economy, night-watchman state, Northern Rock, oil shock, Paradox of Choice, Pareto efficiency, principal–agent problem, profit motive, purchasing power parity, railway mania, rising living standards, Robert Solow, Ronald Reagan, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, social contagion, South Sea Bubble, Steven Pinker, tacit knowledge, The Design of Experiments, The Fortune at the Bottom of the Pyramid, The Market for Lemons, The Myth of the Rational Market, The Spirit Level, the strength of weak ties, Tragedy of the Commons, transaction costs, transfer pricing, tulip mania, ultimatum game, University of East Anglia, vertical integration, web application, web of trust, winner-take-all economy, World Values Survey, zero-sum game

They form what economists refer to as a “general purpose technology” because they affect the organization of the economy in a wide-ranging way, like steam or electricity or rail in the past.20 One widespread effect has been to increase the scope of economies of scale, as there are many industries in which it is now possible to reach a much larger number of consumers at very little additional cost, thanks to the possibilities of online marketing and distribution. Network effects have amplified this dynamic. So in many industries, the structure has evolved into a small number of very large firms competing across all products and services, and often globally, and a large number of small businesses supplying particular niches. Software is a clear example: it costs Microsoft almost nothing to supply one additional copy of its software, as almost all the cost is upfront development.

In particular, the drive to increase in size in order to take advantage of economies of scale is an issue. There has been a sharp divide among experts on competition policy between those who think that it’s good for consumers that Microsoft is so big, because this means lower prices and the benefits of network effects, and those who think it’s bad for consumers because it hasn’t been possible for new or better operating systems and browsers to serve more consumers.26 There are merits in both sets of arguments. As someone who was a UK competition regulator for eight years in the 2000s, I’ve come to the conclusion that too many companies are simply too big and too similar.

., 127–28 Calculus of Consent, The: Logical Foundations of Constitutional Democracy (Buchanan and Tullock), 242 call centers, 131, 133, 161 Cameron, David, 288 capitalism: China and, 234; communism and, 96, 182–83, 209–13, 218, 226, 230, 239–40; community and, 27, 51, 65, 117–18, 137, 141, 152–54; cultural effects of, 25–29, 230–38; current crisis of, 6–9; democracy and, 230–38; Engels on, 14; fairness and, 134, 137, 149; growth and, 268, 275, 290, 293, 297; happiness and, 25–29, 33, 45, 53–54; historical perspective on, 3, 6, 14; institutions and, 240; market failure and, 226–30; Marx on, 14; measurement and, 182; mercantile economy and, 27–28; nutrition and, 10; profit–oriented, 18; Protestant work ethic and, 13–14; protests against, 211–13; rethinking meaning of, 9; social effects of, 25–26; values and, 209–13, 218, 226, 230–32, 235–36; well-being and, 137–39 carbon prices, 70–71 celebrities, 33 charitable giving, 33, 141 Checkpoint Charlie, 147 China, 161, 262, 280; capitalism and, 234; carbon emissions and, 63; changed demographic structure of, 90; convergence and, 122; declining population in, 98; energy use in, 63, 65; global manufacturing and, 149; inequality and, 125–26; Mao and, 10; middle class of, 125–26; as next major power, 94; one–child policy and, 95–96; population growth and, 95–96; purchasing power parity (PPP) and, 306n19; rise in wealth of, 81, 122–23, 125, 212; savings and, 87, 94, 100, 108; wage penalties and, 133; World Bank influence and, 163 cities, 308n29; face-to-face contact and, 165–68; size and, 165–66; structural changes in, 165–70; urban clustering and, 166 City of London, 147, 221 Clemens, Michael, 81 climate change, 5–7, 17, 24, 90, 238; carbon prices and, 70–71; Copenhagen summit and, 62, 64–65, 68, 162, 292; domestic dissent and, 66–71; future and, 75–83; geological history and, 69; global warming and, 57, 64, 66, 68; greenhouse gases and, 23, 29, 35, 59, 61–63, 68, 70–71, 83; Himalayan glaciers and, 66–67; incandescent light bulbs and, 59–60; InterAcademy Council and, 66–67; Intergovernmental Panel on Climate Change (IPCC) and, 59, 66–69, 82, 297; Kyoto Protocol and, 62–64; lack of consensus on, 66–71; Montreal Protocol and, 59; policy dilemma of, 58–62; policy recommendations for, 267, 280, 297; politics and, 62–65; social welfare and, 71–75; technology and, 59–60, 198 Coachella Value Music Festival, 197 Cobb, John, 36 Coca Cola, 150 coherence, 49 Cold War, 93, 112, 147, 209, 213, 239, 252 Collier, Paul, 77–78, 80, 82 Commerzbank, 87 Commission on the Measurement of Economic Performance and Social Progress, 37–38 communism: Berlin Wall and, 182, 226, 239; capitalism and, 96, 182–83, 209–13, 218, 226, 230, 239–40; Cold War and, 93, 112, 147, 209, 213, 239, 252; fall of, 209–13, 226, 239–40, 252; Iron Curtain and, 183, 239, 252; Leipzig marches and, 239; one-child policy and, 95–96; Velvet Revolution and, 239 community: civic engagement and, 140–41; globalization and, 148–49; intangible assets and, 149–52, 157, 161 (see also trust); public service and, 295; Putnam on, 140–41, 152–54 commuting, 45–47 Company of Strangers, The (Seabright), 148–49, 213–14 comprehensive wealth, 81–82, 202–3, 208, 271–73 consumerism, 22, 34, 45, 138 consumption: conspicuous, 11, 22, 45, 236; consumerism and, 22, 34, 45, 138; cutting, 61; downgrading status of, 11; downshifting and, 11, 55; Easterlin Paradox and, 39–44; global per capita, 72; of goods and services, 7, 10, 24, 35–36, 40, 82, 99, 161, 188, 191, 198, 214, 218, 228–29, 282; green lifestyle and, 55, 61, 76, 289, 293; growth and, 280, 295; happiness and, 22, 29, 40, 45; hedonic treadmill and, 40; increasing affluence and, 12; institutions and, 254, 263; Kyoto Protocol and, 63–64; measurement and, 181–82, 198; missing markets and, 229; natural resources and, 8–12, 58, 60, 79–82, 102, 112, 181–82; nature and, 58–61, 71–76, 79, 82; posterity and, 86, 104–5, 112–13; reduction of, 105; Slow Movement and, 27; trends in, 138; trilemma of, 13–14, 230–36, 275; values and, 229, 236 convergence, 5, 122 Copenhagen summit, 62, 64–65, 68, 162, 292 Crackberry, 205 Crafts, Nicholas, 156–57 credit cards, 2, 21, 136, 138, 283 Csikszentmilhalyi, Mihaly, 45–49 Cultural Contradictions of Capitalism, The (Bell), 230, 235–36 Czechoslovakia, 239 Daly, Herman, 36 Damon, William, 48 Dasgupta, Partha, 61, 73, 77–78, 80, 82 David, Paul, 156 Dawkins, Richard, 118 debit cards, 2 decentralization, 7, 159, 218, 246, 255, 275, 291 defense budgets, 93 democracy, 2, 8, 16, 312n19; capitalism and, 230–38; culture and, 230–38; fairness and, 141; growth and, 268–69, 285–89, 296–97; institutions and, 242–43, 251–52, 262; nature and, 61, 66, 68; posterity and, 106; trust and, 175; values and, 230–35 Denmark, 125 Dickens, Charles, 131 Diener, Ed, 48, 49 Discourse on the Origin and Basis of Inequality among Men (Rousseau), 114 distribution, 29, 306n22; Asian influence and, 123; bifurcation of social norms and, 231–32; consumerism and, 22, 34, 45, 138; Easterlin Paradox and, 39–44; fairness and, 115–16, 123–27, 134, 136; food and, 10, 34; of goods and services, 7, 10, 24, 35–36, 40, 82, 99, 161, 188, 191, 198, 214, 218, 228–29, 282; income, 34, 116, 123–27, 134, 278; inequality and, 123 (see also inequality); institutions and, 253; measurement and, 181, 191–99, 202; paradox of prosperity and, 174; policy recommendations for, 276, 278; posterity and, 87, 94; trust and, 151, 171; unequal countries and, 124–30; values and, 226 Dorling, Danny, 224, 307n58, 308n34 Douglas, Michael, 221 downshifting, 11, 55 downsizing, 175, 246, 255 drugs, 44, 46, 137–38, 168–69, 191, 302n47 Easterlin, Richard, 39 Easterlin Paradox, 39–44 eBay, 198 Economics of Ecosystems and Biodiversity project, The (TEEB), 78–79 economies of scale, 253–58 Economy of Enough, 233; building blocks for, 12–17; first ten steps for, 294–98; growth and, 182; happiness and, 24; institutions and, 250–51, 258, 261–63; living standards and, 13, 65, 78–79, 106, 113, 136, 139, 151, 162, 190, 194, 267; Manifesto of, 18, 267–98; measurement and, 182, 186–88, 201–7; nature and, 59, 84; Ostrom on, 250–51; posterity and, 17, 85–113; values and, 217, 233–34, 238; Western consumers and, 22 (see also consumption) Edinburgh University, 221 efficiency, 2, 7; evidence–based policy and, 233–34; fairness and, 126; Fama hypothesis and, 221–22; happiness and, 9, 29–30, 61; institutions and, 245–46, 254–55, 261; limits to, 13; nature and, 61–62, 69, 82; network effects and, 253, 258; productivity and, 13 (see also productivity); trilemma of, 13–14, 230–36, 275; trust and, 158–59; values and, 210, 215–16, 221–35 Ehrlich, Paul, 70 e-mail, 252, 291 “End of History, The” (Fukuyama), 239 Engels, Friedrich, 14 Enlightenment, 7 Enron, 145 environmentalists.


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The Corona Crash: How the Pandemic Will Change Capitalism by Grace Blakeley

Anthropocene, asset-backed security, basic income, Big Tech, bond market vigilante , Bretton Woods, business cycle, capital controls, carbon tax, central bank independence, coronavirus, corporate governance, COVID-19, creative destruction, credit crunch, crony capitalism, debt deflation, decarbonisation, degrowth, deindustrialization, don't be evil, financial deregulation, Francis Fukuyama: the end of history, full employment, gig economy, global pandemic, global value chain, green new deal, Greenspan put, income inequality, informal economy, inverted yield curve, invisible hand, Jeff Bezos, liberal capitalism, light touch regulation, lockdown, low interest rates, Martin Wolf, Modern Monetary Theory, moral hazard, move fast and break things, Network effects, North Sea oil, Northern Rock, offshore financial centre, pensions crisis, Philip Mirowski, post-war consensus, price mechanism, quantitative easing, regulatory arbitrage, rent control, reshoring, Rishi Sunak, savings glut, secular stagnation, shareholder value, social distancing, structural adjustment programs, too big to fail, universal basic income, unorthodox policies, Washington Consensus, yield curve

Instead, they collect an extremely valuable commodity produced by their users – data – and sell it on to advertisers, researchers and states.13 The extraction and commodification of this data by the big tech giants is a new method for the generation of economic rents.14 Business models based on the monopolisation of a particular online ‘space’ use network effects to establish near total market dominance. Monopoly power is then exploited to acquire users’ data for free, often without sufficient privacy safeguards. Prices do not seem to exceed the costs of production, so neoclassical economists cannot detect the existence of a monopoly – yet workers, suppliers, taxpayers and even consumers still suffer as a result.

The tech companies emerged in a world of falling profits and associated rising volatility in financial markets – both of which facilitated their access to investment. Many of these companies were initially either unprofitable or loss-making, as they had not yet developed to a sufficient size to exploit the network effects that would provide the foundation for their monopoly power. As a result, they required significant amounts of upfront investment to maintain their operations and to scale up to reach a position of market dominance that would allow them to turn a profit. The most propitious time for these firms to access such investment was in the wake of a crisis that had depressed returns and when investors were desperately seeking out the next big thing – for the tech companies, this meant either the tech crisis of the early 2000s, after which Google launched its IPO, or the financial crisis of 2008, after which many companies went public, including Facebook and Twitter.17 The cheap capital – in part a result of unorthodox monetary policy – swashing around the global economy in the wake of a financial crisis that had depressed returns everywhere provided the perfect conditions for these plucky tech companies to become the behemoths we know today.


pages: 215 words: 55,212

The Mesh: Why the Future of Business Is Sharing by Lisa Gansky

"World Economic Forum" Davos, Airbnb, Amazon Mechanical Turk, Amazon Web Services, banking crisis, barriers to entry, Bear Stearns, bike sharing, business logic, carbon footprint, carbon tax, Chuck Templeton: OpenTable:, clean tech, cloud computing, credit crunch, crowdsourcing, diversification, Firefox, fixed income, Google Earth, impact investing, industrial cluster, Internet of things, Joi Ito, Kickstarter, late fees, Network effects, new economy, peer-to-peer lending, planned obsolescence, recommendation engine, RFID, Richard Florida, Richard Thaler, ride hailing / ride sharing, sharing economy, Silicon Valley, smart grid, social web, software as a service, TaskRabbit, the built environment, the long tail, vertical integration, walkable city, yield management, young professional, Zipcar

At the time, people would share photo albums with on average five or six of their friends and family. Someone would go to a party, take a bunch of pictures, and share them. Friends and family members would see how fabulous they looked in a photo, and then buy the print, often signing up for an account of their own. We would pay to acquire one customer and get five for free. The “network effect,” as it’s known, was a new phenomenon then, but has grown dramatically in the years since. Newer photo services, such as Olapic, allow shots from anyone who attends an event, such as a wedding, to be uploaded in a single place and shared on social networking sites. panning for gold. or meet my friend, the filter.

See Social networking starting Mesh company Sweet Spot trends influencing growth of trust building Millennial generation Mobile networks digital translation to physical and flash branding as foundation of the Mesh share-based business operation users, increase in Modular design Mohsenin, Kamran Movie rentals online, Mesh companies Mozilla Firefox Music-based businesses, Mesh companies Natural ecosystem, relationship to Mesh ecosystem Netflix annual sales as information business Mesh strategy perfection recommendation engine recommendations Network effect Niche markets for maintaining/servicing products Mesh companies opening, reason for sharing as North Portland Tool Library (NPTL) Ofoto Olapic Ombudsman Open Architecture Network Open Design Open innovation service provider Open networks advantages of Architecture for Humanity communal IP concept and marketing products openness versus proprietary approach and product improvement software development OpenTable O’Reilly, Tim Ostrom, Elinor Own-to-Mesh model car-sharing services profits, generation from retirees as customers Partnerships characteristics of corporations and Mesh companies income generation from in Mesh ecosystem unexpected value of Patagonia recycled textiles of Walmart partnership Paul, Sunil Payne, Steven Peer-to-peer lending.

Croix Falls Cinema SAP Schneeveis, Bob School of Everything (SoE) Seely Brown, John Self-storage listings, Mesh companies SellaBand Seventymm Share-based business during holidays mobile networks as foundation and niche markets shareability, compatible services See also The Mesh Shea, Lucy Sinclair, Cameron Sivers, Derek Skinnipopcorn SmartyPig smava Social lending. See Loans/social lending Social networking importance to the Mesh Mesh companies negative events, broadcasting on on Netflix network effect privacy, importance of and product improvement for word-of-mouth advertising See also Facebook Software getting for startup Mesh open development Software as a service (SaaS) Sourcemap SpareFoot Spride Share Standardization of products Starting a Mesh company capital needs customers, identifying define/redefine/scale stages first mover advantage marketing primary questions serendipity as factor shareable assets, identifying software, ASP model Stohr, Kate Supply chain forward and reverse integration reverse supply chain Sustainable design Swishing Taxi Magic TCHO Technology, Mesh-friendly Mesh companies TED Prize thinkspace thredUP adaptability of case study Tool sharing, Mesh companies Toyota, broken trust Transaction fees Transparency and adaptability “age of radical transparency,” and trust building Transportation efficiency communities developed for See also Bike sharing; Car sharing Travel-related services, Mesh companies Trials Tripkick Trust building basics of broken trust, examples of and customer complaints customer misbehavior, dealing with by delighting customers discoverers as trust agents lost trust, rebuilding maintaining trust negative events, impact on and privacy practices proprietary versus open control reviews, keeping perspective social networks, role of starting slow, necessity of and transparency trials/samples for “virtuous circle of trust,” Tryvertising Twitter Tylenol tragedy Upcycling Mesh companies Vacation Rentals by Owner (VRBO) Virgin Corporation, Mesh strategy Volkswagen, idea solicitation on Web Walmart customer data, use of greening of integration with suppliers Mesh possibilities for waste, created by Waste disposal and climate change as resource underutilization Waste management government initiatives for Mesh companies in Mesh ecosystem in natural ecosystem raw materials, sharing recycling and reuse services reverse value chain yield management See also Recycling and reuse services Water Legacy Wattzon.com Westmill Wind Farm Co-operative WhipCar Wilcox, Ronald Wilhelm, Eric Williamson, Oliver Wine cooperatives, Mesh companies Word of mouth, power of Work-space sharing, Mesh companies World of Goods Yelp Yield management Zipcar customer experience with Mesh model for partners Zopa Zynga Table of Contents Title Page Copyright Page Dedication Introduction Chapter 1 - Getting to Know the Mesh Chapter 2 - The Mesh Advantage Chapter 3 - Mesh Design Chapter 4 - In with the Mesh Chapter 5 - In Mesh We Trust Chapter 6 - The Mesh as Ecosystem Chapter 7 - Open to the Mesh Chapter 8 - Mesh Inc.


pages: 389 words: 87,758

No Ordinary Disruption: The Four Global Forces Breaking All the Trends by Richard Dobbs, James Manyika

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, access to a mobile phone, additive manufacturing, Airbnb, Amazon Mechanical Turk, American Society of Civil Engineers: Report Card, asset light, autonomous vehicles, Bakken shale, barriers to entry, business cycle, business intelligence, carbon tax, Carmen Reinhart, central bank independence, circular economy, cloud computing, corporate governance, creative destruction, crowdsourcing, data science, demographic dividend, deskilling, digital capitalism, disintermediation, disruptive innovation, distributed generation, driverless car, Erik Brynjolfsson, financial innovation, first square of the chessboard, first square of the chessboard / second half of the chessboard, Gini coefficient, global supply chain, global village, high-speed rail, hydraulic fracturing, illegal immigration, income inequality, index fund, industrial robot, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, inventory management, job automation, Just-in-time delivery, Kenneth Rogoff, Kickstarter, knowledge worker, labor-force participation, low interest rates, low skilled workers, Lyft, M-Pesa, machine readable, mass immigration, megacity, megaproject, mobile money, Mohammed Bouazizi, Network effects, new economy, New Urbanism, ocean acidification, oil shale / tar sands, oil shock, old age dependency ratio, openstreetmap, peer-to-peer lending, pension reform, pension time bomb, private sector deleveraging, purchasing power parity, quantitative easing, recommendation engine, Report Card for America’s Infrastructure, RFID, ride hailing / ride sharing, Salesforce, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart cities, Snapchat, sovereign wealth fund, spinning jenny, stem cell, Steve Jobs, subscription business, supply-chain management, synthetic biology, TaskRabbit, The Great Moderation, trade route, transaction costs, Travis Kalanick, uber lyft, urban sprawl, Watson beat the top human players on Jeopardy!, working-age population, Zipcar

The rapid spread of technology will empower individuals and consumers in unprecedented numbers. Increasingly, companies will find that technology drives the marginal cost of delivering a new product, servicing a new customer, or completing a transaction toward zero. And as more people connect to the global communications and commercial systems, the force of network effects will make those systems more valuable—and create more value for those who can tap into them. As a result, the new world will be richer, more urbanized, more skilled, and healthier than the one it replaces. Its population will have access to powerful innovations that could address long-standing challenges, create new products and services for a growing consuming class, and present opportunities for a global entrepreneurial class.

But economic historians tell us that for hundreds of years, people living in cities have enjoyed living standards one and a half to three times better than those of their country cousins. There are many reasons that cities are such powerful engines of growth. Dense population centers generate productivity gains through economies of scale, specialization of labor, knowledge spillovers, and trade. These gains in productivity are reinforced through network effects. Recent research suggests that urban density drives superlinear productivity gains because it affords opportunities for greater social and economic interaction. People and skills attract businesses, which in turn lure migrants from rural areas looking for employment. Companies attract other companies that may want to do business or to share services such as roads, ports, and universities that offer a quick route into the talent pool.

McKinsey research indicates that three-quarters of Europe’s GDP gap with the United States can be explained by the fact that more Americans live in big cities—even American middle-sized cities tend to be larger than large European ones. This matters because larger cities tend to have greater network effects and higher wage premiums compared to rural areas. More densely populated cities are more attractive to innovators and entrepreneurs, who tend to congregate in places where they have greater access to networks of peers, mentors, financial institutions, partners, and potential customers. Cities exhibit superlinear scaling characteristics; with every doubling of a city’s population, each inhabitant becomes, on average, 15 percent wealthier, more productive, and more innovative.28 Companies that seek to tap large cities for talent often worry about the cost of doing business in urban locations.


The Future of Technology by Tom Standage

air freight, Alan Greenspan, barriers to entry, business process, business process outsourcing, call centre, Clayton Christensen, computer vision, connected car, corporate governance, creative destruction, disintermediation, disruptive innovation, distributed generation, double helix, experimental economics, financial engineering, Ford Model T, full employment, hydrogen economy, hype cycle, industrial robot, informal economy, information asymmetry, information security, interchangeable parts, job satisfaction, labour market flexibility, Larry Ellison, Marc Andreessen, Marc Benioff, market design, Menlo Park, millennium bug, moral hazard, natural language processing, Network effects, new economy, Nicholas Carr, optical character recognition, PalmPilot, railway mania, rent-seeking, RFID, Salesforce, seminal paper, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, six sigma, Skype, smart grid, software as a service, spectrum auction, speech recognition, stem cell, Steve Ballmer, Steve Jurvetson, technological determinism, technology bubble, telemarketer, transcontinental railway, vertical integration, Y2K

In some ways, although it firms are the epitome of mass production, when it comes to standards they are still stuck in the craftsmen era, which explains in large part why they have been so amazingly profitable. Network effects make it even more attractive to control a technology, argue Carl Shapiro and Hal Varian, two economics professors, in Information Rules, still the best read on the network economy (Harvard Business School Press, 1998). If the value of a technology depends not just on its quality but also on the number of users, positive feedback can help one firm to dominate the market. For example, the more people are already connected to a data network using a particular transmission standard, the more people will see the point of hooking up to it. These network effects also explain why the it industry in the 1980s already started to move away from completely proprietary technology, the hallmark of the mainframe era.

Customers have to pay large sums of money up front, bear much of the risk that a program may not work as promised and cannot readily switch vendors. it firms, for their part, have to spend a lot of resources on marketing and distribution, rather than concentrating on developing software that works well and is easy to use. Network effects and Wall Street make matters worse. In many markets it is a great advantage to be first, so vendors are tempted to release programs even if they are still riddled with bugs. And because equity analysts rightly consider software firms a risky investment, such firms must grow quickly to justify their relatively high share prices, pushing them to sell more programs than customers need.

This has raised hopes for a huge increase in their use in the next few 90 MAKE IT SIMPLE years (see Chart 3.2). Ronald 3.2 2.1 Towards ubiquity Schmelzer and Jason Web services, % of firms adopting Bloomberg at ZapThink, a 100 consultancy, think that web United 80 services are “nearing their tipStates EU ping point”, because they ben60 Asia efit from “the network effect: Pacific the adoption rate of the net40 work increases in proportion 20 to its utility”. In other words, FORECAST as with telephones or e-mail, 0 2002 03 04 05 06 07 08 09 10 a network with only a few Source: IDC people on it is not very useful; but as more people join it, it becomes exponentially more useful and thereby attracts even more members, and so on.


pages: 482 words: 121,173

Tools and Weapons: The Promise and the Peril of the Digital Age by Brad Smith, Carol Ann Browne

"World Economic Forum" Davos, Affordable Care Act / Obamacare, AI winter, air gap, airport security, Alan Greenspan, Albert Einstein, algorithmic bias, augmented reality, autonomous vehicles, barriers to entry, Berlin Wall, Big Tech, Bletchley Park, Blitzscaling, Boeing 737 MAX, business process, call centre, Cambridge Analytica, Celtic Tiger, Charlie Hebdo massacre, chief data officer, cloud computing, computer vision, corporate social responsibility, data science, deep learning, digital divide, disinformation, Donald Trump, Eben Moglen, Edward Snowden, en.wikipedia.org, Hacker News, immigration reform, income inequality, Internet of things, invention of movable type, invention of the telephone, Jeff Bezos, Kevin Roose, Laura Poitras, machine readable, Mark Zuckerberg, minimum viable product, national security letter, natural language processing, Network effects, new economy, Nick Bostrom, off-the-grid, operational security, opioid epidemic / opioid crisis, pattern recognition, precision agriculture, race to the bottom, ransomware, Ronald Reagan, Rubik’s Cube, Salesforce, school vouchers, self-driving car, Sheryl Sandberg, Shoshana Zuboff, Silicon Valley, Skype, speech recognition, Steve Ballmer, Steve Jobs, surveillance capitalism, tech worker, The Rise and Fall of American Growth, Tim Cook: Apple, Wargames Reagan, WikiLeaks, women in the workforce

The risk here is that US officials will fail to appreciate that technology success almost always requires success on a global scale. The economics of information technology turn on spreading R&D and infrastructure costs over the largest number of users possible. This is what drives down prices and creates the network effects needed to turn new applications into market leaders. As LinkedIn cofounder (and Microsoft board member) Reid Hoffman has shown, the ability to “blitzscale” quickly to global leadership is fundamental to technology success.20 But it’s impossible to pursue global leadership if products can’t leave the United States.

According to Kai-Fu, “AI naturally gravitates toward monopolies . . . once a company has jumped out to an early lead, this kind of ongoing repeating cycle can turn that lead into an insurmountable barrier to entry for other firms.”3 The concept is a common one in information technology markets. It’s referred to as “network effects.” It has long been true in the development of applications for an operating system, for example. Once an operating system is in a leadership position, everyone wants to develop apps for it. While a new operating system might emerge with superior features, it’s difficult to persuade app developers to consider it.

We benefited from this phenomenon in the 1990s with Windows and then hit the barrier on the other side twenty years later, competing against the iPhone and Android with our Windows Phone. Any new social media platform that wants to take on Facebook encounters the same problem today. It’s part of what defeated Google Plus. According to Kai-Fu, AI will benefit from a similar network effect on steroids, with AI leading to increased concentration of power in nearly every sector of the economy. The company in any sector that most effectively deploys AI will gain the most data about its customers and create the strongest feedback loop. In one scenario, the outcome could be even worse.


From Airline Reservations to Sonic the Hedgehog: A History of the Software Industry by Martin Campbell-Kelly

Apple II, Apple's 1984 Super Bowl advert, barriers to entry, Bill Gates: Altair 8800, business process, card file, Charles Babbage, computer age, computer vision, continuous integration, Dennis Ritchie, deskilling, Donald Knuth, Gary Kildall, Grace Hopper, history of Unix, hockey-stick growth, independent contractor, industrial research laboratory, information asymmetry, inventory management, John Markoff, John von Neumann, Larry Ellison, linear programming, longitudinal study, machine readable, Menlo Park, Mitch Kapor, Multics, Network effects, popular electronics, proprietary trading, RAND corporation, Robert X Cringely, Ronald Reagan, seminal paper, Silicon Valley, SimCity, software patent, Steve Jobs, Steve Wozniak, Steven Levy, Thomas Kuhn: the structure of scientific revolutions, vertical integration

FORTRAN rapidly became the industry standard for scientific and engineering applications programming, and other manufacturers were forced to adopt it in order to compete with IBM. There was no conspiracy: FORTRAN was simply the first efficient and reliable programming language. What economists later called “network effects” made FORTRAN a standard language with little or no help from IBM. Users made software investments of tens of millions of lines of FORTRAN code, and when selecting a new computer—whether from IBM or another manufacturer—they needed a compatible FORTRAN system to protect their software investment, and also to share programs with others.

Profits were fed back into the development of software (then given away free) and product improvement, which had the effect of making System/360 more attractive to customers; the result was more sales and profits to be invested in further software development and product improvement, and so on. That virtuous circle gave IBM its 75 percent share of the mainframe market. By the time IBM unbundled its software, System/360 was already a standard platform, and independent software vendors produced software for the IBM platform in order to maximize their sales. These “network effects” further enhanced the desirability of the IBM mainframe. It should be noted that the success of System/360 was largely independent of its original technical merits. It was the mere fact that it was a standard platform that made it desirable. IBM’s market dominance could be explained only partially in terms of the economics of increasing returns.

Bill Gates is not so much a wizard of technology as a wizard Not Only Microsoft 243 of precognition, of discerning the shape of the next game.”18 It is clear from The Road Ahead that what Gates calls “positive feedback” is an intuitive and informal equivalent to the increasing-returns model of the academic economists.19 We also know, from a memorandum dated June 1985 and subsequently published in a history of Apple Computer, that Gates was aware of the importance of network effects in establishing an operating-system standard.20 But until Microsoft opens its archives to independent scholars, we have only some tantalizing hints of the company’s strategic thinking and the extent to which Gates was responsible for it. In the meantime, another firm, Autodesk, has made its early strategic thinking publicly available in a book titled The Autodesk File.21 From 1987 to the present, Autodesk—manufacturer of the leading CAD package— has consistently been among the top ten players in the personal computer software industry.


pages: 370 words: 102,823

Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth by Michael Jacobs, Mariana Mazzucato

Alan Greenspan, balance sheet recession, banking crisis, basic income, Bear Stearns, Bernie Sanders, Bretton Woods, business climate, business cycle, carbon tax, Carmen Reinhart, central bank independence, circular economy, collaborative economy, complexity theory, conceptual framework, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, decarbonisation, degrowth, deindustrialization, dematerialisation, Detroit bankruptcy, double entry bookkeeping, Elon Musk, endogenous growth, energy security, eurozone crisis, factory automation, facts on the ground, fiat currency, Financial Instability Hypothesis, financial intermediation, Ford Model T, forward guidance, full employment, G4S, general purpose technology, Gini coefficient, Growth in a Time of Debt, Hyman Minsky, income inequality, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Internet of things, investor state dispute settlement, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, knowledge economy, labour market flexibility, low interest rates, low skilled workers, Martin Wolf, mass incarceration, military-industrial complex, Modern Monetary Theory, Money creation, Mont Pelerin Society, neoliberal agenda, Network effects, new economy, non-tariff barriers, ocean acidification, paradox of thrift, Paul Samuelson, planned obsolescence, Post-Keynesian economics, price stability, private sector deleveraging, quantitative easing, QWERTY keyboard, railway mania, rent-seeking, road to serfdom, savings glut, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Solyndra, Steve Jobs, stock buybacks, systems thinking, the built environment, The Great Moderation, The Spirit Level, Thorstein Veblen, too big to fail, total factor productivity, Tragedy of the Commons, transaction costs, trickle-down economics, universal basic income, vertical integration, very high income

Markets are ‘embedded’ in these wider institutional structures and social, legal and cultural conditions.38 In the modern world, as Polanyi pointed out, the concept of a ‘free’ market is a construct of economic theory, not an empirical observation.39 Indeed, he observed that the national capitalist market was effectively forced into existence through public policy—there was nothing ‘natural’ or universal about it.40 The orthodox notion of competition between firms is equally misleading. Many of the most important markets in modern capitalism are oligopolistic in form, characterised by economies of scale and ‘network effects’ that lead to concentration and benefit incumbents. But even where there is greater competition, capitalist businesses are not all the same, forced to behave in similar ways by the external forces of ‘the market’. On the contrary, as Lazonick shows, what we actually observe is persistent heterogeneity, both in businesses’ internal characteristics and in their reactions to different market circumstances.

Without strong policy, innovation activity tends to be focused towards the incumbent, dominant technologies, where returns on incremental improvements are easily observed and understood. However, the alignment of expectations on the likely shape of future energy networks and innovations can lead to a ‘tipping point’ where the nature and direction of mainstream innovation activity can switch quickly. This can become self-reinforcing through new network effects. So long as one network technology is dominant, products and services linked to the use of that network will receive the bulk of innovation activity and there will be less effort committed to developing an alternative; but if a new technology network becomes dominant then innovation activity can shift quickly.

Musk realised that fossil-driven networks are hard to dislodge given the vast existing network of petrol stations, and vested interests of car dealerships, that make driving a combustion-engine car so much the norm.22 Rather than trying to win this battle alone, Tesla decided to expand the new market by stimulating the innovative resources of all car companies. Since the industrial revolution, firms have frequently exploited this path-dependence in technology adoption and network effects in order to diffuse their innovations and create new markets.23 Toyota followed suit. A striking finding of recent research is that the potential spillovers from low-carbon innovation to other sectors—one of the factors which helps to drive overall growth—may be higher than for other technologies.24 Aghion et al. provide empirical evidence both for geographical knowledge spillovers (where a firm’s choice of innovation path is influenced by the practice of the countries where its researchers are located) and for path-dependence (where firms tend to direct innovation towards what they are already good at).25 Using data on 1 million patents and 3 million citations, Dechezleprêtre et al. suggest that spillovers from low-carbon innovation in the energy production and transportation sectors are more than 40 per cent greater than in conventional technologies.26 At the same time Acemoglu et al. provide a powerful theoretical case to suggest that once systems of clean innovation have been started up, they may be more productive than conventional alternatives based on existing technologies.27 The lesson for policy-makers and economists here is an important one.


pages: 391 words: 97,018

Better, Stronger, Faster: The Myth of American Decline . . . And the Rise of a New Economy by Daniel Gross

"World Economic Forum" Davos, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, Airbnb, Alan Greenspan, American Society of Civil Engineers: Report Card, asset-backed security, Bakken shale, banking crisis, Bear Stearns, BRICs, British Empire, business cycle, business process, business process outsourcing, call centre, carbon tax, Carmen Reinhart, clean water, collapse of Lehman Brothers, collateralized debt obligation, commoditize, congestion pricing, creative destruction, credit crunch, currency manipulation / currency intervention, demand response, Donald Trump, financial engineering, Frederick Winslow Taylor, high net worth, high-speed rail, housing crisis, hydraulic fracturing, If something cannot go on forever, it will stop - Herbert Stein's Law, illegal immigration, index fund, intangible asset, intermodal, inventory management, Kenneth Rogoff, labor-force participation, LNG terminal, low interest rates, low skilled workers, man camp, Mark Zuckerberg, Martin Wolf, Mary Meeker, Maui Hawaii, McMansion, money market fund, mortgage debt, Network effects, new economy, obamacare, oil shale / tar sands, oil shock, peak oil, plutocrats, price stability, quantitative easing, race to the bottom, reserve currency, reshoring, Richard Florida, rising living standards, risk tolerance, risk/return, scientific management, Silicon Valley, Silicon Valley startup, six sigma, Skype, sovereign wealth fund, Steve Jobs, superstar cities, the High Line, transit-oriented development, Wall-E, Yogi Berra, zero-sum game, Zipcar

When you have a large installed user base, a product or service rolled out on it can gain scale more quickly, and its value can grow exponentially. The development of the U.S. economy over time highlights the power of network effects—the notion that the value of a network to its owner, and to each user, rises as more people join. When a country has the world’s largest economy, with a large population spread over a large landmass and possessed of excellent connections to the global economy, network effects can work wonders. As a launching pad for products and services with global scale, the United States has certain advantages: the world’s largest domestic market; the paths blazed overseas for decades by brands like Coca-Cola, Disney, and McDonald’s; and the use of English as a commercial, financial, advertising, and consuming lingua franca.

Again, one can take these distressing metrics as further evidence of relative decline, or one can look at it this way: the United States manages to do an incredibly large volume of e-commerce with only half its population fully wired in, and with many Americans accessing the Internet more slowly than people in Gyor and Szeged. As hyper-connected and wired as the U.S. economy already is, there is a great deal of room for improvement.5 Recall the power of network effects. From the telegraph to the railroad, infrastructure has always served to rope people, especially in rural areas, into the wider, larger system, enriching both the lives of the individuals and the companies that ply their trade on the new medium. It’s no different with the Internet. Faster connections mean more people are digital, doing transactions, watching content, able to take advantage of free things and become more efficient consumers themselves.

The elevated freight rail line on the West Side of Manhattan was unused and in disrepair until a group of arty visionaries had the idea of turning it into a park. It has become a platform for billions of dollars of investment in stores and restaurants, condominiums, offices, and hotels. Not every place is New York, but many regions and many cities could benefit from the sort of network effects that New York enjoys. Many of the biggest metropolitan areas in the United States are remarkably unnetworked. Knitting physical space more tightly together in networks would help boost real estate values and encourage investment at a time when it is much needed. This process has already been happening, even as infrastructure enthusiasts wring their hands at the lack of investment.


pages: 257 words: 64,285

The End of Traffic and the Future of Transport: Second Edition by David Levinson, Kevin Krizek

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, American Society of Civil Engineers: Report Card, autonomous vehicles, barriers to entry, Bay Area Rapid Transit, big-box store, bike sharing, carbon tax, Chris Urmson, collaborative consumption, commoditize, congestion pricing, crowdsourcing, DARPA: Urban Challenge, dematerialisation, driverless car, Dutch auction, Elon Musk, en.wikipedia.org, Ford Model T, Google Hangouts, high-speed rail, Induced demand, intermodal, invention of the printing press, jitney, John Markoff, labor-force participation, Lewis Mumford, lifelogging, Lyft, means of production, megacity, Menlo Park, Network effects, Occam's razor, oil shock, place-making, pneumatic tube, post-work, printed gun, Ray Kurzweil, rent-seeking, ride hailing / ride sharing, Robert Gordon, self-driving car, sharing economy, Silicon Valley, Skype, smart cities, tacit knowledge, techno-determinism, technological singularity, Tesla Model S, the built environment, The future is already here, Thomas Kuhn: the structure of scientific revolutions, transaction costs, transportation-network company, Uber and Lyft, Uber for X, uber lyft, urban renewal, women in the workforce, working-age population, Yom Kippur War, zero-sum game, Zipcar

., one rents hotel rooms and cars rather than buying condos and vehicles when on travel; it is now common to rent music, videos, and books). Previously cars, taxis, and hotel rooms were rented from companies which could achieve large economies of scale. Now it is possible to rent couches and cars and rides from individuals with excess capacity. The degree to which economies of scale trump the network effects of distributed suppliers awaits to be seen. We roll out four dimensions of sharing—cars, rides, bikes, information—that have emerging implications for transport.  Sharing Cars While living with his family in Italy, Kevin was carless; his family therefore used the town's Hertz, renting a car once per month.

Streets designs will need to accommodate pick-up and drop-off as a major feature, so curb space will need to be re-arranged so people know where to meet their car (and vice versa), so they don't get into the wrong white Prius. While we lose the need for parking, we might think of channelizing roads more like airports or multi-way boulevards than the monolithic pavement they are today. Street design is discussed more in a later chapter. Discussion Sharing—be it cars, bikes, boats or information—has strong network effects driven by convenience (a characteristic the time-starved seem particularly mindful of). But, macro versus micro transit discussions in the following chapter bring up matters of economies of scale versus economies of scope. There's a role for both. For example, one is more likely to use carsharing if more neighbors use it, since that makes it more likely there will be a car in front of one's house, workplace, or wherever, when it is desired.

Middle-aged US systems born in the 1970s like San Francisco's BART, DC Metro, and Atlanta's MARTA face similar issues associated with aging infrastructure, brittle labor relations, and fixed networks unable to meet changing demand patterns. The challenges facing older systems differ from those that were first launched after 1980 in the era of Light Rail. Expanding and extending is immensely easier (sclerotic New York excepted), and given network effects, more promising than starting from scratch. New and emerging systems (at least in the US) are sold on their ability to yield under-appreciated environmental and societal benefits. Where there are large volumes of people already moving in key corridors, the leap to fixed route service is inevitable.


Work in the Future The Automation Revolution-Palgrave MacMillan (2019) by Robert Skidelsky Nan Craig

3D printing, Airbnb, algorithmic trading, AlphaGo, Alvin Toffler, Amazon Web Services, anti-work, antiwork, artificial general intelligence, asset light, autonomous vehicles, basic income, behavioural economics, business cycle, cloud computing, collective bargaining, Computing Machinery and Intelligence, correlation does not imply causation, creative destruction, data is the new oil, data science, David Graeber, David Ricardo: comparative advantage, deep learning, DeepMind, deindustrialization, Demis Hassabis, deskilling, disintermediation, do what you love, Donald Trump, driverless car, Erik Brynjolfsson, fake news, feminist movement, Ford Model T, Frederick Winslow Taylor, future of work, Future Shock, general purpose technology, gig economy, global supply chain, income inequality, independent contractor, informal economy, Internet of things, Jarndyce and Jarndyce, Jarndyce and Jarndyce, job automation, job polarisation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Joseph Schumpeter, knowledge economy, Loebner Prize, low skilled workers, Lyft, Mark Zuckerberg, means of production, moral panic, Network effects, new economy, Nick Bostrom, off grid, pattern recognition, post-work, Ronald Coase, scientific management, Second Machine Age, self-driving car, sharing economy, SoftBank, Steve Jobs, strong AI, tacit knowledge, technological determinism, technoutopianism, TED Talk, The Chicago School, The Future of Employment, the market place, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, Turing test, Uber for X, uber lyft, universal basic income, wealth creators, working poor

Instead, the very nature of a platform business tends towards monopolisation. This is for a few different reasons. One is network effects: the more people who use a platform, the more valuable that platform becomes for everybody else. Again, Facebook is a good example. You may despise Mark Zuckerberg, hate the surveillance practices of Facebook and dislike the way they have handled fake news, but if you are going to join a social media network it will be Facebook, simply because that is where all your friends and family already are. That is the power of network effects, and once they reach a crucial tipping point, they grow and grow and grow.

., 59 Monopolies, 6, 136, 138–140 Morals/morality, 48, 77, 159, 160, 162, 164, 166, 167 Moravec’s paradox, 131 Murnane, Richard, 126 N Nagel, Thomas, 100, 102 National Living wage, 184 Needs vs. Wants, 3, 30, 88 Neoclassical economics, 4, 55, 60, 62, 73 Netherlands, the/Holland, 6, 68, 151, 163, 177, 181–183 Network effects, 138 Networks, 45, 48, 138, 196 Neumann, John von, 99 New Zealand, 179 Nübler, Irmgard, 6, 194, 196 Index O Obama, Barack, 164, 165, 171 Obligation, 38, 53, 73–79 Occupations, 16, 40, 41, 46, 47, 58, 70, 83, 84, 86, 87, 90, 92, 106, 178, 184, 190–192, 194 OECD, 66–68, 178 O’Neil, Cathy, 6 Ontology of work, 65 Organisations dynamics of, 164 Osborne, Michael, 90 Oswald, A, 60 209 Pre-modern/pre-industrial work, 3, 11, 47, 48 Productivity, 7, 10, 79, 86, 87, 176, 178–180, 183–185, 190–192, 199 Professional work, 1, 39 Profits (different profit models), 14–18, 30, 48, 75, 79, 93, 134, 135, 138, 152, 191 Protestant work ethic, 28 Public services, 94, 167 Puritan (view of work), 28, 75, 166 R P Painting Fool, The, 115, 116, 120 Parenting, 75, 76 Patocka, Jan, 9, 21 Pattern recognition, 129 Peasant labour, 41 Perez, Carlota, 192 Philosophy of work, 30 Physical labour, 3 Piasna, Agnieszka, 181, 183 Piece-work, 30 Platform economy/platform capitalism, 6, 140 Polanyi, Karl, 192, 193 Polanyi, Michael, 127 Policy (argument against), 7, 21, 67, 68, 95, 157–173, 180, 181, 183–185, 189–200 Population, 2, 12, 15–17, 19, 28, 30, 89, 90, 117, 147, 158, 172, 198 Postmates, 136 Post-work society, 59 Poverty, 15, 47, 59, 67, 177 Redistribution, 79, 169, 199 Redundancy, 10, 12, 15–17, 19, 78, 179 Religion/religious ritual, 12, 28, 194 Remittances, 40 Responsibility, 44, 47, 76–79, 106, 107, 115, 118, 136 Retail sector, 87, 137 Retirement, 19, 67, 78 Ricardo, David, 2, 13–17 Robinson, James, 194 Robotisation, 21, 94, 95, 192 Robots carers, 106 Romantic (view of work), 34, 35 Ruskin, John, 34 S Safety nets, 67, 68 Sahlins, Marshall, 26, 158 Salazar-Xirinachs, Jose M., 198 Schumpeter, Joseph, 190, 194 Scientific management, 30 Scott, James C., 28 210 Index Searle, John, 100–103 Self-employment, 69–70, 75 Self-realisation, 57, 165 Sennett, Richard, 3 Services/service sector low frequency vs. high frequency, 134 work, 40, 68, 161, 163 Singularity, 116 Skidelsky, Edward, 60, 176 Skidelsky, Robert, 60, 176 Skills acquisition, 33, 70 skilled vs. unskilled labour/jobs, 67 Slavery, 11, 29, 30, 45 Smartphones, 140 Smiles, Samuel, 28 Smith, Adam, 12, 13, 27, 35, 54, 55, 65 Smith, Rob, 177 Social drawing rights, 70 Social interaction, 53, 88, 91 Social media, 77, 138, 168 Societal knowledge base, 196–197 Sociology (of work), 166 Spencer, David, 4, 54, 59, 61 Spinning mills (cotton industry?)


pages: 903 words: 235,753

The Stack: On Software and Sovereignty by Benjamin H. Bratton

1960s counterculture, 3D printing, 4chan, Ada Lovelace, Adam Curtis, additive manufacturing, airport security, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, algorithmic trading, Amazon Mechanical Turk, Amazon Robotics, Amazon Web Services, Andy Rubin, Anthropocene, augmented reality, autonomous vehicles, basic income, Benevolent Dictator For Life (BDFL), Berlin Wall, bioinformatics, Biosphere 2, bitcoin, blockchain, Buckminster Fuller, Burning Man, call centre, capitalist realism, carbon credits, carbon footprint, carbon tax, carbon-based life, Cass Sunstein, Celebration, Florida, Charles Babbage, charter city, clean water, cloud computing, company town, congestion pricing, connected car, Conway's law, corporate governance, crowdsourcing, cryptocurrency, dark matter, David Graeber, deglobalization, dematerialisation, digital capitalism, digital divide, disintermediation, distributed generation, don't be evil, Douglas Engelbart, Douglas Engelbart, driverless car, Edward Snowden, Elon Musk, en.wikipedia.org, Eratosthenes, Ethereum, ethereum blockchain, Evgeny Morozov, facts on the ground, Flash crash, Frank Gehry, Frederick Winslow Taylor, fulfillment center, functional programming, future of work, Georg Cantor, gig economy, global supply chain, Google Earth, Google Glasses, Guggenheim Bilbao, High speed trading, high-speed rail, Hyperloop, Ian Bogost, illegal immigration, industrial robot, information retrieval, Intergovernmental Panel on Climate Change (IPCC), intermodal, Internet of things, invisible hand, Jacob Appelbaum, James Bridle, Jaron Lanier, Joan Didion, John Markoff, John Perry Barlow, Joi Ito, Jony Ive, Julian Assange, Khan Academy, Kim Stanley Robinson, Kiva Systems, Laura Poitras, liberal capitalism, lifelogging, linked data, lolcat, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, Masdar, McMansion, means of production, megacity, megaproject, megastructure, Menlo Park, Minecraft, MITM: man-in-the-middle, Monroe Doctrine, Neal Stephenson, Network effects, new economy, Nick Bostrom, ocean acidification, off-the-grid, offshore financial centre, oil shale / tar sands, Oklahoma City bombing, OSI model, packet switching, PageRank, pattern recognition, peak oil, peer-to-peer, performance metric, personalized medicine, Peter Eisenman, Peter Thiel, phenotype, Philip Mirowski, Pierre-Simon Laplace, place-making, planetary scale, pneumatic tube, post-Fordism, precautionary principle, RAND corporation, recommendation engine, reserve currency, rewilding, RFID, Robert Bork, Sand Hill Road, scientific management, self-driving car, semantic web, sharing economy, Silicon Valley, Silicon Valley ideology, skeuomorphism, Slavoj Žižek, smart cities, smart grid, smart meter, Snow Crash, social graph, software studies, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Startup school, statistical arbitrage, Steve Jobs, Steven Levy, Stewart Brand, Stuxnet, Superbowl ad, supply-chain management, supply-chain management software, synthetic biology, TaskRabbit, technological determinism, TED Talk, the built environment, The Chicago School, the long tail, the scientific method, Torches of Freedom, transaction costs, Turing complete, Turing machine, Turing test, undersea cable, universal basic income, urban planning, Vernor Vinge, vertical integration, warehouse automation, warehouse robotics, Washington Consensus, web application, Westphalian system, WikiLeaks, working poor, Y Combinator, yottabyte

This may insert machine control at almost any point, amplifying or diverting human control over any machine in which the User happens to be installed, or even of the whole infrastructural landscape in which those machines swarm together. For example, the integrated design of driverless cars includes navigation interfaces, computationally intensive and environmentally aware rolling hardware, and street systems that can stage the network effects of hundreds of thousands speeding robots at once. The next stable form of the “automobile” (a description that will become perhaps more and more accurate) may be as a mobile Cloud platform inside of which Users navigate the City layer of a larger Stack according to augmented scenery Interfacial overlays and powered by grids of electrons as well as bits.

Those models may represent a rigorously discrete view of the platform's internal operations, its external environment, or, most likely, some combination of the internal and the external that measures platform performance according to metrics evaluating its outward-facing systems.10 6..  Platforms’ mediation of User-input information may result in an increase in the value of that information for the User. Platform network effects absorb and train that information, making it more visible, more structured, and more extensible for the individual User or in relation to other Users who make further use of it, thereby increasing its social value. At the same time, it is likely the platform itself that derives the most significant net profit from these circulations in total.

Platforms that organize existing systems and information tend to achieve generative entrenchment more quickly than those that seek to introduce new systems from scratch. Users will make tactical use of some platform interfaces to link some existing systems, and in doing so they are incentivized to incorporate more of their own interests within these systems. Subsequent Users are incentivized to link their systems to benefit from the network effects set in motion by earlier Users, who in turn enjoy increasing network benefits as more User systems are incorporated over time. The platform is able to realize platform surplus value from this generative entrenchment. 15..  Platforms link actors, information, and events across multiple spatial and temporal scales at once.


pages: 371 words: 108,317

The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future by Kevin Kelly

A Declaration of the Independence of Cyberspace, Aaron Swartz, AI winter, Airbnb, Albert Einstein, Alvin Toffler, Amazon Web Services, augmented reality, bank run, barriers to entry, Baxter: Rethink Robotics, bitcoin, blockchain, book scanning, Brewster Kahle, Burning Man, cloud computing, commoditize, computer age, Computer Lib, connected car, crowdsourcing, dark matter, data science, deep learning, DeepMind, dematerialisation, Downton Abbey, driverless car, Edward Snowden, Elon Musk, Filter Bubble, Freestyle chess, Gabriella Coleman, game design, Geoffrey Hinton, Google Glasses, hive mind, Howard Rheingold, index card, indoor plumbing, industrial robot, Internet Archive, Internet of things, invention of movable type, invisible hand, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Perry Barlow, Kevin Kelly, Kickstarter, lifelogging, linked data, Lyft, M-Pesa, machine readable, machine translation, Marc Andreessen, Marshall McLuhan, Mary Meeker, means of production, megacity, Minecraft, Mitch Kapor, multi-sided market, natural language processing, Netflix Prize, Network effects, new economy, Nicholas Carr, off-the-grid, old-boy network, peer-to-peer, peer-to-peer lending, personalized medicine, placebo effect, planetary scale, postindustrial economy, Project Xanadu, recommendation engine, RFID, ride hailing / ride sharing, robo advisor, Rodney Brooks, self-driving car, sharing economy, Silicon Valley, slashdot, Snapchat, social graph, social web, software is eating the world, speech recognition, Stephen Hawking, Steven Levy, Ted Nelson, TED Talk, The future is already here, the long tail, the scientific method, transport as a service, two-sided market, Uber for X, uber lyft, value engineering, Watson beat the top human players on Jeopardy!, WeWork, Whole Earth Review, Yochai Benkler, yottabyte, zero-sum game

And this convergence suggests that as long as these technological trends continue—and there’s no reason to think they won’t—AI will keep improving. As it does, this cloud-based AI will become an increasingly ingrained part of our everyday life. But it will come at a price. Cloud computing empowers the law of increasing returns, sometimes called the network effect, which holds that the value of a network increases much faster as it grows bigger. The bigger the network, the more attractive it is to new users, which makes it even bigger and thus more attractive, and so on. A cloud that serves AI will obey the same law. The more people who use an AI, the smarter it gets.

“akin to building a rocket ship”: Caleb Garling, “Andrew Ng: Why ‘Deep Learning’ Is a Mandate for Humans, Not Just Machines,” Wired, May 5, 2015. In 2006, Geoff Hinton: Kate Allen, “How a Toronto Professor’s Research Revolutionized Artificial Intelligence,” Toronto Star, April 17, 2015. he dubbed “deep learning”: Yann LeCun, Yoshua Bengio, and Geoffrey Hinton, “Deep Learning,” Nature 521, no. 7553 (2015): 436–44. the network effect: Carl Shapiro and Hal R. Varian, Information Rules: A Strategic Guide to the Network Economy (Boston: Harvard Business Review Press, 1998). famous man-versus-machine match: “Deep Blue,” IBM 100: Icons of Progress, March 7, 2012. rather than competes against them: Owen Williams, “Garry Kasparov—Biography,” KasparovAgent.com, 2010.

., 70–71 and platform synergy, 122–25 and real-time on demand, 114–17 and renting, 117–18 and right of modification, 124–25 accountability, 260–64 Adobe, 113, 206 advertising, 177–89 aggregated information, 140, 147 Airbnb, 109, 113, 124, 172 algorithms and targeted advertising, 179–82 Alibaba, 109 Amazon and accessibility vs. ownership, 109 and artificial intelligence, 33 cloud of, 128, 129 and on-demand model of access, 115 as ecosystem, 124 and filtering systems, 171–72 and recommendation engines, 169 and robot technology, 50 and tracking technology, 254 and user reviews, 21, 72–73 anime, 198 annotation systems, 202 anonymity, 263–64 anthropomorphization of technology, 259 Apache software, 69, 141, 143 API (application programming interface), 23 Apple, 1–2, 123, 124, 246 Apple Pay, 65 Apple Watch, 224 Arthur, Brian, 193, 209 artificial intelligence (AI), 29–60 ability to think differently, 42–43, 48, 51–52 as accelerant of change, 30 as alien intelligence, 48 in chess, 41–42 and cloud-based services, 127 and collaboration, 273 and commodity consumer attention, 179 and complex questions, 47 concerns regarding, 44 and consciousness, 42 corporate investment in, 32 costs of, 29, 52–53 data informing, 39 and defining humanity, 48–49 and digital storage capacity, 265, 266–67 and emergence of the “holos,” 291 as enhancement of human intelligence, 41–42 and filtering systems, 175 of Google, 36–37 impact of, 29 learning ability of, 32–33, 40 and lifelogging, 251 networked, 30 and network effect, 40 potential applications for, 34–36 questions arising from, 284 specialized applications of, 42 in tagging book content, 98 technological breakthroughs influencing, 38–40 ubiquity of, 30, 33 and video games, 230 and visual intelligence, 203 See also robots arts and artists artist/audience inversion, 81 and augmented reality, 232 and authenticity, 70 and creative remixing, 209 and crowdfunding, 156–61 and low-cost reproduction, 87 and patronage, 72 public art, 232 attention, 168–69, 176, 177–89 audience, 88, 148–49, 155, 156–57 audio recording, 249.


pages: 419 words: 109,241

A World Without Work: Technology, Automation, and How We Should Respond by Daniel Susskind

"World Economic Forum" Davos, 3D printing, agricultural Revolution, AI winter, Airbnb, Albert Einstein, algorithmic trading, AlphaGo, artificial general intelligence, autonomous vehicles, basic income, Bertrand Russell: In Praise of Idleness, Big Tech, blue-collar work, Boston Dynamics, British Empire, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, computer age, computer vision, computerized trading, creative destruction, David Graeber, David Ricardo: comparative advantage, deep learning, DeepMind, Demis Hassabis, demographic transition, deskilling, disruptive innovation, Donald Trump, Douglas Hofstadter, driverless car, drone strike, Edward Glaeser, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, fake news, financial innovation, flying shuttle, Ford Model T, fulfillment center, future of work, gig economy, Gini coefficient, Google Glasses, Gödel, Escher, Bach, Hans Moravec, income inequality, income per capita, industrial robot, interchangeable parts, invisible hand, Isaac Newton, Jacques de Vaucanson, James Hargreaves, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Joi Ito, Joseph Schumpeter, Kenneth Arrow, Kevin Roose, Khan Academy, Kickstarter, Larry Ellison, low skilled workers, lump of labour, machine translation, Marc Andreessen, Mark Zuckerberg, means of production, Metcalfe’s law, natural language processing, Neil Armstrong, Network effects, Nick Bostrom, Occupy movement, offshore financial centre, Paul Samuelson, Peter Thiel, pink-collar, precariat, purchasing power parity, Ray Kurzweil, ride hailing / ride sharing, road to serfdom, Robert Gordon, Sam Altman, Second Machine Age, self-driving car, shareholder value, sharing economy, Silicon Valley, Snapchat, social intelligence, software is eating the world, sovereign wealth fund, spinning jenny, Stephen Hawking, Steve Jobs, strong AI, tacit knowledge, technological solutionism, TED Talk, telemarketer, The Future of Employment, The Rise and Fall of American Growth, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, Travis Kalanick, Turing test, Two Sigma, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, upwardly mobile, warehouse robotics, Watson beat the top human players on Jeopardy!, We are the 99%, wealth creators, working poor, working-age population, Y Combinator

And while small institutions may have one of them—perhaps a talented engineer capable of writing good software or a unique set of valuable data—they are unlikely to have all three at the same time. Only Big Tech will. Aside from this issue of expensive resources, the dominant tech companies are also likely to be “big” for another reason: many new technologies benefit from very strong “network effects.” This means that the more people who use a given system, the more valuable it becomes for those users. The classic explanation of these effects goes back to the days when telephones got installed in people’s houses: adding a new person to a phone network is not only useful for her, but also valuable for everyone already on the network, because now they can call her as well.

And then there is the basic bandwagon effect: once a particular network is popular, it makes sense to join it rather than a fledgling rival. I have a friend named Faiz who once thought about starting a new social network—but it is a curious person who would choose Faizbook, with just a few other patrons, over Facebook with its two billion users. Network effects do not make social platforms completely invulnerable—think of Friendster, MySpace, and BlackBerry Messenger, once-popular networks now consigned to the technological graveyard—but they certainly make it harder for small upstarts to gain traction. All of this explains why large technology companies are acquiring so many other technology companies and start-ups.

See artificial general intelligence agoge agriculture Airbnb airborne fulfillment centers Alaska Permanent Fund Alexa algorithms alienation al-Khwarizmi, Abdallah Muhammad ibn Musa ALM (Autor-Levy-Murnane) hypothesis AlphaGo AlphaGo Zero AlphaZero Altman, Sam Amara, Roy Amazon artificial intelligence and changing-pie effect and competition and concerns about driverless vehicles and market share of network effects and profit and Andreessen, Marc ANI. See artificial narrow intelligence antitrust legislation apathy apotheosis Apple Archilochus Arendt, Hannah Ariely, Dan aristocracy Aristotle Arrow, Kenneth artificial general intelligence (AGI) artificial intelligence (AI) automata and bottom-up vs. top-down economics and fallacy of first wave of general history of priority shift and second wave of artificial narrow intelligence (ANI) artificial neural networks artisan class assembly lines AT&T Atari video games Atkinson, Anthony ATMs (automatic teller machines) automata automation, number of jobs at risk of automation anxiety automation risk autonomous vehicles Autor, David bandwagon effect bank tellers basic income conditional overview of universal Becker, Gary Bell, Daniel Berlin, Isaiah Beveridge, William Beveridge Report bigger-pie effect Big State capital-sharing and conditional basic income and income-sharing and labor-supporting meaning creation and overview of taxation and welfare state vs.


pages: 220 words: 73,451

Democratizing innovation by Eric von Hippel

additive manufacturing, correlation coefficient, Debian, disruptive innovation, Free Software Foundation, hacker house, informal economy, information asymmetry, inventory management, iterative process, James Watt: steam engine, knowledge economy, longitudinal study, machine readable, meta-analysis, Network effects, placebo effect, principal–agent problem, Richard Stallman, software patent, systematic bias, the Cathedral and the Bazaar, tragedy of the anticommons, transaction costs, vertical integration, Vickrey auction

When an innovating user freely reveals an innovation, the direct result is to increase the diffusion of that innovation relative to what it would be if the innovation were either licensed at a fee or held secret. The innovating user may then benefit from the increase in diffusion via a number of effects. Among these are network effects. (The classic illustration of a network effect is that the value of each telephone goes up as more are sold, because the value of a phone is strongly affected by the number of others who can be contacted in the network.) In addition, and very importantly, an innovation that is freely revealed and adopted by others can become an informal standard that may preempt the development and/or commercialization of other versions of the innovation.

Active efforts by innovators to freely reveal—as opposed to sullen acceptance—are explicable because free revealing can provide innovators with significant private benefits as well as losses or risks of loss. Users who freely reveal what they have done often find that others then improve or suggest improvements to the innovation, to mutual benefit (Raymond 1999). Freely revealing users also may benefit from enhancement of reputation, from positive network effects due to increased diffusion of their innovation, and from other factors. Being the first to freely reveal a particular innovation can also enhance the benefits received, and so there can actually be a rush to reveal, much as scientists rush to publish in order to gain the benefits associated with being the first to have made a particular advancement.


pages: 280 words: 79,029

Smart Money: How High-Stakes Financial Innovation Is Reshaping Our WorldÑFor the Better by Andrew Palmer

Affordable Care Act / Obamacare, Alan Greenspan, algorithmic trading, Andrei Shleifer, asset-backed security, availability heuristic, bank run, banking crisis, behavioural economics, Black Monday: stock market crash in 1987, Black-Scholes formula, bonus culture, break the buck, Bretton Woods, call centre, Carmen Reinhart, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, computerized trading, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Graeber, diversification, diversified portfolio, Edmond Halley, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, eurozone crisis, family office, financial deregulation, financial engineering, financial innovation, fixed income, Flash crash, Google Glasses, Gordon Gekko, high net worth, housing crisis, Hyman Minsky, impact investing, implied volatility, income inequality, index fund, information asymmetry, Innovator's Dilemma, interest rate swap, Kenneth Rogoff, Kickstarter, late fees, London Interbank Offered Rate, Long Term Capital Management, longitudinal study, loss aversion, low interest rates, margin call, Mark Zuckerberg, McMansion, Minsky moment, money market fund, mortgage debt, mortgage tax deduction, Myron Scholes, negative equity, Network effects, Northern Rock, obamacare, payday loans, peer-to-peer lending, Peter Thiel, principal–agent problem, profit maximization, quantitative trading / quantitative finance, railway mania, randomized controlled trial, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Savings and loan crisis, short selling, Silicon Valley, Silicon Valley startup, Skype, South Sea Bubble, sovereign wealth fund, statistical model, subprime mortgage crisis, tail risk, Thales of Miletus, the long tail, transaction costs, Tunguska event, unbanked and underbanked, underbanked, Vanguard fund, web application

By December 2012, Lending Club had surpassed $1 billion in loans taken out since its launch in 2007. It had doubled that by the start of July 2013, hit the $3 billion mark by December of that year, and surpassed $6 billion by the end of September 2014. That sort of heft puts it well ahead of rivals. It also reflects what economists like to call “network effects.” A bigger marketplace attracts more borrowers and investors. It also increases liquidity for investors looking to sell off their loans before they mature. Lending Club is one among a whole series of peer-to-peer start-ups. Its biggest rival in the consumer arena is another San Francisco–based firm called Prosper, which stuttered for a few years but is also growing extremely fast.

., 32 Keys, Benjamin, 48 Kharroubi, Enisse, 79 Kickstarter, 172 King, Stephen, 99 Klein, David, 182 Krugman, Paul, xv Lahoud, Sal, 166 Lang, Luke, 153, 161–162 Laplanche, Renaud, 179, 184, 188, 190, 193–194, 196–197 Latency, 53 Law of large numbers, 17 Layering, 57 Left-digit bias, 46 Lehman Brothers, x, 44, 65 Lending direct, 84 marketplace, 184 payday, 200 relationship-based, 11, 151, 206–208 secured, xiv, 76 unsecured, 206 See also Loans; Peer-to-peer lending Lending Club, 172, 179–180, 182–184, 187, 189, 194–195, 197 Leonardo of Pisa (Fibonacci), 19 Lerner, Josh, 59 Lethal pandemic, risk-modeling for demographic profile, 230 exceedance-probability curve, 231–232, 232 figure 3 historical data, 228–229 infectiousness and virulence, 229–230 location of outbreak, 230–231 Leverage, 51, 70–71, 80, 186, 188 Leverage ratio, 76–77 Lewis, Michael, 57 Liber Abaci or Book of Calculation (Fibonacci), 19 LIBOR (London Interbank Offered Rate), 41 Liebman, Jeffrey, 98 Life expectancy government reaction to, 128–129 projections of, 124–127, 126 figure 2 ratio of young to older people, 127–128 Life-insurance policies, 142 Life-settlements industry, 142–143 Life table, 20 Limited liability, 212 Liquidity, 12–14, 39, 185–186 List, John, 109 The Little Book of Behavioral Investing (Montier), 156 Lo, Andrew, 113–115, 117–123 Loans low-documentation, 48–49 secured, 76 small business, 181, 216 student, 164, 166–167, 169–171, 182 syndicated, 41 Victory Loans, 28 See also Lending; Peer-to-Peer lending Logistic regression, 201 London, early fire insurance in, 16–17 London, Great Fire of, 16 London Interbank Offered Rate (LIBOR), 41 Long-Term Capital Management, 123 Longevity, betting on, 143–144 Loss aversion, 136 Lotteries, 212, 213 Low-documentation loans, 48–49 Lumni, 165, 168, 175 Lustgarten, Anders, 111 Lynn, Jeff, 160–161 Mack, John, 180 Mahwah, New Jersey, 52, 53 Marginal borrowers assessment of, 216–217 behavioral finance and, 208–214 industrialization of credit, 206 microfinance and, 203 savings schemes, 209–214 small businesses, 215–219 unsecured lending to, 206 Wonga, 203, 205, 208 Marginal borrowers (continued) ZestFinance, 199, 202, 205–206 Maritime piracy, solutions to, 151–152 Maritime trade, role of in history of finance, 3, 7–8, 14, 17, 23 Market makers, 15–16, 55 MarketInvoice, 195, 207, 217–218 Marketplace lending, 184 Markowitz, Harry, 118 Massachusetts, use of inflation-protected bonds in, 26 Massachusetts, use of social-impact bonds in, 98 Matching engine, 52 Maturity transformation, 12–13, 187–188, 193 McKinsey & Company, ix, 42 Mercator Advisory Group, 203 Merrill, Charles, 28 Merrill, Douglas, 199, 201 Merrill Lynch, 28 Merton, Robert, 31, 113–114, 123–124, 129–132, 142, 145 Mian, Atif, 204 Michigan, University of, financial survey by, 134–135 Microfinance, 203 Micropayment model, 217 Microwave technology, 53 The Million Adventure, 213–214 Minsky, Hyman, 42 Minsky moment, 42 Mississippi scheme, 36 Mitchell, Justin, 166–167 Momentum Ignition, 57 Monaco, modeling risk of earthquake in, 227 Money, history of, 4–5 Money illusion, 73–74 Money laundering, 192 Money-market funds, 43, 44 Monkeys, Yale University study of loss aversion with, 136 Montier, James, 156–157 Moody, John, 24 Moody’s, 24, 235 Moore’s law, 114 Morgan Stanley, 188 Mortgage-backed securities, 49, 233 Mortgage credit by ZIP code, study of, 204 Mortgage debt, role of in 2007–2008 crisis, 69–70 Mortgage products, unsound, 36–37 Mortgage securitization, 47 Multisystemic therapy, 96 Munnell, Alicia, 129 Naked credit-default swaps, 143 Nature Biotechnology, on drug-development megafunds, 118 “Neglected Risks, Financial Innovation and Financial Fragility” (Gennaioli, Shleifer, and Vishny), 42 Network effects, 181 New York, skyscraper craze in, 74–75 New York City, prisoner-rehabilitation program in, 108 New York Stock Exchange (NYSE), 31, 52, 53, 61, 64 New York Times, Merrill Lynch ad in, 28 Noncorrelated assets, 122 Nonprofits, growth of in United States, 105–106 Northern Rock, x NYMEX, 60 NYSE Euronext, 52 NYSE (New York Stock Exchange), 31, 52, 53, 61, 64 OECD (Organization for Economic Co-operation and Development), 128, 147 Oldfield, Sean, 67–68, 80–84 OnDeck, 216–218 One Service, 94–95, 105, 112 Operating expense ratio, 188–189 Options, 15, 124 Order-to-trade ratios, 63 Oregon, interest in income-share agreements, 172, 176 Organization for Economic Co-operation and Development (OECD), 128, 147 Overtrading, 24 Packard, Norman, 60 Pandit, Vikram, 184 Park, Sun Young, 233 Partnership mortgage, 81 Pasion, 11 Pave, 166–168, 173, 175, 182 Payday lending Consumer Financial Protection Bureau, survey on, 200 information on applicants, acquisition of, 202 underwriting of, 201 PayPal, 219 Peak child, 127 Peak risk, 228 Peer-to-peer lending advantages of, 187–189 auction system, 195 big investors in, 183 borrowers, assessment of, 197 in Britain, 181 commercial mortgages, 181 CommonBond, 182, 184, 197 consumer credit, 181 diversification, 196 explained, 180 Funding Circle, 181–182, 189, 197 investors in, 195 Lending Club, 179–180, 182–184, 187, 189, 194–195, 197 network effects, 181 ordinary savers and, 184 Prosper, 181, 187, 195 RateSetter, 181, 187, 196 Relendex, 181 risk management, 195–197 securitization, 183–184, 196 Peer-to-peer lending (continued) small business loans, 181 SoFi, 184 student loans, 182 Zopa, 181, 187, 188, 195 Pensions, cost of, 125–126 Perry, Rick, 142–143 Peterborough, England, social-impact bond pilot in, 90–92, 94–95, 104–105, 112 Petri, Tom, 172 Pharmaceuticals, decline of investment in, 114–115 Piracy Reporting Centre, International Maritime Bureau, 151 Polese, Kim, 210 Poor, Henry Varnum, 24 “Portfolio Selection” (Markowitz), 118 Prediction Company, 60–61 Preferred shares, 25 Prepaid cards, 203 Present value of cash flows, 19 Prime borrowers, 197 Prince, Chuck, 50–51, 62 Principal-agent problem, 8 Prisoner rehabilitation programs, 90–91, 94–95, 98, 108, 112 Private-equity firms, 69, 85, 91, 105, 107 Projection bias, 72–73 Property banking crises and, xiv, 69 banking mistakes involving, 75–80 behavioral biases and, 72–75 dangerous characteristics of, 70–72 fresh thinking, need for, xvii, 80 investors’ systematic errors in, 74–75 perception of as safe investment, 76, 80 Prosper, 181, 187, 195 Provisioning funds, 187 Put options, 9, 82 Quants, 19, 63, 113 QuickBooks, 218 Quote stuffing, 57 Raffray, André-François, 144 Railways, affect of on finance, 23–25 Randomized control trials (RCTs), 101 Raphoen, Christoffel, 15–16 Raphoen, Jan, 15–16 RateSetter, 181, 187, 196 RCTs (randomized control trials), 101 Ready for Zero, 210–211 Rectangularization, 125, 126 figure 2 Regulation NMS, 61 Reinhart, Carmen, 35 Reinsurance, 224 Relendex, 181 Rentes viagères, 20 Repurchase “repo” transactions, 15, 185 Research-backed obligations, 119 Reserve Primary Fund, 44 Retirement, funding for anchoring effect, 137–138 annuities, 139 auto-enrollment in pension schemes, 135 auto-escalation, 135–136 conventional funding, 127–128 decumulation, 138–139 government reaction to increased longevity, 128–129 home equity, 139–140 life expectancy, projections of, 124–127, 126 figure 2 life insurance policies, cash-surrender value of, 142 personal retirement savings, 128–129, 132–133 replacement rate, 125 reverse mortgage, 140–142 savings cues, experiment with, 137 SmartNest, 129–131 Reverse mortgages, 140–142 Risk-adjusted returns, 118 Risk appetite, 116 Risk assessment, 24, 45, 77–78, 208 Risk aversion, 116, 215 Risk-based capital, 77 Risk-based pricing model, 176 Risk management, 55, 117–118, 123, 195–197 Risk Management Solutions, 222 Risk sharing, 8, 82 Risk-transfer instrument, 226 Risk weights, 77–78 Rogoff, Kenneth, 35 “The Role of Government in Education” (Friedman), 165 Roman Empire business corporation in, 7 financial crisis in, 36 forerunners of banks in, 11 maritime insurance in, 8 Rotating Savings and Credit Associations (ROSCAs), 209–210 Roulette wheel, use of in experiment on anchoring, 138 Royal Bank of Scotland, 186 Rubio, Marco, 172 Russia, mortgage market in, 67 S-curve, in diffusion of innovations, 45 Salmon, Felix, 155 Samurai bonds, 27 Satsuma Rebellion (1877), 27 Sauter, George, 58 Save to Win, 214 Savings-and-loan crisis in US (1990s), 30 Savings cues, experiment with, 137 Scared Straight social program, 101 Scholes, Myron, 31, 123–124 Science, Technology, and Industry Scoreboard of OECD, 147 Securities and Exchange Commission (SEC), 54, 56, 57, 58, 64 Securities markets, 14 Securitization, xi, 20, 37–38, 117–122, 183–184, 196, 236 Seedrs, 160–161 Sellaband, 159 Shared equity, 80–84 Shared-equity mortgage, 84 Shepard, Chris, xii–xiii Shiller, Robert, xv–xvi, 242 Shleifer, Andrei, 42, 44 Short termism, 58 SIBs.

., 32 Keys, Benjamin, 48 Kharroubi, Enisse, 79 Kickstarter, 172 King, Stephen, 99 Klein, David, 182 Krugman, Paul, xv Lahoud, Sal, 166 Lang, Luke, 153, 161–162 Laplanche, Renaud, 179, 184, 188, 190, 193–194, 196–197 Latency, 53 Law of large numbers, 17 Layering, 57 Left-digit bias, 46 Lehman Brothers, x, 44, 65 Lending direct, 84 marketplace, 184 payday, 200 relationship-based, 11, 151, 206–208 secured, xiv, 76 unsecured, 206 See also Loans; Peer-to-peer lending Lending Club, 172, 179–180, 182–184, 187, 189, 194–195, 197 Leonardo of Pisa (Fibonacci), 19 Lerner, Josh, 59 Lethal pandemic, risk-modeling for demographic profile, 230 exceedance-probability curve, 231–232, 232 figure 3 historical data, 228–229 infectiousness and virulence, 229–230 location of outbreak, 230–231 Leverage, 51, 70–71, 80, 186, 188 Leverage ratio, 76–77 Lewis, Michael, 57 Liber Abaci or Book of Calculation (Fibonacci), 19 LIBOR (London Interbank Offered Rate), 41 Liebman, Jeffrey, 98 Life expectancy government reaction to, 128–129 projections of, 124–127, 126 figure 2 ratio of young to older people, 127–128 Life-insurance policies, 142 Life-settlements industry, 142–143 Life table, 20 Limited liability, 212 Liquidity, 12–14, 39, 185–186 List, John, 109 The Little Book of Behavioral Investing (Montier), 156 Lo, Andrew, 113–115, 117–123 Loans low-documentation, 48–49 secured, 76 small business, 181, 216 student, 164, 166–167, 169–171, 182 syndicated, 41 Victory Loans, 28 See also Lending; Peer-to-Peer lending Logistic regression, 201 London, early fire insurance in, 16–17 London, Great Fire of, 16 London Interbank Offered Rate (LIBOR), 41 Long-Term Capital Management, 123 Longevity, betting on, 143–144 Loss aversion, 136 Lotteries, 212, 213 Low-documentation loans, 48–49 Lumni, 165, 168, 175 Lustgarten, Anders, 111 Lynn, Jeff, 160–161 Mack, John, 180 Mahwah, New Jersey, 52, 53 Marginal borrowers assessment of, 216–217 behavioral finance and, 208–214 industrialization of credit, 206 microfinance and, 203 savings schemes, 209–214 small businesses, 215–219 unsecured lending to, 206 Wonga, 203, 205, 208 Marginal borrowers (continued) ZestFinance, 199, 202, 205–206 Maritime piracy, solutions to, 151–152 Maritime trade, role of in history of finance, 3, 7–8, 14, 17, 23 Market makers, 15–16, 55 MarketInvoice, 195, 207, 217–218 Marketplace lending, 184 Markowitz, Harry, 118 Massachusetts, use of inflation-protected bonds in, 26 Massachusetts, use of social-impact bonds in, 98 Matching engine, 52 Maturity transformation, 12–13, 187–188, 193 McKinsey & Company, ix, 42 Mercator Advisory Group, 203 Merrill, Charles, 28 Merrill, Douglas, 199, 201 Merrill Lynch, 28 Merton, Robert, 31, 113–114, 123–124, 129–132, 142, 145 Mian, Atif, 204 Michigan, University of, financial survey by, 134–135 Microfinance, 203 Micropayment model, 217 Microwave technology, 53 The Million Adventure, 213–214 Minsky, Hyman, 42 Minsky moment, 42 Mississippi scheme, 36 Mitchell, Justin, 166–167 Momentum Ignition, 57 Monaco, modeling risk of earthquake in, 227 Money, history of, 4–5 Money illusion, 73–74 Money laundering, 192 Money-market funds, 43, 44 Monkeys, Yale University study of loss aversion with, 136 Montier, James, 156–157 Moody, John, 24 Moody’s, 24, 235 Moore’s law, 114 Morgan Stanley, 188 Mortgage-backed securities, 49, 233 Mortgage credit by ZIP code, study of, 204 Mortgage debt, role of in 2007–2008 crisis, 69–70 Mortgage products, unsound, 36–37 Mortgage securitization, 47 Multisystemic therapy, 96 Munnell, Alicia, 129 Naked credit-default swaps, 143 Nature Biotechnology, on drug-development megafunds, 118 “Neglected Risks, Financial Innovation and Financial Fragility” (Gennaioli, Shleifer, and Vishny), 42 Network effects, 181 New York, skyscraper craze in, 74–75 New York City, prisoner-rehabilitation program in, 108 New York Stock Exchange (NYSE), 31, 52, 53, 61, 64 New York Times, Merrill Lynch ad in, 28 Noncorrelated assets, 122 Nonprofits, growth of in United States, 105–106 Northern Rock, x NYMEX, 60 NYSE Euronext, 52 NYSE (New York Stock Exchange), 31, 52, 53, 61, 64 OECD (Organization for Economic Co-operation and Development), 128, 147 Oldfield, Sean, 67–68, 80–84 OnDeck, 216–218 One Service, 94–95, 105, 112 Operating expense ratio, 188–189 Options, 15, 124 Order-to-trade ratios, 63 Oregon, interest in income-share agreements, 172, 176 Organization for Economic Co-operation and Development (OECD), 128, 147 Overtrading, 24 Packard, Norman, 60 Pandit, Vikram, 184 Park, Sun Young, 233 Partnership mortgage, 81 Pasion, 11 Pave, 166–168, 173, 175, 182 Payday lending Consumer Financial Protection Bureau, survey on, 200 information on applicants, acquisition of, 202 underwriting of, 201 PayPal, 219 Peak child, 127 Peak risk, 228 Peer-to-peer lending advantages of, 187–189 auction system, 195 big investors in, 183 borrowers, assessment of, 197 in Britain, 181 commercial mortgages, 181 CommonBond, 182, 184, 197 consumer credit, 181 diversification, 196 explained, 180 Funding Circle, 181–182, 189, 197 investors in, 195 Lending Club, 179–180, 182–184, 187, 189, 194–195, 197 network effects, 181 ordinary savers and, 184 Prosper, 181, 187, 195 RateSetter, 181, 187, 196 Relendex, 181 risk management, 195–197 securitization, 183–184, 196 Peer-to-peer lending (continued) small business loans, 181 SoFi, 184 student loans, 182 Zopa, 181, 187, 188, 195 Pensions, cost of, 125–126 Perry, Rick, 142–143 Peterborough, England, social-impact bond pilot in, 90–92, 94–95, 104–105, 112 Petri, Tom, 172 Pharmaceuticals, decline of investment in, 114–115 Piracy Reporting Centre, International Maritime Bureau, 151 Polese, Kim, 210 Poor, Henry Varnum, 24 “Portfolio Selection” (Markowitz), 118 Prediction Company, 60–61 Preferred shares, 25 Prepaid cards, 203 Present value of cash flows, 19 Prime borrowers, 197 Prince, Chuck, 50–51, 62 Principal-agent problem, 8 Prisoner rehabilitation programs, 90–91, 94–95, 98, 108, 112 Private-equity firms, 69, 85, 91, 105, 107 Projection bias, 72–73 Property banking crises and, xiv, 69 banking mistakes involving, 75–80 behavioral biases and, 72–75 dangerous characteristics of, 70–72 fresh thinking, need for, xvii, 80 investors’ systematic errors in, 74–75 perception of as safe investment, 76, 80 Prosper, 181, 187, 195 Provisioning funds, 187 Put options, 9, 82 Quants, 19, 63, 113 QuickBooks, 218 Quote stuffing, 57 Raffray, André-François, 144 Railways, affect of on finance, 23–25 Randomized control trials (RCTs), 101 Raphoen, Christoffel, 15–16 Raphoen, Jan, 15–16 RateSetter, 181, 187, 196 RCTs (randomized control trials), 101 Ready for Zero, 210–211 Rectangularization, 125, 126 figure 2 Regulation NMS, 61 Reinhart, Carmen, 35 Reinsurance, 224 Relendex, 181 Rentes viagères, 20 Repurchase “repo” transactions, 15, 185 Research-backed obligations, 119 Reserve Primary Fund, 44 Retirement, funding for anchoring effect, 137–138 annuities, 139 auto-enrollment in pension schemes, 135 auto-escalation, 135–136 conventional funding, 127–128 decumulation, 138–139 government reaction to increased longevity, 128–129 home equity, 139–140 life expectancy, projections of, 124–127, 126 figure 2 life insurance policies, cash-surrender value of, 142 personal retirement savings, 128–129, 132–133 replacement rate, 125 reverse mortgage, 140–142 savings cues, experiment with, 137 SmartNest, 129–131 Reverse mortgages, 140–142 Risk-adjusted returns, 118 Risk appetite, 116 Risk assessment, 24, 45, 77–78, 208 Risk aversion, 116, 215 Risk-based capital, 77 Risk-based pricing model, 176 Risk management, 55, 117–118, 123, 195–197 Risk Management Solutions, 222 Risk sharing, 8, 82 Risk-transfer instrument, 226 Risk weights, 77–78 Rogoff, Kenneth, 35 “The Role of Government in Education” (Friedman), 165 Roman Empire business corporation in, 7 financial crisis in, 36 forerunners of banks in, 11 maritime insurance in, 8 Rotating Savings and Credit Associations (ROSCAs), 209–210 Roulette wheel, use of in experiment on anchoring, 138 Royal Bank of Scotland, 186 Rubio, Marco, 172 Russia, mortgage market in, 67 S-curve, in diffusion of innovations, 45 Salmon, Felix, 155 Samurai bonds, 27 Satsuma Rebellion (1877), 27 Sauter, George, 58 Save to Win, 214 Savings-and-loan crisis in US (1990s), 30 Savings cues, experiment with, 137 Scared Straight social program, 101 Scholes, Myron, 31, 123–124 Science, Technology, and Industry Scoreboard of OECD, 147 Securities and Exchange Commission (SEC), 54, 56, 57, 58, 64 Securities markets, 14 Securitization, xi, 20, 37–38, 117–122, 183–184, 196, 236 Seedrs, 160–161 Sellaband, 159 Shared equity, 80–84 Shared-equity mortgage, 84 Shepard, Chris, xii–xiii Shiller, Robert, xv–xvi, 242 Shleifer, Andrei, 42, 44 Short termism, 58 SIBs.


pages: 434 words: 77,974

Mastering Blockchain: Unlocking the Power of Cryptocurrencies and Smart Contracts by Lorne Lantz, Daniel Cawrey

air gap, altcoin, Amazon Web Services, barriers to entry, bitcoin, blockchain, business logic, business process, call centre, capital controls, cloud computing, corporate governance, creative destruction, cross-border payments, cryptocurrency, currency peg, disinformation, disintermediation, distributed ledger, Dogecoin, Ethereum, ethereum blockchain, fault tolerance, fiat currency, Firefox, global reserve currency, information security, initial coin offering, Internet of things, Kubernetes, litecoin, low interest rates, Lyft, machine readable, margin call, MITM: man-in-the-middle, multilevel marketing, Network effects, offshore financial centre, OSI model, packet switching, peer-to-peer, Ponzi scheme, prediction markets, QR code, ransomware, regulatory arbitrage, rent-seeking, reserve currency, Robinhood: mobile stock trading app, Ross Ulbricht, Satoshi Nakamoto, Silicon Valley, Skype, smart contracts, software as a service, Steve Wozniak, tulip mania, uber lyft, unbanked and underbanked, underbanked, Vitalik Buterin, web application, WebSocket, WikiLeaks

The larger the network, the more decentralized, trustworthy, and secure it becomes. Omni wanted to focus its efforts on making tokenization and other smart contract features work on a decentralized blockchain without the burden of building that network effect. By building a second-layer protocol on top of Bitcoin, Omni benefited from the large network effect Bitcoin already had. Adding custom logic Bitcoin performs logical operations—rules that maintain the blockchain, proving that the fundamental concept of achieving consensus works. Omni adds custom logical operations to the Bitcoin blockchain.

The greater the demand, the less space is available in the blocks, which can create a fee market where the highest bidder “wins.” This supply and demand paradigm also exists in Ethereum for gas fees and token prices once they hit exchanges. Airdrops As we’ve said, the main way to distribute tokens is via an ICO or similar type of offering. Another alternative is doing an airdrop. Intended to leverage network effects of already existing blockchains, airdrops are free or low-cost disbursements of cryptocurrencies to a large subset of users. The idea is to rapidly give a project a user base from its inception, baking in adoption of an already existing project/cryptocurrency. The largest case so far has been the Stellar Foundation’s $125 million airdrop of its XLM token via the Blockchain.info wallet.


pages: 179 words: 43,441

The Fourth Industrial Revolution by Klaus Schwab

"World Economic Forum" Davos, 3D printing, additive manufacturing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, Anthropocene, augmented reality, autonomous vehicles, barriers to entry, Baxter: Rethink Robotics, bitcoin, blockchain, Buckminster Fuller, call centre, circular economy, clean water, collaborative consumption, commoditize, conceptual framework, continuous integration, CRISPR, cross-border payments, crowdsourcing, digital divide, digital twin, disintermediation, disruptive innovation, distributed ledger, driverless car, Edward Snowden, Elon Musk, epigenetics, Erik Brynjolfsson, future of work, global value chain, Google Glasses, hype cycle, income inequality, Internet Archive, Internet of things, invention of the steam engine, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, life extension, Lyft, Marc Benioff, mass immigration, megacity, meta-analysis, more computing power than Apollo, mutually assured destruction, Narrative Science, Network effects, Nicholas Carr, nuclear taboo, OpenAI, personalized medicine, precariat, precision agriculture, Productivity paradox, race to the bottom, randomized controlled trial, reshoring, RFID, rising living standards, Sam Altman, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, smart cities, smart contracts, social contagion, software as a service, Stephen Hawking, Steve Jobs, Steven Levy, Stuxnet, supercomputer in your pocket, synthetic biology, TaskRabbit, The Future of Employment, The Spirit Level, total factor productivity, transaction costs, Uber and Lyft, uber lyft, Watson beat the top human players on Jeopardy!, Wayback Machine, WikiLeaks, winner-take-all economy, women in the workforce, working-age population, Y Combinator, Zipcar

The fourth industrial revolution forces companies to think about how offline and online worlds work together in practice. 3.2.4 New Operating Models All these different impacts require companies to rethink their operating models. Accordingly, strategic planning is being challenged by the need for companies to operate faster and with greater agility. As mentioned earlier, an important operating model enabled by the network effects of digitization is the platform. While the third industrial revolution saw the emergence of purely digital platforms, a hallmark of the fourth industrial revolution is the appearance of global platforms intimately connected to the physical world. The platform strategy is both profitable and disruptive.

Fast-moving competitors provoke a disaggregation of the more traditional industry silos and value chains, and also disintermediate the existing relationship between businesses and their customers. New disruptors can rapidly scale at a much lower cost than the incumbents, generating in the process a rapid growth in their financial returns through network effects. Amazon’s evolution from a bookseller to a $100 billion a year retail conglomerate shows how customer loyalty, combined with insights on preferences and solid execution can lead to selling across multiple industries. It also demonstrates the benefits of scale. In almost all industries, digital technologies have created new, disruptive ways of combining products and services – and in the process, have dissolved the traditional boundaries between industries.


pages: 791 words: 85,159

Social Life of Information by John Seely Brown, Paul Duguid

Alvin Toffler, business process, Charles Babbage, Claude Shannon: information theory, computer age, Computing Machinery and Intelligence, cross-subsidies, disintermediation, double entry bookkeeping, Frank Gehry, frictionless, frictionless market, future of work, George Gilder, George Santayana, global village, Goodhart's law, Howard Rheingold, informal economy, information retrieval, invisible hand, Isaac Newton, John Markoff, John Perry Barlow, junk bonds, Just-in-time delivery, Kenneth Arrow, Kevin Kelly, knowledge economy, knowledge worker, lateral thinking, loose coupling, Marshall McLuhan, medical malpractice, Michael Milken, moral hazard, Network effects, new economy, Productivity paradox, Robert Metcalfe, rolodex, Ronald Coase, scientific management, shareholder value, Shoshana Zuboff, Silicon Valley, Steve Jobs, Superbowl ad, tacit knowledge, Ted Nelson, telepresence, the medium is the message, The Nature of the Firm, the strength of weak ties, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, Turing test, Vannevar Bush, Y2K

A second problem is that, as part of the process of price competition and standardization, subjective issues such as quality and service disappear. Both service and quality, the economists Brad de Long and Michael Froomkin have argued, tend to get squeezed Page 47 out of markets when low price becomes the decisive factor. 18 From the decisive factor, low price soon becomes the only factor. Network effects will tend to marginalize merchants who try to resist. With bots, which are not well suited to weigh subjective issues such as quality and service, these will probably disappear much more quickly. In fact, though, quality and service don't simply disappear in these conditions. They can become highly problematic "externalities," not subject to the sales and purchase contract, but imposing heavy burdens after the fact.

The picture drawn there recalled Frank Norris's famous image of the railroads as an "octopus," but, as with any list we might produce, the Nation's octopus is already well out of date. 28. Paul Krugman, quoted in Kelly, 1998. 29. The appearance of the fax provides a conventional example of network effects at work. At first, for most people, it was hardly worth owning a fax machine because so few others did. But with each new buyer, owning a fax became more useful and so more valuable. Each addition to the network meant that everyone had more people to fax to and receive faxes from. By the late 1980s, the network had grown to such a size that owning one became almost a necessity.

The fax spread on the back of nonproprietary standards that allowed many different firms to compete in the fax market, as they still do. But if someone had owned those standards, the results would have been quite different. Here the obvious example is not the fax, but the video recorder and the battle between VHS and Betamax. This battle was in effect a race between the two to establish network effects. In such races, a small lead can produce a "tipping" effect, where whoever gets ahead can quickly end up taking it all. In such conditions, firms will grow, not shrink. 30. Raik-Allen, 1998. 31. Sassen, 1996, p. 38. 32. With the rise of the Internet, many people argue that information can travel straight from its producer to its consumer, without need for any intermediaries.


pages: 314 words: 83,631

Tubes: A Journey to the Center of the Internet by Andrew Blum

air freight, cable laying ship, call centre, digital divide, Donald Davies, global village, Hibernia Atlantic: Project Express, if you build it, they will come, inflight wifi, invisible hand, John Markoff, Kevin Kelly, Leonard Kleinrock, Marc Andreessen, Mark Zuckerberg, Menlo Park, Mercator projection, messenger bag, Neal Stephenson, Network effects, New Urbanism, packet switching, Ralph Waldo Emerson, RAND corporation, satellite internet, side project, Silicon Valley, Skype, South of Market, San Francisco, Steve Crocker, Steve Jobs, Steven Levy, undersea cable, urban planning, UUNET, WikiLeaks, zero-sum game

The Internet is built on connections between networks agreed on with a handshake and consummated with the plugging in of a yellow fiber-optic cable. Technically the connections happening here could happen across any distance. But there’s a profound efficiency in doing it directly, in plugging my box into your box, in an exponentially repeating pattern. Walking through the PAIX is a lesson in the “network effect,” the phenomenon by which something becomes vastly more useful the more people use it—leading more people to use it. In Palo Alto, the more and larger Internet players moved into the building, the more and larger players wanted to be there, seemingly ad infinitum, up against the laws of physics—and the Palo Alto city council.

As Kris Foster, the representative from TORIX, in Toronto, offered, “If you’ve got fiber routes from New York to Chicago through Toronto, maybe you should think about stopping.” It wasn’t a bad suggestion. It might make your network more efficient, but at the least it was a way to be “multi-homed,” a salve against fragmentation. But for the most part, the gravitational pull of the biggest exchanges was powerful enough to overcome that geographic diversity. The network effect was unassailable: more networks disproportionately concentrated in fewer places. The result was a striking gap between the average-sized Internet exchanges and the behemoths. “Places like AMS-IX and LINX are a routing engineer’s paradise,” Renesys’s Cowie explained. “They are full of hundreds of organizations that are begging you, ‘Please look at my routes, study me!’”

See also Tata Communications New York City data storage in, 230 Equinix in, 164 and Europe-US telephone connection, 175 fiber highways in, 163–71, 172, 265–66 fiber-optic connections to, 26 Fitzgerald story about, 3 Google headquarters in, 163–64, 172 history of Internet and, 50 hubs in, 171–80, 181 as important network meeting point, 164 and Internet as series of tubes, 5 London traffic with, 180, 202, 208 111 Eighth Avenue (New York City), 163–64, 171, 266 peering and, 128 60 Hudson Street in, 171–74, 176 structure of Internet and, 27 32 Avenue of the Americas in, 171–80 as undersea cables port, 194, 199 New York University (NYU), 50 Newby, Hunter, 174 Ninth Avenue fiber highway (New York City), 164 Nipper, Arnold, 137–38, 140–43, 144–45, 239 North American Network Operators’ Group (NANOG), 58, 66, 157 Austin meeting of, 119–23, 127, 128–35, 157 Northrop Grumman, 62, 123 NorthWestNet, 53 NSFNET, 59, 138 NTT, 125 O’Kane, Victoria, 165 One Wilshire (Los Angeles, California), 200–201 111 Eighth Avenue (New York City), 163–64, 171, 266 online videos, 119 Open Compute project (Facebook), 258 optical modules, 160 Orlowski, Frank, 133–34, 135, 145, 157 Osés, Mara Vanina, 7 Pacific Bell, 64, 84 Pacific DC Intertie, 228 Page, Larry, 69–70 PAIX, undersea cables, PAIX and, 78 Pakistan Telecom, 30 Paling, Jol, 208, 209, 210–15, 216, 267 Palo Alto, California Adelson-Troyer-Blum meeting in, 71–72, 73 See also Palo Alto Internet Exchange (PAIX) Palo Alto Internet Exchange (PAIX) Adelson and, 72, 76–77, 88 Blum visit to, 71–72, 76–85 cable management at, 81–82 carriers and, 89 DEC and, 76, 87, 88 definition of Internet exchange and, 109 diversity at, 79 Equinix and, 76–77, 87 expansion of, 78, 86–87 importance of, 78 location of, 76 “network effect” at, 80–81 openness of Internet and, 117 peering and, 122, 127, 128 problems of, 85–86 Qatar Telecom and, 139 quantity of information passing through, 82–83 and rerouting traffic, 200–201 routers at, 79–80, 82–83, 266 security at, 95 Paris, France, structure of Internet and, 27 Passaic, New Jersey, Smithson tour of, 150–51, 152, 154 Patchett, Ken, 255–56, 257, 258–59, 260–62, 267 Pedro, John, 82 “peering” de-peering and, 123–24, 151 definition of, 118–19 division of groups for, 121–22 globalization of, 125–26 Internet exchanges and, 121–22, 126, 127, 129, 130 NANOG meeting and, 118–23, 128–30, 131–32 and “open peering policy,” 127 Qatar Telecom and, 140 Tier-1 domination of, 124–25 Witteman-Orloski meeting and, 133–35 PeeringDB (website), 126 Peter Faber (cable ship), 219, 221–22 Petrie, Anne, 83 Pipex, 184, 185, 186 “point of entry,” 178, 179 POP (point of presence), 59, 78, 84 Porthcurno (Cornwall, England), 202–16, 253, 267 Portugal, 191–92, 194, 217–26, 267 Postel, Jon, 31, 45 Prineville, Oregon: Facebook data center in, 250–62, 267 privacy issues, 258 Provo, Joe, 122 Provo, Ren, 122, 123 PSI, 56, 59, 60 Qatar, 197 Qatar Telecom, 79, 139–40 Quality Life Broadband (Q-Life), 236, 237, 238, 242, 246 Quincy, Washington, data centers in, 234–35, 250 RAND Corporation, 42 Reid, Brian, 74, 75, 76 Renesys, 123, 124–25, 151 Renton, Alan, 205–6 Research in Motion (RIM), 121 Resolute (cable ship), 218 Reyes, Felix, 77, 81 Roberts, Larry, 42–43, 51 routes/routers in Ashburn, 99–100 as basic building blocks of Internet, 158 Brocade, 157–58, 159–63, 188 dead-end, 31, 32 expansion of Internet and, 55 function of, 160 Internet as self-healing and, 200 IP addresses and, 29–30 at large Internet exchanges, 111 at MAE-East, 65–66, 75–76, 80 in New York City, 164–71 at PAIX, 79–80, 82–83, 266 peering and, 124–25, 127 and rerouting traffic, 200–201 “routing table” and, 30 Traceroute program and, 31–34 trust and, 30–31 “routing table,” 30, 125 Rudin Management, 174–75, 176 Rwanda, 110 Sabey, 235 Sacca, Chris, 237–38, 239 San Jose, California: peering and, 128 SAT-3 (undersea communications cables), 191–92, 197 satellites: Internet exchanges and, 110 Saudi Arabia, 197 Schoffstall, Marty, 60 SEACOM (undersea communications cables), 192, 197 Seales, Brian, 166–71 security/secrecy for cable landing stations, 202, 203 for data centers/storage, 93, 141, 237–40, 242–43, 254, 257 at DE-CIX, 140–41 at Dutch data centers, 152 at Equinix, 93, 141 at Google data center, 242–50, 254, 257 at Internet exchanges, 113–16 at LINX, 185–86 Sensitive Compartmented Information Facilities (“skiffs”), 62 Seoul, Korea: structure of Internet and, 27 service providers: peering and, 119 SESQUINET, 53 The Shadow Factory (Bamford), 63 Shorto, Russell, 146 Siemens Brothers, 206 Sigma-7 computer, 43 Silcock, Colin, 186, 187–89 Silicon Valley belief in limitless potential of technology in, 70 connection of networks in, 67 expansion of Internet and, 50 structure of Internet and, 27 wealth in, 70 See also Palo Alto, California; specific person or corporation Singapore, 128, 139, 194, 196, 199, 201 Singapore Telecommunications, 79 SIX (Seattle, Washington), 111 60 Hudson Street (New York City), 171–74, 176, 202, 215, 266 Smallwood, Christine, 107 Smithson, Robert, 150–51, 154 South Africa, 191–93, 197, 204, 219 South Asia, 196, 200 South Park (TV show), 107–8 Spain, 113 SPAN, 52 speed.


pages: 291 words: 90,771

Upscale: What It Takes to Scale a Startup. By the People Who've Done It. by James Silver

Airbnb, augmented reality, Ben Horowitz, Big Tech, blockchain, business process, call centre, credit crunch, crowdsourcing, data science, DeepMind, DevOps, family office, flag carrier, fulfillment center, future of work, Google Hangouts, growth hacking, high net worth, hiring and firing, imposter syndrome, Jeff Bezos, Kickstarter, Lean Startup, Lyft, Mark Zuckerberg, minimum viable product, Network effects, pattern recognition, reality distortion field, ride hailing / ride sharing, Salesforce, Silicon Valley, Skype, Snapchat, software as a service, Uber and Lyft, uber lyft, WeWork, women in the workforce, Y Combinator

‘Actually, they should flip it the other way round and ask themselves: “What do I need to do to win in this market?” The answer is everything from designers to engineers - and in an ideal world, that’s 100+ people to beat the incumbent domestic player - because every market has a really strong domestic player, who gets the benefits of being really well localised but loses out on network effects and the economies of scale of being global.’ Now, you’re unlikely to want 100 people for every market, Corstor- phine says, so you then need to ask ‘What do I need to have that is specific to that market, and then what do I degrade to regional and what can I degrade to central/global?’ - and not the other way around.

Well, that’s fine, but actually we don’t need another grill in that particular postcode, what we urgently need is a sushi place. So, yes, that salesperson can bring on that restaurant, but it won’t count towards their numbers and they won’t be paid a bonus. They’ll get their bonus when they add the sushi place and develop the right mix of cuisine into each postcode, because on the consumer side there’s a network effect, where once you add in the right mix of cuisine categories the customer will come back more frequently and become more loyal. ‘So it was really important that we were very, very granular around that detail. It was no good looking at our cuisine coverage globally and massaging our own ego about how many different cuisine categories we had across the world.

‘When I’d visit the local market, I’d walk the streets and if the branding wasn’t done properly, like how Coke would brand a newsagent, I would personally brand it there and then and I would really drive the salespeople and say: “You have to brand up local investments.” There’s a reason why Mars and Coke do branding at a local level, and that’s because it drives consumer transaction, it builds the brand and creates a network effect on the B2B side, because local restaurant owners look at other restaurants and when they see our brand they get to know Just Eat and they want to join us. ‘So there were a few areas like those where I was really passionate about making sure the quality of our operational execution was of a high standard because it drove both growth and loyalty.


pages: 385 words: 48,143

The Monk and the Riddle: The Education of a Silicon Valley Entrepreneur by Randy Komisar

Apple's 1984 Super Bowl advert, barriers to entry, belly landing, discounted cash flows, estate planning, Jeff Bezos, Network effects, new economy, Pepto Bismol, Sand Hill Road, Silicon Valley, Silicon Valley startup, Steve Jobs

Just a few messages, including a response from Frank, had dropped in since I had last checked a couple of hours earlier. TO: randy@virtual.net FROM: frank@vcfirm.com SUBJECT: Re: A Second Life Randy, Interesting. The content and community aspects are appealing--playing to the Internet's strengths. Incorporating the local services also sounds good. I can definitely see some network effect here. Makes a win-win and a more defensible referral channel. Obviously has to be fleshed out, but more intriguing. Unfortunately, it's not the Funerals.com Lenny presented. Is it yours or Lenny's? Lenny seems stuck on the casket business. Who will lead this? Frank Who will lead this?

The more people who gravitated to the site, the more valuable it would become to others as they shared information and attracted more local providers of goods and Page 167 services. Competitors could try to duplicate this model, but once Circle-of-Life.com established itself at the center of the network, competitors would find it difficult to dislodge. This scenario is referred to as the much-coveted "network effect," an increasing return on the benefits of growing scale on the Internet with little or no marginal cost. What Lenny and Allison proposed to do required an enormous amount of work, and success was far from guaranteed. But here the risk was in the right placein the execution of the big idea.


pages: 515 words: 126,820

Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World by Don Tapscott, Alex Tapscott

"World Economic Forum" Davos, Airbnb, altcoin, Alvin Toffler, asset-backed security, autonomous vehicles, barriers to entry, behavioural economics, bitcoin, Bitcoin Ponzi scheme, blockchain, Blythe Masters, Bretton Woods, business logic, business process, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, carbon footprint, clean water, cloud computing, cognitive dissonance, commoditize, commons-based peer production, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crowdsourcing, cryptocurrency, currency risk, decentralized internet, digital capitalism, disintermediation, disruptive innovation, distributed ledger, do well by doing good, Donald Trump, double entry bookkeeping, driverless car, Edward Snowden, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, failed state, fiat currency, financial innovation, Firefox, first square of the chessboard, first square of the chessboard / second half of the chessboard, future of work, Future Shock, Galaxy Zoo, general purpose technology, George Gilder, glass ceiling, Google bus, GPS: selective availability, Hacker News, Hernando de Soto, Higgs boson, holacracy, income inequality, independent contractor, informal economy, information asymmetry, information security, intangible asset, interest rate swap, Internet of things, Jeff Bezos, jimmy wales, Kickstarter, knowledge worker, Kodak vs Instagram, Lean Startup, litecoin, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, means of production, microcredit, mobile money, money market fund, Neal Stephenson, Network effects, new economy, Oculus Rift, off grid, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, performance metric, Peter Thiel, planetary scale, Ponzi scheme, prediction markets, price mechanism, Productivity paradox, QR code, quantitative easing, radical decentralization, ransomware, Ray Kurzweil, renewable energy credits, rent-seeking, ride hailing / ride sharing, Ronald Coase, Ronald Reagan, Salesforce, Satoshi Nakamoto, search costs, Second Machine Age, seigniorage, self-driving car, sharing economy, Silicon Valley, Skype, smart contracts, smart grid, Snow Crash, social graph, social intelligence, social software, standardized shipping container, Stephen Hawking, Steve Jobs, Steve Wozniak, Stewart Brand, supply-chain management, systems thinking, TaskRabbit, TED Talk, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, The Soul of a New Machine, The Wisdom of Crowds, transaction costs, Turing complete, Turing test, Tyler Cowen, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, unorthodox policies, vertical integration, Vitalik Buterin, wealth creators, X Prize, Y2K, Yochai Benkler, Zipcar

Bandwidth lags behind computer processing power, which increases by about 60 percent annually (Moore’s law). So bandwidth is the gating factor, according to Jakob Nielsen.53 Most designs—interfaces, Web sites, digital products, services, organizations, and so forth—will need to accommodate the technology of the masses to leverage network effects. So inclusion means considering the full spectrum of usage—not just the state of the science of high-end users, but the slow tech and sporadic power outages of users in remote regions of the world’s poorest countries. Implications for the Blockchain Economy: Later in the book, we tackle the issue of the prosperity paradox—how the first era of the Internet benefited many, but overall prosperity in the Western world for most people is no longer improving.

Nodes can be trusted to be well connected, as in most use cases they are large financial institutions. Furthermore, they are easier for regulators to monitor. However, these advantages also create weaknesses. The easier it is to change the rules, the more likely a member is to flout them. Private blockchains also prevent the network effects that enable a technology to scale rapidly. Intentionally limiting certain freedoms by creating new rules can inhibit neutrality. Finally, with no open value innovation, the technology is more likely to stagnate and become vulnerable.29 This is not to say private blockchains won’t flourish, but financial services stakeholders must still take these concerns seriously.

In the United States, 15 percent over fifteen years of age, or 37 million Americans, are unbanked.17 Financial inequality is an economic condition that can quickly morph into a social crisis.18 In 2014, the World Economic Forum, a multistakeholder organization whose members include the largest companies and most powerful governments in the world, argued that growing inequality posed the single biggest risk globally, beating out global warming, war, disease, and other calamities.19 Blockchain could be the solution. By lowering barriers to financial inclusion and enabling new models of entrepreneurship, the tonic of the market could be brought to bear on the dreams and ideas of billions of the unbanked. Prosperity Purgatory: An Exercise in Futility For centuries, banks have relied on network effects. Each successive customer, branch, product, dollar in, and dollar out increases the value of the bank’s network. However, building these networks has come at a cost. Specifically, the cost of acquiring a profit-turning customer has only increased. If a prospect’s money won’t earn its keep, the bank won’t be interested in keeping it.


pages: 319 words: 89,477

The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion by John Hagel Iii, John Seely Brown

Albert Einstein, Andrew Keen, barriers to entry, Black Swan, business process, call centre, Clayton Christensen, clean tech, cloud computing, commoditize, corporate governance, creative destruction, disruptive innovation, Elon Musk, en.wikipedia.org, future of work, game design, George Gilder, intangible asset, Isaac Newton, job satisfaction, Joi Ito, knowledge economy, knowledge worker, loose coupling, Louis Pasteur, Malcom McLean invented shipping containers, Marc Benioff, Maui Hawaii, medical residency, Network effects, old-boy network, packet switching, pattern recognition, peer-to-peer, pre–internet, profit motive, recommendation engine, Ronald Coase, Salesforce, shareholder value, Silicon Valley, Skype, smart transportation, software as a service, supply-chain management, tacit knowledge, The Nature of the Firm, the new new thing, the strength of weak ties, too big to fail, trade liberalization, transaction costs, TSMC, Yochai Benkler

This is what we call the “collaboration curve”—a curve that points upward when more participants join and when the interactions between the participants increase. Collaboration curves are a reversal of the diminishing-returns dynamics of the experience curve, delivering increasing returns to performance instead. What do we mean by increasing returns? The idea of network effects provides a useful starting point. The fax machine (which is fast becoming extinct) provides the classic example of network effects in action. One fax machine is useless. It even has negative value, since it costs money to purchase and operate and generates no value. But as more and more people purchase fax machines, the value of that fax machine increases at an exponential rate.

More than 9,000 companies participate in SAP’s various partner networks globally and 1.2 million people participate in SAP’s online communities. The creation space continues to grow at a healthy pace—more than 25,000 new participants sign up each month in SAP’s online communities and the number of page views doubled between 2006 and 2007, reaching 150 million. Strong network effects appear to be in play as participants find that the value of the creation space as a whole increases with the number of participants. Interactions are also increasing with the number of participants. For example, participants contribute more than 6,000 posts per day in SAP’s online communities.


pages: 374 words: 94,508

Infonomics: How to Monetize, Manage, and Measure Information as an Asset for Competitive Advantage by Douglas B. Laney

3D printing, Affordable Care Act / Obamacare, banking crisis, behavioural economics, blockchain, book value, business climate, business intelligence, business logic, business process, call centre, carbon credits, chief data officer, Claude Shannon: information theory, commoditize, conceptual framework, crowdsourcing, dark matter, data acquisition, data science, deep learning, digital rights, digital twin, discounted cash flows, disintermediation, diversification, en.wikipedia.org, endowment effect, Erik Brynjolfsson, full employment, hype cycle, informal economy, information security, intangible asset, Internet of things, it's over 9,000, linked data, Lyft, Nash equilibrium, Neil Armstrong, Network effects, new economy, obamacare, performance metric, profit motive, recommendation engine, RFID, Salesforce, semantic web, single source of truth, smart meter, Snapchat, software as a service, source of truth, supply-chain management, tacit knowledge, technological determinism, text mining, uber lyft, Y2K, yield curve

Most information assets have significant potential utility well beyond the application that produces, captures, and/or initially consumes them.13 Even if their future uses and value are unknown, their potential ancillary value likely outweighs the cost of generating/collecting and managing it. Also keep in mind that information’s realized value may grow exponentially, via what’s known as the “network effect.”14 This principle implies that the value of the original business or IT investment is potentially greater than its core benefits. It should also include the value of the data it generates as well. Therefore, project justification/return on investment (ROI) models should consider the derivative or alternative potential value of these information assets across an extended lifecycle.

st=ivuf553s&sh=34087f7e. 13 The concept of how the future value of information can be used to fund current initiatives is explored in “How CIOs and CDOs Can Use Infonomics to Identify, Justify and Fund Initiatives,” Douglas Laney and Michael Smith, Gartner, 29 March 2016. www.gartner.com/document/3267517. 14 The network effect is a phenomenon in which a product or service gains additional value as more people use it. It’s also called a network externality or demand-side economy of scale in economic parlance. 15 John Ladley, email to author, 17 December 2016. 16 “The Business of Data,” The Economist Intelligence Unit Ltd., 2015.

Power 57, 67, 229 Jessup, Beau Rose 35 Juniper Networks 33 keiretsus 132 Keough, Don 132 Knowledge Centered Support (KCS) 171n15 knowledge management (KM): information strategy 179; knowhow 155–6; people 191 “KnowMe” program, Westpac 54 Kosmix 31 Kovitz Investment 164 Kraft 39 Kreditech 62 Krishna, Dilip 260 Kroger 32, 36 Kumar, V. 30 Kushner, Theresa 272 Kyoto Protocol 63 Ladley, John 25, 120n13, 148, 187 Last.fm 34 Latulippe, Barb 188, 195, 234–5 Leatherberry, Tonie 260 legal rulings, information property rights 303–5 LexisNexis 57 liability, information as 216 library and information science (LIS) 156–8 library science: information strategy 179–80; metrics 184 lifecycle 252; see also information lifecycle LinkedIn 64 liquidity, information 20–1 Lockheed Martin 41–3, 62; project information 88 Logan, Valerie 144, 244 logical data warehouse (LDW) 181 Loss Adjustment Expense (LAE) 95 Lovelock, James 144n7 Lowans, Brian 272 loyalty 15, 22, 37, 80, 246 Lyft 141 McCrory, Dave 261 McDonald’s 236 McGilvray, Danette 272 McKnight, William 148 Magic Quadrants 68 marginal utility 273, 276; architecting for optimized information utility 278–9; concept of 284n4; of information 276–8; information for people 277; of information for people 277; information for technologies 278; of information for technologies 278; law of diminishing 276; negative 276; positive 276; understanding 273 market: cultivating for information product 73; entering new 35–6; market value of information (MVI) 257, 262, 266, 274; monetization success 74 Mashey, James 101n8 Mears, Rena 260 measurement: business-related benefits 244–5; data quality 246–8; future of infonomics 292; information assets 242–6; information asset valuation models 249–60; information–related benefits 242–4; information valuation 260–1; value of information 246–61 Mechanical Turk 65 Medicaid 44, 98 Medicare 44, 98 Megaupload 225 Memorial Healthcare System 62 Merck 66 Mercy Hospitals 98 metrics: applied asset management 184–6; assessing data quality 246–9; information asset management 182–6; information management challenges 299; information supply chain 126–7; objective quality 247–8; subjective quality 249 Microsoft 42, 223–5, 239n8 Microstrategy 133 Miller, Nolan 231, 272 Mishra, Gokula 235 MISO Energy 267 Mobilink 80 Mondelez 39 monetization 11–13, 16–18, 20, 29, 31–2, 34, 40–1, 44, 46, 55–6, 66–9, 80–100, 139, 176, 195, 244–5, 257, 265–6, 273, 277, 281, 286–7, 290, 292 monetizing information 28–9; analytics as engine of 77; bartering for favorable terms and conditions 38–9; bartering for goods and services 37–8; being in information business 48–9; creating supplemental revenue stream 32–3; defraying costs of information management and analytics 40–1; enabling competitive differentiation 36–7; entering new markets 35–6; future of infonomics 292; improving citizen well-being 45–8; increasing customer acquisition and retention 29–31; introducing a new line of business 33–4; measurement benefits 244–5; more than cash for 14–16; myths of 12–13; possibilities of 11–12; recognizing organizational roadblocks to 287–8; reducing fraud and risk 44–5; reducing maintenance costs, cost overruns and delays 41–4; success of 74–6; understanding unstructured information 94–5; value of 265–6 monetizing information steps 55–74; alternatives for direct and indirect monetization 66–8; available information assets 59–66; feasibility of ideas 69–73; high-value ideas from other industries 69; information product management function 56–9; market cultivation for information 73–4; preparing data for monetization 73 Monsanto 8, 21 Mozenda 65 Mullier, Graham 239n15 multiple listing service (MLS) 53–4 Multispectral 35 Nabisco 39 Nash Equilibrium 273 National Health Service 232 Naudé, Glabriel 156 Negroponte, Nicholas 147 Netflix 59 network effect 25, 27n14 New Jersey, state of 179, 192 New York City, reducing fraud and risk 44–5 New York Stock Exchange 23, 134 Ng, Andrew 231 Nielsen 34, 57, 63, 67 non-rivalrous 19, 131, 235, 256, 277, 280 non-rivalry principle 142, 274 Nordic Wellness Products 33 North Atlantic Treaty Organization (NATO) 147–8 Oberholzer-Gee, Felix 169 Ocean Tomo 213 O’Neal, Kelle 272 OpenClinical.org 98 operational data, information asset 61 opportunity cost for information 279–80 Orange 33 ownership: brief history of 223; habeas corpus of rulings on 226–7; information 221–2, 237–8; information location 223–5; infothievery 225–6; internal, of information 233–7; owning usage of information 230–1; personal, of personal information 231–3; see also information ownership; property, information as Pacioli, Luca 210 Panchmatia, Nimish 43 Patel, Ash 134 patent 1, 19, 28; algorithm 239nn17–18; applications 230–1, 260; economic value 229; intangible asset 168, 207; intellectual property 128, 130 Patrick, Charlotte 34 People Capability Maturity Model (P-CMM) 165–6 people-process-technology 99 Pepsi 40 performance metrics, information supply chain 126–7 performance value of information (PVI) 254–5 periodicity 248 personal information, ownership of 231–3 personally identifiable information (PII) 25, 76, 178 physical asset management 158–63; asset condition 161–2; asset maintenance and replacement costs 162–3; asset register 160–1; asset risks 161–2; governance 188; vision 176 Pigott, Ian 7 Pinterest 31 Plotkin, David 187 PNC Bank 192 Poste Italiane 47 Post Malaysia 47 Potbot 64 Preska, Loretta 224 Prevedere Software 97 Price, James 106, 114–15, 181, 186, 272 price elasticity of information 275–6 process: applied asset management 194–6; information management 193–6; information management challenges 301–2; maturity, challenges and remedies 193–4 production possibility frontier 280 productive efficiency 280 productization, monetization success 75 product management function 56–9 profitability, information 24–6 ProgrammableWeb 63 property, information as 227–30 public data, information asset 64 Publicly Available Specification (PAS): metrics 184; physical asset management 158–60, 162–3 public-private partnerships 47 quality see data quality Radio Shack 141 Rajesekhar, Ruchi 267 Raskino, Mark 37 Realtor.com 53 records information management (RIM) 152–3 Reddit 23 Redman, Thomas 235, 272 relationships, bartering for 38–9 reusable nature, information 19–20 revenue: monetization success 74; supplemental stream 32–3; value of expanded 266 Ricardian Rent 273 risk 12, 14, 28, 44–5, 62, 74–5, 85, 89, 91–2, 106, 115, 125, 139, 152, 159–61, 185, 194, 216, 242–4, 256–7, 286–90; reduction 44–5, 74–5, 85, 89; monetization success 74 Rite Aid 32 Roosevelt, Franklin 37 Rosenkranz, E.


pages: 611 words: 188,732

Valley of Genius: The Uncensored History of Silicon Valley (As Told by the Hackers, Founders, and Freaks Who Made It Boom) by Adam Fisher

adjacent possible, Airbnb, Albert Einstein, AltaVista, An Inconvenient Truth, Andy Rubin, AOL-Time Warner, Apple II, Apple Newton, Apple's 1984 Super Bowl advert, augmented reality, autonomous vehicles, Bill Atkinson, Bob Noyce, Brownian motion, Buckminster Fuller, Burning Man, Byte Shop, circular economy, cognitive dissonance, Colossal Cave Adventure, Computer Lib, disintermediation, Do you want to sell sugared water for the rest of your life?, don't be evil, Donald Trump, Douglas Engelbart, driverless car, dual-use technology, Dynabook, Elon Musk, Fairchild Semiconductor, fake it until you make it, fake news, frictionless, General Magic , glass ceiling, Hacker Conference 1984, Hacker Ethic, Henry Singleton, Howard Rheingold, HyperCard, hypertext link, index card, informal economy, information retrieval, Ivan Sutherland, Jaron Lanier, Jeff Bezos, Jeff Rulifson, John Markoff, John Perry Barlow, Jony Ive, Kevin Kelly, Kickstarter, knowledge worker, Larry Ellison, life extension, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Marshall McLuhan, Maui Hawaii, Menlo Park, Metcalfe’s law, Mondo 2000, Mother of all demos, move fast and break things, Neal Stephenson, Network effects, new economy, nuclear winter, off-the-grid, PageRank, Paul Buchheit, paypal mafia, peer-to-peer, Peter Thiel, pets.com, pez dispenser, popular electronics, quantum entanglement, random walk, reality distortion field, risk tolerance, Robert Metcalfe, rolodex, Salesforce, self-driving car, side project, Silicon Valley, Silicon Valley startup, skeuomorphism, skunkworks, Skype, Snow Crash, social graph, social web, South of Market, San Francisco, Startup school, Steve Jobs, Steve Jurvetson, Steve Wozniak, Steven Levy, Stewart Brand, Susan Wojcicki, synthetic biology, Ted Nelson, telerobotics, The future is already here, The Hackers Conference, the long tail, the new new thing, Tim Cook: Apple, Tony Fadell, tulip mania, V2 rocket, We are as Gods, Whole Earth Catalog, Whole Earth Review, Y Combinator

BOOK TWO The Hacker Ethic What Information Wants: Heroes of the computer revolution The Whole Earth ’Lectronic Link: Welcome to the restaurant at the end of the universe Reality Check: The new new thing—that wasn’t From Insanely Great to Greatly Insane: General Magic mentors a generation The Bengali Typhoon: Wired’s revolution of the month Toy Stories: From PARC to Pixar Jerry Garcia’s Last Words: Netscape opened at what?! A Fish, a Barrel, and a Gun: Suck perfects the art of snark Culture Hacking: The cyberunderground goes mainstream BOOK THREE Network Effects The Check Is in the Mail: eBay’s trillion-dollar garage sale The Shape of the Internet: A problem of great googolplexity Free as in Beer: Two teenagers crash the music industry The Dot Bomb: Only the cockroaches survive… and you’re one of the cockroaches The Return of the King: iCame, iSaw, iConquered I’m Feeling Lucky: Google cracks the code I’m CEO… Bitch: Zuck moves to Silicon Valley to “dominate” (and does) Purple People Eater: Apple, the company that cannibalizes itself Twttr: Nose-ring-wearing, tattooed, neck-bearded, long-haired punk hippie misfits To Infinity… and Beyond!

Po Bronson: That became an imprint that got repeated and repeated and repeated. Steve Jobs: And that’s why the Valley is here today. Carol Bartz: The future doesn’t just happen. Ev Williams: Sparks happen and then it just erupts. I think a lot of it has to do with networks. Networks—they get bigger. Ray Sidney: There’s this network effect: Sharp people come to be with other sharp people. People come to Silicon Valley just to be with these movers and shakers and brilliant engineers and product designers and marketers and sales folks and whoever. Lee Felsenstein: The story of Silicon Valley is the story of networks. There was never any centralized place.

You cannot make money on the internet, it is free.” Marc Andreessen: We were talking one day and we said, “Well, this internet thing—no one takes it seriously but it’s growing vertically…” Jim Clark: All I had to do was look at the growth of Mosaic for a year and see that it grew to a million users, and I figured there was a network effect of people getting online. Marc Andreessen: The idea was to basically do a new version of Mosaic but from scratch, and in particular do it as a real product. Jim Clark: I said, “Okay, let’s hop on a plane and go out and recruit your buddies.” Aleks Totić: Then Marc calls: “Hey, we’re flying in—I think we’re doing it: We’re going to do the Mosaic killer.”


pages: 183 words: 49,460

Start Small, Stay Small: A Developer's Guide to Launching a Startup by Rob Walling

8-hour work day, en.wikipedia.org, fail fast, inventory management, Jeff Hawkins, Kickstarter, Lean Startup, Marc Andreessen, Network effects, Paul Graham, rolodex, Salesforce, side project, Silicon Valley, social bookmarking, software as a service, Superbowl ad, web application

Assume you will convert between 2% and 5% of people who clicked “try now” or “download free trial.” Assume 40% of the people who clicked “buy now” would have completed the purchase. When Not to Use This Approach In general, this approach will not work if you are planning to build a social networking or social media site, or any other product that’s reliant on a network effect. With these types of sites you can’t test the idea until you try it out with a full-blown marketing effort. But if you’re selling a niche downloadable, mobile or web-based (SaaS) application this approach will work. The Components Screenshots – For application screen shots, you can build them yourself or pay a designer for mockups – you only need 2-3 screens and they never have to be built into HTML.

Here is a quick rundown of the potential market sizes for the largest platforms based on the most recent numbers I could track down: Facebook – over 500 million active users MySpace – over 125 million users SalesForce.com – over 1.5 million paying subscribers Pricing Structure In the consumer space, applications are free and typically earn revenue through advertising, affiliate links, or driving traffic to a specific website where users can be monetized In the enterprise space (such as SalesForce.com) applications may have an up-front or recurring cost Benefits for the Entrepreneur These platforms tend to have a high adoption rate for new plug-ins If you design your application correctly, you can achieve exponential growth using viral marketing since the social platforms tend to have a high network effect Often your audience has a single place where they can acquire applications (such as the Facebook Application Directory or Salesforce AppExchange) so there is more likelihood your application will be discovered accidentally than with an application on the open internet The space is relatively new so there is less competition than with web or desktop apps Benefits for the Customer Convenience of new features and functionality without relying on the platform providers to build them Many plug-ins are free The Downside Gold-rush mentality and dubious monetization methods means few applications ever make money Plugging functionality holes in the application of a major vendor will eventually backfire should the vendor incorporate your functionality into the main application When to Use When you want to extend an existing web or desktop application by making it easy for platform users to add your application’s capabilities When you have a product idea that’s targeted towards a demographic that resides on a particular platform Type #6 – Community Websites Though not a conventional “cash for software” arrangement, community websites such as social networks, forums, social bookmarking tools, file sharing or photo sharing sites can not only be fun projects to build, but fun to market since the press is currently enamored with this market segment.


pages: 212 words: 49,544

WikiLeaks and the Age of Transparency by Micah L. Sifry

1960s counterculture, Amazon Web Services, Andy Carvin, banking crisis, barriers to entry, Bernie Sanders, Buckminster Fuller, Chelsea Manning, citizen journalism, Climategate, crowdsourcing, digital divide, digital rights, Evgeny Morozov, Gabriella Coleman, Google Earth, Howard Rheingold, Internet Archive, Jacob Appelbaum, John Markoff, John Perry Barlow, Julian Assange, Network effects, RAND corporation, school vouchers, Skype, social web, source of truth, Stewart Brand, the Cathedral and the Bazaar, web application, WikiLeaks, Yochai Benkler

Google’s search engine ranks pages based on how many other pages link to them, and it learns from what links people click which pages offer the best results to a particular search phrase. Wikipedia harnesses the power-of-many by allowing anyone to add or edit any page. Picture-sharing sites like Flickr let anyone make up their own tags for content, rather than forcing people to only use categories chosen from above. In each case, network effects make these services more valuable as they gain more users. y Data is “the next Intel inside”: successful Web 2.0 companies win in their fields not only by cornering some class of data (location, product identifiers, namespaces) but by also making their data the underpinning of a whole range of additional services.

It is striking to see how often people react to the news about WikiLeaks by asking how they could possibly do their jobs if every confidential conversation or negotiation were required to be public. But the transparency movement isn’t aimed at exposing the doings of ordinary people to intense scrutiny, and the kind of network effects that occur around instances of information censorship generally don’t happen around spreading someone’s shopping list. As Julian Assange argued as recently as the middle of January 2011, “Transparency should be proportional to the power that one has. The more power one has, the greater the dangers generated by that power, and the more need for transparency.


pages: 340 words: 100,151

Secrets of Sand Hill Road: Venture Capital and How to Get It by Scott Kupor

activist fund / activist shareholder / activist investor, Airbnb, Amazon Web Services, asset allocation, barriers to entry, Ben Horowitz, Benchmark Capital, Big Tech, Blue Bottle Coffee, carried interest, cloud computing, compensation consultant, corporate governance, cryptocurrency, discounted cash flows, diversification, diversified portfolio, estate planning, family office, fixed income, Glass-Steagall Act, high net worth, index fund, information asymmetry, initial coin offering, Lean Startup, low cost airline, Lyft, Marc Andreessen, Myron Scholes, Network effects, Paul Graham, pets.com, power law, price stability, prudent man rule, ride hailing / ride sharing, rolodex, Salesforce, Sand Hill Road, seminal paper, shareholder value, Silicon Valley, software as a service, sovereign wealth fund, Startup school, the long tail, Travis Kalanick, uber lyft, VA Linux, Y Combinator, zero-sum game

After all, drivers who couldn’t afford to purchase a taxi medallion could just use their own cars to increase the supply of available drivers, and this increase in supply would therefore dramatically increase the convenience of utilizing the service for consumers. Increased supply would drive increased demand, which would in turn drive more supply into the market. You get the picture—a true network-effects business. Network effects of course don’t exist in every market, but this line of reasoning could be (and has been) applied to lots of pitches to VCs. For example, if cancer screening techniques improved to the point that they are materially less invasive and have a higher predictive value relative to current screening modalities, people might get cancer screenings as part of their annual physical exams, and the market for early-stage cancer screening could become orders of magnitude bigger than it is today.

See acquisitions Microsoft, 25, 41, 272–273 Middle Eastern countries, 55–56 milestones, 115–118, 138–139 minority investors, 174, 182–183 Mixed Media Labs, 213 momentum, maintaining, 121–122 Morgan, J. P., 53–54 mutual funds, 108 Nasdaq index and dot.com boom/bust, 10–11, 15 and median ten-year returns in VC, 30 natural resources, investments in, 58, 63, 64 Netscape, 10, 14 network effects, 128 networking and building relationships, 248 Nicira, 45, 131–132 non-disclosure agreements, 187, 285 non-qualified options (NQOs), 104–105, 185 no-shop provisions, 187–188, 239, 285 notes, convertible, 28–29, 142–147, 148, 233 officers, 183, 206–207 Okta, 128–129, 132, 136 Opsware, 2, 18–19 option pricing model (OPM), 78, 79 Oracle, 51 Otto, 102 pari passu, 157–158, 164 partnerships, 70–71, 92, 93 pass-through entities, 71, 92–94 pension funds, 55 Pinterest, 45 pitching to venture capitalists, 124–139 and discussing learning from failures, 131 and getting an introduction, 124–126 and goals of VCs, 126 on going-to-market, 135–138 on market opportunity, 127–130 and planning for next round of financing, 138–139 on your founder-market fit, 130–133 on your product, 135 on your team, 134 pivoting and adaptability of founders, 49, 135, 137–138 of Butterfield, 137 conflicts resulting from, 213–214 Planck, Max, 49 post-money valuation, 147 power-law curve, 30–31, 31, 36–37, 38, 40 “preferred returns,” 83 preferred stock about, 163 and comparing finance deals, 196–197 and voting, 174, 235 preferred stock/shareholders, 141–142 about, 93, 141–142 and acquisitions, 252 and authorization of new classes of stock, 176 conversion to common shares, 160–165, 177, 235, 280 and corporate actions, 176 and dividends, 155 and drag-along provisions in term sheets, 182 and fiduciary duty of board members, 215–216 and liquidation preference, 157–158, 162–163, 164, 177, 235 and liquidation/recapitalization, 176–177 and protective provisions, 173–177 representation of, on board, 171 and stock restrictions in term sheets, 182 pre-money valuation, 147 price per share, 147–149, 278 price-to-earnings ratio (P/E ratio), 10–11 private equities, 57, 62 “product-first company” concept, 44–45 products and ability to pivot, 49, 135, 137–138 and adaptability of companies, 136–137 adoption of new, 49–50 aspirin/vitamin analogy for, 50 and evaluation of early-stage companies, 48–50 and pitching to venture capitalists, 135 product-market fit, 45, 48, 49 testing of, 49 profits, distribution of, 92–93 pro rata investments, 178–180, 283 prospectuses, 261, 263 protective provisions in term sheets, 173–177, 281–282 “prudent man rule” (1979), 41 public companies, 257–260.


pages: 372 words: 101,678

Lessons from the Titans: What Companies in the New Economy Can Learn from the Great Industrial Giants to Drive Sustainable Success by Scott Davis, Carter Copeland, Rob Wertheimer

3D printing, activist fund / activist shareholder / activist investor, additive manufacturing, Airbnb, airport security, asset light, barriers to entry, Big Tech, Boeing 747, business cycle, business process, clean water, commoditize, coronavirus, corporate governance, COVID-19, data science, disruptive innovation, Elisha Otis, Elon Musk, factory automation, fail fast, financial engineering, Ford Model T, global pandemic, hydraulic fracturing, Internet of things, iterative process, junk bonds, Kaizen: continuous improvement, Kanban, low cost airline, Marc Andreessen, Mary Meeker, megacity, Michael Milken, Network effects, new economy, Ponzi scheme, profit maximization, random walk, RFID, ride hailing / ride sharing, risk tolerance, Salesforce, shareholder value, Silicon Valley, six sigma, skunkworks, software is eating the world, strikebreaker, tech billionaire, TED Talk, Toyota Production System, Uber for X, value engineering, warehouse automation, WeWork, winner-take-all economy

Jeff Immelt cited share gains as proof that the strategy was working, all while the underlying foundation of the company was floundering. And clearly Boeing’s race to beat Airbus and get the 737MAX out the door led to regretful oversights and mistakes. In some fast-growing, immature industries, market share might make some sense, as when Google, Apple, or Amazon invests in growth to achieve network effects on its platform. But network effects are isolated to a few disparate examples where they can lead to outsized profits down the road. For 99 percent of businesses out there, pricing a contract at or below cost, or allowing a customer to defer cash payments, brings eventual pitfalls. We find few examples where the strategy actually works past a company’s early disruption phase.

We find few examples where the strategy actually works past a company’s early disruption phase. Some industrials have succeeded with razor/razorblade models that warrant selling up front at just above cost. But these businesses require long-term service revenue streams protected by intellectual property. More and more, the bloom is off that rose. Network effects can prove fleeting, and the US government has threatened to investigate tech firms that have acquired outsized power with this strategy. Countries in Europe and Asia have promised to follow suit. In the end, every company has its unique circumstances. Different levels of competition, different levels of maturity.


pages: 271 words: 52,814

Blockchain: Blueprint for a New Economy by Melanie Swan

23andMe, Airbnb, altcoin, Amazon Web Services, asset allocation, banking crisis, basic income, bioinformatics, bitcoin, blockchain, capital controls, cellular automata, central bank independence, clean water, cloud computing, collaborative editing, Conway's Game of Life, crowdsourcing, cryptocurrency, data science, digital divide, disintermediation, Dogecoin, Edward Snowden, en.wikipedia.org, Ethereum, ethereum blockchain, fault tolerance, fiat currency, financial innovation, Firefox, friendly AI, Hernando de Soto, information security, intangible asset, Internet Archive, Internet of things, Khan Academy, Kickstarter, Large Hadron Collider, lifelogging, litecoin, Lyft, M-Pesa, microbiome, Neal Stephenson, Network effects, new economy, operational security, peer-to-peer, peer-to-peer lending, peer-to-peer model, personalized medicine, post scarcity, power law, prediction markets, QR code, ride hailing / ride sharing, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, SETI@home, sharing economy, Skype, smart cities, smart contracts, smart grid, Snow Crash, software as a service, synthetic biology, technological singularity, the long tail, Turing complete, uber lyft, unbanked and underbanked, underbanked, Vitalik Buterin, Wayback Machine, web application, WikiLeaks

The economy that the blockchain enables is not merely the movement of money, however; it is the transfer of information and the effective allocation of resources that money has enabled in the human- and corporate-scale economy. With revolutionary potential equal to that of the Internet, blockchain technology could be deployed and adopted much more quickly than the Internet was, given the network effects of current widespread global Internet and cellular connectivity. Just as the social-mobile functionality of Paradigm 4 has become an expected feature of technology properties, with mobile apps for everything and sociality as a website property (liking, commenting, friending, forum participation), so too could the blockchain of Paradigm 5 bring the pervasive expectation of value exchange functionality.

Insiders have different degrees of confidence as to whether and how these issues can be overcome to evolve into the next phases of blockchain industry development. Some think that the de facto standard will be the Bitcoin blockchain, as it is the incumbent, with the most widely deployed infrastructure and such network effects that it cannot help but be the standardized base. Others are building different new and separate blockchains (like Ethereum) or technology that does not use a blockchain (like Ripple). One central challenge with the underlying Bitcoin technology is scaling up from the current maximum limit of 7 transactions per second (the VISA credit card processing network routinely handles 2,000 transactions per second and can accommodate peak volumes of 10,000 transactions per second), especially if there were to be mainstream adoption of Bitcoin.178 Some of the other issues include increasing the block size, addressing blockchain bloat, countering vulnerability to 51 percent mining attacks, and implementing hard forks (changes that are not backward compatible) to the code, as summarized here:179 Throughput The Bitcoin network has a potential issue with throughput in that it is processing only one transaction per second (tps), with a theoretical current maximum of 7 tps.


pages: 552 words: 143,074

Without Copyrights: Piracy, Publishing, and the Public Domain (Modernist Literature and Culture) by Robert Spoo

invisible hand, Network effects, New Journalism, peer-to-peer, Ronald Reagan, tragedy of the anticommons, transaction costs

He was, in a sense, U.S. copyright law luridly personified, shorn of courtesies and dedicated to a louche, bullying sort of public service. Joyce, in contrast, was the preacher of droit d’auteur, a self-righteous property scold who, even as he launched protests and lawsuits, quietly benefited from the network effects of enhanced fame and expanded markets that lawful piracies created.23 He was Roth’s inevitable adversary, the avenging fury of authors’ moral and natural entitlements. Pound was the theorist of modernism’s encounter with copyright and piracy. Unafraid to articulate the contradictions within literary property, he believed in strong authorial rights as long as they did not interfere with free trade in books and ideas.

Foreign authors may have benefited in still other ways from the former lack of copyright protection in the United States. According to B. Zorina Khan, it can be argued that piracy allowed foreign authors “to reap higher total returns from the expansion of the market” and to enjoy the benefits of network effects and bundled products, such as best sellers and lecture tours.216 During the 1880s, the cheap reprinter John B. Alden told foreign authors that they should be pleased with unremunerated circulation of their books in the United States because the widespread exposure would help their sales when international copyright finally did come.217 The chief drawback to the Chace Act, however, was its manufacturing clause.

Conan Doyle’s 1894 tour of America and Canada is discussed in Redmond, Sherlock Holmes among the Pirates, xvi, 20, 61–62. Lawful piracy enabled Dickens and other authors to provide “complementary goods and services, such as readings and lecture tours” (Khan, Democratization of Invention, 274). 23. Transatlantic authors were able to exploit “network effects as piracy increased the scale of readership and encouraged the growth of a mass market in the United States” (ibid.). 24. Roth to Dr. H. K. Croessmann, 5/5/1927, HKC. 25. Hyde, The Gift, xix. CHAPTER 1. THE AMERICAN PUBLIC DOMAIN AND THE COURTESY OF THE TRADE IN THE NINETEENTH CENTURY 1.


pages: 543 words: 153,550

Model Thinker: What You Need to Know to Make Data Work for You by Scott E. Page

Airbnb, Albert Einstein, Alfred Russel Wallace, algorithmic trading, Alvin Roth, assortative mating, behavioural economics, Bernie Madoff, bitcoin, Black Swan, blockchain, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Checklist Manifesto, computer age, corporate governance, correlation does not imply causation, cuban missile crisis, data science, deep learning, deliberate practice, discrete time, distributed ledger, Easter island, en.wikipedia.org, Estimating the Reproducibility of Psychological Science, Everything should be made as simple as possible, experimental economics, first-price auction, Flash crash, Ford Model T, Geoffrey West, Santa Fe Institute, germ theory of disease, Gini coefficient, Higgs boson, High speed trading, impulse control, income inequality, Isaac Newton, John von Neumann, Kenneth Rogoff, knowledge economy, knowledge worker, Long Term Capital Management, loss aversion, low skilled workers, Mark Zuckerberg, market design, meta-analysis, money market fund, multi-armed bandit, Nash equilibrium, natural language processing, Network effects, opioid epidemic / opioid crisis, p-value, Pareto efficiency, pattern recognition, Paul Erdős, Paul Samuelson, phenotype, Phillips curve, power law, pre–internet, prisoner's dilemma, race to the bottom, random walk, randomized controlled trial, Richard Feynman, Richard Thaler, Robert Solow, school choice, scientific management, sealed-bid auction, second-price auction, selection bias, six sigma, social graph, spectrum auction, statistical model, Stephen Hawking, Supply of New York City Cabdrivers, systems thinking, tacit knowledge, The Bell Curve by Richard Herrnstein and Charles Murray, The Great Moderation, the long tail, The Rise and Fall of American Growth, the rule of 72, the scientific method, The Spirit Level, the strength of weak ties, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, Tragedy of the Commons, urban sprawl, value at risk, web application, winner-take-all economy, zero-sum game

Player i’s payoff equals The first derivative of this payoff function equals To find a maximum, we set the first derivative equal to zero, giving . In the symmetric equilibrium Ei = E∗. Substituting in gives the result. To prove that the first derivative gives a maximum, we need only check that the second derivative of the payoff function is negative. 2 See Shalizi and Thomas 2011 on how to tease out network effects and on the difficulty of making claims about network effects with snapshot data. See Christakis and Fowler 2009 for many examples of clustered behaviors and attributes. Chapter 22: Models of Cooperation 1 See Science magazine’s special 125th-anniversary edition, published in 2005. 2 See Martin et al. 2008 and Biernaskie 2011. 3 See Zaretsky 1998.

Asking that question and exploring its implications can help to reveal the limits of evolutionary processes. Abandoning the constraints of reality can spur creativity. For this reason, advocates of the critical design movement engage in speculative fictions to generate new ideas.19 Exploration sometimes consists of comparing common assumptions across domains. To understand network effects, a modeler might begin a collection of stylized network structures and then ask whether and how network structure affects cooperation, disease spread, or social uprisings. Or a modeler might apply a collection of learning models to decisions, two-person games, and multiperson games. The purpose of these exercises is not to explain, predict, act, or design.

Note that the Shapley values sum to 9, the total number of ideas. 3 An alternative measure of voting power, the Banzhaf-Penrose index, counts the total number of parties that can be pivotal given all possible winning coalitions and assigns a value to each party equal to the number of times it is pivotal divided by this number. See Banzhaf 1965. 4 See Groseclose and Snyder 1996 for the formal analysis. Chapter 10: Network Models 1 See Newman 2010 for comprehensive treatment of networks; see Jackson 2008 and Tassier 2013 for network effects in social science. 2 Given any node, its minimal paths have length 1 to 4 nodes, minimal paths of length 2 to 4 nodes, and minimal paths of length 3 to 4 nodes, producing a total of 12 nodes on the minimal paths from each node. On average, the minimal paths from a node visit one other node. It follows that average betweenness for each node equals .


pages: 394 words: 57,287

Unleashed by Anne Morriss, Frances Frei

"Susan Fowler" uber, Airbnb, An Inconvenient Truth, Black Lives Matter, book value, Donald Trump, future of work, gamification, gig economy, glass ceiling, Grace Hopper, Greyball, Jeff Bezos, Netflix Prize, Network effects, performance metric, race to the bottom, ride hailing / ride sharing, Salesforce, Sheryl Sandberg, side hustle, Silicon Valley, SoftBank, Steve Jobs, super pumped, TaskRabbit, TED Talk, Tony Hsieh, Toyota Production System, Travis Kalanick, Uber for X, WeWork, women in the workforce, work culture

This gives you the option to raise prices and enjoy higher margins, while also increasing how much delight your customers experience. Additional strategies for increasing WTP include better branding and storytelling. They include finding or designing great complements (the ketchup to your hotdogs) and leveraging network effects (more users, more value). They include ideas that could fill entire books, collectively entire WTP libraries, and our objective here is not to add to this impressive catalogue. Instead, we want to remind you that strategy is an extension of who you are as a leader. As impersonal as the language of strategy sometimes sounds, with its forces and sticks and wedges, strategy embeds your humanity into the behavior of your company.

“we,” 84 Laurent, Nicolo, 124 leaders “A,” 132 absence of, 131–132 cultural, 185, 190–192 expectations of, 62, 77–81 integrity of, 60–61 signs of self-distracted, 6–8 unapologetic, 24–25 underrepresented, 18–19 visibility of queer, 113 leadership See also empowerment leadership justice and, 60–61 new definition of, 4–5, 8–9 outward orientation of, 2, 4–5, 8–12 performance curve, 10, 133 standards-devotion matrix of, 62–67, 70–87 traditional models of, 1–2 trust as foundation of, 33–34 Leadership Agency, 98 leadership profile, 64–65 LGBT+ people, creating inclusive spaces for, 110–112 LinkedIn, 9 little red book, 159–160 logic, 34–37, 41, 45–46, 51, 57 love, 12, 13, 57, 59–87 devotion and, 72–73 from expectations to, 77–81 from neglect to, 81, 84 tough, 62, 86–87 loyalty, 60, 67, 77 Marcario, Rose, 42–43 Mariscal, Marguerite Zabar, 160 Maximus, Valerius (ValMax), 59–62, 71, 72 McCord, Patty, 168–169, 172 McMillon, Doug, 2 meetings, 40–41, 55 inclusive, 108–109, 112–114 Memorable Deeds and Sayings (Maximus), 59–61 mentoring, 78–79, 109 meritocracy, 68, 109, 178 #MeToo, 24 Microsoft, 116, 191–192 Mikitani, Hiroshi, 161 Miller, Jo, 102–103 mindfulness, 52 Mission Command, 16–18 Moltke, Helmuth von, 17 Moments of Truth (Carlzon), 159–160 Momofuku, 160 Morgan, Jen, 2 Nadella, Satya, 116, 191–192 Neeleman, David, 167 Neeley, Tsedal, 161 neglect, 63, 65, 66, 67, 81, 84 Netflix, 168–169, 172 network effects, 153 NFL, 103–104 Nohria, Nitin, 122–123 O’Brien, Deirdre, 113 OKR (objectives and key results) system, 79 One-Strike-and-You’re-Out You, 64 O’Reilly, Tim, 143, 144 organizational change, 90–91 See also change resistance to, 92–94 other people’s awesomeness (OPA), 23, 74 others abilities of, 7 believing in, 22 curiosity about, 6, 82 empowerment of, 4–5, 54, 71 helping, 82–83 importance of, 2, 4 learning from, 45 orientation toward, 15 performance of, 9–12 seeing potential of, 14–15, 22, 23 outside lives, 83–84, 100–101 Patagonia, 42–43 Pawsitive Dog, 75–76 pay gap, 121–122 PayPal, 9 performance reviews, 80, 116, 117–119 PFLAG, 112 positive reinforcement, 22–23, 73–76, 78 praise, 73–74, 78 presence, 29–30, 40–41, 131 pricing decisions, 141–143, 144 primate brain, 52 private bathrooms, 111 profitability, 142, 143 promotions process, 114–115, 116, 119, 121 pronouns, 111 Prophet, Tony, 107, 122 psychological safety, 47, 107 public bathrooms, 111 Queer Eye, 15, 18 queer identities, 110–112 queer people, creating inclusive spaces for, 110–112 QuikTrip, 147–148 quotas, 104 radical accountability, 175 See also radical responsibility radical responsibility, 10, 40, 123 See also radical accountability Rakuten, 161 Rapinoe, Megan, 121–122 reconciliation, 122–123 recruitment process, 95–104 redemption, 123 representation tax, 120–121 retainment, 120–122 Revere, Paul, 24 Riot Games, 124–126, 168, 179–182 Rodriguez-Pastor, Carlos (CRP), 67–70 Roizen, Heidi, 117–118 Romney, Mitt, 99 Rooney, Dan, 103 Rooney rule, 103–104 root cause analysis, 115 Roseboro, Angela, 125 safety, 105, 106, 107 Safe Zone Project, 112 Saint John, Bozoma, 2, 121 Salesforce, 107 Sandberg, Sheryl, 5, 126, 169 SAP, 2 Sasser, Earl, 94 Scandinavian Airlines (SAS), 159–160 Schein, Edgar H., 167, 168, 177 Scooby Snacks, 78 Scrub Daddy, 157 self-distraction, 6–8, 18–19 self-improvement, 20–21 self-trust, 56–57 severity, 61, 63, 64–65, 66, 67, 77 sexual harassment, 106 Shark Tank, 156–157 “sink or swim” approach, 109, 112 SMART goals, 79 Smith, Fred, 166 social media, 52 Southwest Airlines, 136–138, 161 standards-devotion matrix, 62–67, 70–87 standard setting, 78–80 Starbucks, 168 Stonewall, 110 strategic confusion, 135 strategic value stick, 145, 150, 151, 155 strategic wedge, 152–153, 154–156, 191 strategy, 12–14, 132, 135–163 changing, 162 communication of, 156–161 defined, 136–138 growth, 152–154 planning, 154–156 strategic trade-offs, 136–141 suppliers and, 144–148 value-based, 135–136 value creation and, 141–144 writing about, 158 Stripe, 14 Su, Lisa, 62 Sulla, 72, 73 Super Pumped (Isaac), 172–173 Super You, 139 suppliers, 144–148, 153–154 talent attracting diverse, 95–104 retaining, 120–122 task forces, 92 TaskRabbit, 5, 148–152, 161 Tatum, Lisa Skeete, 14 teams building, 54 diverse, 48–49 leadership of, 13 terminations, 84, 85–86 360-degree reviews, 117–119 “toe-stepping,” 178–179 Ton, Zeynep, 147–148 tough love, 62, 86–87 toxic employees, 123 Toyota, 153–154 Toyota Production System (TPS), 153–154 trade-offs, 136–141 Trader Joe’s, 44 trust, 12, 13, 31–58 attributes of, 34, 36 authenticity and, 34–37, 47–54, 57 diagnosing your own level of, 35–39 empathy and, 34–41, 51, 57 as foundation of leadership, 33–34 logic and, 41, 45–46, 51, 57 rebuilding, 1, 55–56 in yourself, 56–57 trust anchor, 35, 37 trust drivers, 34, 35 trust triangle, 34, 36–37 trust wobble, 35–39, 42–44 Twitter, 102 Uber, 31–32, 51, 54–56, 114, 172–174, 178–179 United States Army, 16–18 USAID, 43 US Soccer Federation (USSF), 121–122 ValMax.


pages: 416 words: 106,532

Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond: The Innovative Investor's Guide to Bitcoin and Beyond by Chris Burniske, Jack Tatar

Airbnb, Alan Greenspan, altcoin, Alvin Toffler, asset allocation, asset-backed security, autonomous vehicles, Bear Stearns, bitcoin, Bitcoin Ponzi scheme, blockchain, Blythe Masters, book value, business cycle, business process, buy and hold, capital controls, carbon tax, Carmen Reinhart, Clayton Christensen, clean water, cloud computing, collateralized debt obligation, commoditize, correlation coefficient, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, disintermediation, distributed ledger, diversification, diversified portfolio, Dogecoin, Donald Trump, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, fixed income, Future Shock, general purpose technology, George Gilder, Google Hangouts, high net worth, hype cycle, information security, initial coin offering, it's over 9,000, Jeff Bezos, Kenneth Rogoff, Kickstarter, Leonard Kleinrock, litecoin, low interest rates, Marc Andreessen, Mark Zuckerberg, market bubble, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, packet switching, passive investing, peer-to-peer, peer-to-peer lending, Peter Thiel, pets.com, Ponzi scheme, prediction markets, quantitative easing, quantum cryptography, RAND corporation, random walk, Renaissance Technologies, risk free rate, risk tolerance, risk-adjusted returns, Robert Shiller, Ross Ulbricht, Salesforce, Satoshi Nakamoto, seminal paper, Sharpe ratio, Silicon Valley, Simon Singh, Skype, smart contracts, social web, South Sea Bubble, Steve Jobs, transaction costs, tulip mania, Turing complete, two and twenty, Uber for X, Vanguard fund, Vitalik Buterin, WikiLeaks, Y2K

Chris Burniske and Jack Tatar steer the reader through a torrent of unknowns, illuminating the complicated world of cryptoassets and their underlying technology, which will more than likely become our generation’s most important innovation. —RYAN LANCELOT, coauthor of What’s the Deal with Bitcoins? A must-read to appreciate the Bitcoin network effect and the wave of innovation that it launched through the community of people who played critical roles in creating all the distributed ecosystems that are transforming business models. —CRISTINA DOLAN, cofounder and COO of InsureX Crypto trading and the FinTech innovations unlocked by blockchains will do to Wall Street what personal Internet publishing and blogging did to media empires.

Armed with this knowledge, the reader can then use the valuation framework laid out in Chapters 12 and 13 to find the most promising cryptoassets. Valuing cryptoassets is done unlike traditional investments; they typically do not have revenue or cash flows and thus present a conundrum for those evaluating their merits. Here, Chris and Jack present groundbreaking work on how to properly value an asset based on the network effect and teams of decentralized developers. Everyone who is even thinking about investing in cryptoassets needs to read these chapters. One of the most fascinating outcomes of the blockchain revolution is how cryptoassets are disrupting the disruptors. As Chris and Jack explain, the venture capital business model is being turned on its head by crowdfunding efforts that include initial cryptoasset offerings, or ICOs.

These systems are made of open-source software, which must evolve over time to stay secure and relevant. If no one is maintaining the software, then two things will happen: One, bugs will be found and exploited by bad actors. Two, without enough developers, the software will stagnate, ultimately losing out to more compelling projects. Developers have their own network effect: the more smart developers there are working on a project, the more useful and intriguing that project becomes to other developers. These developers are then drawn to the project, and a positively reinforcing flywheel is created. On the other hand, if developers are exiting a project, then it quickly becomes less and less interesting to other developers, ultimately leaving no one to captain the software ship.


pages: 232 words: 63,846

Traction: How Any Startup Can Achieve Explosive Customer Growth by Gabriel Weinberg, Justin Mares

Airbnb, content marketing, Firefox, Hacker News, if you build it, they will come, jimmy wales, Justin.tv, Lean Startup, Marc Andreessen, Mark Zuckerberg, Network effects, Paul Graham, Peter Thiel, Salesforce, side project, Skype, Snapchat, social bookmarking, social graph, software as a service, TechCrunch disrupt, the long tail, the payments system, Uber for X, Virgin Galactic, web application, working poor, Y Combinator

This type of virality comes with the advantage of “network effects,” where the value of the network increases as more people get on it. That is, the more people who are on Skype, the more valuable it becomes. Other products grow by encouraging collaboration. In this case, the product is still valuable on its own, but becomes more so as you invite others. Google Docs is useful alone, but it is far more valuable when used collaboratively. This type of viral loop can take longer to spread if your customers don’t need to immediately collaborate. However, once they do, strong network effects kick in as the service becomes a central tool around which collaboration occurs.


100 Baggers: Stocks That Return 100-To-1 and How to Find Them by Christopher W Mayer

Alan Greenspan, asset light, bank run, Bear Stearns, Bernie Madoff, book value, business cycle, buy and hold, Carl Icahn, cloud computing, disintermediation, Dissolution of the Soviet Union, dumpster diving, Edward Thorp, Henry Singleton, hindsight bias, housing crisis, index fund, Jeff Bezos, market bubble, Network effects, new economy, oil shock, passive investing, peak oil, Pershing Square Capital Management, shareholder value, Silicon Valley, SimCity, Stanford marshmallow experiment, Steve Jobs, stock buybacks, survivorship bias, Teledyne, The Great Moderation, The Wisdom of Crowds, tontine

Yet when you look at the numbers, people tend to stay at their banks for six to seven years. The reason is it’s a pain in the neck to change banks. As economists say, “switching costs” are high. That’s a moat. • You enjoy network effects. Microsoft had a great moat for years. Everybody used its operating system. And so you wanted to use its operating system too. The more people who use these products, the more they enjoy network effects. Think of Twitter, Facebook and YouTube. It’s very hard for competitors to crack a network moat. It’s like trying to sell the first telephone. • You do something cheaper than everybody else. If you are the lowcost guy, like Walmart, you have a moat.


pages: 561 words: 157,589

WTF?: What's the Future and Why It's Up to Us by Tim O'Reilly

"Friedman doctrine" OR "shareholder theory", 4chan, Affordable Care Act / Obamacare, Airbnb, AlphaGo, Alvin Roth, Amazon Mechanical Turk, Amazon Robotics, Amazon Web Services, AOL-Time Warner, artificial general intelligence, augmented reality, autonomous vehicles, barriers to entry, basic income, behavioural economics, benefit corporation, Bernie Madoff, Bernie Sanders, Bill Joy: nanobots, bitcoin, Blitzscaling, blockchain, book value, Bretton Woods, Brewster Kahle, British Empire, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, Captain Sullenberger Hudson, carbon tax, Carl Icahn, Chuck Templeton: OpenTable:, Clayton Christensen, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, computer vision, congestion pricing, corporate governance, corporate raider, creative destruction, CRISPR, crowdsourcing, Danny Hillis, data acquisition, data science, deep learning, DeepMind, Demis Hassabis, Dennis Ritchie, deskilling, DevOps, Didi Chuxing, digital capitalism, disinformation, do well by doing good, Donald Davies, Donald Trump, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, fake news, Filter Bubble, Firefox, Flash crash, Free Software Foundation, fulfillment center, full employment, future of work, George Akerlof, gig economy, glass ceiling, Glass-Steagall Act, Goodhart's law, Google Glasses, Gordon Gekko, gravity well, greed is good, Greyball, Guido van Rossum, High speed trading, hiring and firing, Home mortgage interest deduction, Hyperloop, income inequality, independent contractor, index fund, informal economy, information asymmetry, Internet Archive, Internet of things, invention of movable type, invisible hand, iterative process, Jaron Lanier, Jeff Bezos, jitney, job automation, job satisfaction, John Bogle, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John Zimmer (Lyft cofounder), Kaizen: continuous improvement, Ken Thompson, Kevin Kelly, Khan Academy, Kickstarter, Kim Stanley Robinson, knowledge worker, Kodak vs Instagram, Lao Tzu, Larry Ellison, Larry Wall, Lean Startup, Leonard Kleinrock, Lyft, machine readable, machine translation, Marc Andreessen, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, McMansion, microbiome, microservices, minimum viable product, mortgage tax deduction, move fast and break things, Network effects, new economy, Nicholas Carr, Nick Bostrom, obamacare, Oculus Rift, OpenAI, OSI model, Overton Window, packet switching, PageRank, pattern recognition, Paul Buchheit, peer-to-peer, peer-to-peer model, Ponzi scheme, post-truth, race to the bottom, Ralph Nader, randomized controlled trial, RFC: Request For Comment, Richard Feynman, Richard Stallman, ride hailing / ride sharing, Robert Gordon, Robert Metcalfe, Ronald Coase, Rutger Bregman, Salesforce, Sam Altman, school choice, Second Machine Age, secular stagnation, self-driving car, SETI@home, shareholder value, Silicon Valley, Silicon Valley startup, skunkworks, Skype, smart contracts, Snapchat, Social Responsibility of Business Is to Increase Its Profits, social web, software as a service, software patent, spectrum auction, speech recognition, Stephen Hawking, Steve Ballmer, Steve Jobs, Steven Levy, Stewart Brand, stock buybacks, strong AI, synthetic biology, TaskRabbit, telepresence, the built environment, the Cathedral and the Bazaar, The future is already here, The Future of Employment, the map is not the territory, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Davenport, Tony Fadell, Tragedy of the Commons, transaction costs, transcontinental railway, transportation-network company, Travis Kalanick, trickle-down economics, two-pizza team, Uber and Lyft, Uber for X, uber lyft, ubercab, universal basic income, US Airways Flight 1549, VA Linux, warehouse automation, warehouse robotics, Watson beat the top human players on Jeopardy!, We are the 99%, web application, Whole Earth Catalog, winner-take-all economy, women in the workforce, Y Combinator, yellow journalism, zero-sum game, Zipcar

In particular, I thought that building a critical mass of user-contributed data led to self-reinforcing network effects. The term network effect generally refers to systems that gain in utility the more people use them. A single telephone is not very useful, but once enough people have them, it is very hard not to join the network. So too, the competition in social networks has been to assemble massive user bases, because the lock-in is not via software but through the number of other people using the same service. The network effects that I observed in data were more indirect, and had to do with the way that companies were learning to harvest value from the users of their systems.

., 125 Markle Foundation Rework America task force, 320–21, 342–43 Marriage of Heaven and Hell (Blake), 265 mashups, 127, 128 Masiello, Betsy, 64 Mattison, John, 224 Maudslay, Henry, 324 Mazzucato, Mariana, 296 McAfee, Andy, xxii–xxiii McChrystal, Stanley, 116–17 McCloskey, Mike, 368 McCool, Rob, 81 McGovern, Pat, 344 McKusick, Kirk, 16 McLaughlin, David, 340–41 Meckling, William, 240–41 MediaLive International, 29 Medium, 89, 143, 183, 196, 226–27 Megill, Colin, 200, 221 meme maps, 51–53 memes (self-replicating ideas), 44, 205 Merchant of Venice, The (Shakespeare), 171 Messina, Chris, 42 Metaweb, 158 Microsoft, 5 Active/X, 10 barriers to entry against competitors, 13 and cloud computing, 113 and HITs, 166–67 HoloLens, 344, 345 and IBM, 12 investments in AI and “cognitive services,” 53 missing the Internet wave, 360 monopoly position, 33, 102–4 and open source software, 24 operating systems, 7 and World Wide Web, 99–100 Microsoft Network (MSN), 100 minimum wage, 264–68 Misérables, Les (Hugo), 355 Mitchell, Stacy, 103 MIT’s X Window System for Unix and Linux, 16 Molano Vega, Diego, 174 Money:Tech conference, 104 monopoly status, 33, 102–4 Monsanto, 326 Moonves, Leslie, 228 Moore’s Law, 36, 149 Morin, Brin, 341–42 Mosseri, Adam, 224, 226 Mother Night (Vonnegut), 357–58 Moto X phone (Google), 82–83 Mundie, Craig, 131 Muñoz, Cecilia, 148 Musk, Elon, xvi, 302, 329, 363 Nadella, Satya, 353 Napster, 25 narrow AI, 232–33 National Highway Traffic Safety Administration, 188–89 National Science Foundation (NSF), 80, 132 navigation, 83–84, 131, 176–77 Nest, 82 Netscape, 15 networks, xxiv, 90–91 centralization and decentralization, 105–8 hosting data centers, 121 insight vs. blinded by the familiar, 95–98 marketplace at critical mass, 102–5 networked marketplace platforms, 67 network effects, 34 platforms for physical world services, 92–95 thick marketplaces, 98–105, 128, 133 See also platforms Neuralink Brain-Machine interface, 329 neurotech interfaces, 328–32 NewMark, Craig, 101 news media, 18–19, 200–201, 201–8, 210–14, 225–28 Next:Economy Summit, 267, 303, 309, 369–70 Nielsen, Michael, 43 No Ordinary Disruption (Dobbs, Manykia, and Woetzel), xxiii Nordhaus, William, 296 Norvig, Peter, 33, 155–56 Norway, 305–6 O’Brien, Chris, 225 Occupy Wall Street movement, 229–31, 255 Oculus, 291 “Of the 1%, by the 1%, for the 1%” (Stiglitz), 255 Omidyar, Pierre, 357 on-demand blood-delivery drones, 370 on-demand education, 341–45 on-demand services, x, xxiii, xxiv, 67–68, 89, 92–95, 302, 309–10.


pages: 596 words: 163,682

The Third Pillar: How Markets and the State Leave the Community Behind by Raghuram Rajan

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, airline deregulation, Albert Einstein, Andrei Shleifer, banking crisis, barriers to entry, basic income, battle of ideas, Bernie Sanders, blockchain, borderless world, Bretton Woods, British Empire, Build a better mousetrap, business cycle, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, central bank independence, computer vision, conceptual framework, corporate governance, corporate raider, corporate social responsibility, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, currency manipulation / currency intervention, data acquisition, David Brooks, Deng Xiaoping, desegregation, deskilling, disinformation, disruptive innovation, Donald Trump, driverless car, Edward Glaeser, facts on the ground, financial innovation, financial repression, full employment, future of work, Glass-Steagall Act, global supply chain, Great Leap Forward, high net worth, household responsibility system, housing crisis, Ida Tarbell, illegal immigration, income inequality, industrial cluster, intangible asset, invention of the steam engine, invisible hand, Jaron Lanier, job automation, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, labor-force participation, Les Trente Glorieuses, low interest rates, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, means of production, Money creation, moral hazard, Network effects, new economy, Nicholas Carr, obamacare, opioid epidemic / opioid crisis, Productivity paradox, profit maximization, race to the bottom, Richard Thaler, Robert Bork, Robert Gordon, Ronald Reagan, Sam Peltzman, shareholder value, Silicon Valley, social distancing, Social Responsibility of Business Is to Increase Its Profits, SoftBank, South China Sea, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, superstar cities, The Future of Employment, The Wealth of Nations by Adam Smith, trade liberalization, trade route, transaction costs, transfer pricing, Travis Kalanick, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, Upton Sinclair, Walter Mischel, War on Poverty, women in the workforce, working-age population, World Values Survey, Yom Kippur War, zero-sum game

From 1970 to 1999, regulators brought sixteen cases against mergers on average every year; in the period 2000–2014, this had fallen below three.52 In recent years, a strong positive correlation has emerged between the concentration of industry and the profitability of firms in it.53 As Bork argued, growing profitability in a concentrated industry need not be a sign only of monopolistic practices, it could be a sign of the greater efficiency of large incumbents that allows them to gain market share. Greater size itself could reduce costs if there are scale economies in the industry. Also, the size of the customer base could increase demand if there are network effects—where the product increases in value as more people use it. Compounding all these effects, large firms do seem to attract better management.54 It is hard for researchers to tell monopoly power from efficiency since an increase in a company’s revenues for a given amount of input costs could be because the company has raised prices unduly or because it produces more, higher-quality output at the same costs.

Regardless, as industry sales concentrate in a small number of firms—dubbed “superstar firms”—a substantial portion of the rise in inequality of worker incomes that we discussed earlier seems to be largely because highly paid workers work at firms that pay their average worker better: Productive, well-paid workers seem to congregate in profitable firms.56 Growing inequality in profitability between firms is translating into inequality between the incomes of the employees of those firms. The relatively stagnant median wage problem actually seems to be a stagnant median firm problem. While some of this is because of economies of scale and network effects, indubitably some of this is also because large firms have altered the rules of the competitive game. SCARING COMPETITION AWAY AND ALTERING THE RULES OF THE GAME Economists since Joseph Schumpeter have argued that just because competition is weak today does not mean it will be weak in the future.

Similarly, large online platforms have protected themselves with both the Computer Fraud and Abuse Act and the Digital Millennium Copyright Act, which make it a crime punishable by prison for any outside firm to plug into their platforms. This holds back interoperability, which would allow others to benefit from the platform’s network effects and let them compete on a more level playing field. As worrisome as the effects on the incentives to innovate is the effect on the diffusion of knowledge. Patents and copyright laws protect the right for an innovator or artist to benefit from their innovation for a while. If granted overly long or expansive protection, though, the innovator can stand in the way of new innovation or creativity.


pages: 396 words: 117,149

The Master Algorithm: How the Quest for the Ultimate Learning Machine Will Remake Our World by Pedro Domingos

Albert Einstein, Amazon Mechanical Turk, Arthur Eddington, backpropagation, basic income, Bayesian statistics, Benoit Mandelbrot, bioinformatics, Black Swan, Brownian motion, cellular automata, Charles Babbage, Claude Shannon: information theory, combinatorial explosion, computer vision, constrained optimization, correlation does not imply causation, creative destruction, crowdsourcing, Danny Hillis, data is not the new oil, data is the new oil, data science, deep learning, DeepMind, double helix, Douglas Hofstadter, driverless car, Erik Brynjolfsson, experimental subject, Filter Bubble, future of work, Geoffrey Hinton, global village, Google Glasses, Gödel, Escher, Bach, Hans Moravec, incognito mode, information retrieval, Jeff Hawkins, job automation, John Markoff, John Snow's cholera map, John von Neumann, Joseph Schumpeter, Kevin Kelly, large language model, lone genius, machine translation, mandelbrot fractal, Mark Zuckerberg, Moneyball by Michael Lewis explains big data, Narrative Science, Nate Silver, natural language processing, Netflix Prize, Network effects, Nick Bostrom, NP-complete, off grid, P = NP, PageRank, pattern recognition, phenotype, planetary scale, power law, pre–internet, random walk, Ray Kurzweil, recommendation engine, Richard Feynman, scientific worldview, Second Machine Age, self-driving car, Silicon Valley, social intelligence, speech recognition, Stanford marshmallow experiment, statistical model, Stephen Hawking, Steven Levy, Steven Pinker, superintelligent machines, the long tail, the scientific method, The Signal and the Noise by Nate Silver, theory of mind, Thomas Bayes, transaction costs, Turing machine, Turing test, Vernor Vinge, Watson beat the top human players on Jeopardy!, white flight, yottabyte, zero-sum game

The success or failure of a company now depends on how much the learners like its products, and the success of a whole economy—whether everyone gets the best products for their needs at the best price—depends on how good the learners are. The best way for a company to ensure that learners like its products is to run them itself. Whoever has the best algorithms and the most data wins. A new type of network effect takes hold: whoever has the most customers accumulates the most data, learns the best models, wins the most new customers, and so on in a virtuous circle (or a vicious one, if you’re the competition). Switching from Google to Bing may be easier than switching from Windows to Mac, but in practice you don’t because Google, with its head start and larger market share, knows better what you want, even if Bing’s technology is just as good.

Competing on Analytics, by Tom Davenport and Jeanne Harris (HBS Press, 2007), is an introduction to the use of predictive analytics in business. In the Plex, by Steven Levy (Simon & Schuster, 2011), describes at a high level how Google’s technology works. Carl Shapiro and Hal Varian explain the network effect in Information Rules (HBS Press, 1999). Chris Anderson does the same for the long-tail phenomenon in The Long Tail (Hyperion, 2006). The transformation of science by data-intensive computing is surveyed in The Fourth Paradigm, edited by Tony Hey, Stewart Tansley, and Kristin Tolle (Microsoft Research, 2009).

See Markov logic networks (MLNs) Moby Dick (Melville), 72 Molecular biology, data and, 14 Moneyball (Lewis), 39 Mooney, Ray, 76 Moore’s law, 287 Moravec, Hans, 288 Muggleton, Steve, 80 Multilayer perceptron, 108–111 autoencoder, 116–118 Bayesian, 170 driving a car and, 113 Master Algorithm and, 244 NETtalk system, 112 reinforcement learning and, 222 support vector machines and, 195 Music composition, case-based reasoning and, 199 Music Genome Project, 171 Mutation, 124, 134–135, 241, 252 Naïve Bayes classifier, 151–153, 171, 304 Bayesian networks and, 158–159 clustering and, 209 Master Algorithm and, 245 medical diagnosis and, 23 relational learning and, 228–229 spam filters and, 23–24 text classification and, 195–196 Narrative Science, 276 National Security Agency (NSA), 19–20, 232 Natural selection, 28–29, 30, 52 as algorithm, 123–128 Nature Bayesians and, 141 evolutionaries and, 137–142 symbolists and, 141 Nature (journal), 26 Nature vs. nurture debate, machine learning and, 29, 137–139 Neal, Radford, 170 Nearest-neighbor algorithms, 24, 178–186, 202, 306–307 dimensionality and, 186–190 Negative examples, 67 Netflix, 12–13, 183–184, 237, 266 Netflix Prize, 238, 292 Netscape, 9 NETtalk system, 112 Network effect, 12, 299 Neumann, John von, 72, 123 Neural learning, fitness and, 138–139 Neural networks, 99, 100, 112–114, 122, 204 convolutional, 117–118, 302–303 Master Algorithm and, 240, 244, 245 reinforcement learning and, 222 spin glasses and, 102–103 Neural network structure, Baldwin effect and, 139 Neurons action potentials and, 95–96, 104–105 Hebb’s rule and, 93–94 McCulloch-Pitts model of, 96–97 processing in brain and, 94–95 See also Perceptron Neuroscience, Master Algorithm and, 26–28 Newell, Allen, 224–226, 302 Newhouse, Neil, 17 Newman, Mark, 160 Newton, Isaac, 293 attribute selection, 189 laws of, 4, 14, 15, 46, 235 rules of induction, 65–66, 81, 82 Newtonian determinism, Laplace and, 145 Newton phase of science, 39–400 New York Times (newspaper), 115, 117 Ng, Andrew, 117, 297 Nietzche, Friedrich, 178 NIPS.


pages: 380 words: 118,675

The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone

airport security, Amazon Mechanical Turk, Amazon Web Services, AOL-Time Warner, Apollo 11, bank run, Bear Stearns, Bernie Madoff, big-box store, Black Swan, book scanning, Brewster Kahle, buy and hold, call centre, centre right, Chuck Templeton: OpenTable:, Clayton Christensen, cloud computing, collapse of Lehman Brothers, crowdsourcing, cuban missile crisis, Danny Hillis, deal flow, Douglas Hofstadter, drop ship, Elon Musk, facts on the ground, fulfillment center, game design, housing crisis, invention of movable type, inventory management, James Dyson, Jeff Bezos, John Markoff, junk bonds, Kevin Kelly, Kiva Systems, Kodak vs Instagram, Larry Ellison, late fees, loose coupling, low skilled workers, Maui Hawaii, Menlo Park, Neal Stephenson, Network effects, new economy, off-the-grid, optical character recognition, PalmPilot, pets.com, Ponzi scheme, proprietary trading, quantitative hedge fund, reality distortion field, recommendation engine, Renaissance Technologies, RFID, Rodney Brooks, search inside the book, shareholder value, Silicon Valley, Silicon Valley startup, six sigma, skunkworks, Skype, SoftBank, statistical arbitrage, Steve Ballmer, Steve Jobs, Steven Levy, Stewart Brand, the long tail, Thomas L Friedman, Tony Hsieh, two-pizza team, Virgin Galactic, Whole Earth Catalog, why are manhole covers round?, zero-sum game

Customers could reach Amazon Auctions only by clicking on a separate tab on the Amazon home page, and it looked like a dingy leftovers bin to people who were accustomed to using Amazon to shop in the traditional way, with predictable prices for each item. The high-tech community was getting a lesson in the dynamics of network effects—products or services become increasingly valuable as more people use them. In online marketplaces, the network effect was pervasive; sellers stuck around for access to a critical mass of buyers, and vice versa. In the auctions category, eBay already had an insurmountable advantage. Amazon’s executives remember this significant failure as painful but strangely uplifting.

Amazon’s executives remember this significant failure as painful but strangely uplifting. “Those days in the nineties were the most intense, fun time I ever had at the company,” Blackburn says. “We had an insanely talented group of people trying to figure out how to launch a superior auctions site. In the end the network effect mattered. You could say we were naïve, but we built a great product.” Bezos didn’t take the defeat personally. He later cast the mistake as the first step in a series of important experiments to bring third-party sellers onto Amazon. Auctions would evolve into something called zShops, a platform for sellers that allowed them to operate their own fixed-price stores on Amazon.com (zShops, incidentally, was almost called Jeff’s Club, à la Walmart’s Sam’s Club).


pages: 390 words: 114,538

Digital Wars: Apple, Google, Microsoft and the Battle for the Internet by Charles Arthur

activist fund / activist shareholder / activist investor, AltaVista, Andy Rubin, Build a better mousetrap, Burning Man, cloud computing, commoditize, credit crunch, crowdsourcing, disintermediation, don't be evil, en.wikipedia.org, Firefox, gravity well, Jeff Bezos, John Gruber, Mark Zuckerberg, Menlo Park, Network effects, PageRank, PalmPilot, pre–internet, Robert X Cringely, Silicon Valley, Silicon Valley startup, skunkworks, Skype, slashdot, Snapchat, software patent, speech recognition, stealth mode startup, Steve Ballmer, Steve Jobs, Susan Wojcicki, the long tail, the new new thing, the scientific method, Tim Cook: Apple, Tony Fadell, turn-by-turn navigation, upwardly mobile, vertical integration

Page and Brin also liked him because he had been to the Burning Man festival, a meeting place for geeks. The venture capitalists liked him because he looked like, as Schmidt put it, ‘adult supervision’. Boom With a business model in place, Google could expand aggressively. It started to benefit too from the network effect among advertisers. If you advertised on Google and you got business from it, then you’d probably point people back towards it. By automating the process of bidding for an advertisement based on any search term you liked, Google also made it possible for the tiniest business to get seen by the world in a way that previous search engines hadn’t.

Being in the Xbox division, I knew all about that because those guys [from Windows and Office] would say ‘What are you [people in the division housing Xbox] doing for us? You’re just eating up all our profit and you’re spending all our money, and what for?’32 What for indeed? By mid-2005, the online advertising market was worth $5 billion and growing at 40 per cent. And the benefits were beginning to accrue to Google through a network effect: the more popular a marketplace destination is, the more it will grow compared to others because traders want to be at a place that maximizes their opportunity to trade. And Microsoft couldn’t beat the auction model. Google’s moat was repelling invaders. But Microsoft could still use its dominance on the desktop and browsers to push its new web search to prominence, couldn’t it?

It wasn’t sticky enough. Symbian was unable to form a protective moat – that combination of hardware accessories and software ecosystem – to hold its users close and prevent defection to other platforms. In addition, of course, Nokia didn’t react quickly enough, as Dediu had forecast. ‘You have to quantify the network effects [of being on a platform],’ he continues. ‘Apple’s iOS is sticky.’ And that’s where the simplistic ‘winning’ or ‘losing’ idea breaks down. ‘Each platform has a different position. I think Microsoft will buy its way in – $2 billion will buy a way in,’ Dediu says. (That’s the minimum amount Microsoft spent on its partnership with Nokia; the true cost is likely to be very much higher.)


pages: 458 words: 116,832

The Costs of Connection: How Data Is Colonizing Human Life and Appropriating It for Capitalism by Nick Couldry, Ulises A. Mejias

"World Economic Forum" Davos, 23andMe, Airbnb, Amazon Mechanical Turk, Amazon Web Services, behavioural economics, Big Tech, British Empire, call centre, Cambridge Analytica, Cass Sunstein, choice architecture, cloud computing, colonial rule, computer vision, corporate governance, dark matter, data acquisition, data is the new oil, data science, deep learning, different worldview, digital capitalism, digital divide, discovery of the americas, disinformation, diversification, driverless car, Edward Snowden, emotional labour, en.wikipedia.org, European colonialism, Evgeny Morozov, extractivism, fake news, Gabriella Coleman, gamification, gig economy, global supply chain, Google Chrome, Google Earth, hiring and firing, income inequality, independent contractor, information asymmetry, Infrastructure as a Service, intangible asset, Internet of things, Jaron Lanier, job automation, Kevin Kelly, late capitalism, lifelogging, linked data, machine readable, Marc Andreessen, Mark Zuckerberg, means of production, military-industrial complex, move fast and break things, multi-sided market, Naomi Klein, Network effects, new economy, New Urbanism, PageRank, pattern recognition, payday loans, Philip Mirowski, profit maximization, Ray Kurzweil, RFID, Richard Stallman, Richard Thaler, Salesforce, scientific management, Scientific racism, Second Machine Age, sharing economy, Shoshana Zuboff, side hustle, Sidewalk Labs, Silicon Valley, Slavoj Žižek, smart cities, Snapchat, social graph, social intelligence, software studies, sovereign wealth fund, surveillance capitalism, techlash, The Future of Employment, the scientific method, Thomas Davenport, Tim Cook: Apple, trade liberalization, trade route, undersea cable, urban planning, W. E. B. Du Bois, wages for housework, work culture , workplace surveillance

These models of economic power and social order depend on the unspoken principle of seamlessness: every barrier to data flow is a barrier to the unlimited production of social life in forms that can generate data for capital.106 The largest platforms distribute their presence across the internet via plug-ins that allow platform users, wherever they are, to link back to the resources of the platform, creating even more possibilities for aggregating data continuously across space and time.107 These power concentrations depend on the emerging social centrality of these platforms in a genuine sense, for we really do go onto platforms because we know others will be there (the so-called network effect). That is why platforms are fast becoming meaningful social infrastructures too.108 In these various ways, platforms are a principal organizational form through which capitalism’s connected social and economic order is being realized.109 They are a key tool for ensuring that the colonial-scale appropriation of data for human life becomes the norm.

His “Data for Development” program collected mobile and demographic data “for the entire country of Ivory Coast.”138 The goal is to “really know ourselves” by understanding the social context that shapes decisions and desires. By “social context” Pentland does not mean the practical settings in which action occurs and desires have meaning; instead, he means “social network effects” culled from Big Data.139 He offers an adventure in “reality mining” fueled by data as “the new oil of the internet.”140 To be fair, Pentland cares about data privacy and has developed an “Open Personal Data Store” that separates the sending of information for authentication purposes from the underlying private data that enables authentication, hopefully minimizing risks of reidentification.

See also social quantification sector information technology (IT) sector: cloud computing as largest growth sector of, 46–48; internal colonizing and social quantification sector, 55; in United States, 104 infrastructures of connection: cloud computing as episteme, 42–43; data and emerging social order of capitalism, 19–27; defined, 6; embedding of computer systems in human life, x; geography of data colonialism, 17–18; goal of, xix–xx; and historical colonial exploration, 94–95; infrastructure-as-a-service, 47–48; logistics of, 39; networked services as platforms, 51; network effect, 26–27; neural networks, 142; “tethered” devices, 15; as violent, 45–46. See also Cloud Empire; social media Instagram, 11, 110, 236n58 insurers, 136, 147 intellectual property: consent to platform use, 28–30, 93–94; copyright infringement monitoring, 59; and free-trade agreements, 105 intelligent personal assistants: and autonomy, 170; data and emerging social order of capitalism, 23; and social knowledge, 133 International Telephone & Telegraph, 96 internet: data and emerging social order of capitalism, 19–21; distributed ownership of resources by, 46–48; Free Basics (Facebook) as “free” internet, 12, 49, 97; inception of, xx; Marco Civil (Brazil) on, 181; and monopoly-monopsony hybrids, 44; net neutrality, 15; origin of, 19; traffic flow statistics, 44, 103, 136; users of, as exploited labor, 101–2.


System Error by Rob Reich

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 2021 United States Capitol attack, A Declaration of the Independence of Cyberspace, Aaron Swartz, AI winter, Airbnb, airport security, Alan Greenspan, Albert Einstein, algorithmic bias, AlphaGo, AltaVista, artificial general intelligence, Automated Insights, autonomous vehicles, basic income, Ben Horowitz, Berlin Wall, Bernie Madoff, Big Tech, bitcoin, Blitzscaling, Cambridge Analytica, Cass Sunstein, clean water, cloud computing, computer vision, contact tracing, contact tracing app, coronavirus, corporate governance, COVID-19, creative destruction, CRISPR, crowdsourcing, data is the new oil, data science, decentralized internet, deep learning, deepfake, DeepMind, deplatforming, digital rights, disinformation, disruptive innovation, Donald Knuth, Donald Trump, driverless car, dual-use technology, Edward Snowden, Elon Musk, en.wikipedia.org, end-to-end encryption, Fairchild Semiconductor, fake news, Fall of the Berlin Wall, Filter Bubble, financial engineering, financial innovation, fulfillment center, future of work, gentrification, Geoffrey Hinton, George Floyd, gig economy, Goodhart's law, GPT-3, Hacker News, hockey-stick growth, income inequality, independent contractor, informal economy, information security, Jaron Lanier, Jeff Bezos, Jim Simons, jimmy wales, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John Perry Barlow, Lean Startup, linear programming, Lyft, Marc Andreessen, Mark Zuckerberg, meta-analysis, minimum wage unemployment, Monkeys Reject Unequal Pay, move fast and break things, Myron Scholes, Network effects, Nick Bostrom, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, NP-complete, Oculus Rift, OpenAI, Panopticon Jeremy Bentham, Parler "social media", pattern recognition, personalized medicine, Peter Thiel, Philippa Foot, premature optimization, profit motive, quantitative hedge fund, race to the bottom, randomized controlled trial, recommendation engine, Renaissance Technologies, Richard Thaler, ride hailing / ride sharing, Ronald Reagan, Sam Altman, Sand Hill Road, scientific management, self-driving car, shareholder value, Sheryl Sandberg, Shoshana Zuboff, side project, Silicon Valley, Snapchat, social distancing, Social Responsibility of Business Is to Increase Its Profits, software is eating the world, spectrum auction, speech recognition, stem cell, Steve Jobs, Steven Levy, strong AI, superintelligent machines, surveillance capitalism, Susan Wojcicki, tech billionaire, tech worker, techlash, technoutopianism, Telecommunications Act of 1996, telemarketer, The Future of Employment, TikTok, Tim Cook: Apple, traveling salesman, Triangle Shirtwaist Factory, trolley problem, Turing test, two-sided market, Uber and Lyft, uber lyft, ultimatum game, union organizing, universal basic income, washing machines reduced drudgery, Watson beat the top human players on Jeopardy!, When a measure becomes a target, winner-take-all economy, Y Combinator, you are the product

The marriage of technology and capital has come to define the “move fast and break things” culture of Silicon Valley. The countercultural notion of a free and uncontrolled cyberspace has given way to the new mantra of “blitzscaling,” where companies grow as quickly as possible to grab a dominant market position, demonstrate hockey-stick growth to their investors, and lock in any potential network effects before competitors can respond. The monopolistic tendencies of two-sided markets that often appear on the internet only serve to reinforce the “winner-take-all” dominance of the largest players in each market. Name the largest online auction site? eBay. Name the second largest? Who knows. Buyers want to go to the place with the most sellers, and sellers want to go to the place with the most buyers.

One is that technology is a source of enormous progress, a force for good in the world, and a source of economic, technological, and geopolitical strength and that more than anything else, the market power of these companies reflects their success in delivering high-quality products and services to consumers. From this perspective, if government gets in the way, it risks upsetting a virtuous cycle of competition and innovation. The other view is that network effects and an absence of regulatory oversight account for a nontrivial portion of the companies’ market success. And what’s good for the companies may no longer be good for all of us. As one commentator put it, perhaps we are coming to realize that “it is possible to love the services of Facebook and Google and question whether the benefits justify the harm.”

But in recent years, the terrain has been changing fast. Both citizens and politicians are concerned about the untrammeled power and market domination of big tech. And there is increasing recognition that their power isn’t only a result of their high-quality products. Instead, their dominance reflects unique features of information technology—“network effects” in which goods or services become more valuable as more people use them—and the decidedly hostile view toward regulation that enabled the growth of the information economy in the 1990s but failed to put any meaningful constraints into place. US regulators are finally getting into the game and playing catch-up to Vestager and her EU colleagues.


pages: 412 words: 116,685

The Metaverse: And How It Will Revolutionize Everything by Matthew Ball

"hyperreality Baudrillard"~20 OR "Baudrillard hyperreality", 3D printing, Airbnb, Albert Einstein, Amazon Web Services, Apple Newton, augmented reality, Big Tech, bitcoin, blockchain, business process, call centre, cloud computing, commoditize, computer vision, COVID-19, cryptocurrency, deepfake, digital divide, digital twin, disintermediation, don't be evil, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, game design, gig economy, Google Chrome, Google Earth, Google Glasses, hype cycle, intermodal, Internet Archive, Internet of things, iterative process, Jeff Bezos, John Gruber, Kevin Roose, Kickstarter, lockdown, Mark Zuckerberg, Metcalfe’s law, Minecraft, minimum viable product, Neal Stephenson, Network effects, new economy, non-fungible token, open economy, openstreetmap, pattern recognition, peer-to-peer, peer-to-peer model, Planet Labs, pre–internet, QR code, recommendation engine, rent control, rent-seeking, ride hailing / ride sharing, Robinhood: mobile stock trading app, satellite internet, self-driving car, SETI@home, Silicon Valley, skeuomorphism, Skype, smart contracts, Snapchat, Snow Crash, social graph, social web, SpaceX Starlink, Steve Ballmer, Steve Jobs, thinkpad, TikTok, Tim Cook: Apple, TSMC, undersea cable, Vannevar Bush, vertical integration, Vitalik Buterin, Wayback Machine, Y2K

From Q4 2018 to January 2022, average monthly players increased from an estimated 76 million to more than 226 million (or 200%), while average daily players grew from around 13.7 to 54.7 (or 300%). You’ll note that daily players grew more than the monthly userbase, and engagement grew by an even larger volume (400%). Not only is Roblox becoming more popular overall; it’s becoming more popular with its users, too. We can see similar evidence of Roblox’s network effects in its financials. Roblox’s revenues are up 469% from Q4 2018 to Q4 2021, while its payments to on-platform world builders (i.e., developers) have grown 660%. In other words, the average Roblox user is spending more per hour than ever before and generating revenues faster than ever before, and with growth in these two metrics exceeding the already impressive growth in users, which is then exceeded by the growth in compensation to developers.

Based on fiscal 2021 performance, $30 goes to Apple off the top, $24 is consumed by Roblox’s core infrastructure and safety costs, and another $16 is taken up by overhead. This leaves a total of $30 in pretax gross margin dollars for Roblox to reinvest in its platform. Reinvestment spans three categories: research and development (which makes the platform better for users and developers), user acquisition (which increases network effects, value for the individual player, and revenues for developers), and developer payments (which leads to the creation of better games on Roblox). These categories receive $28, $5, and $28 (this exceeds Roblox’s target 25% due to incentives, minimum guarantees, and other commitments to developers), or $60 combined.

Second, the ability to use any device and interact with any other user led to a surge in engagement—just imagine how much less you might use Facebook if you had a different account with different friends and different photos on your PC versus on your iPhone, and if you could only message those who were using the same device as you. If the digital era has been defined by network effects and Metcalfe’s Law, then the enablement of cross-platform play instantly made these virtual worlds more valuable by joining together their forked networks. Third, this increased engagement had a disproportionate impact on those building virtual worlds. Almost all of the costs to build a game, avatar, or item on Roblox, for example, are up-front and fixed.


pages: 224 words: 64,156

You Are Not a Gadget by Jaron Lanier

1960s counterculture, Abraham Maslow, accounting loophole / creative accounting, additive manufacturing, Albert Einstein, Bear Stearns, call centre, cloud computing, commoditize, crowdsourcing, death of newspapers, different worldview, digital Maoism, Douglas Hofstadter, Extropian, follow your passion, General Magic , hive mind, Internet Archive, Jaron Lanier, jimmy wales, John Conway, John Perry Barlow, John von Neumann, Kevin Kelly, Long Term Capital Management, Neal Stephenson, Network effects, new economy, packet switching, PageRank, pattern recognition, Ponzi scheme, Project Xanadu, Ray Kurzweil, Richard Stallman, Savings and loan crisis, Silicon Valley, Silicon Valley startup, slashdot, social graph, stem cell, Steve Jobs, Stewart Brand, Stuart Kauffman, synthetic biology, technological determinism, Ted Nelson, telemarketer, telepresence, the long tail, The Wisdom of Crowds, trickle-down economics, Turing test, Vernor Vinge, Whole Earth Catalog

Google had discovered a new permanently entrenched niche enabled by the nature of digital technology. It turns out that the digital system of representing people and ads so they can be matched is like MIDI. It is an example of how digital technology can cause an explosive increase in the importance of the “network effect.” Every element in the system—every computer, every person, every bit—comes to depend on relentlessly detailed adherence to a common standard, a common point of exchange. Unlike MIDI, Google’s secret software standard is hidden in its computer cloud* instead of being replicated in your pocket.

Google, Microsoft, IBM, and various government agencies are some of the proprietors of computing clouds. * Facebook does have advertising, and is surely contemplating a variety of other commercial plays, but so far has earned only a trickle of income, and no profits. The same is true for most of the other web 2.0 businesses. Because of the enhanced network effect of all things digital, it’s tough for any new player to become profitable in advertising, since Google has already seized a key digital niche (its ad exchange). In the same way, it would be extraordinarily hard to start a competitor to eBay or Craigslist. Digital network architectures naturally incubate monopolies.


pages: 251 words: 76,128

Borrow: The American Way of Debt by Louis Hyman

Alan Greenspan, asset-backed security, barriers to entry, big-box store, business cycle, cashless society, collateralized debt obligation, credit crunch, deindustrialization, deskilling, diversified portfolio, financial engineering, financial innovation, Ford Model T, Ford paid five dollars a day, Home mortgage interest deduction, housing crisis, income inequality, low interest rates, market bubble, McMansion, mortgage debt, mortgage tax deduction, Network effects, new economy, Paul Samuelson, plutocrats, price stability, Ronald Reagan, Savings and loan crisis, statistical model, Tax Reform Act of 1986, technology bubble, transaction costs, vertical integration, women in the workforce

In Chicago, the aggressive move of some banks into the credit card field had particularly calamitous results, highlighting the challenges facing lenders in the 1960s. In Chicago, as in many regions, a group of banks banded together in 1966 to form the Midwest Bank Card System.18 Though each bank enrolled its own clients, a card issued by Bank A could be used at a retailer affiliated with Bank B. In that way, a network effect could be created similar to that enjoyed by much larger banks such as BofA. Customers and retailers alike would find Bank A’s and Bank B’s cards more convenient than either one of them independently. And when a bank got a customer in 1966, it would probably keep that customer even after BankAmericard came to town.

A few local programs remained in New York City and in certain states such as Georgia and Michigan, but by the early 1970s, most banks were aligned with either BankAmericard or Master Charge,44 which dramatically increased the usefulness of credit cards. Credit cards took off because of those new networks.45 The network effect is evident in the proliferation of card programs from 1967 to 1968 as BankAmericard and Master Charge spread. In September 1967, 197 banks offered credit cards, and by June 1968—just nine months later—that number had more than doubled, to 416.46 Yet despite the greater availability of bank cards, most retail borrowing (93 percent) remained through the store and not the bank.47 Master Charge turned out to be good for BankAmericard, which was threatening to look like a monopoly.


pages: 245 words: 72,893

How Democracy Ends by David Runciman

barriers to entry, basic income, Bernie Sanders, Big Tech, bitcoin, blockchain, Brexit referendum, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, centre right, crowdsourcing, cuban missile crisis, disinformation, Dominic Cummings, Donald Trump, Dr. Strangelove, Edward Snowden, fake news, first-past-the-post, Francis Fukuyama: the end of history, full employment, Internet of things, Jeremy Corbyn, Jon Ronson, Joseph Schumpeter, Kickstarter, Large Hadron Collider, loss aversion, Mahatma Gandhi, Mark Zuckerberg, money: store of value / unit of account / medium of exchange, mutually assured destruction, Network effects, Nick Bostrom, Norman Mailer, opioid epidemic / opioid crisis, Panopticon Jeremy Bentham, Paris climate accords, Peter Thiel, post-truth, power law, precautionary principle, quantitative easing, Russell Brand, self-driving car, Sheryl Sandberg, Silicon Valley, Steve Bannon, Steven Pinker, the long tail, The Wisdom of Crowds, Travis Kalanick, universal basic income, Yogi Berra

Where once someone who thought the British royal family are lizards in human form would have had little chance of meeting anyone else who shared that view, now like-minded conspiracy theorists are just a click away from each other. This visibility does not mean that there are more of these ideas about than ever before, only that they are more likely to achieve a critical mass. The phenomenon of network effects, where something gains in value the more people use it, holds for bad ideas as well as good ones. The more people who subscribe to a conspiracy theory, the more point there is in joining them. Social networks provide safety in numbers. But something else has changed. Conspiracy theories are no longer just for losers.

Macron, the supposed saviour of Europe from the populist scourge, used movement politics to defeat Marine Le Pen, the candidate of the far-right National Front. Le Pen found herself outflanked. Over time, her movement had turned into something more like a political party. These successful movements benefit from the power of network effects. People join because other people join: they want to be where the action is. Political movements use social media and online communication to draw voters in. They grow quickly and offer more immediate and direct political involvement than can be had from conventional party politics. For now, they look like the only forms of representative democracy that can cope with the demands of the digital age.


pages: 272 words: 76,154

How Boards Work: And How They Can Work Better in a Chaotic World by Dambisa Moyo

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Airbnb, algorithmic trading, Amazon Web Services, AOL-Time Warner, asset allocation, barriers to entry, Ben Horowitz, Big Tech, bitcoin, Black Lives Matter, blockchain, Boeing 737 MAX, Bretton Woods, business cycle, business process, buy and hold, call centre, capital controls, carbon footprint, collapse of Lehman Brothers, coronavirus, corporate governance, corporate social responsibility, COVID-19, creative destruction, cryptocurrency, deglobalization, don't be evil, Donald Trump, fake news, financial engineering, gender pay gap, geopolitical risk, George Floyd, gig economy, glass ceiling, global pandemic, global supply chain, hiring and firing, income inequality, index fund, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Jeff Bezos, knowledge economy, labor-force participation, long term incentive plan, low interest rates, Lyft, money: store of value / unit of account / medium of exchange, multilevel marketing, Network effects, new economy, old-boy network, Pareto efficiency, passive investing, Pershing Square Capital Management, proprietary trading, remote working, Ronald Coase, Savings and loan crisis, search costs, shareholder value, Shoshana Zuboff, Silicon Valley, social distancing, Social Responsibility of Business Is to Increase Its Profits, SoftBank, sovereign wealth fund, surveillance capitalism, The Nature of the Firm, Tim Cook: Apple, too big to fail, trade route, Travis Kalanick, uber lyft, Vanguard fund, Washington Consensus, WeWork, women in the workforce, work culture

From a board perspective, I believe that the question of data privacy is much more complex than these discussions make it out to be. In fact, I see two specific issues that complicate the immediate instinct to pass judgment on matters of data privacy. First is the matter of network effects. The efficacy of search engines or GPS-based maps relies on pooling vast amounts of data to verify and enhance the results. Even if we can accept that these network effects are crucial to the instantaneous retrieval of high-quality information, it is not so simple to conclude that technology companies are justified in collating and utilizing an individual’s data. Furthermore, it is an open question whether technology companies are within their rights to block users who do not grant access to their private information.


pages: 248 words: 73,689

Age of the City: Why Our Future Will Be Won or Lost Together by Ian Goldin, Tom Lee-Devlin

15-minute city, 1960s counterculture, agricultural Revolution, Alvin Toffler, Anthropocene, anti-globalists, Berlin Wall, Bonfire of the Vanities, Brixton riot, call centre, car-free, carbon footprint, Cass Sunstein, charter city, Chuck Templeton: OpenTable:, clean water, cloud computing, congestion charging, contact tracing, coronavirus, COVID-19, CRISPR, data science, David Brooks, David Ricardo: comparative advantage, decarbonisation, deindustrialization, Deng Xiaoping, desegregation, Edward Glaeser, Edward Jenner, Enrique Peñalosa, fake news, Fall of the Berlin Wall, financial engineering, financial independence, future of work, General Motors Futurama, gentrification, germ theory of disease, global pandemic, global supply chain, global village, Haight Ashbury, Hernando de Soto, high-speed rail, household responsibility system, housing crisis, Howard Rheingold, income per capita, Induced demand, industrial robot, informal economy, invention of the printing press, invention of the wheel, Jane Jacobs, Jeff Bezos, job automation, John Perry Barlow, John Snow's cholera map, Kickstarter, knowledge economy, knowledge worker, labour mobility, Lewis Mumford, lockdown, Louis Pasteur, low interest rates, low skilled workers, manufacturing employment, Marshall McLuhan, mass immigration, megacity, Neal Stephenson, Network effects, New Urbanism, offshore financial centre, open borders, open economy, Pearl River Delta, race to the bottom, Ray Oldenburg, remote working, rent control, Republic of Letters, Richard Florida, ride hailing / ride sharing, rising living standards, Salesforce, Shenzhen special economic zone , smart cities, smart meter, Snow Crash, social distancing, special economic zone, spinning jenny, Steve Jobs, Stewart Brand, superstar cities, the built environment, The Death and Life of Great American Cities, The Great Good Place, The Wealth of Nations by Adam Smith, trade liberalization, trade route, Upton Sinclair, uranium enrichment, urban decay, urban planning, urban sprawl, Victor Gruen, white flight, working poor, working-age population, zero-sum game, zoonotic diseases

The benefits of scale for firms are stronger than ever in today’s knowledge economy. US companies with revenues in excess of $10 billion generate a return on equity that is nearly four times the rate generated by firms with revenues less than $1 billion, up from 1.2 times in the 1980s.27 Part of this is the rapid growth in industries like social media that exhibit ‘network effects’, where the value of a service to users increases with the number of other users, creating a natural tendency towards a single dominant player. However, the widening differential in company performance can also be seen in many industries that do not experience these kinds of effects, suggesting there is more to the story.

Index abortion here abstract mathematics here Achaemenid Empire here Adani, Gautam here agglomeration effects here agriculture here, here, here, here, here, here, here, here, here and carbon emissions here and disease here, here productivity here, here vertical farming here Ahmedabad here air-conditioning here, here airports here, here, here, here Albuquerque here Alexandria here Allen, Paul here Allen, Thomas here Altrincham here Amazon here, here, here Amazon rainforest here Amsterdam here Anatolia here Anderson, Benedict here Anheuser-Busch here antibiotics here, here, here Antonine Plague here Anyang here apartment conversions here, here Apple here, here, here Aristotle here Arizona State University here Arlington here Assyrian merchants here Athens, Ancient here, here, here, here, here, here Atlanta here, here Austin here, here, here automation here, here, here, here, here, here, here, here axial precession here Baghdad, House of Wisdom here Baltimore here, here Bangalore here, here Bangkok here Bangladesh here, here, here, here Barlow, John Perry here Bauhaus here Beijing here, here Belmar redevelopment here Berkes, Enrico here Berlin here, here, here Berlin Wall, fall of here Bezos, Jeff here biological weapons here ‘biophilia’ here biospheres here bird flu here Birmingham here, here Black Death here, here, here Blake, William here Bloom, Nick here BMW here ‘bobo’ (bourgeois bohemian) here, here, here Boccaccio, Giovanni here Boeing here, here, here Bogota here Bologna here Bonfire of the Vanities here Borneo here Boston here, here, here Boston University here, here Brand, Stewart here Brazil here, here Brexit here, here, here Bristol here Britain broadcasting here deindustrialization here education here enclosure movement here foreign aid here high-speed rail here, here house prices here immigration here industrialization here, here infant mortality here ‘levelling up’ here life expectancy here mayoralties here per capita emissions here per capita incomes here remote working here social housing here Brixton riots here broadcasting here Bronze Age here, here, here, here bronze, and shift to iron here Brooks, David here Brynjolfsson, Eric here Burgess, Ernest here bushmeat here, here Byzantine Empire, fall of here Cairncross, Frances here Cairo here calendar, invention of here Cambridge, Massachusetts here Cambridge University here canals here, here, here ‘cancel culture’ here Cape Town here Catholic Church here C40 Cities partnership here Chadwick, Edwin here Chang’an (Xi’an) here, here, here, here Charles, Prince of Wales here charter cities here Chengdu here Chiba here Chicago here, here, here, here, here, here, here, here childbirth, average age at here childcare here, here, here, here, here China here ancient here, here, here, here call-centre workers here cereal production here civil strife here and Covid-19 pandemic here Cultural Revolution here definition of cities here economic liberalization here entry into WTO here Household Responsibility System here hukou system here One Child Policy here Open Coastal Cities here per capita emissions here rapid ageing here Special Economic Zones here technology here urbanization here China Towns here Chinese Communist Party here cholera here, here, here, here Chongqing here cities, definition of here Citigroup here city networks here civil wars here Cleveland here, here, here, here climate change here, here, here, here, here, here, here, here, here, here coastal cities here, here, here, here commuting here, here, here, here, here, here, here, here Concentric Zone Model here Confucius here conspiracy theories here Constantinople here, here containerization here, here Copenhagen here, here Corinth here Cornwall here corruption here Coventry here, here covid-19 see pandemics crime rates here ‘cyberbalkanization’ here cycling here, here, here, here Damascus here Dark Ages here, here data science here de Soto, Hernando here deforestation here, here, here, here Delhi here Dell here Delphic oracle here democracy here, here, here Democratic Republic of Congo here, here, here, here, here, here Deng Xiaoping here dengue fever here Denmark here, here Detroit here, here, here, here, here, here, here Dhaka here, here, here, here, here Dharavi here Diana, Princess of Wales here diasporas here, here Dickens, Charles here district heating systems here Dresden here drought here, here, here, here, here, here, here Drucker, Peter here dual-income households here, here Dubai here, here, here Dunbar, Kevin here Düsseldorf here East Antarctic ice sheet here East China Sea here, here Easterly, William here Eastern Mediterranean here, here, here Ebola here Edinburgh here education here, here, here, here, here, here, here, here, here, here, here, here, here, here higher education here, here, here, here; see also universities Japanese school system here Egypt here, here Ancient here, here, here, here Ehrenhalt, Alan here electric vehicles (EVs) here Engels, Friedrich here Enlightenment here Epic of Gilgamesh here Erfurt here Ethiopia here, here Euripides here European Enlightenment here exchange rates here Facebook here, here, here fake news here famine here, here fertility rates here, here, here ‘15-minute city’ principle here Fischer, Claude here Fleming, Alexander here flooding here, here, here, here, here, here, here Florida, Richard here, here food shortages here Ford, Henry here, here foreign aid here fossil fuels here, here France here, here, here, here, here, here, here, here, here, here, here Frankfurt here Franklin, Benjamin here Friedman, Thomas here, here Fryer, Roland here Fukuoka here, here Gaetani, Ruben here Galileo Galilei here Ganges River here Garden Cities here Garden of Eden here Gates, Bill here, here gay community here General Electric here General Motors here genetic engineering here gentrification here, here, here, here, here George, Andy here Germany here, here, here, here, here, here Gingrich, Newt here glaciers here Glasgow here Glass, Ruth here global financial crisis here, here, here global population, size of here globalization here, here, here, here, here, here, here, here, here, here Goldstein, Amy here Google here, here, here Goos, Maarten here Grant, Adam here Great Depression here, here Greece, Ancient here, here, here, here, here Griffith Observatory here Gropius, Walter here Gruen, Victor here Gulf Stream here Haiti here Hamburg here Hanseatic League here, here Harappa here, here Harry, Prince here Harvard University here hate speech here Haussmann, Baron here, here Hawaii here Hazlitt, William here healthcare here, here, here, here, here, here, here, here, here, here heatwaves here, here Hebei here Heckscher, Eli here Herodotus here Himalayas here Hippocrates here Hippodamus here Hittite Empire here HIV here, here Ho Chi Minh City here Holocene here, here, here homophily here Hong Kong here house prices here, here, here, here, here, here, here Houston here, here, here Howard, Ebenezer here Hudson River here Hugo, Victor here Hume, David here Hurricane Katrina here hybrid working, see remote and hybrid working ice melting here, here import substitution industrialization here InBev here India here, here, here, here, here, here, here, here, here fertility rates here Indonesia here, here Indus River here Indus Valley here, here, here inequality here, here, here, here, here, here, here, here, here, here, here infant and child mortality here, here, here, here influenza here, here, here ‘information cocoons’ here Instagram here internet here, here, here, here, here, here invention here, here, here, here, here, here, here, here, here, here irrigation here, here, here, here Italy here Jacobs, Jane here, here, here Jakarta here, here James, Sheila here Japan here, here, here, here, here, here, here, here, here post-war development here schooling system here Jenner, Edward here Jesus Christ here Jobs, Steve here jobs apprenticeships here ‘lousy’ and ‘lovely’ here tradeable and non-tradeable here Justinian Plague here Kashmir here Kenya here Kinshasa here, here Kish here knowledge workers here, here, here, here, here, here, here, here, here, here, here, here Koch, Robert here Kolkata here Korean War here Krugman, Paul here Kushim Tablet here Lagash here Lagos here, here, here, here, here, here, here Lahore here land titling programmes here Las Vegas here Latin language here Lee Kuan Yew here, here Leeds here, here Leicester here Leipzig here, here, here, here Letchworth here life expectancy here, here, here, here, here, here Liverpool here, here Ljubljana here London here, here, here, here, here, here, here bike lanes here Canary Wharf here, here Chelsea here, here, here China Town here cholera outbreaks here City of London here, here coffeehouses here and Covid-19 pandemic here financial services here gentrification here, here, here Great Stink here, here heatwaves here, here house prices here, here hybrid working here, here immigration here, here incomes here, here mayoralty here migration into inner London here population growth here, here, here poverty here, here public transport here, here, here slum housing here social housing here suburbanization here Los Angeles here, here, here, here Louisville here Luoyang here Luther, Martin here Luton Airport here Luxembourg here, here Lyon here McDonald’s here McDonnell Douglas here McLuhan, Marshall here Madagascar here malaria here, here, here, here Malaysia here Mali here malls, reinvention of here Manchester here, here, here, here, here, here, here Manila here Manning, Alan here Markle, Meghan here marriage here Marshall, Alfred here Marshall, Tim here Marx, Karl here Maya here, here measles here, here, here Meetup here mega regions here Mekong River here Memphis, Egypt here, here Mesoamerica here, here Mesopotamia here, here, here metallurgy here metaverse here methane here, here Mexico here Miami here, here, here microbiology here Microsoft here, here, here middle class, rise of here migration policy here millennial generation here Milwaukee here, here Minoan civilization here Mistry, Rohinton here MIT here MMR vaccine here ‘modernization’ theory here Mohenjo-Daro here, here Moretti, Enrico here, here mortality rates here, here, here, here, here, here, here, here, here, here, here, here motor car, invention of here Moynihan, Daniel here Mumbai here, here Mumford, Lewis here, here, here, here Munich here, here Mycenaean civilization here Nagoya here, here Nairobi here Nashville here National Landing, Arlington here Natural History Museum here natural resource exports here Nestlé here Netherlands here network effects here New Economics Foundation here New Orleans here, here New York here, here, here, here, here, here, here, here, here, here carbon emissions here and Covid-19 pandemic here gentrification here, here housing here, here, here incomes here, here Manhattan here, here, here, here, here population growth here, here and rising sea levels here slum housing here suburbanization here, here subway here waste and recycling here New York Central Railroad here New York World Fair here Newcastle here Nextdoor here Niger here Nigeria here, here, here, here Nilles, Jack here, here Nipah virus here Norway here, here Nottingham here Novgorod here ocean and air circulation here office rental and sales prices here Ohlin, Bertil here Oldenburg, Ray here online deliveries here OpenTable here Osaka here, here Oslo here Ottoman Empire here Oxford, population of here Oxford University here Pacific Belt Zone here Padua here Pakistan here, here, here pandemics here, here, here, here, here, here, here, here, here, here, here, here, here, here and zoonotic diseases here paramyxovirus here Paris here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here Paris Conference (2015) here Park Chung-hee, General here parks here Pasteur, Louis here Pearl River Delta here, here Peñalosa, Enrique here per capita income here Philadelphia here Philippines here, here Phoenix here, here Pixar here plague here, here, here, here Plato here plough, invention of here pollution here, here, here, here air pollution here, here, here, here population growth here, here, here, here, here, here, here, here PORTL here potter’s wheel, invention of here printing press here, here productivity here, here, here, here, here agricultural here, here Protestantism, rise of here public transport here, here, here, here, here, here, here, here, here, here, here, here, here, here Putnam, Robert here, here quarantine here railways here, here, here, here, here high-speed rail here, here, here Ralston Purina here Reagan, Ronald here recycling here, here religion here remote and hybrid working here, here, here, here Renaissance Florence here, here, here renewable energy here, here Republic of Letters here République des Hyper Voisins here ‘resource curse’ here Rheingold, Howard here Ricardo, David here Rio de Janeiro here Riverside, San Francisco here robotics here Rockefeller, John D. here Roman Empire here, here, here Rome, Ancient here, here, here, here, here, here Romer, Paul here Rotterdam here Rousseau, Jean-Jacques here, here Sahel here, here sailboat, invention of here St Augustine here St Louis here, here, here Salesforce here San Diego here San Francisco here, here, here, here, here, here, here, here, here, here, here gentrification here, here hybrid working here, here San Francisco Bay Area here, here, here Santa Fe here São Paulo here Savonarola, Girolamo here Scientific American here Scott, Emmett J. here sea levels, rising here, here, here Seattle here, here, here, here, here, here Second Opium War here Seneca here Seoul here Shanghai here, here, here, here, here Shantou here Sheffield here, here, here Shen Nung here Shenzhen here, here Siemens here Silk Roads here, here Sinclair, Upton here Singapore here, here, here, here Slater, Samuel here smallpox here, here Smith, Adam here, here Snow, John here social capital here social housing here, here social media here, here, here, here, here Socrates here solar panels here South Africa here South Korea here, here, here, here, here, here Southdale Center here specialization here, here, here, here, here, here Spengler, Oswald here Starbucks here Stephenson, Neal here Stewart, General William here Stuttgart here Sub-Saharan Africa here subsidiarity principle here suburbanization here, here, here, here, here, here, here, here, here Sunstein, Cass here Sweden here, here Sydney here, here, here, here, here, here Syrian refugees here, here Taiwan here Tanzania here telegraph here Tempest, Kae here Thailand here Thames River here, here Thatcher, Margaret here, here, here ‘third places’ here Tianjin here Tocqueville, Alexis de here Toffler, Alvin here Tokyo here, here, here, here trade liberalization here trade routes here Trump, Donald here, here tuberculosis here, here, here Twain, Mark here Twitter here, here typhoid here, here typhus here, here Uber here Uganda here Ukraine here, here Umayyad Caliphate here unemployment here, here United Nations here, here United States anti-global populism here anti-trust regulation and industrial consolidation here anxiety and depression here broadcasting here car registrations here cost of education here decline in trust here deindustrialization here Gilded Age here Great Migration here house prices here, here immigration here industrialization here inequality here labour mobility here ‘magnet schools’ here parking spaces here patent filings here per capita emissions here, here per capita incomes here remote working here, here, here return on equity here Rust Belt here schools funding here slavery here socioeconomic mobility here suburbanization here tax revenues here US Federal Housing Authority here US General Social Survey here US Trade Adjustment Assistance Program here universities here, here, here University College London here University of Texas here university-educated professionals here Ur here urban heat island effect here urbanism, subcultural theory of here Uruk here, here, here, here, here vaccines here, here Van Alstyne, Marshall here Vancouver here Venice here, here Vienna here, here Vietnam here voluntary associations here, here Wakefield, Andrew here walking here, here, here Wall Street here Warwick University here Washington University here WELL, The here Welwyn Garden City here wheel, invention of here wildfires here, here William the Conqueror here Wilson, Edward Osborne here, here Wilson, William here World Bank here, here World Health organization here World Trade Organization here World Wide Web here writing, invention of here Wuhan here, here Xiamen here Yangtze River here, here Yangtze River Delta here yellow fever here Yellow River here, here Yersinia pestis here Yokohama here YouTube here, here Yu the Great here Zhuhai here Zoom here Zoroastrianism here BLOOMSBURY CONTINUUM Bloomsbury Publishing Plc 50 Bedford Square, London, WC1B 3DP, UK 29 Earlsfort Terrace, Dublin 2, Ireland BLOOMSBURY, BLOOMSBURY CONTINUUM and the Diana logo are trademarks of Bloomsbury Publishing Plc This electronic edition first published in Great Britain 2023 Copyright © Ian Goldin and Tom Lee-Devlin 2023 Ian Goldin and Tom Lee-Devlin have asserted their right under the Copyright, Designs and Patents Act, 1988, to be identified as Authors of this work All rights reserved.


pages: 428 words: 134,832

Straphanger by Taras Grescoe

active transport: walking or cycling, Affordable Care Act / Obamacare, airport security, Albert Einstein, big-box store, bike sharing, Boeing 747, Boris Johnson, British Empire, call centre, car-free, carbon credits, carbon footprint, carbon tax, City Beautiful movement, classic study, company town, congestion charging, congestion pricing, Cornelius Vanderbilt, correlation does not imply causation, David Brooks, deindustrialization, Donald Shoup, East Village, edge city, Enrique Peñalosa, extreme commuting, financial deregulation, fixed-gear, Frank Gehry, gentrification, glass ceiling, Golden Gate Park, Great Leap Forward, high-speed rail, housing crisis, hydraulic fracturing, indoor plumbing, intermodal, invisible hand, it's over 9,000, Jane Jacobs, Japanese asset price bubble, jitney, Joan Didion, Kickstarter, Kitchen Debate, laissez-faire capitalism, Marshall McLuhan, mass immigration, McMansion, megacity, megaproject, messenger bag, mortgage tax deduction, Network effects, New Urbanism, obamacare, oil shale / tar sands, oil shock, Own Your Own Home, parking minimums, peak oil, pension reform, Peter Calthorpe, Ponzi scheme, Ronald Reagan, Rosa Parks, sensible shoes, Silicon Valley, Skype, streetcar suburb, subprime mortgage crisis, the built environment, The Death and Life of Great American Cities, the High Line, transit-oriented development, union organizing, urban planning, urban renewal, urban sprawl, walkable city, white flight, working poor, young professional, Zipcar

“The challenge of getting people out of their cars,” he told me, “involves providing them with a comprehensive package of alternatives and not getting too excited about which one of them they use.” The key lies in boosting what Mees calls the network effect. Transit agencies need to knit different routes into a single, multimodal network, one where transfers between lines are effortless. Since trip origins and destinations have become increasingly dispersed, transit has to provide links between suburbs, not just between suburbs and downtown. For the network effect to come into its own, and for transit to truly imitate the flexibility of the car, service must be frequent, even if that means vehicles sometimes run empty.

In the 1950s, influential studies set the threshold for economical transit at 25,000 people per square mile, or about forty an acre. Mees argues this number has been repeated mindlessly ever since, often as justification for killing less frequented transit lines; setting the bar this high also ignores the chief benefit of the network effect: busy trunk lines can cross-subsidize sparsely used bus routes through even the lowest-density suburbia. I’m not as optimistic as Mees about transit’s potential for replacing cars in places like Phoenix. The issue for me is not density, but the physical realities of edge cities and sprawled metropolises.


pages: 532 words: 139,706

Googled: The End of the World as We Know It by Ken Auletta

"World Economic Forum" Davos, 23andMe, AltaVista, An Inconvenient Truth, Andy Rubin, Anne Wojcicki, AOL-Time Warner, Apple's 1984 Super Bowl advert, Ben Horowitz, bioinformatics, Burning Man, carbon footprint, citizen journalism, Clayton Christensen, cloud computing, Colonization of Mars, commoditize, company town, corporate social responsibility, creative destruction, death of newspapers, digital rights, disintermediation, don't be evil, facts on the ground, Firefox, Frank Gehry, Google Earth, hypertext link, Innovator's Dilemma, Internet Archive, invention of the telephone, Jeff Bezos, jimmy wales, John Markoff, Kevin Kelly, knowledge worker, Larry Ellison, Long Term Capital Management, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, Mary Meeker, Menlo Park, Network effects, new economy, Nicholas Carr, PageRank, Paul Buchheit, Peter Thiel, Ralph Waldo Emerson, Richard Feynman, Sand Hill Road, Saturday Night Live, semantic web, sharing economy, Sheryl Sandberg, Silicon Valley, Skype, slashdot, social graph, spectrum auction, stealth mode startup, Stephen Hawking, Steve Ballmer, Steve Jobs, strikebreaker, Susan Wojcicki, systems thinking, telemarketer, the Cathedral and the Bazaar, the long tail, the scientific method, The Wisdom of Crowds, Tipper Gore, Upton Sinclair, vertical integration, X Prize, yield management, zero-sum game

So Microsoft offered a free browser to knock out the Netscape browser and attacked Java software that might “facilitate competition with the underlying operating system.” Google’s power flows from a different source, he said. “They have produced this amazing machine for building data, and that data has its own ‘network effect’”—the more people who use it, the more data generated, the more advertisers flock to it. “Everything sits on top of that layer, starting with search. Every time you search, you give Google some value because you pick a certain result. And every time you pick a result, Google learns something from that.

No one can predict with certainty where Google and the digital wave is heading, when it will crest, or who it will flatten. If the public or its representatives come to believe Google plays favorites, aims to monopolize knowledge or its customers, invades their privacy, or arrogantly succumbs, in the words of Clayton Christensen, “to the falsehood that you can grow and grow because of network effects,” then it will be more vulnerable. If Google maintains its deposit of public trust—continuing to put users first—and if it stays humble and moves with the swiftness of a fox, it will be difficult to catch. Other companies have profoundly disrupted the business landscape. Think of the Ford automobile or the Intel chip.

See Data collection by Google; Privacy CPC (cost per click) development of DoubleClick effectiveness of ads, measuring future pressures in Gmail Gmail problem Google Ad Planner Google as Big Brother view Google Audio Ads Google News as Google option Google policy Google Print Ads Google TV Ads and Google values Google viewpoint on importance to Americans initial resistance to method, advantages of on mobile devices network effect versus old media ads. See Advertising, traditional; Old media and Patriot Act privacy versus user trust revenues sales force syndication of ads and YouTube Google Analytics, function of Google Audio Ads Google Books Google Book Search Google Checkout Google Content Network Google Desktop Google Desktop Search Google Docs Google Earth Google employees dog policy engineering staff.


pages: 494 words: 142,285

The Future of Ideas: The Fate of the Commons in a Connected World by Lawrence Lessig

AltaVista, Andy Kessler, AOL-Time Warner, barriers to entry, Bill Atkinson, business process, Cass Sunstein, commoditize, computer age, creative destruction, dark matter, decentralized internet, Dennis Ritchie, disintermediation, disruptive innovation, Donald Davies, Erik Brynjolfsson, Free Software Foundation, Garrett Hardin, George Gilder, Hacker Ethic, Hedy Lamarr / George Antheil, history of Unix, Howard Rheingold, Hush-A-Phone, HyperCard, hypertext link, Innovator's Dilemma, invention of hypertext, inventory management, invisible hand, Jean Tirole, Jeff Bezos, John Gilmore, John Perry Barlow, Joseph Schumpeter, Ken Thompson, Kenneth Arrow, Larry Wall, Leonard Kleinrock, linked data, Marc Andreessen, Menlo Park, Mitch Kapor, Network effects, new economy, OSI model, packet switching, peer-to-peer, peer-to-peer model, price mechanism, profit maximization, RAND corporation, rent control, rent-seeking, RFC: Request For Comment, Richard Stallman, Richard Thaler, Robert Bork, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, Silicon Valley, smart grid, software patent, spectrum auction, Steve Crocker, Steven Levy, Stewart Brand, systematic bias, Ted Nelson, Telecommunications Act of 1996, the Cathedral and the Bazaar, The Chicago School, tragedy of the anticommons, Tragedy of the Commons, transaction costs, vertical integration, Yochai Benkler, zero-sum game

I am not claiming IPSec would necessarily be consistent with end-to-end, but simply that it provides a consistent protocol that could be implemented consistent with end-to-end. 53 Garrett Hardin, “The Tragedy of the Commons,” Science 162 (1968): 1243, 1244 (emphasis added). 54 National Research Council, 24-25. 55 As Faulhaber put it, “[T]he third view is that, as Adam Smith pointed out, producers are always conspiring about how to fleece the unsuspecting consuming public; it is only the competitive market that keeps their avarice in check. But producers will always search for ways to escape competition, through marketing, customer lock-in, predatory pricing, network effects, etc. AND . . . technological innovation is just a part of this strategic quest for greater profits, perhaps at the consumers' expense.” “Faulhaber Comments at E-2-E Workshop,” http://www.law.stanford.edu/e2e/papers.html. François Bar has made a similar point: “If the Internet could reduce friction, the same technology can also be deployed to create more of it.”

., 26. 67 Ibid. 68 A similar skepticism has been raised about strong property rights where network externalities are strong. See Pamela Samuelson et al., “Manifesto Concerning the Legal Protection of Computer Programs,” Columbia Law Review 94 (1994): 2308, 2375, citing Joseph Farrell, “Standardization and Intellectual Property,” Jurimetrics Journal 30 (1989): 35, 36-38, 45-46 (discussing network effects). 69 See, e.g., Josh Lerner, “150 Years of Patent Protection” (NBER Working Paper No. 7477, January 2000) (examines 177 policy changes in the strength of protection across sixty countries, over a 150-year period, and concludes that strengthening patent protection had few positive effects on patent applications in the country making the policy change); Mariko Sakakibara and Lee Branstetter, “Do Stronger Patents Induce More Innovation?

See also Kahin, 3-4 (“At the level of individual patents, patents may benefit small firms more than large firms because small-firm options for appropriating returns from innovation are fewer. For example, small firms may be less able to exploit first-mover advantages. At the portfolio level, large firms with large portfolios benefit disproportionately from network effects and economies of scale and scope. This includes their ability to manage transaction costs, which is the subject of the third perspective that I will explore at greater length.”); Kahin, 4 (“Small firms [with some exceptions] are generally disadvantaged because they lack in-house patent counsel and their business focus can be easily distracted by litigation or even claims of infringement.”). 104 “In the short run, individual patents work to [the benefit of small firms], while in the long run and in the aggregate, patents favor large firms.


pages: 457 words: 128,838

The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Paul Vigna, Michael J. Casey

Airbnb, Alan Greenspan, altcoin, Apple Newton, bank run, banking crisis, bitcoin, Bitcoin Ponzi scheme, blockchain, Bretton Woods, buy and hold, California gold rush, capital controls, carbon footprint, clean water, Cody Wilson, collaborative economy, collapse of Lehman Brothers, Columbine, Credit Default Swap, cross-border payments, cryptocurrency, David Graeber, decentralized internet, disinformation, disintermediation, Dogecoin, driverless car, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, Firefox, Flash crash, Ford Model T, Fractional reserve banking, Glass-Steagall Act, hacker house, Hacker News, Hernando de Soto, high net worth, informal economy, intangible asset, Internet of things, inventory management, Joi Ito, Julian Assange, Kickstarter, Kuwabatake Sanjuro: assassination market, litecoin, Long Term Capital Management, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, McMansion, means of production, Menlo Park, mobile money, Money creation, money: store of value / unit of account / medium of exchange, Nelson Mandela, Network effects, new economy, new new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, off-the-grid, offshore financial centre, payday loans, Pearl River Delta, peer-to-peer, peer-to-peer lending, pets.com, Ponzi scheme, prediction markets, price stability, printed gun, profit motive, QR code, RAND corporation, regulatory arbitrage, rent-seeking, reserve currency, Robert Shiller, Ross Ulbricht, Satoshi Nakamoto, seigniorage, shareholder value, sharing economy, short selling, Silicon Valley, Silicon Valley startup, Skype, smart contracts, special drawing rights, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, supply-chain management, Ted Nelson, The Great Moderation, the market place, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, Turing complete, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, underbanked, Vitalik Buterin, WikiLeaks, Y Combinator, Y2K, zero-sum game, Zimmermann PGP

* * * Anyone can become a miner and is free to use whatever computing equipment he or she can come up with to participate. Nakamoto knew that as more miners entered the hunt, the incentive would be strong to ramp up computing power to beat the competition. So to keep everything in sync, he programmed the bitcoin algorithm to calculate the so-called hashrate of the overall network—effectively, the total computational capacity per second—and automatically adjust the mathematical puzzle’s difficulty so that blocks would become harder to seal off. That way, the bitcoin reward program could more or less stick to an ingrained ten-minute-per-block schedule. The ten-minute gap is somewhat arbitrary, but by choosing an interval and programming the software to stick to that fixed schedule, he could arrange the currency-issuance schedule to be consistent over a 130-year period.

As a group of businesses in one region begins adopting the currency, it will become more appealing to others with whom they do business. Once such a network of intertwined businesses builds up, no one wants to be excluded from it. Or so the theory goes. “Just as American retail collapsed into Walmart, who knows how much can collapse into us? And I don’t mean Overstock. I mean bitcoin,” Byrne said. “You start getting network effects. You are incentivizing everyone—it’s like we have the first fax machine but nobody else has a fax machine, so it doesn’t do you any good. But you start adding other nodes and making incentives to add nodes and eventually get a critical mass. Now people aren’t just faxing us, they are faxing each other

Imagine how much wider the use of cryptocurrency would be if a major retailer such as Walmart switched to a blockchain-based payment network in order to cut tens of billions of dollars in transaction costs off the $350 billion it sends annually to tens of thousands of suppliers worldwide. What if, further, such a player really got religion, as Overstock CEO Patrick Byrne did with his plan to incentivize suppliers to accept bitcoin? That way it would foment changes that go far beyond its direct payment relationships. With networking effects like that in mind, it’s not hard to imagine a Walmart-like player feeding the spread of adoption until a critical mass of self-reinforcement is reached. (For the record, we have no idea of Walmart’s current thinking on cryptocurrency.) The major catalyst for adoption might be a government seeking to reduce procurement costs or bring greater transparency to governance.


pages: 468 words: 137,055

Crypto: How the Code Rebels Beat the Government Saving Privacy in the Digital Age by Steven Levy

Albert Einstein, Bletchley Park, Claude Shannon: information theory, cognitive dissonance, Compatible Time-Sharing System, computer age, disinformation, Donald Knuth, Eratosthenes, Extropian, Fairchild Semiconductor, information security, invention of the telegraph, Jim Simons, John Gilmore, John Markoff, John Perry Barlow, Kevin Kelly, knapsack problem, Marc Andreessen, Mitch Kapor, MITM: man-in-the-middle, Mondo 2000, Network effects, new economy, NP-complete, quantum cryptography, Ronald Reagan, Saturday Night Live, Silicon Valley, Simon Singh, Stephen Hawking, Steven Levy, Watson beat the top human players on Jeopardy!, web of trust, Whole Earth Catalog, zero-sum game, Zimmermann PGP, éminence grise

There was a definite Catch-22 aspect to claiming crypto as intellectual property: if algorithms were patented, then they could be used only by those who licensed them from the owners (presumably for a fee). But such tariffs might create a disincentive to universal adoption. If crypto was to be useful on a large scale, it stood to reason that everyone had to be using the same system, a convergence that would come about much more quickly if the system was free. It was a classic example of the Network Effect, a positive feedback loop in which value comes only with ubiquity. If everyone wasn’t using the same algorithms, then communicating with others in secret would be infinitely more difficult. It would be as if Bob had to worry about what brand of phone Alice used before he could ring her up. Not that this bothered the institutions that helped subsidize the public key research.

By then, Diffie had decided not to work for RSA formally—“I’ve never had a start-up personality; I’ve never been able to work on anything but what I was interested in at the moment,” he later explained. The company instead needed people like Rivest, who could focus his attention and write thousands of lines of product code in a few weeks. Bidzos had himself become quite an explicator of the crypto revolution. He understood completely how what would later be called the Network Effect was absolutely crucial when it came to public key cryptography: its value increased exponentially by the degree to which it spread throughout the population. For that reason, he almost always insisted that RSA be built into the basic product, so buyers would get crypto without specifically having to ask for it.

To do this, it had to be written in a computer language that was amenable to all sorts of different processors, and as any programmer knew, the language that best satisfied that requirement was called C. Fortunately, Zimmermann knew C inside out. The program also had to be easy to use. And its circulation had to be so widespread that a near-ubiquity could quickly be realized. Thus it would benefit by the Network Effect. Charlie Merritt was a holdout who still hadn’t tackled C, but he was strong in an area where Zimmermann was sadly deficient: the complicated mathematics that enabled one to work with the huge numbers required by RSA. This was particularly important in implementing RSA on a personal computer, which used 8-bit “words” in its calculations: it was a challenging process to apply those relatively small numbers in a way that could process the mighty numbers that RSA demanded—512 bits, 1028 bits, and even more.


pages: 283 words: 85,824

The People's Platform: Taking Back Power and Culture in the Digital Age by Astra Taylor

"World Economic Forum" Davos, A Declaration of the Independence of Cyberspace, Aaron Swartz, Alan Greenspan, American Legislative Exchange Council, Andrew Keen, AOL-Time Warner, barriers to entry, Berlin Wall, big-box store, Brewster Kahle, business logic, Californian Ideology, citizen journalism, cloud computing, collateralized debt obligation, Community Supported Agriculture, conceptual framework, content marketing, corporate social responsibility, creative destruction, cross-subsidies, crowdsourcing, David Brooks, digital capitalism, digital divide, digital Maoism, disinformation, disintermediation, don't be evil, Donald Trump, Edward Snowden, Evgeny Morozov, Fall of the Berlin Wall, Filter Bubble, future of journalism, Gabriella Coleman, gentrification, George Gilder, Google Chrome, Google Glasses, hive mind, income inequality, informal economy, Internet Archive, Internet of things, invisible hand, Jane Jacobs, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Perry Barlow, Julian Assange, Kevin Kelly, Kickstarter, knowledge worker, Laura Poitras, lolcat, Mark Zuckerberg, means of production, Metcalfe’s law, Naomi Klein, Narrative Science, Network effects, new economy, New Journalism, New Urbanism, Nicholas Carr, oil rush, peer-to-peer, Peter Thiel, planned obsolescence, plutocrats, post-work, power law, pre–internet, profit motive, recommendation engine, Richard Florida, Richard Stallman, self-driving car, shareholder value, sharing economy, Sheryl Sandberg, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, slashdot, Slavoj Žižek, Snapchat, social graph, Steve Jobs, Stewart Brand, technological solutionism, technoutopianism, TED Talk, the long tail, trade route, Tragedy of the Commons, vertical integration, Whole Earth Catalog, WikiLeaks, winner-take-all economy, Works Progress Administration, Yochai Benkler, young professional

In his book Linked, physicist Albert-László Barabási investigated network phenomena by mapping online space and came to this dramatic conclusion: “The most intriguing result … is the complete absence of democracy, fairness, and egalitarian values on the Web.” These dynamics partly explain why, for all of its overwhelming, exciting variation, the Internet has a strange tendency toward monopoly. Aided by preferential attachment and network effects (the phenomenon of a good or service becoming more valuable the more people who use it), a handful of winners emerge, overshadowing other available options. While you can find something related to any subject online—medieval polyphonic music, lepidoptery, retroviruses, you name it—there is still one leading search engine (Google), one major bookstore (Amazon), one predominant market (eBay), one popular place to see movies (Netflix—a site that accounts for more than 40 percent of U.S. bandwidth usage most evenings), and so on.

“Big sucks the traffic out of small,” Yuri Milner, an investor who owns a chunk of Facebook, told Wired magazine. “In theory you can have a few very successful individuals controlling hundreds of millions of people. You can become big fast, and that favors the domination of strong people.” Preferential attachment, network effects, and the power laws they produce matter, in part, because they intensify and epitomize the old inequities we hoped the Internet would overthrow, from the star system to the hit-driven manufacturing of movies, music, and books. Winner-take-all markets promote certain types of culture at the expense of others, can make it harder for niche cultures and late bloomers to flourish, and contribute to broader income inequality.26 More specifically, where cultural production is concerned, the persistence of power laws refutes the myth of independent creators competing on even ground.


pages: 411 words: 80,925

What's Mine Is Yours: How Collaborative Consumption Is Changing the Way We Live by Rachel Botsman, Roo Rogers

"World Economic Forum" Davos, Abraham Maslow, Airbnb, Apollo 13, barriers to entry, behavioural economics, Bernie Madoff, bike sharing, Buckminster Fuller, business logic, buy and hold, carbon footprint, Cass Sunstein, collaborative consumption, collaborative economy, commoditize, Community Supported Agriculture, credit crunch, crowdsourcing, dematerialisation, disintermediation, en.wikipedia.org, experimental economics, Ford Model T, Garrett Hardin, George Akerlof, global village, hedonic treadmill, Hugh Fearnley-Whittingstall, information retrieval, intentional community, iterative process, Kevin Kelly, Kickstarter, late fees, Mark Zuckerberg, market design, Menlo Park, Network effects, new economy, new new economy, out of africa, Paradox of Choice, Parkinson's law, peer-to-peer, peer-to-peer lending, peer-to-peer rental, planned obsolescence, Ponzi scheme, pre–internet, public intellectual, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Shiller, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, Simon Kuznets, Skype, slashdot, smart grid, South of Market, San Francisco, Stewart Brand, systems thinking, TED Talk, the long tail, The Nature of the Firm, The Spirit Level, the strength of weak ties, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thorstein Veblen, Torches of Freedom, Tragedy of the Commons, transaction costs, traveling salesman, ultimatum game, Victor Gruen, web of trust, women in the workforce, work culture , Yochai Benkler, Zipcar

A single phone is useless, but the more people who own telephones, the more valuable the telephone is to each owner as the total number of people on the network increases. Similarly, the more users who participate in programs such as Landshare, Airbnb, or bike sharing, the better the system works for everyone—there is a “network effect.” Every single person who joins or uses Collaborative Consumption creates value for another person, even if this was not the intention. Trust Between Strangers The second intersection of Ostrom’s research with Collaborative Consumption is her idea that “commoners” can self-govern shared resources if they are empowered with the right tools to coordinate projects or specific needs, and the right to monitor each other.

Hundreds of thousands of early users spread the brand through discussing a new service called VoIP, whereby you could call people anywhere in the world for free on blogs, Facebook, and forums. Skype made it easy for the brand to go viral by providing users with items they could easily share, such as Skype buttons for personal Web sites. Within a couple of years, the verb “to Skype” was being used almost as often as “to Google.” The network effect was in play. Given that any Skype user can call any other Skype user, it was in the early adopters’ self-interest to get their friends and relatives to sign up to Skype, not Vonage or Go2Call or any other VoIP service. But awareness of Skype grew at a rapid rate primarily because people felt that they made a discovery of something new and valuable and immediately wanted to talk it up.


pages: 302 words: 84,881

The Digital Party: Political Organisation and Online Democracy by Paolo Gerbaudo

Airbnb, barriers to entry, basic income, Bernie Sanders, bitcoin, Californian Ideology, call centre, Cambridge Analytica, centre right, creative destruction, crowdsourcing, data science, digital capitalism, digital divide, digital rights, disintermediation, disruptive innovation, Donald Trump, Dunbar number, Edward Snowden, end-to-end encryption, Evgeny Morozov, feminist movement, gig economy, industrial robot, Jaron Lanier, Jeff Bezos, Jeremy Corbyn, jimmy wales, Joseph Schumpeter, Mark Zuckerberg, Network effects, Occupy movement, offshore financial centre, oil shock, post-industrial society, precariat, Ralph Waldo Emerson, Richard Florida, Richard Stallman, Ruby on Rails, self-driving car, Silicon Valley, Skype, Slavoj Žižek, smart cities, Snapchat, social web, software studies, Stewart Brand, technological solutionism, technoutopianism, the long tail, Thomas L Friedman, universal basic income, vertical integration, Vilfredo Pareto, WikiLeaks

Second, these companies are based on a free membership model in which users do not need to pay for access, sometimes having to pay only for additional services (the ‘freemium’ model). Funding comes mostly from advertisement and from sale of user data and connected services to third parties. Such openness goes hand in hand, paradoxically, with the closed or ‘enclosed’ character of such systems, fencing in users and their data as a means of leveraging ‘network effects’.146 Hence the talking about these platforms as ‘digital enclosures’ which, while open to users, end up progressively trapping them. Third, in order to gather data, digital companies vastly rely on the free labour of their members and ‘user-generated content’, namely information that is produced not by paid staff, but by ordinary people as they interact on the platform.

Karl Marx, A contribution to the critique of political economy (London: International Library, 1904). 143. Daniel J. Boorstin. The image: a guide to pseudo-events in America (New York: Vintage, 2012). 144. Joss Hands, ‘Platform communism’, Culture Machine 14 (2013). 145. Tarleton Gillespie, ‘The politics of ‘platforms’, New Media & Society 12, no.3 (2010): 347–364. 146. Network effect describes the way in which a product becomes more valuable as more people use it, hence the alternate definition as demand-side economy of scale. See Albert-László Barabási and Réka Albert, ‘Emergence of scaling in random networks’. Science 286, no.5439 (1999): 509–512. 147. Tiziana Terranova, ‘Free labor: producing culture for the digital economy’, Social Text 18, no.2 (2000): 33–58. 148.


pages: 315 words: 85,791

Technical Blogging: Turn Your Expertise Into a Remarkable Online Presence by Antonio Cangiano

23andMe, Albert Einstein, anti-pattern, bitcoin, bounce rate, cloud computing, content marketing, en.wikipedia.org, Hacker News, John Gruber, Kickstarter, Lean Startup, lolcat, Network effects, Paradox of Choice, revision control, Ruby on Rails, search engine result page, slashdot, software as a service, web application

This means that new updates I posted on the page appeared in the News Feeds of these fans, who could then interact with the updates by liking them, commenting on them, or even sharing them with their friends. And hopefully their friends will do the same in turn, and so on. If your updates are engaging and your fans loyal enough, you can leverage a network effect and reach thousands of people’s News Feeds very quickly. For Twitter, I did something similar. I announced the new account from my personal Twitter account, leveraging my existing contacts in this case as well. If you don’t have the luxury of an existing account and network, fear not.

Finally, when visitors like your fan page through your site, they’ll increase your Facebook counter, automatically subscribe to your updates on Facebook, and broadcast that they just liked you to their friends. A small percentage of their friends may decide to like you as well, and in turn, some of their followers will too, and so on. Again, a network effect can take place if enough people genuinely like your brand/site/blog. For Facebook, opt to use the official Like button so as to show a random assortment of your followers. Faces add a powerful human element to what you’re doing and may increase trust for your project or business as well as invite others to like the page also.


pages: 239 words: 80,319

Lurking: How a Person Became a User by Joanne McNeil

"World Economic Forum" Davos, 4chan, A Declaration of the Independence of Cyberspace, Ada Lovelace, Adam Curtis, Airbnb, AltaVista, Amazon Mechanical Turk, Andy Rubin, benefit corporation, Big Tech, Black Lives Matter, Burning Man, Cambridge Analytica, Chelsea Manning, Chris Wanstrath, citation needed, cloud computing, context collapse, crowdsourcing, data science, deal flow, decentralized internet, delayed gratification, dematerialisation, disinformation, don't be evil, Donald Trump, drone strike, Edward Snowden, Elon Musk, eternal september, fake news, feminist movement, Firefox, gentrification, Google Earth, Google Glasses, Google Hangouts, green new deal, helicopter parent, holacracy, Internet Archive, invention of the telephone, Jeff Bezos, jimmy wales, John Perry Barlow, Jon Ronson, Julie Ann Horvath, Kim Stanley Robinson, l'esprit de l'escalier, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, Max Levchin, means of production, Menlo Park, Mondo 2000, moral panic, move fast and break things, Neal Stephenson, Network effects, packet switching, PageRank, pre–internet, profit motive, Project Xanadu, QAnon, real-name policy, recommendation engine, Salesforce, Saturday Night Live, Sheryl Sandberg, Shoshana Zuboff, Silicon Valley, slashdot, Snapchat, social graph, Social Justice Warrior, Stephen Hawking, Steve Jobs, Steven Levy, Stewart Brand, subscription business, surveillance capitalism, tech worker, techlash, technoutopianism, Ted Nelson, TED Talk, Tim Cook: Apple, trade route, Turing complete, Wayback Machine, We are the 99%, web application, white flight, Whole Earth Catalog, you are the product

, the contrail of status updates became a user’s identity; the archive was more of a zoetrope than a photograph. Public assumptions about shared content shifted from a belief that posts were temporary and ephemeral to an expectation that even casual updates were enduring and entrenched. Online content wasn’t “forever,” as Brad Paisley insisted, but there was resilience due to the network effect of more users connected, while anchored with the coercive stability of mega-companies like Facebook and Google. The social memory of someone’s post can feel like forever, even if a user deletes it—and especially when content travels beyond intended immediate circles. Platforms for the masses, rather than specific groups, meant a user could share with broader audiences, by accident or intention.

Then there is its insidious “free basics” program, which offered internet service to developing countries for free through their platform—hooking in vulnerable people as users and locking them in, as well as their relatives in the diaspora who sign in to keep up with family back home. All of these individuals are subject to Facebook’s crass sorting methods. It is a privilege to delete Facebook, because the social network is built to be coercive. The network effect is that everyone is stuck, some more than others. We can, as individuals, always do our part to make the social sacrifice of leaving Facebook less painful. For example, someone creating an event page on Facebook might also set up another page on the web, just so non-users can see it (services like Eventbrite let you do this).


pages: 361 words: 86,921

The End of Medicine: How Silicon Valley (And Naked Mice) Will Reboot Your Doctor by Andy Kessler

airport security, Andy Kessler, Bear Stearns, bioinformatics, Buckminster Fuller, call centre, Dean Kamen, digital divide, El Camino Real, employer provided health coverage, full employment, George Gilder, global rebalancing, Law of Accelerating Returns, low earth orbit, Metcalfe’s law, moral hazard, Network effects, off-the-grid, pattern recognition, personalized medicine, phenotype, Ray Kurzweil, Richard Feynman, Sand Hill Road, Silicon Valley, stem cell, Steve Jurvetson, vertical integration

Maybe we’ll check out the mass spec lab and you can see the output and it’ll make more sense.” I looked out the window. We were coming into Boeing Field. I’ve driven by there tons of times, after landing in SeaTac on the long taxi ride into Seattle. Cool. This was convenient, probably a five- or ten-minute drive into town. Don went on about an informational network effect and biomarker bank but I was enjoying the approach too much to pay attention anymore. We hit the runway a little hard, but no big deal, that happens on 757s all the time. No problem, we were wheels down on the runway, and Don was going on about a consortium with a Korean institute and their analytics when a loud boom came from under the jet.

Lee Moffitt Cancer Center Hodgkin’s disease Honda, Mike hormones hospitals: bed space in emergency rooms of expenses for length of stays in necessity of Hounsfield, Godfrey Huffman, Andy Human Genome Project Human Genome Science (HGS) “Hutch, the,” see Fred Hutchinson Cancer Research Center hybridoma hypertension, see blood pressure hysterectomies IBM iCAD ID-9 codes illness: asymptomatic chronic early detection of rare Imatron ImClone Immelt, Jeffrey immune deficiencies immune system immunology Impinge implantable cardioverter defibrillators (ICDs) imprint lithography incompleteness theorem individual retirement accounts (IRAs) infant survival rates infarct core inflammation informatics informational network effect InSightec insulin insurance, health: co-payments for as employee benefit premiums for reimbursements by surgery covered by technology covered by tests covered by see also Medicaid; Medicare integrin molecules Intel intellectual property International HapMap Project Internet internists Intuitive Surgical ionization Iressa isoflurane Is Prevention Better Than Cure?


pages: 81 words: 24,626

The Internet of Garbage by Sarah Jeong

4chan, Aaron Swartz, Brian Krebs, Compatible Time-Sharing System, crowdsourcing, John Markoff, Kickstarter, Network effects, Silicon Valley, Social Justice Warrior

What client-side spam filtering does is—depending on your point of view—either give freedom to the user to decide, or it punts responsibility for garbage disposal to the user. Being responsible for defining spam on your own or opting in to certain blacklists is simultaneously better and worse for you. It is both freeing and burdensome. In contrast, server-side filtering has enormous benefits insofar as efficiency and network effects, even if it takes agency away from the end-user. The speech versus spam concerns have never gone away. They remain with us even if they don’t circulate much in mainstream public discourse, and they should certainly be taken seriously. However, even a hard civil libertarian organization like the Electronic Frontier Foundation acknowledges that spam filtering is an essential part of the Internet.


pages: 499 words: 144,278

Coders: The Making of a New Tribe and the Remaking of the World by Clive Thompson

"Margaret Hamilton" Apollo, "Susan Fowler" uber, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 4chan, 8-hour work day, Aaron Swartz, Ada Lovelace, AI winter, air gap, Airbnb, algorithmic bias, AlphaGo, Amazon Web Services, Andy Rubin, Asperger Syndrome, augmented reality, Ayatollah Khomeini, backpropagation, barriers to entry, basic income, behavioural economics, Bernie Sanders, Big Tech, bitcoin, Bletchley Park, blockchain, blue-collar work, Brewster Kahle, Brian Krebs, Broken windows theory, call centre, Cambridge Analytica, cellular automata, Charles Babbage, Chelsea Manning, Citizen Lab, clean water, cloud computing, cognitive dissonance, computer vision, Conway's Game of Life, crisis actor, crowdsourcing, cryptocurrency, Danny Hillis, data science, David Heinemeier Hansson, deep learning, DeepMind, Demis Hassabis, disinformation, don't be evil, don't repeat yourself, Donald Trump, driverless car, dumpster diving, Edward Snowden, Elon Musk, Erik Brynjolfsson, Ernest Rutherford, Ethereum, ethereum blockchain, fake news, false flag, Firefox, Frederick Winslow Taylor, Free Software Foundation, Gabriella Coleman, game design, Geoffrey Hinton, glass ceiling, Golden Gate Park, Google Hangouts, Google X / Alphabet X, Grace Hopper, growth hacking, Guido van Rossum, Hacker Ethic, hockey-stick growth, HyperCard, Ian Bogost, illegal immigration, ImageNet competition, information security, Internet Archive, Internet of things, Jane Jacobs, John Markoff, Jony Ive, Julian Assange, Ken Thompson, Kickstarter, Larry Wall, lone genius, Lyft, Marc Andreessen, Mark Shuttleworth, Mark Zuckerberg, Max Levchin, Menlo Park, meritocracy, microdosing, microservices, Minecraft, move 37, move fast and break things, Nate Silver, Network effects, neurotypical, Nicholas Carr, Nick Bostrom, no silver bullet, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, Oculus Rift, off-the-grid, OpenAI, operational security, opioid epidemic / opioid crisis, PageRank, PalmPilot, paperclip maximiser, pattern recognition, Paul Graham, paypal mafia, Peter Thiel, pink-collar, planetary scale, profit motive, ransomware, recommendation engine, Richard Stallman, ride hailing / ride sharing, Rubik’s Cube, Ruby on Rails, Sam Altman, Satoshi Nakamoto, Saturday Night Live, scientific management, self-driving car, side project, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, single-payer health, Skype, smart contracts, Snapchat, social software, software is eating the world, sorting algorithm, South of Market, San Francisco, speech recognition, Steve Wozniak, Steven Levy, systems thinking, TaskRabbit, tech worker, techlash, TED Talk, the High Line, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, universal basic income, urban planning, Wall-E, Watson beat the top human players on Jeopardy!, WeWork, WikiLeaks, women in the workforce, Y Combinator, Zimmermann PGP, éminence grise

“Is that hockey stick not hockey stick enough?” he joked. “The X axis has to be half the page,” Rogynskyy said. Scale, of course, brings enormous benefits. It’s certainly financially valuable for the big tech firms! If they grow fast enough, they scare off competitors and develop the lock-in of “network effects.” When a social network like Facebook or WeChat gets big enough, users can’t easily stop using it, because all their friends are there. And certainly, when a tech firm grows rapidly it can be enormously beneficial for users, too. Because of Facebook’s global ubiquity, it’s now the easiest way for people to organize virtually anything, large or small, from family meetups to political fund-raising campaigns to search-and-rescue efforts.

Robot (TV show), ref1, ref2, ref3 Mueller, Robert, ref1 Mullenweg, Matt, ref1 munitions law, ref1, ref2 Murphy, Bobby, ref1 Musk, Elon, ref1 My Fair Ladies (IBM recruiting brochure), ref1 MySpace, ref1 Myst (game), ref1 Mythical Man-Month, The (Brooks), ref1 Nakamoto, Satoshi (pseudonym), ref1 National Cancer Institute, ref1 National Health Service hospitals, ransomware attack on, ref1 National Security Agency (NSA) Clipper Chip created by, ref1 cypherpunks and, ref1 munitions law, ref1, ref2 public/private key crypto and, ref1 Neopets, ref1, ref2 Net, The (film), ref1 Netscape, ref1, ref2, ref3 network effects, of scale, ref1 neural nets, ref1 bias in, ref1 black-box training, ref1 coding for, ref1 data gathering for, ref1 deep learning, ref1 LeCun first hypothesizes, in 1950s, ref1 training of, ref1, ref2 Newhouse, Ben, ref1, ref2, ref3 News Feed (Facebook), ref1, ref2, ref3 coding for and launch of, ref1 initial negative reaction to, ref1 measures to fix problems found at, ref1 optimization and, ref1 political partisanship and other negative side effects of, ref1 privacy code released, ref1 scale and, ref1 success of, ref1 viewership on Facebook increased by, ref1 New York Times, ref1 Ng, Andrew, ref1, ref2, ref3 Nightingale, Johnathan, ref1 Noble, Safiya Umoja, ref1, ref2 Noisebridge, ref1 Northpointe, ref1 Norvig, Peter, ref1 “Nosedive” (Black Mirror TV show), ref1 NSA.

See 10X coders Rogynskyy, Oleg, ref1 Rosenstein, Justin, ref1, ref2, ref3, ref4 Ross, Blake, ref1 Rubin, Andy, ref1 Run, ref1 Rushkoff, Douglas, ref1, ref2 Russell, Slug, ref1 Rutherford, Ernest, ref1 Sacca, Chris, ref1 Sachs, David, ref1 Sackman, Hal, ref1 Safire, William, ref1 Sammet, Jean, ref1 Samsung, ref1 Sanghvi, Ruchi, ref1, ref2, ref3, ref4 coding for and launch of News Feed, ref1 education of, ref1 hired at Facebook, ref1 at South Park Commons, ref1 Sarikaya, Ruhi, ref1 Sarkeesian, Anita, ref1 Sax, Linda, ref1 scale, ref1, ref2, ref3, ref4 advertising’s role in changing treatment of users, ref1 algorithms and, ref1 combating harassment and abuse, ref1 competitive market forces and, ref1 financial benefits of, ref1 free-to-use model and, ref1 network effects of, ref1 venture capitalists and, ref1 Schafer, Tim, ref1 Schüll, Natasha Dow, ref1 Schürmann, Carsten, ref1 Scratch coding language, ref1 Secretary Problem, ref1 SecureDrop, ref1, ref2, ref3, ref4 Sedol, Lee, ref1, ref2 self-driving car programs, ref1 self-esteem of coders, ref1 self-improving AI, warnings about and debate over dangers of, ref1 self-taught coders, ref1, ref2 Send the Sunshine app, ref1 Shakespeare, William, ref1 Shirky, Clay, ref1 Shop Class as Soulcraft (Crawford), ref1 Shutt, Elsie, ref1 side effects, of optimization, ref1 Signal, ref1 Silbermann, Ben, ref1 Silicon Syndrome, The (Hollands), ref1 Silicon Valley (TV show), ref1, ref2 Silk Road, ref1 Silver, David, ref1 Silverio, C.


Mastering Blockchain, Second Edition by Imran Bashir

3D printing, altcoin, augmented reality, autonomous vehicles, bitcoin, blockchain, business logic, business process, carbon footprint, centralized clearinghouse, cloud computing, connected car, cryptocurrency, data acquisition, Debian, disintermediation, disruptive innovation, distributed ledger, Dogecoin, domain-specific language, en.wikipedia.org, Ethereum, ethereum blockchain, fault tolerance, fiat currency, Firefox, full stack developer, general-purpose programming language, gravity well, information security, initial coin offering, interest rate swap, Internet of things, litecoin, loose coupling, machine readable, MITM: man-in-the-middle, MVC pattern, Network effects, new economy, node package manager, Oculus Rift, peer-to-peer, platform as a service, prediction markets, QR code, RAND corporation, Real Time Gross Settlement, reversible computing, RFC: Request For Comment, RFID, ride hailing / ride sharing, Satoshi Nakamoto, seminal paper, single page application, smart cities, smart contracts, smart grid, smart meter, supply-chain management, transaction costs, Turing complete, Turing machine, Vitalik Buterin, web application, x509 certificate

This impacted the Bitcoin price directly and it fell almost 10% on the day this announcement was made. Interested readers can read more about the regulation of Bitcoin and other relevant activities at https://www.coindesk.com/category/regulation/. The growth of Bitcoin is also due to so-called network effect. Also called demand-side economies of scale, it is a concept that basically means more users who use the network, the more valuable it becomes. Over time, an exponential increase has been seen in the Bitcoin network growth. This increase in the number of users is largely financial gain driven.

For this reason, it is desirable to either write a new coin from scratch or fork the bitcoin (or another coin's source code) to create a new currency with the desired parameters and features. Altcoins must be able to attract new users, trades, and miners otherwise the currency will have no value. Currency gains its value, especially in the virtual currency space, due to the network effect and its acceptability by the community. If a coin fails to attract enough users then soon it will be forgotten. Users can be attracted by providing an initial amount of coins and can be achieved by using various methods. There is, however, a risk that if the new coin does not perform well than their initial investment may be lost.

DLTs do not perform any mining as all the participants are already vetted and known to the network and there is no requirement for mining to secure the network. There is also no concept of digital currency on private permissioned distributed ledgers because the aim of the permissioned blockchain is different from a public blockchain. In a public blockchain, access is open to everyone and requires some form of incentive and network effect in order to grow; on the contrary, in permissioned DLTs, there are no such requirements. It is possible to build permissioned DLTs using Ethereum in private consortium settings, especially to work within existing financial systems. The key benefit of distributed ledger systems is that they are much faster, governable, and possibly interoperable with the existing financial system.


pages: 79 words: 24,875

Are Trams Socialist?: Why Britain Has No Transport Policy by Christian Wolmar

active transport: walking or cycling, Beeching cuts, Berlin Wall, Boris Johnson, BRICs, congestion charging, Crossrail, Diane Coyle, driverless car, financial independence, full employment, joint-stock company, Kickstarter, low cost airline, Network effects, railway mania, trade route, Traffic in Towns by Colin Buchanan, Tragedy of the Commons, urban sprawl, wikimedia commons, Zipcar

The development of road freight traffic had been stimulated by the cheap availability of ex-army lorries in the aftermath of the war. These were bought cheaply by ex-servicemen, who promptly set up local haulage businesses, taking freight off the railways, which never recovered to their pre-war levels of goods carriage. The General Strike of 1926, when the rail network effectively ground to a halt, also proved a boon to the haulage industry as, mostly not unionized, it kept running for the duration of the action. The number of buses also increased rapidly in the 1920s, mostly run by small outfits, although the railway companies, now consolidated into just four groupings, were eager to stifle competition by using their industrial muscle to enter the bus market.


pages: 366 words: 94,209

Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity by Douglas Rushkoff

activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, algorithmic trading, Amazon Mechanical Turk, Andrew Keen, bank run, banking crisis, barriers to entry, benefit corporation, bitcoin, blockchain, Burning Man, business process, buy and hold, buy low sell high, California gold rush, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, centralized clearinghouse, citizen journalism, clean water, cloud computing, collaborative economy, collective bargaining, colonial exploitation, Community Supported Agriculture, corporate personhood, corporate raider, creative destruction, crowdsourcing, cryptocurrency, data science, deep learning, disintermediation, diversified portfolio, Dutch auction, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, fiat currency, Firefox, Flash crash, full employment, future of work, gamification, Garrett Hardin, gentrification, gig economy, Gini coefficient, global supply chain, global village, Google bus, Howard Rheingold, IBM and the Holocaust, impulse control, income inequality, independent contractor, index fund, iterative process, Jaron Lanier, Jeff Bezos, jimmy wales, job automation, Joseph Schumpeter, Kickstarter, Large Hadron Collider, loss aversion, low interest rates, Lyft, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, Marshall McLuhan, means of production, medical bankruptcy, minimum viable product, Mitch Kapor, Naomi Klein, Network effects, new economy, Norbert Wiener, Oculus Rift, passive investing, payday loans, peer-to-peer lending, Peter Thiel, post-industrial society, power law, profit motive, quantitative easing, race to the bottom, recommendation engine, reserve currency, RFID, Richard Stallman, ride hailing / ride sharing, Ronald Reagan, Russell Brand, Satoshi Nakamoto, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Snapchat, social graph, software patent, Steve Jobs, stock buybacks, TaskRabbit, the Cathedral and the Bazaar, The Future of Employment, the long tail, trade route, Tragedy of the Commons, transportation-network company, Turing test, Uber and Lyft, Uber for X, uber lyft, unpaid internship, Vitalik Buterin, warehouse robotics, Wayback Machine, Y Combinator, young professional, zero-sum game, Zipcar

Union Square Ventures founder Fred Wilson worries aloud on his company blog that digital entrepreneurs are more focused on creating monopolies and extracting value than they are on realizing the Internet’s potential to promote value creation by many players. Wilson is excited about the possibility of new platforms that allow new sorts of exchange, “but,” he says, “there is another aspect to the Internet that is not so comforting. And that is that the Internet is a network and the dominant platforms enjoy network effects that, over time, lead to dominant monopolies.”27 The fact that digital companies can build platform monopolies brings creative destruction to a whole new level. Amazon provides the clearest example of traditional corporate values amplified through a digital platform monopoly. As the New York Times explained, “At first, those in the publishing business considered it a cute toy (you could see a book’s exact sales ranking!)

Unless you’re spending BerkShares, how can you make it clear to merchants that you are thoughtfully supporting local business? Local currencies are their own best publicity, rendering “buy local” visible and thereby fostering the community spirit and soft peer pressure that lead to widespread buy-in and network effect. Then again, some customers might demonstrate their loyalty to local merchants by forgoing the local currency discount altogether and spending “real” money without the discount. Many other communities are experimenting with variations on the BerkShare model. Proponents claim that by being removed from the greater economy, these currencies work against the scarcity bias of central currency and are more resistant to boom, bust, and bubble cycles.54 Detroit Dollars, Santa Barbara Missions, and, in the UK, the Bristol, Brixton, and Cumbrian Pounds each offer their particular variations.


pages: 371 words: 93,570

Broad Band: The Untold Story of the Women Who Made the Internet by Claire L. Evans

4chan, Ada Lovelace, air gap, Albert Einstein, Bletchley Park, British Empire, Charles Babbage, colonial rule, Colossal Cave Adventure, computer age, crowdsourcing, D. B. Cooper, dark matter, dematerialisation, Doomsday Book, Douglas Engelbart, Douglas Engelbart, Douglas Hofstadter, East Village, Edward Charles Pickering, game design, glass ceiling, Grace Hopper, Gödel, Escher, Bach, Haight Ashbury, Harvard Computers: women astronomers, Honoré de Balzac, Howard Rheingold, HyperCard, hypertext link, index card, information retrieval, Internet Archive, Jacquard loom, John von Neumann, Joseph-Marie Jacquard, junk bonds, knowledge worker, Leonard Kleinrock, machine readable, Mahatma Gandhi, Mark Zuckerberg, Menlo Park, military-industrial complex, Mondo 2000, Mother of all demos, Network effects, old-boy network, On the Economy of Machinery and Manufactures, packet switching, PalmPilot, pets.com, rent control, RFC: Request For Comment, rolodex, San Francisco homelessness, semantic web, side hustle, Silicon Valley, Skype, South of Market, San Francisco, Steve Jobs, Steven Levy, Stewart Brand, subscription business, tech worker, technoutopianism, Ted Nelson, telepresence, The Soul of a New Machine, Wayback Machine, Whole Earth Catalog, Whole Earth Review, women in the workforce, Works Progress Administration, Y2K

Because Microcosm links were stored in a database rather than embedded into documents, the system could generate new connections on the fly, tailoring itself to individual users’ browsing habits. “I was still thinking of the Web as one of the systems we would use,” Wendy says. What she didn’t anticipate is the network effect. Because the Web was built on top of the Internet, and because it was free, early adopters quickly gave way to more mainstream users, and the more people got on the Web, the more interesting it became to their friends and family, and so on, very quickly making it dominant. Meanwhile, the Microcosm team released new stopgaps.

., 173 multimedia, 157, 159 Multi-User Dungeons (Multi-User Domains; MUDs), 143, 214 Myst, 165, 229 NASA, 24, 76 National Advisory Committee for Aeronautics, 24 National Defense Research Committee, 24 National Parks Department, 83 National Science Foundation, 130, 133, 153 NATO, 77 Navy, U.S., 29–31, 70, 75 Nehru, Jawaharlal, 160 Nelson, Ted, 154 Netscape, 172, 191, 209, 215 network effect, 172 Network Information Center (NIC), 112–19, 114, 121, 122, 166 Reference Desk of, 113 WHOIS, 119–20 networks, 25 packets in, 110, 126, 202 spanning-tree protocol for, 126–28 Network Working Group, 117 Neustrup, Chris, 97–98 Newsweek, 183, 184, 191 New York, 187, 210 New York City: 9/11 attack in, 150, 200–201 Silicon Alley in, 146, 182, 184, 186–88, 191–94, 196–201, 218, 219 New-York Historical Society, 150–51 New York Times, 9–10, 50, 136, 191, 194, 199, 218, 235 New York University (NYU), 134, 195, 196 Interactive Telecommunications Program, 182 NeXT, 168 Nightline, 233 9/11 terrorist attacks, 150, 200–201, 204 NLS (oNLine System), 111–12, 115, 116, 154, 210 NoteCards, 164–66, 168, 170 nuclear bombs, 36, 55 nuclear submarines, 76 Old Boys’ Network, 239–40 online publishing, see electronic publishing OS/360 operating system, 76 Oxygen Media, 216 Pack, Ellen, 205–13, 215, 216, 219–20 packets, 110, 126, 202 PDQ Committee, 71, 73 Pearce, Naomi, 133, 208 Pearl, Amy, 162 Pearl Harbor attack, 27–29, 32 People’s Computer, 98, 119 Perlman, Radia, 123–28 Phiber Optik, 136, 187 Pickering, Edward Charles, 23 PicoSpan, 132, 135 Pierce, Julianne, 237 Plant, Sadie, 11, 21, 80, 238 PLATO (Programmed Logic for Automatic Teaching Operations), 178–81 Pleasant Company, 235 Poetics (Aristotle), 226 Pollock, Scarlet, 239 Powers, Richard, 88 presidential election of 1952, 60 programming, 25, 26, 46, 52, 64–74, 75–80, 91–92, 106, 122–24, 162, 226 and association between women and software, 51–52 automatic, 65–69, 73, 119 caving compared with, 88 compilers in, 66–69, 73 computer-written programs, 59–60, 68 conference on crisis in, 77 Cosmopolitan article about, 75, 76, 77 debugging and, 66, 68, 74 decline in women in, 76–78, 93 distinction between operating and, 52 documentation in, 37, 65, 69 Editing Generator and, 73 educational requirements for, 78, 93 EMCC and, 56, 57 ENIAC and, 44–52, 79 first programs, 21 flowcharts and, 59 hardware development and, 77 Lovelace and, 20 machine code in, 66–68 magnetic-tape, 60–62, 79, 110 Mark I and, 32–33, 46, 59 perfection required in, 76–77 professionalization and masculinization of, 76–78, 93, 222, 228 punch cards and tapes in, 12–13, 32–33, 35–36, 39, 46, 47, 60–62, 79, 110 renamed software engineering, 77–78, 93 shortage in programmers, 76 social skills and, 78–79 Sort-Merge Generator and, 59, 68, 73 subroutines in, 37, 65, 67, 68 UNIVAC and, 58–59, 65 see also software programming languages, 46, 65–73, 79, 108 COBOL, 71–73 FORTRAN, 70, 88, 89, 93 Project One, 95–108, 119 Prose, Francine, 218 Pseudo, 186–87, 199 publishing, see electronic publishing punch cards and tapes, 12–13, 32–33, 35–36, 39, 46, 47, 60–62, 79, 110 Purple Moon, 227–36 Radio Corporation of America (RCA), 69 Radio Shack, 225 Raisch, Charles, 96 Razorfish, 191, 197–99 Reddit, 149 Reed, Lou, 192 Remington Rand, 60–63, 65–70, 73 Requests for Comments (RFCs), 117–18, 120, 129 Reson, Sherry, 95, 96, 103–7 Resource One, 96–108, 109, 130, 132, 215, 242 Resource One Generalized Information Retrieval System (ROGIRS), 98 Reynolds, Joyce, 117 Rheingold, Howard, 148–49 Rhine, Nancy, 132–33, 205–12 Richardson, Ann, 75 Rockett games, 230–36 Rolling Stone, 99 routers, 86, 93 routing algorithms, 124–28 Salon, 218 Sammet, Jean E., 70, 72, 73 San Francisco Bay Area, 95–98, 100–102, 104–6, 109, 135, 179 San Francisco Public Library, 106 San Francisco Switchboard, 97 Scientific Data Systems 940 (SDS-940), 96–99, 101, 103–5, 107, 109–10 search engines, 115, 154 Sears, 225 Secret Paths games, 232, 236 Sega, 233 Semantic Web, 174 Seneca Falls Conference on the Rights of Women, 11 September 11 terrorist attacks, 150, 200–201, 204 Sharp, Elliot, 187 Shepard, Alan, 24 Sherman, Aliza, 131–32, 140, 143, 214 Shirky, Clay, 181 Shone, Mya, 96, 104–6 Silicon Alley, 146, 182, 184, 186–88, 191–94, 196–201, 218, 219 Silicon Alley Reporter, 198–99 Simpson, O.


pages: 299 words: 91,839

What Would Google Do? by Jeff Jarvis

"World Economic Forum" Davos, 23andMe, Amazon Mechanical Turk, Amazon Web Services, Anne Wojcicki, AOL-Time Warner, barriers to entry, Berlin Wall, bike sharing, business process, call centre, carbon tax, cashless society, citizen journalism, clean water, commoditize, connected car, content marketing, credit crunch, crowdsourcing, death of newspapers, different worldview, disintermediation, diversified portfolio, don't be evil, Dunbar number, fake news, fear of failure, Firefox, future of journalism, G4S, Golden age of television, Google Earth, Googley, Howard Rheingold, informal economy, inventory management, Jeff Bezos, jimmy wales, John Perry Barlow, Kevin Kelly, Marc Benioff, Mark Zuckerberg, moral hazard, Network effects, new economy, Nicholas Carr, old-boy network, PageRank, peer-to-peer lending, post scarcity, prediction markets, pre–internet, Ronald Coase, Salesforce, search inside the book, Sheryl Sandberg, Silicon Valley, Skype, social graph, social software, social web, spectrum auction, speech recognition, Steve Jobs, the long tail, the medium is the message, The Nature of the Firm, the payments system, The Wisdom of Crowds, transaction costs, web of trust, WikiLeaks, Y Combinator, Zipcar

Glam also replicates the best of the network’s content at Glam.com, selling ads there—at a higher rate—and sharing that revenue, too. Glam gives its member sites technology and content to make them better. It gives them traffic and they give each other traffic, pointing to sister sites in the network. The more traffic each site gets, the more traffic it has to send around—that is the network effect, another virtuous circle. Glam also gives its sites prestige, for unlike Google, it is selective. Glam’s editors find sites they like and highlight the best of the content, making Glam a curated content and ad network. That allows Glam to tell skittish advertisers that their messages will appear in a quality, safe environment, and advertisers will pay more for that.

If a Googley restaurant would tell me how many diners ordered the crab cakes, a Googley doctor should tell me how often she has treated afib. I would also be impressed if the doctor treating me had written about the condition online. I’d be doubly impressed if I saw other doctors linking to her. The changes in medicine we’ve touched on all relate to information: opening it up, sharing it, organizing it, analyzing it, bringing the network effect to the industry and our health. That is Google’s specialty. Google Mutual Insurance: The business of cooperation As I was researching this book, I wrote on my blog that I had come up against a few industries I thought were immune from reform through Googlification. Insurance topped my list (we’ll get to the others shortly).


pages: 313 words: 95,077

Here Comes Everybody: The Power of Organizing Without Organizations by Clay Shirky

Andrew Keen, Andy Carvin, Berlin Wall, bike sharing, bioinformatics, Brewster Kahle, c2.com, Charles Lindbergh, commons-based peer production, crowdsourcing, digital rights, en.wikipedia.org, Free Software Foundation, Garrett Hardin, hiring and firing, hive mind, Howard Rheingold, Internet Archive, invention of agriculture, invention of movable type, invention of the printing press, invention of the telegraph, jimmy wales, John Perry Barlow, Joi Ito, Kuiper Belt, liberation theology, Mahatma Gandhi, means of production, Merlin Mann, Metcalfe’s law, Nash equilibrium, Network effects, Nicholas Carr, Picturephone, place-making, Pluto: dwarf planet, power law, prediction markets, price mechanism, prisoner's dilemma, profit motive, Richard Stallman, Robert Metcalfe, Ronald Coase, Silicon Valley, slashdot, social software, Stewart Brand, supply-chain management, the Cathedral and the Bazaar, the long tail, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tragedy of the Commons, transaction costs, ultimatum game, Vilfredo Pareto, Wayback Machine, Yochai Benkler, Yogi Berra

What they didn’t understand was how those networks were held together. In 1998 Duncan Watts and Steve Strogatz published their research on a pattern they dubbed the “Small World network.” Small World networks have two characteristics that, when balanced properly, let messages move through the network effectively. The first is that small groups are densely connected. In a small group the best pattern of communication is that everyone connects with everyone. In a group of friends Alice knows Bob, Carol, Doria, and Eunice, and each of them knows the others. In a cluster of five people there would be ten connections (by Birthday Paradox math), so each person could communicate directly with any of the others.

By 2008, there were 3.3 billion mobile phone subscribers, out of a global adult population of less than 5 billion. This increase in scale, both of the underlying social media and of the population that uses it, is still creating surprises because large systems behave differently from small ones. One fitting name for the way more is different is “the network effect,” the name given to networks that become more valuable as people adopt them. Robert Metcalfe, the inventor of the Ethernet networking protocol, gave his name to a law that describes this increase in value. Metcalfe’s Law is usually stated this way: “The value of the network grows with the square of its users.”


pages: 108 words: 27,451

Magic Internet Money: A Book About Bitcoin by Jesse Berger

Alan Greenspan, barriers to entry, bitcoin, blockchain, Bretton Woods, Cambridge Analytica, capital controls, carbon footprint, correlation does not imply causation, cryptocurrency, diversification, diversified portfolio, Ethereum, ethereum blockchain, fiat currency, Firefox, forward guidance, Fractional reserve banking, George Gilder, inflation targeting, invisible hand, Johann Wolfgang von Goethe, liquidity trap, litecoin, low interest rates, Marshall McLuhan, Metcalfe’s law, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, Nixon shock, Nixon triggered the end of the Bretton Woods system, oil shale / tar sands, planned obsolescence, price mechanism, Ralph Waldo Emerson, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, Robert Metcalfe, Satoshi Nakamoto, the medium is the message, Vitalik Buterin

It is crucially important that block rewards be designed to create a positive feedback loop for value and trust. Their economics and utility must equitably empower and incentivize users to achieve the common goal of sustaining the network, especially since it exists for their mutual benefit. This is blockchain’s most potent utility – the reinforcement of public collaboration. 5.3.4 Blockchain 101: Network Effects “It is no wonder that eight years after its invention, blockchain technology has not yet managed to break through in a successful, ready-for-market commercial application other than the one for which it was specifically designed: Bitcoin.” Saifedean Ammous, The Bitcoin Standard If blockchain is best understood as a tool for public collaboration, and if block rewards are the method by which participants are enticed to discover, expand, and utilize the network’s value, and if that value can be freely transferred, secured, and accounted for in a trust-minimized environment, then a well-designed blockchain invariably exhibits the attributes and functions of money.


pages: 125 words: 28,222

Growth Hacking Techniques, Disruptive Technology - How 40 Companies Made It BIG – Online Growth Hacker Marketing Strategy by Robert Peters

Airbnb, bounce rate, business climate, citizen journalism, content marketing, crowdsourcing, digital map, fake it until you make it, Google Glasses, growth hacking, Hacker News, Jeff Bezos, Lean Startup, Menlo Park, Network effects, new economy, pull request, revision control, ride hailing / ride sharing, search engine result page, sharing economy, Skype, social bookmarking, TaskRabbit, turn-by-turn navigation, Twitter Arab Spring, ubercab

. — Dan Martell, Founder of Clarity A growth hacker is someone who has thrown out the playbook of traditional marketing and replaced it with only what is testable, trackable, and scalable. Their tools are emails, pay-per-click ads, blogs, and platform APIs instead of commercials, publicity, and money. Growth hacking tends to be more “experience” focused. This includes driving engagement and sharing within a product or spreading a product experience across networks. Effective growth hackers are relentless about running creative experiments and optimizing the components of the experiment until finding something that works. - Sean Ellis, CEO of Qualaroo Perhaps my favorite however is by David Ogilvy, known as “the father of advertising.” It speaks to both the serious detail orientation of growth hacking and the relentless curiosity and urge to optimize that goes with it: “I prefer the discipline of knowledge to the anarchy of ignorance.


pages: 410 words: 101,260

Originals: How Non-Conformists Move the World by Adam Grant

"World Economic Forum" Davos, Abraham Maslow, Albert Einstein, Apple's 1984 Super Bowl advert, availability heuristic, barriers to entry, behavioural economics, Bluma Zeigarnik, business process, business process outsourcing, Cass Sunstein, classic study, clean water, cognitive dissonance, creative destruction, cuban missile crisis, Daniel Kahneman / Amos Tversky, Dean Kamen, double helix, Elon Musk, emotional labour, fear of failure, Firefox, George Santayana, Ignaz Semmelweis: hand washing, information security, Jeff Bezos, Jeff Hawkins, job satisfaction, job-hopping, Joseph Schumpeter, Kevin Roose, Kickstarter, Lean Startup, Louis Pasteur, Mahatma Gandhi, Mark Zuckerberg, meta-analysis, minimum viable product, Neil Armstrong, Nelson Mandela, Network effects, off-the-grid, PalmPilot, pattern recognition, Paul Graham, Peter Thiel, Ralph Waldo Emerson, random walk, risk tolerance, Rosa Parks, Saturday Night Live, Sheryl Sandberg, Silicon Valley, Skype, Steve Jobs, Steve Wozniak, Steven Pinker, TED Talk, The Wisdom of Crowds, women in the workforce

I don’t mean to imply that it’s never wise to be first. If we all wait for others to act, nothing original will ever be created. Someone has to be the pioneer, and sometimes that will pay off. First-mover advantages tend to prevail when patented technology is involved, or when there are strong network effects (the product or service becomes more valuable when there are a greater number of users, as with telephones or social media). But in the majority of circumstances, your odds of success aren’t higher if you go first. And when the market is uncertain, unknown, or underdeveloped, being a pioneer has pronounced disadvantages.

Vincent, 114 Miller, Arthur, 238 Milosevic, Slobodan, 218–20, 223, 226, 227, 236, 241, 242 Mindset (Dweck), 169n Minkoff, Rob, 134, 135, 137, 141 minorities, 86 Mitteness, Cheryl, 54 Mojzisch, Andreas, 199n Molitor, Paul, 151 Mona Lisa (da Vinci), 96, 112 Moreno, Omar, 149 Morita, Akio, 183–84 Morse, Meroë, 182 motivation, 218, 248 converting anxiety into, 213, 215, 217 movements, 126 former adversaries and, 132 resistance, 219–20, 223, 225–27 status and, 121n–22n See also Coalitions movie rentals, 105 Moyers, Bill, 177 Mozart, Wolfgang Amadeus, 36 Mubarak, Hosni, 228 Musk, Elon, 172 My Left Foot, 238 Nadkarni, Sucheta, 100–101 NASA, 27, 197, 203 Navy, U.S., 125, 247 NBC, 34, 40, 45, 50 negative thinking, 212, 214, 214n neglect, 79–80, 89, 249 Nemeth, Charlan, 185, 191–94 Netflix, 105 network effects, 108 Neustadt, Richard, 178 new skills, learning, 246 Newton, Isaac, 151 New Yorker, 23 New York Times, 71 niches, 156–59, 174, 253 Nicolay, John, 98 Nike, 2 Nintendo, 104–5 Nobel Peace Prize, 143n Nobel Prize, 46–47, 110, 113, 123, 154, 232, 233 Norem, Julie, 212–13, 217 North Pole, 27, 210–11, 214, 217 O’Brien, Conan, 45 “O Canada,” 120 Occupy Wall Street, 125–26 odyssey, 104 offense, playing defense versus, 234n Office, The, 45 O’Keeffe, Georgia, 114 Oliner, Pearl, 163–65, 168 Oliner, Samuel, 163–65, 168 Omidyar, Pierre, 19–20 openness, 47n–48n opinions: believability and, 200–201, 207, 208 dissenting.


pages: 326 words: 103,170

The Seventh Sense: Power, Fortune, and Survival in the Age of Networks by Joshua Cooper Ramo

air gap, Airbnb, Alan Greenspan, Albert Einstein, algorithmic trading, barriers to entry, Berlin Wall, bitcoin, Bletchley Park, British Empire, cloud computing, Computing Machinery and Intelligence, crowdsourcing, Danny Hillis, data science, deep learning, defense in depth, Deng Xiaoping, drone strike, Edward Snowden, Fairchild Semiconductor, Fall of the Berlin Wall, financial engineering, Firefox, Google Chrome, growth hacking, Herman Kahn, income inequality, information security, Isaac Newton, Jeff Bezos, job automation, Joi Ito, Laura Poitras, machine translation, market bubble, Menlo Park, Metcalfe’s law, Mitch Kapor, Morris worm, natural language processing, Neal Stephenson, Network effects, Nick Bostrom, Norbert Wiener, Oculus Rift, off-the-grid, packet switching, paperclip maximiser, Paul Graham, power law, price stability, quantitative easing, RAND corporation, reality distortion field, Recombinant DNA, recommendation engine, Republic of Letters, Richard Feynman, road to serfdom, Robert Metcalfe, Sand Hill Road, secular stagnation, self-driving car, Silicon Valley, Skype, Snapchat, Snow Crash, social web, sovereign wealth fund, Steve Jobs, Steve Wozniak, Stewart Brand, Stuxnet, superintelligent machines, systems thinking, technological singularity, The Coming Technological Singularity, The Wealth of Nations by Adam Smith, too big to fail, Vernor Vinge, zero day

The convenience, the efficiency, the benefits of Microsoft’s billions of dollars of research spending to you and me, might dwarf even the company’s massive profits. “Increasing returns,” Arthur wrote, “cause businesses to work differently, and they stand many of our notions of how business operates on their head.” The essential phenomenon that Arthur spotted at work two decades ago is something we now know as “network effects”—an idea that changed how we think about businesses, and particularly about the sticky and alluring power of gated, connected systems. In the years after Arthur’s paper was published, billions of us ran madly along a course he had anticipated: We crashed our way as fast as possible into those single, winning businesses, rewarding them with near-monopoly positions in exchange for the benefits of being “inside.”

It is why mastery of network gates is even more insanely lucrative than Cecil Rhodes’s gold mines. Think of the old Industrial Age power games for a moment, by way of comparison: Britain and Germany tried to match each other with their industrial output during a fatal competitive sprint 150 years ago. But imagine if network effects had obtained? If Britain’s initial head start in the Industrial Revolution had given them a 90 percent share of global trade? Germany would never have even tried to compete. They would have been the Friendster of the twentieth century: isolated, slow growing, powerless, and, finally, bankrupted or consumed.


pages: 327 words: 103,336

Everything Is Obvious: *Once You Know the Answer by Duncan J. Watts

"World Economic Forum" Davos, active measures, affirmative action, Albert Einstein, Amazon Mechanical Turk, AOL-Time Warner, Bear Stearns, behavioural economics, Black Swan, business cycle, butterfly effect, carbon credits, Carmen Reinhart, Cass Sunstein, clockwork universe, cognitive dissonance, coherent worldview, collapse of Lehman Brothers, complexity theory, correlation does not imply causation, crowdsourcing, death of newspapers, discovery of DNA, East Village, easy for humans, difficult for computers, edge city, en.wikipedia.org, Erik Brynjolfsson, framing effect, Future Shock, Geoffrey West, Santa Fe Institute, George Santayana, happiness index / gross national happiness, Herman Kahn, high batting average, hindsight bias, illegal immigration, industrial cluster, interest rate swap, invention of the printing press, invention of the telescope, invisible hand, Isaac Newton, Jane Jacobs, Jeff Bezos, Joseph Schumpeter, Kenneth Rogoff, lake wobegon effect, Laplace demon, Long Term Capital Management, loss aversion, medical malpractice, meta-analysis, Milgram experiment, natural language processing, Netflix Prize, Network effects, oil shock, packet switching, pattern recognition, performance metric, phenotype, Pierre-Simon Laplace, planetary scale, prediction markets, pre–internet, RAND corporation, random walk, RFID, school choice, Silicon Valley, social contagion, social intelligence, statistical model, Steve Ballmer, Steve Jobs, Steve Wozniak, supply-chain management, tacit knowledge, The Death and Life of Great American Cities, the scientific method, The Wisdom of Crowds, too big to fail, Toyota Production System, Tragedy of the Commons, ultimatum game, urban planning, Vincenzo Peruggia: Mona Lisa, Watson beat the top human players on Jeopardy!, X Prize

Regardless, by the time it had become clear that home movie viewing, not taping TV shows, would be the killer app of the VCR, it was too late. Sony did their best to correct course, and in fact very quickly produced a longer-playing BII version, eliminating the initial advantage held by Matsushita. But it was all to no avail. Once VHS got a sufficient market lead, the resulting network effects were impossible to overcome. Sony’s failure, in other words, was not really the strategic blunder it is often made out to be, resulting instead from a shift in consumer demand that happened far more rapidly than anyone in the industry had anticipated. Shortly after their debacle with Betamax, Sony made another big strategic bet on recording technology—this time with their MiniDisc players.

Persistence and Periodicity in a Dynamic Proximity Network in DIMACS Workshop on Compututional Methods for Dynamic Interaction Networks. Clifford, Stephanie. 2009. “Put Ad on Web. Count Clicks. Revise.” New York Times, May 30. ———. 2010. “We’ll Make You a Star (if the Web Agrees).” New York Times, June 4. Cohen-Cole, Ethan, and Jason M. Fletcher. 2008a. “Are All Health Outcomes ‘Contagious’? Detecting Implausible Social Network Effects in Acne, Height, and Headaches.” Available at SSRN: ssrn.count/abstract=133901. ———. 2008b. “Is Obesity Contagious? Social Networks vs. Environmental Factors in the Obesity Epidemic.” Journal of Health Economics 27 (5):1382–7. Cohn, Jonathan. 2007. Sick: The Untold Story of America’s Health Care Crisis—and the People Who Pay the Price.


Rockonomics: A Backstage Tour of What the Music Industry Can Teach Us About Economics and Life by Alan B. Krueger

"Friedman doctrine" OR "shareholder theory", accounting loophole / creative accounting, Affordable Care Act / Obamacare, Airbnb, Alan Greenspan, autonomous vehicles, bank run, behavioural economics, Berlin Wall, bitcoin, Bob Geldof, butterfly effect, buy and hold, congestion pricing, creative destruction, crowdsourcing, digital rights, disintermediation, diversified portfolio, Donald Trump, endogenous growth, Gary Kildall, George Akerlof, gig economy, income inequality, independent contractor, index fund, invisible hand, Jeff Bezos, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kickstarter, Larry Ellison, Live Aid, Mark Zuckerberg, Moneyball by Michael Lewis explains big data, moral hazard, Multics, Network effects, obamacare, offshore financial centre, opioid epidemic / opioid crisis, Paul Samuelson, personalized medicine, power law, pre–internet, price discrimination, profit maximization, random walk, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, Saturday Night Live, Skype, Steve Jobs, the long tail, The Wealth of Nations by Adam Smith, TikTok, too big to fail, transaction costs, traumatic brain injury, Tyler Cowen, ultimatum game, winner-take-all economy, women in the workforce, Y Combinator, zero-sum game

In fact, the number of musical choices facing individuals greatly expanded—and became even more bewildering—with the advent of streaming services, which is likely to lead us to rely even more on our social networks for clues in selecting songs and artists. And the rapidly growing set of curated recommendation systems that use Big Data to help us discover new music is also likely to reinforce network effects, unless there is a surge in demand for curation systems that recommend songs that are both unpopular and likely to stay that way. Gloria Estefan: Music of the Heart Gloria Estefan is the most successful crossover artist of all time. With her husband, Emilio, and the Miami Sound Machine, and as a solo artist, she has sold over one hundred million records worldwide and won seven Grammys.

He carefully constructed artists’ stories to attract interest in the contestants. He hired a hundred interns to post positive comments about the singers on the Baidu message board. This strategy created a critical mass, leading to more comments being posted, and soon some of the singers went viral—yet another example of network effects and compound advantage in the music business. He is proud of the “buzz creation methodology that we created.” The show ran for seven seasons, but Zho left after the third season to strike out on his own. His friends urged him to stay in China because of the opportunity to shape the nation’s culture.


pages: 407 words: 103,501

The Digital Divide: Arguments for and Against Facebook, Google, Texting, and the Age of Social Netwo Rking by Mark Bauerlein

Alvin Toffler, Amazon Mechanical Turk, Andrew Keen, business cycle, centre right, citizen journalism, collaborative editing, computer age, computer vision, corporate governance, crowdsourcing, David Brooks, digital divide, disintermediation, folksonomy, Frederick Winslow Taylor, Future Shock, Hacker News, Herbert Marcuse, Howard Rheingold, invention of movable type, invention of the steam engine, invention of the telephone, Jaron Lanier, Jeff Bezos, jimmy wales, Kevin Kelly, knowledge worker, late fees, Lewis Mumford, Mark Zuckerberg, Marshall McLuhan, means of production, meta-analysis, moral panic, Network effects, new economy, Nicholas Carr, PageRank, PalmPilot, peer-to-peer, pets.com, radical decentralization, Results Only Work Environment, Saturday Night Live, scientific management, search engine result page, semantic web, Silicon Valley, slashdot, social graph, social web, software as a service, speech recognition, Steve Jobs, Stewart Brand, technology bubble, Ted Nelson, the long tail, the strength of weak ties, The Wisdom of Crowds, Thorstein Veblen, web application, Yochai Benkler

There are more than 100,000 open source software projects listed on SourceForge.net. Anyone can add a project, anyone can download and use the code, and new projects migrate from the edges to the center as a result of users putting them to work, an organic software adoption process relying almost entirely on viral marketing. The lesson: Network effects from user contributions are the key to market dominance in the Web 2.0 era. Blogging and the Wisdom of Crowds One of the most highly touted features of the Web 2.0 era is the rise of blogging. Personal home pages have been around since the early days of the Web, and the personal diary and daily opinion column around much longer than that, so just what is the fuss all about?

The answers helped us understand the rules of business on this new platform. Chief among our insights was that “the network as platform” means far more than just offering old applications via the network (“software as a service”); it means building applications that literally get better the more people use them, harnessing network effects not only to acquire users, but also to learn from them and build on their contributions. From Google and Amazon to Wikipedia, eBay, and craigslist, we saw that the value was facilitated by the software, but was cocreated by and for the community of connected users. Since then, powerful new platforms like YouTube, Facebook, and Twitter have demonstrated that same insight in new ways.


pages: 416 words: 100,130

New Power: How Power Works in Our Hyperconnected World--And How to Make It Work for You by Jeremy Heimans, Henry Timms

"Susan Fowler" uber, "World Economic Forum" Davos, 3D printing, 4chan, Affordable Care Act / Obamacare, Airbnb, algorithmic management, augmented reality, autonomous vehicles, battle of ideas, benefit corporation, Benjamin Mako Hill, Big Tech, bitcoin, Black Lives Matter, blockchain, British Empire, Chris Wanstrath, Columbine, Corn Laws, crowdsourcing, data science, David Attenborough, death from overwork, Donald Trump, driverless car, Elon Musk, fake news, Ferguson, Missouri, future of work, game design, gig economy, hiring and firing, holacracy, hustle culture, IKEA effect, impact investing, income inequality, informal economy, job satisfaction, John Zimmer (Lyft cofounder), Jony Ive, Kevin Roose, Kibera, Kickstarter, Lean Startup, Lyft, Mark Zuckerberg, Minecraft, Network effects, new economy, Nicholas Carr, obamacare, Occupy movement, post-truth, profit motive, race to the bottom, radical decentralization, ride hailing / ride sharing, rolling blackouts, rolodex, Salesforce, Saturday Night Live, sharing economy, side hustle, Silicon Valley, six sigma, Snapchat, social web, subscription business, TaskRabbit, tech billionaire, TED Talk, the scientific method, transaction costs, Travis Kalanick, Uber and Lyft, uber lyft, upwardly mobile, web application, WikiLeaks, Yochai Benkler

It has a call to action at its heart, beginning with sharing, but often going much further. Connected—The idea promotes a peer connection with people you care about or share values with. Connected ideas bring you closer to other people and make you (feel) part of a like-minded community. This sets off a network effect that spreads the idea further. Extensible—The idea can be easily customized, remixed, and shaped by the participant. It is structured with a common stem that encourages its communities to alter and extend it. We can see these qualities playing out in the Ice Bucket Challenge. It was Actionable in several clear ways.

Ride Austin has shown that its service is viable, both in terms of providing rides and in terms of its finances. By spring 2017, it was closing in on profitability, had hit its millionth ride, and had 5,100 drivers delivering 70,000 rides a week. And it achieved all this with great community goodwill and a bank of trust and satisfaction among its key players. The conventional wisdom is that network effects at work around platforms like Uber will lead inexorably toward a national and perhaps global monopoly or duopoly emerging (and that is certainly Uber’s goal). Yet, as Deshotel reminded us, 90 percent of ridesharing is purely local. It is a service fairly well suited to a city scale and a more communitarian bent, especially if the incentives of drivers, riders, community, and government can all fall into alignment.


Mindf*ck: Cambridge Analytica and the Plot to Break America by Christopher Wylie

4chan, affirmative action, Affordable Care Act / Obamacare, air gap, availability heuristic, Berlin Wall, Bernie Sanders, Big Tech, big-box store, Boris Johnson, Brexit referendum, British Empire, call centre, Cambridge Analytica, Chelsea Manning, chief data officer, cognitive bias, cognitive dissonance, colonial rule, computer vision, conceptual framework, cryptocurrency, Daniel Kahneman / Amos Tversky, dark pattern, dark triade / dark tetrad, data science, deep learning, desegregation, disinformation, Dominic Cummings, Donald Trump, Downton Abbey, Edward Snowden, Elon Musk, emotional labour, Etonian, fake news, first-past-the-post, gamification, gentleman farmer, Google Earth, growth hacking, housing crisis, income inequality, indoor plumbing, information asymmetry, Internet of things, Julian Assange, Lyft, Marc Andreessen, Mark Zuckerberg, Menlo Park, move fast and break things, Network effects, new economy, obamacare, Peter Thiel, Potemkin village, recommendation engine, Renaissance Technologies, Robert Mercer, Ronald Reagan, Rosa Parks, Sand Hill Road, Scientific racism, Shoshana Zuboff, side project, Silicon Valley, Skype, Stephen Fry, Steve Bannon, surveillance capitalism, tech bro, uber lyft, unpaid internship, Valery Gerasimov, web application, WikiLeaks, zero-sum game

Like physical utilities, these architectures often serve as a de facto backbone of commerce and society, where their existence has become a given of day-to-day life. Businesses have come to passively rely upon the existence of Google’s search engine for their workforces, for example. And this is not a bad thing. Search engines and social media benefit from network effects, where the more people use the service, the more useful the service becomes. As with physical utilities, scale can create a huge benefit to the consumer, and we do not want to impede this public benefit. However, as with other natural monopolies, the same kinds of risks threaten consumers. And it is these potential harms that we must account for in a new set of rules.

These regulations should take the form of statutory duties, with penalties benchmarked to annual profits as a way to stop the current situation, in which regulatory infractions are negotiated and accounted for as a cost of doing business. In the same way we do not penalize the scale of electric companies, the scale of Internet utilities should not be penalized where there are network effects of genuine social benefit. In other words, this is not about breaking up large technology companies; this is about making them accountable. However, in exchange for maintaining their scale, Internet utilities should be required to act proactively as responsible stewards of what eventually evolve into our digital commons.


The Winner-Take-All Society: Why the Few at the Top Get So Much More Than the Rest of Us by Robert H. Frank, Philip J. Cook

accounting loophole / creative accounting, air freight, Alvin Roth, Apple's 1984 Super Bowl advert, business cycle, compensation consultant, Daniel Kahneman / Amos Tversky, delayed gratification, Garrett Hardin, global village, haute couture, income inequality, independent contractor, invisible hand, junk bonds, labor-force participation, longitudinal study, Marshall McLuhan, medical malpractice, Network effects, positional goods, prisoner's dilemma, rent-seeking, rising living standards, Ronald Reagan, school choice, Shoshana Zuboff, Stephen Hawking, stock buybacks, Tragedy of the Commons, transaction costs, trickle-down economics, winner-take-all economy

In an earlier time, Adair would have labored exclusively in the West Texas oil fields near his home, where he originally earned his reputation as the world's premier oil-field fireman. With the global communication network in place, however, he worked on only the most valuable jobs, no matter where in the world they might be located. The infonnation revolution and falling transport and tariff costs have also combined to strengthen the network effects that give rise to winner-take-all markets. This change follows from what it means to be part of a network-namely, that there be some form of interconnect­ edness among members. Perhaps the most explosive growth has come 52 The Winner-Take-All Society in the most literal networks of all-electronic communications net­ works like telephone, fax, and E-mail.

Katz, Lawrence, and Kevin M. Murphy. "Changes in Relative Wages, 1963-87: Supply and Demand Factors." Cambridge, Mass.: NBER Work­ ing Paper No. 3927, 1992. Katz, M. L., and Carl Shapiro. "Network Externalities, Competition and Compatibility. " American Economic Review 75 ( 1 985) : 424�0. . "Systems Competition and Network Effects." Journal 0/ Economic Perspectives ( Spring 1994): 93-1 15. Kaus, Mickey. The End o/Equality. New York: Basic Books, 1992. Kiernan, V. G. The Duel in European History: Honour and the Reign 0/Aristoc­ racy. New York: Oxford University Press, 1 988. Kilday, Gregg, and Anne Thompson. "Offers They Can't Refuse. " Entertain­ ment Weekly, April 8, 1994, pp. 16-23.


pages: 309 words: 96,168

Masters of Scale: Surprising Truths From the World's Most Successful Entrepreneurs by Reid Hoffman, June Cohen, Deron Triff

"Susan Fowler" uber, 23andMe, 3D printing, Airbnb, Anne Wojcicki, Ben Horowitz, bitcoin, Blitzscaling, Broken windows theory, Burning Man, call centre, chief data officer, clean water, collaborative consumption, COVID-19, crowdsourcing, data science, desegregation, do well by doing good, Elon Musk, financial independence, fulfillment center, gender pay gap, global macro, growth hacking, hockey-stick growth, Internet of things, knowledge economy, late fees, Lean Startup, lone genius, Marc Benioff, Mark Zuckerberg, minimum viable product, move fast and break things, Network effects, Paul Graham, Peter Thiel, polynesian navigation, race to the bottom, remote working, RFID, Ronald Reagan, Rubik’s Cube, Ruby on Rails, Salesforce, Sam Altman, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, social distancing, Steve Jobs, Susan Wojcicki, TaskRabbit, TechCrunch disrupt, TED Talk, the long tail, the scientific method, Tim Cook: Apple, Travis Kalanick, two and twenty, work culture , Y Combinator, zero day, Zipcar

And it can all be rapidly accelerated if those local successes then pay it forward in their communities by supporting other local entrepreneurs. “Many local cultures have two or three successful businesspeople that create companies,” Linda says. “But if they don’t pay it forward and reinvest in the ecosystem—becoming mentors, becoming angel investors, inspiring their employees to start new companies—then it stops. The network effect is key to scaling an entire business community.” One of the most important things Linda’s firm has done to encourage this virtuous cycle is to help convince successful local business leaders that it’s in their own interest to support the growth of an entrepreneurial ecosystem in the region—that it creates a bigger local talent base, opens up opportunities to collaborate with business partners, and strengthens the local economy.

His unique understanding of consumer behavior and a clear-eyed ability to guide startups from inception through ramped-up “blitzscaling” has made him a sought-after advisor, partner, and investor. Reid was a board observer for Airbnb and currently serves as a board director for Apollo Fusion, Aurora, Blockstream, Coda, Convoy, Entrepreneur First, Microsoft, Nauto, Neeva, Xapo, and a few early-stage companies still in stealth. Reid’s core focus is on businesses with network effects. In 2003, he co-founded LinkedIn, the world’s largest professional network that today has more than 650 million members and a diversified revenue model that includes subscriptions, advertising, and software licensing. Before LinkedIn, Reid served as executive vice president at PayPal, where he was a founding board member and responsible for all of the company’s external relationships.


pages: 329 words: 99,504

Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud by Ben McKenzie, Jacob Silverman

algorithmic trading, asset allocation, bank run, barriers to entry, Ben McKenzie, Bernie Madoff, Big Tech, bitcoin, Bitcoin "FTX", blockchain, capital controls, citizen journalism, cognitive dissonance, collateralized debt obligation, COVID-19, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, cryptocurrency, data science, distributed ledger, Dogecoin, Donald Trump, effective altruism, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, experimental economics, financial deregulation, financial engineering, financial innovation, Flash crash, Glass-Steagall Act, high net worth, housing crisis, information asymmetry, initial coin offering, Jacob Silverman, Jane Street, low interest rates, Lyft, margin call, meme stock, money market fund, money: store of value / unit of account / medium of exchange, Network effects, offshore financial centre, operational security, payday loans, Peter Thiel, Ponzi scheme, Potemkin village, prediction markets, proprietary trading, pushing on a string, QR code, quantitative easing, race to the bottom, ransomware, regulatory arbitrage, reserve currency, risk tolerance, Robert Shiller, Robinhood: mobile stock trading app, Ross Ulbricht, Sam Bankman-Fried, Satoshi Nakamoto, Saturday Night Live, short selling, short squeeze, Silicon Valley, Skype, smart contracts, Steve Bannon, systems thinking, TikTok, too big to fail, transaction costs, tulip mania, uber lyft, underbanked, vertical integration, zero-sum game

I think there are two reasons for that. The first is network effects. You need the sender and receiver to agree, you need somehow to get over that network barrier if you want to have bilateral payments with it.” “You need to have some trust.” “You need to have some trust and you need to have enough widespread adoption that you could actually have a bilateral payments method.” This was a core philosophical disagreement between us. I was trying to point out that you can’t just create trust out of thin air, you need that trusted third party—such as a central bank—to serve as a bridge. Sam claimed that “network effects” and “widespread adoption” would magically provide that bridge; once enough people started using crypto, more people would be drawn into crypto, and a self-reinforcing cycle could begin.


pages: 139 words: 35,022

Roads and Bridges by Nadia Eghbal

AGPL, Airbnb, Amazon Web Services, barriers to entry, Benevolent Dictator For Life (BDFL), corporate social responsibility, crowdsourcing, cryptocurrency, data science, David Heinemeier Hansson, Debian, DevOps, en.wikipedia.org, Firefox, Free Software Foundation, GnuPG, Guido van Rossum, Ken Thompson, Khan Academy, Kickstarter, leftpad, Marc Andreessen, market design, Network effects, platform as a service, pull request, Richard Stallman, Ruby on Rails, Salesforce, side project, Silicon Valley, Skype, software is eating the world, the Cathedral and the Bazaar, Tragedy of the Commons, Y Combinator

New projects should make an improvement to an existing project, or solve a chronic problem, in order to be deemed useful and worthy of adoption. When developers are asked why their project got so popular, many of them will shrug and simply say, It was the best thing out there. Not unlike technology startups, new digital infrastructure projects rely upon network effects for adoption. Getting a core group of developers excited, or a software company using the project, helps spread the word. A catchy name, branding, or website can add to the project’s novelty factor. A developer’s reputation within their respective community also helps determine whether a new project gets noticed.


pages: 385 words: 111,113

Augmented: Life in the Smart Lane by Brett King

23andMe, 3D printing, additive manufacturing, Affordable Care Act / Obamacare, agricultural Revolution, Airbnb, Albert Einstein, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, Apollo 11, Apollo Guidance Computer, Apple II, artificial general intelligence, asset allocation, augmented reality, autonomous vehicles, barriers to entry, bitcoin, Bletchley Park, blockchain, Boston Dynamics, business intelligence, business process, call centre, chief data officer, Chris Urmson, Clayton Christensen, clean water, Computing Machinery and Intelligence, congestion charging, CRISPR, crowdsourcing, cryptocurrency, data science, deep learning, DeepMind, deskilling, different worldview, disruptive innovation, distributed generation, distributed ledger, double helix, drone strike, electricity market, Elon Musk, Erik Brynjolfsson, Fellow of the Royal Society, fiat currency, financial exclusion, Flash crash, Flynn Effect, Ford Model T, future of work, gamification, Geoffrey Hinton, gig economy, gigafactory, Google Glasses, Google X / Alphabet X, Hans Lippershey, high-speed rail, Hyperloop, income inequality, industrial robot, information asymmetry, Internet of things, invention of movable type, invention of the printing press, invention of the telephone, invention of the wheel, James Dyson, Jeff Bezos, job automation, job-hopping, John Markoff, John von Neumann, Kevin Kelly, Kickstarter, Kim Stanley Robinson, Kiva Systems, Kodak vs Instagram, Leonard Kleinrock, lifelogging, low earth orbit, low skilled workers, Lyft, M-Pesa, Mark Zuckerberg, Marshall McLuhan, megacity, Metcalfe’s law, Minecraft, mobile money, money market fund, more computing power than Apollo, Neal Stephenson, Neil Armstrong, Network effects, new economy, Nick Bostrom, obamacare, Occupy movement, Oculus Rift, off grid, off-the-grid, packet switching, pattern recognition, peer-to-peer, Ray Kurzweil, retail therapy, RFID, ride hailing / ride sharing, Robert Metcalfe, Salesforce, Satoshi Nakamoto, Second Machine Age, selective serotonin reuptake inhibitor (SSRI), self-driving car, sharing economy, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, Skype, smart cities, smart grid, smart transportation, Snapchat, Snow Crash, social graph, software as a service, speech recognition, statistical model, stem cell, Stephen Hawking, Steve Jobs, Steve Wozniak, strong AI, synthetic biology, systems thinking, TaskRabbit, technological singularity, TED Talk, telemarketer, telepresence, telepresence robot, Tesla Model S, The future is already here, The Future of Employment, Tim Cook: Apple, trade route, Travis Kalanick, TSMC, Turing complete, Turing test, Twitter Arab Spring, uber lyft, undersea cable, urban sprawl, V2 rocket, warehouse automation, warehouse robotics, Watson beat the top human players on Jeopardy!, white picket fence, WikiLeaks, yottabyte

This glimpse into that future is ultimately optimistic but, along the way, I wanted to see if there are any specific lessons we could learn as to how we might react to the seismic shifts coming. I interviewed and sought the contributions of some of the world’s most pre-eminent experts in the areas of network effect, health care, artificial intelligence, robotics, consumer behaviour and sociological impact to ensure that you don’t just get a single commentator’s view. In the last decade, I’ve spent my life talking to business leaders, entrepreneurs and media about the future. How banking, money and commerce are being fundamentally changed by smartphones, how identity and privacy are evolving, how consumer buying habits have shifted around buying books, music and TV and will never return to what they were in the past.

Banks were platforms, initially isolated, later networked, much later interconnected. Credit and debit cards went through the same evolution: isolated platforms that grew exponentially as they interconnected and became interoperable. The Internet and the web made each of us participants in a much greater platform, and the same network effects were afforded to us as well. And then the smart mobile device came along and made all this possible on the move, allowing us to discover trust “independent of time and distance”. Context became discoverable: we could identify where we were, who and what we were near, what was approaching us, the whole nine yards.


The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy by Bruce Katz, Jennifer Bradley

"World Economic Forum" Davos, 3D printing, additive manufacturing, Affordable Care Act / Obamacare, benefit corporation, British Empire, business climate, carbon footprint, clean tech, clean water, collapse of Lehman Brothers, company town, congestion pricing, data science, deindustrialization, demographic transition, desegregation, Donald Shoup, double entry bookkeeping, edge city, Edward Glaeser, financial engineering, global supply chain, immigration reform, income inequality, industrial cluster, intermodal, Jane Jacobs, jitney, Kickstarter, knowledge economy, Lewis Mumford, lone genius, longitudinal study, Mark Zuckerberg, Masdar, megacity, megaproject, Menlo Park, Moneyball by Michael Lewis explains big data, Network effects, new economy, New Urbanism, Occupy movement, place-making, postindustrial economy, purchasing power parity, Quicken Loans, race to the bottom, Richard Florida, Shenzhen was a fishing village, Silicon Valley, smart cities, smart grid, sovereign wealth fund, tech worker, TechCrunch disrupt, TED Talk, the built environment, The Death and Life of Great American Cities, the market place, The Spirit Level, Tony Hsieh, too big to fail, trade route, transit-oriented development, urban planning, white flight, Yochai Benkler

Steven Johnson points to fourteenth-century Italian market cities as examples of networked economies: these were the places from which emerged double-entry bookkeeping—the notion of recording each transaction as a debit or a credit, which was one of financial accounting’s biggest innovations. This network effect applies to the game-changers approach as well: “They didn’t magically create some higher-level group consciousness. They simply widened the pool of minds that could come up with and share good ideas. This is not the wisdom of the crowd, but the wisdom of someone in the crowd.”66 Moreover, a half-year period of brainstorming sessions gave the NYCEDC time to discern common threads and connect different expressions or facets of the same idea.67 Cities and metropolitan areas concentrate the expertise of a vast range of people working in myriad sectors.

Together: The Rituals, Pleasures, and Politics of Cooperation. Yale University Press, 2012. 11-2151-2 biblio.indd 248 5/20/13 7:00 PM SELECTED BIBLIOGRAPHY 249 Sørensen, Eva, and Jacob Torfing. “The Democratic Anchorage of Governance Networks.” Scandinavian Political Studies 28, no. 3 (2005): 195–218. ———. “Making Governance Networks Effective and Democratic through Metagovernance.” Public Administration 87, no. 2 (2009): 234–58. Sorkin, Andrew Ross. Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System from Crisis—and Themselves. New York: Viking, 2009. Sthanumoorthy, R. “Rate War, Race to the Bottom, and Uniform State VAT Rates: An Empirical Foundation for a Difficult Policy Issue.”


pages: 378 words: 110,518

Postcapitalism: A Guide to Our Future by Paul Mason

air traffic controllers' union, Alan Greenspan, Alfred Russel Wallace, bank run, banking crisis, banks create money, Basel III, basic income, Bernie Madoff, Bill Gates: Altair 8800, bitcoin, Bletchley Park, Branko Milanovic, Bretton Woods, BRICs, British Empire, business cycle, business process, butterfly effect, call centre, capital controls, carbon tax, Cesare Marchetti: Marchetti’s constant, Claude Shannon: information theory, collaborative economy, collective bargaining, commons-based peer production, Corn Laws, corporate social responsibility, creative destruction, credit crunch, currency manipulation / currency intervention, currency peg, David Graeber, deglobalization, deindustrialization, deskilling, discovery of the americas, disinformation, Downton Abbey, drone strike, en.wikipedia.org, energy security, eurozone crisis, factory automation, false flag, financial engineering, financial repression, Firefox, Fractional reserve banking, Frederick Winslow Taylor, fulfillment center, full employment, future of work, game design, Glass-Steagall Act, green new deal, guns versus butter model, Herbert Marcuse, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Perry Barlow, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, late capitalism, low interest rates, low skilled workers, market clearing, means of production, Metcalfe's law, microservices, middle-income trap, Money creation, money: store of value / unit of account / medium of exchange, mortgage debt, Network effects, new economy, Nixon triggered the end of the Bretton Woods system, Norbert Wiener, Occupy movement, oil shale / tar sands, oil shock, Paul Samuelson, payday loans, Pearl River Delta, post-industrial society, power law, precariat, precautionary principle, price mechanism, profit motive, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, RFID, Richard Stallman, Robert Gordon, Robert Metcalfe, scientific management, secular stagnation, sharing economy, Stewart Brand, structural adjustment programs, supply-chain management, technological determinism, The Future of Employment, the scientific method, The Wealth of Nations by Adam Smith, Transnistria, Twitter Arab Spring, union organizing, universal basic income, urban decay, urban planning, vertical integration, Vilfredo Pareto, wages for housework, WikiLeaks, women in the workforce, Yochai Benkler

Next, it began to undermine traditional concepts of property and privacy. Wikileaks and the controversy over the mass surveillance data collected by the NSA are just the latest phase of a war over who can own and store information. But the biggest impact of all is only now being understood. The ‘network effect’ was first theorized by Bell Telephone boss Theodore Vail 100 years ago. Vail realized that networks create something extra, for free. In addition to utility for the user of a telephone and revenue for the owner, he noticed a third thing: the more people join the network, the more useful it becomes to everybody.

‘While the Internet’s impact on market transactions and value added has been undoubtedly far-reaching,’ they wrote, ‘its effect on non-market interactions … is even more profound.’39 Economists have tended to ignore non-market interactions: they are, by definition, non-economic – as insignificant as a smile passed between two customers in the Starbucks queue. As to the network effect, they assumed its benefits would be quantified into lower prices and distributed between producers and consumers. But in the space of less than thirty years, network technologies have opened whole areas of economic life to the possibility of collaboration and production beyond the market. On 15 September 2008, the Nokias and Motorolas pointed at Lehman Brothers HQ, and the free wifi signal in the Starbucks opposite, were in their own way just as significant as the bank that had collapsed.


pages: 391 words: 105,382

Utopia Is Creepy: And Other Provocations by Nicholas Carr

Abraham Maslow, Air France Flight 447, Airbnb, Airbus A320, AltaVista, Amazon Mechanical Turk, augmented reality, autonomous vehicles, Bernie Sanders, book scanning, Brewster Kahle, Buckminster Fuller, Burning Man, Captain Sullenberger Hudson, centralized clearinghouse, Charles Lindbergh, cloud computing, cognitive bias, collaborative consumption, computer age, corporate governance, CRISPR, crowdsourcing, Danny Hillis, data science, deskilling, digital capitalism, digital map, disruptive innovation, Donald Trump, driverless car, Electric Kool-Aid Acid Test, Elon Musk, Evgeny Morozov, factory automation, failed state, feminist movement, Frederick Winslow Taylor, friendly fire, game design, global village, Google bus, Google Glasses, Google X / Alphabet X, Googley, hive mind, impulse control, indoor plumbing, interchangeable parts, Internet Archive, invention of movable type, invention of the steam engine, invisible hand, Isaac Newton, Jeff Bezos, jimmy wales, Joan Didion, job automation, John Perry Barlow, Kevin Kelly, Larry Ellison, Lewis Mumford, lifelogging, lolcat, low skilled workers, machine readable, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, Max Levchin, means of production, Menlo Park, mental accounting, natural language processing, Neal Stephenson, Network effects, new economy, Nicholas Carr, Nick Bostrom, Norman Mailer, off grid, oil shale / tar sands, Peter Thiel, plutocrats, profit motive, Ralph Waldo Emerson, Ray Kurzweil, recommendation engine, Republic of Letters, robot derives from the Czech word robota Czech, meaning slave, Ronald Reagan, scientific management, self-driving car, SETI@home, side project, Silicon Valley, Silicon Valley ideology, Singularitarianism, Snapchat, social graph, social web, speech recognition, Startup school, stem cell, Stephen Hawking, Steve Jobs, Steven Levy, technoutopianism, TED Talk, the long tail, the medium is the message, theory of mind, Turing test, Tyler Cowen, Whole Earth Catalog, Y Combinator, Yochai Benkler

Big media outlets moved online, creating vast, enticing pools of branded content. Search engines and content aggregators expanded explosively, providing them with the money and expertise to create technical advantages—in speed and reliability, among other things—that often proved decisive in attracting and holding consumers. The winner-take-all “network effects” of mass communication systems took hold. (Everybody wants to be where everyone else is.) And, of course, people began to demonstrate their innate laziness, retreating from the wilds and following well-trod trails. A Google search may turn up thousands of results, but few of us bother to scroll beyond the top three.

More interesting is the study’s finding of a causal link between higher connection speeds and higher abandonment rates. Every time a network gets quicker, we get antsier. “Every millisecond matters,” says a Google engineer. As we experience faster flows of information online, we become, in other words, less patient people. But impatience is not just a network effect. The phenomenon is amplified by the constant buzz of Facebook, Twitter, Snapchat, texting, and social networking in general. Society’s “activity rhythm” has never been so harried. Impatience is a contagion spread from gadget to gadget. All of this has obvious importance to anyone involved in producing online media or running data centers.


pages: 571 words: 106,255

The Bitcoin Standard: The Decentralized Alternative to Central Banking by Saifedean Ammous

"World Economic Forum" Davos, Airbnb, Alan Greenspan, altcoin, bank run, banks create money, bitcoin, Black Swan, blockchain, Bretton Woods, British Empire, business cycle, capital controls, central bank independence, Charles Babbage, conceptual framework, creative destruction, cryptocurrency, currency manipulation / currency intervention, currency peg, delayed gratification, disintermediation, distributed ledger, Elisha Otis, Ethereum, ethereum blockchain, fiat currency, fixed income, floating exchange rates, Fractional reserve banking, full employment, George Gilder, Glass-Steagall Act, global reserve currency, high net worth, initial coin offering, invention of the telegraph, Isaac Newton, iterative process, jimmy wales, Joseph Schumpeter, low interest rates, market bubble, market clearing, means of production, military-industrial complex, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, Paul Samuelson, peer-to-peer, Peter Thiel, price mechanism, price stability, profit motive, QR code, quantum cryptography, ransomware, reserve currency, Richard Feynman, risk tolerance, Satoshi Nakamoto, scientific management, secular stagnation, smart contracts, special drawing rights, Stanford marshmallow experiment, The Nature of the Firm, the payments system, too big to fail, transaction costs, Walter Mischel, We are all Keynesians now, zero-sum game

The Austrian theory of money posits that money emerges in a market as the most marketable commodity and most salable asset, the one asset whose holders can sell with the most ease, in favorable conditions.7 An asset that holds its value is preferable to an asset that loses value, and savers who want to choose a medium of exchange will gravitate toward assets that hold value over time as monetary assets. Network effects mean that eventually only one, or a few, assets can emerge as media of exchange. For Mises, the absence of control by government is a necessary condition for the soundness of money, seeing as government will have the temptation to debase its money whenever it begins to accrue wealth as savers invest in it.

If some members of the Bitcoin network decided to change a parameter in the Bitcoin code by introducing a new version of the software that is incompatible with the rest of the network members, the result would be a fork, which effectively creates two separate currencies and networks. For as long as any members stay on the old network, they would benefit from the infrastructure of the network as it exists, the mining equipment, the network effect, and name recognition. In order for the new fork to succeed it would need an overwhelming majority of users, mining hashing power, and all of the related infrastructure to migrate at the same time. If it doesn't get that overwhelming majority, the likeliest outcome is that the two Bitcoins would trade versus one another on exchanges.


pages: 518 words: 107,836

How Not to Network a Nation: The Uneasy History of the Soviet Internet (Information Policy) by Benjamin Peters

Albert Einstein, American ideology, Andrei Shleifer, Anthropocene, Benoit Mandelbrot, bitcoin, Brownian motion, Charles Babbage, Claude Shannon: information theory, cloud computing, cognitive dissonance, commons-based peer production, computer age, conceptual framework, continuation of politics by other means, crony capitalism, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, disinformation, Dissolution of the Soviet Union, Donald Davies, double helix, Drosophila, Francis Fukuyama: the end of history, From Mathematics to the Technologies of Life and Death, Gabriella Coleman, hive mind, index card, informal economy, information asymmetry, invisible hand, Jacquard loom, John von Neumann, Kevin Kelly, knowledge economy, knowledge worker, Lewis Mumford, linear programming, mandelbrot fractal, Marshall McLuhan, means of production, megaproject, Menlo Park, Mikhail Gorbachev, military-industrial complex, mutually assured destruction, Network effects, Norbert Wiener, packet switching, Pareto efficiency, pattern recognition, Paul Erdős, Peter Thiel, Philip Mirowski, power law, RAND corporation, rent-seeking, road to serfdom, Ronald Coase, scientific mainstream, scientific management, Steve Jobs, Stewart Brand, stochastic process, surveillance capitalism, systems thinking, technoutopianism, the Cathedral and the Bazaar, the strength of weak ties, The Structural Transformation of the Public Sphere, transaction costs, Turing machine, work culture , Yochai Benkler

The result of Baran’s conversations was packet switching, a technology that broke messages into “packets,” which allowed digital “bursts” of data to be rerouted around damaged parts of a network—just as the brain can reroute neural impulses around damaged neural matter. Similarly, Baran’s observation was that, due to network effects, the brilliance of a distributed network, whether neural or national, is that it does not need each of the average eighty-six billion neurons in the human brain to connect to every other (and the number of possible connections between eighty-six billion neurons is so incomprehensibly large that the need for robust reconnection becomes obvious).42 Rather, attaching to a couple of other nodes allows a distributed packet-switched network to reroute in real time around damaged territory, whether neural or national.

Both international and internal critics, including the British organizational cyberneticist Stafford Beer, were critical of Soviet management techniques.7 More than a network, the OGAS Project as formulated by Glushkov outlines a daring technocratic economic imagining that was meant to operate in a future Soviet information society by digitizing, supervising, and optimizing the coordination challenges besetting the national command economy. The associated costs and scale of such a supercharged system were accordingly colossal. Glushkov captured the sentiment of network effects, which is still alive in surveillance capitalism’s promotion of big data today, in this phrase: “world practice shows that the larger the object for which an information-management system is created, the greater its economic effect.”8 More than komchamstvo, or Lenin’s term for “Communist boasting,” the basic OGAS blueprint affirms its staggering magnitude.


pages: 374 words: 111,284

The AI Economy: Work, Wealth and Welfare in the Robot Age by Roger Bootle

"World Economic Forum" Davos, 3D printing, agricultural Revolution, AI winter, Albert Einstein, AlphaGo, Alvin Toffler, anti-work, antiwork, autonomous vehicles, basic income, Ben Bernanke: helicopter money, Bernie Sanders, Bletchley Park, blockchain, call centre, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, Chris Urmson, computer age, Computing Machinery and Intelligence, conceptual framework, corporate governance, correlation does not imply causation, creative destruction, David Ricardo: comparative advantage, deep learning, DeepMind, deindustrialization, Demis Hassabis, deskilling, Dr. Strangelove, driverless car, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, facts on the ground, fake news, financial intermediation, full employment, future of work, Future Shock, general purpose technology, Great Leap Forward, Hans Moravec, income inequality, income per capita, industrial robot, Internet of things, invention of the wheel, Isaac Newton, James Watt: steam engine, Jeff Bezos, Jeremy Corbyn, job automation, job satisfaction, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Joseph Schumpeter, Kevin Kelly, license plate recognition, low interest rates, machine translation, Marc Andreessen, Mark Zuckerberg, market bubble, mega-rich, natural language processing, Network effects, new economy, Nicholas Carr, Ocado, Paul Samuelson, Peter Thiel, Phillips curve, positional goods, quantitative easing, RAND corporation, Ray Kurzweil, Richard Florida, ride hailing / ride sharing, rising living standards, road to serfdom, Robert Gordon, Robert Shiller, Robert Solow, Rutger Bregman, Second Machine Age, secular stagnation, self-driving car, seminal paper, Silicon Valley, Silicon Valley billionaire, Simon Kuznets, Skype, social intelligence, spinning jenny, Stanislav Petrov, Stephen Hawking, Steven Pinker, synthetic biology, technological singularity, The Future of Employment, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, universal basic income, US Airways Flight 1549, Vernor Vinge, warehouse automation, warehouse robotics, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, wealth creators, winner-take-all economy, world market for maybe five computers, Y2K, Yogi Berra

This result was regarded as especially impressive in Asia, where Go is much more popular than it is in Europe or America. It is the internet that has impelled AI to much greater capability and intelligence. A key feature behind human beings’ rise to dominion over the physical world was the development of exchange and specialization, which was a network effect. When the internet came along, connecting computers in a network, this transformed their capability.11 And then we have coming along soon what the British entrepreneur Kevin Ashton has called “The Internet of Things.” IBM calls this the “Smarter Planet”; Cisco calls it the “Internet of Everything”; GE calls it “the Industrial Internet”; while the German government calls it “Industry 4.0.”

Yet the IT/digital revolution massively expanded the range of things (or more usually non-things) that do not obey the usual laws of shortage. Anything that can be digitized, such as information, data, or knowledge – is not diminished by being shared more widely. The term used to describe this quality is “non-rival.” Moreover, in the digital world network effects abound. The marginal cost of increasing the membership of a network is virtually zero but it has benefits for all other members of the network. Economics has grown up to analyze a world where goods are made up of atoms. But things made of bits display four markedly different characteristics: • They can be replicated perfectly


pages: 297 words: 108,353

Boom and Bust: A Global History of Financial Bubbles by William Quinn, John D. Turner

accounting loophole / creative accounting, Alan Greenspan, algorithmic trading, AOL-Time Warner, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, Big bang: deregulation of the City of London, bitcoin, blockchain, book value, Bretton Woods, business cycle, buy and hold, capital controls, Celtic Tiger, collapse of Lehman Brothers, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, cryptocurrency, debt deflation, deglobalization, Deng Xiaoping, different worldview, discounted cash flows, Donald Trump, equity risk premium, Ethereum, ethereum blockchain, eurozone crisis, fake news, financial deregulation, financial intermediation, Flash crash, Francis Fukuyama: the end of history, George Akerlof, government statistician, Greenspan put, high-speed rail, information asymmetry, initial coin offering, intangible asset, Irish property bubble, Isaac Newton, Japanese asset price bubble, joint-stock company, Joseph Schumpeter, junk bonds, land bank, light touch regulation, low interest rates, margin call, market bubble, market fundamentalism, Martin Wolf, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, negative equity, Network effects, new economy, Northern Rock, oil shock, Ponzi scheme, quantitative easing, quantitative trading / quantitative finance, railway mania, Right to Buy, Robert Shiller, Shenzhen special economic zone , short selling, short squeeze, Silicon Valley, smart contracts, South Sea Bubble, special economic zone, subprime mortgage crisis, technology bubble, the built environment, total factor productivity, transaction costs, tulip mania, urban planning

The Economist, cheerleaders for free trade and competition, declared that whether new railway companies should be established in competition with existing ones should not be left to the likes of Mr Gladstone; rather (and somewhat unfortunately as events would prove), they suggested that those who invest their money are the best judges.14 The excitement generated by Gladstone’s Railway Act in the first half of 1844 can be seen from Figure 4.1, which charts a railway stock index and, for the purposes of comparison, an index of returns on the 20 largest non-railway companies in this era. Railways were extensively promoted around this time, and 199 applications for new railways were presented for consideration in the 1845 parliamentary session, which at the time typically ran from February to July.15 Since many believed that the network effects from new railways would make existing railways even more profitable, railway stock prices skyrocketed, and many more 60 THE GREAT RAILWAY MANIA 2,200 2,000 All railways 1,800 Non-railways 1,600 1,400 1,200 1,000 800 600 400 1843 1844 1845 1846 1847 1848 1849 1850 Figure 4.1 Weekly stock indexes of British Railways and non-railway blue-chip companies16 promoters devised railway schemes for consideration in the 1846 session of Parliament.

By one estimate, in the month before the NASDAQ peaked, insiders sold 23 times as many shares as they bought.49 As is often the case, speculative investment strategies were much more profitable for experienced investors and those with privileged information. The spark for the bubble was provided by the realisation that network effects would vastly increase the usefulness of computer technology. The 1990s saw spectacular growth at existing firms such as Hewlett-Packard and Microsoft, providing early investors with enormous capital gains. The initial success of newcomers such as Netscape and AOL further demonstrated the potential profits that could be made from investing in dot-com firms.


pages: 379 words: 109,223

Frenemies: The Epic Disruption of the Ad Business by Ken Auletta

"World Economic Forum" Davos, Airbnb, Alvin Toffler, AOL-Time Warner, barriers to entry, Bernie Sanders, bike sharing, Boris Johnson, Build a better mousetrap, Burning Man, call centre, Cambridge Analytica, capitalist realism, carbon footprint, cloud computing, commoditize, connected car, content marketing, corporate raider, crossover SUV, data science, digital rights, disintermediation, Donald Trump, driverless car, Elon Musk, fake news, financial engineering, forensic accounting, Future Shock, Google Glasses, Internet of things, Jeff Bezos, Kevin Roose, Khan Academy, Lyft, Mark Zuckerberg, market design, Mary Meeker, Max Levchin, Menlo Park, move fast and break things, Naomi Klein, NetJets, Network effects, pattern recognition, pets.com, race to the bottom, Richard Feynman, ride hailing / ride sharing, Salesforce, Saturday Night Live, self-driving car, sharing economy, Sheryl Sandberg, Shoshana Zuboff, Silicon Valley, Snapchat, Steve Ballmer, Steve Jobs, surveillance capitalism, Susan Wojcicki, The Theory of the Leisure Class by Thorstein Veblen, three-martini lunch, Tim Cook: Apple, transaction costs, Uber and Lyft, uber lyft, Upton Sinclair, éminence grise

“No one else has scaled it,” Irwin Gotlieb says. “You can’t scale if you’re just an individual. What Michael did most successfully was he expanded from a one-man operation.” There are consultancies that headhunt or advise on management, but these are siloed efforts. After operating largely uncontested since 2003, MediaLink benefits from network effects. Michael Kassan has his critics, though the fiercest criticism is usually volunteered only after the critic is guaranteed anonymity. “MediaLink is like the Mafia. You pay them for protection,” the CEO of one tech firm who retained them says. “I used to pay them twenty thousand dollars per month during year one.

Data was “the oil of the digital era,” The Economist editorialized in May 2017. “Old ways of thinking about competition, devised in the era of oil, look outdated in what has come to be called the ‘data economy.’” Abundant data, they continued, alters the nature of competition, and companies with this data benefit from network effects. The data empowers Google to “see what people search for, Facebook what they share, Amazon what they buy.” They have the resources to erect “barriers” to entry by absorbing potential competitors. And their abundant data allows a peek into private lives, employing this information as a marketing tool.


pages: 460 words: 107,454

Stakeholder Capitalism: A Global Economy That Works for Progress, People and Planet by Klaus Schwab, Peter Vanham

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 3D printing, additive manufacturing, agricultural Revolution, air traffic controllers' union, Anthropocene, Apple II, Asian financial crisis, Asperger Syndrome, basic income, Berlin Wall, Big Tech, biodiversity loss, bitcoin, Black Lives Matter, blockchain, blue-collar work, Branko Milanovic, Bretton Woods, British Empire, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, car-free, carbon footprint, carbon tax, centre right, clean tech, clean water, cloud computing, collateralized debt obligation, collective bargaining, colonial rule, company town, contact tracing, contact tracing app, Cornelius Vanderbilt, coronavirus, corporate governance, corporate social responsibility, COVID-19, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, cuban missile crisis, currency peg, cyber-physical system, decarbonisation, demographic dividend, Deng Xiaoping, Diane Coyle, digital divide, don't be evil, European colonialism, Fall of the Berlin Wall, family office, financial innovation, Francis Fukuyama: the end of history, future of work, gender pay gap, general purpose technology, George Floyd, gig economy, Gini coefficient, global supply chain, global value chain, global village, Google bus, green new deal, Greta Thunberg, high net worth, hiring and firing, housing crisis, income inequality, income per capita, independent contractor, industrial robot, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Khan Academy, Kickstarter, labor-force participation, lockdown, low interest rates, low skilled workers, Lyft, manufacturing employment, Marc Benioff, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, Martin Wolf, means of production, megacity, microplastics / micro fibres, Mikhail Gorbachev, mini-job, mittelstand, move fast and break things, neoliberal agenda, Network effects, new economy, open economy, Peace of Westphalia, Peter Thiel, precariat, Productivity paradox, profit maximization, purchasing power parity, race to the bottom, reserve currency, reshoring, ride hailing / ride sharing, Ronald Reagan, Salesforce, San Francisco homelessness, School Strike for Climate, self-driving car, seminal paper, shareholder value, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, social distancing, Social Responsibility of Business Is to Increase Its Profits, special economic zone, Steve Jobs, Steve Wozniak, synthetic biology, TaskRabbit, The Chicago School, The Future of Employment, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the scientific method, TikTok, Tim Cook: Apple, trade route, transfer pricing, Uber and Lyft, uber lyft, union organizing, universal basic income, War on Poverty, We are the 99%, women in the workforce, working poor, working-age population, Yom Kippur War, young professional, zero-sum game

Figure 6.2 The Elephant Curve of Global Inequality and Growth Source: World Inequality Report (2018). Inspired by Lakner and Milanovic, World Bank Economic Review (2015). Elephant first added by Caroline Freund45 (Peterson Institute for International Economics). But the Third Industrial Revolution had another effect. It introduced the network effect as a competitive force, locking users into networks used by a majority of others, and heightened the importance of intellectual property. Microsoft was a case in point. As personal computers conquered the office, Microsoft's Windows became the dominant operating system, Office the dominant software, and Internet Explorer the dominant web browser.

In the online ad market, then, the Big Tech firms did set the price, lacking competition. But because this market is less visible, it didn't prompt the same regulatory scrutiny. In Europe, by contrast, DG Comp, the EU competition watchdog, looked at broader market indicators, allowing it to intervene quicker. Second, having locked in consumers through the network effect (as consumer, you don't want to be the only one not using a particular social network), Big Tech has also been able to put in place rules on the use of personal data that were previously unheard of. As these practices were simply non-existent in previous industrial revolutions, there was until recently no template for regulators to act against them.


pages: 460 words: 107,454

Stakeholder Capitalism: A Global Economy That Works for Progress, People and Planet by Klaus Schwab

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 3D printing, additive manufacturing, agricultural Revolution, air traffic controllers' union, Anthropocene, Apple II, Asian financial crisis, Asperger Syndrome, basic income, Berlin Wall, Big Tech, biodiversity loss, bitcoin, Black Lives Matter, blockchain, blue-collar work, Branko Milanovic, Bretton Woods, British Empire, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, car-free, carbon footprint, carbon tax, centre right, clean tech, clean water, cloud computing, collateralized debt obligation, collective bargaining, colonial rule, company town, contact tracing, contact tracing app, Cornelius Vanderbilt, coronavirus, corporate governance, corporate social responsibility, COVID-19, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, cuban missile crisis, currency peg, cyber-physical system, decarbonisation, demographic dividend, Deng Xiaoping, Diane Coyle, digital divide, don't be evil, European colonialism, Fall of the Berlin Wall, family office, financial innovation, Francis Fukuyama: the end of history, future of work, gender pay gap, general purpose technology, George Floyd, gig economy, Gini coefficient, global supply chain, global value chain, global village, Google bus, green new deal, Greta Thunberg, high net worth, hiring and firing, housing crisis, income inequality, income per capita, independent contractor, industrial robot, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Khan Academy, Kickstarter, labor-force participation, lockdown, low interest rates, low skilled workers, Lyft, manufacturing employment, Marc Benioff, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, Martin Wolf, means of production, megacity, microplastics / micro fibres, Mikhail Gorbachev, mini-job, mittelstand, move fast and break things, neoliberal agenda, Network effects, new economy, open economy, Peace of Westphalia, Peter Thiel, precariat, Productivity paradox, profit maximization, purchasing power parity, race to the bottom, reserve currency, reshoring, ride hailing / ride sharing, Ronald Reagan, Salesforce, San Francisco homelessness, School Strike for Climate, self-driving car, seminal paper, shareholder value, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, social distancing, Social Responsibility of Business Is to Increase Its Profits, special economic zone, Steve Jobs, Steve Wozniak, synthetic biology, TaskRabbit, The Chicago School, The Future of Employment, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the scientific method, TikTok, Tim Cook: Apple, trade route, transfer pricing, Uber and Lyft, uber lyft, union organizing, universal basic income, War on Poverty, We are the 99%, women in the workforce, working poor, working-age population, Yom Kippur War, young professional, zero-sum game

Figure 6.2 The Elephant Curve of Global Inequality and Growth Source: World Inequality Report (2018). Inspired by Lakner and Milanovic, World Bank Economic Review (2015). Elephant first added by Caroline Freund45 (Peterson Institute for International Economics). But the Third Industrial Revolution had another effect. It introduced the network effect as a competitive force, locking users into networks used by a majority of others, and heightened the importance of intellectual property. Microsoft was a case in point. As personal computers conquered the office, Microsoft's Windows became the dominant operating system, Office the dominant software, and Internet Explorer the dominant web browser.

In the online ad market, then, the Big Tech firms did set the price, lacking competition. But because this market is less visible, it didn't prompt the same regulatory scrutiny. In Europe, by contrast, DG Comp, the EU competition watchdog, looked at broader market indicators, allowing it to intervene quicker. Second, having locked in consumers through the network effect (as consumer, you don't want to be the only one not using a particular social network), Big Tech has also been able to put in place rules on the use of personal data that were previously unheard of. As these practices were simply non-existent in previous industrial revolutions, there was until recently no template for regulators to act against them.


pages: 777 words: 186,993

Imagining India by Nandan Nilekani

"World Economic Forum" Davos, addicted to oil, affirmative action, Airbus A320, BRICs, British Empire, business process, business process outsourcing, call centre, carbon credits, carbon tax, clean water, colonial rule, corporate governance, cuban missile crisis, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, digital map, distributed generation, electricity market, farmers can use mobile phones to check market prices, flag carrier, full employment, ghettoisation, glass ceiling, global supply chain, Hernando de Soto, income inequality, informal economy, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), joint-stock company, knowledge economy, land reform, light touch regulation, LNG terminal, load shedding, low cost airline, Mahatma Gandhi, market fragmentation, mass immigration, Mikhail Gorbachev, Network effects, new economy, New Urbanism, open economy, Parag Khanna, pension reform, Potemkin village, price mechanism, public intellectual, race to the bottom, rent control, rolodex, Ronald Reagan, school vouchers, Silicon Valley, smart grid, special economic zone, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, Tragedy of the Commons, transaction costs, trickle-down economics, unemployed young men, upwardly mobile, urban planning, urban renewal, women in the workforce, working poor, working-age population

Table of Contents Copyright Page Title Page Dedication Foreword Part One - INDIA REIMAGINED IDEAS THAT HAVE ARRIVED INDIA, BY ITS PEOPLE FROM REJECTION TO OPEN ARMS - The Entrepreneur in India THE PHOENIX TONGUE - The Rise, Fall and Rise of English FROM MANEATERS TO ENABLERS HOME AND THE WORLD - Our Changing Seasons THE DEEPENING OF OUR DEMOCRACY A RESTLESS COUNTRY Part Two - ALL ABOARD IDEAS IN PROGRESS S IS FOR SCHOOLS - The Challenges in India’s Classrooms OUR CHANGING FACES - India in the City THE LONG ROADS HOME ERASING LINES - Our Emerging Single Market MOVING DEADLINES Part Three - FIGHTING WORDS IDEAS IN BATTLE THE SOUND AND THE FURY - Our Biggest Fights JOSTLING FOR JOBS INSTITUTIONS OF SAND - Our Universities A FINE BALANCE Part Four - CLOSER THAN THEY APPEAR IDEAS TO ANTICIPATE ICT IN INDIA - From Bangalore One to Country One CHANGING EPIDEMICS - From Hunger to Heart Disease OUR SOCIAL INSECURITIES - The Missing Demographic THE FOREST FOR THE TREES - India’s Environment Challenge POWER PLAYS - In Search of Our Energy Solutions THE NETWORK EFFECT CONCLUSION Acknowledgements NOTES A TIME LINE OF KEY EVENTS INDEX VIKING CANADA Published by the Penguin Group Penguin Group (Canada), 90 Eglinton Avenue East, Suite 700, Toronto, Ontario, Canada M4P 2Y3 (a division of Pearson Canada Inc.) • Penguin Group (USA) Inc., 375 Hudson Street, New York, New York 10014, U.S.A. • Penguin Books Ltd, 80 Strand, London WC2R 0RL, England Penguin Ireland, 25 St Stephen’s Green, Dublin 2, Ireland (a division of Penguin Books Ltd) • Penguin Group (Australia), 250 Camberwell Road, Camberwell, Victoria 3124, Australia (a division of Pearson Australia Group Pty Ltd) • Penguin Books India Pvt Ltd, 11 Community Centre, Panchsheel Park, New Delhi - 110 017, India • Penguin Group (NZ), 67 Apollo Drive, Rosedale, North Shore 0632, New Zealand (a division of Pearson New Zealand Ltd) • Penguin Books (South Africa) (Pty) Ltd, 24 Sturdee Avenue, Rosebank, Johannesburg 2196, South Africa Penguin Books Ltd, Registered Offices: 80 Strand, London WC2R 0RL, England Simultaneously published by the Penguin Press, a member of Penguin Group (USA) Inc.

It is increasingly obvious that what we need instead are well-connected states that diminish the distance between the two—the vitality of both the city and the village hinges on our infrastructure. Productivity in rural India will only improve with stronger supply chains and multiple ways to connect people, both within rural India and with urban areas. So far, India, and particularly the countryside, has not yet experienced the immense productivity gains that will emerge from the “network effect” of being well connected to markets through telecom, roads and rail. To date, our policy makers have underestimated the impact of building these connections. But as India’s fishermen who use mobile phones and farmers who use Internet kiosks have shown, giving people multiple means of connectivity can trigger a level of economic growth that we have so far underplayed.

We can move to empowerment and decentralization, from monopolistic, inefficient systems to a market governed by both efficiency standards and carbon pricing, and from subsidies to funds for new technologies and R&D in energy. It is a chance to choose a solution that is not “dirty, insecure and unsafe,” but one that is far more democratic and equitable, and which leverages India’s greatest strength—the momentum of our human capital and our capacity for bottom-up growth. THE NETWORK EFFECT OUR ANSWERS TO our emerging challenges—in technology, health, pensions, environment and energy—depend very much on decentralized approaches, and these will have to come, in part, from the same people who built the jugaad. Jugaad, which means “everything put together,” quick-fix and improvised, is the name of the vehicle that people in many parts of rural north India use to travel.


pages: 133 words: 36,528

Peak Car: The Future of Travel by David Metz

autonomous vehicles, behavioural economics, bike sharing, Clayton Christensen, congestion charging, Crossrail, crowdsourcing, David Attenborough, decarbonisation, disruptive innovation, driverless car, edge city, Edward Glaeser, Ford Model T, gentrification, high-speed rail, Just-in-time delivery, low cost airline, megaproject, Network effects, Ocado, Richard Florida, Robert Gordon, seminal paper, Silicon Valley, Skype, Suez canal 1869, The future is already here, urban sprawl, yield management, young professional

There is, nevertheless, scope to configure bus services to cater for off‑peak, cross‑city and recreational travel, as well as peak flows. A network of routes, linking with rail and trams, and with easy transfers, can attract passengers—as seen in many European cities as well as London. There is a ‘network effect’ at work—recognised by economists as a ‘positive externality’—in which the more users there are, the greater the value for each user, as first seen in the early days of telephones. For buses what is needed is a single planned network with near effortless transfers between routes, with timetable coordination and through ticketing.


pages: 151 words: 38,153

With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don't Pay Enough by Peter Barnes

adjacent possible, Alfred Russel Wallace, banks create money, basic income, Buckminster Fuller, carbon tax, collective bargaining, computerized trading, creative destruction, David Ricardo: comparative advantage, declining real wages, deindustrialization, diversified portfolio, driverless car, en.wikipedia.org, Fractional reserve banking, full employment, Glass-Steagall Act, hydraulic fracturing, income inequality, It's morning again in America, Jaron Lanier, Jevons paradox, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, land reform, Mark Zuckerberg, Money creation, Network effects, oil shale / tar sands, Paul Samuelson, power law, profit maximization, quantitative easing, rent-seeking, Ronald Coase, Ronald Reagan, Silicon Valley, sovereign wealth fund, Stuart Kauffman, the map is not the territory, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, Upton Sinclair, Vilfredo Pareto, wealth creators, winner-take-all economy

The reasons why people pay hundreds of dollars, over and over, for unexceptional products that cost just a few dollars to reproduce include the following: • Everyone uses Microsoft programs, so if you want to be compatible, you have to use them, too. • Your computer manufacturer preinstalled them and included them in the price of your computer. • You can’t borrow them from friends because they’re copyrighted. Thus, a sizable portion of Microsoft’s stock value—arguably the lion’s share—comes from system properties such as the network effect, market power, and copyright protection, a gift for which our government charges nothing. On top of this, Microsoft benefits from decades of public investment in schools, semiconductors, and the Internet; centuries of scientific progress; and unstinting generosity from nature (think of the fuels and atmosphere required to power the Internet).


pages: 434 words: 117,327

Can It Happen Here?: Authoritarianism in America by Cass R. Sunstein

active measures, affirmative action, Affordable Care Act / Obamacare, airline deregulation, anti-communist, anti-globalists, availability heuristic, behavioural economics, Black Lives Matter, Brexit referendum, business cycle, Cambridge Analytica, Cass Sunstein, cognitive load, David Brooks, disinformation, Donald Trump, driverless car, Edward Snowden, Estimating the Reproducibility of Psychological Science, failed state, fake news, Filter Bubble, Francis Fukuyama: the end of history, Garrett Hardin, ghettoisation, illegal immigration, immigration reform, Isaac Newton, job automation, Joseph Schumpeter, Long Term Capital Management, microaggression, Nate Silver, Network effects, New Journalism, night-watchman state, nudge theory, obamacare, Paris climate accords, post-truth, Potemkin village, random walk, Richard Thaler, road to serfdom, Ronald Reagan, seminal paper, Steve Bannon, TED Talk, the scientific method, Tragedy of the Commons, Tyler Cowen, War on Poverty, WikiLeaks, World Values Survey

For example, if there is no one with a threshold of one and two actors with a threshold of two—a tiny, probably undetectable difference in underlying preferences—the violence will stop with just the first actor; no unraveling will occur. To an observer, the two scenarios could not look more different—a single agitator jostling an otherwise orderly crowd versus a full-scale riot—yet ex ante there is essentially no difference (Watts 2011). Effects like these show up everywhere. For example, markets can exhibit network effects (Economides 1996), meaning that small differences in market share can be amplified over time for reasons unrelated to intrinsic quality, possibly creating lock-in (Arthur 1989), whereupon dominant players can be near impossible to displace (e.g., Microsoft in PCs, Google in search, Facebook in social media).

., 178, 179 Multiculturalism, 210–11, 241, 409 Murphy, Frank, 316 “Mushy middle,” 269–70 Muslim bans, 79, 235, 262, 319, 322, 328n, 369–70, 371–73 Muslim registry, 314 Mussolini, Benito, 15, 46–47, 233, 277 Napoléon Bonaparte, 284–85, 286, 298 Narcissistic rulers, 279–84 National Front, 190, 205, 209–10 Nationalism, 15–16, 243–46, 404–5, 418–20 National Security Act of 1947, 108 National Security Agency (NSA), 108, 109, 112, 122, 124 National Security Council (NSC), 108 Nativist intolerance, 240, 242–49, 264–66, 267, 268, 410–11, 418–20 Navalny, Alexei, 148 Nazi Germany, x, 38, 40, 45–48, 66, 75, 158, 167, 399 Netherlands, 177 Network effects, 344 New Deal, 78, 381–82 Newton, Isaac, 360 New York Times, 117–18, 283–84, 436 New Zealand, 52–53 NFIB v. Sebelius, 382–83 NFL (National Football League), 16, 138 “Night watchman state,” 38–40, 43 Nineteen Eighty-Four (Orwell), ix Nixon, Richard, 4, 6, 7, 78–79, 109 Non-Detention Act of 1971, 316–17 Normative threat, 179, 180, 181, 185, 186–87, 193–94, 196, 201–6, 215 North Carolina, 152–53 North Korea, viii Nudging (nudge theory), 342–43 Obama, Barack, 1, 5, 6, 7, 75, 122, 129n, 222, 323, 332, 404–5 probabilistic approach of, 351–52 Obamacare, 29–31, 345–46, 351, 382–83 Office of Government Ethics, 154–55 Oligarchy, 20, 21, 23–24, 26, 29–34 O’Malley, Edward, 85 “On ‘It Can’t Happen Here’” (Feldman), 157–74 Orbán, Viktor, 147, 151, 165, 408–10, 419 Orwell, George, ix Pagès, Jean-Pierre, 291 Paine, Thomas, 331–32 Pakistan, 107 Palmer, A.


pages: 501 words: 114,888

The Future Is Faster Than You Think: How Converging Technologies Are Transforming Business, Industries, and Our Lives by Peter H. Diamandis, Steven Kotler

Ada Lovelace, additive manufacturing, Airbnb, Albert Einstein, AlphaGo, Amazon Mechanical Turk, Amazon Robotics, augmented reality, autonomous vehicles, barriers to entry, Big Tech, biodiversity loss, bitcoin, blockchain, blood diamond, Boston Dynamics, Burning Man, call centre, cashless society, Charles Babbage, Charles Lindbergh, Clayton Christensen, clean water, cloud computing, Colonization of Mars, computer vision, creative destruction, CRISPR, crowdsourcing, cryptocurrency, data science, Dean Kamen, deep learning, deepfake, DeepMind, delayed gratification, dematerialisation, digital twin, disruptive innovation, Donald Shoup, driverless car, Easter island, Edward Glaeser, Edward Lloyd's coffeehouse, Elon Musk, en.wikipedia.org, epigenetics, Erik Brynjolfsson, Ethereum, ethereum blockchain, experimental economics, fake news, food miles, Ford Model T, fulfillment center, game design, Geoffrey West, Santa Fe Institute, gig economy, gigafactory, Google X / Alphabet X, gravity well, hive mind, housing crisis, Hyperloop, impact investing, indoor plumbing, industrial robot, informal economy, initial coin offering, intentional community, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invention of the telegraph, Isaac Newton, Jaron Lanier, Jeff Bezos, job automation, Joseph Schumpeter, Kevin Kelly, Kickstarter, Kiva Systems, late fees, Law of Accelerating Returns, life extension, lifelogging, loss aversion, Lyft, M-Pesa, Mary Lou Jepsen, Masayoshi Son, mass immigration, megacity, meta-analysis, microbiome, microdosing, mobile money, multiplanetary species, Narrative Science, natural language processing, Neal Stephenson, Neil Armstrong, Network effects, new economy, New Urbanism, Nick Bostrom, Oculus Rift, One Laptop per Child (OLPC), out of africa, packet switching, peer-to-peer lending, Peter H. Diamandis: Planetary Resources, Peter Thiel, planned obsolescence, QR code, RAND corporation, Ray Kurzweil, RFID, Richard Feynman, Richard Florida, ride hailing / ride sharing, risk tolerance, robo advisor, Satoshi Nakamoto, Second Machine Age, self-driving car, Sidewalk Labs, Silicon Valley, Skype, smart cities, smart contracts, smart grid, Snapchat, SoftBank, sovereign wealth fund, special economic zone, stealth mode startup, stem cell, Stephen Hawking, Steve Jobs, Steve Jurvetson, Steven Pinker, Stewart Brand, supercomputer in your pocket, supply-chain management, tech billionaire, technoutopianism, TED Talk, Tesla Model S, Tim Cook: Apple, transaction costs, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, urban planning, Vision Fund, VTOL, warehouse robotics, Watson beat the top human players on Jeopardy!, We wanted flying cars, instead we got 140 characters, X Prize

These egalitarian establishments drew people from all walks of life, allowing novel notions to meet and mingle and “have sex,” as author Matt Ridley famously wrote. By becoming a hub for information sharing—a network—coffee shops were foundational in driving progress forward. Not surprisingly, we see similar network effects in cities, which are essentially coffee shops writ large. Two-thirds of all growth takes place in urban environments because population density leads to the cross-pollination of ideas. This is why Santa Fe Institute physicist Geoffrey West discovered that doubling the size of a city produces a 15 percent increase in income, wealth, and innovation (as measured by the number of new patents).

The 1920s, for example, gave us “bait and hook” models, where customers are lured in with a low-cost initial product (the bait, say, a free razor) and then forced to buy endless refills (the hook, aka: razor blade refills). In the 1950s, it was the “franchise models” pioneered by McDonald’s; in the 1960s we got “hypermarkets” like Walmart. But with the arrival of the internet in the 1990s, business model reinvention entered a period of radical growth. In less than two decades, we’ve seen network effects birth new platforms in record time, bitcoin and blockchain undercut existing “trusted third party” financial models, and crowdfunding and ICOs upend the traditional ways capital is raised. What do all of these new models share? By significantly shortening the distance between “I’ve got a neat idea” and “I run a billion-dollar business,” these models are more than an upgrade to our systems and processes, they’re actually another force for acceleration.


pages: 706 words: 202,591

Facebook: The Inside Story by Steven Levy

active measures, Airbnb, Airbus A320, Amazon Mechanical Turk, AOL-Time Warner, Apple's 1984 Super Bowl advert, augmented reality, Ben Horowitz, Benchmark Capital, Big Tech, Black Lives Matter, Blitzscaling, blockchain, Burning Man, business intelligence, Cambridge Analytica, cloud computing, company town, computer vision, crowdsourcing, cryptocurrency, data science, deep learning, disinformation, don't be evil, Donald Trump, Dunbar number, East Village, Edward Snowden, El Camino Real, Elon Musk, end-to-end encryption, fake news, Firefox, Frank Gehry, Geoffrey Hinton, glass ceiling, GPS: selective availability, growth hacking, imposter syndrome, indoor plumbing, information security, Jeff Bezos, John Markoff, Jony Ive, Kevin Kelly, Kickstarter, lock screen, Lyft, machine translation, Mahatma Gandhi, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Max Levchin, Menlo Park, Metcalfe’s law, MITM: man-in-the-middle, move fast and break things, natural language processing, Network effects, Oculus Rift, operational security, PageRank, Paul Buchheit, paypal mafia, Peter Thiel, pets.com, post-work, Ray Kurzweil, recommendation engine, Robert Mercer, Robert Metcalfe, rolodex, Russian election interference, Salesforce, Sam Altman, Sand Hill Road, self-driving car, sexual politics, Sheryl Sandberg, Shoshana Zuboff, side project, Silicon Valley, Silicon Valley startup, skeuomorphism, slashdot, Snapchat, social contagion, social graph, social software, South of Market, San Francisco, Startup school, Steve Ballmer, Steve Bannon, Steve Jobs, Steven Levy, Steven Pinker, surveillance capitalism, tech billionaire, techlash, Tim Cook: Apple, Tragedy of the Commons, web application, WeWork, WikiLeaks, women in the workforce, Y Combinator, Y2K, you are the product

Over the next few days, Thefacebook began a relentless takeover of the Harvard student body. As more Harvard students signed up, the chances increased that they would find profiles of their friends, of people they might like to have as friends. In the early 1980s, computer scientist Bob Metcalfe wrote about the network effect, postulating that the value of a network increases exponentially with the number of people joining (this became known as Metcalfe’s law). Hour by hour, the impetus for students to sign up began to flip from engaging in a diverting pastime to an absolute necessity, as not being on Thefacebook made you a virtual exile on the physical campus.

s attempt to acquire FB, 134–35 on Zuckerberg’s personality, 256 Kendall, Tim, 178–79, 180, 183, 187, 189, 198, 199, 211 Kirkpatrick, David, 10, 244–45 Kogan, Aleksandr background of, 399–400 banned from FB, 425 colleagues’ concerns about, 415–17 consulting work with Facebook, 408, 419 critical Guardian article on, 417–18 and data deletion demanded by FB, 419, 420, 422, 424–25 and data for Cambridge Analytica, 399, 411–13, 414–19, 420–21, 422, 423–26 data gathering app of, 408–10, 412, 413, 414, 419 and FB’s Terms of Service, 414, 415 and Global Science Research, 412, 413 and SCL, 410, 413, 417 Kordestani, Omid, 192, 193, 200 Kosinski, Michal, 400, 401–5, 410, 412–13, 414–17 Koum, Jan, 317–25, 501, 503, 504, 505 Kramer, Adam, 406 Krieger, Mike, 300–302, 304, 305, 489, 509, 512 Kushner, Jared, 351 Lane, Sean, 187, 189 Leahy, Patrick, 437 Leathern, Rob, 466 LeCun, Yann, 453–54 Lessin, Sam, 65–66, 173, 472 Levchin, Max, 88, 152, 160–61, 164 Levine, Marne, 200, 339 Lewis, Harry, 61–62 Li, Charlene, 186 Libra digital currency, 516–21 Like button, 202–7, 402–4, 416 LinkedIn, 86, 220, 269 location technology, 310–11 Lookalike Audiences, 352 Losse, Kate, 130, 136, 228, 246, 248–49, 294 Luckey, Palmer, 325–27, 492–95 Macedonia, fake news originating from, 358–59, 364, 365 machine learning, 452–53, 454 Marconi, Guglielmo, 19 Marcus, David, 315, 506, 517, 519 Marks, Meagan, 39, 64 Marlette, Scott, 105, 114 Marlinspike, Moxie, 500, 505 Marlow, Cameron, 224, 337–38, 408 Martin, Kevin, 339 Martínez, Antonio García, 466 Mayer, Marissa, 322 McCollum, Andrew on adding new features, 111 and Casa Facebook in Silicon Valley, 76, 77, 83 co-founder role of, 69 at Harvard, 50, 54, 60 at La Jennifer house, 97 on Moskovitz’s importance to FB, 96 page design and logo for thefacebook, 62 on Parker–Zuckerberg relationship, 93 on personality of Zuckerberg, 70 on servers, 98 and Silicon Valley workspace, 77 and Wirehog project, 94 on work style of Zuckerberg, 92 McNamee, Roger, 134, 193–94, 211, 359, 473 Mechanical Turk, 409 “memorialization” protocols, 450 Mentions feature, 439 Mercer, Robert, 411, 417, 422 Messenger, 313–15, 477 Metcalfe’s law (network effect), 67 Microsoft attempts to acquire FB, 179 and contact scraping issue, 215–16 investment in FB, 185 and invitations to join FB labeled as spam, 184 and MySpace ads, 179 partnership with FB, 131–32, 183–85, 198 and Platform of FB, 155 Zuckerberg’s respect for, 152 midterm elections of 2018, 485–86 Milgram, Stanley, 20 Miller, Ross, 30 Milner, Yuri, 288 Mini-Feed feature, 130–31, 139–40 misinformation.

s attempt to acquire FB, 136 Mossberg, Walt, 271 Mosseri, Adam, 362, 364–65, 388–89, 390, 512 “Move fast and break things” ethic of Facebook, 6, 16, 106, 240–43, 246, 427 MoveOn.org, 188, 262 Mueller, Robert, 336, 374–75, 378 murders on Facebook Live, 441 Murdoch, Rupert, 132 Murphy, Bobby, 308, 311–12 music industry, 93–94 Musk, Elon, 5, 6, 7, 8, 88, 232, 506 Myanmar (previously Burma), 11, 435–39, 526 MySpace acquired by Murdoch’s NewsCorp, 132 advertising practices on, 199 and child predation settlement, 250 and iLike app, 158 images posted to, 113–14 market dominance of, 91, 132 obsolescence of, 297 and Open Registration at FB, 144 popularity of, 59 proposed acquisition of FB, 132, 179 and RapLeaf (data broker), 269 third-party apps on, 153–54, 155, 159–60 “Napalm Girl” image, 456–58 Napster, 80, 86, 93–94 Narendra, Divya, 56, 73, 76 NECO campaigns, 176 Netflix, 171, 175, 239 net neutrality, 233 network effect (Metcalfe’s law), 67 News Feed of FB advertisements in, 138, 181, 295–98, 475, 477 algorithms feeding and filtering, 127–28, 142, 163, 172, 260–61, 385, 391 and Cambridge Analytica, 399 and content publishers, 387–90, 391 criticisms of, 385–86 and customer support issues, 250 design and implementation of, 14, 123–31, 139–40 “disputed content” on, 389 and emotional contagion study, 406–8 and fact-checking operations, 389 fake news on (see fake news and misinformation) and Instant Articles feature, 387, 388 and Like button, 202–7, 402–4, 416 and Mini-Feed feature, 130–31, 139–40 and monetization of FB, 180 and myPersonality survey, 401 need for changes in, 385, 386–89 news consumption on, 128, 386–90, 391 and new users, 224 and Next Facebook, 488 outside content appearing on, 307–8 power of, 142 and privacy questions, 137–38, 143–44 and propaganda, 346, 348 quality studies for, 391 sensational content amplified on, 399 and sharing of content, 401 and spam wars, 163–65 and sponsored stories, 180, 296, 476 and stories from newer, weaker ties, 225 testing of, 137 and third-party developers and apps, 163–65 toxic addictiveness of, 385–86 and Trump campaign’s ads, 353 Twitter-inspired redesign of, 259–63, 525 and user activities reported from partner apps, 172 users’ reactions to, 140–43 video content in, 390–91 and virality, 262–63 news sources on social media, 132, 347 nipples policy, 252–53, 254 Nix, Alexander, 410–11, 413–14, 420–23 Obama, Barack, 334, 339–40, 350, 361–62, 363 Obama, Michelle, 467–68 Obama presidential campaigns, 350, 352 objectionable content on Facebook, 247–54, 435, 456.


pages: 133 words: 42,254

Big Data Analytics: Turning Big Data Into Big Money by Frank J. Ohlhorst

algorithmic trading, bioinformatics, business intelligence, business logic, business process, call centre, cloud computing, create, read, update, delete, data acquisition, data science, DevOps, extractivism, fault tolerance, information security, Large Hadron Collider, linked data, machine readable, natural language processing, Network effects, pattern recognition, performance metric, personalized medicine, RFID, sentiment analysis, six sigma, smart meter, statistical model, supply-chain management, warehouse automation, Watson beat the top human players on Jeopardy!, web application

A number of new businesses are now building Big Data environments, based on scale-out clusters using power-efficient multicore processors that leverage consumers’ (conscious or unconscious) nearly continuous streams of data about themselves (e.g., likes, locations, and opinions). Thanks to the network effect of successful sites, the total data generated can expand at an exponential rate. Some companies have collected and analyzed over 4 billion data points (e.g., web site cut-and-paste operations) since information collection started, and within a year the process has expanded to 20 billion data points gathered.


Google AdWords by Anastasia Holdren

bounce rate, information security, Network effects, search engine result page

Then, create a custom combination, showing ads to people who visited, minus those who converted. Custom combinations and interest categories can define specific audiences in “and,” “or,” or “not” relationships. Note Learn more about interest-based advertising and audiences at the AdWords Help Center. Top 10 GDN Tips Here are 10 tips for using the Google Display Network effectively. If you’re brand new to AdWords, save the GDN for later. AdWords turns the GDN on by default for new campaigns. If this is your first time using AdWords, turn this network off in the campaign settings (Networks section). Once you are comfortable using AdWords and interpreting the results, try the GDN to see if you can make it work for your advertising goals.


pages: 480 words: 123,979

Dawn of the New Everything: Encounters With Reality and Virtual Reality by Jaron Lanier

4chan, air gap, augmented reality, back-to-the-land, Big Tech, Bill Atkinson, Buckminster Fuller, Burning Man, carbon footprint, cloud computing, collaborative editing, commoditize, Computer Lib, cosmological constant, creative destruction, crowdsourcing, deep learning, Donald Trump, Douglas Engelbart, Douglas Hofstadter, El Camino Real, Elon Musk, fake news, Firefox, game design, general-purpose programming language, gig economy, Google Glasses, Grace Hopper, Gödel, Escher, Bach, Hacker Ethic, Hans Moravec, Howard Rheingold, hype cycle, impulse control, information asymmetry, intentional community, invisible hand, Ivan Sutherland, Jaron Lanier, John Gilmore, John Perry Barlow, John von Neumann, Kevin Kelly, Kickstarter, Kuiper Belt, lifelogging, mandelbrot fractal, Mark Zuckerberg, Marshall McLuhan, Menlo Park, military-industrial complex, Minecraft, Mitch Kapor, Mondo 2000, Mother of all demos, Murray Gell-Mann, Neal Stephenson, Netflix Prize, Network effects, new economy, Nick Bostrom, Norbert Wiener, Oculus Rift, pattern recognition, Paul Erdős, peak TV, Plato's cave, profit motive, Project Xanadu, quantum cryptography, Ray Kurzweil, reality distortion field, recommendation engine, Richard Feynman, Richard Stallman, Ronald Reagan, self-driving car, Silicon Valley, Silicon Valley startup, Skinner box, Skype, Snapchat, stem cell, Stephen Hawking, Steve Bannon, Steve Jobs, Steven Levy, Stewart Brand, systems thinking, technoutopianism, Ted Nelson, telemarketer, telepresence, telepresence robot, Thorstein Veblen, Turing test, Vernor Vinge, Whole Earth Catalog, Whole Earth Review, WikiLeaks, wikimedia commons

All of America, including the Valley, retained a slimy coating from the 1970s. Rusty signs with missing blinking lights offered live sex shows just north of Menlo Park, and beleaguered streetwalkers crowded the corners. And yet this was our gathering place. We needed to stay close together, as there was not yet an Internet, but we needed network effects. I remember playing pool at a rough dive bar on El Camino Real, the main drag, and thinking that a hacker in Palo Alto was like a cue ball that spins in a fixed spot after knocking another ball into faraway action. We spun in place in our new home while our momentum was transferred outward, reformatting the whole rest of the world.

Different abstractions might have been put in place instead of any of the familiar ones, but for the quirks of history. (Whether widely used software abstractions can ever be reconsidered is an open question. In a previous book, You Are Not a Gadget, I examine the way ideas that are expressed in software can become “locked in” by pernicious “network effects,” but for the purposes of this book, I assume that there’s time and hope for change.) The only things that are fundamental and inviolate—truly real—while you are using a computer are you and the run of patterns of bits inside the computers. The abstractions linking those two real phenomena are not real.


pages: 481 words: 125,946

What to Think About Machines That Think: Today's Leading Thinkers on the Age of Machine Intelligence by John Brockman

Adam Curtis, agricultural Revolution, AI winter, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, algorithmic trading, Anthropocene, artificial general intelligence, augmented reality, autism spectrum disorder, autonomous vehicles, backpropagation, basic income, behavioural economics, bitcoin, blockchain, bread and circuses, Charles Babbage, clean water, cognitive dissonance, Colonization of Mars, complexity theory, computer age, computer vision, constrained optimization, corporate personhood, cosmological principle, cryptocurrency, cuban missile crisis, Danny Hillis, dark matter, data science, deep learning, DeepMind, Demis Hassabis, digital capitalism, digital divide, digital rights, discrete time, Douglas Engelbart, driverless car, Elon Musk, Emanuel Derman, endowment effect, epigenetics, Ernest Rutherford, experimental economics, financial engineering, Flash crash, friendly AI, functional fixedness, global pandemic, Google Glasses, Great Leap Forward, Hans Moravec, hive mind, Ian Bogost, income inequality, information trail, Internet of things, invention of writing, iterative process, James Webb Space Telescope, Jaron Lanier, job automation, Johannes Kepler, John Markoff, John von Neumann, Kevin Kelly, knowledge worker, Large Hadron Collider, lolcat, loose coupling, machine translation, microbiome, mirror neurons, Moneyball by Michael Lewis explains big data, Mustafa Suleyman, natural language processing, Network effects, Nick Bostrom, Norbert Wiener, paperclip maximiser, pattern recognition, Peter Singer: altruism, phenotype, planetary scale, Ray Kurzweil, Recombinant DNA, recommendation engine, Republic of Letters, RFID, Richard Thaler, Rory Sutherland, Satyajit Das, Search for Extraterrestrial Intelligence, self-driving car, sharing economy, Silicon Valley, Skype, smart contracts, social intelligence, speech recognition, statistical model, stem cell, Stephen Hawking, Steve Jobs, Steven Pinker, Stewart Brand, strong AI, Stuxnet, superintelligent machines, supervolcano, synthetic biology, systems thinking, tacit knowledge, TED Talk, the scientific method, The Wisdom of Crowds, theory of mind, Thorstein Veblen, too big to fail, Turing machine, Turing test, Von Neumann architecture, Watson beat the top human players on Jeopardy!, We are as Gods, Y2K

But it’s getting better, slowly. Search engines, for example, have in some cases become a workable memory prosthesis for some of us. But they’re still pretty dumb. So I can’t wait for the moment when I can say to my computer, “Hey, do you think Robert Nozick’s idea about how the state evolves is really an extreme case of network effects in action?,” and get an answer that’s approximately as good as what I get from the average grad student. That moment, alas, is still a long way off. Right now, I’m finding it hard to persuade my dictation software that when I say “Bruno Latour,” I don’t mean “Banana till.” But at least the “personal assistant” app on my smartphone knows that when I ask for the weather forecast I get the one for Cambridge, U.K., rather than Cambridge, MA.

The true transforming genius of human intelligence is not individual thinking at all but collective, collaborative, and distributed intelligence—the fact that (as the libertarian Leonard Read pointed out) it takes thousands of different people to make a pencil, not one of whom knows how to make a pencil. What transformed the human race into a world-dominating technium was not some change in human heads but a change among them: the invention of exchange and specialization. It was a network effect. We really have no idea what dolphins or octopi or crows could achieve if their brains were networked in the same way. Conversely, if human beings had remained largely autonomous individuals, they would have continued as rare hunter-gatherers at the mercy of their environments, as the huge-brained Neanderthals indeed did right to the end.


pages: 448 words: 117,325

Click Here to Kill Everybody: Security and Survival in a Hyper-Connected World by Bruce Schneier

23andMe, 3D printing, air gap, algorithmic bias, autonomous vehicles, barriers to entry, Big Tech, bitcoin, blockchain, Brian Krebs, business process, Citizen Lab, cloud computing, cognitive bias, computer vision, connected car, corporate governance, crowdsourcing, cryptocurrency, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Heinemeier Hansson, disinformation, Donald Trump, driverless car, drone strike, Edward Snowden, Elon Musk, end-to-end encryption, fault tolerance, Firefox, Flash crash, George Akerlof, incognito mode, industrial robot, information asymmetry, information security, Internet of things, invention of radio, job automation, job satisfaction, John Gilmore, John Markoff, Kevin Kelly, license plate recognition, loose coupling, market design, medical malpractice, Minecraft, MITM: man-in-the-middle, move fast and break things, national security letter, Network effects, Nick Bostrom, NSO Group, pattern recognition, precautionary principle, printed gun, profit maximization, Ralph Nader, RAND corporation, ransomware, real-name policy, Rodney Brooks, Ross Ulbricht, security theater, self-driving car, Seymour Hersh, Shoshana Zuboff, Silicon Valley, smart cities, smart transportation, Snapchat, sparse data, Stanislav Petrov, Stephen Hawking, Stuxnet, supply-chain attack, surveillance capitalism, The Market for Lemons, Timothy McVeigh, too big to fail, Uber for X, Unsafe at Any Speed, uranium enrichment, Valery Gerasimov, Wayback Machine, web application, WikiLeaks, Yochai Benkler, zero day

If Walmart won’t sell music CDs with a parental warning advisory label, we are all free to buy those albums elsewhere. But many Internet companies can be very powerful, more so than predominantly brick-and-mortar stores, even chains as enormous as Walmart, because they benefit from what is called the network effect. That is, they become more useful as more people use them. One telephone is useless, and two are marginally useful, but an entire network of telephones is very useful. The same thing is true for fax machines, e-mail, the web, text messages, Snapchat, Facebook, Instagram, PayPal, and everything else.

., 190 wiretapping by, 168 FDA, 137, 145, 151 Federal Communications Commission (FCC), 149 FedRAMP, 123 Felten, Ed, 223 financial crisis (2008), 125–26 FinFisher, 64–65 FireEye, 42 flash crash, 85 Ford Foundation, 224 Fort Hood shooting (2009), 202 Freeh, Louis, 193 FTC, 148, 154 Gamma Group, 30, 65 Gartner tech analyst firm, 101 GDPR (General Data Protection Regulation) [EU], 151, 184–88 Geer, Dan, 163, 217 George, Richard, 170 Gerasimov Doctrine, 71 Germany, BSI and BND in, 173 GGE (Group of Governmental Experts), UN, 158 Gmail, 153 Goldsmith, Jack, 163 Google: Advanced Protection Program, 47 censorship by, 60 controls exerted by, 61, 62 and EU regulations, 185 identification systems in, 199 lobbying by, 154 state investigation of, 187 surveillance via, 58–59, 169, 196 governments, 144–59 asymmetry between, 91–92 censorship by, 60 and defense over offense, 160–79 functions of, 10 and industry, 176–79 information sharing by, 176 and infrastructure, 117 insecurity favored by, 57 international cooperation, 156–59 international espionage, 171–72 jurisdictional arbitrage, 156 and liability law, 128–33 lobbying of, 154–55 mistrust of, 208, 220 policy challenges in, 99, 100–101, 192–206 regulatory bodies, 121, 144, 150–52, 156–59, 192 and security standards, 167 supply-chain attacks on, 87–89 surveillance by, 64–68, 172, 195, 208 vulnerability disclosure by, 163 Greer, John, 126 GTT Communications, 115 Gutenberg, Johannes, 24 hacking: catastrophic, 9, 16, 217 class breaks, 33, 95 contests in, 85 costs of, 102–3 cyberweapons in, 73 increasing threat of, 79 international havens of, 156 through fish tank, 29 hacking back, 203–4 HackingTeam, 30, 45, 65 HAMAS, 93 Hancock Health, 74 harm, legal definition of, 130 Harris Corporation, 168 Hathaway, Melissa, 114 Hayden, Michael, 170 Healey, Jason, 158, 160 Heartbleed, 21, 114–15 Hello Barbie (doll), 106 Hilton Hotels, 185 Hizballah, 93 Honan, Mat, 29 Hotmail, 153 HP printers, 62 Huawai (Chinese company), 87 Human Rights Watch, 223 humans, as system component, 7 IBM, 33 iCloud, 7 hacking of, 78 and privacy, 190 quality standards for, 111, 123, 135 Idaho National Laboratory, 79, 90 identification, 51–55, 199–200 attribution, 52–55 breeder documents for, 51 impersonation of, 51, 75 identity, 44 identity theft, 50–51, 74–76, 106, 171 Ilves, Toomas Hendrik, 221 iMessage, 170 impersonation, 51, 75 IMSI (international mobile subscriber identity), 168–70 industry lobbying groups, 183 information asymmetries, 133–38 information security, 78 infrastructure: critical, use of term, 116 security of, 116–18 Inglis, Chris, 28 innovation, 155 insecurity, 56–77 cost of, 126 criminals’ benefit from, 74–77 and cyberwar, 68–74 insurance industry, 132–33 integrity, attacks on, 78–82 intellectual property theft, 66, 72–73, 75 interconnections, vulnerabilities in, 28–30, 90 International Organization for Standardization (ISO), 140 Internet: advertising model of, 57, 60 changing concepts of, 5, 218 connectivity of, 5, 91, 105–6 demilitarization of, 212–15 dependence on, 89–90 development phase of, 22–23, 157 explosive growth of, 5, 146 global, 7, 16, 161 governance model of, 157 government regulation of, 152–55 horizontal growth of, 146 industry standards for, 23, 122–23 lack of encryption on, 170–72 maintenance and upkeep of, 143 nonlinear system of, 211 private ownership of infrastructure, 126 resilience of, 210–12 as social equalizer, 214, 217 surveillance and control via, 64–68 viral dissident content on, 158 Internet+: authentication in, 49–51 coining of term, 8 cybersecurity safety board for, 177 risks and dangers of, 217–18 simultaneous vulnerabilities in, 94 Internet+ security: closing the skills gap, 141–42 correcting information asymmetries in, 133–38 correcting misaligned incentives in, 124–28 current state of, 9 defense in, see attack vs. defense enforcement of, 121 funding maintenance and upkeep in, 143 incentives and policy solutions for, 100–103, 120–43 increasing research in, 142–43 liabilities clarified for, 128–33 litigation for, 121 meanings of, 15–17 and privacy, 9 public education about, 138–41 public policies for, 120–21 standards for, 122–23, 140–41, 157–59 as wicked problem, 11, 99 Internet Engineering Task Force (IETF), 23, 167 Internet of Things (IoT), 5 as computerization of everything, 7 Cybersecurity Improvement Act, 180 in developmental stage, 8 patching of, 37–38 smartphone as controller hub for, 48 Internet Policy Research Initiative, MIT, 224 Investigatory Powers Act (UK), 195 iPhones, 3–4 encryption on, 174, 197 new versions of, 42–43 IPsec, 167 Iran: cyberattack by, 71, 116, 178 hackers in, 45 Stuxnet attack on, 79 Iraq, 212 ISIS, 69, 93 ISPs: connections via, 113–14 Tier 1 type, 115 ISS World (“Wiretappers’ Ball”), 65 jobs, in cybersecurity, 141–42 John Deere, 59–60, 62, 63 Joyce, Rob, 45, 53, 54, 164, 166 Kaplan, Fred, 73 Kaspersky Lab, 29, 74, 87 Kello, Lucas, 71 Kelly, John, 66 Keurig coffee makers, 62 key escrow, 194 KICTANet, Kenya, 214 labeling requirements, 134–35 LabMD, unfair practices of, 130–31 Landau, Susan, 175, 176, 223 Las Vegas shooting (2017), 202 Ledgett, Rick, 163–64, 166 lemons market, 134 Lenovo, 187 letters of marque, 204 Level 3 ISP, 115 liability law, 125, 128–33 Liars and Outliers (Schneier), 101, 209 Library of Congress, 42 license plate scanners, 201 linear systems, 210 Lloyd’s of London, 90 Lynn, William, 198 machine learning, 7, 82–87 adversarial, 84 algorithms beyond human comprehension, 111–12 autonomous, 82–83, 85 Maersk, 71, 94 malware, 26, 30, 196 man-in-the-middle attacks, 49, 169 market economics, and competition, 6 mass shootings, 202 May, Theresa, 197 McConnell, Mike, 198 McVeigh, Timothy, 202 medical devices: bugs in, 41 and government regulations, 151 hacking, 16 and privacy, 151 Meltdown vulnerability, 21 Merkel, Angela, 66 metadata, 174 Microsoft, 57, 190 Microsoft Office, new versions of, 42, 43 military systems, autonomous, 86 Minecraft video game, 94 miniaturization, 7 Mirai botnet, 29, 37, 77, 94, 130 money laundering, 183 monocultures, vulnerabilities in, 31 Moonlight Maze, 66 “movie-plot threats,” 96 Mozilla, 163 Munich Security Conference, 70 My Friend Cayla (doll), 106 Nader, Ralph, Unsafe at Any Speed, 182 National Cyber Office (NCO), 146–50 National Cyber Security Centre (UK), 173 National Cybersecurity Safety Board (proposed), 177 National Institute of Standards and Technology (NIST), Cybersecurity Framework of, 123, 147 National Intelligence Council, 211–12 National Science Foundation (NSF), 147 National Security Council, 163 National Security Strategy, 117 National Transportation Safety Board, 177 Netflix, 148 net neutrality, 61, 119 network effect, 60 networks: “air gapped,” 118 collective action required of, 23–24 end-to-end model of, 23 firewalls for, 102 iCloud, 111 secure connections in, 113–14, 125 and spam, 100 telephone, 119 New America, 223 New York Cyber Task Force, 213 NOBUS (nobody but us), 164–65, 169, 170 norms, 157–59 North Korea: cyberattack by, 71 cybercrimes by, 76, 157 hacking by, 54, 71, 78 threats by, 70, 72 Norwegian Consumer Council, 105–6 NotPetya malware, 71, 77, 89, 94 NSA: attribution in, 53–55 BULLRUN program, 167–68 credential stealing by, 45 cyberattack tools of, 165–67 on cybersecurity, 86 cyberweapons stolen from, 73 disclosing and fixing vulnerabilities, 162–67 encryption circumvented by, 171, 193 intelligence-gathering hacks by, 116, 118 missions of, 160–61, 172 mistrust of, 208 reorganization (2016) in, 173 and security standards, 167–70 splitting into three organizations, 172–73 supply-chain attacks by, 87 surveillance by, 65, 66–67, 190, 202 NSO Group, 65 Nye, Joseph, 157 Obama, Barack, 66, 69, 92, 117, 163, 180, 208 Ochoa, Higinio O.


pages: 550 words: 124,073

Democracy and Prosperity: Reinventing Capitalism Through a Turbulent Century by Torben Iversen, David Soskice

Andrei Shleifer, assortative mating, augmented reality, barriers to entry, Big Tech, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, centre right, clean tech, cloud computing, collateralized debt obligation, collective bargaining, colonial rule, confounding variable, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, deindustrialization, deskilling, Donald Trump, first-past-the-post, full employment, general purpose technology, gentrification, Gini coefficient, hiring and firing, implied volatility, income inequality, industrial cluster, inflation targeting, invisible hand, knowledge economy, labor-force participation, liberal capitalism, low skilled workers, low-wage service sector, means of production, middle-income trap, mirror neurons, mittelstand, Network effects, New Economic Geography, new economy, New Urbanism, non-tariff barriers, Occupy movement, offshore financial centre, open borders, open economy, passive investing, precariat, race to the bottom, radical decentralization, rent-seeking, RFID, road to serfdom, Robert Bork, Robert Gordon, Silicon Valley, smart cities, speech recognition, tacit knowledge, The Future of Employment, The Great Moderation, The Rise and Fall of American Growth, the strength of weak ties, too big to fail, trade liberalization, union organizing, urban decay, vertical integration, Washington Consensus, winner-take-all economy, working-age population, World Values Survey, young professional, zero-sum game

In the case of vocational training, an effective system depends on a large number of young people choosing such training and providing firms with an incentive to orient their product market strategies to depend more on specific-skill workers, which raises demand and gives a stronger incentive to acquire such skills, etc. In the case of public investment in education, especially higher education, there are also strong network effects. This is because when spending is largely public it is difficult to opt out of the public system, and the high-educated instead tend become strong supporters of public spending to improve the quality of the system. In educational systems where a large proportion of the cost is private, by contrast, those with high income who pay most of their expenses themselves will tend to oppose more public spending to protect the returns to their investment (both for themselves and their children).

Coupled with the difficulties of creating effective long-distance production networks that we noted above, there consequently have to be very weighty reasons to divide specialized production across borders. It could happen when two technologies and knowledge clusters have developed independently in different countries but subsequently persist in both because of self-reinforcing network effects with strong complementarities. However, given that most new technologies are spun off from existing production networks, such instances will be rare. But if production networks are embedded in social networks, would it not be possible to reconstitute social networks across borders to coincide with any reconfiguration of the economic network, or perhaps causing such a reconfiguration?


pages: 386 words: 122,595

Naked Economics: Undressing the Dismal Science (Fully Revised and Updated) by Charles Wheelan

affirmative action, Alan Greenspan, Albert Einstein, Andrei Shleifer, barriers to entry, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Boeing 747, Bretton Woods, business cycle, buy and hold, capital controls, carbon tax, Cass Sunstein, central bank independence, classic study, clean water, collapse of Lehman Brothers, congestion charging, creative destruction, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, currency risk, Daniel Kahneman / Amos Tversky, David Brooks, demographic transition, diversified portfolio, Doha Development Round, Exxon Valdez, financial innovation, fixed income, floating exchange rates, George Akerlof, Gini coefficient, Gordon Gekko, Great Leap Forward, greed is good, happiness index / gross national happiness, Hernando de Soto, income inequality, index fund, interest rate swap, invisible hand, job automation, John Markoff, Joseph Schumpeter, junk bonds, Kenneth Rogoff, libertarian paternalism, low interest rates, low skilled workers, Malacca Straits, managed futures, market bubble, microcredit, money market fund, money: store of value / unit of account / medium of exchange, Network effects, new economy, open economy, presumed consent, price discrimination, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, race to the bottom, RAND corporation, random walk, rent control, Richard Thaler, rising living standards, Robert Gordon, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Sam Peltzman, school vouchers, seminal paper, Silicon Valley, Silicon Valley startup, South China Sea, Steve Jobs, tech worker, The Market for Lemons, the rule of 72, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, transcontinental railway, trickle-down economics, urban sprawl, Washington Consensus, Yogi Berra, young professional, zero-sum game

There are a limited number of gate spaces available at most airports, and they tend to be controlled by the big guys. At Chicago’s O’Hare Airport, one of the world’s biggest and busiest airports, American and United control some 80 percent of all the gates.6 Or consider a different kind of entry barrier that has become highly relevant in the Internet age: network effects. The basic idea of a network effect is that the value of some goods rises with the number of other people using them. I don’t think Microsoft Word is particularly impressive software, but I own it anyway because I spend my days e-mailing documents to people who do like Word (or at least they use it). It would be very difficult to introduce a rival word-processing package—no matter how good the features or how low the price—as long as most of the world is using Word.


pages: 251 words: 44,888

The Words You Should Know to Sound Smart: 1200 Essential Words Every Sophisticated Person Should Be Able to Use by Bobbi Bly

Albert Einstein, Alistair Cooke, Anton Chekhov, British Empire, Columbine, Donald Trump, George Santayana, haute couture, Honoré de Balzac, Joan Didion, John Nash: game theory, Network effects, placebo effect, Ralph Waldo Emerson, school vouchers, Stephen Hawking, Steve Jobs, three-masted sailing ship

geostationary (GEE-oh-STAY-shin-air-ee), adjective A satellite in orbit 22,300 miles above the Earth’s surface so that the satellite is always directly over the same spot of ground. Arthur C. Clark was the first to propose that three GEOSTATIONARY satellites orbiting Earth could provide a global communications network effectively covering every location on the planet. germane (jehr-MANE), adjective Relevant, pertinent, and fitting. “Quotes from Mao, Castro, and Che Guevara … are as GERMANE to our highly technological, computerized society as a stagecoach on a jet runway at Kennedy airport.” – Saul Alinksy, American activist germinal (JUHRM-nuhl), adjective Related to the earliest stage of development.


pages: 241 words: 43,073

Puppet 3 Beginner's Guide by John Arundel

business logic, cloud computing, Debian, DevOps, job automation, job satisfaction, Lao Tzu, Larry Wall, Network effects, SpamAssassin

Once he learns to use it, and to write programs in the standard language, he can take that skill with him to other jobs. He can choose from a large library of existing programs in the standard configuration language, covering most of the popular software in use. These programs are updated and improved to keep up with changes in the software and operating systems they manage. This kind of beneficial network effect is why we don't have a million different operating systems, or programming languages, or processor chips. There's strong pressure for people to converge on a standard. On the other hand, we don't have just one of each of those things either. There's never just one solution that pleases everybody.


pages: 742 words: 137,937

The Future of the Professions: How Technology Will Transform the Work of Human Experts by Richard Susskind, Daniel Susskind

23andMe, 3D printing, Abraham Maslow, additive manufacturing, AI winter, Albert Einstein, Amazon Mechanical Turk, Amazon Robotics, Amazon Web Services, Andrew Keen, Atul Gawande, Automated Insights, autonomous vehicles, Big bang: deregulation of the City of London, big data - Walmart - Pop Tarts, Bill Joy: nanobots, Blue Ocean Strategy, business process, business process outsourcing, Cass Sunstein, Checklist Manifesto, Clapham omnibus, Clayton Christensen, clean water, cloud computing, commoditize, computer age, Computer Numeric Control, computer vision, Computing Machinery and Intelligence, conceptual framework, corporate governance, creative destruction, crowdsourcing, Daniel Kahneman / Amos Tversky, data science, death of newspapers, disintermediation, Douglas Hofstadter, driverless car, en.wikipedia.org, Erik Brynjolfsson, Evgeny Morozov, Filter Bubble, full employment, future of work, Garrett Hardin, Google Glasses, Google X / Alphabet X, Hacker Ethic, industrial robot, informal economy, information retrieval, interchangeable parts, Internet of things, Isaac Newton, James Hargreaves, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Khan Academy, knowledge economy, Large Hadron Collider, lifelogging, lump of labour, machine translation, Marshall McLuhan, Metcalfe’s law, Narrative Science, natural language processing, Network effects, Nick Bostrom, optical character recognition, Paul Samuelson, personalized medicine, planned obsolescence, pre–internet, Ray Kurzweil, Richard Feynman, Second Machine Age, self-driving car, semantic web, Shoshana Zuboff, Skype, social web, speech recognition, spinning jenny, strong AI, supply-chain management, Susan Wojcicki, tacit knowledge, TED Talk, telepresence, The Future of Employment, the market place, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tragedy of the Commons, transaction costs, Turing test, Two Sigma, warehouse robotics, Watson beat the top human players on Jeopardy!, WikiLeaks, world market for maybe five computers, Yochai Benkler, young professional

This is a doubling every year, a steeper exponential growth than in processing power. In the same vein is Metcalfe’s Law, which states (broadly speaking) that the value of a network to its users is proportional to the square of the number of the users connected to it. This is sometimes referred to as the ‘network effect’, and it means that a network’s utility increases non-linearly with the number of new users who join.24 Yet another illustration is Koomey’s Law—that the electrical efficiency of computation will double roughly every eighteen months, as it has done for the last six decades.25 We accept that Kurzweil’s theories do not command universal assent.26 However, other experts and commentators draw similar conclusions on the question of the exponential growth in processing power.27 We also acknowledge that exponential growth in information technologies need not always lead to an explosive increase in the speed and scale of adoption of new systems.

Adrian Paenza, ‘How folding paper can get you to the moon’, Ted-Ed video, <http://ed.ted.com/lessons/how-folding-paper-can-get-you-to-the-moon> (accessed 27 March 2015). 19 Ray Kurzweil, How to Create a Mind (2012), 249. Also see Kurzweil, The Singularity is Near, chs. 2 and 3. 20 Kurzweil, The Singularity is Near, 7–8. 21 Kurzweil, The Singularity is Near, 22–6. 22 Kurzweil, The Singularity is Near, 127. 23 Kurzweil, How to Create a Mind, 248–61. 24 The economic impact of this network effect is discussed by Michael Spence in his Nobel Prize lecture of 2001. See Michael Spence, ‘Signaling in Retrospect and the Informational Structure of Markets’, Nobel Prize Lecture, 8 Dec. 2001. 25 Jonathan Koomey et al., ‘Implications of Historical Trends in the Electrical Efficiency of Computing’, Annals of the History of Computing, 33: 3 (2011), 46–54. 26 See ongoing discussions on Kurzweil’s website <www.kurzweilai.net>.


pages: 545 words: 137,789

How Markets Fail: The Logic of Economic Calamities by John Cassidy

Abraham Wald, Alan Greenspan, Albert Einstein, An Inconvenient Truth, Andrei Shleifer, anti-communist, AOL-Time Warner, asset allocation, asset-backed security, availability heuristic, bank run, banking crisis, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Black Monday: stock market crash in 1987, Black-Scholes formula, Blythe Masters, book value, Bretton Woods, British Empire, business cycle, capital asset pricing model, carbon tax, Carl Icahn, centralized clearinghouse, collateralized debt obligation, Columbine, conceptual framework, Corn Laws, corporate raider, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Daniel Kahneman / Amos Tversky, debt deflation, different worldview, diversification, Elliott wave, Eugene Fama: efficient market hypothesis, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, Garrett Hardin, George Akerlof, Glass-Steagall Act, global supply chain, Gunnar Myrdal, Haight Ashbury, hiring and firing, Hyman Minsky, income per capita, incomplete markets, index fund, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Nash: game theory, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kickstarter, laissez-faire capitalism, Landlord’s Game, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, Louis Bachelier, low interest rates, mandelbrot fractal, margin call, market bubble, market clearing, mental accounting, Mikhail Gorbachev, military-industrial complex, Minsky moment, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Myron Scholes, Naomi Klein, negative equity, Network effects, Nick Leeson, Nixon triggered the end of the Bretton Woods system, Northern Rock, paradox of thrift, Pareto efficiency, Paul Samuelson, Phillips curve, Ponzi scheme, precautionary principle, price discrimination, price stability, principal–agent problem, profit maximization, proprietary trading, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, RAND corporation, random walk, Renaissance Technologies, rent control, Richard Thaler, risk tolerance, risk-adjusted returns, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, subprime mortgage crisis, tail risk, Tax Reform Act of 1986, technology bubble, The Chicago School, The Great Moderation, The Market for Lemons, The Wealth of Nations by Adam Smith, too big to fail, Tragedy of the Commons, transaction costs, Two Sigma, unorthodox policies, value at risk, Vanguard fund, Vilfredo Pareto, wealth creators, zero-sum game

One of the first people to point this out was W. Brian Arthur, a soft-spoken applied mathematician who grew up in Northern Ireland and fell into economics almost by accident. Back in the mid-1980s, Arthur, who was then at Stanford, presented a paper at Harvard in which he argued that chance events and network effects can enable inferior technologies to beat out superior products and take over entire markets. A Harvard economist, Richard Zeckhauser, stood up afterward and said, “If you are right, capitalism can’t work.” A few months later, Arthur presented the same paper in Moscow, where an eminent Russian economist said, “Your argument cannot be true!”

At its core, it says simply: self-interest plus competition equals nirvana. There is no mention in this equation of the institutions of modern capitalism, such as multinational corporations, derivatives markets, universal banks, and mutual funds. Information asymmetries, uncertainty, copycat behavior, network effects, and disaster myopia—the invisible hand metaphor abstracts from all of these awkward features of reality, too. Don’t worry, its defenders say, the market will take care of things. Just make sure that competition reigns, prevent the emergence of monopolies, and a good outcome is guaranteed. Actually, some free market economists aren’t saying this anymore.


pages: 477 words: 135,607

The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger by Marc Levinson

air freight, anti-communist, barriers to entry, Bay Area Rapid Transit, British Empire, business cycle, call centre, collective bargaining, conceptual framework, David Ricardo: comparative advantage, deindustrialization, deskilling, Edward Glaeser, Erik Brynjolfsson, flag carrier, full employment, global supply chain, intermodal, Isaac Newton, job automation, Jones Act, knowledge economy, Malcom McLean invented shipping containers, manufacturing employment, Network effects, New Economic Geography, new economy, oil shock, Panamax, Port of Oakland, post-Panamax, Productivity paradox, refrigerator car, Robert Solow, South China Sea, trade route, vertical integration, Works Progress Administration, Yom Kippur War, zero-sum game

There is an extensive literature exploring the economic costs of technological incompatibilities; see especially Joseph Farrell and Garth Saloner, “Installed Base and Compatibility: Innovation, Product Preannouncements, and Predation,” American Economic Review 76, no. 5 (1986): 940–955; Michael L. Katz and Carl Shapiro, “Systems Competition and Network Effects,” Journal of Economic Perspectives 8, no. 2 (1994): 93–115; and S. J. Liebowitz and Stephen E. Margolis, “Network Externality: An Uncommon Tragedy,” Journal of Economic Perspectives 8, no. 2 (1994): 133–150. 5. Minutes of November 18, 1958, meeting of Committee on Standardization of Van Container Dimensions (hereafter Marad Dimensions Committee). 6.

Isard, Caroline, and Walter Isard. “Economic Implications of Aircraft.” Quarterly Journal of Economics 59 (1945): 145–169. Jorgenson, Dale W., and Kevin J. Stiroh. “Information Technology and Growth.” American Economic Review 89, no. 2 (1999): 109–115. Katz, Michael L., and Carl Shapiro. “Systems Competition and Network Effects.” Journal of Economic Perspectives 8, no. 2 (1994): 93–115. Kelley, Robin D. G. “‘We Are Not What We Seem’: Rethinking Black Working-Class Opposition in the Jim Crow South.” Journal of American History 80, no. 1 (1993). Kerr, Clark, and Lloyd Fisher. “Conflict on the Waterfront.” Atlantic 184, no. 3 (1949).


pages: 444 words: 127,259

Super Pumped: The Battle for Uber by Mike Isaac

"Susan Fowler" uber, "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Airbnb, Albert Einstein, always be closing, Amazon Web Services, Andy Kessler, autonomous vehicles, Ayatollah Khomeini, barriers to entry, Bay Area Rapid Transit, Benchmark Capital, Big Tech, Burning Man, call centre, Cambridge Analytica, Chris Urmson, Chuck Templeton: OpenTable:, citizen journalism, Clayton Christensen, cloud computing, corporate governance, creative destruction, data science, Didi Chuxing, don't be evil, Donald Trump, driverless car, Elon Musk, end-to-end encryption, fake news, family office, gig economy, Google Glasses, Google X / Alphabet X, Greyball, Hacker News, high net worth, hockey-stick growth, hustle culture, impact investing, information security, Jeff Bezos, John Markoff, John Zimmer (Lyft cofounder), Kevin Roose, Kickstarter, Larry Ellison, lolcat, Lyft, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Masayoshi Son, mass immigration, Menlo Park, Mitch Kapor, money market fund, moral hazard, move fast and break things, Network effects, new economy, off grid, peer-to-peer, pets.com, Richard Florida, ride hailing / ride sharing, Salesforce, Sand Hill Road, self-driving car, selling pickaxes during a gold rush, shareholder value, Shenzhen special economic zone , Sheryl Sandberg, side hustle, side project, Silicon Valley, Silicon Valley startup, skunkworks, Snapchat, SoftBank, software as a service, software is eating the world, South China Sea, South of Market, San Francisco, sovereign wealth fund, special economic zone, Steve Bannon, Steve Jobs, stock buybacks, super pumped, TaskRabbit, tech bro, tech worker, the payments system, Tim Cook: Apple, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, ubercab, union organizing, upwardly mobile, Vision Fund, WeWork, Y Combinator

Gurley had already been meeting with companies like Cabulous, Taxi Magic, and a handful of other San Francisco–based ride-hailing companies. A popular ride-hailing company could quickly produce what technologists call a “network effect”—a shorter way of saying “the more people that use a service, the more beneficial it is to everyone else over time.” And Uber’s growing popularity in San Francisco meant it was creating strong network effects among its two-sided marketplace of both riders and drivers. Just a few months after Uber had raised its seed round with investors like Chris Sacca and Rob Hayes, Kalanick was already out hunting for investors for Uber’s Series A.


pages: 511 words: 132,682

Competition Overdose: How Free Market Mythology Transformed Us From Citizen Kings to Market Servants by Maurice E. Stucke, Ariel Ezrachi

"Friedman doctrine" OR "shareholder theory", affirmative action, Airbnb, Alan Greenspan, Albert Einstein, Andrei Shleifer, behavioural economics, Bernie Sanders, Boeing 737 MAX, Cambridge Analytica, Cass Sunstein, choice architecture, cloud computing, commoditize, corporate governance, Corrections Corporation of America, Credit Default Swap, crony capitalism, delayed gratification, disinformation, Donald Trump, en.wikipedia.org, fake news, Garrett Hardin, George Akerlof, gig economy, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Google Chrome, greed is good, hedonic treadmill, incognito mode, income inequality, income per capita, independent contractor, information asymmetry, invisible hand, job satisfaction, labor-force participation, late fees, loss aversion, low skilled workers, Lyft, mandatory minimum, Mark Zuckerberg, market fundamentalism, mass incarceration, Menlo Park, meta-analysis, Milgram experiment, military-industrial complex, mortgage debt, Network effects, out of africa, Paradox of Choice, payday loans, Ponzi scheme, precariat, price anchoring, price discrimination, profit maximization, profit motive, race to the bottom, Richard Thaler, ride hailing / ride sharing, Robert Bork, Robert Shiller, Ronald Reagan, search costs, shareholder value, Sheryl Sandberg, Shoshana Zuboff, Silicon Valley, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Stanford prison experiment, Stephen Hawking, sunk-cost fallacy, surveillance capitalism, techlash, The Chicago School, The Market for Lemons, The Myth of the Rational Market, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Davenport, Thorstein Veblen, Tim Cook: Apple, too big to fail, Tragedy of the Commons, transaction costs, Uber and Lyft, uber lyft, ultimatum game, Vanguard fund, vertical integration, winner-take-all economy, Yochai Benkler

As more people turn to these online platforms, each person can consider more dating options at the same time. According to one 2017 survey, over half were communicating with four or more people at the same time on a dating platform, with 19 percent juggling over ten people at the same time. Imagine trying that in a spin class. Here we also see the power of network effects, where the benefits increase as other people join the platform. Not everyone uses the dating platform for true love or long-term relationships. But as the platforms differentiate themselves, one can visit certain platforms for one-night hookups.55 If we are seeking entertainment, then we can try other platforms.

See also social, moral, and ethical values Muilenburg, Dennis, 266 Mulvaney, Mick, 159, 269 National Collegiate Athletic Association (NCAA), 134–38, 142 National Hockey League and helmets, 4–5 Nazi party and reprivatization, 189–90 negative externalities, 124 neighborhood community organizations, 243–44 Nestlé, 55, 56 Netherlands, The, 148 network effects and online dating, 111–12 neurological research, 72–73 New England Small College Athletic Conference (NESCAC), 138 New Mexico complaint against Tiny Lab, Google, and other online companies, 194–95, 198, 199, 202–3, 223 Newsweek magazine, 245 New York City private day schools, 32–33 New York Times, 106, 107, 177, 196, 223 NHS (UK National Health Service), 183–87 noble competition overview, 228, 229, 256–60 big business role in promoting, 272–78 Brady’s diet scenario, 5 consumers’ role in promoting, 279–91 overcoming the paradox, 258–60 See also competition ideal; government’s role in promoting healthy competition Notes from the Underground (Dostoyevsky), 71 Obama, Barack, 10, 130 Obama administration, 174, 268 OkCupid.com, 108, 110 olive oil fraud, 52 “On the Origin and Nature of Values” (Ellis), 256–58 Oxford University, Tanner Lecture, 256–60 Page, Lawrence, 282–83 partition pricing, 78–79 pen-buying experience, 104–5 perceptions based on names, 242 Pew Research, 113, 114 pharmaceutical prices, 60–61 Platonic ideal of morality, 257 POF.com dating service, 109 police as forensic examiners, 179–80, 180–81 policy makers alignment with big business for reelection, 230–31, 232 ways to bolster the FTC, 269 and competition ideology, 130–32 concerns about fairness of anticompetitive restraints, 144 contributions from private prisons, 173, 174–75 and crony capitalism, 160, 163, 230, 285 designers of competitive process, 251–52 on drip pricing, 150 failure to act on toxic competition in collegiate sports, 143–45 on financial crisis of 2008, 158 and Gamemakers, 223 privatization designed to gain support from the wealthy, 190 promoting competition as a panacea, 229 protecting and promoting a competition ideal, 261–69 See also government’s role in promoting healthy competition; regulations pollution as negative externality, 124 poor people, 160, 230–31, 232 Porter, Michael, 244 positive-sum competition, 242, 244, 251, 255–56, 257, 289–90 precariats, 232 prep schools, 31–34 price, single-minded focus on, 56.


pages: 515 words: 143,055

The Attention Merchants: The Epic Scramble to Get Inside Our Heads by Tim Wu

1960s counterculture, Aaron Swartz, Affordable Care Act / Obamacare, AltaVista, Andrew Keen, anti-communist, AOL-Time Warner, Apple II, Apple's 1984 Super Bowl advert, barriers to entry, Bob Geldof, borderless world, Brownian motion, Burning Man, Cass Sunstein, citizen journalism, colonial rule, content marketing, cotton gin, data science, do well by doing good, East Village, future of journalism, George Gilder, Golden age of television, Golden Gate Park, Googley, Gordon Gekko, Herbert Marcuse, housing crisis, informal economy, Internet Archive, Jaron Lanier, Jeff Bezos, jimmy wales, John Perry Barlow, Live Aid, Mark Zuckerberg, Marshall McLuhan, McMansion, mirror neurons, Nate Silver, Neal Stephenson, Network effects, Nicholas Carr, Pepsi Challenge, placebo effect, Plato's cave, post scarcity, race to the bottom, road to serfdom, Saturday Night Live, science of happiness, self-driving car, side project, Silicon Valley, Skinner box, slashdot, Snapchat, Snow Crash, Steve Jobs, Steve Wozniak, Steven Levy, Ted Nelson, telemarketer, the built environment, The Chicago School, the scientific method, The Structural Transformation of the Public Sphere, Tim Cook: Apple, Torches of Freedom, Upton Sinclair, upwardly mobile, Virgin Galactic, Wayback Machine, white flight, Yochai Benkler, zero-sum game

Of course, by the 1990s AOL wasn’t alone in providing email to people outside computer science and government. Universities had begun handing out email addresses early in the decade to anyone interested, and to all students by the mid-1990s. In the late 1990s, companies began creating email addresses for their employees. The race was on, and in a classic example of network effects, the more people who had email, the more valuable it became. It may be hard for some to imagine a moment when receiving email was considered a big deal. At the time, however, it seemed exciting enough for Nora Ephron to base a Warner Bros. romantic comedy on the story of two strangers (played by Tom Hanks and Meg Ryan) meeting through AOL email.*3 The Washington Post wrote that Ephron, herself a subscriber, depicted “the service as smooth, cool, a glamorous tool of glamorous people.”14 To capitalize on that aura, the original title of her film, You Have Mail, was changed to echo exactly AOL’s “You’ve Got Mail.”

And yet no firm, save Google, has harvested as much attention from the Internet, or commercialized it as effectively. As with Google, that attention would be a by-product of the needs, desires, and efforts of its users. But where Google prevailed by offering the best search, Facebook reached the top thanks to stable code and “network effect”: the phenomenon by which a system of connections grows in value with the number of its users. Zuckerberg understood this from the start. In its primitive way, AOL had proven decisively that the surest means of getting people to spend more time with their computers was to promise some kind of social experience.


pages: 454 words: 134,482

Money Free and Unfree by George A. Selgin

Alan Greenspan, asset-backed security, bank run, banking crisis, barriers to entry, Bear Stearns, break the buck, Bretton Woods, business cycle, capital controls, central bank independence, centralized clearinghouse, Charles Lindbergh, credit crunch, Credit Default Swap, crony capitalism, disintermediation, Dutch auction, fear of failure, fiat currency, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, foreign exchange controls, Fractional reserve banking, German hyperinflation, Glass-Steagall Act, Hyman Minsky, incomplete markets, inflation targeting, information asymmetry, invisible hand, Isaac Newton, Joseph Schumpeter, large denomination, liquidity trap, Long Term Capital Management, low interest rates, market microstructure, Money creation, money market fund, moral hazard, Network effects, Northern Rock, oil shock, Paul Samuelson, Phillips curve, plutocrats, price stability, profit maximization, purchasing power parity, quantitative easing, random walk, rent-seeking, reserve currency, Robert Gordon, Robert Solow, Savings and loan crisis, savings glut, seigniorage, special drawing rights, The Great Moderation, the payments system, too big to fail, transaction costs, Tyler Cowen, unorthodox policies, vertical integration, Y2K

If domestic money is being frequently debased, traders quoting prices in weight units would naturally favor more stable foreign coins—less frequently requiring weighing and assaying—as their medium of exchange. By contrast, traders who consider switching from a domestic to an alternative fiat currency as a medium of exchange find that there is no simple common metric. A network effect associated with using the common unit of account protects the incumbent currency by imposing high transactions costs on those who would switch first (Selgin 2003). Acceptance of an alternative currency in transactions presupposes familiarity with its exchange value, but until its acceptance is widespread, or at least until the domestic unit has become thoroughly unreliable as a unit of account (as in a high inflation), there is scant individual incentive to track the exchange rate between the incumbent and alternative currencies.

Britain’s example was especially influential because Britain’s financial preeminence made stable exchange rates between sterling and other currencies particularly desirable (Gallarotti 1995: 141–80). That preeminence itself came more and more to be understood, rightly or wrongly, as having been aided by Britain’s decision to embrace gold (Feaveryear 1963: 212–13). The response to Britain’s decision was nevertheless slow in coming. At first, network effects favored bimetallism at the French ratio, if they favored any particular metallic system. The gold finds of 1848 and 1850 fortuitously reaffirmed Britain’s decision to abandon its “ancient standard.” But a genuine golden “avalanche” didn’t begin until Germany joined Britain in the aftermath of the Franco-Prussian war, tipping the scales decisively in gold’s favor.


pages: 524 words: 130,909

The Contrarian: Peter Thiel and Silicon Valley's Pursuit of Power by Max Chafkin

3D printing, affirmative action, Airbnb, anti-communist, bank run, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, Black Monday: stock market crash in 1987, Blitzscaling, Boeing 747, borderless world, Cambridge Analytica, charter city, cloud computing, cognitive dissonance, Cornelius Vanderbilt, coronavirus, COVID-19, Credit Default Swap, cryptocurrency, David Brooks, David Graeber, DeepMind, digital capitalism, disinformation, don't be evil, Donald Trump, driverless car, Electric Kool-Aid Acid Test, Elon Musk, Ethereum, Extropian, facts on the ground, Fairchild Semiconductor, fake news, Ferguson, Missouri, Frank Gehry, Gavin Belson, global macro, Gordon Gekko, Greyball, growth hacking, guest worker program, Hacker News, Haight Ashbury, helicopter parent, hockey-stick growth, illegal immigration, immigration reform, Internet Archive, Jeff Bezos, John Markoff, Kevin Roose, Kickstarter, Larry Ellison, life extension, lockdown, low interest rates, Lyft, Marc Andreessen, Mark Zuckerberg, Maui Hawaii, Max Levchin, Menlo Park, military-industrial complex, moral panic, move fast and break things, Neal Stephenson, Nelson Mandela, Network effects, off grid, offshore financial centre, oil shale / tar sands, open borders, operational security, PalmPilot, Paris climate accords, Patri Friedman, paypal mafia, Peter Gregory, Peter Thiel, pets.com, plutocrats, Ponzi scheme, prosperity theology / prosperity gospel / gospel of success, public intellectual, QAnon, quantitative hedge fund, quantitative trading / quantitative finance, randomized controlled trial, regulatory arbitrage, Renaissance Technologies, reserve currency, ride hailing / ride sharing, risk tolerance, Robinhood: mobile stock trading app, Ronald Reagan, Sam Altman, Sand Hill Road, self-driving car, sharing economy, Sheryl Sandberg, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Silicon Valley startup, skunkworks, social distancing, software is eating the world, sovereign wealth fund, Steve Bannon, Steve Jobs, Steven Levy, Stewart Brand, surveillance capitalism, TaskRabbit, tech billionaire, tech worker, TechCrunch disrupt, techlash, technology bubble, technoutopianism, Ted Kaczynski, TED Talk, the new new thing, the scientific method, Tim Cook: Apple, transaction costs, Travis Kalanick, Tyler Cowen, Uber and Lyft, uber lyft, Upton Sinclair, Vitalik Buterin, We wanted flying cars, instead we got 140 characters, Whole Earth Catalog, WikiLeaks, William Shockley: the traitorous eight, Y Combinator, Y2K, yellow journalism, Zenefits

That meant that landing an enormous Army contract was next to impossible—that is, if Palantir approached the problem the old-fashioned way, which would have entailed lobbying Pentagon officials and modifying its software to work with the existing system. Instead, Thiel used a variation of the approach that had worked for PayPal—spending vast sums of money to market the service to directly to potential users, in the hopes of creating a network effect that would then influence the top brass in the same way that eBay sellers’ adoption of PayPal had persuaded Meg Whitman to give up on her PayPal competitor. Palantir adapted this strategy by targeting mid-level Army commanders who might be open to trying out something new, giving them free versions of the software to try.

Soldiers in the brigade would later claim that this months-long delay contributed to the unit’s more than thirty casualties, a claim that Palantir would use in years to come when selling its services. Word spread in Afghanistan, and several other brigades also got their hands on the software, which allowed them to share intelligence with one another and created the beginnings of the PayPal-style network effects. This caught the attention of the military’s head of intelligence in Afghanistan, a major general named Michael Flynn. Like Tunnell, Flynn was a critic of the United States’ counterinsurgency approach who had been arguing for a more muscular campaign that would take advantage of intelligence gathered by soldiers on the ground.


pages: 166 words: 49,639

Start It Up: Why Running Your Own Business Is Easier Than You Think by Luke Johnson

Albert Einstein, barriers to entry, Bear Stearns, Bernie Madoff, business cycle, collapse of Lehman Brothers, compensation consultant, Cornelius Vanderbilt, corporate governance, corporate social responsibility, creative destruction, credit crunch, false flag, financial engineering, Ford Model T, Grace Hopper, happiness index / gross national happiness, high net worth, James Dyson, Jarndyce and Jarndyce, Jarndyce and Jarndyce, Kickstarter, mass immigration, mittelstand, Network effects, North Sea oil, Northern Rock, patent troll, plutocrats, Ponzi scheme, profit motive, Ralph Waldo Emerson, Silicon Valley, software patent, stealth mode startup, Steve Jobs, Steve Wozniak, The Wealth of Nations by Adam Smith, traveling salesman, tulip mania, Vilfredo Pareto, wealth creators

It couldn’t happen soon enough: if I were twenty-five with no ties I’d relocate to Silicon Valley or New York in a flash, the better to draw upon the bountiful and sophisticated investor culture in those places. So how do you reach this audience to raise equity? Despite the scale of business angel activity, it is an inefficient market. Both entrepreneurs and business angels complain that they find it difficult to meet each other and network effectively, but finding angel networks isn’t difficult – a quick web search will reveal that every country has multiple trade organizations for angel investors. It’s worth noting at this stage that the race for funding is like every other appealing prize: it attracts a small percentage of scammers, incompetents and shady types.


pages: 186 words: 49,251

The Automatic Customer: Creating a Subscription Business in Any Industry by John Warrillow

Airbnb, airport security, Amazon Web Services, asset allocation, barriers to entry, call centre, cloud computing, commoditize, David Heinemeier Hansson, discounted cash flows, Hacker Conference 1984, high net worth, Jeff Bezos, Network effects, passive income, rolodex, Salesforce, sharing economy, side project, Silicon Valley, Silicon Valley startup, software as a service, statistical model, Steve Jobs, Stewart Brand, subscription business, telemarketer, the long tail, time value of money, zero-sum game, Zipcar

Today, a Boston-based subscriber can not only find a car in her neighborhood, she can just as easily hop out of a train in Baltimore or a plane in Bristol, UK, and find a Zipcar. Thanks to leveraging the network model, Griffiths had built the company up to more than $100 million in revenue and 760,000 subscribers when Avis Budget Group acquired it in 2013 for $491 million.6 The Network Effect in Reverse The word-of-mouth advertising that helps you build a subscription business using the network model can also work in reverse. Let’s take a look at the dramatic rise and recent stumble of World of Warcraft, a fantasy adventure video game in the genre commonly referred to as MMORPGs (massively multiplayer online role-playing games).


pages: 798 words: 240,182

The Transhumanist Reader by Max More, Natasha Vita-More

"World Economic Forum" Davos, 23andMe, Any sufficiently advanced technology is indistinguishable from magic, artificial general intelligence, augmented reality, Bill Joy: nanobots, bioinformatics, brain emulation, Buckminster Fuller, cellular automata, clean water, cloud computing, cognitive bias, cognitive dissonance, combinatorial explosion, Computing Machinery and Intelligence, conceptual framework, Conway's Game of Life, cosmological principle, data acquisition, discovery of DNA, Douglas Engelbart, Drosophila, en.wikipedia.org, endogenous growth, experimental subject, Extropian, fault tolerance, Flynn Effect, Francis Fukuyama: the end of history, Frank Gehry, friendly AI, Future Shock, game design, germ theory of disease, Hans Moravec, hypertext link, impulse control, index fund, John von Neumann, joint-stock company, Kevin Kelly, Law of Accelerating Returns, life extension, lifelogging, Louis Pasteur, Menlo Park, meta-analysis, moral hazard, Network effects, Nick Bostrom, Norbert Wiener, pattern recognition, Pepto Bismol, phenotype, positional goods, power law, precautionary principle, prediction markets, presumed consent, Project Xanadu, public intellectual, radical life extension, Ray Kurzweil, reversible computing, RFID, Ronald Reagan, scientific worldview, silicon-based life, Singularitarianism, social intelligence, stem cell, stochastic process, superintelligent machines, supply-chain management, supply-chain management software, synthetic biology, systems thinking, technological determinism, technological singularity, Ted Nelson, telepresence, telepresence robot, telerobotics, the built environment, The Coming Technological Singularity, the scientific method, The Wisdom of Crowds, transaction costs, Turing machine, Turing test, Upton Sinclair, Vernor Vinge, Von Neumann architecture, VTOL, Whole Earth Review, women in the workforce, zero-sum game

Allen Buchanan posits “that some enhancements will increase human productivity very broadly conceived and thereby create the potential for large-scale increases in human ­well-being, and that the enhancements that are most likely to attract sufficient resources to become widespread will be those that promise increased productivity and will often exhibit what economists call network effects; the benefit to the individual of being enhanced will depend upon, or at least be greatly augmented by others having the enhancement as well” (Buchanan 2008: 2). Buchanan points out that much of the ethical debate (cited above) about enhancements focuses on them as positional goods that primarily help an individual to outcompete his rivals.

Everyone will want to have a good reputation. One might try to fake being virtuous, but the best and easiest way to have a good reputation will be the same as it is today, by actually being virtuous. Buchanan argues that modern people have already adopted a wide array of enhancements that display these beneficial network effects, including literacy, numeracy, and social institutions that “extend our abilities beyond what is natural for human beings” (Buchanan 2008: 7). Some future biomedical enhancements that would significantly increase both individual and social productivity include those that raise the cognitive capabilities of human beings (memory, attention, and processing speed), increase healthy lifespans, and boost our immune systems.

Assumption#2: Once greater than human intelligence comes into existence, everything will change within hours or days or, at most, a few weeks. All the old rules will cease to apply. The awakening of a superhumanly intelligent computer is only one of several possible initiators of a Singularity recognized by Vinge. Other possibilities include the emergence of superhuman intelligence in computer networks, effective human-computer interfaces, and biotechnologically improved human intelligence. Whichever of these paths to superintelligence Vinge, like I.J. Good, expects an immediate intelligence explosion leading to a total transformation of the world. I have doubts about both of these assumptions. Curiously, the first assumption of an immediate jump from human-level AI to superhuman intelligence seems not to be a major hurdle for most people to whom Vinge has presented this idea.


pages: 309 words: 54,839

Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts by David Gerard

altcoin, Amazon Web Services, augmented reality, Bernie Madoff, bitcoin, Bitcoin Ponzi scheme, blockchain, Blythe Masters, Bretton Woods, Californian Ideology, clean water, cloud computing, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, distributed ledger, Dogecoin, Dr. Strangelove, drug harm reduction, Dunning–Kruger effect, Ethereum, ethereum blockchain, Extropian, fiat currency, financial innovation, Firefox, Flash crash, Fractional reserve banking, functional programming, index fund, information security, initial coin offering, Internet Archive, Internet of things, Kickstarter, litecoin, M-Pesa, margin call, Neal Stephenson, Network effects, operational security, peer-to-peer, Peter Thiel, pets.com, Ponzi scheme, Potemkin village, prediction markets, quantitative easing, RAND corporation, ransomware, Ray Kurzweil, Ross Ulbricht, Ruby on Rails, Satoshi Nakamoto, short selling, Silicon Valley, Silicon Valley ideology, Singularitarianism, slashdot, smart contracts, South Sea Bubble, tulip mania, Turing complete, Turing machine, Vitalik Buterin, WikiLeaks

For all the considerable effort at computerisation, there’s still too much paper and human effort. Settlements can still take days. Wall Street was very receptive to the blockchain pitch.370 The blockchain proponents’ business goal is to become the organisation controlling the new data standard, with a monopoly maintained by network effect. The barrier that such efforts founder on, over and over – and did before anyone tried adding blockchains to the idea – is that no industry’s players want to create a new central octopus. Examples include: Blem Information Management, an insurance software company, posit putting all documents on a blockchain so smart contracts can speed up payouts.


pages: 171 words: 54,334

Barefoot Into Cyberspace: Adventures in Search of Techno-Utopia by Becky Hogge, Damien Morris, Christopher Scally

"World Economic Forum" Davos, A Declaration of the Independence of Cyberspace, back-to-the-land, Berlin Wall, Buckminster Fuller, Chelsea Manning, citizen journalism, cloud computing, corporate social responsibility, disintermediation, DIY culture, Douglas Engelbart, Douglas Engelbart, Electric Kool-Aid Acid Test, Evgeny Morozov, Fall of the Berlin Wall, game design, Hacker Conference 1984, Hacker Ethic, Hans Moravec, informal economy, information asymmetry, Jacob Appelbaum, jimmy wales, John Gilmore, John Markoff, John Perry Barlow, Julian Assange, Kevin Kelly, mass immigration, Menlo Park, military-industrial complex, Mitch Kapor, MITM: man-in-the-middle, moral panic, Mother of all demos, Naomi Klein, Nelson Mandela, Network effects, New Journalism, Norbert Wiener, off-the-grid, peer-to-peer, Richard Stallman, Silicon Valley, Skype, Socratic dialogue, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, systems thinking, technoutopianism, Telecommunications Act of 1996, The Hackers Conference, Vannevar Bush, Whole Earth Catalog, Whole Earth Review, WikiLeaks

The many-to-many communications environment would allow individuals to bypass outmoded cultural gatekeepers and to smash corrupt institutions. The assumption was twofold – that those institutions would be unable to fight back, and that the ordinary people at the bottom of society, the edges of the network, were somehow worthier than the centralised elites at the top. Internet thinkers like to talk about “network effects”, about how networks that connect everyone to everyone double in value each time they add one more connection, how the value of a network, and thus its power, can increase exponentially and at a rapid pace. WikiLeaks takes advantage of this feature, and attempts to exploit it in pursuit of truth.


pages: 188 words: 9,226

Collaborative Futures by Mike Linksvayer, Michael Mandiberg, Mushon Zer-Aviv

4chan, AGPL, Benjamin Mako Hill, British Empire, citizen journalism, cloud computing, collaborative economy, corporate governance, crowdsourcing, Debian, Eben Moglen, en.wikipedia.org, fake news, Firefox, informal economy, jimmy wales, Kickstarter, late capitalism, lolcat, loose coupling, Marshall McLuhan, means of production, Naomi Klein, Network effects, optical character recognition, packet switching, planned obsolescence, postnationalism / post nation state, prediction markets, Richard Stallman, semantic web, Silicon Valley, slashdot, Slavoj Žižek, stealth mode startup, technoutopianism, The future is already here, the medium is the message, The Wisdom of Crowds, web application, WikiLeaks, Yochai Benkler

This is not a democracy, but a meritocracy. A meritocracy that favors technical expertise, free time, persistence and social skills. All traits that are definitely not evenly distributed. 102 Initiatives like FLOSS Manuals have acknowledged the importance of documentation for the collaborative process. To take real advantage of the network effect, we should learn to document failure, not only success. In the past, experiments in alternative social organizations were hampered by limitations on the resources available within individual projects, and isolated by the costs of communication and coordination with kindred efforts. This was the case of the Cooperative movement, communes, the occupied factories in Argentina and other similar alternative social experiments.


pages: 528 words: 146,459

Computer: A History of the Information Machine by Martin Campbell-Kelly, William Aspray, Nathan L. Ensmenger, Jeffrey R. Yost

Ada Lovelace, air freight, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Apple's 1984 Super Bowl advert, barriers to entry, Bill Gates: Altair 8800, Bletchley Park, borderless world, Buckminster Fuller, Build a better mousetrap, Byte Shop, card file, cashless society, Charles Babbage, cloud computing, combinatorial explosion, Compatible Time-Sharing System, computer age, Computer Lib, deskilling, don't be evil, Donald Davies, Douglas Engelbart, Douglas Engelbart, Dynabook, Edward Jenner, Evgeny Morozov, Fairchild Semiconductor, fault tolerance, Fellow of the Royal Society, financial independence, Frederick Winslow Taylor, game design, garden city movement, Gary Kildall, Grace Hopper, Herman Kahn, hockey-stick growth, Ian Bogost, industrial research laboratory, informal economy, interchangeable parts, invention of the wheel, Ivan Sutherland, Jacquard loom, Jeff Bezos, jimmy wales, John Markoff, John Perry Barlow, John von Neumann, Ken Thompson, Kickstarter, light touch regulation, linked data, machine readable, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, Menlo Park, Mitch Kapor, Multics, natural language processing, Network effects, New Journalism, Norbert Wiener, Occupy movement, optical character recognition, packet switching, PageRank, PalmPilot, pattern recognition, Pierre-Simon Laplace, pirate software, popular electronics, prediction markets, pre–internet, QWERTY keyboard, RAND corporation, Robert X Cringely, Salesforce, scientific management, Silicon Valley, Silicon Valley startup, Steve Jobs, Steven Levy, Stewart Brand, Ted Nelson, the market place, Turing machine, Twitter Arab Spring, Vannevar Bush, vertical integration, Von Neumann architecture, Whole Earth Catalog, William Shockley: the traitorous eight, women in the workforce, young professional

Between 1983 and 1991 the French government distributed more than 5 million Minitel units and developed an online telephone/address directory that people could use for free. The Minitel terminals, with their monochrome nine-inch screen and small keypads, cost approximately 500 francs (less than $100) to manufacture. The massive free distribution of these basic terminals (in place of white-page directories) led to what economists call “network effects”: more Minitel users generated the need for more service providers, more service providers attracted more users, and so on. The provision of new services, in turn, accelerated the demand for upscale Minitel units with larger screens and color monitors, which were sold or leased by France Télécom.

Both organizations also had excellent distribution channels through which they could get access software into the hands of their subscribers. But success was elusive, and it proved very difficult to compete with CompuServe. The Source was sold to CompuServe in 1989, while Prodigy incurred huge losses before its owners abandoned it in 1996. CompuServe’s relative success benefited from network effects. At a time when users of one network could not communicate with those of another, it made sense to belong to the biggest network. By 1990, CompuServe had 600,000 subscribers and it offered literally thousands of services: from home banking to hotel reservations, from Roger Ebert’s movie reviews to Golf Magazine.


pages: 482 words: 149,351

The Finance Curse: How Global Finance Is Making Us All Poorer by Nicholas Shaxson

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Airbnb, airline deregulation, Alan Greenspan, anti-communist, bank run, banking crisis, Basel III, Bear Stearns, benefit corporation, Bernie Madoff, Big bang: deregulation of the City of London, Blythe Masters, Boris Johnson, Bretton Woods, British Empire, business climate, business cycle, capital controls, carried interest, Cass Sunstein, Celtic Tiger, central bank independence, centre right, Clayton Christensen, cloud computing, corporate governance, corporate raider, creative destruction, Credit Default Swap, cross-subsidies, David Ricardo: comparative advantage, demographic dividend, Deng Xiaoping, desegregation, Donald Trump, Etonian, export processing zone, failed state, fake news, falling living standards, family office, financial deregulation, financial engineering, financial innovation, forensic accounting, Francis Fukuyama: the end of history, full employment, gig economy, Gini coefficient, Glass-Steagall Act, global supply chain, Global Witness, high net worth, Ida Tarbell, income inequality, index fund, invisible hand, Jeff Bezos, junk bonds, Kickstarter, land value tax, late capitalism, light touch regulation, London Whale, Long Term Capital Management, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, megaproject, Michael Milken, Money creation, Mont Pelerin Society, moral hazard, neoliberal agenda, Network effects, new economy, Northern Rock, offshore financial centre, old-boy network, out of africa, Paul Samuelson, plutocrats, Ponzi scheme, price mechanism, proprietary trading, purchasing power parity, pushing on a string, race to the bottom, regulatory arbitrage, rent-seeking, road to serfdom, Robert Bork, Ronald Coase, Ronald Reagan, Savings and loan crisis, seminal paper, shareholder value, sharing economy, Silicon Valley, Skype, smart grid, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, special economic zone, Steve Ballmer, Steve Jobs, stock buybacks, Suez crisis 1956, The Chicago School, Thorstein Veblen, too big to fail, Tragedy of the Commons, transfer pricing, two and twenty, vertical integration, Wayback Machine, wealth creators, white picket fence, women in the workforce, zero-sum game

Large financial institutions in the City of London and Wall Street are not just assembling market power by owning strategic stakes in markets, but they are also the financialising machines that assemble mergers and build monopolies. Mergers and acquisitions are among the most lucrative sports in the City of London and Wall Street.20 Pick up any copy of the Financial Times, and there’s a good chance that the top headline involves a mega-merger. There are natural monopolies where so-called network effects permanently prevent competitors from breaking in. Facebook is one: you want to be on the platform where your friends are, not searching for them on five different platforms. The UK financial payments system, dominated by just four banks, is another example. Then there is the hydra monopoly, where if you control one part of a supply chain, you can hold the whole industry to ransom.

P. 21, 22, 76, 77, 84 Morgenthau, Henry 33 Morgenthau, Robert 145 Moriarty Tribunal (2006) 136 Morris, Peter 196, 212, 215 Mossack Fonseca 66–7 Moulton, Jon 163 Munger, Charlie 235 Murdoch family 70–1, 80 Murphy, Richard 169, 170 National Archives 59, 66 National Audit Office 224, 229, 240 National City Brokers 129 Nazi Party 35, 52, 76, 77, 111 neoliberalism 28–49, 69, 72, 74, 76, 97, 101, 103, 188, 232, 260 network effects 84 Network Rail 227 New Deal, U.S. 33, 55, 68, 71, 76 New Labour 97, 102–5, 220, 257 Newton Investment Management Limited 220 New York Stock Exchange (NYSE) 21, 167 NHS (National Health Service) 36, 86, 223 Niue 66–7 Northern Ireland 39, 120, 126, 137–8 Northern Rock 165, 169–70, 173, 174, 185 Northwestern University 28, 29 Oates, Wallace 38, 39, 40, 45, 46 OECD 8, 186, 263; Common Reporting Standard 269 Offshore Alert 157 Ó hUigínn, Pádraig 130 oil sector 4–5, 6, 7, 8, 19–21, 25, 26–7, 53–4, 58, 59, 71, 76, 77, 85, 94, 126, 146, 182, 219, 225, 233 O’Leary, Olivia 126–7 Opco-Propco shuffle 201–2 Open Markets Institute 80, 99, 271 Operation Robot 52–3 Opium Wars 50 O’Regan, Brendan 117 Ormond Quay 133 Osborne, George 167, 219, 234, 238, 262 O’Toole, Fintan 116; Ship of Fools 116, 121–2, 123, 138 outsourcing 87, 90, 203, 223, 224, 226–7, 229–32, 234, 240 Oxford University Centre for Business Taxation 242–3 Packard, David 39–40 Palan, Professor Ronen 64 Panama 22–4, 64, 66–7, 176, 185–6, 188 Panama Canal Company of America 22–4 Panama Papers 66–7, 109, 268 Payton, Stanley 60–1, 62 pension funds 200–1, 206, 207, 210, 212, 213, 214, 216, 223 perpetuities 181 Phalippou, Ludovic 212, 215 Piper, Steve 255 Ponzi schemes 93, 96, 145, 177 Porter, Michael 101; The Competitive Advantage of Nations 101 Portes, Jonathan 106 Posner, Richard 74, 79, 80 Potts, Robin 157, 158 predatory pricing 78, 81 Price Waterhouse/Price Waterhouse Coopers (PwC) 62, 68, 95, 129, 137, 167, 235, 236, 237, 239 private equity 4, 26, 83, 103, 181, 190–217, 226, 231, 233, 234, 240, 269, 272 Private Equity, Public Loss report (2010) 212 Private Eye 113, 114 private finance initiative (PFI) 103, 220–4, 228 Project Troy 201 Promoting Employment Across Kansas programme 43 protectionism 51, 106 Prowse, David 210–11 Public Accounts Committee (PAC) 168, 239 public services 4, 30, 39, 47, 69, 224, 256 Railtrack 231 Rand, Ayn 75 Reagan, Ronald 80, 87, 99, 146 Redwood, John 143 rehypothecation 163–4 relocation, company 39–49, 116–39, 250, 266 repo 162–4 resource curse 5, 219 return on invested capital (ROIC) 198 return on net assets (RONA) 198 Reuters 4, 250 Revealed Preference Theory 29 Ricardo, David 105, 108 Ridley, Matt 185 Rising Tide Foundation 216 Roberts, George 2, 195 Rockefeller, John D. 19–21, 26, 31, 71, 76 Rodrik, Dani 254 Roosa, Robert 57 Roosevelt, F.


pages: 554 words: 158,687

Profiting Without Producing: How Finance Exploits Us All by Costas Lapavitsas

Alan Greenspan, Andrei Shleifer, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, borderless world, Branko Milanovic, Bretton Woods, business cycle, capital controls, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, computer age, conceptual framework, corporate governance, credit crunch, Credit Default Swap, David Graeber, David Ricardo: comparative advantage, disintermediation, diversified portfolio, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, false flag, financial deregulation, financial independence, financial innovation, financial intermediation, financial repression, Flash crash, full employment, general purpose technology, Glass-Steagall Act, global value chain, global village, High speed trading, Hyman Minsky, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, job satisfaction, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, liberal capitalism, London Interbank Offered Rate, low interest rates, low skilled workers, M-Pesa, market bubble, means of production, Minsky moment, Modern Monetary Theory, Money creation, money market fund, moral hazard, mortgage debt, Network effects, new economy, oil shock, open economy, pensions crisis, post-Fordism, Post-Keynesian economics, price stability, Productivity paradox, profit maximization, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, race to the bottom, regulatory arbitrage, reserve currency, Robert Shiller, Robert Solow, savings glut, Scramble for Africa, secular stagnation, shareholder value, Simon Kuznets, special drawing rights, Thales of Miletus, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, total factor productivity, trade liberalization, transaction costs, union organizing, value at risk, Washington Consensus, zero-sum game

However, these classification problems do not affect the gist of the analysis. 52 See also Federal Reserve Bulletin, ‘The Use of Checks and Other Noncash Payment Instruments in the United States’, December 2002; Federal Reserve Bulletin, ‘Trends in the Use of Payment Instruments in the United States’, Spring 2005; Federal Reserve, ‘The Future of Retail Electronic Payments Systems: Industry Interviews and Analysis’, Staff Study 175, December 2002. 53 See European Central Bank, ‘Electronification of Payments in Europe’, Monthly Bulletin, May 2003. 54 For further analysis of this point, see Costas Lapavitsas and Paulo Dos Santos, ‘Globalization and Contemporary Banking: On the Impact of New Technology’, Contributions to Political Economy 27, 2008, pp. 31–56. 55 Some replacement has of course taken place, though the extent of it remains empirically unclear; see Willem Boeschoten and Gerrit E. Hebbink, ‘Electronic Money, Currency Demand and Seignorage Loss in the G10 Countries’, De Nederlandsche Bank, 1996; Sheri Markose and Yiing Jia Loke, ‘Network Effects on Cash-Card Substitution in Transactions and Low Interest Rate Regimes’, Economic Journal 113, April 2003; Helmut Stix, ‘How Do Debit Cards Affect Cash Demand?’, Working Paper 82, Oesterreichische Nationalbank, 2003; Gene Amromin and Sujit Chakravorti, ‘Debit Card and Cash Usage: A Cross-Country Analysis’, WP 2007–04, Federal Reserve bank of Chicago, 2007. 56 There is much official concern about this issue, see, selectively, BIS, ‘Security of Electronic Money’, August 1996; BIS, ‘International Convergence of Capital Measurement and Capital Standards’, July 1988; and European Central Bank, Electronic Money System Security Objectives, May 2003. 57 See Mathias Drehmann et al., ‘Challenges to Currency’, Economic Policy, April 2002. 58 The possibility of introducing micro-payments has led to lively exchanges often revealing strong ideological opposition to the rule of money on the internet; see, for instance, Clay Shirky, ‘Fame vs Fortune: Micropayments and Free Content’, 5 September 2003, at shirky.com; and Scott McCloud, ‘Misunderstanding Micropayments’, 11 September 2003, at scottmccloud.com. 59 See Article 1(3) of the European Monetary Institute’s Directive 2000/46/EC, which regulates the issuing of e-money in the European Union.

MacKenzie, Donald, and Yuval Millo, ‘Constructing a Market, Performing Theory: The Historical Sociology of a Financial Derivatives Exchange’, American Journal of Sociology 109:1, 2003, pp. 107–45. Magdoff, Harry, and Paul M. Sweezy, Stagnation and the Financial Explosion, New York: Monthly Review Press, 1987. Mandel, Ernest, Marxist Economic Theory, London: Merlin, 1968. Markose, Sheri, and Yiing Jia Loke, ‘Network Effects on Cash-Card Substitution in Transactions and Low Interest Rate Regimes’, Economic Journal 113, April 2003, pp. 456–76. Martin, Randy, Financialization of Daily Life, Philadelphia: Temple University Press, 2002. Martin, Ron, Money and the Space Economy, London: Wiley, 1999. Marx, Karl, Capital, vol. 1, London: Penguin/NLR, 1976 (1867).


pages: 665 words: 146,542

Money: 5,000 Years of Debt and Power by Michel Aglietta

accelerated depreciation, Alan Greenspan, bank run, banking crisis, Basel III, Berlin Wall, bitcoin, blockchain, Bretton Woods, British Empire, business cycle, capital asset pricing model, capital controls, cashless society, central bank independence, circular economy, collapse of Lehman Brothers, collective bargaining, corporate governance, David Graeber, debt deflation, dematerialisation, Deng Xiaoping, double entry bookkeeping, energy transition, eurozone crisis, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, forward guidance, Francis Fukuyama: the end of history, full employment, German hyperinflation, income inequality, inflation targeting, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invention of writing, invisible hand, joint-stock company, Kenneth Arrow, Kickstarter, land bank, liquidity trap, low interest rates, margin call, means of production, Money creation, money market fund, moral hazard, Nash equilibrium, Network effects, Northern Rock, oil shock, planetary scale, plutocrats, precautionary principle, price stability, purchasing power parity, quantitative easing, race to the bottom, reserve currency, secular stagnation, seigniorage, shareholder value, special drawing rights, special economic zone, stochastic process, Suez crisis 1956, the payments system, the scientific method, tontine, too big to fail, trade route, transaction costs, transcontinental railway, Washington Consensus

These characteristics mean that the law of reflux is fulfilled in the centralisation of the relations between interbanking correspondents within multilateral clearing systems.47 Banks are institutions that offer non-tradable credits combined with the provision of payment services. They invest in specific information whose quality cannot be evaluated by depositors. This asymmetric information structure, linked to network effects in the payment system, implies that the most effective relationship is for deposits to be valued at par in units of account, and hence convertible at par into the base currency. This relationship expanded greatly in the second half of the nineteenth century, when deposits became transferable via cheques.

The share of French export invoicing made out in dollars rose from 9 percent in 1974 to 18.6 percent in 1995 and 38.5 percent in 2012. Only Germany is able to more easily impose the euro’s use (62 percent of its exports are made out in euros). The literature that seeks to explain the inertia in the dollar’s position emphasises the network effects and the higher costs that come with a change of invoicing currency. This is particularly true on hydrocarbon markets, where almost all transactions are carried out in dollars, notwithstanding vague and often partly politically motivated bids to replace the dollar with some other currency. (Such was the case of Saddam Hussein’s Iraq under sanctions; the Iranian project for a euro-based oil market; the euro-denominated oil contracts under Hugo Chávez’s regime; and the Russian–Chinese gas deal in 2013.)


pages: 532 words: 141,574

Bleeding Edge: A Novel by Thomas Pynchon

addicted to oil, AltaVista, anti-communist, Anton Chekhov, Bernie Madoff, big-box store, Burning Man, carried interest, deal flow, Donald Trump, double entry bookkeeping, East Village, eternal september, false flag, fixed-gear, gentrification, Hacker Ethic, index card, invisible hand, jitney, Larry Ellison, late capitalism, margin call, messenger bag, Network effects, Ponzi scheme, prediction markets, pre–internet, QWERTY keyboard, RAND corporation, rent control, rolodex, Ronald Reagan, Sand Hill Road, Silicon Valley, telemarketer, Y2K

If this generation of con artists came up short now and then in IT skills, they made up for it in the area of social engineering, and many entreprenerds, being trusting souls, got taken. But sometimes distinctions between hustling and being hustled broke down. It didn’t escape Maxine’s notice that, given stock valuations on some start-ups of interest chiefly to the insane, there might not much difference. How is a business plan that depends on faith in “network effects” kicking in someday different from the celestial pastry exercise known as a Ponzi scheme? Venture capitalists feared industrywide for their rapacity were observed to surface from pitch sessions with open wallets and leaking eyeballs, having been subjected to nerd-produced videos with subliminal messages and sound tracks featuring oldie mixes that pushed more buttons than a speed freak with a Nintendo 64.

Someday there’ll be a Napster for videos, it’ll be routine to post anything and share it with anybody.” “How could anybody make money doing that?” Maxine can’t quite figure. “There’s always a way to monetize anything. Not my department. I’m happy enough with the exposure.” “Build up your traffic, hope that network effects kick in, yes, sounds like an all-too-familiar sad but true business plan.” “As long as the material gets out there. Long as somebody puts in some HTML that’ll make it easy to repost.” “You really think Bush’s people are behind this.” “You don’t?” “I’m just a fraud examiner. Bush, don’t get me started.


pages: 201 words: 63,192

Graph Databases by Ian Robinson, Jim Webber, Emil Eifrem

Amazon Web Services, anti-pattern, bioinformatics, business logic, commoditize, corporate governance, create, read, update, delete, data acquisition, en.wikipedia.org, fault tolerance, linked data, loose coupling, Network effects, recommendation engine, semantic web, sentiment analysis, social graph, software as a service, SPARQL, the strength of weak ties, web application

RETURN DISTINCT asset ensures that unique assets are returned in the results, no matter how many times they are matched. Given that such a query is readily supported by our graph, we gain confidence that the design is fit for purpose. Cross-Domain Models Business insight often depends on us understanding the hidden network effects at play in a complex value chain. To generate this understanding, we need to join domains together without distorting or sacrificing the details particular to each domain. Property graphs provide a solution here. Using a property graph, we can model a value chain as a graph of graphs in which specific relationships connect and distinguish constituent subdomains.


pages: 219 words: 63,495

50 Future Ideas You Really Need to Know by Richard Watson

23andMe, 3D printing, access to a mobile phone, Albert Einstein, Alvin Toffler, artificial general intelligence, augmented reality, autonomous vehicles, BRICs, Buckminster Fuller, call centre, carbon credits, Charles Babbage, clean water, cloud computing, collaborative consumption, computer age, computer vision, crowdsourcing, dark matter, dematerialisation, Dennis Tito, digital Maoism, digital map, digital nomad, driverless car, Elon Musk, energy security, Eyjafjallajökull, failed state, Ford Model T, future of work, Future Shock, gamification, Geoffrey West, Santa Fe Institute, germ theory of disease, global pandemic, happiness index / gross national happiness, Higgs boson, high-speed rail, hive mind, hydrogen economy, Internet of things, Jaron Lanier, life extension, Mark Shuttleworth, Marshall McLuhan, megacity, natural language processing, Neil Armstrong, Network effects, new economy, ocean acidification, oil shale / tar sands, pattern recognition, peak oil, personalized medicine, phenotype, precision agriculture, private spaceflight, profit maximization, RAND corporation, Ray Kurzweil, RFID, Richard Florida, Search for Extraterrestrial Intelligence, self-driving car, semantic web, Skype, smart cities, smart meter, smart transportation, space junk, statistical model, stem cell, Stephen Hawking, Steve Jobs, Steven Pinker, Stewart Brand, strong AI, Stuxnet, supervolcano, synthetic biology, tech billionaire, telepresence, The Wisdom of Crowds, Thomas Malthus, Turing test, urban decay, Vernor Vinge, Virgin Galactic, Watson beat the top human players on Jeopardy!, web application, women in the workforce, working-age population, young professional

One issue, for example, is why some medical records still held by medical institutions are often on paper. This is slowly changing, but until we achieve a shift in attitudes relating to who has access to what and in what format, this will act against not only the generation and transmission of knowledge by small groups of patients, but will also prevent the occurrence of larger network effects (i.e. “the wisdom of crowds”). “This artificial distinction between a consumer and a producer is dissolving, I call it the participant economy. Web 2.0 is about people.” David Sifry, Technorati But does user-generated medicine or “open-source health” really have a future? On the one hand, you’d think that privacy issues alone would prevent any meaningful exchange of knowledge, but this doesn’t seem to be an issue.


pages: 282 words: 63,385

Attention Factory: The Story of TikTok and China's ByteDance by Matthew Brennan

Airbnb, AltaVista, augmented reality, Benchmark Capital, Big Tech, business logic, Cambridge Analytica, computer vision, coronavirus, COVID-19, deep learning, Didi Chuxing, Donald Trump, en.wikipedia.org, fail fast, Google X / Alphabet X, growth hacking, ImageNet competition, income inequality, invisible hand, Kickstarter, Mark Zuckerberg, Menlo Park, natural language processing, Netflix Prize, Network effects, paypal mafia, Pearl River Delta, pre–internet, recommendation engine, ride hailing / ride sharing, Sheryl Sandberg, Silicon Valley, Snapchat, social graph, Steve Jobs, TikTok, Travis Kalanick, WeWork, Y Combinator

Videos are more challenging as they tend to be uploaded without keyword tagging or accurate titles and descriptions, making for an exciting computer vision challenge to work out what is actually in the video. The beauty of relying on recommendations to improve engagement is that it creates a virtuous cycle of continual improvement over time, often referred to as a “data network effect.” The more time spent using the app, the more enriched becomes the user profile, which leads to more accurate content matches and better user experience. This naturally leads to more time being spent in the app, which further enriches the user profile and so on. Above: Some of the factors influencing an article’s recommendation value.


pages: 247 words: 60,543

The Currency Cold War: Cash and Cryptography, Hash Rates and Hegemony by David G. W. Birch

"World Economic Forum" Davos, Alan Greenspan, algorithmic management, AlphaGo, bank run, Big Tech, bitcoin, blockchain, Bretton Woods, BRICs, British Empire, business cycle, capital controls, cashless society, central bank independence, COVID-19, cross-border payments, cryptocurrency, Diane Coyle, disintermediation, distributed ledger, Donald Trump, driverless car, Elon Musk, Ethereum, ethereum blockchain, facts on the ground, fault tolerance, fiat currency, financial exclusion, financial innovation, financial intermediation, floating exchange rates, forward guidance, Fractional reserve banking, global reserve currency, global supply chain, global village, Hyman Minsky, information security, initial coin offering, Internet of things, Jaron Lanier, Kenneth Rogoff, knowledge economy, M-Pesa, Mark Zuckerberg, market clearing, market design, Marshall McLuhan, mobile money, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, new economy, Northern Rock, one-China policy, Overton Window, PalmPilot, pattern recognition, Pingit, QR code, quantum cryptography, race to the bottom, railway mania, ransomware, Real Time Gross Settlement, reserve currency, Satoshi Nakamoto, seigniorage, Silicon Valley, smart contracts, social distancing, sovereign wealth fund, special drawing rights, subscription business, the payments system, too big to fail, transaction costs, Vitalik Buterin, Washington Consensus

The real fear of some big-picture thinkers is that, if this new cold war breaks out – with Calibra facing off against Alipay on the one hand and, more importantly, CNY facing off against the US dollar on the other – then it might turn out that the US dollar is vulnerable. And, whether private or public, if one or more SHCs obtain Patrician status (so that people begin to hold them as a reserve), the nature of the network effects of, well, networks means that the US dollar’s position at the top of the pyramid will become shakier than we ever could have imagined a generation ago. That was when management consultants McKinsey & Company wrote that the dollar’s dominance could not be explained by the size of the US economy alone.


pages: 442 words: 39,064

Why Stock Markets Crash: Critical Events in Complex Financial Systems by Didier Sornette

Alan Greenspan, Asian financial crisis, asset allocation, behavioural economics, Berlin Wall, Black Monday: stock market crash in 1987, Bretton Woods, Brownian motion, business cycle, buy and hold, buy the rumour, sell the news, capital asset pricing model, capital controls, continuous double auction, currency peg, Deng Xiaoping, discrete time, diversified portfolio, Elliott wave, Erdős number, experimental economics, financial engineering, financial innovation, floating exchange rates, frictionless, frictionless market, full employment, global village, implied volatility, index fund, information asymmetry, intangible asset, invisible hand, John von Neumann, joint-stock company, law of one price, Louis Bachelier, low interest rates, mandelbrot fractal, margin call, market bubble, market clearing, market design, market fundamentalism, mental accounting, moral hazard, Network effects, new economy, oil shock, open economy, pattern recognition, Paul Erdős, Paul Samuelson, power law, quantitative trading / quantitative finance, random walk, risk/return, Ronald Reagan, Schrödinger's Cat, selection bias, short selling, Silicon Valley, South Sea Bubble, statistical model, stochastic process, stocks for the long run, Tacoma Narrows Bridge, technological singularity, The Coming Technological Singularity, The Wealth of Nations by Adam Smith, Tobin tax, total factor productivity, transaction costs, tulip mania, VA Linux, Y2K, yield curve

This is usually attributed to a “business-as-usual” corporate statement of a slightly revised, smallerthan-expected earnings! These considerations make it clear that it is the expectation of future earnings and future capital gains rather than present economic reality that motivates the average investor, thus creating a speculative bubble. It has also been proposed [289] that better business models, the network effect, first-to-scale advantages, and real options effect could account for the apparent overvaluation, providing a sound justification for the high prices of dot.com and other New Economy companies. In a nutshell, the arguments are as follows. 1. The better business models refer to the fact that dot.com companies such as Amazon require little capital investment compared to their autopsy of major c r a s h e s 271 brick-and-mortar competitors.

Usually, positive feedback stems from economies of scale: the largest companies sustain the lowest unit costs. Economies of scale are driven by the “supply side,” and consequently, may run into natural limitations and wane at a point well below market dominance. In the Internet economy, in contrast, positive feedback is fueled by the network effect, whose fundamental principle is that a network becomes more valuable to each user as incremental users are added. More specifically, the value of the network grows exponentially as the number of members grows arithmetically. A network of users is very valuable and becomes more so as it grows over time, locking in the customer base and enhancing the sustainability of excess returns.


pages: 614 words: 174,226

The Economists' Hour: How the False Prophets of Free Markets Fractured Our Society by Binyamin Appelbaum

90 percent rule, airline deregulation, Alan Greenspan, Alvin Roth, Andrei Shleifer, anti-communist, battle of ideas, Benoit Mandelbrot, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, Celtic Tiger, central bank independence, clean water, collective bargaining, Corn Laws, correlation does not imply causation, Credit Default Swap, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, desegregation, Diane Coyle, Donald Trump, Dr. Strangelove, ending welfare as we know it, financial deregulation, financial engineering, financial innovation, fixed income, flag carrier, floating exchange rates, full employment, George Akerlof, George Gilder, Gini coefficient, greed is good, Greenspan put, Growth in a Time of Debt, Ida Tarbell, income inequality, income per capita, index fund, inflation targeting, invisible hand, Isaac Newton, It's morning again in America, Jean Tirole, John Markoff, Kenneth Arrow, Kenneth Rogoff, land reform, Les Trente Glorieuses, long and variable lags, Long Term Capital Management, low cost airline, low interest rates, manufacturing employment, means of production, Menlo Park, minimum wage unemployment, Mohammed Bouazizi, money market fund, Mont Pelerin Society, Network effects, new economy, Nixon triggered the end of the Bretton Woods system, oil shock, Paul Samuelson, Philip Mirowski, Phillips curve, plutocrats, precautionary principle, price stability, profit motive, public intellectual, Ralph Nader, RAND corporation, rent control, rent-seeking, Richard Thaler, road to serfdom, Robert Bork, Robert Gordon, Robert Solow, Ronald Coase, Ronald Reagan, Sam Peltzman, Savings and loan crisis, Silicon Valley, Simon Kuznets, starchitect, Steve Bannon, Steve Jobs, supply-chain management, The Chicago School, The Great Moderation, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, trickle-down economics, ultimatum game, Unsafe at Any Speed, urban renewal, War on Poverty, Washington Consensus, We are all Keynesians now

In the chaotic new world of floating exchange rates, many nations expanded their dollar reserves as a cushion against volatility. The economic historian Barry Eichengreen notes that movie villains continued to demand payment in dollars. So did a wide range of international businesses. It was a network effect, much like Facebook: everyone used the dollar because everyone used the dollar. Some members of OPEC, the oil cartel, tried and failed to find a viable alternative. Both West Germany and Japan resisted the international use of their currencies, determined to preserve export-oriented economic systems.

Vane, Conversations with Leading Economists: Interpreting Modern Macroeconomics (Cheltenham, Eng.: Edward Elgar, 1999), 124–44. 69. Michael Hirsh, Capital Offense (Hoboken, N.J.: John Wiley, 2010), 46. 70. Eichengreen, the nearest thing to an official biographer of the dollar, downplays the importance of network effects. In his view, the dollar remains dominant because the United States still has the largest economy and the obvious alternatives, like the euro and the Chinese yuan, have significant shortcomings. He notes the dollar rose to dominance in about a decade, between 1914 and 1925, and he argues it could be replaced just as swiftly.


pages: 247 words: 63,208

The Open Organization: Igniting Passion and Performance by Jim Whitehurst

Airbnb, behavioural economics, cloud computing, content marketing, crowdsourcing, digital capitalism, en.wikipedia.org, fail fast, Google Hangouts, Infrastructure as a Service, job satisfaction, Kaizen: continuous improvement, market design, meritocracy, Network effects, new economy, place-making, platform as a service, post-materialism, profit motive, risk tolerance, Salesforce, shareholder value, side project, Silicon Valley, Skype, Snapchat, Steve Jobs, subscription business, TED Talk, The Wisdom of Crowds, Tony Hsieh

By embracing participation from contributors within and outside the walls of the organization, Red Hat has created a competitive advantage that enables it to compete against—and beat—far larger rivals. Red Hat operates in a really fast-paced environment, and the organizational structure, an open one, is the best way for it to keep pace with the flurry of changes it faces every single day. We have harnessed the power of what economists call the “network effect” that results when you connect people and ideas. The more people you connect, the more value they create, which in turn attracts more people, and so on. Red Hat’s management system encompasses principles such as: People join us because they want to. Contribution is critical, but it’s not a quid pro quo.


pages: 295 words: 66,824

A Mathematician Plays the Stock Market by John Allen Paulos

Alan Greenspan, AOL-Time Warner, Benoit Mandelbrot, Black-Scholes formula, book value, Brownian motion, business climate, business cycle, butter production in bangladesh, butterfly effect, capital asset pricing model, confounding variable, correlation coefficient, correlation does not imply causation, Daniel Kahneman / Amos Tversky, diversified portfolio, dogs of the Dow, Donald Trump, double entry bookkeeping, Elliott wave, endowment effect, equity risk premium, Erdős number, Eugene Fama: efficient market hypothesis, four colour theorem, George Gilder, global village, greed is good, index fund, intangible asset, invisible hand, Isaac Newton, it's over 9,000, John Bogle, John Nash: game theory, Larry Ellison, Long Term Capital Management, loss aversion, Louis Bachelier, mandelbrot fractal, margin call, mental accounting, Myron Scholes, Nash equilibrium, Network effects, passive investing, Paul Erdős, Paul Samuelson, Plato's cave, Ponzi scheme, power law, price anchoring, Ralph Nelson Elliott, random walk, Reminiscences of a Stock Operator, Richard Thaler, risk free rate, Robert Shiller, short selling, six sigma, Stephen Hawking, stocks for the long run, survivorship bias, transaction costs, two and twenty, ultimatum game, UUNET, Vanguard fund, Yogi Berra

technical analysis trading strategies unemployment whim World Class Options Market Maker (WCOMM) present value compound interest and discounting process for stock purchases based on price movements complexity changes over time extreme movements herd-like and volatile nature of insider trading and network effect on normal curve and power law and subterranean information processing and price, P/E ratio price targets anchoring effect and hype and unrealistic prices, of stocks manipulating for own benefit (management/CEO) oscillation created by investor reactions to each other reflecting publicly available information prisoner’s dilemma private information becoming common knowledge dynamic with common knowledge market predictions and probability coin flipping game and dice and gambling games games of chance outguessing the average guess St.


pages: 239 words: 56,531

The Secret War Between Downloading and Uploading: Tales of the Computer as Culture Machine by Peter Lunenfeld

Albert Einstein, Andrew Keen, anti-globalists, Apple II, Berlin Wall, British Empire, Brownian motion, Buckminster Fuller, Burning Man, business cycle, business logic, butterfly effect, Charles Babbage, computer age, Computing Machinery and Intelligence, creative destruction, crowdsourcing, cuban missile crisis, Dissolution of the Soviet Union, don't be evil, Douglas Engelbart, Douglas Engelbart, Dynabook, East Village, Edward Lorenz: Chaos theory, Fairchild Semiconductor, Fall of the Berlin Wall, folksonomy, Francis Fukuyama: the end of history, Frank Gehry, Free Software Foundation, Grace Hopper, gravity well, Guggenheim Bilbao, Herman Kahn, Honoré de Balzac, Howard Rheingold, Ian Bogost, invention of movable type, Isaac Newton, Ivan Sutherland, Jacquard loom, Jane Jacobs, Jeff Bezos, John Markoff, John von Neumann, Jon Ronson, Kickstarter, Mark Zuckerberg, Marshall McLuhan, Mercator projection, Metcalfe’s law, Mother of all demos, mutually assured destruction, Neal Stephenson, Nelson Mandela, Network effects, new economy, Norbert Wiener, PageRank, pattern recognition, peer-to-peer, planetary scale, plutocrats, post-materialism, Potemkin village, RFID, Richard Feynman, Richard Stallman, Robert Metcalfe, Robert X Cringely, Schrödinger's Cat, Search for Extraterrestrial Intelligence, seminal paper, SETI@home, Silicon Valley, Skype, social bookmarking, social software, spaced repetition, Steve Ballmer, Steve Jobs, Steve Wozniak, technological determinism, Ted Nelson, the built environment, the Cathedral and the Bazaar, The Death and Life of Great American Cities, the medium is the message, Thomas L Friedman, Turing machine, Turing test, urban planning, urban renewal, Vannevar Bush, walkable city, Watson beat the top human players on Jeopardy!, William Shockley: the traitorous eight

The World Game was a product of postscarcity thinking and 1960s’ utopianism, played without benefit of networks and computer simulations, but its essential message—that humans working together have the 73 CHAPTER 3 potential to craft a better world—resonates, and more than ever looks like a prototype for the networked effects of simulation and participation.26 Running Room or Play Space? Simulation and participation drive everything from figuring information to the fabbing of WYMIWYM objects; they make possible the mixing and mashing of open-source sound and imagescapes; and they shape the ways that we work as well as the ways that we play.


pages: 244 words: 66,977

Subscribed: Why the Subscription Model Will Be Your Company's Future - and What to Do About It by Tien Tzuo, Gabe Weisert

3D printing, Airbnb, airport security, Amazon Web Services, augmented reality, autonomous vehicles, Big Tech, bike sharing, blockchain, Brexit referendum, Build a better mousetrap, business cycle, business intelligence, business process, call centre, cloud computing, cognitive dissonance, connected car, data science, death of newspapers, digital nomad, digital rights, digital twin, double entry bookkeeping, Elon Musk, factory automation, fake news, fiat currency, Ford Model T, fulfillment center, growth hacking, hockey-stick growth, Internet of things, inventory management, iterative process, Jeff Bezos, John Zimmer (Lyft cofounder), Kevin Kelly, Lean Startup, Lyft, manufacturing employment, Marc Benioff, Mary Meeker, megaproject, minimum viable product, natural language processing, Network effects, Nicholas Carr, nuclear winter, pets.com, planned obsolescence, pneumatic tube, profit maximization, race to the bottom, ride hailing / ride sharing, Salesforce, Sand Hill Road, shareholder value, Silicon Valley, skunkworks, smart meter, social graph, software as a service, spice trade, Steve Ballmer, Steve Jobs, subscription business, systems thinking, tech worker, TED Talk, Tim Cook: Apple, transport as a service, Uber and Lyft, uber lyft, WeWork, Y2K, Zipcar

Growth rates (last twelve months): SaaS growth: 23% Telecommunications growth: 14% Media growth: 9% Corporate Services growth: 4.4% SUBSCRIPTION REVENUE GROWTH BY REVENUE BAND Size matters in the Subscription Economy. The subindex made up of $100M+ constituents has been the highest performing since its inception in 2014. In contrast to start-ups, these larger companies have more resources, more distribution, more new acquisitions, more channels to grow. As a result, they benefit from the network effects mentioned earlier in this study. SEI Growth by Company Revenue SEI subindices for company size, as given by revenue band. Each subindex is launched starting from the value of the main SEI when twenty-five constituents are available. Note that the revenue band refers to the overall revenue of the constituent company, and not to the specific products hosted on the Zuora platform.


pages: 242 words: 71,943

Strong Towns: A Bottom-Up Revolution to Rebuild American Prosperity by Charles L. Marohn, Jr.

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, A Pattern Language, American Society of Civil Engineers: Report Card, anti-fragile, bank run, big-box store, Black Swan, bread and circuses, Bretton Woods, British Empire, business cycle, call centre, cognitive dissonance, complexity theory, corporate governance, Detroit bankruptcy, Donald Trump, en.wikipedia.org, facts on the ground, Ferguson, Missouri, gentrification, global reserve currency, high-speed rail, housing crisis, index fund, it is difficult to get a man to understand something, when his salary depends on his not understanding it, Jane Jacobs, Jeff Bezos, low interest rates, low skilled workers, mass immigration, megaproject, Modern Monetary Theory, mortgage debt, Network effects, new economy, New Urbanism, paradox of thrift, Paul Samuelson, pensions crisis, Ponzi scheme, quantitative easing, reserve currency, restrictive zoning, Savings and loan crisis, the built environment, The Death and Life of Great American Cities, trickle-down economics, Upton Sinclair, urban planning, urban renewal, walkable city, white flight, women in the workforce, yield curve, zero-sum game

The same with building a new highway interchange so a few hundred homes can be built an hour away from the regional employment center. When looked at individually, the public-sector math behind most of these projects makes no sense. Yet, the true believer is comfortable assuming that, if you add up all the negative-returning infrastructure investments, the network effects from them produces a platform of economic efficiency. Not only is there no evidence to support that conclusion; it defies logic. Another favorite secondary benefit to cite is job creation. The case here is stronger at the federal level and in states and the handful of cities with an income tax, but the financial case is still more wish than rigorous reality.


pages: 226 words: 65,516

Kings of Crypto: One Startup's Quest to Take Cryptocurrency Out of Silicon Valley and Onto Wall Street by Jeff John Roberts

4chan, Airbnb, Alan Greenspan, altcoin, Apple II, Bernie Sanders, Bertram Gilfoyle, Big Tech, bitcoin, blockchain, Blythe Masters, Bonfire of the Vanities, Burning Man, buttonwood tree, cloud computing, coronavirus, COVID-19, creative destruction, Credit Default Swap, cryptocurrency, democratizing finance, Dogecoin, Donald Trump, double helix, driverless car, Elliott wave, Elon Musk, Ethereum, ethereum blockchain, family office, financial engineering, Flash crash, forensic accounting, hacker house, Hacker News, hockey-stick growth, index fund, information security, initial coin offering, Jeff Bezos, John Gilmore, Joseph Schumpeter, litecoin, Marc Andreessen, Mark Zuckerberg, Masayoshi Son, Menlo Park, move fast and break things, Multics, Network effects, offshore financial centre, open borders, Paul Graham, Peter Thiel, Ponzi scheme, prediction markets, proprietary trading, radical decentralization, ransomware, regulatory arbitrage, reserve currency, ride hailing / ride sharing, Robert Shiller, rolodex, Ross Ulbricht, Sam Altman, Sand Hill Road, Satoshi Nakamoto, sharing economy, side hustle, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, smart contracts, SoftBank, software is eating the world, Startup school, Steve Ballmer, Steve Jobs, Steve Wozniak, transaction costs, Vitalik Buterin, WeWork, work culture , Y Combinator, zero-sum game

By 2020, Fred has lost most of his hard-charging “run through brick walls” demeanor, while taking up activities like vipassana, a silent meditation technique. He describes one ten-day retreat that obliged him to reflect without talking, paper, or possessions. The process led him to ruminate about life and ideas that would change the world, and most particularly about crypto. “The hardest part about getting a new network effects-based technology is the start, and crypto seems to have overcome that initial inertia,” says Fred. “The next twenty years, much like the internet, is likely to awe us in ways no one can predict.” Index Accenture, 140 addresses, blockchain, 19–20 Age of Cryptocurrency, The (Vigna and Casey), 23 Airbnb, 3, 5 Alford, Gary, 122 algorithms, in financial trading, 11–12 AlphaBay, 107–108 Alphabet, 64 altcoins, 138 crash in, 165, 202 value of, 146–148 Altman, Sam, 5–6, 7–8 American Kingpin (Bilton), 31 Andreessen, Marc, 11, 48 Andreessen Horowitz, 137, 177, 186–187, 225 Andresen, Gavin, 82 Antonopoulos, Andreas, 44 Apple, 7, 216 Coinbase app and, 40, 63 gift cards, money laundering with, 45 iPhone, 94–95 April Fools’ Day rally, 201 Arca, 105–106 Armstrong, Brian, 155, 206 in Beijing, 81–83 blog posts by, 109–111, 161 Coinbase culture and, 49–51 Covid-19 and, 222 on the crypto winter, 173 Dimon and, 211–213 first meeting with Fred, 13–14 in funding rounds, 33–37 on the future of Coinbase, 219–220 Gemini and, 116–117 Hirji and, 190, 192–200 IRS and, 125–126 leadership development of, 66, 68, 111–113, 117, 199–200 media coverage and, 159 origins of Coinbase and, 3–15 personal life of, 175 at Satoshi Roundtable, 80–81 social media scams using, 143 Srinivasan and, 186 super voting shares to, 112–113 targeted by bitcoin believers, 78–80 in Washington, DC, 129–131 workplace morale and, 67–68 authentication, two-factor, 143 Bain & Company, 191 Bain Capital, 204 Bakkt, 223 Bancor, 135–136 Berlin, Leslie, 99 Bezos, Jeff, 111 Big Pump, 144 Billions (TV show), 168, 224 Binance Coin, 179–182, 187, 196, 209 bitcoin academic attention to, 107 acceptance of by merchants, 29–30, 55, 64 anonymity of, 20 blocks, 19–20, 152–153 bull run in, 201–203 in China, 81–83 code oversight, 94 Covid-19 and, 221–223 crashes, 40, 160–161, 165–175 creation of, 4–5 criminal activity with, 17–18, 30–31, 58–60, 79, 107–108 in the crypto winter, 172–175 decentralization and, 8–9, 12, 104–105 Ethereum compared with, 88–93 federal efforts to prosecute, 17–18, 20 future of, 224–225 IRS on, 121–126 lifestyle and, 105–106 network problems with, 152–154 origin story of, 23–24 Pizza Day, 22 problems with using, 61–62 as property versus currency, 122–126 reputation of, 58, 69–70 resilience of, 208–210 as rival to gold, 83–84 scaling and, 88 traditional finance and, 65, 99–108 true believers in, 23, 25 user growth and network problems in, 75–84 US government ownership of, 126–127 value fluctuation in, 21–23, 47, 57–60, 61–62, 65–66, 121, 139, 146–148, 151–155 Wall Street and, 99 warring factions in, 75–84 Bitcoin Cash, 147, 173 on Coinbase, 159–160 collapse of, 202–203 Bitcoin Core, 75–76, 78, 82–83 bitcoin exchanges.


Big Data and the Welfare State: How the Information Revolution Threatens Social Solidarity by Torben Iversen, Philipp Rehm

23andMe, Affordable Care Act / Obamacare, algorithmic bias, barriers to entry, Big Tech, business cycle, centre right, collective bargaining, COVID-19, crony capitalism, data science, DeepMind, deindustrialization, full employment, George Akerlof, income inequality, information asymmetry, invisible hand, knowledge economy, land reform, lockdown, loss aversion, low interest rates, low skilled workers, microbiome, moral hazard, mortgage debt, Network effects, new economy, obamacare, personalized medicine, Ponzi scheme, price discrimination, principal–agent problem, profit maximization, Robert Gordon, speech recognition, subprime mortgage crisis, tail risk, The Market for Lemons, The Rise and Fall of American Growth, union organizing, vertical integration, working-age population

Because this development is also a driver of growing neighborhood segregation, information is increasingly shared in narrow, socioeconomically homogenous groups. In more heterogeneous groups, people’s views on risks and policies tend to converge to the mean of the national distribution, whereas in small homogenous groups, views tend to converge to the mean in each distinct group. This network effect is amplified by the rising housing prices in upscale neighborhoods with good schools and services because property prices are a barrier to entry for those with fewer resources and higher risks. Redlining – the discredited practice of discriminating against Black and minority zip https://doi.org/10.1017/9781009151405.001 Published online by Cambridge University Press 12 Introduction codes in the USA – was outlawed in the Fair Housing Act of 1968, but “race-blind” location data can be plugged into algorithms along with hundreds or even thousands of other pieces of information to accurately pin down risks, and there are no laws against people forming differentiated risk perceptions and opinions based on class-divided social networks.

Although illnesses can still strike without warning – the pandemic is a stark reminder of that – the scope for differentiating by risk is much greater today than it was in the past. We see this both in the rise of supplementary private insurance, which is subject to the same adverse selection problems as other types of health insurance, and in the increased segmentation of both private and public provision. But the picture is more complex than that because of the network effects and double-payment problems noted previously; the extent and forms of change are very country-specific. From a methodological perspective, life insurance is a much simpler case because it is entirely in the private domain, even though it shares many of the same information-related dynamics as health insurance (notably the capacity of insurers to predict risks of illness and https://doi.org/10.1017/9781009151405.001 Published online by Cambridge University Press 14 Introduction death).


pages: 254 words: 76,064

Whiplash: How to Survive Our Faster Future by Joi Ito, Jeff Howe

3D printing, air gap, Albert Michelson, AlphaGo, Amazon Web Services, artificial general intelligence, basic income, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, Black Swan, Bletchley Park, blockchain, Burning Man, business logic, buy low sell high, Claude Shannon: information theory, cloud computing, commons-based peer production, Computer Numeric Control, conceptual framework, CRISPR, crowdsourcing, cryptocurrency, data acquisition, deep learning, DeepMind, Demis Hassabis, digital rights, disruptive innovation, Donald Trump, double helix, Edward Snowden, Elon Musk, Ferguson, Missouri, fiat currency, financial innovation, Flash crash, Ford Model T, frictionless, game design, Gerolamo Cardano, informal economy, information security, interchangeable parts, Internet Archive, Internet of things, Isaac Newton, Jeff Bezos, John Harrison: Longitude, Joi Ito, Khan Academy, Kickstarter, Mark Zuckerberg, microbiome, move 37, Nate Silver, Network effects, neurotypical, Oculus Rift, off-the-grid, One Laptop per Child (OLPC), PalmPilot, pattern recognition, peer-to-peer, pirate software, power law, pre–internet, prisoner's dilemma, Productivity paradox, quantum cryptography, race to the bottom, RAND corporation, random walk, Ray Kurzweil, Ronald Coase, Ross Ulbricht, Satoshi Nakamoto, self-driving car, SETI@home, side project, Silicon Valley, Silicon Valley startup, Simon Singh, Singularitarianism, Skype, slashdot, smart contracts, Steve Ballmer, Steve Jobs, Steven Levy, Stewart Brand, Stuxnet, supply-chain management, synthetic biology, technological singularity, technoutopianism, TED Talk, The Nature of the Firm, the scientific method, The Signal and the Noise by Nate Silver, the strength of weak ties, There's no reason for any individual to have a computer in his home - Ken Olsen, Thomas Kuhn: the structure of scientific revolutions, Two Sigma, universal basic income, unpaid internship, uranium enrichment, urban planning, warehouse automation, warehouse robotics, Wayback Machine, WikiLeaks, Yochai Benkler

Previous generations of innovation have largely been driven by questions of individual or corporate profit—questions like “What does this thing do for me? How do I use it to make money?” However, the era in which innovators could develop new products and technological interventions without considering their ecological, social, and network effects has passed. In the future, the drive toward innovation must be tempered with a deep consideration of its potential systemic effects. By fully embracing this principle, we can help to ensure that future innovations have either a positive or, at worst, neutral impact on the various natural systems in which we exist.


pages: 263 words: 75,610

Delete: The Virtue of Forgetting in the Digital Age by Viktor Mayer-Schönberger

digital divide, en.wikipedia.org, Erik Brynjolfsson, Firefox, full text search, George Akerlof, information asymmetry, information retrieval, information security, information trail, Internet Archive, invention of movable type, invention of the printing press, John Markoff, Joi Ito, lifelogging, moveable type in China, Network effects, packet switching, Panopticon Jeremy Bentham, pattern recognition, power law, RFID, slashdot, Steve Jobs, Steven Levy, systematic bias, The Market for Lemons, The Structural Transformation of the Public Sphere, Vannevar Bush, Yochai Benkler

Individuals may often be in an inferior bargaining position when they negotiate expiration dates, and they may also face limited choices in expressing their dissatisfaction. It is a common phenomenon in information markets: while there are dozens, even hundreds of vendors, less than a handful capture most of the market. More so than elsewhere, in sectors built on networks, success begets more success (due to network effects), thus creating a strong pull towards a dominating vendor. On the other hand, switching costs for consumers tend to be lower than in some traditional settings, perhaps offsetting some of the unequal negotiation power and capture effect of large information processors. The remaining power imbalance may make lawmakers want to offer a more gradated solution to jointly generated expiration dates.


pages: 256 words: 79,075

Hired: Six Months Undercover in Low-Wage Britain by James Bloodworth

Airbnb, algorithmic management, Berlin Wall, call centre, clockwatching, collective bargaining, congestion charging, credit crunch, deindustrialization, Fall of the Berlin Wall, fulfillment center, gentrification, gig economy, Greyball, independent contractor, Jeff Bezos, low skilled workers, Network effects, new economy, North Sea oil, Panopticon Jeremy Bentham, payday loans, post-truth, post-work, profit motive, race to the bottom, reshoring, scientific management, Silicon Valley, Travis Kalanick, Uber for X, working poor, working-age population

The important question then was: who bore the cost of the waste? For James, it was the driver who picked up the tab. At some point the number of drivers on the road would outstrip demand, especially in a city as congested as London. And notably, Uber had not published data on hourly earnings amongst its London-based drivers. ‘So what is a network effect? I pick up the phone and there is a dial tone, right? There is always a dial tone. And you will not be happy with your phone service if you pick up and there’s no dial tone because it’s busy ... I’ll have to wait twenty minutes, you know. That’s not what you want. It’s the same with Uber ... in order for that peak to be met, there has to be many more drivers on the road than is necessary.’


pages: 269 words: 77,876

Brilliant, Crazy, Cocky: How the Top 1% of Entrepreneurs Profit From Global Chaos by Sarah Lacy

Asian financial crisis, barriers to entry, Benchmark Capital, BRICs, clean tech, clean water, cloud computing, Deng Xiaoping, digital divide, Donald Trump, Elon Musk, fear of failure, Firefox, Great Leap Forward, Huaqiangbei: the electronics market of Shenzhen, China, income per capita, intangible asset, Jeff Bezos, knowledge economy, knowledge worker, M-Pesa, Mahatma Gandhi, Marc Andreessen, Mark Zuckerberg, Max Levchin, McMansion, megacity, Network effects, off-the-grid, One Laptop per Child (OLPC), paypal mafia, QWERTY keyboard, risk tolerance, Salesforce, Skype, social web, Steve Jobs, Tony Hsieh, urban planning, web application, women in the workforce, working-age population, zero-sum game

And like India’s low-cost telecom base station company VNL, BS Construtora may have come up with an innovative way to solve a problem that even poorer countries are grappling with, giving huge populations of displaced people a place to cal home. Brazil may not have grown as fast as China or India in the last 10 years, but a network effect is happening slowly but surely as the country stabilizes. It’s not any one sector that makes Brazil an emerging market; it’s the interplay between the government’s efforts to eradicate poverty and violence, tech companies like Crivo that facilitate consumer lending, companies like BS Construtora that can quickly build new, modern neighborhoods, and other consumer goods that fil in the needs of a new ascendant middle class, while commodities and cleantech could be the sexy, disruptive growth industry that the computer was in the United States in the late 20th century.


Times Square Red, Times Square Blue by Samuel R. Delany

Jane Jacobs, Network effects, rent stabilization, Silicon Valley, social intelligence, The Death and Life of Great American Cities, trickle-down economics, upwardly mobile, urban renewal

Recently when I outlined the differences between contact and networking to a friend, he came back with the following examples: “Contact is Jimmy Stewart; networking is Tom Cruise. Contact is complex carbohydrates; networking is simple sugar. Contact is Zen; networking is Scientology. Contact can effect changes at the infrastructural level; networking effects changes at the superstructural level.” Amusing as these examples are, it’s important to speak about the very solid benefits of both forms of sociality. Otherwise we risk falling into some dualistic schema, with wonderful, free-form, authentic, Dionysian contact on the one side, §D. Contact is random only in the sense that diversity represents a web of random needs vis-à-vis the constraints on the needs of all the members of a single profession, a single class.


pages: 260 words: 76,223

Ctrl Alt Delete: Reboot Your Business. Reboot Your Life. Your Future Depends on It. by Mitch Joel

3D printing, Amazon Web Services, augmented reality, behavioural economics, call centre, clockwatching, cloud computing, content marketing, digital nomad, do what you love, Firefox, future of work, gamification, ghettoisation, Google Chrome, Google Glasses, Google Hangouts, Khan Academy, Kickstarter, Kodak vs Instagram, Lean Startup, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Network effects, new economy, Occupy movement, place-making, prediction markets, pre–internet, QR code, recommendation engine, Richard Florida, risk tolerance, Salesforce, self-driving car, Silicon Valley, Silicon Valley startup, Skype, social graph, social web, Steve Jobs, Steve Wozniak, TechCrunch disrupt, TED Talk, the long tail, Thomas L Friedman, Tim Cook: Apple, Tony Hsieh, vertical integration, white picket fence, WikiLeaks, zero-sum game

The intrusion of brands is simply that: an intrusion. Your business will never get everyone to like it. So instead, turn to the fanatical. Find and nurture your true fans. Your heavy users. As that relationship delivers, they will become evangelists for you and you will begin to experience the network effect. IT’S NOT (PERFECTLY) CLEAR. Look at everything from your business development and sales to your marketing and public relations. Is what you’re doing based on nurturing a more direct and personal relationship with your consumers, or are you simply blasting corporate messaging out through the channels?


pages: 287 words: 80,180

Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim, Renée A. Mauborgne

Asian financial crisis, Blue Ocean Strategy, borderless world, call centre, classic study, cloud computing, commoditize, creative destruction, disruptive innovation, endogenous growth, Ford Model T, haute couture, index fund, information asymmetry, interchangeable parts, job satisfaction, Joseph Schumpeter, Kickstarter, knowledge economy, machine translation, market fundamentalism, NetJets, Network effects, RAND corporation, Salesforce, Skype, telemarketer, The Wealth of Nations by Adam Smith, There's no reason for any individual to have a computer in his home - Ken Olsen, Thomas Kuhn: the structure of scientific revolutions, Vanguard fund, zero-sum game

Kanter, Rosabeth Moss. 1983. The Change Masters: Innovation for Productivity in the American Corporation. New York: Simon & Schuster. Katz, D. 1964. “The Motivational Basis of Organizational Behavior.” Behavioral Science 9, 131–146. Katz, Michael, and Carl Shapiro. 1994. “Systems Competition and Network Effects.” Journal of Economic Perspectives 8, no. 2, 93–115. Kim, W. Chan, and Renée Mauborgne. 1993. “Procedural Justice, Attitudes and Subsidiary Top Management Compliance with Multinational’s Corporate Strategic Decisions.” The Academy of Management Journal 36, no. 3, 502–526. ———. 1995. “A Procedural Justice Model of Strategic Decision Making: Strategy Content Implications in the Multinational.”


pages: 269 words: 79,285

Silk Road by Eileen Ormsby

4chan, bitcoin, blockchain, Brian Krebs, corporate governance, cryptocurrency, disinformation, drug harm reduction, Edward Snowden, fiat currency, Firefox, incognito mode, Julian Assange, litecoin, Mark Zuckerberg, Network effects, off-the-grid, operational security, peer-to-peer, Ponzi scheme, power law, profit motive, Right to Buy, Ross Ulbricht, Satoshi Nakamoto, stealth mode startup, Ted Nelson, trade route, Turing test, web application, WikiLeaks

Silk Road, in business terms, had ‘first-mover advantage’; the advantage of the initial significant player in a market segment: The reason the media blitz didn’t work and they lost in the competition against SR is not because of any security issues, since most people don’t know anything about those issues and that was not a part of their decision making process. They lost because they couldn’t beat the network effect on SR. How likely is Facebook to be replaced by another social network at this point? Any new social network will be a wasteland. If you sign up, you will have no friends there. But if you sign up on Facebook, half the people you know will already be on it, creating a better experience. SR’s biggest asset is the people who are already using it.


Buy Then Build: How Acquisition Entrepreneurs Outsmart the Startup Game by Walker Deibel

barriers to entry, Blue Ocean Strategy, book value, Clayton Christensen, commoditize, deal flow, deliberate practice, discounted cash flows, diversification, drop ship, Elon Musk, family office, financial engineering, financial independence, high net worth, intangible asset, inventory management, Jeff Bezos, knowledge worker, Lean Startup, Mark Zuckerberg, meta-analysis, Network effects, new economy, Peter Thiel, risk tolerance, risk/return, rolodex, software as a service, Steve Jobs, subscription business, supply-chain management, Y Combinator

If someone else wanted to start a similar business, what would keep them out? The threat of new entrants is typically kept at bay with competitive tools such as differentiation, brand equity, economies of scale, switching costs, cost of starting up, access to distribution channels, geographic restrictions, or the new favorite, network effects. Does the target business hold any protection from this threat? How strong is it? THE THREAT OF SUBSTITUTES The threat of substitutes refers to analyzing the value the product or service has to the customer. Is there a potential easier way to accomplish the same or similar goal for the customer?


pages: 269 words: 70,543

Tech Titans of China: How China's Tech Sector Is Challenging the World by Innovating Faster, Working Harder, and Going Global by Rebecca Fannin

"World Economic Forum" Davos, Adam Neumann (WeWork), Airbnb, augmented reality, autonomous vehicles, Benchmark Capital, Big Tech, bike sharing, blockchain, call centre, cashless society, Chuck Templeton: OpenTable:, clean tech, cloud computing, computer vision, connected car, corporate governance, cryptocurrency, data is the new oil, data science, deep learning, Deng Xiaoping, Didi Chuxing, digital map, disruptive innovation, Donald Trump, El Camino Real, electricity market, Elon Musk, fake news, family office, fear of failure, fulfillment center, glass ceiling, global supply chain, Great Leap Forward, income inequality, industrial robot, information security, Internet of things, invention of movable type, Jeff Bezos, Kickstarter, knowledge worker, Lyft, Mark Zuckerberg, Mary Meeker, megacity, Menlo Park, money market fund, Network effects, new economy, peer-to-peer lending, personalized medicine, Peter Thiel, QR code, RFID, ride hailing / ride sharing, Sand Hill Road, self-driving car, sharing economy, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Skype, smart cities, smart transportation, Snapchat, social graph, SoftBank, software as a service, South China Sea, sovereign wealth fund, speech recognition, stealth mode startup, Steve Jobs, stock buybacks, supply-chain management, tech billionaire, TechCrunch disrupt, TikTok, Tim Cook: Apple, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, urban planning, Vision Fund, warehouse automation, WeWork, winner-take-all economy, Y Combinator, young professional

Tencent, the leader of digital content and entertainment, is playing in Alibaba’s sandbox by launching WeChat minishops. Baidu is largely staying out of the fray, focused on AI for autonomous driving and smart-home devices for lighting and speakers. New rivals are ready to pounce on China’s BAT companies if they slip up. But it won’t be easy to penetrate their league. The clubby network effect in China is just as strong as it is in Silicon Valley. Similar to PayPal’s so-called mafia, the BAT trio and their alumni represent 42 percent of China’s venture investments, one in five top Chinese startups, and 30 percent of funding in Chinese startups.4 Copying from China China’s rough-and-tumble environment toughens up entrepreneurs and forces them to get new ideas into the marketplace fast and first, often ahead of US counterparts, which are today ending up as the copycats.


pages: 342 words: 72,927

Transport for Humans: Are We Nearly There Yet? by Pete Dyson, Rory Sutherland

Abraham Maslow, Alan Greenspan, autonomous vehicles, barriers to entry, behavioural economics, bitcoin, Black Swan, Boeing 747, BRICs, butterfly effect, car-free, carbon footprint, Charles Babbage, choice architecture, cognitive bias, cognitive load, coronavirus, COVID-19, Crossrail, Daniel Kahneman / Amos Tversky, decarbonisation, demand response, Diane Coyle, digital map, driverless car, Dunning–Kruger effect, Elon Musk, fake news, functional fixedness, gender pay gap, George Akerlof, gig economy, global supply chain, Goodhart's law, Greta Thunberg, Gödel, Escher, Bach, high-speed rail, hive mind, Hyperloop, Induced demand, informal economy, Isaac Newton, Jane Jacobs, lockdown, longitudinal study, loss aversion, low cost airline, Lyft, megaproject, meta-analysis, Network effects, nudge unit, Ocado, overview effect, Paul Samuelson, performance metric, pneumatic tube, RAND corporation, randomized controlled trial, remote working, ride hailing / ride sharing, risk tolerance, Rory Sutherland, Sapir-Whorf hypothesis, selection bias, Skype, smart transportation, social distancing, South Sea Bubble, systems thinking, TED Talk, the map is not the territory, The Market for Lemons, the scientific method, The Wisdom of Crowds, Thomas Malthus, Uber and Lyft, uber lyft, urban planning, Veblen good, When a measure becomes a target, yield management, zero-sum game

Online explainer (www.instituteforgovernment.org.uk/explainers/big-vs-small-infrastructure-projects-does-size-matter). 17 D. R. Hofstadter. 1979. Gödel, Escher, Bach. Hassocks: Harvester Press. 18 European Court of Auditors. 2020. EU transport infrastructures: more speed needed in megaproject implementation to deliver network effects on time. Report, October (www.eca.europa.eu/Lists/ECADocuments/SR20_10/SR_Transport_Flagship_Infrastructures_EN.pdf). 19 Department for Transport. 2020. Full business case: High Speed 2 phase 1. Report, DfT, April (http://data.parliament.uk/DepositedPapers/Files/DEP2020-0213/MASTER_Phase_One_FBC.pdf). 20 J.


PostGIS in Action by Regina O. Obe, Leo S. Hsu

business logic, call centre, crowdsourcing, database schema, Debian, domain-specific language, en.wikipedia.org, Firefox, functional programming, Google Earth, job automation, McMansion, Mercator projection, Network effects, null island, openstreetmap, planetary scale, profit maximization, Ruby on Rails, Skype, South of Market, San Francisco, SQL injection, traveling salesman, web application

There are three levels of explain plans in PostgreSQL: EXPLAIN doesn’t try to run the query but provides the general approach that will be taken, without extensive analysis. EXPLAIN ANALYZE runs the query but doesn’t return an answer. It generates the true plan and timings without returning results. As a result, it tends to be much slower than a simple EXPLAIN and takes at least the amount of time needed to run the query (minus any network effects of returning the data). In addition to the rows estimated, it provides actual row counts and timings for each step. It also indicates the amount of memory used. Comparing the actual row counts against the estimated ones is a good way of telling if your planner statistics are out of date. EXPLAIN ANALYZE VERBOSE does an in-depth plan analysis that also includes more information, such as the columns being output. 15.3.1.

ST_DumpPoints is pretty fast in PostGIS 2.1+, and the ST_DumpPoints time is a relatively small percentage of the time required for the overall query, so you’ll only notice slight differences in speed between this approach and LATERAL for this particular task. Note Note that for these exercises we’re showing the EXPLAIN ANALYZE VERBOSE time, which excludes network effects of returning the data to the client. In practice, most of the time spent in dumping is spent returning data to the client, so the time can jump about ten-fold or more depending on how close the server and client are and the speed of memory. Listing 15.18. Exploding the naive way: don’t do this EXPLAIN ANALYZE VERBOSE SELECT p1.neighborho As nei_1, (ST_DumpPoints(p1.geom)).geom As geom, (ST_DumpPoints(p1.geom)).path[1] As poly_index, (ST_DumpPoints(p1.geom)).path[2] As poly_ring_index, (ST_DumpPoints(p1.geom)).path[3] As pt_index FROM ch15.planning_neighborhoods As p1; The problem with listing 15.18 is that it will call ST_DumpPoints for each column output.


pages: 322 words: 84,752

Pax Technica: How the Internet of Things May Set Us Free or Lock Us Up by Philip N. Howard

Aaron Swartz, Affordable Care Act / Obamacare, Berlin Wall, bitcoin, blood diamond, Bretton Woods, Brian Krebs, British Empire, butter production in bangladesh, call centre, Chelsea Manning, citizen journalism, Citizen Lab, clean water, cloud computing, corporate social responsibility, creative destruction, crowdsourcing, digital map, Edward Snowden, en.wikipedia.org, Evgeny Morozov, failed state, Fall of the Berlin Wall, feminist movement, Filter Bubble, Firefox, Francis Fukuyama: the end of history, Google Earth, Hacker News, Howard Rheingold, income inequality, informal economy, information security, Internet of things, John Perry Barlow, Julian Assange, Kibera, Kickstarter, land reform, M-Pesa, Marshall McLuhan, megacity, Mikhail Gorbachev, mobile money, Mohammed Bouazizi, national security letter, Nelson Mandela, Network effects, obamacare, Occupy movement, off-the-grid, packet switching, pension reform, prediction markets, sentiment analysis, Silicon Valley, Skype, spectrum auction, statistical model, Stuxnet, Tactical Technology Collective, technological determinism, trade route, Twitter Arab Spring, undersea cable, uranium enrichment, WikiLeaks, zero day

Islamists who hope to participate in political life, on the whole, are having a hard time. In Indonesia, Malaysia, and Turkey, Islamist political parties have had to moderate their message, and they often get punished by voters when they try to introduce radical legislation. Indeed, there is a growing interest in using the network effects of digital media to consolidate radical groups more aggressively: dedicated social-network applications to support ex-neo-Nazis and ex-terrorists,50 mainstream civic groups and think tanks made up of former members of extreme groups.51 When someone in a migrant community comes from overseas and acts badly in the name of his faith or some perceived injustice in his homeland, news headlines tend to blame the internet for allowing radical ideas to spread among immigrants.


pages: 273 words: 87,159

The Vanishing Middle Class: Prejudice and Power in a Dual Economy by Peter Temin

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, American Legislative Exchange Council, American Society of Civil Engineers: Report Card, anti-communist, Bernie Sanders, Branko Milanovic, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carried interest, clean water, corporate raider, Corrections Corporation of America, crack epidemic, deindustrialization, desegregation, Donald Trump, driverless car, Edward Glaeser, Ferguson, Missouri, financial innovation, financial intermediation, floating exchange rates, full employment, income inequality, independent contractor, intangible asset, invisible hand, longitudinal study, low skilled workers, low-wage service sector, mandatory minimum, manufacturing employment, Mark Zuckerberg, mass immigration, mass incarceration, means of production, mortgage debt, Network effects, New Urbanism, Nixon shock, Nixon triggered the end of the Bretton Woods system, obamacare, offshore financial centre, oil shock, plutocrats, Powell Memorandum, price stability, race to the bottom, road to serfdom, Robert Solow, Ronald Reagan, Savings and loan crisis, secular stagnation, Silicon Valley, Simon Kuznets, the scientific method, War on Poverty, Washington Consensus, white flight, working poor

And the bargaining power of these independent contractors will fall if Uber replaces them with driverless cars. Drivers now find their way with the aid of Uber maps on their smartphones; driverless cars can use the same maps once they learn how to drive in traffic.6 There also has been a sharp reduction in competition among large companies in America due partly to the growth of network effects and partly to a relaxation of antitrust standards for mergers. The reduction in competition is quite widespread, ranging from Apple and Microsoft in networks to agricultural businesses and wireless communication. The first effect is to raise prices to obtain monopoly rents. This reduces the value of poor people’s wages.


pages: 398 words: 86,023

The Wikipedia Revolution: How a Bunch of Nobodies Created the World's Greatest Encyclopedia by Andrew Lih

Albert Einstein, AltaVista, barriers to entry, Benjamin Mako Hill, Bill Atkinson, c2.com, Cass Sunstein, citation needed, commons-based peer production, crowdsourcing, Debian, disinformation, en.wikipedia.org, Firefox, Ford Model T, Free Software Foundation, Hacker Ethic, HyperCard, index card, Jane Jacobs, Jason Scott: textfiles.com, jimmy wales, Ken Thompson, Kickstarter, Marshall McLuhan, Mitch Kapor, Network effects, optical character recognition, Ralph Waldo Emerson, Richard Stallman, side project, Silicon Valley, Skype, slashdot, social software, Steve Jobs, the Cathedral and the Bazaar, The Death and Life of Great American Cities, the long tail, The Wisdom of Crowds, Tragedy of the Commons, urban planning, urban renewal, Vannevar Bush, wikimedia commons, Y2K, Yochai Benkler

A search for “Jew” brings up one such unexpected result.85 People upset at Google’s results were not going to let it stand. A movement quickly formed to use a grassroots technique to counteract this: the GoogleBomb. It was a way to artificially influence the results of Google’s PageRank by encouraging people to put the word “jew” on their Web sites and link to something else, in effect diluting the network effect of JewWatch. The problem was, what should people link to? Asking sites to point to a “pro-Jewish” site could possibly create a problem in the other direction, promoting causes and stances not everyone might agree with. The GoogleBomb activists instead decided that linking to the Wikipedia article [[Jew]] would have the wid-est appeal.


pages: 297 words: 84,009

Big Business: A Love Letter to an American Anti-Hero by Tyler Cowen

"Friedman doctrine" OR "shareholder theory", 23andMe, Affordable Care Act / Obamacare, augmented reality, barriers to entry, Bernie Sanders, Big Tech, bitcoin, blockchain, Bretton Woods, cloud computing, cognitive dissonance, company town, compensation consultant, corporate governance, corporate social responsibility, correlation coefficient, creative destruction, crony capitalism, cryptocurrency, dark matter, David Brooks, David Graeber, don't be evil, Donald Trump, driverless car, Elon Musk, employer provided health coverage, experimental economics, Fairchild Semiconductor, fake news, Filter Bubble, financial innovation, financial intermediation, gentrification, Glass-Steagall Act, global reserve currency, global supply chain, Google Glasses, income inequality, Internet of things, invisible hand, Jeff Bezos, junk bonds, late fees, Mark Zuckerberg, mobile money, money market fund, mortgage debt, Network effects, new economy, Nicholas Carr, obamacare, offshore financial centre, passive investing, payday loans, peer-to-peer lending, Peter Thiel, pre–internet, price discrimination, profit maximization, profit motive, RAND corporation, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, Ronald Coase, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, The Nature of the Firm, Tim Cook: Apple, too big to fail, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, ultimatum game, WikiLeaks, women in the workforce, World Values Survey, Y Combinator

About half of that can be attributed to risk bearing, and another fifth follows from the greater size of financial firms. The rest is a mix of special talents for which educational degrees do not serve as a good proxy (ambition and drive?) and unproductive rent-seeking—in what proportions, we do not know.23 One likely possibility is that the highest-earning firms enjoy some economies of scale, due to the network effects of bringing together so many smart people. Those firms earn much more, and in turn they share some of those earnings by paying their employees more, most of all top management. Technologies that favor superfirms are also, to some extent, going to favor big finance. Some of these firms earn superior returns by figuring out how to apply new quantitative techniques to market trading and investing.


pages: 304 words: 82,395

Big Data: A Revolution That Will Transform How We Live, Work, and Think by Viktor Mayer-Schonberger, Kenneth Cukier

23andMe, Affordable Care Act / Obamacare, airport security, Apollo 11, barriers to entry, Berlin Wall, big data - Walmart - Pop Tarts, Black Swan, book scanning, book value, business intelligence, business process, call centre, cloud computing, computer age, correlation does not imply causation, dark matter, data science, double entry bookkeeping, Eratosthenes, Erik Brynjolfsson, game design, hype cycle, IBM and the Holocaust, index card, informal economy, intangible asset, Internet of things, invention of the printing press, Jeff Bezos, Joi Ito, lifelogging, Louis Pasteur, machine readable, machine translation, Marc Benioff, Mark Zuckerberg, Max Levchin, Menlo Park, Moneyball by Michael Lewis explains big data, Nate Silver, natural language processing, Netflix Prize, Network effects, obamacare, optical character recognition, PageRank, paypal mafia, performance metric, Peter Thiel, Plato's cave, post-materialism, random walk, recommendation engine, Salesforce, self-driving car, sentiment analysis, Silicon Valley, Silicon Valley startup, smart grid, smart meter, social graph, sparse data, speech recognition, Steve Jobs, Steven Levy, systematic bias, the scientific method, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, Thomas Davenport, Turing test, vertical integration, Watson beat the top human players on Jeopardy!

It may also become a powerful barrier to entry against rivals. Consider: if a newly launched company devised an e-commerce site, social network, or search engine that was much better than today’s leaders like Amazon, Google, or Facebook, it would have trouble competing not simply because of economies of scale and network effects or brand, but because so much of those leading firms’ performance is due to the data exhaust they collect from customer interactions and incorporate back into the service. Could a new online education site have the know-how to compete with one that already has a gargantuan amount of data with which it can learn what works best?


pages: 247 words: 81,135

The Great Fragmentation: And Why the Future of All Business Is Small by Steve Sammartino

3D printing, additive manufacturing, Airbnb, augmented reality, barriers to entry, behavioural economics, Bill Gates: Altair 8800, bitcoin, BRICs, Buckminster Fuller, citizen journalism, collaborative consumption, cryptocurrency, data science, David Heinemeier Hansson, deep learning, disruptive innovation, driverless car, Dunbar number, Elon Musk, fiat currency, Frederick Winslow Taylor, game design, gamification, Google X / Alphabet X, haute couture, helicopter parent, hype cycle, illegal immigration, index fund, Jeff Bezos, jimmy wales, Kickstarter, knowledge economy, Law of Accelerating Returns, lifelogging, market design, Mary Meeker, Metcalfe's law, Minecraft, minimum viable product, Network effects, new economy, peer-to-peer, planned obsolescence, post scarcity, prediction markets, pre–internet, profit motive, race to the bottom, random walk, Ray Kurzweil, recommendation engine, remote working, RFID, Rubik’s Cube, scientific management, self-driving car, sharing economy, side project, Silicon Valley, Silicon Valley startup, skunkworks, Skype, social graph, social web, software is eating the world, Steve Jobs, subscription business, survivorship bias, The Home Computer Revolution, the long tail, too big to fail, US Airways Flight 1549, vertical integration, web application, zero-sum game

In the new media of today the most trusted voice is an independent one, something a corporation can never be. Network diffusion In simple terms, Metcalfe’s law2 states that the power of a network is proportional to the number of connected people using the system. So, the power of a network increases as a function of the number of people using it. This law was first used to describe the network effects of fax machines or the number of telephone lines, both of which are useless with only one device. But the value of the network increases with each device because the total number of connections is increased. For example, two telephones can only make one connection, five can make 10 connections and 12 can make 66 connections.


pages: 309 words: 79,414

Going Dark: The Secret Social Lives of Extremists by Julia Ebner

23andMe, 4chan, Airbnb, anti-communist, anti-globalists, augmented reality, Ayatollah Khomeini, Bellingcat, Big Tech, bitcoin, blockchain, Boris Johnson, Cambridge Analytica, citizen journalism, cognitive dissonance, Comet Ping Pong, crisis actor, crowdsourcing, cryptocurrency, deepfake, disinformation, Donald Trump, Dunning–Kruger effect, Elon Musk, fake news, false flag, feminist movement, game design, gamification, glass ceiling, Google Earth, Greta Thunberg, information security, job satisfaction, Mark Zuckerberg, mass immigration, Menlo Park, Mikhail Gorbachev, Network effects, off grid, OpenAI, Overton Window, pattern recognition, pre–internet, QAnon, RAND corporation, ransomware, rising living standards, self-driving car, Silicon Valley, Skype, Snapchat, social intelligence, Social Justice Warrior, SQL injection, Steve Bannon, Steve Jobs, Transnistria, WikiLeaks, zero day

The loss of trust in the mainstream benefits the radical fringes: an increasing number of users turn their backs on established social media outlets. On the one hand, there are those that quit social media altogether to express their discontent or disillusionment with the platforms. On the other hand, there are those that migrate to other platforms in protest. Due to the network effect, every new user significantly enhances the value of a network, and every lost user exponentially decreases its value. This means that platform migration dynamics set in motion by take-down policies could significantly change the social media landscape in years to come. At this point, it may be worth asking whether we will see a decline of the big tech platforms to the benefit of their ultra-libertarian rivals.


Know Thyself by Stephen M Fleming

Abraham Wald, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, AlphaGo, autism spectrum disorder, autonomous vehicles, availability heuristic, backpropagation, citation needed, computer vision, confounding variable, data science, deep learning, DeepMind, Demis Hassabis, Douglas Hofstadter, Dunning–Kruger effect, Elon Musk, Estimating the Reproducibility of Psychological Science, fake news, global pandemic, higher-order functions, index card, Jeff Bezos, l'esprit de l'escalier, Lao Tzu, lifelogging, longitudinal study, meta-analysis, mutually assured destruction, Network effects, patient HM, Pierre-Simon Laplace, power law, prediction markets, QWERTY keyboard, recommendation engine, replication crisis, self-driving car, side project, Skype, Stanislav Petrov, statistical model, theory of mind, Thomas Bayes, traumatic brain injury

Just as in the cases of Jane, Judith, and James at the start of the book, if I have poor metacognition about my knowledge or skills or abilities, my future job prospects, financial situation, or physical health might suffer. In these isolated cases, failures of self-awareness are unlikely to affect others. But, as we have seen, the impact of metacognition is rarely limited to any one individual. If I am working with others, a lack of self-awareness may result in network effects—effects that are difficult to anticipate at the level of the individual but can have a detrimental impact on teams, groups, or even institutions. In the next chapter, we are going to expand our focus from individuals making decisions alone to people working together in groups. We will see that effective metacognition not only is central to how we reflect on and control our own thinking, but it also allows us to broadcast our mental states to others, becoming a catalyst for human collaboration of all kinds. 8 COLLABORATING AND SHARING Consciousness is actually nothing but a network of connections between man and man—only as such did it have to develop: a reclusive or predatory man would not have needed it.


pages: 295 words: 87,204

The Capitalist Manifesto by Johan Norberg

AltaVista, anti-communist, barriers to entry, Berlin Wall, Bernie Sanders, Big Tech, Boris Johnson, business climate, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon tax, Charles Babbage, computer age, coronavirus, COVID-19, creative destruction, crony capitalism, data is not the new oil, data is the new oil, David Graeber, DeepMind, degrowth, deindustrialization, Deng Xiaoping, digital map, disinformation, Donald Trump, Elon Musk, energy transition, Erik Brynjolfsson, export processing zone, failed state, Filter Bubble, gig economy, Gini coefficient, global supply chain, Google Glasses, Greta Thunberg, Gunnar Myrdal, Hans Rosling, Hernando de Soto, Howard Zinn, income inequality, independent contractor, index fund, Indoor air pollution, industrial robot, Intergovernmental Panel on Climate Change (IPCC), invention of the printing press, invisible hand, Jeff Bezos, Jeremy Corbyn, job automation, job satisfaction, Joseph Schumpeter, land reform, liberal capitalism, lockdown, low cost airline, low interest rates, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, means of production, meta-analysis, Minecraft, multiplanetary species, Naomi Klein, Neal Stephenson, Nelson Mandela, Network effects, open economy, passive income, Paul Graham, Paul Samuelson, payday loans, planned obsolescence, precariat, profit motive, Ralph Nader, RAND corporation, rent control, rewilding, ride hailing / ride sharing, Ronald Coase, Rosa Parks, Salesforce, Sam Bankman-Fried, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, Snapchat, social distancing, social intelligence, South China Sea, Stephen Fry, Steve Jobs, tech billionaire, The Spirit Level, The Wealth of Nations by Adam Smith, TikTok, Tim Cook: Apple, total factor productivity, trade liberalization, transatlantic slave trade, Tyler Cowen, Uber and Lyft, uber lyft, ultimatum game, Virgin Galactic, Washington Consensus, working-age population, World Values Survey, X Prize, you are the product, zero-sum game

No business sector has fallen from grace faster than the tech sector. Just a few years ago tech companies were perceived as exciting and creative, but are now perceived as insidious monopolies who sell out our integrity and hypnotize us to ignore real life. These companies can take advantage of spectacular network effects. You have to be on Facebook because so many people are already there, and when you join, the platform becomes even more indispensable for others. Then Facebook gets more and more data, which means they can tailor their services and their ads to even more people. Data is the new oil, so success breeds success for social media, search engines, map services, e-commerce, payment apps, streaming, app-based taxi services and other digital services.


pages: 323 words: 92,135

Running Money by Andy Kessler

Alan Greenspan, Andy Kessler, Apple II, bioinformatics, Bob Noyce, British Empire, business intelligence, buy and hold, buy low sell high, call centre, Charles Babbage, Corn Laws, cotton gin, Douglas Engelbart, Fairchild Semiconductor, family office, flying shuttle, full employment, General Magic , George Gilder, happiness index / gross national happiness, interest rate swap, invisible hand, James Hargreaves, James Watt: steam engine, joint-stock company, joint-stock limited liability company, junk bonds, knowledge worker, Leonard Kleinrock, Long Term Capital Management, mail merge, Marc Andreessen, margin call, market bubble, Mary Meeker, Maui Hawaii, Menlo Park, Metcalfe’s law, Michael Milken, Mitch Kapor, Network effects, packet switching, pattern recognition, pets.com, railway mania, risk tolerance, Robert Metcalfe, Sand Hill Road, Silicon Valley, South China Sea, spinning jenny, Steve Jobs, Steve Wozniak, Suez canal 1869, Toyota Production System, TSMC, UUNET, zero-sum game

The best investors don’t get persuaded by stock blips or charts. It’s about staying ahead of the curve—anticipating changes in sentiment. You’ve got to anticipate what newspaper headlines will say next. > > > Packet Racket Many others have written about the history of the PC business. I’m more intrigued by the network effect, linking all these machines together. Steam engines made cheaper goods; steamships delivered those goods more cheaply. Both provided scale. Microprocessors make applications cheaper; communications deliver those applications more cheaply. “Do you know the first packet sent?” I looked over and noticed for the first time the man sitting next to me at the table.


pages: 309 words: 95,495

Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe by Greg Ip

Affordable Care Act / Obamacare, Air France Flight 447, air freight, airport security, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Bear Stearns, behavioural economics, Boeing 747, book value, break the buck, Bretton Woods, business cycle, capital controls, central bank independence, cloud computing, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, Daniel Kahneman / Amos Tversky, diversified portfolio, double helix, endowment effect, Exxon Valdez, Eyjafjallajökull, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, foreign exchange controls, full employment, global supply chain, hindsight bias, Hyman Minsky, Joseph Schumpeter, junk bonds, Kenneth Rogoff, lateral thinking, Lewis Mumford, London Whale, Long Term Capital Management, market bubble, Michael Milken, money market fund, moral hazard, Myron Scholes, Network effects, new economy, offshore financial centre, paradox of thrift, pets.com, Ponzi scheme, proprietary trading, quantitative easing, Ralph Nader, Richard Thaler, risk tolerance, Ronald Reagan, Sam Peltzman, savings glut, scientific management, subprime mortgage crisis, tail risk, technology bubble, TED Talk, The Great Moderation, too big to fail, transaction costs, union organizing, Unsafe at Any Speed, value at risk, William Langewiesche, zero-sum game

Compared to what they had endured—the routine anxiety about not getting any work at all, the seemingly interminable wait for the rains to come—life as a migrant construction worker still seemed pretty attractive.” The economic logic that draws poor peasants to cities in India does the same for highly educated professionals in the rich world. Much of the value of cities comes from “network effects,” the increased productivity that each worker, manager, and professional derives from living, working, and interacting with others in close proximity. This makes it difficult to dislodge a city from a position of economic strength. One study of Japanese cities from the Stone Age to the modern era found that the built-in advantages of their location and increasing returns from their density imparted powerful staying power.


words: 49,604

The Weightless World: Strategies for Managing the Digital Economy by Diane Coyle

Alan Greenspan, barriers to entry, Berlin Wall, Big bang: deregulation of the City of London, blue-collar work, Bretton Woods, business cycle, clean water, company town, computer age, Corn Laws, creative destruction, cross-subsidies, David Ricardo: comparative advantage, dematerialisation, Diane Coyle, Edward Glaeser, everywhere but in the productivity statistics, financial deregulation, flying shuttle, full employment, George Santayana, global village, Great Leap Forward, hiring and firing, Howard Rheingold, income inequality, informal economy, invention of the sewing machine, invisible hand, Jane Jacobs, Joseph Schumpeter, Kickstarter, knowledge economy, labour market flexibility, laissez-faire capitalism, lump of labour, Mahbub ul Haq, Marshall McLuhan, mass immigration, McJob, Meghnad Desai, microcredit, moral panic, Neal Stephenson, Network effects, new economy, Nick Leeson, night-watchman state, North Sea oil, offshore financial centre, pension reform, pension time bomb, pensions crisis, Robert Solow, Ronald Reagan, Silicon Valley, Snow Crash, spinning jenny, The Death and Life of Great American Cities, the market place, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tobin tax, Tragedy of the Commons, two tier labour market, very high income, War on Poverty, winner-take-all economy, working-age population

The most important kind of positive feedback in marketing exploits ‘network externalities’. This term just means that a product becomes more beneficial to its users the more other people are using it, because it sets a common standard. There are countless examples of one product squeezing another out of the market entirely because of network effects — for example, the VHS rather than the Beta standard for video cassette recorders, the spread of the DOS operating system for PCs, the use of petrol or gasoline to power car engines, the QWERTY arrangement on keyboards well beyond the technological advance that meant typewriter keys would not get stuck with any other layout.


pages: 346 words: 90,371

Rethinking the Economics of Land and Housing by Josh Ryan-Collins, Toby Lloyd, Laurie Macfarlane

agricultural Revolution, asset-backed security, balance sheet recession, bank run, banking crisis, barriers to entry, basic income, book value, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, Corn Laws, correlation does not imply causation, creative destruction, credit crunch, debt deflation, deindustrialization, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, foreign exchange controls, full employment, garden city movement, George Akerlof, ghettoisation, Gini coefficient, Hernando de Soto, housing crisis, Hyman Minsky, income inequality, information asymmetry, knowledge worker, labour market flexibility, labour mobility, land bank, land reform, land tenure, land value tax, Landlord’s Game, low interest rates, low skilled workers, market bubble, market clearing, Martin Wolf, means of production, Minsky moment, Money creation, money market fund, mortgage debt, negative equity, Network effects, new economy, New Urbanism, Northern Rock, offshore financial centre, Pareto efficiency, place-making, Post-Keynesian economics, price stability, profit maximization, quantitative easing, rent control, rent-seeking, Richard Florida, Right to Buy, rising living standards, risk tolerance, Robert Solow, Second Machine Age, secular stagnation, shareholder value, subprime mortgage crisis, the built environment, The Great Moderation, The Market for Lemons, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, universal basic income, urban planning, urban sprawl, working poor, working-age population

Despite the fact that they do not create any physical output, locating in the middle of a city gives them access to better transport links, means they are closer to some of their key clients and complementary firms (for example digital design or IT service firms) and makes them a more attractive place to work for talented staff. There are well-known ‘agglomeration’ efficiencies and network effects from city centre locations and clustering of similar types of company in the same areas (Feldman and Florida, 1994; Porter and Clark, 2000). The difference in the rent such companies will be prepared to pay between the city centre location and a location on the outskirts of the city reflects the fact that they will have to invest more time and money in travel, maintaining relations with clients and firms or salaries for high calibre staff.


pages: 343 words: 91,080

Uberland: How Algorithms Are Rewriting the Rules of Work by Alex Rosenblat

"Susan Fowler" uber, Affordable Care Act / Obamacare, Airbnb, algorithmic management, Amazon Mechanical Turk, autonomous vehicles, barriers to entry, basic income, big-box store, bike sharing, Black Lives Matter, business logic, call centre, cashless society, Cass Sunstein, choice architecture, cognitive load, collaborative economy, collective bargaining, creative destruction, crowdsourcing, data science, death from overwork, digital divide, disinformation, disruptive innovation, don't be evil, Donald Trump, driverless car, emotional labour, en.wikipedia.org, fake news, future of work, gender pay gap, gig economy, Google Chrome, Greyball, income inequality, independent contractor, information asymmetry, information security, Jaron Lanier, Jessica Bruder, job automation, job satisfaction, Lyft, marginal employment, Mark Zuckerberg, move fast and break things, Network effects, new economy, obamacare, performance metric, Peter Thiel, price discrimination, proprietary trading, Ralph Waldo Emerson, regulatory arbitrage, ride hailing / ride sharing, Salesforce, self-driving car, sharing economy, side hustle, Silicon Valley, Silicon Valley ideology, Skype, social software, SoftBank, stealth mode startup, Steve Jobs, strikebreaker, TaskRabbit, technological determinism, Tim Cook: Apple, transportation-network company, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, union organizing, universal basic income, urban planning, Wolfgang Streeck, work culture , workplace surveillance , Yochai Benkler, Zipcar

It creates cheap private transportation for people in cities with less reliable public transit options, and it improves the efficiency of private transportation for people in cities where are many public and private options too. The ridehail model brings the benefits of innovative technology to millions of people around the globe, and the effects are felt immediately. For consumers, Uber’s network effects at scale are astonishing. A global traveler can disembark from her flight in a midsized city in the middle of the country, pull out her iPhone, and hail a ride with the touch of a button. Chris Sacca, an Uber investor and venture capitalist, summed up the popular support Uber enjoys in its battles with the taxi industry when he declared in a Pando interview by journalist and Uber critic Sarah Lacy: “Who is happy with their taxi service anywhere in America?


Driverless: Intelligent Cars and the Road Ahead by Hod Lipson, Melba Kurman

AI winter, Air France Flight 447, AlphaGo, Amazon Mechanical Turk, autonomous vehicles, backpropagation, barriers to entry, butterfly effect, carbon footprint, Chris Urmson, cloud computing, computer vision, connected car, creative destruction, crowdsourcing, DARPA: Urban Challenge, deep learning, digital map, Donald Shoup, driverless car, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, General Motors Futurama, Geoffrey Hinton, Google Earth, Google X / Alphabet X, Hans Moravec, high net worth, hive mind, ImageNet competition, income inequality, industrial robot, intermodal, Internet of things, Jeff Hawkins, job automation, Joseph Schumpeter, lone genius, Lyft, megacity, Network effects, New Urbanism, Oculus Rift, pattern recognition, performance metric, Philippa Foot, precision agriculture, RFID, ride hailing / ride sharing, Second Machine Age, self-driving car, Silicon Valley, smart cities, speech recognition, statistical model, Steve Jobs, technoutopianism, TED Talk, Tesla Model S, Travis Kalanick, trolley problem, Uber and Lyft, uber lyft, Unsafe at Any Speed, warehouse robotics

For example, if you’re in a driverless car headed to the grocery store and have some flexibility in where you shop, your car could consider only nearby traffic patterns and steer you to the grocery store that’s the currently easiest to get to. Traffic systems are a classic example of what scientists call a nonlinear system, a system made up of a combination of multiple codependent effects that affect one another in ways that are difficult to predict. Identifying the subtle and complex codependent network effects in a nonlinear system is an active area of research for scientists and engineers in many disciplines. Stock markets are complex systems whose dynamics are in a continual state of flux, pulled off-center by market forces, and in rampaging human investors. The ecological fluctuations in a rainforest are similarly complex, involving hundreds of dependent and independent variables that act on one another in unpredictable ways.


pages: 319 words: 90,965

The End of College: Creating the Future of Learning and the University of Everywhere by Kevin Carey

Albert Einstein, barriers to entry, Bayesian statistics, behavioural economics, Berlin Wall, Blue Ocean Strategy, business cycle, business intelligence, carbon-based life, classic study, Claude Shannon: information theory, complexity theory, data science, David Heinemeier Hansson, declining real wages, deliberate practice, discrete time, disruptive innovation, double helix, Douglas Engelbart, Douglas Engelbart, Downton Abbey, Drosophila, Fairchild Semiconductor, Firefox, Frank Gehry, Google X / Alphabet X, Gregor Mendel, informal economy, invention of the printing press, inventory management, John Markoff, Khan Academy, Kickstarter, low skilled workers, Lyft, Marc Andreessen, Mark Zuckerberg, meta-analysis, natural language processing, Network effects, open borders, pattern recognition, Peter Thiel, pez dispenser, Recombinant DNA, ride hailing / ride sharing, Ronald Reagan, Ruby on Rails, Sand Hill Road, self-driving car, Silicon Valley, Silicon Valley startup, social web, South of Market, San Francisco, speech recognition, Steve Jobs, technoutopianism, transcontinental railway, uber lyft, Vannevar Bush

Instead, the best will be created by teams of people specializing in different aspects of the learning experience. They will be shaped, tweaked, and assembled using open-source components shared by millions of educators collaborating in the educational equivalent of GitHub—coders working in the operating system of human cognition. They will benefit from network effects: The better they are, the more people will use them, generating more data and more money that can be used to make them better still. Organizations competing for students—some existing colleges, many others businesses and nonprofits yet to be created—will incorporate increasingly sophisticated artificial intelligence into their educational designs.


pages: 344 words: 94,332

The 100-Year Life: Living and Working in an Age of Longevity by Lynda Gratton, Andrew Scott

"World Economic Forum" Davos, 3D printing, Airbnb, asset light, assortative mating, behavioural economics, carbon footprint, carbon tax, classic study, Clayton Christensen, collapse of Lehman Brothers, creative destruction, crowdsourcing, deep learning, delayed gratification, disruptive innovation, diversification, Downton Abbey, driverless car, Erik Brynjolfsson, falling living standards, financial engineering, financial independence, first square of the chessboard, first square of the chessboard / second half of the chessboard, future of work, gender pay gap, gig economy, Google Glasses, indoor plumbing, information retrieval, intangible asset, Isaac Newton, job satisfaction, longitudinal study, low skilled workers, Lyft, Nelson Mandela, Network effects, New Economic Geography, old age dependency ratio, pattern recognition, pension reform, Peter Thiel, Ray Kurzweil, Richard Florida, Richard Thaler, risk free rate, Second Machine Age, sharing economy, Sheryl Sandberg, side project, Silicon Valley, smart cities, Stanford marshmallow experiment, Stephen Hawking, Steve Jobs, tacit knowledge, The Future of Employment, uber lyft, warehouse robotics, women in the workforce, young professional

These turned out to be particularly effective if the team trusted each other and had a positive regard for each other’s reputation. This effect was so crucial that when an analyst’s performance actually did remain the same or increase when they moved firms, it was almost always the case that their own team moved with them. Without this network effect the majority of stars that switched firms turned out to be meteors, quickly losing lustre in their new settings. These networks and relationships are an important aspect of productive assets and we term them professional social capital.13 The strong relationships you develop enable knowledge to flow easily between people and help bolster your productivity and innovation.


pages: 378 words: 94,468

Drugs 2.0: The Web Revolution That's Changing How the World Gets High by Mike Power

air freight, Alexander Shulgin, banking crisis, bitcoin, blockchain, Buckminster Fuller, Burning Man, cloud computing, credit crunch, crowdsourcing, death of newspapers, Donald Davies, double helix, Douglas Engelbart, drug harm reduction, Electric Kool-Aid Acid Test, fiat currency, Firefox, Fractional reserve banking, frictionless, fulfillment center, Haight Ashbury, independent contractor, John Bercow, John Gilmore, John Markoff, Kevin Kelly, Leonard Kleinrock, means of production, Menlo Park, moral panic, Mother of all demos, Network effects, nuclear paranoia, packet switching, pattern recognition, PIHKAL and TIHKAL, pre–internet, QR code, RAND corporation, Satoshi Nakamoto, selective serotonin reuptake inhibitor (SSRI), sexual politics, Skype, Stephen Hawking, Steve Jobs, Stewart Brand, trade route, Whole Earth Catalog, Zimmermann PGP

Customers started to pay flat subscription fees for constant access to the internet, rather than paying per minute to dial in, and the net became firmly embedded into everyone’s daily lives in a way that had never been seen before. Previously, modem speeds had been limited to 56K; broadband connections increased the speed by a factor of ten overnight, to 0.5MB. That doubled within a year. Faster speeds meant net users spent more and more time online as the experience grew less frustrating, and network effects – whereby the service became more useful as it became more populated – started to be felt. There was a corresponding increase in the use of the web for people with niche interests, who could now coalesce and communicate in ways that previously were available only to those with the skill to configure Usenet servers and subscriptions.


pages: 292 words: 81,699

More Joel on Software by Joel Spolsky

a long time ago in a galaxy far, far away, AOL-Time Warner, barriers to entry, Black Swan, Build a better mousetrap, business process, call centre, Danny Hillis, David Heinemeier Hansson, Dennis Ritchie, failed state, Firefox, fixed income, functional programming, George Gilder, Larry Ellison, Larry Wall, lolcat, low cost airline, Mars Rover, Network effects, Paradox of Choice, Paul Graham, performance metric, place-making, price discrimination, prisoner's dilemma, Ray Oldenburg, Ruby on Rails, Salesforce, Sand Hill Road, Silicon Valley, slashdot, social software, Steve Ballmer, Steve Jobs, Superbowl ad, The Great Good Place, The Soul of a New Machine, Tragedy of the Commons, type inference, unpaid internship, wage slave, web application, Y Combinator

A lot of people thought this. We were all wrong. Wrong, wrong, wrong. eBay made a big bet on the cultural anthropology of human beings and won. The great thing about eBay is that it was a huge success precisely because it seemed like a terrible idea at the time, and so nobody else tried it, until eBay locked in the network effects and first-mover advantage. In addition to absolute success and failures in social software, there are also social software side effects. The way social software behaves determines a huge amount about the type of community that develops. Usenet clients have this big-R command, which is used to reply to a message while quoting the original message with those elegant >’s in the left It’s Not Just Usability 107 column.


pages: 307 words: 88,745

War for Eternity: Inside Bannon's Far-Right Circle of Global Power Brokers by Benjamin R. Teitelbaum

Affordable Care Act / Obamacare, bitcoin, Black Lives Matter, Boris Johnson, Cambridge Analytica, creative destruction, crony capitalism, cryptocurrency, Donald Trump, Etonian, fake news, Francis Fukuyama: the end of history, illegal immigration, Joseph Schumpeter, liberal capitalism, liberal world order, mass immigration, mutually assured destruction, Network effects, public intellectual, Saturday Night Live, school choice, side project, Skype, South China Sea, Steve Bannon, Westphalian system, WikiLeaks

As he sees it, borders are central to China’s view of the world and their attempts to dominate it: “What the Chinese have in mind is anti-Westphalian. This is why Olavo and I are exactly on the same page. The Westphalian system is a system of nation-states—individual, independent, robust nation-states where the citizen can get the most value and have the most ability to control his own fate. What the Chinese are doing is a network effect. They’re taking the British East India Company model of predatory capitalism, spreading it out through One Belt One Road and Made in China 2025 initiatives, where they’re going to be an über-EU, which is, you know, whether it’s sub-Saharan Africa, Europe, the United States, Brazil, we’re all just administrative units in a network, right?”


pages: 332 words: 93,672

Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy by George Gilder

23andMe, Airbnb, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, AlphaGo, AltaVista, Amazon Web Services, AOL-Time Warner, Asilomar, augmented reality, Ben Horowitz, bitcoin, Bitcoin Ponzi scheme, Bletchley Park, blockchain, Bob Noyce, British Empire, Brownian motion, Burning Man, business process, butterfly effect, carbon footprint, cellular automata, Claude Shannon: information theory, Clayton Christensen, cloud computing, computer age, computer vision, crony capitalism, cross-subsidies, cryptocurrency, Danny Hillis, decentralized internet, deep learning, DeepMind, Demis Hassabis, disintermediation, distributed ledger, don't be evil, Donald Knuth, Donald Trump, double entry bookkeeping, driverless car, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, fake news, fault tolerance, fiat currency, Firefox, first square of the chessboard, first square of the chessboard / second half of the chessboard, floating exchange rates, Fractional reserve banking, game design, Geoffrey Hinton, George Gilder, Google Earth, Google Glasses, Google Hangouts, index fund, inflation targeting, informal economy, initial coin offering, Internet of things, Isaac Newton, iterative process, Jaron Lanier, Jeff Bezos, Jim Simons, Joan Didion, John Markoff, John von Neumann, Julian Assange, Kevin Kelly, Law of Accelerating Returns, machine translation, Marc Andreessen, Mark Zuckerberg, Mary Meeker, means of production, Menlo Park, Metcalfe’s law, Money creation, money: store of value / unit of account / medium of exchange, move fast and break things, Neal Stephenson, Network effects, new economy, Nick Bostrom, Norbert Wiener, Oculus Rift, OSI model, PageRank, pattern recognition, Paul Graham, peer-to-peer, Peter Thiel, Ponzi scheme, prediction markets, quantitative easing, random walk, ransomware, Ray Kurzweil, reality distortion field, Recombinant DNA, Renaissance Technologies, Robert Mercer, Robert Metcalfe, Ronald Coase, Ross Ulbricht, Ruby on Rails, Sand Hill Road, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Singularitarianism, Skype, smart contracts, Snapchat, Snow Crash, software is eating the world, sorting algorithm, South Sea Bubble, speech recognition, Stephen Hawking, Steve Jobs, Steven Levy, Stewart Brand, stochastic process, Susan Wojcicki, TED Talk, telepresence, Tesla Model S, The Soul of a New Machine, theory of mind, Tim Cook: Apple, transaction costs, tulip mania, Turing complete, Turing machine, Vernor Vinge, Vitalik Buterin, Von Neumann architecture, Watson beat the top human players on Jeopardy!, WikiLeaks, Y Combinator, zero-sum game

In 2014, Google summoned Jeremy Rifkin to its lecture series to sum it all up. He heralded a “zero marginal cost society.” Under the new regime, the price of every incremental good and service, from search to software, from news to energy, will plunge toward “free” as every device and entity in the world is subsumed in an Internet of Things, where exponential network effects yield a new economy of leisure and abundance.3 Rifkin assured his audience that it is indeed a Google world. But not only is “free” a lie, as we’ve seen, but a price of zero signifies a return to the barter system, a morass of incommensurable exchanges that the human race left behind in the Stone Age.


pages: 761 words: 231,902

The Singularity Is Near: When Humans Transcend Biology by Ray Kurzweil

additive manufacturing, AI winter, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, anthropic principle, Any sufficiently advanced technology is indistinguishable from magic, artificial general intelligence, Asilomar, augmented reality, autonomous vehicles, backpropagation, Benoit Mandelbrot, Bill Joy: nanobots, bioinformatics, brain emulation, Brewster Kahle, Brownian motion, business cycle, business intelligence, c2.com, call centre, carbon-based life, cellular automata, Charles Babbage, Claude Shannon: information theory, complexity theory, conceptual framework, Conway's Game of Life, coronavirus, cosmological constant, cosmological principle, cuban missile crisis, data acquisition, Dava Sobel, David Brooks, Dean Kamen, digital divide, disintermediation, double helix, Douglas Hofstadter, en.wikipedia.org, epigenetics, factory automation, friendly AI, functional programming, George Gilder, Gödel, Escher, Bach, Hans Moravec, hype cycle, informal economy, information retrieval, information security, invention of the telephone, invention of the telescope, invention of writing, iterative process, Jaron Lanier, Jeff Bezos, job automation, job satisfaction, John von Neumann, Kevin Kelly, Law of Accelerating Returns, life extension, lifelogging, linked data, Loebner Prize, Louis Pasteur, mandelbrot fractal, Marshall McLuhan, Mikhail Gorbachev, Mitch Kapor, mouse model, Murray Gell-Mann, mutually assured destruction, natural language processing, Network effects, new economy, Nick Bostrom, Norbert Wiener, oil shale / tar sands, optical character recognition, PalmPilot, pattern recognition, phenotype, power law, precautionary principle, premature optimization, punch-card reader, quantum cryptography, quantum entanglement, radical life extension, randomized controlled trial, Ray Kurzweil, remote working, reversible computing, Richard Feynman, Robert Metcalfe, Rodney Brooks, scientific worldview, Search for Extraterrestrial Intelligence, selection bias, semantic web, seminal paper, Silicon Valley, Singularitarianism, speech recognition, statistical model, stem cell, Stephen Hawking, Stewart Brand, strong AI, Stuart Kauffman, superintelligent machines, technological singularity, Ted Kaczynski, telepresence, The Coming Technological Singularity, Thomas Bayes, transaction costs, Turing machine, Turing test, two and twenty, Vernor Vinge, Y2K, Yogi Berra

The higher the value of a, the closer the singularity. My view is that it is hard to imagine infinite knowledge, given apparently finite resources of matter and energy, and the trends to date match a double exponential process. The additional term (to W) appears to be of the form W Î log(W). This term describes a network effect. If we have a network such as the Internet, its effect or value can reasonably be shown to be proportional to n Î log(n) where n is the number of nodes. Each node (each user) benefits, so this accounts for the n multiplier. The value to each user (to each node) = log(n). Bob Metcalfe (inventor of Ethernet) has postulated the value of a network of n nodes = c În2, but this is overstated.

If the Internet doubles in size, its value to me does increase but it does not double. It can be shown that a reasonable estimate is that a network's value to each user is proportional to the log of the size of the network. Thus, its overall value is proportional to n Î log(n). If the growth rate instead includes a logarithmic network effect, we get an equation for the rate of change that is given by: (14) The solution to this is a double exponential, which we have seen before in the data: (15) Notes Prologue: The Power of Ideas 1. My mother is a talented artist specializing in watercolor paintings. My father was a noted musician, conductor of the Bell Symphony, founder and former chairman of the Queensborough College Music Department. 2.


PostGIS in Action, 2nd Edition by Regina O. Obe, Leo S. Hsu

business logic, call centre, crowdsourcing, database schema, Debian, domain-specific language, en.wikipedia.org, Firefox, functional programming, Google Earth, job automation, McMansion, megacity, Mercator projection, Network effects, null island, openstreetmap, planetary scale, profit maximization, Ruby on Rails, Skype, South of Market, San Francisco, SQL injection, traveling salesman, web application

There are three levels of explain plans in PostgreSQL:  EXPLAIN doesn’t try to run the query but provides the general approach that will be taken, without extensive analysis.  EXPLAIN ANALYZE runs the query but doesn’t return an answer. It generates the true plan and timings without returning results. As a result, it tends to be much slower than a simple EXPLAIN and takes at least the amount of time needed to run the query (minus any network effects of returning the data). In addition to the rows estimated, it provides actual row counts and timings for each step. It also indicates the amount of memory used. Comparing the actual row counts against the estimated ones is a good way of telling if your planner statistics are out of date.  EXPLAIN ANALYZE VERBOSE does an in-depth plan analysis that also includes more information, such as the columns being output. 15.3.1 Text explain versus pgAdmin graphical explain There are two kinds of plan displays you can use in PostgreSQL: textual explain plans and graphical explain plans.

ST_DumpPoints is pretty fast in PostGIS 2.1+, and the ST_DumpPoints time is a relatively small percentage of the time required for the overall query, so you’ll only notice slight differences in speed between this approach and LATERAL for this particular task. Note that for these exercises we’re showing the EXPLAIN ANALYZE VERBOSE time, which excludes network effects of returning the data to the cli- NOTE ent. In practice, most of the time spent in dumping is spent returning data to the client, so the time can jump about ten-fold or more depending on how close the server and client are and the speed of memory. Listing 15.18 Exploding the naive way: don’t do this EXPLAIN ANALYZE VERBOSE SELECT p1.neighborho As nei_1, (ST_DumpPoints(p1.geom)).geom As geom, (ST_DumpPoints(p1.geom)).path[1] As poly_index, (ST_DumpPoints(p1.geom)).path[2] As poly_ring_index, (ST_DumpPoints(p1.geom)).path[3] As pt_index FROM ch15.planning_neighborhoods As p1; The problem with listing 15.18 is that it will call ST_DumpPoints for each column output.


pages: 831 words: 98,409

SUPERHUBS: How the Financial Elite and Their Networks Rule Our World by Sandra Navidi

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Anthropocene, assortative mating, bank run, barriers to entry, Bear Stearns, Bernie Sanders, Black Swan, Blythe Masters, Bretton Woods, butterfly effect, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, commoditize, conceptual framework, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, digital divide, diversification, Dunbar number, East Village, eat what you kill, Elon Musk, eurozone crisis, fake it until you make it, family office, financial engineering, financial repression, Gini coefficient, glass ceiling, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Google bus, Gordon Gekko, haute cuisine, high net worth, hindsight bias, income inequality, index fund, intangible asset, Jaron Lanier, Jim Simons, John Meriwether, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Roose, knowledge economy, London Whale, Long Term Capital Management, longitudinal study, Mark Zuckerberg, mass immigration, McMansion, mittelstand, Money creation, money market fund, Myron Scholes, NetJets, Network effects, no-fly zone, offshore financial centre, old-boy network, Parag Khanna, Paul Samuelson, peer-to-peer, performance metric, Peter Thiel, plutocrats, Ponzi scheme, power law, public intellectual, quantitative easing, Renaissance Technologies, rent-seeking, reserve currency, risk tolerance, Robert Gordon, Robert Shiller, rolodex, Satyajit Das, search costs, shareholder value, Sheryl Sandberg, Silicon Valley, social intelligence, sovereign wealth fund, Stephen Hawking, Steve Jobs, subprime mortgage crisis, systems thinking, tech billionaire, The Future of Employment, The Predators' Ball, The Rise and Fall of American Growth, too big to fail, Tyler Cowen, women in the workforce, young professional

SHAUKAT AZIZ, former Prime Minister and Finance Minister of Pakistan, former CEO of Citibank Global Wealth Management, and author “In $uperHubs, Sandra Navidi provides an entertaining and absorbing portrayal of the networks used by many of the top executives in finance. She has a unique set of perceptions of how certain elements of that world work. She describes examples taken from meetings in Switzerland at the World Economic Forum and traces relationships and their network effects on a broader basis. She draws many useful conclusions and provides terrific portraits of some of the major players in finance today.” —STEPHEN A. SCHWARZMAN, Chairman, CEO, and Cofounder of Blackstone “An expert tour guide, Ms. Navidi helps us understand the mechanisms that drive our global financial system by ultimately telling a human story of how a select few wield incredible financial and political power.


pages: 350 words: 103,988

Reinventing the Bazaar: A Natural History of Markets by John McMillan

accounting loophole / creative accounting, Albert Einstein, Alvin Roth, Andrei Shleifer, Anton Chekhov, Asian financial crisis, classic study, congestion charging, corporate governance, corporate raider, crony capitalism, Dava Sobel, decentralized internet, Deng Xiaoping, Dutch auction, electricity market, experimental economics, experimental subject, fear of failure, first-price auction, frictionless, frictionless market, George Akerlof, George Gilder, global village, Great Leap Forward, Hacker News, Hernando de Soto, I think there is a world market for maybe five computers, income inequality, income per capita, independent contractor, informal economy, information asymmetry, invisible hand, Isaac Newton, job-hopping, John Harrison: Longitude, John Perry Barlow, John von Neumann, Kenneth Arrow, land reform, lone genius, manufacturing employment, market clearing, market design, market friction, market microstructure, means of production, Network effects, new economy, offshore financial centre, ought to be enough for anybody, pez dispenser, pre–internet, price mechanism, profit maximization, profit motive, proxy bid, purchasing power parity, Robert Solow, Ronald Coase, Ronald Reagan, sealed-bid auction, search costs, second-price auction, Silicon Valley, spectrum auction, Stewart Brand, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, War on Poverty, world market for maybe five computers, Xiaogang Anhui farmers, yield management

The production of software such as Microsoft’s Windows is an archetypical economy-of-scale activity: most of the costs are incurred in the up-front design, and the cost of servicing an extra customer is small. In the pharmaceutical industry, large sales are needed to cover research-and-development expenses. Products like breakfast cereals and household cleaners gain economies of scale through distribution and marketing. In electronic commerce, scale economies arise from network effects. At an internet auction site, having more sellers attracts more bidders, which attracts more sellers, so the site grows in a self-reinforcing spiral; new auction sites find it difficult to get started because it is hard to dislodge the users of the incumbent’s site. Bigger can be better. Economies of scale do not by themselves determine where the boundary between a firm and the market is drawn.


pages: 381 words: 101,559

Currency Wars: The Making of the Next Gobal Crisis by James Rickards

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, bank run, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, borderless world, Bretton Woods, BRICs, British Empire, business climate, buy and hold, capital controls, Carmen Reinhart, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, currency manipulation / currency intervention, currency peg, currency risk, Daniel Kahneman / Amos Tversky, deal flow, Deng Xiaoping, diversification, diversified portfolio, Dr. Strangelove, Fall of the Berlin Wall, family office, financial innovation, floating exchange rates, full employment, game design, German hyperinflation, Gini coefficient, global rebalancing, global reserve currency, Great Leap Forward, guns versus butter model, high net worth, income inequality, interest rate derivative, it's over 9,000, John Meriwether, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, Long Term Capital Management, low interest rates, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, Money creation, money market fund, money: store of value / unit of account / medium of exchange, Myron Scholes, Network effects, New Journalism, Nixon shock, Nixon triggered the end of the Bretton Woods system, offshore financial centre, oil shock, one-China policy, open economy, paradox of thrift, Paul Samuelson, power law, price mechanism, price stability, private sector deleveraging, proprietary trading, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, Ronald Reagan, short squeeze, sovereign wealth fund, special drawing rights, special economic zone, subprime mortgage crisis, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, time value of money, too big to fail, value at risk, vertical integration, War on Poverty, Washington Consensus, zero-sum game

Regional currency blocs could quickly devolve into regional trading blocs with diminished world trade, undoubtedly the opposite of what the advocates of multiple reserve currencies such as Eichengreen envision. Eichengreen expects what he calls healthy competition among multiple reserve currencies. He discounts models of unhealthy competition and dysfunction—what economists call a “race to the bottom,” which can arise when leading central banks lock in regional dominance through network effects and simultaneously abuse their reserve status by money printing. The best advice for advocates of the multiple reserve currency model is “Be careful what you wish for.” This is an untested and untried model, absent gold or some single currency anchor. The missing-anchor problem may be one reason why the dollar continues to dominate despite its difficulties.


pages: 332 words: 100,601

Rebooting India: Realizing a Billion Aspirations by Nandan Nilekani

Airbnb, Atul Gawande, autonomous vehicles, barriers to entry, bitcoin, call centre, carbon credits, cashless society, clean water, cloud computing, collaborative consumption, congestion charging, DARPA: Urban Challenge, data science, dematerialisation, demographic dividend, digital rights, driverless car, Edward Snowden, en.wikipedia.org, energy security, fail fast, financial exclusion, gamification, Google Hangouts, illegal immigration, informal economy, information security, Khan Academy, Kickstarter, knowledge economy, land reform, law of one price, M-Pesa, machine readable, Mahatma Gandhi, Marc Andreessen, Mark Zuckerberg, mobile money, Mohammed Bouazizi, more computing power than Apollo, Negawatt, Network effects, new economy, off-the-grid, offshore financial centre, price mechanism, price stability, rent-seeking, RFID, Ronald Coase, school choice, school vouchers, self-driving car, sharing economy, Silicon Valley, single source of truth, Skype, smart grid, smart meter, software is eating the world, source of truth, Steve Jobs, systems thinking, The future is already here, The Nature of the Firm, transaction costs, vertical integration, WikiLeaks, work culture

Customers must have the freedom of choice, in this case being able to carry out transactions with a representative from any bank through the creation of an interoperable payments network. The economics of the system must be such that participants find it easier to make money legitimately rather than through corruption and rent-seeking. By creating standardized and simple processes, scaling up the network to include millions of customers becomes easier. Thanks to the ‘network effect’, each individual added to the system enriches it exponentially, creating a large enough user base that it expands under its own momentum. And finally, all solutions must recognize and harness the energy of the Indian market. Today, we have emerged as a nation of entrepreneurs, a development that Nandan charted in Imagining India.


pages: 323 words: 95,939

Present Shock: When Everything Happens Now by Douglas Rushkoff

"Hurricane Katrina" Superdome, algorithmic trading, Alvin Toffler, Andrew Keen, bank run, behavioural economics, Benoit Mandelbrot, big-box store, Black Swan, British Empire, Buckminster Fuller, business cycle, cashless society, citizen journalism, clockwork universe, cognitive dissonance, Credit Default Swap, crowdsourcing, Danny Hillis, disintermediation, Donald Trump, double helix, East Village, Elliott wave, European colonialism, Extropian, facts on the ground, Flash crash, Future Shock, game design, global pandemic, global supply chain, global village, Howard Rheingold, hypertext link, Inbox Zero, invention of agriculture, invention of hypertext, invisible hand, iterative process, James Bridle, John Nash: game theory, Kevin Kelly, laissez-faire capitalism, lateral thinking, Law of Accelerating Returns, Lewis Mumford, loss aversion, mandelbrot fractal, Marshall McLuhan, Merlin Mann, messenger bag, Milgram experiment, mirror neurons, mutually assured destruction, negative equity, Network effects, New Urbanism, Nicholas Carr, Norbert Wiener, Occupy movement, off-the-grid, passive investing, pattern recognition, peak oil, Peter Pan Syndrome, price mechanism, prisoner's dilemma, Ralph Nelson Elliott, RAND corporation, Ray Kurzweil, recommendation engine, scientific management, selective serotonin reuptake inhibitor (SSRI), Silicon Valley, SimCity, Skype, social graph, South Sea Bubble, Steve Jobs, Steve Wozniak, Steven Pinker, Stewart Brand, supply-chain management, technological determinism, the medium is the message, The Wisdom of Crowds, theory of mind, Tragedy of the Commons, Turing test, upwardly mobile, Whole Earth Catalog, WikiLeaks, Y2K, zero-sum game

The next day, we learned how all this openness can be turned on its head, lending the explosive impact of jet liners and the population density of modern skyscrapers to a few guys armed with box cutters. That’s when the dream of a connected world revealed itself rather as the nightmare of a world vulnerable to network effects. Whether it’s a congressman losing his job over an errant Tweet, a State Department humiliated by the release of its cache of cables on WikiLeaks, or a corporation whose progressive consumers just learned their phones were assembled in Chinese sweatshops, connectedness has turned every glitch into a potentially mortal blow, every interactor into a potential slayer.


pages: 368 words: 96,825

Bold: How to Go Big, Create Wealth and Impact the World by Peter H. Diamandis, Steven Kotler

3D printing, additive manufacturing, adjacent possible, Airbnb, Amazon Mechanical Turk, Amazon Web Services, Apollo 11, augmented reality, autonomous vehicles, Boston Dynamics, Charles Lindbergh, cloud computing, company town, creative destruction, crowdsourcing, Daniel Kahneman / Amos Tversky, data science, deal flow, deep learning, dematerialisation, deskilling, disruptive innovation, driverless car, Elon Musk, en.wikipedia.org, Exxon Valdez, fail fast, Fairchild Semiconductor, fear of failure, Firefox, Galaxy Zoo, Geoffrey Hinton, Google Glasses, Google Hangouts, gravity well, hype cycle, ImageNet competition, industrial robot, information security, Internet of things, Jeff Bezos, John Harrison: Longitude, John Markoff, Jono Bacon, Just-in-time delivery, Kickstarter, Kodak vs Instagram, Law of Accelerating Returns, Lean Startup, life extension, loss aversion, Louis Pasteur, low earth orbit, Mahatma Gandhi, Marc Andreessen, Mark Zuckerberg, Mars Rover, meta-analysis, microbiome, minimum viable product, move fast and break things, Narrative Science, Netflix Prize, Network effects, Oculus Rift, OpenAI, optical character recognition, packet switching, PageRank, pattern recognition, performance metric, Peter H. Diamandis: Planetary Resources, Peter Thiel, pre–internet, Ray Kurzweil, recommendation engine, Richard Feynman, ride hailing / ride sharing, risk tolerance, rolodex, Scaled Composites, self-driving car, sentiment analysis, shareholder value, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, skunkworks, Skype, smart grid, SpaceShipOne, stem cell, Stephen Hawking, Steve Jobs, Steven Levy, Stewart Brand, Stuart Kauffman, superconnector, Susan Wojcicki, synthetic biology, technoutopianism, TED Talk, telepresence, telepresence robot, Turing test, urban renewal, Virgin Galactic, Wayback Machine, web application, X Prize, Y Combinator, zero-sum game

When the prize is driven by an MTP, while a team’s primary purpose is to win, a close second is their desire to see the primary objective achieved; thus teams exhibit a much higher willingness to share. A well-designed incentive competition provides teams with a “whole is bigger than the sum of the parts” mindset. This happens because the right motivations lead to increased cooperation, which leads to unpredictable network effects. In November 2007, for example, progress toward Netflix’s desired 10 percent improvement had slowed considerably. The geeks had taken things about as far as possible when a British psychologist named Gavin Potter entered the fray. Instead of the purely mathematical approach utilized by most of the other teams, Potter was making startling progress by considering the human factor (he had actually outsourced the difficult math to his daughter, then a high school student).


pages: 345 words: 100,989

The Pyramid of Lies: Lex Greensill and the Billion-Dollar Scandal by Duncan Mavin

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Adam Neumann (WeWork), air freight, banking crisis, Bernie Madoff, Big Tech, Boeing 737 MAX, Boris Johnson, Brexit referendum, British Empire, carbon footprint, coronavirus, corporate governance, COVID-19, Credit Default Swap, democratizing finance, Donald Trump, Eyjafjallajökull, financial engineering, fixed income, global pandemic, global supply chain, Gordon Gekko, Greensill Capital, high net worth, Kickstarter, lockdown, Long Term Capital Management, low interest rates, Masayoshi Son, means of production, Menlo Park, mittelstand, move fast and break things, NetJets, Network effects, Ponzi scheme, private military company, proprietary trading, remote working, rewilding, Rishi Sunak, rolodex, Silicon Valley, skunkworks, SoftBank, sovereign wealth fund, supply chain finance, Tim Haywood, Vision Fund, WeWork, work culture

At internal SoftBank events, Son put Lex on a pedestal alongside other stars of the Vision Fund, especially WeWork founder Adam Neumann, who was still then in favour, and Ritesh Agarwal, the head of India’s OYO Hotels. The three were featured in a presentation to SoftBank shareholders that referred to them as pioneers of artificial intelligence leading ‘the biggest revolution in human history’. Son also pointed to Greensill as an example of how portfolio companies could benefit from the network effect they could achieve by working together – the so-called ‘Cluster of No. 1’ strategy. Vision Fund insiders found that Greensill’s name was frequently invoked by Son in meetings, often as a solution to financing problems at other portfolio companies. A Vision Fund company needed more cash? Greensill can get it.


The Art of SEO by Eric Enge, Stephan Spencer, Jessie Stricchiola, Rand Fishkin

AltaVista, barriers to entry, bounce rate, Build a better mousetrap, business intelligence, cloud computing, content marketing, dark matter, en.wikipedia.org, Firefox, folksonomy, Google Chrome, Google Earth, hypertext link, index card, information retrieval, Internet Archive, Larry Ellison, Law of Accelerating Returns, linked data, mass immigration, Metcalfe’s law, Network effects, optical character recognition, PageRank, performance metric, Quicken Loans, risk tolerance, search engine result page, self-driving car, sentiment analysis, social bookmarking, social web, sorting algorithm, speech recognition, Steven Levy, text mining, the long tail, vertical integration, Wayback Machine, web application, wikimedia commons

Google can also choose to take action against the site purchasing the links or participating in manipulative link practices. If a large percentage of the site’s links are suddenly disabled, this could have a very significant impact on rankings. Social Networking for Links When you add social media to the equation, the network effect can multiply the yield from your link-building efforts. You can use this effect to help your content spread virally, or to develop relationships with critical influencers. Blogging for Links Blogging can be very effective in link development. How effective a blog will be depends highly on the content on it, the market space, and how the publisher promotes it.

The ever-expanding versatility and power of tablet and mobile devices—from indispensable utility apps, to immersive multimedia players, to massively multiplayer online games, to paradigm-shifting hardware advances such as the iPhone’s multitouch display, proximity sensor, GPS, and gyroscopes—will fuel this growth. The network effect, whereby the value of the network grows by the square of the size of the network (Metcalf’s Law), gives further incentive for users to migrate to their mobile devices as more and more apps allow them to interact with their peers in increasingly more interesting ways. The small keyboard/typing surface is currently a severe limitation, but Apple and Google’s voice-based solutions have already made great strides in replacing the keyboard as the input device of choice.


pages: 502 words: 107,657

Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie, or Die by Eric Siegel

Alan Greenspan, Albert Einstein, algorithmic trading, Amazon Mechanical Turk, Apollo 11, Apple's 1984 Super Bowl advert, backtesting, Black Swan, book scanning, bounce rate, business intelligence, business process, butter production in bangladesh, call centre, Charles Lindbergh, commoditize, computer age, conceptual framework, correlation does not imply causation, crowdsourcing, dark matter, data is the new oil, data science, driverless car, en.wikipedia.org, Erik Brynjolfsson, Everything should be made as simple as possible, experimental subject, Google Glasses, happiness index / gross national happiness, information security, job satisfaction, Johann Wolfgang von Goethe, lifelogging, machine readable, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, mass immigration, Moneyball by Michael Lewis explains big data, Nate Silver, natural language processing, Netflix Prize, Network effects, Norbert Wiener, personalized medicine, placebo effect, prediction markets, Ray Kurzweil, recommendation engine, risk-adjusted returns, Ronald Coase, Search for Extraterrestrial Intelligence, self-driving car, sentiment analysis, Shai Danziger, software as a service, SpaceShipOne, speech recognition, statistical model, Steven Levy, supply chain finance, text mining, the scientific method, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, Thomas Bayes, Thomas Davenport, Turing test, Watson beat the top human players on Jeopardy!, X Prize, Yogi Berra, zero-sum game

Author manuscript; available in PMC October 25, 2006; published in final edited form as: Journal of Marriage and Family 63, no. 2 (May 2001): 473–479. doi:10.1111/j.1741-3737.2001.00473.x. www.ncbi.nlm.nih.gov/pmc/articles/PMC1622921/. Rose McDermott, James H. Fowler, and Nicholas A. Christakis, “Breaking Up Is Hard to Do, Unless Everyone Else Is Doing It Too: Social Network Effects on Divorce in a Longitudinal Sample Followed for 32 Years,” Social Science Research Network Online (SSRN), October 18, 2009. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1490708. Justin Wolfers, “Assessing Your Divorce Risk,” Freakonomics.com, December 2, 2008. www.freakonomics.com/2008/12/02/assessing-your-divorce-risk/.


pages: 484 words: 104,873

Rise of the Robots: Technology and the Threat of a Jobless Future by Martin Ford

3D printing, additive manufacturing, Affordable Care Act / Obamacare, AI winter, algorithmic management, algorithmic trading, Amazon Mechanical Turk, artificial general intelligence, assortative mating, autonomous vehicles, banking crisis, basic income, Baxter: Rethink Robotics, Bernie Madoff, Bill Joy: nanobots, bond market vigilante , business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Charles Babbage, Chris Urmson, Clayton Christensen, clean water, cloud computing, collateralized debt obligation, commoditize, computer age, creative destruction, data science, debt deflation, deep learning, deskilling, digital divide, disruptive innovation, diversified portfolio, driverless car, Erik Brynjolfsson, factory automation, financial innovation, Flash crash, Ford Model T, Fractional reserve banking, Freestyle chess, full employment, general purpose technology, Geoffrey Hinton, Goldman Sachs: Vampire Squid, Gunnar Myrdal, High speed trading, income inequality, indoor plumbing, industrial robot, informal economy, iterative process, Jaron Lanier, job automation, John Markoff, John Maynard Keynes: technological unemployment, John von Neumann, Kenneth Arrow, Khan Academy, Kiva Systems, knowledge worker, labor-force participation, large language model, liquidity trap, low interest rates, low skilled workers, low-wage service sector, Lyft, machine readable, machine translation, manufacturing employment, Marc Andreessen, McJob, moral hazard, Narrative Science, Network effects, new economy, Nicholas Carr, Norbert Wiener, obamacare, optical character recognition, passive income, Paul Samuelson, performance metric, Peter Thiel, plutocrats, post scarcity, precision agriculture, price mechanism, public intellectual, Ray Kurzweil, rent control, rent-seeking, reshoring, RFID, Richard Feynman, Robert Solow, Rodney Brooks, Salesforce, Sam Peltzman, secular stagnation, self-driving car, Silicon Valley, Silicon Valley billionaire, Silicon Valley startup, single-payer health, software is eating the world, sovereign wealth fund, speech recognition, Spread Networks laid a new fibre optics cable between New York and Chicago, stealth mode startup, stem cell, Stephen Hawking, Steve Jobs, Steven Levy, Steven Pinker, strong AI, Stuxnet, technological singularity, telepresence, telepresence robot, The Bell Curve by Richard Herrnstein and Charles Murray, The Coming Technological Singularity, The Future of Employment, the long tail, Thomas L Friedman, too big to fail, Tragedy of the Commons, Tyler Cowen, Tyler Cowen: Great Stagnation, uber lyft, union organizing, Vernor Vinge, very high income, warehouse automation, warehouse robotics, Watson beat the top human players on Jeopardy!, women in the workforce

They might travel in convoys, riding in each other’s draft to save fuel. High-speed coordination on freeways would reduce, or perhaps even virtually eliminate, traffic jams. Here, I think the hype is running substantially ahead of any near-term reality. Benefits of this type rely heavily on a network effect: a substantial fraction of the cars on the road would need to be autonomous. The obvious reality is that a great many drivers are going to be, at best, ambivalent about self-driving technology. A lot of people simply like to drive. Enthusiast magazines like Motor Trend and Car and Driver have millions of subscribers.


pages: 268 words: 112,708

Culture works: the political economy of culture by Richard Maxwell

1960s counterculture, accelerated depreciation, American ideology, AOL-Time Warner, Apple's 1984 Super Bowl advert, barriers to entry, Berlin Wall, big-box store, business process, commoditize, corporate governance, cuban missile crisis, deindustrialization, digital capitalism, digital divide, Fall of the Berlin Wall, Ford Model T, Francis Fukuyama: the end of history, global village, Howard Rheingold, income inequality, informal economy, intermodal, late capitalism, Marshall McLuhan, medical malpractice, Neil Armstrong, Network effects, post-Fordism, profit maximization, Ralph Nader, refrigerator car, Ronald Reagan, Silicon Valley, streetcar suburb, structural adjustment programs, talking drums, telemarketer, the built environment, the Cathedral and the Bazaar, Thorstein Veblen, Unsafe at Any Speed, urban renewal, vertical integration, Victor Gruen, Whole Earth Catalog, women in the workforce, work culture

By undercutting prices for the rival Macintosh computer, IBM (and the low-cost PC clone makers that followed it) grabbed the bulk of the market for business PCs. Throughout the 1980s, Apple offered a more user-friendly graphical interface than Microsoft, and at several points Intel’s competitors offered faster chips.29 But the large installed base of Wintel users created growing network effects, whereby the greater the number of users of a communication technology, the more valuable it becomes to each of them, because users can share information with more people. In response, more software developers began to create programs for the Wintel platform first, best, or only, reinforcing the platform’s market power.


pages: 355 words: 63

The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics by William R. Easterly

Andrei Shleifer, business climate, business cycle, Carmen Reinhart, central bank independence, clean water, colonial rule, correlation does not imply causation, creative destruction, endogenous growth, financial repression, foreign exchange controls, Gini coefficient, government statistician, Gunnar Myrdal, income inequality, income per capita, inflation targeting, interchangeable parts, inventory management, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, large denomination, low interest rates, manufacturing employment, Money creation, Network effects, New Urbanism, open economy, PalmPilot, Productivity paradox, purchasing power parity, rent-seeking, Robert Solow, Ronald Reagan, selection bias, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thomas Malthus, total factor productivity, trade liberalization, Tragedy of the Commons, urban sprawl, Watson beat the top human players on Jeopardy!, Yogi Berra, Yom Kippur War

Moreover, in a theme that is familiar throughout this book, individual factories’ decisions on electric power depended on whatother factories were doing. It was worthwhile building generating a station only if a large number of commercial users were in the vicinity. If neighboring users were not adopting electric power, an individual factory was out of luck. This network effect may explain why there was very little electrification at first, and then it happened all in a rush. By 1930, 80 percent of American industry was electrified. Similarly, the productivity gains of the computer are slow to be realized, because they imply a whole reorganization of the old way we do business.


pages: 390 words: 109,519

Custodians of the Internet: Platforms, Content Moderation, and the Hidden Decisions That Shape Social Media by Tarleton Gillespie

4chan, A Declaration of the Independence of Cyberspace, affirmative action, Airbnb, algorithmic bias, algorithmic management, AltaVista, Amazon Mechanical Turk, borderless world, Burning Man, complexity theory, conceptual framework, crowdsourcing, deep learning, do what you love, Donald Trump, drone strike, easy for humans, difficult for computers, Edward Snowden, eternal september, fake news, Filter Bubble, Gabriella Coleman, game design, gig economy, Google Glasses, Google Hangouts, hiring and firing, Ian Bogost, independent contractor, Internet Archive, Jean Tirole, John Gruber, Kickstarter, Mark Zuckerberg, mass immigration, Menlo Park, Minecraft, moral panic, multi-sided market, Netflix Prize, Network effects, pattern recognition, peer-to-peer, power law, real-name policy, recommendation engine, Rubik’s Cube, Salesforce, sharing economy, Silicon Valley, Skype, slashdot, Snapchat, social graph, social web, Steve Jobs, Stewart Brand, TED Talk, Telecommunications Act of 1996, two-sided market, WikiLeaks, Yochai Benkler

The earliest content platforms—MP3.com, SixDegrees, Livejournal, Blogger, Cyworld, Friendster, LinkedIn, MySpace, Delicious, Orkut, Flickr, Dodgeball, YouTube—often began by trying to facilitate one element of being on the web (write without needing to know HTML; keep a list of friends or fans; make content easier to find through directed search).53 These services were meant to “solve” some of the challenges of navigating the open web. They substantially simplified the tools needed for posting, distributing, sharing, commenting; they linked users to a larger, even global audience; and they did so at an appealing price. They also had acute network effects: if you want to share and participate, you want to do so where there are people to share and participate with. These platforms were, of course, nearly all for-profit operations. This made them quite interested in not just facilitating but also incorporating the kinds of participation that the web itself made possible.54 Platform companies developed new ways to keep users navigating and posting, coax them into revealing their preferences and proclivities, and save all of it as personalized data, to sell to advertisers and content partners.


pages: 344 words: 104,522

Woke, Inc: Inside Corporate America's Social Justice Scam by Vivek Ramaswamy

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 2021 United States Capitol attack, activist fund / activist shareholder / activist investor, affirmative action, Airbnb, Amazon Web Services, An Inconvenient Truth, anti-bias training, Bernie Sanders, Big Tech, BIPOC, Black Lives Matter, carbon footprint, clean tech, cloud computing, contact tracing, coronavirus, corporate governance, corporate social responsibility, COVID-19, critical race theory, crony capitalism, cryptocurrency, defund the police, deplatforming, desegregation, disinformation, don't be evil, Donald Trump, en.wikipedia.org, Eugene Fama: efficient market hypothesis, fudge factor, full employment, George Floyd, glass ceiling, global pandemic, green new deal, hiring and firing, Hyperloop, impact investing, independent contractor, index fund, Jeff Bezos, lockdown, Marc Benioff, Mark Zuckerberg, microaggression, military-industrial complex, Network effects, Parler "social media", plant based meat, Ponzi scheme, profit maximization, random walk, ride hailing / ride sharing, risk-adjusted returns, Robert Bork, Robinhood: mobile stock trading app, Ronald Reagan, Salesforce, self-driving car, shareholder value, short selling, short squeeze, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, single source of truth, Snapchat, social distancing, Social Responsibility of Business Is to Increase Its Profits, source of truth, sovereign wealth fund, Susan Wojcicki, the scientific method, Tim Cook: Apple, too big to fail, trade route, transcontinental railway, traveling salesman, trickle-down economics, Vanguard fund, Virgin Galactic, WeWork, zero-sum game

It would leave “only a small number of giant and well-funded technology companies,” he testified.36 Dorsey’s lack of self-awareness is laughable: the only way that the current Silicon Valley behemoths ever became behemoths was due to the existence of Section 230 in the first place. But this is at best a learning for the future. Unfortunately, in one narrow sense, Dorsey is right: a repeal of the law is probably too little, too late—and may even do more harm than good given that the network effects already enjoyed by the larger incumbents like Facebook and Twitter would only be strengthened by making it more costly for other startups to reach their scale and reach… even if Section 230 was a mistake when it was passed in 1996. Congress opened Pandora’s box, and it may be too late to shut it.


The Smart Wife: Why Siri, Alexa, and Other Smart Home Devices Need a Feminist Reboot by Yolande Strengers, Jenny Kennedy

active measures, Amazon Robotics, Anthropocene, autonomous vehicles, Big Tech, Boston Dynamics, cloud computing, cognitive load, computer vision, Computing Machinery and Intelligence, crowdsourcing, cyber-physical system, data science, deepfake, Donald Trump, emotional labour, en.wikipedia.org, Evgeny Morozov, fake news, feminist movement, game design, gender pay gap, Grace Hopper, hive mind, Ian Bogost, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Jeff Bezos, John Markoff, Kitchen Debate, knowledge economy, Masayoshi Son, Milgram experiment, Minecraft, natural language processing, Network effects, new economy, pattern recognition, planned obsolescence, precautionary principle, robot derives from the Czech word robota Czech, meaning slave, self-driving car, Shoshana Zuboff, side hustle, side project, Silicon Valley, smart grid, smart meter, social intelligence, SoftBank, Steve Jobs, surveillance capitalism, systems thinking, technological solutionism, technoutopianism, TED Talk, Turing test, Wall-E, Wayback Machine, women in the workforce

And Alexa is the gateway to the enormous amounts of traffic directed toward the Amazonian retail paradise. Alexa is a cloud-based operating system (OS). She connects a multitude of devices and services through applications known as “skills,” which ensure a consistent set of interfaces. Consistency produces a network effect—the more users there are, the more applications are developed; the more applications are developed, the more users there are. In 2019, you could buy this OS for $40 to $250 depending on which Echo (speaker) device you chose. Asking Alexa to buy stuff for you is so easy that even parrots can do it.18 As of 2017, Alexa had five thousand employees working on her OSs and related products.19 And her reach is expanding: by 2019, she was available in eighty-nine countries.20 Thanks to a partnership between Amazon and the real estate developer Lennar Corporation (with other developers expected to follow suit), Alexa is now being built into homes.21 Amazon has opened up Alexa to other smart home developers through its Alexa Skills Kit, which according to Amazon’s website, allows third-party devices to “build capabilities, or skills, that make Alexa smarter and make everyday tasks faster, easier, and more delightful for customers.”22 Alexa Skills increased from 5,191 in November 2016 to 30,006 in March 2018—an almost sixfold increase in just two years.23 These third-party-developed skills, once published, are available across Alexa-enabled devices and can be enabled by any user via the Alexa app.


pages: 356 words: 106,161

The Glass Half-Empty: Debunking the Myth of Progress in the Twenty-First Century by Rodrigo Aguilera

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Anthropocene, availability heuristic, barriers to entry, basic income, benefit corporation, Berlin Wall, Bernie Madoff, Bernie Sanders, bitcoin, Boris Johnson, Branko Milanovic, Bretton Woods, Brexit referendum, Capital in the Twenty-First Century by Thomas Piketty, capitalist realism, carbon footprint, Carmen Reinhart, centre right, clean water, cognitive bias, collapse of Lehman Brothers, Colonization of Mars, computer age, Corn Laws, corporate governance, corporate raider, creative destruction, cryptocurrency, cuban missile crisis, David Graeber, David Ricardo: comparative advantage, death from overwork, decarbonisation, deindustrialization, Deng Xiaoping, Doha Development Round, don't be evil, Donald Trump, Doomsday Clock, Dunning–Kruger effect, Elon Musk, European colonialism, fake news, Fall of the Berlin Wall, first-past-the-post, Francis Fukuyama: the end of history, fundamental attribution error, gig economy, Gini coefficient, Glass-Steagall Act, Great Leap Forward, green new deal, Hans Rosling, housing crisis, income inequality, income per capita, index fund, intangible asset, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, Jeff Bezos, Jeremy Corbyn, Jevons paradox, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, karōshi / gwarosa / guolaosi, Kenneth Rogoff, Kickstarter, lake wobegon effect, land value tax, Landlord’s Game, late capitalism, liberal capitalism, long peace, loss aversion, low interest rates, Mark Zuckerberg, market fundamentalism, means of production, meta-analysis, military-industrial complex, Mont Pelerin Society, moral hazard, moral panic, neoliberal agenda, Network effects, North Sea oil, Northern Rock, offshore financial centre, opioid epidemic / opioid crisis, Overton Window, Pareto efficiency, passive investing, Peter Thiel, plutocrats, principal–agent problem, profit motive, public intellectual, purchasing power parity, race to the bottom, rent-seeking, risk tolerance, road to serfdom, Robert Shiller, Robert Solow, savings glut, Scientific racism, secular stagnation, Silicon Valley, Silicon Valley ideology, Slavoj Žižek, Social Justice Warrior, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, Stanislav Petrov, Steven Pinker, structural adjustment programs, surveillance capitalism, tail risk, tech bro, TED Talk, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transatlantic slave trade, trolley problem, unbiased observer, universal basic income, Vilfredo Pareto, Washington Consensus, Winter of Discontent, Y2K, young professional, zero-sum game

Overall, our findings suggest that the nature of US product markets has undergone a structural shift that has weakened competition.20 Particularly problematic is the tech industry which, unlike the markets of most goods and services, is naturally prone to concentration. More so even than industries that gravitate towards natural monopolies like transportation and utilities (Figure 6.7). This is due to the prevalence of network effects; that is, the increase in the value of a tech product the more people use it which essentially makes competition impractical — it is more convenient for just one social media platform like Facebook to exist than if we had to engage with our friends across three or four different platforms. In this sense, these hyper-capitalist enterprises ironically have far more in common with state-provided utilities like railroads or the water supply than most other private industries.


pages: 918 words: 257,605

The Age of Surveillance Capitalism by Shoshana Zuboff

"World Economic Forum" Davos, algorithmic bias, Amazon Web Services, Andrew Keen, augmented reality, autonomous vehicles, barriers to entry, Bartolomé de las Casas, behavioural economics, Berlin Wall, Big Tech, bitcoin, blockchain, blue-collar work, book scanning, Broken windows theory, California gold rush, call centre, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, choice architecture, citizen journalism, Citizen Lab, classic study, cloud computing, collective bargaining, Computer Numeric Control, computer vision, connected car, context collapse, corporate governance, corporate personhood, creative destruction, cryptocurrency, data science, deep learning, digital capitalism, disinformation, dogs of the Dow, don't be evil, Donald Trump, Dr. Strangelove, driverless car, Easter island, Edward Snowden, en.wikipedia.org, Erik Brynjolfsson, Evgeny Morozov, facts on the ground, fake news, Ford Model T, Ford paid five dollars a day, future of work, game design, gamification, Google Earth, Google Glasses, Google X / Alphabet X, Herman Kahn, hive mind, Ian Bogost, impulse control, income inequality, information security, Internet of things, invention of the printing press, invisible hand, Jean Tirole, job automation, Johann Wolfgang von Goethe, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Kevin Roose, knowledge economy, Lewis Mumford, linked data, longitudinal study, low skilled workers, Mark Zuckerberg, market bubble, means of production, multi-sided market, Naomi Klein, natural language processing, Network effects, new economy, Occupy movement, off grid, off-the-grid, PageRank, Panopticon Jeremy Bentham, pattern recognition, Paul Buchheit, performance metric, Philip Mirowski, precision agriculture, price mechanism, profit maximization, profit motive, public intellectual, recommendation engine, refrigerator car, RFID, Richard Thaler, ride hailing / ride sharing, Robert Bork, Robert Mercer, Salesforce, Second Machine Age, self-driving car, sentiment analysis, shareholder value, Sheryl Sandberg, Shoshana Zuboff, Sidewalk Labs, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, slashdot, smart cities, Snapchat, social contagion, social distancing, social graph, social web, software as a service, speech recognition, statistical model, Steve Bannon, Steve Jobs, Steven Levy, structural adjustment programs, surveillance capitalism, technological determinism, TED Talk, The Future of Employment, The Wealth of Nations by Adam Smith, Tim Cook: Apple, two-sided market, union organizing, vertical integration, Watson beat the top human players on Jeopardy!, winner-take-all economy, Wolfgang Streeck, work culture , Yochai Benkler, you are the product

Economic historians describe the dedication to lawlessness among the Gilded Age “robber barons” for whom Herbert Spencer’s social Darwinism played the same role that Hayek, Jensen, and even Ayn Rand play for today’s digital barons. In the same way that surveillance capitalists excuse their corporations’ unprecedented concentrations of information and wealth as the unavoidable result of “network effects” and “winner-take-all” markets, the Gilded Age industrialists cited Spencer’s specious, pseudoscientific “survival of the fittest” as proof of a divine plan intended to put society’s wealth in the hands of its most aggressively competitive individuals.29 The Gilded Age millionaires, like today’s surveillance capitalists, stood on the frontier of a vast discontinuity in the means of production with nothing but blank territory in which to invent a new industrial capitalism free from constraints on the use of labor, the nature of working conditions, the extent of environmental destruction, the sourcing of raw materials, or even the quality of their own products.

Worse yet, the students found it impossible to imagine even casual social participation without social media, especially Facebook: “Increasingly no young person who wants a social life can afford not to be active on the site, and being active on the site means living one’s life on the site.” Business and tech analysts cite “network effects” as a structural source of Facebook’s dominance in social media, but those effects initially derived from the demand characteristics of adolescents and emerging adults, reflecting the peer orientation of their age and stage. Indeed, Facebook’s early advantage in this work arose in no small measure from the simple fact that its founders and original designers were themselves adolescents and emerging adults.


pages: 524 words: 120,182

Complexity: A Guided Tour by Melanie Mitchell

Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, Albert Michelson, Alfred Russel Wallace, algorithmic management, anti-communist, Arthur Eddington, Benoit Mandelbrot, bioinformatics, cellular automata, Claude Shannon: information theory, clockwork universe, complexity theory, computer age, conceptual framework, Conway's Game of Life, dark matter, discrete time, double helix, Douglas Hofstadter, Eddington experiment, en.wikipedia.org, epigenetics, From Mathematics to the Technologies of Life and Death, Garrett Hardin, Geoffrey West, Santa Fe Institute, Gregor Mendel, Gödel, Escher, Bach, Hacker News, Hans Moravec, Henri Poincaré, invisible hand, Isaac Newton, John Conway, John von Neumann, Long Term Capital Management, mandelbrot fractal, market bubble, Menlo Park, Murray Gell-Mann, Network effects, Norbert Wiener, Norman Macrae, Paul Erdős, peer-to-peer, phenotype, Pierre-Simon Laplace, power law, Ray Kurzweil, reversible computing, scientific worldview, stem cell, Stuart Kauffman, synthetic biology, The Wealth of Nations by Adam Smith, Thomas Malthus, Tragedy of the Commons, Turing machine

Similarly, my friend Greg knows and cares a lot more about math than Kim, so if I wanted to share some neat mathematical fact I learned, I’d be much more likely to tell Greg about it than Kim. Such differences in link and node types as well as link strength can have very significant effects on how information spreads in a network, effects that are not captured by the simplified network models. Information Spreading and Cascading Failure in Networks In fact, understanding the ways in which information spreads in networks is one of the most important open problems in network science. The results I have described in this and the previous chapter are all about the structure of networks—e.g., their static degree distributions—rather than dynamics of spreading information in a network.


pages: 379 words: 113,656

Six Degrees: The Science of a Connected Age by Duncan J. Watts

AOL-Time Warner, Berlin Wall, Bretton Woods, business process, corporate governance, Drosophila, Erdős number, experimental subject, fixed income, Frank Gehry, Geoffrey West, Santa Fe Institute, independent contractor, industrial cluster, invisible hand, it's over 9,000, Long Term Capital Management, market bubble, Milgram experiment, MITM: man-in-the-middle, Murray Gell-Mann, Network effects, new economy, Norbert Wiener, PalmPilot, Paul Erdős, peer-to-peer, power law, public intellectual, rolodex, Ronald Coase, Savings and loan crisis, scientific worldview, Silicon Valley, social contagion, social distancing, Stuart Kauffman, supply-chain management, The Nature of the Firm, the strength of weak ties, The Wealth of Nations by Adam Smith, Toyota Production System, Tragedy of the Commons, transaction costs, transcontinental railway, vertical integration, Vilfredo Pareto, Y2K

Other social network–based companies have been getting off the ground in 2003 as well, mostly seeking to mine the e-mail server logs of companies in order to generate better sales contacts—the theory being that if someone in your company knows someone in a potential client company, their recommendation may help you at least get a first conversation off the ground. But the recent influence of social networks on current events has been much broader than even their popularity in the business world might suggest. One example of network effects that isn’t so obvious is the phenomenal success of Hillary Clinton’s memoir, despite its publication in what has generally been a bad year for books, its overwhelmingly poor reviews, and its lack of any novel information. Apparently none of this mattered—in true Harry Potter style (the fifth installment of which also arrived this year) people bought the book in droves, earning Hillary even more in royalties than the $8 million she had been paid in advance, and far more than the publisher itself had predicted.


pages: 437 words: 113,173

Age of Discovery: Navigating the Risks and Rewards of Our New Renaissance by Ian Goldin, Chris Kutarna

"World Economic Forum" Davos, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, Airbnb, Albert Einstein, AltaVista, Asian financial crisis, asset-backed security, autonomous vehicles, banking crisis, barriers to entry, battle of ideas, Bear Stearns, Berlin Wall, bioinformatics, bitcoin, Boeing 747, Bonfire of the Vanities, bread and circuses, carbon tax, clean water, collective bargaining, Colonization of Mars, Credit Default Swap, CRISPR, crowdsourcing, cryptocurrency, Dava Sobel, demographic dividend, Deng Xiaoping, digital divide, Doha Development Round, double helix, driverless car, Edward Snowden, Elon Musk, en.wikipedia.org, epigenetics, experimental economics, Eyjafjallajökull, failed state, Fall of the Berlin Wall, financial innovation, full employment, Galaxy Zoo, general purpose technology, Glass-Steagall Act, global pandemic, global supply chain, Higgs boson, Hyperloop, immigration reform, income inequality, indoor plumbing, industrial cluster, industrial robot, information retrieval, information security, Intergovernmental Panel on Climate Change (IPCC), intermodal, Internet of things, invention of the printing press, Isaac Newton, Islamic Golden Age, Johannes Kepler, Khan Academy, Kickstarter, Large Hadron Collider, low cost airline, low skilled workers, Lyft, Mahbub ul Haq, Malacca Straits, mass immigration, Max Levchin, megacity, Mikhail Gorbachev, moral hazard, Nelson Mandela, Network effects, New Urbanism, non-tariff barriers, Occupy movement, On the Revolutions of the Heavenly Spheres, open economy, Panamax, Paris climate accords, Pearl River Delta, personalized medicine, Peter Thiel, post-Panamax, profit motive, public intellectual, quantum cryptography, rent-seeking, reshoring, Robert Gordon, Robert Metcalfe, Search for Extraterrestrial Intelligence, Second Machine Age, self-driving car, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Skype, smart grid, Snapchat, special economic zone, spice trade, statistical model, Stephen Hawking, Steve Jobs, Stuxnet, synthetic biology, TED Talk, The Future of Employment, too big to fail, trade liberalization, trade route, transaction costs, transatlantic slave trade, uber lyft, undersea cable, uranium enrichment, We are the 99%, We wanted flying cars, instead we got 140 characters, working poor, working-age population, zero day

It should be no surprise that Apple’s developer community doubled, from 4.5 to 9 million programmers, between 2012 and 2014.28 The reputational costs of failure are falling, too. Don’t be too proud of your fame; don’t be ashamed if your innovation flops. More and more, both are driven by network effects beyond your control—and are quickly crowded out of everyone’s mind by whatever topic trends next. Attention is cheap. Knowing that frees you to make a brief fool of yourself as often as it takes to achieve what’s important to you. How to be bold The first courageous act is to take a long-term, big-picture view.


pages: 441 words: 113,244

Seasteading: How Floating Nations Will Restore the Environment, Enrich the Poor, Cure the Sick, and Liberate Humanity From Politicians by Joe Quirk, Patri Friedman

3D printing, access to a mobile phone, addicted to oil, Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, barriers to entry, biodiversity loss, Biosphere 2, Branko Milanovic, British Empire, Buckminster Fuller, Burning Man, business climate, business cycle, business process, California gold rush, Celtic Tiger, Charles Lindbergh, clean water, Colonization of Mars, Dean Kamen, Deng Xiaoping, drone strike, Elon Musk, en.wikipedia.org, export processing zone, failed state, financial intermediation, Garrett Hardin, Gini coefficient, Great Leap Forward, happiness index / gross national happiness, income inequality, intentional community, Intergovernmental Panel on Climate Change (IPCC), joint-stock company, joint-stock limited liability company, Kickstarter, low skilled workers, Machinery of Freedom by David Friedman, Mark Zuckerberg, megacity, megaproject, minimum wage unemployment, Neil Armstrong, Network effects, new economy, obamacare, ocean acidification, off-the-grid, offshore financial centre, One Laptop per Child (OLPC), open borders, Patri Friedman, paypal mafia, peak oil, Peter H. Diamandis: Planetary Resources, Peter Thiel, price stability, profit motive, radical decentralization, Ronald Coase, Ronald Reagan, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, special economic zone, standardized shipping container, stem cell, TechCrunch disrupt, TED Talk, trade route, Tragedy of the Commons, UNCLOS, UNCLOS, undersea cable, young professional

Well, the incalculable economic power of mobility recently got calculated, and it makes the wild-eyed optimists like David Friedman seem like pessimists by comparison. We know from studying the proliferation of special economic zones (SEZs) that when states step back from micromanaging people’s behavior, unpredictable network effects emerge that swiftly accomplish humanitarian goals. The ever-increasing density of the voluntary transaction network creates more conditions for creative connections that the best intentions of bureaucratic designers never predicted. People are smarter than their politics. Yet engage in politics they will.


pages: 425 words: 112,220

The Messy Middle: Finding Your Way Through the Hardest and Most Crucial Part of Any Bold Venture by Scott Belsky

23andMe, 3D printing, Airbnb, Albert Einstein, Anne Wojcicki, augmented reality, autonomous vehicles, behavioural economics, Ben Horowitz, bitcoin, blockchain, Chuck Templeton: OpenTable:, commoditize, correlation does not imply causation, cryptocurrency, data science, delayed gratification, DevOps, Donald Trump, Elon Musk, endowment effect, fake it until you make it, hiring and firing, Inbox Zero, iterative process, Jeff Bezos, knowledge worker, Lean Startup, Lyft, Mark Zuckerberg, Marshall McLuhan, minimum viable product, move fast and break things, NetJets, Network effects, new economy, old-boy network, Paradox of Choice, pattern recognition, Paul Graham, private spaceflight, reality distortion field, ride hailing / ride sharing, Salesforce, Sheryl Sandberg, Silicon Valley, skeuomorphism, slashdot, Snapchat, Steve Jobs, subscription business, sugar pill, systems thinking, TaskRabbit, TED Talk, the medium is the message, Tony Fadell, Travis Kalanick, Uber for X, uber lyft, WeWork, Y Combinator, young professional

A “working pair” represented an independent professional and a client working together using the company’s platform and tools. Specifically, the Prefer team measured the total number of working pairs every month, which represented the product’s ability to retain its users, as well as “new working pairs,” which represented the product’s network effect and ability to attract and convert new users. Sure, Julio could have also focused on more traditional measures like number of downloads, monthly revenue processed, total users, total transactions, and countless others. However, by focusing only on measuring “working pairs,” he empowered the team to try other tactics that could strengthen the retention and growth of the company’s most important metric, and not get caught up trying to increase surface measures like revenue or downloads.


pages: 518 words: 49,555

Designing Social Interfaces by Christian Crumlish, Erin Malone

A Pattern Language, Amazon Mechanical Turk, anti-pattern, barriers to entry, c2.com, carbon footprint, cloud computing, collaborative editing, commons-based peer production, creative destruction, crowdsourcing, en.wikipedia.org, Firefox, folksonomy, Free Software Foundation, game design, ghettoisation, Howard Rheingold, hypertext link, if you build it, they will come, information security, lolcat, Merlin Mann, Nate Silver, Network effects, Potemkin village, power law, recommendation engine, RFC: Request For Comment, semantic web, SETI@home, Skype, slashdot, social bookmarking, social graph, social software, social web, source of truth, stealth mode startup, Stewart Brand, systems thinking, tacit knowledge, telepresence, the long tail, the strength of weak ties, The Wisdom of Crowds, web application, Yochai Benkler

That’s what mass media did. Mass media tried to farm conversations. And created cultured pearls. Social objects are natural, not artificial. A successful social object is one that has layer upon layer of conversation created around it; as the number of participants increases, social objects enjoy network effects. Social objects are about participation and participants. When designing your social interfaces, ask yourself what social objects belong in the architecture and how you are going to support them. What activities are you going to make possible that enable people to engage with one another around these social objects?


pages: 402 words: 110,972

Nerds on Wall Street: Math, Machines and Wired Markets by David J. Leinweber

"World Economic Forum" Davos, AI winter, Alan Greenspan, algorithmic trading, AOL-Time Warner, Apollo 11, asset allocation, banking crisis, barriers to entry, Bear Stearns, Big bang: deregulation of the City of London, Bob Litterman, book value, business cycle, butter production in bangladesh, butterfly effect, buttonwood tree, buy and hold, buy low sell high, capital asset pricing model, Charles Babbage, citizen journalism, collateralized debt obligation, Cornelius Vanderbilt, corporate governance, Craig Reynolds: boids flock, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Danny Hillis, demand response, disintermediation, distributed generation, diversification, diversified portfolio, electricity market, Emanuel Derman, en.wikipedia.org, experimental economics, fake news, financial engineering, financial innovation, fixed income, Ford Model T, Gordon Gekko, Hans Moravec, Herman Kahn, implied volatility, index arbitrage, index fund, information retrieval, intangible asset, Internet Archive, Ivan Sutherland, Jim Simons, John Bogle, John Nash: game theory, Kenneth Arrow, load shedding, Long Term Capital Management, machine readable, machine translation, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, market fragmentation, market microstructure, Mars Rover, Metcalfe’s law, military-industrial complex, moral hazard, mutually assured destruction, Myron Scholes, natural language processing, negative equity, Network effects, optical character recognition, paper trading, passive investing, pez dispenser, phenotype, prediction markets, proprietary trading, quantitative hedge fund, quantitative trading / quantitative finance, QWERTY keyboard, RAND corporation, random walk, Ray Kurzweil, Reminiscences of a Stock Operator, Renaissance Technologies, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Metcalfe, Ronald Reagan, Rubik’s Cube, Savings and loan crisis, semantic web, Sharpe ratio, short selling, short squeeze, Silicon Valley, Small Order Execution System, smart grid, smart meter, social web, South Sea Bubble, statistical arbitrage, statistical model, Steve Jobs, Steven Levy, stock buybacks, Tacoma Narrows Bridge, the scientific method, The Wisdom of Crowds, time value of money, tontine, too big to fail, transaction costs, Turing machine, two and twenty, Upton Sinclair, value at risk, value engineering, Vernor Vinge, Wayback Machine, yield curve, Yogi Berra, your tax dollars at work

The following cloud was made using the very snappy and very free tool from Wordle: * According to Tim O’Reilly, “Web 2.0 is the business revolution in the computer industry caused by the move to the internet as platform, and an attempt to understand the rules for success on that new platform. Chief among those rules is this: Build applications that harness network effects to get better the more people use them. (This is what I’ve elsewhere called “harnessing collective intelligence.”).” For more on the definition see http://radar .oreilly.com/archives/2006/12/web-20-compact.html and http://www.oreillynet.com/ pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.html.


pages: 216 words: 115,870

The Player of Games by Iain M. Banks

always be closing, fake news, ghettoisation, gravity well, invisible hand, Network effects, New Journalism

Whatever it was, it was a good forty metres away, and he must be almost invisible sitting here in the tree. He couldn't be traced; he'd left his terminal back at the house, something he had taken to doing increasingly often recently, even though it was a dangerous, irresponsible thing to do, to be apart from the Hub's information network, effectively cut off from the rest of the Culture. He held his breath, sat dead still. The little machine seemed to hesitate in mid-air, then point in his direction. It came floating straight towards him. It wasn't Mawhrin-Skel or Loash the verbose; it wasn't even the same type. It was a little larger and fatter and it had no aura at all.


pages: 298 words: 43,745

Understanding Sponsored Search: Core Elements of Keyword Advertising by Jim Jansen

AltaVista, AOL-Time Warner, barriers to entry, behavioural economics, Black Swan, bounce rate, business intelligence, butterfly effect, call centre, Claude Shannon: information theory, complexity theory, content marketing, correlation does not imply causation, data science, en.wikipedia.org, first-price auction, folksonomy, Future Shock, information asymmetry, information retrieval, intangible asset, inventory management, life extension, linear programming, longitudinal study, machine translation, megacity, Nash equilibrium, Network effects, PageRank, place-making, power law, price mechanism, psychological pricing, random walk, Schrödinger's Cat, sealed-bid auction, search costs, search engine result page, second-price auction, second-price sealed-bid, sentiment analysis, social bookmarking, social web, software as a service, stochastic process, tacit knowledge, telemarketer, the market place, The Present Situation in Quantum Mechanics, the scientific method, The Wisdom of Crowds, Vickrey auction, Vilfredo Pareto, yield management

Negative keywords: filtered-out keywords to prevent ad serves on them in order to avoid irrelevant click-through charges or to refine and narrow the targeting of your keywords. Formatting negative keywords varies by search engine, but they are usually designated with a minus sign (Source: modified SEMPO) (see Chapter 3 keywords). Network effect: the phenomenon whereby a service becomes more valuable as more people use it, thereby encouraging ever-increasing numbers of adopters (Source: MarketingTerms.com) (see Chapter 2 model). New visitor: a unique visitor who visits a Web site for the first time ever in the period of time being analyzed (Source: Quirk) (see Chapter 7 analytics).


pages: 309 words: 114,984

The Digital Doctor: Hope, Hype, and Harm at the Dawn of Medicine’s Computer Age by Robert Wachter

activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, AI winter, Airbnb, Atul Gawande, Captain Sullenberger Hudson, Checklist Manifesto, Chuck Templeton: OpenTable:, Clayton Christensen, cognitive load, collapse of Lehman Brothers, computer age, creative destruction, crowdsourcing, deep learning, deskilling, disruptive innovation, driverless car, en.wikipedia.org, Erik Brynjolfsson, everywhere but in the productivity statistics, Firefox, Frank Levy and Richard Murnane: The New Division of Labor, general purpose technology, Google Glasses, human-factors engineering, hype cycle, Ignaz Semmelweis: hand washing, Internet of things, job satisfaction, Joseph Schumpeter, Kickstarter, knowledge worker, lifelogging, Marc Benioff, medical malpractice, medical residency, Menlo Park, minimum viable product, natural language processing, Network effects, Nicholas Carr, obamacare, pattern recognition, peer-to-peer, personalized medicine, pets.com, pneumatic tube, Productivity paradox, Ralph Nader, RAND corporation, Richard Hendricks, Robert Solow, Salesforce, Second Machine Age, self-driving car, seminal paper, Silicon Valley, Silicon Valley startup, six sigma, Skype, Snapchat, software as a service, Steve Jobs, Steven Levy, TED Talk, The future is already here, the payments system, The Wisdom of Crowds, Thomas Bayes, Toyota Production System, Uber for X, US Airways Flight 1549, Watson beat the top human players on Jeopardy!, Yogi Berra

This was not a compliment. This slide was rapidly followed by a series of videos that displayed a smorgasbord of unflattering, histrionic, and sometimes buffoonish Bush interviews and stage appearances. In one particularly damning mash-up, Bush slings around virtually every Internet buzz-term: “creating network effect, creating an Airbnb.” “a little bit of Facebook.” “it’s a little bit like Salesforce.com, but we do more work.” “athenahealth is a cloud-based service—we sell results. Amazon has great software, athena has great software; Amazon sells stories, we sell paid claims, settled appointments, filed claims.”


A People’s History of Computing in the United States by Joy Lisi Rankin

activist fund / activist shareholder / activist investor, Albert Einstein, Apple II, Bill Gates: Altair 8800, Charles Babbage, Compatible Time-Sharing System, computer age, Computer Lib, corporate social responsibility, digital divide, Douglas Engelbart, Douglas Engelbart, Grace Hopper, Hacker Ethic, Howard Rheingold, Howard Zinn, it's over 9,000, Jeff Bezos, John Markoff, John von Neumann, language acquisition, Mark Zuckerberg, Menlo Park, military-industrial complex, Mother of all demos, Multics, Network effects, Norbert Wiener, pink-collar, profit motive, public intellectual, punch-card reader, RAND corporation, Silicon Valley, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, Ted Nelson, the market place, urban planning, Whole Earth Catalog, wikimedia commons

As reported in the newsletter, TIES staff communicated with colleagues in New York, New ­England, California, Michigan, and Oregon.64 They welcomed visitors from Michigan, Palo Alto, and the University of Southern California.65 They reported on an educational technology conference in Scotland and on student computer simulations in Westchester County, New York.66 TIES staff used their newsletters to create a network of individuals, schools, and school systems across Minnesota linked by time-­sharing, but they also forged connections and a sense of belonging in a network across the United States and beyond. The TIES staff filled each newsletter with the promise of computing. The software banking and other network effects that TIES facilitated underscore the importance of understanding TIES as people-­ focused and community-­based—­t hat is, as a social network. The use of time-­sharing in TIES member schools exploded during 1970, paralleled by the emergence of TIES as a software repository. During the 1970–1971 school year, over twenty-­six thousand students used the TIES teletypes.67 The newsletter explained, “As more and more teachers and students become involved with the BASIC [programming] language and the use of the computer, additional programs are generated and additional uses of the devices are developed.”68 The special structure of TIES enabled this phenomenal growth of usage and programs: if one student in one member district wrote a program, he could save it to TIES’s computer library, where it could be called up, used, and modified by another student or teacher in another TIES member district.


pages: 386 words: 113,709

Why We Drive: Toward a Philosophy of the Open Road by Matthew B. Crawford

1960s counterculture, Airbus A320, airport security, augmented reality, autonomous vehicles, behavioural economics, Bernie Sanders, Big Tech, Boeing 737 MAX, British Empire, Burning Man, business logic, call centre, classic study, collective bargaining, confounding variable, congestion pricing, crony capitalism, data science, David Sedaris, deskilling, digital map, don't be evil, Donald Trump, driverless car, Elon Musk, emotional labour, en.wikipedia.org, Fellow of the Royal Society, Ford Model T, gamification, gentrification, gig economy, Google Earth, Great Leap Forward, Herbert Marcuse, hive mind, Ian Bogost, income inequality, informal economy, Internet of things, Jane Jacobs, labour mobility, Lyft, mirror neurons, Network effects, New Journalism, New Urbanism, Nicholas Carr, planned obsolescence, Ponzi scheme, precautionary principle, Ralph Nader, ride hailing / ride sharing, Ronald Reagan, Sam Peltzman, security theater, self-driving car, sharing economy, Shoshana Zuboff, Silicon Valley, smart cities, social graph, social intelligence, Stephen Hawking, surveillance capitalism, tacit knowledge, tech worker, technoutopianism, the built environment, The Death and Life of Great American Cities, the High Line, time dilation, too big to fail, traffic fines, Travis Kalanick, trolley problem, Uber and Lyft, Uber for X, uber lyft, Unsafe at Any Speed, urban planning, Wall-E, Works Progress Administration

.), chairman of the House Transportation Committee, as reported in the Washington Post, Boeing’s internal communications “paint a deeply disturbing picture of the lengths Boeing was apparently willing to go to in order to evade scrutiny from regulators, flight crews, and the flying public, even as its own employees were sounding alarms internally.” https://www.washingtonpost.com/local/trafficandcommuting/internal-boeing-documents-show-employees-discussing-efforts-to-mani/2020/01/09/83a0c6ec-334f-11ea-91fd-82d4e04a3fac_story.html. 11.When a self-driving Uber struck and killed a pedestrian in Tempe, Arizona, in March, 2018, the National Transportation Safety Board launched a twenty-month investigation, at the conclusion of which it was revealed that Uber’s self-driving system was not programmed to recognize a pedestrian crossing outside of a crosswalk. Doing so makes the engineering challenge more difficult, and solving such challenges takes time. But given the “platform” or “network effect” economics of Uber, in which the goal is to achieve monopoly and discourage competitors as early as possible, being first to market is an overwhelming business consideration. The NTSB documents are available at https://dms.ntsb.gov/pubdms/search/hitlist.cfm?docketID=62978&CFID=2951047&CFTOKEN=433700b0892cd668-640F9CEA-D954-5E42-4EBD48460CC5D731. 12.Günther Anders, “On Promethean Shame,” in Christopher John Müller, Prometheanism: Technology, Digital Culture and Human Obsolescence (London: Rowman and Littlefield, 2016), p. 30. 13.Anders, “On Promethean Shame,” p. 31. 14.An account of this seminar, convened in Los Angeles in August 1942 by Max Horkheimer and Theodor Adorno, and the quote I present here, are from Christopher John Müller’s interpretive essay on Anders, “Better than Human: Promethean Shame and the (Trans)humanist Project,” in Prometheanism, p. 100.


pages: 521 words: 110,286

Them and Us: How Immigrants and Locals Can Thrive Together by Philippe Legrain

affirmative action, Albert Einstein, AlphaGo, autonomous vehicles, Berlin Wall, Black Lives Matter, Boris Johnson, Brexit referendum, British Empire, call centre, centre right, Chelsea Manning, clean tech, coronavirus, corporate social responsibility, COVID-19, creative destruction, crowdsourcing, data science, David Attenborough, DeepMind, Demis Hassabis, demographic dividend, digital divide, discovery of DNA, Donald Trump, double helix, Edward Glaeser, en.wikipedia.org, eurozone crisis, failed state, Fall of the Berlin Wall, future of work, illegal immigration, immigration reform, informal economy, Jane Jacobs, job automation, Jony Ive, labour market flexibility, lockdown, low cost airline, low interest rates, low skilled workers, lump of labour, Mahatma Gandhi, Mark Zuckerberg, Martin Wolf, Mary Meeker, mass immigration, moral hazard, Mustafa Suleyman, Network effects, new economy, offshore financial centre, open borders, open immigration, postnationalism / post nation state, purchasing power parity, remote working, Richard Florida, ride hailing / ride sharing, Rishi Sunak, Ronald Reagan, Silicon Valley, Skype, SoftBank, Steve Jobs, tech worker, The Death and Life of Great American Cities, The future is already here, The Future of Employment, Tim Cook: Apple, Tyler Cowen, urban sprawl, WeWork, Winter of Discontent, women in the workforce, working-age population

journalCode=mnsc 70 William Kerr, ‘Ethnic Scientific Communities and International Technology Diffusion’, Review of Economics and Statistics, 90:3, 2008, pp. 518–37. https://ssrn.com/abstract=983573 71 Gabriel Felbermayr and Farid Toubal, ‘Revisiting the trade-migration nexus: Evidence from new OECD data’, World Development, 40:5, 2012, pp. 928–37. https://ideas.repec.org/a/eee/wdevel/v40y2012i5p928-937.html 72 Mariya Aleksynska and Giovanni Peri, ‘Isolating the network effect of immigrants on trade’, The World Economy, 37:3, 2014, pp. 434–55. https://onlinelibrary.wiley.com/doi/abs/10.1111/twec.12079 73 Paul Collier, Exodus, 2013, p. 200. 15 Cultural Cornucopia 1 Alison Caporimo, ‘15 Iconic American Things That Wouldn’t Exist Without Immigrants’, BuzzFeed, 2 February 2017. https://www.buzzfeed.com/alisoncaporimo/inventions-made-by-famous-immigrants-america 2 Michael Oliver, ‘”You’re not welcome”: rap’s racial divide in France’, Guardian, 22 April 2020. https://www.theguardian.com/music/2020/apr/22/rap-music-racial-divide-france 3 Philip Kasinitz and Marco Martiniello, ‘Music, migration and the city’, Ethnic and Racial Studies, 42:6, 2019, pp. 857–64. https://www.tandfonline.com/doi/full/10.1080/01419870.2019.1567930 4 Emma Bleznak, ‘Inside Melania and Donald Trump’s Extravagant Wedding (Plus, the Real Reason Melania Had 2 Wedding Dresses)’, Showbiz Cheatsheet, 27 April 2018. https://www.cheatsheet.com/health-fitness/inside-melania-and-donald-trumps-extravagant-wedding-plus-the-real-reason-melania-had-2-wedding-dresses.html/ 5 ‘The Afrobeats nightclub uniting Naples ­– Ternanga’, Guardian, 7 February 2020. https://www.theguardian.com/news/ng-interactive/2020/feb/07/teranga-the-migrant-run-afrobeat-nightclub-uniting-naples-video 6 ‘Attitudes towards Immigration and their Antecedents: Topline Results from Round 7 of the European Social Survey’, ESS Topline Results Series 7, November 2016. http://www.europeansocialsurvey.org/docs/findings/ESS7_toplines_issue_7_immigration.pdf 16 Irregularity 1 IOM, ‘Flow Monitoring Europe’.


pages: 409 words: 112,055

The Fifth Domain: Defending Our Country, Our Companies, and Ourselves in the Age of Cyber Threats by Richard A. Clarke, Robert K. Knake

"World Economic Forum" Davos, A Declaration of the Independence of Cyberspace, Affordable Care Act / Obamacare, air gap, Airbnb, Albert Einstein, Amazon Web Services, autonomous vehicles, barriers to entry, bitcoin, Black Lives Matter, Black Swan, blockchain, Boeing 737 MAX, borderless world, Boston Dynamics, business cycle, business intelligence, call centre, Cass Sunstein, cloud computing, cognitive bias, commoditize, computer vision, corporate governance, cryptocurrency, data acquisition, data science, deep learning, DevOps, disinformation, don't be evil, Donald Trump, Dr. Strangelove, driverless car, Edward Snowden, Exxon Valdez, false flag, geopolitical risk, global village, immigration reform, information security, Infrastructure as a Service, Internet of things, Jeff Bezos, John Perry Barlow, Julian Assange, Kubernetes, machine readable, Marc Benioff, Mark Zuckerberg, Metcalfe’s law, MITM: man-in-the-middle, Morris worm, move fast and break things, Network effects, open borders, platform as a service, Ponzi scheme, quantum cryptography, ransomware, Richard Thaler, Salesforce, Sand Hill Road, Schrödinger's Cat, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, Skype, smart cities, Snapchat, software as a service, Steven Levy, Stuxnet, technoutopianism, The future is already here, Tim Cook: Apple, undersea cable, unit 8200, WikiLeaks, Y2K, zero day

We have had the pleasure, as unpaid advisers, to work with the IT departments in both New York and Virginia. The idea is simple enough. No state agency (or in the case of Virginia, no commonwealth agency, because “commonwealth” just sounds classier) or department is likely to have the ability to recruit enough quality IT professionals to run the agency’s own network effectively and securely. Moreover, the leadership of, let’s say, the Fish and Game Department is probably not really likely to be a great set of supervisors for a bunch of computer geeks running the agency’s network. Nothing against Fish and Game people, you understand. The solution is to make all, repeat all, IT functions into services that state agencies buy from the one state agency that specializes in computer science, network management, data storage, and, oh yeah, cybersecurity.


pages: 370 words: 112,809

The Equality Machine: Harnessing Digital Technology for a Brighter, More Inclusive Future by Orly Lobel

2021 United States Capitol attack, 23andMe, Ada Lovelace, affirmative action, Airbnb, airport security, Albert Einstein, algorithmic bias, Amazon Mechanical Turk, augmented reality, barriers to entry, basic income, Big Tech, bioinformatics, Black Lives Matter, Boston Dynamics, Charles Babbage, choice architecture, computer vision, Computing Machinery and Intelligence, contact tracing, coronavirus, corporate social responsibility, correlation does not imply causation, COVID-19, crowdsourcing, data science, David Attenborough, David Heinemeier Hansson, deep learning, deepfake, digital divide, digital map, Elon Musk, emotional labour, equal pay for equal work, feminist movement, Filter Bubble, game design, gender pay gap, George Floyd, gig economy, glass ceiling, global pandemic, Google Chrome, Grace Hopper, income inequality, index fund, information asymmetry, Internet of things, invisible hand, it's over 9,000, iterative process, job automation, Lao Tzu, large language model, lockdown, machine readable, machine translation, Mark Zuckerberg, market bubble, microaggression, Moneyball by Michael Lewis explains big data, natural language processing, Netflix Prize, Network effects, Northpointe / Correctional Offender Management Profiling for Alternative Sanctions, occupational segregation, old-boy network, OpenAI, openstreetmap, paperclip maximiser, pattern recognition, performance metric, personalized medicine, price discrimination, publish or perish, QR code, randomized controlled trial, remote working, risk tolerance, robot derives from the Czech word robota Czech, meaning slave, Ronald Coase, Salesforce, self-driving car, sharing economy, Sheryl Sandberg, Silicon Valley, social distancing, social intelligence, speech recognition, statistical model, stem cell, Stephen Hawking, Steve Jobs, Steve Wozniak, surveillance capitalism, tech worker, TechCrunch disrupt, The Future of Employment, TikTok, Turing test, universal basic income, Wall-E, warehouse automation, women in the workforce, work culture , you are the product

I’ve advocated that as a matter of policy, we should make existing data sets easier for all to access for the purposes of research and monitoring, and that governments should initiate and fund the creation of fuller data sets as well as more experimentation with digital technology that promotes equality and other socially valuable goals.8 Competition law and antitrust policies too must be revamped and refocused to better address the forces that amplify market concentration in the digital world, including the proprietary nature of data and the network effects of large-scale multisided online platforms that impede new entry into dominant markets. Beyond raw data, researchers and non-profit organizations should also receive more access to advances in AI itself and computational resources. Standardization of what algorithms are doing will help audits.


pages: 400 words: 124,678

The Investment Checklist: The Art of In-Depth Research by Michael Shearn

accelerated depreciation, AOL-Time Warner, Asian financial crisis, barriers to entry, Bear Stearns, book value, business cycle, call centre, Carl Icahn, Clayton Christensen, collective bargaining, commoditize, compensation consultant, compound rate of return, Credit Default Swap, currency risk, do what you love, electricity market, estate planning, financial engineering, Henry Singleton, intangible asset, Jeff Bezos, Larry Ellison, London Interbank Offered Rate, margin call, Mark Zuckerberg, money market fund, Network effects, PalmPilot, pink-collar, risk tolerance, shareholder value, six sigma, Skype, Steve Jobs, stock buybacks, subscription business, supply-chain management, technology bubble, Teledyne, time value of money, transaction costs, urban planning, women in the workforce, young professional

In contrast, Western Union’s closest competitor is MoneyGram International, which has 200,000 locations (less than half of Western Union’s 410,000 locations), and it processes only one-fourth of the total customer dollars that Western Union does. Its network is weaker because it offers its agents fewer customer dollars, and it offers its customers fewer quality locations.2 Example of a Deteriorating Advantage A network effect is not always sustainable. Can you guess which was the first third-party charge card developed in the United States? Most of you will answer American Express, Discover, Visa, or MasterCard, which together represent the majority of current spending on credit cards. However, the correct answer is Diners Club, which spawned a new industry when it launched the third-party charge-card business in the 1950s.


pages: 410 words: 119,823

Radical Technologies: The Design of Everyday Life by Adam Greenfield

3D printing, Airbnb, algorithmic bias, algorithmic management, AlphaGo, augmented reality, autonomous vehicles, bank run, barriers to entry, basic income, bitcoin, Black Lives Matter, blockchain, Boston Dynamics, business intelligence, business process, Californian Ideology, call centre, cellular automata, centralized clearinghouse, centre right, Chuck Templeton: OpenTable:, circular economy, cloud computing, Cody Wilson, collective bargaining, combinatorial explosion, Computer Numeric Control, computer vision, Conway's Game of Life, CRISPR, cryptocurrency, David Graeber, deep learning, DeepMind, dematerialisation, digital map, disruptive innovation, distributed ledger, driverless car, drone strike, Elon Musk, Ethereum, ethereum blockchain, facts on the ground, fiat currency, fulfillment center, gentrification, global supply chain, global village, Goodhart's law, Google Glasses, Herman Kahn, Ian Bogost, IBM and the Holocaust, industrial robot, informal economy, information retrieval, Internet of things, Jacob Silverman, James Watt: steam engine, Jane Jacobs, Jeff Bezos, Jeff Hawkins, job automation, jobs below the API, John Conway, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John Perry Barlow, John von Neumann, joint-stock company, Kevin Kelly, Kickstarter, Kiva Systems, late capitalism, Leo Hollis, license plate recognition, lifelogging, M-Pesa, Mark Zuckerberg, means of production, megacity, megastructure, minimum viable product, money: store of value / unit of account / medium of exchange, natural language processing, Network effects, New Urbanism, Nick Bostrom, Occupy movement, Oculus Rift, off-the-grid, PalmPilot, Pareto efficiency, pattern recognition, Pearl River Delta, performance metric, Peter Eisenman, Peter Thiel, planetary scale, Ponzi scheme, post scarcity, post-work, printed gun, proprietary trading, RAND corporation, recommendation engine, RFID, rolodex, Rutger Bregman, Satoshi Nakamoto, self-driving car, sentiment analysis, shareholder value, sharing economy, Shenzhen special economic zone , Sidewalk Labs, Silicon Valley, smart cities, smart contracts, social intelligence, sorting algorithm, special economic zone, speech recognition, stakhanovite, statistical model, stem cell, technoutopianism, Tesla Model S, the built environment, The Death and Life of Great American Cities, The Future of Employment, Tony Fadell, transaction costs, Uber for X, undersea cable, universal basic income, urban planning, urban sprawl, vertical integration, Vitalik Buterin, warehouse robotics, When a measure becomes a target, Whole Earth Review, WikiLeaks, women in the workforce

The shared tastes, priorities and assumptions of a compact and relatively homogeneous body of people, most of whom work within a few miles of the Highway 85/101 interchange in Mountain View, sharply inflect the design of products made in Hyderabad, Seoul and New Taipei, in a way that can’t simply be accounted for by network effects or convergent evolution. For all the weirdness and vitality percolating up from the bottom of the technological food chain, a profoundly conservative tendency reigns at its apex. At present, the Stacks are able to reproduce and reinforce the conditions of their own survival through an array of canny strategic investments.


pages: 587 words: 117,894

Cybersecurity: What Everyone Needs to Know by P. W. Singer, Allan Friedman

4chan, A Declaration of the Independence of Cyberspace, air gap, Apple's 1984 Super Bowl advert, barriers to entry, Berlin Wall, bitcoin, blood diamond, borderless world, Brian Krebs, business continuity plan, Chelsea Manning, cloud computing, cognitive load, crowdsourcing, cuban missile crisis, data acquisition, do-ocracy, Dr. Strangelove, drone strike, Edward Snowden, energy security, failed state, fake news, Fall of the Berlin Wall, fault tolerance, Free Software Foundation, global supply chain, Google Earth, information security, Internet of things, invention of the telegraph, John Markoff, John Perry Barlow, Julian Assange, Khan Academy, M-Pesa, military-industrial complex, MITM: man-in-the-middle, mutually assured destruction, Network effects, packet switching, Peace of Westphalia, pre–internet, profit motive, RAND corporation, ransomware, RFC: Request For Comment, risk tolerance, rolodex, Seymour Hersh, Silicon Valley, Skype, smart grid, SQL injection, Steve Jobs, Stuxnet, Twitter Arab Spring, uranium enrichment, vertical integration, We are Anonymous. We are Legion, web application, WikiLeaks, Yochai Benkler, zero day, zero-sum game

“You can learn a lot from the enemy by watching them chat online,” said Martin Libicki, a senior policy analyst at the RAND Corporation, a nonprofit research organization. The point is that the advantages of cyberspace for terrorism can be equally useful for counterterrorism. The Web has aided terrorist groups by acting as both a Rolodex and playbook. But those on the other side of the fight have access to the same Rolodex and playbooks. The networking effects of cyberspace, for instance, allow terrorists to link as never before, but they also allow intelligence analysts to map out social networks in unprecedented ways, providing clues about the leadership and structure of terrorist groups that would otherwise be impossible to gain. The world learned just how powerful some of these tools can be from documents leaked by NSA contractor Edward Snowden in 2013, detailing how US intelligence agencies and their allies engaged in online surveillance of an unprecedented scale.


pages: 504 words: 126,835

The Innovation Illusion: How So Little Is Created by So Many Working So Hard by Fredrik Erixon, Bjorn Weigel

Airbnb, Alan Greenspan, Albert Einstein, American ideology, asset allocation, autonomous vehicles, barriers to entry, Basel III, Bernie Madoff, bitcoin, Black Swan, blockchain, Blue Ocean Strategy, BRICs, Burning Man, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, classic study, Clayton Christensen, Colonization of Mars, commoditize, commodity super cycle, corporate governance, corporate social responsibility, creative destruction, crony capitalism, dark matter, David Graeber, David Ricardo: comparative advantage, discounted cash flows, distributed ledger, Donald Trump, Dr. Strangelove, driverless car, Elon Musk, Erik Brynjolfsson, Fairchild Semiconductor, fear of failure, financial engineering, first square of the chessboard / second half of the chessboard, Francis Fukuyama: the end of history, general purpose technology, George Gilder, global supply chain, global value chain, Google Glasses, Google X / Alphabet X, Gordon Gekko, Greenspan put, Herman Kahn, high net worth, hiring and firing, hockey-stick growth, Hyman Minsky, income inequality, income per capita, index fund, industrial robot, Internet of things, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, Just-in-time delivery, Kevin Kelly, knowledge economy, laissez-faire capitalism, low interest rates, Lyft, manufacturing employment, Mark Zuckerberg, market design, Martin Wolf, mass affluent, means of production, middle-income trap, Mont Pelerin Society, Network effects, new economy, offshore financial centre, pensions crisis, Peter Thiel, Potemkin village, precautionary principle, price mechanism, principal–agent problem, Productivity paradox, QWERTY keyboard, RAND corporation, Ray Kurzweil, rent-seeking, risk tolerance, risk/return, Robert Gordon, Robert Solow, Ronald Coase, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, Silicon Valley, Silicon Valley startup, Skype, sovereign wealth fund, Steve Ballmer, Steve Jobs, Steve Wozniak, subprime mortgage crisis, technological determinism, technological singularity, TED Talk, telemarketer, The Chicago School, The Future of Employment, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, transaction costs, transportation-network company, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, uber lyft, University of East Anglia, unpaid internship, Vanguard fund, vertical integration, Yogi Berra

They are intended to consolidate, rather than build competition. Hence they are sometimes, if not often, used in order to defend market positions – and, in that way, they form part of a different type of globalization that emerged in the 1990s and promoted horizontal expansion, vertical integration, and corporate attempts to create stronger network effects on the market. More importantly, however, latter-year M&As are a sign of middle-aged corporates that have lost their ability to reproduce through innovation and have to get their vitality from other firms to stay on the market. Management and shareholders in middle-aged capitalism have chosen between different alternative uses of their capital, favoring mergers with or acquisitions of other companies because they believe they can better control the returns of M&As compared to other alternatives on offer.


pages: 423 words: 126,096

Our Own Devices: How Technology Remakes Humanity by Edward Tenner

A. Roger Ekirch, Apple Newton, Bonfire of the Vanities, card file, Douglas Engelbart, Douglas Engelbart, Frederick Winslow Taylor, future of work, indoor plumbing, informal economy, invention of the telephone, invisible hand, Johannes Kepler, John Markoff, Joseph-Marie Jacquard, Lewis Mumford, Multics, multilevel marketing, Network effects, optical character recognition, PalmPilot, QWERTY keyboard, safety bicycle, scientific management, Shoshana Zuboff, Stewart Brand, tacit knowledge, women in the workforce

We have already noted the rise of electrified typewriters in telegraphy In 1902, George Blickensderfer introduced the Blickensderfer Electric, with an interchangeable type element and keyboard control of underscoring, line spacing, carriage return, and tabulation. Hammer force could also be adjusted from the keyboard to produce as many as fifteen carbon copies. The inventor’s only mistake was ignoring a different set of network effects: utilities were still supplying electricity only after dark, and the machine’s power cord was designed to be screwed into a lightbulb socket. Blickensderfer’s death in 1917 left his ideas orphaned by the company’s successors, but Remington and Electromatic (absorbed by IBM) began making commercially successful machines in the 1920s.36 By the 1930s, IBM was using typewriter-style keyboards for card punching; even early scientific computation used stacks of punched cards, and the keyboard was already an important input device.


pages: 597 words: 119,204

Website Optimization by Andrew B. King

AltaVista, AOL-Time Warner, bounce rate, don't be evil, Dr. Strangelove, en.wikipedia.org, Firefox, In Cold Blood by Truman Capote, information retrieval, iterative process, Kickstarter, machine readable, medical malpractice, Network effects, OSI model, performance metric, power law, satellite internet, search engine result page, second-price auction, second-price sealed-bid, semantic web, Silicon Valley, slashdot, social bookmarking, social graph, Steve Jobs, the long tail, three-martini lunch, traumatic brain injury, web application

We have encountered the following issues when analyzing and optimizing Ajax for clients: Mandatory JavaScript-style architecture effects — Accessibility problems — Search engine optimization (SEO) problems caused by lack of indexing by non-JavaScript-aware spiders coupled with one-page architecture issues Perception of browser and code errors by users Network effects — Lags in response time when the user expects immediacy — Timeouts and retries because of intermittent network issues — Lack of appropriate network and server error handling — Dependency and data ordering problems One-page architecture effects — Breaking the Back button and bookmarking — Difficulty with standard web analytics systems — Indexability of deep content by search robots * * * [120] Garrett, J.


pages: 420 words: 124,202

The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention by William Rosen

Albert Einstein, All science is either physics or stamp collecting, barriers to entry, Charles Babbage, collective bargaining, computer age, Copley Medal, creative destruction, David Ricardo: comparative advantage, decarbonisation, delayed gratification, Fellow of the Royal Society, flying shuttle, Flynn Effect, fudge factor, full employment, Higgs boson, independent contractor, invisible hand, Isaac Newton, Islamic Golden Age, iterative process, James Hargreaves, James Watt: steam engine, John Harrison: Longitude, Joseph Schumpeter, Joseph-Marie Jacquard, knowledge economy, language acquisition, Lewis Mumford, moral hazard, Network effects, Panopticon Jeremy Bentham, Paul Samuelson, Peace of Westphalia, Peter Singer: altruism, QWERTY keyboard, Ralph Waldo Emerson, rent-seeking, Robert Solow, Ronald Coase, Simon Kuznets, spinning jenny, tacit knowledge, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, three-masted sailing ship, transaction costs, transcontinental railway, zero-sum game, éminence grise

Stephenson’s rails seem mundane next to better-known “eureka” moments, but as much as any other innovation of the day they underline the importance of such micro-inventions in the making of a revolution. For it was the rails that finally made the entire network of devices—engine, linkage, wheel, and track—work. Stephenson’s working life* marks the point in the development of steam technology when the value of what economists call “network effects” finally overtook the importance of any individual invention, however brilliant. Setting the distance between the smooth tracks on which the Blucher traveled at four feet eight and a half inches was arbitrary—that was the width of the Killingworth Colliery wagonway—but its specific width was irrelevant.


pages: 457 words: 126,996

Hacker, Hoaxer, Whistleblower, Spy: The Story of Anonymous by Gabriella Coleman

1960s counterculture, 4chan, Aaron Swartz, Amazon Web Services, Bay Area Rapid Transit, bitcoin, Chelsea Manning, citizen journalism, cloud computing, collective bargaining, corporate governance, creative destruction, crowdsourcing, data science, David Graeber, Debian, digital rights, disinformation, do-ocracy, East Village, Eben Moglen, Edward Snowden, false flag, feminist movement, Free Software Foundation, Gabriella Coleman, gentrification, George Santayana, Hacker News, hive mind, impulse control, information security, Jacob Appelbaum, jimmy wales, John Perry Barlow, Julian Assange, Laura Poitras, lolcat, low cost airline, mandatory minimum, Mohammed Bouazizi, Network effects, Occupy movement, Oklahoma City bombing, operational security, pirate software, power law, Richard Stallman, SETI@home, side project, Silicon Valley, Skype, SQL injection, Steven Levy, Streisand effect, TED Talk, Twitter Arab Spring, WikiLeaks, zero day

He claimed that Anonymous had already doxed “everyone involved” with the cover-up and crime—parents, teachers, and kids—and were going to release their private information online “unless all accused parties come forward by New Years Day and issue a public apology to the girl and her family.”45 By the next day, a hacker, Noah McHugh, who went by “JustBatCat,” allegedly gained access to RollRedRoll.com, the school’s sports web portal (named after its buff, red, devil-like stallion mascot), and accessed team emails. KyAnonymous tweeted nonstop while celebrities like Roseanne Barr added their network effect to the cause. Then, on December 29, a cold wintry day, Anonymous’ call for a street demonstration in Steubenville was answered by a throng of a thousand demonstrators—with a now-requisite smattering of Guy Fawkes masks. “In a dramatic turn, some of them spoke of their own sexual assaults and rapes, removing their masks to show themselves to the crowd,” wrote Kushner.


pages: 521 words: 118,183

The Wires of War: Technology and the Global Struggle for Power by Jacob Helberg

"World Economic Forum" Davos, 2021 United States Capitol attack, A Declaration of the Independence of Cyberspace, active measures, Affordable Care Act / Obamacare, air gap, Airbnb, algorithmic management, augmented reality, autonomous vehicles, Berlin Wall, Bernie Sanders, Big Tech, bike sharing, Black Lives Matter, blockchain, Boris Johnson, Brexit referendum, cable laying ship, call centre, Cambridge Analytica, Cass Sunstein, cloud computing, coronavirus, COVID-19, creative destruction, crisis actor, data is the new oil, data science, decentralized internet, deep learning, deepfake, deglobalization, deindustrialization, Deng Xiaoping, deplatforming, digital nomad, disinformation, don't be evil, Donald Trump, dual-use technology, Edward Snowden, Elon Musk, en.wikipedia.org, end-to-end encryption, fail fast, fake news, Filter Bubble, Francis Fukuyama: the end of history, geopolitical risk, glass ceiling, global pandemic, global supply chain, Google bus, Google Chrome, GPT-3, green new deal, information security, Internet of things, Jeff Bezos, Jeffrey Epstein, John Markoff, John Perry Barlow, knowledge economy, Larry Ellison, lockdown, Loma Prieta earthquake, low earth orbit, low skilled workers, Lyft, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Mary Meeker, Mikhail Gorbachev, military-industrial complex, Mohammed Bouazizi, move fast and break things, Nate Silver, natural language processing, Network effects, new economy, one-China policy, open economy, OpenAI, Parler "social media", Peter Thiel, QAnon, QR code, race to the bottom, Ralph Nader, RAND corporation, reshoring, ride hailing / ride sharing, Ronald Reagan, Russian election interference, Salesforce, Sam Altman, satellite internet, self-driving car, Sheryl Sandberg, side project, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Skype, smart grid, SoftBank, Solyndra, South China Sea, SpaceX Starlink, Steve Jobs, Steven Levy, Stuxnet, supply-chain attack, Susan Wojcicki, tech worker, techlash, technoutopianism, TikTok, Tim Cook: Apple, trade route, TSMC, Twitter Arab Spring, uber lyft, undersea cable, Unsafe at Any Speed, Valery Gerasimov, vertical integration, Wargames Reagan, Westphalian system, white picket fence, WikiLeaks, Y Combinator, zero-sum game

Although policymakers’ natural instincts—and political incentives—might push them to spread reshoring investments across the country, some of America’s most innovative global hubs have been successful because they are geographically concentrated: Wall Street, Hollywood, Silicon Valley, the Motor City. Geographically concentrated regional hubs unlock network effects that allow them to become growth engines for their state and the rest of the country. Much like magnets, these hubs attract talented individuals from around the world who self-select to relocate closer to their industry’s center of gravity. This clustering of specialized expertise increases the connections between participants of the ecosystem, allowing them to match problems and solutions more quickly than elsewhere.


pages: 474 words: 130,575

Surveillance Valley: The Rise of the Military-Digital Complex by Yasha Levine

23andMe, activist fund / activist shareholder / activist investor, Adam Curtis, Airbnb, AltaVista, Amazon Web Services, Anne Wojcicki, anti-communist, AOL-Time Warner, Apple's 1984 Super Bowl advert, bitcoin, Black Lives Matter, borderless world, Boston Dynamics, British Empire, Californian Ideology, call centre, Charles Babbage, Chelsea Manning, cloud computing, collaborative editing, colonial rule, company town, computer age, computerized markets, corporate governance, crowdsourcing, cryptocurrency, data science, digital map, disinformation, don't be evil, Donald Trump, Douglas Engelbart, Douglas Engelbart, Dr. Strangelove, drone strike, dual-use technology, Edward Snowden, El Camino Real, Electric Kool-Aid Acid Test, Elon Musk, end-to-end encryption, fake news, fault tolerance, gentrification, George Gilder, ghettoisation, global village, Google Chrome, Google Earth, Google Hangouts, Greyball, Hacker Conference 1984, Howard Zinn, hypertext link, IBM and the Holocaust, index card, Jacob Appelbaum, Jeff Bezos, jimmy wales, John Gilmore, John Markoff, John Perry Barlow, John von Neumann, Julian Assange, Kevin Kelly, Kickstarter, Laura Poitras, life extension, Lyft, machine readable, Mark Zuckerberg, market bubble, Menlo Park, military-industrial complex, Mitch Kapor, natural language processing, Neal Stephenson, Network effects, new economy, Norbert Wiener, off-the-grid, One Laptop per Child (OLPC), packet switching, PageRank, Paul Buchheit, peer-to-peer, Peter Thiel, Philip Mirowski, plutocrats, private military company, RAND corporation, Ronald Reagan, Ross Ulbricht, Satoshi Nakamoto, self-driving car, sentiment analysis, shareholder value, Sheryl Sandberg, side project, Silicon Valley, Silicon Valley startup, Skype, slashdot, Snapchat, Snow Crash, SoftBank, speech recognition, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, Susan Wojcicki, Telecommunications Act of 1996, telepresence, telepresence robot, The Bell Curve by Richard Herrnstein and Charles Murray, The Hackers Conference, Tony Fadell, uber lyft, vertical integration, Whole Earth Catalog, Whole Earth Review, WikiLeaks

It didn’t mention the leaker by name in its promotional materials, but it profited from the crypto culture he promoted and benefited from his direct endorsement of the crypto tools it financed. It boasted that its partnership with both Silicon Valley and respected privacy activists meant that hundreds of millions of people could use the privacy tools the US government had brought to market. And OTF promised that this was just a start: “By leveraging social network effects, we expect to expand to a billion regular users taking advantage of OTF-supported tools and Internet Freedom technologies by 2015.”132 False Sense of Security While accolades for the Tor Project, Signal, and other crypto apps funded by the US government rolled in, a deeper look showed that they were not as secure or as impervious to government penetration as their proponents claimed.


pages: 624 words: 127,987

The Personal MBA: A World-Class Business Education in a Single Volume by Josh Kaufman

Albert Einstein, Alvin Toffler, Atul Gawande, Black Swan, Blue Ocean Strategy, business cycle, business process, buy low sell high, capital asset pricing model, Checklist Manifesto, cognitive bias, correlation does not imply causation, Credit Default Swap, Daniel Kahneman / Amos Tversky, David Heinemeier Hansson, David Ricardo: comparative advantage, Dean Kamen, delayed gratification, discounted cash flows, Donald Knuth, double entry bookkeeping, Douglas Hofstadter, Dunning–Kruger effect, en.wikipedia.org, Frederick Winslow Taylor, George Santayana, Gödel, Escher, Bach, high net worth, hindsight bias, index card, inventory management, iterative process, job satisfaction, Johann Wolfgang von Goethe, Kaizen: continuous improvement, Kevin Kelly, Kickstarter, Lao Tzu, lateral thinking, loose coupling, loss aversion, Marc Andreessen, market bubble, Network effects, Parkinson's law, Paul Buchheit, Paul Graham, place-making, premature optimization, Ralph Waldo Emerson, rent control, scientific management, side project, statistical model, stealth mode startup, Steve Jobs, Steve Wozniak, subscription business, systems thinking, telemarketer, the scientific method, time value of money, Toyota Production System, tulip mania, Upton Sinclair, Vilfredo Pareto, Walter Mischel, Y Combinator, Yogi Berra

Now, $1 invested in television advertising is lucky to return $1.20—there are more channels, advertising is more expensive, and people have the technology to filter out unwanted distractions. The loop still works in some circumstances, but it doesn’t work as well as it used to. Autocatalysis doesn’t always have to be money: “network effects” and “viral loops” are also examples of Autocatalysis. Every time someone signs up for Facebook, they’ll naturally invite even more users to the network. Every time someone sees a funny video on YouTube, they’ll pass it along to several friends. That’s Autocatalysis. If your business includes some Autocatalyzing element, it’ll grow more quickly than you expect.


pages: 538 words: 141,822

The Net Delusion: The Dark Side of Internet Freedom by Evgeny Morozov

"World Economic Forum" Davos, A Declaration of the Independence of Cyberspace, Alvin Toffler, Ayatollah Khomeini, Berlin Wall, borderless world, Buckminster Fuller, Californian Ideology, Cass Sunstein, citizen journalism, cloud computing, cognitive dissonance, Columbine, computer age, conceptual framework, crowdsourcing, digital divide, disinformation, Dissolution of the Soviet Union, don't be evil, Evgeny Morozov, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, global village, Google Earth, Herbert Marcuse, illegal immigration, invention of radio, invention of the printing press, invisible hand, John Markoff, John Perry Barlow, John von Neumann, lolcat, Marshall McLuhan, Mitch Kapor, Naomi Klein, Network effects, new economy, New Urbanism, off-the-grid, Panopticon Jeremy Bentham, peer-to-peer, pirate software, pre–internet, Productivity paradox, public intellectual, RAND corporation, Robert Solow, Ronald Reagan, Ronald Reagan: Tear down this wall, Silicon Valley, Silicon Valley startup, Sinatra Doctrine, Skype, Slavoj Žižek, social graph, Steve Jobs, Streisand effect, technological determinism, technoutopianism, TED Talk, The Wisdom of Crowds, urban planning, Washington Consensus, WikiLeaks, women in the workforce

Most popular social networking sites were not set up for activists by activists; they were created for the purposes of entertainment and attract activists not because they offer unique services but because they are hard to block. Even though Facebook activism offers only a limited vision of what is really possible in the digital space, the network effect—the fact that so many people and organizations are already on Facebook—makes it hard to think outside the box. Activists can easily set up a website with better privacy defaults and a gazillion more functions, but why should they bother building it if it may fail to attract any visitors? Most campaigns have no choice but to conform to the shallowness and limitations of Facebook communications; in a tradeoff between scale and functionality, most of them choose the former.


pages: 441 words: 136,954

That Used to Be Us by Thomas L. Friedman, Michael Mandelbaum

addicted to oil, Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, Amazon Web Services, American Society of Civil Engineers: Report Card, Andy Kessler, Ayatollah Khomeini, bank run, barriers to entry, Bear Stearns, Berlin Wall, blue-collar work, Bretton Woods, business process, call centre, carbon footprint, carbon tax, Carmen Reinhart, Cass Sunstein, centre right, Climatic Research Unit, cloud computing, collective bargaining, corporate social responsibility, cotton gin, creative destruction, Credit Default Swap, crowdsourcing, delayed gratification, drop ship, energy security, Fall of the Berlin Wall, fear of failure, full employment, Google Earth, illegal immigration, immigration reform, income inequality, Intergovernmental Panel on Climate Change (IPCC), job automation, Kenneth Rogoff, knowledge economy, Lean Startup, low interest rates, low skilled workers, Mark Zuckerberg, market design, mass immigration, more computing power than Apollo, Network effects, Nixon triggered the end of the Bretton Woods system, obamacare, oil shock, PalmPilot, pension reform, precautionary principle, proprietary trading, Report Card for America’s Infrastructure, rising living standards, Ronald Reagan, Rosa Parks, Saturday Night Live, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Steve Jobs, the long tail, the scientific method, Thomas L Friedman, too big to fail, University of East Anglia, vertical integration, WikiLeaks

The “cloud” refers to the amorphous, out-of-sight, out-of-mind mess of computer tasks that happen on someone else’s equipment. Though the cloud is still in its infancy, in 2009 alone global data flows grew by 50 percent thanks in part to its emergence, along with wireless connectivity. “The more people are connected, the more people connect,” said Hewlett-Packard’s CEO, Léo Apotheker, “so you get these network effects, and that is just flattening the world even more every day.” Indeed, every day more and more of the features that defined the personal computer are finding their way into the phone and the tablet. True, the majority of the world’s people still don’t have smartphones. But you can see the future, and it will be smart; there will be Web- and video-enabled phones everywhere for everyone—and sooner than you think.


pages: 503 words: 131,064

Liars and Outliers: How Security Holds Society Together by Bruce Schneier

Abraham Maslow, airport security, Alvin Toffler, barriers to entry, behavioural economics, benefit corporation, Berlin Wall, Bernie Madoff, Bernie Sanders, Brian Krebs, Broken windows theory, carried interest, Cass Sunstein, Chelsea Manning, commoditize, corporate governance, crack epidemic, credit crunch, CRISPR, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, desegregation, don't be evil, Double Irish / Dutch Sandwich, Douglas Hofstadter, Dunbar number, experimental economics, Fall of the Berlin Wall, financial deregulation, Future Shock, Garrett Hardin, George Akerlof, hydraulic fracturing, impulse control, income inequality, information security, invention of agriculture, invention of gunpowder, iterative process, Jean Tirole, John Bogle, John Nash: game theory, joint-stock company, Julian Assange, language acquisition, longitudinal study, mass incarceration, meta-analysis, microcredit, mirror neurons, moral hazard, Multics, mutually assured destruction, Nate Silver, Network effects, Nick Leeson, off-the-grid, offshore financial centre, Oklahoma City bombing, patent troll, phenotype, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, profit motive, race to the bottom, Ralph Waldo Emerson, RAND corporation, Recombinant DNA, rent-seeking, RFID, Richard Thaler, risk tolerance, Ronald Coase, security theater, shareholder value, slashdot, statistical model, Steven Pinker, Stuxnet, technological singularity, The Market for Lemons, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Timothy McVeigh, too big to fail, traffic fines, Tragedy of the Commons, transaction costs, ultimatum game, UNCLOS, union organizing, Vernor Vinge, WikiLeaks, World Values Survey, Y2K, Yochai Benkler, zero-sum game

Gal Zauberman (2003), “The Intertemporal Dynamics of Consumer Lock-In,” Journal of Consumer Research, 30:405–19. William Barnes, Myles Gartland, and Martin Stack (2004), “Old Habits Die Hard: Path Dependency and Behavioral Lock-In,” Journal of Economic Issues, 38:371–7. Joseph Farrell and Paul Klemperer (2007), “Coordination and Lock-In: Competition with Switching Costs and Network Effects,” in Mark Armstrong and Robert Porter, eds., Handbook of Industrial Organization, Volume 3, North-Holland, 1967–2072. able to bargain down Tricia Bishop (13 Dec 2008), “Court Orders ‘Scareware’ Shut Down,” Baltimore Sun. Lucian Constantin (16 Jun 2009), “ByteHosting Settles with the FTC in Scareware Advertising Lawsuit,” Softpedia.


Adam Smith: Father of Economics by Jesse Norman

active measures, Alan Greenspan, Andrei Shleifer, balance sheet recession, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Berlin Wall, Black Swan, Branko Milanovic, Bretton Woods, British Empire, Broken windows theory, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, centre right, cognitive dissonance, collateralized debt obligation, colonial exploitation, Corn Laws, Cornelius Vanderbilt, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, David Ricardo: comparative advantage, deindustrialization, electricity market, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Fellow of the Royal Society, financial engineering, financial intermediation, frictionless, frictionless market, future of work, George Akerlof, Glass-Steagall Act, Hyman Minsky, income inequality, incomplete markets, information asymmetry, intangible asset, invention of the telescope, invisible hand, Isaac Newton, Jean Tirole, John Nash: game theory, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, lateral thinking, loss aversion, low interest rates, market bubble, market fundamentalism, Martin Wolf, means of production, mirror neurons, money market fund, Mont Pelerin Society, moral hazard, moral panic, Naomi Klein, negative equity, Network effects, new economy, non-tariff barriers, Northern Rock, Pareto efficiency, Paul Samuelson, Peter Thiel, Philip Mirowski, price mechanism, principal–agent problem, profit maximization, public intellectual, purchasing power parity, random walk, rent-seeking, Richard Thaler, Robert Shiller, Robert Solow, Ronald Coase, scientific worldview, seigniorage, Socratic dialogue, South Sea Bubble, special economic zone, speech recognition, Steven Pinker, The Chicago School, The Myth of the Rational Market, The Nature of the Firm, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Malthus, Thorstein Veblen, time value of money, transaction costs, transfer pricing, Veblen good, Vilfredo Pareto, Washington Consensus, working poor, zero-sum game

Google has a 70 per cent market share in search services; Google and Apple together provide the operating systems of 90 per cent of smartphones; Facebook has 2 billion active users every month. These companies manage technology platforms that are private and proprietary, their inner workings opaque to public scrutiny. They are highly scalable, and benefit from so-called ‘network effects’ by which new members increase the value of connectivity for all, and growth in data equates to super-growth in economic value. The introduction in recent years of feedback methods that allow buyers and sellers to evaluate each other, reducing informational gaps and improving incentives on both sides to perform well, has only added to the platforms’ extraordinary market power.


pages: 460 words: 131,579

Masters of Management: How the Business Gurus and Their Ideas Have Changed the World—for Better and for Worse by Adrian Wooldridge

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, affirmative action, Alan Greenspan, barriers to entry, behavioural economics, Black Swan, blood diamond, borderless world, business climate, business cycle, business intelligence, business process, carbon footprint, Cass Sunstein, Clayton Christensen, clean tech, cloud computing, collaborative consumption, collapse of Lehman Brothers, collateralized debt obligation, commoditize, company town, corporate governance, corporate social responsibility, creative destruction, credit crunch, crowdsourcing, David Brooks, David Ricardo: comparative advantage, disintermediation, disruptive innovation, do well by doing good, don't be evil, Donald Trump, Edward Glaeser, Exxon Valdez, financial deregulation, Ford Model T, Frederick Winslow Taylor, future of work, George Gilder, global supply chain, Golden arches theory, hobby farmer, industrial cluster, intangible asset, It's morning again in America, job satisfaction, job-hopping, joint-stock company, Joseph Schumpeter, junk bonds, Just-in-time delivery, Kickstarter, knowledge economy, knowledge worker, lake wobegon effect, Long Term Capital Management, low skilled workers, Mark Zuckerberg, McMansion, means of production, Menlo Park, meritocracy, Michael Milken, military-industrial complex, mobile money, Naomi Klein, Netflix Prize, Network effects, new economy, Nick Leeson, Norman Macrae, open immigration, patent troll, Ponzi scheme, popular capitalism, post-industrial society, profit motive, purchasing power parity, radical decentralization, Ralph Nader, recommendation engine, Richard Florida, Richard Thaler, risk tolerance, Ronald Reagan, science of happiness, scientific management, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, Steven Levy, supply-chain management, tacit knowledge, technoutopianism, the long tail, The Soul of a New Machine, The Wealth of Nations by Adam Smith, Thomas Davenport, Tony Hsieh, too big to fail, vertical integration, wealth creators, women in the workforce, young professional, Zipcar

Platform leaders are more difficult to dislodge than product leaders: Microsoft has been a much more consistent performer than Apple from the 1980s onward despite offering an inferior operating system. They can lock their clients into their orbits, making it expensive and inconvenient to shift to other platforms. They can benefit from network effects, growing more powerful with every new customer. And they can reap the rewards of innovations across an entire network of firms. Platform-based strategies are subtly different from product-based ones. Managers need to think more about ecosystems than about products. This does not mean ignoring products entirely—companies that produce lousy products are unlikely to be able to tempt people to jump onto their platforms (and companies that produce a stream of excellent products, like Apple, can sometimes end up almost accidentally evolving into creators of platforms).


pages: 588 words: 131,025

The Patient Will See You Now: The Future of Medicine Is in Your Hands by Eric Topol

23andMe, 3D printing, Affordable Care Act / Obamacare, Anne Wojcicki, Atul Gawande, augmented reality, Big Tech, bioinformatics, call centre, Clayton Christensen, clean water, cloud computing, commoditize, computer vision, conceptual framework, connected car, correlation does not imply causation, creative destruction, crowdsourcing, dark matter, data acquisition, data science, deep learning, digital divide, disintermediation, disruptive innovation, don't be evil, driverless car, Edward Snowden, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Firefox, gamification, global village, Google Glasses, Google X / Alphabet X, Ignaz Semmelweis: hand washing, information asymmetry, interchangeable parts, Internet of things, Isaac Newton, it's over 9,000, job automation, Julian Assange, Kevin Kelly, license plate recognition, lifelogging, Lyft, Mark Zuckerberg, Marshall McLuhan, meta-analysis, microbiome, Nate Silver, natural language processing, Network effects, Nicholas Carr, obamacare, pattern recognition, personalized medicine, phenotype, placebo effect, quantum cryptography, RAND corporation, randomized controlled trial, Salesforce, Second Machine Age, self-driving car, Silicon Valley, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, Snapchat, social graph, speech recognition, stealth mode startup, Steve Jobs, synthetic biology, the scientific method, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, traumatic brain injury, Turing test, Uber for X, uber lyft, Watson beat the top human players on Jeopardy!, WikiLeaks, X Prize

Add Facebook, Twitter, Amazon, and a long list of others to the list. It’s now hard to imagine a tech company not leveraging an open platform and developers. We have learned that to be really successful, it’s not just about hardware and software, but also about achieving a colossal crowdsourcing network effect. During the same period, a second major driver of open knowledge has emerged. These are MOOCs (massive open online courses), which broadcast lectures to tens of thousands of people who have an Internet connection and want to sign up. This isn’t your grandparents’ correspondence course! MIT’s OpenCourseWare initiated the movement in 2002 and the MOOC term was coined in 2008, but this really took off in 20116–11 with a Stanford University artificial intelligence class: 160,000 people signed up from 195 countries after one public announcement and 23,000 finished the course.7 (Talk about flattening the Earth, which only has 195 countries.)


pages: 506 words: 133,134

The Lonely Century: How Isolation Imperils Our Future by Noreena Hertz

"Friedman doctrine" OR "shareholder theory", Airbnb, airport security, algorithmic bias, Asian financial crisis, autism spectrum disorder, Bernie Sanders, Big Tech, big-box store, Broken windows theory, call centre, Capital in the Twenty-First Century by Thomas Piketty, car-free, Cass Sunstein, centre right, conceptual framework, Copley Medal, coronavirus, correlation does not imply causation, COVID-19, dark matter, deindustrialization, Diane Coyle, digital divide, disinformation, Donald Trump, driverless car, emotional labour, en.wikipedia.org, Erik Brynjolfsson, Evgeny Morozov, fake news, Fellow of the Royal Society, future of work, gender pay gap, gentrification, gig economy, Gordon Gekko, greed is good, Greta Thunberg, happiness index / gross national happiness, housing crisis, illegal immigration, independent contractor, industrial robot, Jane Jacobs, Jeff Bezos, Jeremy Corbyn, Jessica Bruder, job automation, job satisfaction, karōshi / gwarosa / guolaosi, Kevin Roose, knowledge economy, labor-force participation, lockdown, longitudinal study, low interest rates, low skilled workers, Lyft, Mark Zuckerberg, mass immigration, means of production, megacity, meta-analysis, move fast and break things, Network effects, new economy, Pepto Bismol, QWERTY keyboard, Ray Oldenburg, remote working, rent control, RFID, robo advisor, Ronald Reagan, Salesforce, San Francisco homelessness, Second Machine Age, Shoshana Zuboff, side hustle, Silicon Valley, Skype, Snapchat, social distancing, Social Responsibility of Business Is to Increase Its Profits, SoftBank, Steve Jobs, surveillance capitalism, TaskRabbit, tech worker, The Death and Life of Great American Cities, The Future of Employment, The Great Good Place, the long tail, The Wealth of Nations by Adam Smith, TikTok, Tim Cook: Apple, Uber and Lyft, uber lyft, urban planning, Wall-E, warehouse automation, warehouse robotics, WeWork, work culture , working poor, workplace surveillance

And like smokers being encouraged to quit, public health campaigns to encourage us to reduce our time on our phones and on social media should also be considered. Especially as unlike sugar – an addictive drug which harms only the user themselves – social media, like tobacco, has a significant network effect potentially damaging not only to ourselves but to those around us as well.106 When it comes to children we need to go further still. When children as young as nine are ‘increasingly anxious about their online image’ and becoming ‘addicted to likes as a form of social validation’, as Anne Longfield, the children’s commissioner for England has said, we cannot accept the harm social media is causing so many young people as ‘just the way the world is now’.107 As such, addictive social media platforms should be banned for children under the age of adult consent (16 in the UK, 18 in the United States).


pages: 505 words: 138,917

Open: The Story of Human Progress by Johan Norberg

Abraham Maslow, additive manufacturing, affirmative action, Albert Einstein, anti-globalists, basic income, Berlin Wall, Bernie Sanders, Bletchley Park, Brexit referendum, British Empire, business cycle, business process, California gold rush, carbon tax, citizen journalism, classic study, Clayton Christensen, clean water, cognitive dissonance, collective bargaining, Corn Laws, coronavirus, COVID-19, creative destruction, crony capitalism, decarbonisation, deindustrialization, Deng Xiaoping, digital map, Donald Trump, Edward Jenner, fake news, Fall of the Berlin Wall, falling living standards, Filter Bubble, financial innovation, flying shuttle, Flynn Effect, Francis Fukuyama: the end of history, future of work, Galaxy Zoo, George Gilder, Gini coefficient, global pandemic, global supply chain, global village, green new deal, humanitarian revolution, illegal immigration, income per capita, Indoor air pollution, indoor plumbing, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Islamic Golden Age, James Watt: steam engine, Jane Jacobs, Jeff Bezos, job automation, John von Neumann, joint-stock company, Joseph Schumpeter, Kickstarter, knowledge economy, labour mobility, Lao Tzu, liberal capitalism, manufacturing employment, mass immigration, negative emissions, Network effects, open borders, open economy, Pax Mongolica, place-making, profit motive, RAND corporation, regulatory arbitrage, rent control, Republic of Letters, road to serfdom, Ronald Reagan, Schrödinger's Cat, sharing economy, side project, Silicon Valley, Solyndra, spice trade, stem cell, Steve Bannon, Steve Jobs, Steve Wozniak, Steven Pinker, tacit knowledge, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trade liberalization, trade route, transatlantic slave trade, Tyler Cowen, Uber for X, ultimatum game, universal basic income, World Values Survey, Xiaogang Anhui farmers, zero-sum game

This includes mining and commodities, defence, banking, tech, telecom, infrastructure, real estate and construction.31 It doesn’t rule out the possibility that they made money on heroic entrepreneurship to the benefit of consumers, of course. If a company becomes the most successful because it is the best company, and the market is so open that the company must continue to innovate to stay on top, that is great. Their position might be dependent on economies of scale and network effects, but that is not cheating if it is what helps them produce better and/or cheaper goods and services than any competitor. But we have to be eternally vigilant. The index does suggest that favourable policies towards particular businesses are often decisive and that profits are larger than they would be on a competitive market.


pages: 512 words: 131,112

Retrofitting Suburbia, Updated Edition: Urban Design Solutions for Redesigning Suburbs by Ellen Dunham-Jones, June Williamson

accelerated depreciation, banking crisis, big-box store, bike sharing, call centre, carbon footprint, Donald Shoup, edge city, gentrification, global village, index fund, iterative process, Jane Jacobs, knowledge worker, land bank, Lewis Mumford, McMansion, megaproject, megastructure, Network effects, new economy, New Urbanism, off-the-grid, peak oil, Peter Calthorpe, place-making, postindustrial economy, Ray Oldenburg, Richard Florida, ride hailing / ride sharing, Savings and loan crisis, Seaside, Florida, Silicon Valley, skinny streets, streetcar suburb, the built environment, The Death and Life of Great American Cities, The Great Good Place, transit-oriented development, upwardly mobile, urban decay, urban renewal, urban sprawl, vertical integration, Victor Gruen, white flight, working poor, young professional, zero-sum game

A newly created arts district along historic Route 1 nearby is expected to thrive. Morphological analysis clearly shows how the series of “buffers”—churches, a public library, a community center—built on land donated by the developer in the 1960s to separate his project from the single-family house neighborhoods to the east is now an impediment to extending the street network effectively through the retrofitted site. Instead, the new “streets” remain just internal ways, although they are a tremendous improvement. (See Figure 12-10.) Figure 12-10 Diagram of block structure at UTC. The campus tissue of the office park, once similar to the mall next door, (a) has been broken up into smaller blocks (b) that more closely resemble the static tissue of the residential blocks (c).


pages: 460 words: 130,820

The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion by Eliot Brown, Maureen Farrell

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Adam Neumann (WeWork), Airbnb, AOL-Time Warner, asset light, Bear Stearns, Bernie Madoff, Burning Man, business logic, cloud computing, coronavirus, corporate governance, COVID-19, Didi Chuxing, do what you love, don't be evil, Donald Trump, driverless car, East Village, Elon Musk, financial engineering, Ford Model T, future of work, gender pay gap, global pandemic, global supply chain, Google Earth, Gordon Gekko, greed is good, Greensill Capital, hockey-stick growth, housing crisis, index fund, Internet Archive, Internet of things, Jeff Bezos, John Zimmer (Lyft cofounder), Larry Ellison, low interest rates, Lyft, Marc Benioff, Mark Zuckerberg, Masayoshi Son, Maui Hawaii, Network effects, new economy, PalmPilot, Peter Thiel, pets.com, plant based meat, post-oil, railway mania, ride hailing / ride sharing, Robinhood: mobile stock trading app, rolodex, Salesforce, San Francisco homelessness, Sand Hill Road, self-driving car, sharing economy, Sheryl Sandberg, side hustle, side project, Silicon Valley, Silicon Valley startup, smart cities, Snapchat, SoftBank, software as a service, sovereign wealth fund, starchitect, Steve Jobs, subprime mortgage crisis, super pumped, supply chain finance, Tim Cook: Apple, Travis Kalanick, Uber and Lyft, Uber for X, uber lyft, vertical integration, Vision Fund, WeWork, women in the workforce, work culture , Y Combinator, Zenefits, Zipcar

Whatever WeWork’s faults, its design wasn’t sterile. A problem for WeWork, though, was that these advantages didn’t lead to profits. The energy and aesthetic of WeWork didn’t result in noticeably higher rents; instead, WeWork’s rents were comparable to Regus’s. While Facebook and LinkedIn benefited from a “network effect” where the bigger they got, the better they could serve targeted high-priced ads or charge more to recruiters, there was no real corollary for WeWork. As WeWork got bigger, so too did its costs—it still had to build desks—while average rents tended to be flat or even go down. Members rarely used the company’s app—the magic elixir that was meant to supercharge WeWork’s physical social network.


pages: 470 words: 128,328

Reality Is Broken: Why Games Make Us Better and How They Can Change the World by Jane McGonigal

Abraham Maslow, airport security, Albert Einstein, Amazon Mechanical Turk, Anthropocene, citizen journalism, clean water, collaborative economy, crowdsourcing, delayed gratification, en.wikipedia.org, fear of failure, G4S, game design, hedonic treadmill, hobby farmer, Ian Bogost, jimmy wales, mass immigration, Merlin Mann, Network effects, new economy, oil shock, peak oil, planetary scale, Ralph Waldo Emerson, Richard Stallman, science of happiness, Search for Extraterrestrial Intelligence, SETI@home, Silicon Valley, SimCity, smart meter, Stewart Brand, The Wisdom of Crowds, Tony Hsieh, Tragedy of the Commons, urban planning, We are as Gods, web application, Whole Earth Catalog

It’s also creating a new way of helping to save the world: by investing our social attention in people who are doing good. As the game’s cocreator Richard Dorsey likes to say, “Wouldn’t it be cool if every time we unplugged an appliance or flipped a switch, somebody noticed?”16 By turning energy saving into a massively multiplayer experience, Lost Joules takes advantage of the network effect: it amplifies my private epic wins into spectacular social achievements. Of course, many people won’t want their energy consumption to be scrutinized and wagered on by the playing public. But given the history of increasing public disclosure on the Internet—from blogs to videos to social network to real-time status updates—it’s a safe bet that the lure of being lauded in the public spotlight will attract plenty of players.


Investment: A History by Norton Reamer, Jesse Downing

activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, algorithmic trading, asset allocation, backtesting, banking crisis, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, book value, break the buck, Brownian motion, business cycle, buttonwood tree, buy and hold, California gold rush, capital asset pricing model, Carmen Reinhart, carried interest, colonial rule, Cornelius Vanderbilt, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, debt deflation, discounted cash flows, diversified portfolio, dogs of the Dow, equity premium, estate planning, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, family office, Fellow of the Royal Society, financial innovation, fixed income, flying shuttle, Glass-Steagall Act, Gordon Gekko, Henri Poincaré, Henry Singleton, high net worth, impact investing, index fund, information asymmetry, interest rate swap, invention of the telegraph, James Hargreaves, James Watt: steam engine, John Bogle, joint-stock company, Kenneth Rogoff, labor-force participation, land tenure, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, low interest rates, managed futures, margin call, means of production, Menlo Park, merger arbitrage, Michael Milken, money market fund, moral hazard, mortgage debt, Myron Scholes, negative equity, Network effects, new economy, Nick Leeson, Own Your Own Home, Paul Samuelson, pension reform, Performance of Mutual Funds in the Period, Ponzi scheme, Post-Keynesian economics, price mechanism, principal–agent problem, profit maximization, proprietary trading, quantitative easing, RAND corporation, random walk, Renaissance Technologies, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Sand Hill Road, Savings and loan crisis, seminal paper, Sharpe ratio, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spinning jenny, statistical arbitrage, survivorship bias, tail risk, technology bubble, Teledyne, The Wealth of Nations by Adam Smith, time value of money, tontine, too big to fail, transaction costs, two and twenty, underbanked, Vanguard fund, working poor, yield curve

Across many countries, stock ownership and utilization of these exchanges broadened widely. Whereas just 3 to 5 percent of adults owned stocks in the 1920s, about half of American households own stocks today. Of course, over time, the progress of public markets does not mean more public markets. There has been powerful consolidation afoot in recent years as network effects set in and there was more logic to having fewer exchanges, rather than a plethora of regional ones, list stocks. FINAL COMMENTS In the final analysis, the advent of public markets has significant implications for managed investments. As the final piece in the story of the democratization of investment, the evolution of public equity, capitalraising mechanisms, and strategy for professional money managers and individual investors cannot be ignored.


pages: 585 words: 151,239

Capitalism in America: A History by Adrian Wooldridge, Alan Greenspan

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, agricultural Revolution, air freight, Airbnb, airline deregulation, Alan Greenspan, American Society of Civil Engineers: Report Card, Asian financial crisis, bank run, barriers to entry, Bear Stearns, Berlin Wall, Blitzscaling, Bonfire of the Vanities, book value, Bretton Woods, British Empire, business climate, business cycle, business process, California gold rush, Charles Lindbergh, cloud computing, collateralized debt obligation, collective bargaining, Corn Laws, Cornelius Vanderbilt, corporate governance, corporate raider, cotton gin, creative destruction, credit crunch, debt deflation, Deng Xiaoping, disruptive innovation, Donald Trump, driverless car, edge city, Elon Musk, equal pay for equal work, Everybody Ought to Be Rich, Fairchild Semiconductor, Fall of the Berlin Wall, fiat currency, financial deregulation, financial engineering, financial innovation, fixed income, Ford Model T, full employment, general purpose technology, George Gilder, germ theory of disease, Glass-Steagall Act, global supply chain, Great Leap Forward, guns versus butter model, hiring and firing, Ida Tarbell, income per capita, indoor plumbing, informal economy, interchangeable parts, invention of the telegraph, invention of the telephone, Isaac Newton, Jeff Bezos, jimmy wales, John Maynard Keynes: technological unemployment, Joseph Schumpeter, junk bonds, Kenneth Rogoff, Kitchen Debate, knowledge economy, knowledge worker, labor-force participation, land bank, Lewis Mumford, Louis Pasteur, low interest rates, low skilled workers, manufacturing employment, market bubble, Mason jar, mass immigration, McDonald's hot coffee lawsuit, means of production, Menlo Park, Mexican peso crisis / tequila crisis, Michael Milken, military-industrial complex, minimum wage unemployment, mortgage debt, Myron Scholes, Network effects, new economy, New Urbanism, Northern Rock, oil rush, oil shale / tar sands, oil shock, Peter Thiel, Phillips curve, plutocrats, pneumatic tube, popular capitalism, post-industrial society, postindustrial economy, price stability, Productivity paradox, public intellectual, purchasing power parity, Ralph Nader, Ralph Waldo Emerson, RAND corporation, refrigerator car, reserve currency, rising living standards, road to serfdom, Robert Gordon, Robert Solow, Ronald Reagan, Sand Hill Road, savings glut, scientific management, secular stagnation, Silicon Valley, Silicon Valley startup, Simon Kuznets, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, stem cell, Steve Jobs, Steve Wozniak, strikebreaker, supply-chain management, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, total factor productivity, trade route, transcontinental railway, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, union organizing, Unsafe at Any Speed, Upton Sinclair, urban sprawl, Vannevar Bush, vertical integration, War on Poverty, washing machines reduced drudgery, Washington Consensus, white flight, wikimedia commons, William Shockley: the traitorous eight, women in the workforce, Works Progress Administration, Yom Kippur War, young professional

They invest the superprofits that they gain from those temporary monopolies in more R&D in order to stay ahead in the race. Great firms “largely create what they exploit,” as he put it. That said, there are reasons for deep concern. Companies are protecting themselves from competition by building all sorts of walls and moats. This is particularly true of the tech giants. They are using network effects to dominate markets: the more people you have in your network, the more valuable those networks are. They are using convenience to squeeze out potential rivals: iPhones work easily with iPads, for example. They are highly aggressive in buying up patents and suing rivals for patent infringements.13 There is growing evidence that consolidation is slowing the rate of the diffusion of innovations through the economy.


pages: 518 words: 147,036

The Fissured Workplace by David Weil

"Friedman doctrine" OR "shareholder theory", accounting loophole / creative accounting, affirmative action, Affordable Care Act / Obamacare, banking crisis, barriers to entry, behavioural economics, business cycle, business process, buy and hold, call centre, Carmen Reinhart, Cass Sunstein, Clayton Christensen, clean water, collective bargaining, commoditize, company town, corporate governance, corporate raider, Corrections Corporation of America, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, declining real wages, employer provided health coverage, Frank Levy and Richard Murnane: The New Division of Labor, George Akerlof, global supply chain, global value chain, hiring and firing, income inequality, independent contractor, information asymmetry, intermodal, inventory management, Jane Jacobs, Kenneth Rogoff, law of one price, long term incentive plan, loss aversion, low skilled workers, minimum wage unemployment, moral hazard, Network effects, new economy, occupational segregation, Paul Samuelson, performance metric, pre–internet, price discrimination, principal–agent problem, Rana Plaza, Richard Florida, Richard Thaler, Ronald Coase, seminal paper, shareholder value, Silicon Valley, statistical model, Steve Jobs, supply-chain management, The Death and Life of Great American Cities, The Nature of the Firm, transaction costs, Triangle Shirtwaist Factory, ultimatum game, union organizing, vertical integration, women in the workforce, yield management

-Mexico Relations: Labor Market Interdependence, edited by Jorge Bustamante, Clark Reynolds, and Raul Hinojosa-Ojeda. Stanford, CA: Stanford University Press. Mishel, Lawrence, Josh Bivens, Elise Gould, and Heidi Shierholz. 2013. The State of Working America. 12th ed. Ithaca, NY: Cornell University Press. Mookherjee, Dilip, and Masatoshi Tsumagari. 2004. “The Organization of Supplier Networks: Effects of Delegation and Intermediation.” Econometrica 72, no. 4: 1179–1219. Morantz, Alison. 2011. “Does Unionization Strengthen Regulatory Enforcement? An Empirical Study of the Mine Safety and Health Administration.” New York University Journal of Legislation and Public Policy 14, no. 3: 697–727.


pages: 559 words: 155,372

Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley by Antonio Garcia Martinez

Airbnb, airport security, always be closing, Amazon Web Services, Big Tech, Burning Man, business logic, Celtic Tiger, centralized clearinghouse, cognitive dissonance, collective bargaining, content marketing, corporate governance, Credit Default Swap, crowdsourcing, data science, deal flow, death of newspapers, disruptive innovation, Dr. Strangelove, drone strike, drop ship, El Camino Real, Elon Musk, Emanuel Derman, Fairchild Semiconductor, fake it until you make it, financial engineering, financial independence, Gary Kildall, global supply chain, Goldman Sachs: Vampire Squid, Hacker News, hive mind, How many piano tuners are there in Chicago?, income inequality, industrial research laboratory, information asymmetry, information security, interest rate swap, intermodal, Jeff Bezos, Kickstarter, Malcom McLean invented shipping containers, Marc Andreessen, Mark Zuckerberg, Maui Hawaii, means of production, Menlo Park, messenger bag, minimum viable product, MITM: man-in-the-middle, move fast and break things, Neal Stephenson, Network effects, orbital mechanics / astrodynamics, Paul Graham, performance metric, Peter Thiel, Ponzi scheme, pre–internet, public intellectual, Ralph Waldo Emerson, random walk, Reminiscences of a Stock Operator, Ruby on Rails, Salesforce, Sam Altman, Sand Hill Road, Scientific racism, second-price auction, self-driving car, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Skype, Snapchat, social graph, Social Justice Warrior, social web, Socratic dialogue, source of truth, Steve Jobs, tech worker, telemarketer, the long tail, undersea cable, urban renewal, Y Combinator, zero-sum game, éminence grise

This is often derided as the “YC mafia” by outsiders. “Mafia” is a pejorative term bringing to mind tracksuit-wearing Russians bolting vodka, shouting into burner cellphones, and whispering to each other in raspy, Slavic tones. There is a feeling of collective defense around YC, and it does know how to circle the wagons if threatened. The real network effect, however, was this: With the pool of YC companies expanding every year, you could probably re-create 80 percent of the consumer and infrastructure technology used in our Internet-enabled age exclusively with Y Combinator companies. Whatever need you had, whether system-monitoring tools, mobile development, or even marketing tools (“Have you heard of our product, AdGrok?”)


pages: 598 words: 134,339

Data and Goliath: The Hidden Battles to Collect Your Data and Control Your World by Bruce Schneier

23andMe, Airbnb, airport security, AltaVista, Anne Wojcicki, AOL-Time Warner, augmented reality, behavioural economics, Benjamin Mako Hill, Black Swan, Boris Johnson, Brewster Kahle, Brian Krebs, call centre, Cass Sunstein, Chelsea Manning, citizen journalism, Citizen Lab, cloud computing, congestion charging, data science, digital rights, disintermediation, drone strike, Eben Moglen, Edward Snowden, end-to-end encryption, Evgeny Morozov, experimental subject, failed state, fault tolerance, Ferguson, Missouri, Filter Bubble, Firefox, friendly fire, Google Chrome, Google Glasses, heat death of the universe, hindsight bias, informal economy, information security, Internet Archive, Internet of things, Jacob Appelbaum, James Bridle, Jaron Lanier, John Gilmore, John Markoff, Julian Assange, Kevin Kelly, Laura Poitras, license plate recognition, lifelogging, linked data, Lyft, Mark Zuckerberg, moral panic, Nash equilibrium, Nate Silver, national security letter, Network effects, Occupy movement, operational security, Panopticon Jeremy Bentham, payday loans, pre–internet, price discrimination, profit motive, race to the bottom, RAND corporation, real-name policy, recommendation engine, RFID, Ross Ulbricht, satellite internet, self-driving car, Shoshana Zuboff, Silicon Valley, Skype, smart cities, smart grid, Snapchat, social graph, software as a service, South China Sea, sparse data, stealth mode startup, Steven Levy, Stuxnet, TaskRabbit, technological determinism, telemarketer, Tim Cook: Apple, transaction costs, Uber and Lyft, uber lyft, undersea cable, unit 8200, urban planning, Wayback Machine, WikiLeaks, workplace surveillance , Yochai Benkler, yottabyte, zero day

Reveron (Summer 2008), “Counterterrorism and intelligence cooperation,” Journal of Global Change and Governance 1, http://www.globalaffairsjournal.com/archive/Summer08/REVERON.pdf. It makes the best sense to join: Ross Anderson (23–24 Jun 2014), “Privacy versus government surveillance: Where network effects meet public choice,” 13th Annual Workshop on the Economics of Information Security, Pennsylvania State University, http://weis2014.econinfosec.org/papers/Anderson-WEIS2014.pdf. the Five Eyes: Nick Perry and Paisley Dodds (16 Jul 2013), “5-nation spy alliance too vital for leaks to harm,” Associated Press, http://bigstory.ap.org/article/experts-say-us-spy-alliance-will-survive-snowden.


pages: 496 words: 154,363

I'm Feeling Lucky: The Confessions of Google Employee Number 59 by Douglas Edwards

"World Economic Forum" Davos, Albert Einstein, AltaVista, Any sufficiently advanced technology is indistinguishable from magic, AOL-Time Warner, barriers to entry, book scanning, Build a better mousetrap, Burning Man, business intelligence, call centre, commoditize, crowdsourcing, don't be evil, Dutch auction, Elon Musk, fault tolerance, Googley, gravity well, invisible hand, Jeff Bezos, job-hopping, John Markoff, Kickstarter, machine translation, Marc Andreessen, Menlo Park, microcredit, music of the spheres, Network effects, PageRank, PalmPilot, performance metric, pets.com, Ralph Nader, risk tolerance, second-price auction, Sheryl Sandberg, side project, Silicon Valley, Silicon Valley startup, slashdot, stem cell, Superbowl ad, Susan Wojcicki, tech worker, The Turner Diaries, Y2K

AOL noted our strategic goals and our generous gesture and demanded ninety-one percent. "We're going to make your network," AOL told Alan's team. "No, you're not," Alan responded. Everybody knew he was bluffing. Larry and Sergey were desperate to kick-start our ad-syndication program, and a deal with AOL would leap across the Internet, creating a network effect that would bring in thousands of other sites. AOL had leverage and they used it to push harder and harder. A key for Google was exclusivity for the placement of ads on AOL's pages. The more places to click on a page, the lower the odds a user would click on one of our syndicated ads. If Google was going to make the huge revenue guarantee AOL demanded, we would need every penny a page could generate.


pages: 470 words: 148,730

Good Economics for Hard Times: Better Answers to Our Biggest Problems by Abhijit V. Banerjee, Esther Duflo

3D printing, accelerated depreciation, affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, Airbnb, basic income, behavioural economics, Bernie Sanders, Big Tech, business cycle, call centre, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, carbon tax, Cass Sunstein, charter city, company town, congestion pricing, correlation does not imply causation, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, decarbonisation, Deng Xiaoping, Donald Trump, Edward Glaeser, en.wikipedia.org, endowment effect, energy transition, Erik Brynjolfsson, experimental economics, experimental subject, facts on the ground, fake news, fear of failure, financial innovation, flying shuttle, gentrification, George Akerlof, Great Leap Forward, green new deal, high net worth, immigration reform, income inequality, Indoor air pollution, industrial cluster, industrial robot, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, Jean Tirole, Jeff Bezos, job automation, Joseph Schumpeter, junk bonds, Kevin Roose, labor-force participation, land reform, Les Trente Glorieuses, loss aversion, low skilled workers, manufacturing employment, Mark Zuckerberg, mass immigration, middle-income trap, Network effects, new economy, New Urbanism, no-fly zone, non-tariff barriers, obamacare, off-the-grid, offshore financial centre, One Laptop per Child (OLPC), open economy, Paul Samuelson, place-making, post-truth, price stability, profit maximization, purchasing power parity, race to the bottom, RAND corporation, randomized controlled trial, restrictive zoning, Richard Thaler, ride hailing / ride sharing, Robert Gordon, Robert Solow, Ronald Reagan, Savings and loan crisis, school choice, Second Machine Age, secular stagnation, self-driving car, shareholder value, short selling, Silicon Valley, smart meter, social graph, spinning jenny, Steve Jobs, systematic bias, Tax Reform Act of 1986, tech worker, technology bubble, The Chicago School, The Future of Employment, The Market for Lemons, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, total factor productivity, trade liberalization, transaction costs, trickle-down economics, Twitter Arab Spring, universal basic income, urban sprawl, very high income, War on Poverty, women in the workforce, working-age population, Y2K

Technological innovations have also transformed existing industries, and created large benefits from being connected to industries where they used to be largely absent, like hospitality or transportation. For example, if drivers know that all passengers use a particular ride-sharing platform, they will choose to stay on that one. Conversely, if passengers know that all drivers use a particular platform, that is where they will go. These network effects explain in part the dominance of giant tech companies like Google, Facebook, Apple, Amazon, Uber, and Airbnb, but also of “old economy” behemoths, such as Walmart and Federal Express. In addition, the globalization of demand has increased the value of brands, as rich Chinese and Indian customers can now aspire to the same goods.


pages: 524 words: 155,947

More: The 10,000-Year Rise of the World Economy by Philip Coggan

accounting loophole / creative accounting, Ada Lovelace, agricultural Revolution, Airbnb, airline deregulation, Alan Greenspan, Andrei Shleifer, anti-communist, Apollo 11, assortative mating, autonomous vehicles, bank run, banking crisis, banks create money, basic income, Bear Stearns, Berlin Wall, Black Monday: stock market crash in 1987, Bletchley Park, Bob Noyce, Boeing 747, bond market vigilante , Branko Milanovic, Bretton Woods, Brexit referendum, British Empire, business cycle, call centre, capital controls, carbon footprint, carbon tax, Carl Icahn, Carmen Reinhart, Celtic Tiger, central bank independence, Charles Babbage, Charles Lindbergh, clean water, collective bargaining, Columbian Exchange, Columbine, Corn Laws, cotton gin, credit crunch, Credit Default Swap, crony capitalism, cross-border payments, currency peg, currency risk, debt deflation, DeepMind, Deng Xiaoping, discovery of the americas, Donald Trump, driverless car, Easter island, Erik Brynjolfsson, European colonialism, eurozone crisis, Fairchild Semiconductor, falling living standards, financial engineering, financial innovation, financial intermediation, floating exchange rates, flying shuttle, Ford Model T, Fractional reserve banking, Frederick Winslow Taylor, full employment, general purpose technology, germ theory of disease, German hyperinflation, gig economy, Gini coefficient, Glass-Steagall Act, global supply chain, global value chain, Gordon Gekko, Great Leap Forward, greed is good, Greenspan put, guns versus butter model, Haber-Bosch Process, Hans Rosling, Hernando de Soto, hydraulic fracturing, hydroponic farming, Ignaz Semmelweis: hand washing, income inequality, income per capita, independent contractor, indoor plumbing, industrial robot, inflation targeting, Isaac Newton, James Watt: steam engine, job automation, John Snow's cholera map, joint-stock company, joint-stock limited liability company, Jon Ronson, Kenneth Arrow, Kula ring, labour market flexibility, land reform, land tenure, Lao Tzu, large denomination, Les Trente Glorieuses, liquidity trap, Long Term Capital Management, Louis Blériot, low cost airline, low interest rates, low skilled workers, lump of labour, M-Pesa, Malcom McLean invented shipping containers, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Martin Wolf, McJob, means of production, Mikhail Gorbachev, mittelstand, Modern Monetary Theory, moral hazard, Murano, Venice glass, Myron Scholes, Nelson Mandela, Network effects, Northern Rock, oil shale / tar sands, oil shock, Paul Samuelson, Paul Volcker talking about ATMs, Phillips curve, popular capitalism, popular electronics, price stability, principal–agent problem, profit maximization, purchasing power parity, quantitative easing, railway mania, Ralph Nader, regulatory arbitrage, road to serfdom, Robert Gordon, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, savings glut, scientific management, Scramble for Africa, Second Machine Age, secular stagnation, Silicon Valley, Simon Kuznets, South China Sea, South Sea Bubble, special drawing rights, spice trade, spinning jenny, Steven Pinker, Suez canal 1869, TaskRabbit, techlash, Thales and the olive presses, Thales of Miletus, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, transatlantic slave trade, transcontinental railway, Triangle Shirtwaist Factory, universal basic income, Unsafe at Any Speed, Upton Sinclair, V2 rocket, Veblen good, War on Poverty, Washington Consensus, Watson beat the top human players on Jeopardy!, women in the workforce, world market for maybe five computers, Yom Kippur War, you are the product, zero-sum game

In contrast, an idea can be used by anyone on the planet.4 Software is a good example of increasing returns. It takes a lot of time and effort to devise a software programme. But once it is created, additional copies of the programme are virtually costless to produce. The same is true of video games or music files on streaming services. Many technologies benefit from “network effects”. The greater the number of people who use them, the more valuable they become. Had Alexander Graham Bell created a single telephone, it would have been a useless novelty. Once one family member got a phone, others had an incentive to get one too; and then shops and businesses needed phones to speak to their customers.


Spies, Lies, and Algorithms by Amy B. Zegart

2021 United States Capitol attack, 4chan, active measures, air gap, airport security, Apollo 13, Bellingcat, Bernie Sanders, Bletchley Park, Chelsea Manning, classic study, cloud computing, cognitive bias, commoditize, coronavirus, correlation does not imply causation, COVID-19, crowdsourcing, cryptocurrency, cuban missile crisis, Daniel Kahneman / Amos Tversky, deep learning, deepfake, DeepMind, disinformation, Donald Trump, drone strike, dual-use technology, Edward Snowden, Elon Musk, en.wikipedia.org, end-to-end encryption, failed state, feminist movement, framing effect, fundamental attribution error, Gene Kranz, global pandemic, global supply chain, Google Earth, index card, information asymmetry, information security, Internet of things, job automation, John Markoff, lockdown, Lyft, Mark Zuckerberg, Nate Silver, Network effects, off-the-grid, openstreetmap, operational security, Parler "social media", post-truth, power law, principal–agent problem, QAnon, RAND corporation, Richard Feynman, risk tolerance, Robert Hanssen: Double agent, Ronald Reagan, Rubik’s Cube, Russian election interference, Saturday Night Live, selection bias, seminal paper, Seymour Hersh, Silicon Valley, Steve Jobs, Stuxnet, synthetic biology, uber lyft, unit 8200, uranium enrichment, WikiLeaks, zero day, zero-sum game

Many have called data “the new oil”—a precious resource that fuels geopolitical competition.36 In many ways, it’s a poor analogy. The differences between oil and data are stark, and they offer insight into just how much the world is changing. Oil is valuable because it is scarce; data is valuable because it isn’t. Data is essentially infinite and everyone can get it—creating network effects. Oil is captive to geography, making some countries more powerful than others. Data is unbound by geography, making even powerful countries vulnerable to attack (more on that below). Adversaries cannot turn oil into water or make it look like something it isn’t. But they can with data, corrupting it or generating so much uncertainty that nobody trusts it.


pages: 483 words: 145,225

Rebel Code: Linux and the Open Source Revolution by Glyn Moody

barriers to entry, business logic, commoditize, Compatible Time-Sharing System, Debian, Dennis Ritchie, Donald Knuth, Eben Moglen, Free Software Foundation, ghettoisation, Guido van Rossum, history of Unix, hypertext link, Johann Wolfgang von Goethe, John Gilmore, Ken Thompson, Kickstarter, Larry Ellison, Larry Wall, Marc Andreessen, MITM: man-in-the-middle, Multics, Network effects, new economy, packet switching, RFC: Request For Comment, Richard Stallman, Silicon Valley, skunkworks, slashdot, SoftBank, Steve Ballmer, Steve Jobs, Steven Levy, the Cathedral and the Bazaar, thinkpad, VA Linux

Because the second-order effects are many-to-many, whereas the relationship with the center is one-to-many.” In a sense, Wall wrote Perl and distributed it freely to give members of the community that grew around it the possibility of a similar generosity in their interactions with each other—but one on an even larger scale, thanks to the network effect. “By and large I think I’ve got my wish on that,” Wall says. “People really do help people for the sake of helping people.” For Wall, a committed Christian, this hoped-for effect is nothing less than “theological.” Wall draws explicit parallels between his creation of Perl, artistic creation in general, and the primordial Creation.


pages: 855 words: 178,507

The Information: A History, a Theory, a Flood by James Gleick

Ada Lovelace, Alan Turing: On Computable Numbers, with an Application to the Entscheidungsproblem, Albert Einstein, AltaVista, bank run, bioinformatics, Bletchley Park, Brownian motion, butterfly effect, Charles Babbage, citation needed, classic study, Claude Shannon: information theory, clockwork universe, computer age, Computing Machinery and Intelligence, conceptual framework, crowdsourcing, death of newspapers, discovery of DNA, Donald Knuth, double helix, Douglas Hofstadter, en.wikipedia.org, Eratosthenes, Fellow of the Royal Society, Gregor Mendel, Gödel, Escher, Bach, Henri Poincaré, Honoré de Balzac, index card, informal economy, information retrieval, invention of the printing press, invention of writing, Isaac Newton, Jacquard loom, Jaron Lanier, jimmy wales, Johannes Kepler, John von Neumann, Joseph-Marie Jacquard, Lewis Mumford, lifelogging, Louis Daguerre, machine translation, Marshall McLuhan, Menlo Park, microbiome, Milgram experiment, Network effects, New Journalism, Norbert Wiener, Norman Macrae, On the Economy of Machinery and Manufactures, PageRank, pattern recognition, phenotype, Pierre-Simon Laplace, pre–internet, quantum cryptography, Ralph Waldo Emerson, RAND corporation, reversible computing, Richard Feynman, Rubik’s Cube, Simon Singh, Socratic dialogue, Stephen Hawking, Steven Pinker, stochastic process, talking drums, the High Line, The Wisdom of Crowds, transcontinental railway, Turing machine, Turing test, women in the workforce, yottabyte

It remains difficult to know when and how much to trust the wisdom of crowds—the title of a 2004 book by James Surowiecki, to be distinguished from the madness of crowds as chronicled in 1841 by Charles Mackay, who declared that people “go mad in herds, while they recover their senses slowly, and one by one.”♦ Crowds turn all too quickly into mobs, with their time-honored manifestations: manias, bubbles, lynch mobs, flash mobs, crusades, mass hysteria, herd mentality, goose-stepping, conformity, groupthink—all potentially magnified by network effects and studied under the rubric of information cascades. Collective judgment has appealing possibilities; collective self-deception and collective evil have already left a cataclysmic record. But knowledge in the network is different from group decision making based on copying and parroting. It seems to develop by accretion; it can give full weight to quirks and exceptions; the challenge is to recognize it and gain access to it.


pages: 561 words: 163,916

The History of the Future: Oculus, Facebook, and the Revolution That Swept Virtual Reality by Blake J. Harris

"World Economic Forum" Davos, 4chan, airport security, Anne Wojcicki, Apollo 11, Asian financial crisis, augmented reality, barriers to entry, Benchmark Capital, Bernie Sanders, bitcoin, call centre, Carl Icahn, company town, computer vision, cryptocurrency, data science, disruptive innovation, Donald Trump, drone strike, Elon Musk, fake news, financial independence, game design, Grace Hopper, hype cycle, illegal immigration, invisible hand, it's over 9,000, Ivan Sutherland, Jaron Lanier, Jony Ive, Kickstarter, Marc Andreessen, Mark Zuckerberg, Menlo Park, Minecraft, move fast and break things, Neal Stephenson, Network effects, Oculus Rift, off-the-grid, Peter Thiel, QR code, sensor fusion, Sheryl Sandberg, side project, Silicon Valley, SimCity, skunkworks, Skype, slashdot, Snapchat, Snow Crash, software patent, stealth mode startup, Steve Jobs, unpaid internship, white picket fence

On February 12, Iribe met with Zuckerberg to explain why staying open, or even “mostly open” was core to Oculus’s strategy of funneling users into their platform. The more open their platform was, the more it would attract consumers, developers, and distributors; and, as a result, the more Oculus’s platform would grow and be the beneficiary of network effects. This was more or less the strategy that had won Microsoft the PC market and had won Google the mobile market. History and strategy aside, there was also an ideological component to this. Iribe, Abrash, Luckey, and all of Oculus’s other execs believed in an ethos of openness when it came to the PC marketplace.


pages: 604 words: 165,488

Mr Five Per Cent: The Many Lives of Calouste Gulbenkian, the World's Richest Man by Jonathan Conlin

accounting loophole / creative accounting, anti-communist, banking crisis, British Empire, carried interest, cotton gin, Ernest Rutherford, estate planning, Fellow of the Royal Society, light touch regulation, military-industrial complex, MITM: man-in-the-middle, Network effects, Pierre-Simon Laplace, rent-seeking, stakhanovite, Suez canal 1869, vertical integration, Yom Kippur War

This would be the beachhead for the invasion of Mesopotamia, the British capture of Mosul and the creation of the British mandate of Iraq. Shopping for Shell Addressing the board of Royal Dutch-Shell in November 1914, Henri Deterding wrote bullishly of its prospects. Investments in production facilities in California, Mexico, Venezuela, Egypt and Borneo were creating positive network effects, as the company’s rapidly expanding tanker fleet was now able to circumnavigate the world while minimising wasted journeys. ‘We now go from London to the Gulf [of Mexico], load Kerosene there, and then we go through the Panama Canal to Shanghai, whence we go to Singapore or Borneo, load Benzine or Liquid Fuel for Europe, – and then start the same way over again,’ Deterding noted.


pages: 526 words: 160,601

A Generation of Sociopaths: How the Baby Boomers Betrayed America by Bruce Cannon Gibney

1960s counterculture, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, AlphaGo, American Society of Civil Engineers: Report Card, Bear Stearns, Bernie Madoff, Bernie Sanders, Black Lives Matter, bond market vigilante , book value, Boston Dynamics, Bretton Woods, business cycle, buy and hold, carbon footprint, carbon tax, Charles Lindbergh, classic study, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, corporate personhood, Corrections Corporation of America, currency manipulation / currency intervention, Daniel Kahneman / Amos Tversky, dark matter, DeepMind, Deng Xiaoping, Donald Trump, Downton Abbey, Edward Snowden, Elon Musk, ending welfare as we know it, equal pay for equal work, failed state, financial deregulation, financial engineering, Francis Fukuyama: the end of history, future of work, gender pay gap, gig economy, Glass-Steagall Act, Haight Ashbury, Higgs boson, high-speed rail, Home mortgage interest deduction, Hyperloop, illegal immigration, impulse control, income inequality, Intergovernmental Panel on Climate Change (IPCC), invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jane Jacobs, junk bonds, Kitchen Debate, labor-force participation, Long Term Capital Management, low interest rates, Lyft, Mark Zuckerberg, market bubble, mass immigration, mass incarceration, McMansion, medical bankruptcy, Menlo Park, Michael Milken, military-industrial complex, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, Neil Armstrong, neoliberal agenda, Network effects, Nixon triggered the end of the Bretton Woods system, obamacare, offshore financial centre, oil shock, operation paperclip, plutocrats, Ponzi scheme, price stability, prosperity theology / prosperity gospel / gospel of success, quantitative easing, Ralph Waldo Emerson, RAND corporation, rent control, ride hailing / ride sharing, risk tolerance, Robert Shiller, Ronald Reagan, Rubik’s Cube, Savings and loan crisis, school choice, secular stagnation, self-driving car, shareholder value, short selling, side project, Silicon Valley, smart grid, Snapchat, source of truth, stem cell, Steve Jobs, Stewart Brand, stock buybacks, survivorship bias, TaskRabbit, The Wealth of Nations by Adam Smith, Tim Cook: Apple, too big to fail, War on Poverty, warehouse robotics, We are all Keynesians now, white picket fence, Whole Earth Catalog, women in the workforce, Y2K, Yom Kippur War, zero-sum game

The state analogy is the public good/natural monopoly. It’s helpful that there’s only one fire department, and probably just as well that it’s run by the government. On the private side, Facebook, at least in America, is an economically acceptable natural monopoly—it’s a product that gets better as more people use it (a “network effect”), it’s difficult for competitors to re-create and doubtful consumers want a substitute, and there have been no real charges that Mark Zuckerberg has abused his position to dispatch competitors. Still, not all monopolies are natural, and there has been an alarming rise in the market power of megafirms.


Alpha Trader by Brent Donnelly

Abraham Wald, algorithmic trading, Asian financial crisis, Atul Gawande, autonomous vehicles, backtesting, barriers to entry, beat the dealer, behavioural economics, bitcoin, Boeing 747, buy low sell high, Checklist Manifesto, commodity trading advisor, coronavirus, correlation does not imply causation, COVID-19, crowdsourcing, cryptocurrency, currency manipulation / currency intervention, currency risk, deep learning, diversification, Edward Thorp, Elliott wave, Elon Musk, endowment effect, eurozone crisis, fail fast, financial engineering, fixed income, Flash crash, full employment, global macro, global pandemic, Gordon Gekko, hedonic treadmill, helicopter parent, high net worth, hindsight bias, implied volatility, impulse control, Inbox Zero, index fund, inflation targeting, information asymmetry, invisible hand, iterative process, junk bonds, Kaizen: continuous improvement, law of one price, loss aversion, low interest rates, margin call, market bubble, market microstructure, Market Wizards by Jack D. Schwager, McMansion, Monty Hall problem, Network effects, nowcasting, PalmPilot, paper trading, pattern recognition, Peter Thiel, prediction markets, price anchoring, price discovery process, price stability, quantitative easing, quantitative trading / quantitative finance, random walk, Reminiscences of a Stock Operator, reserve currency, risk tolerance, Robert Shiller, secular stagnation, Sharpe ratio, short selling, side project, Stanford marshmallow experiment, Stanford prison experiment, survivorship bias, tail risk, TED Talk, the scientific method, The Wisdom of Crowds, theory of mind, time dilation, too big to fail, transaction costs, value at risk, very high income, yield curve, you are the product, zero-sum game

If you work hard at it and find a way to authentically connect to people, after maybe 10 years you will have a huge network of followers or contacts. To build a network, play the long game. It can’t be done overnight. Building a network is hard, frustrating work. Gains are tiny at first. But network effects scale geometrically. The eventual benefits are tremendous. 3. Study the central banks. If you are a macro trader, this is obviously key, but even if you trade single name stocks you should still understand what is going on with the major central banks (Fed, ECB and PBoC). Overall global liquidity is the number one factor driving all global asset prices much of the time and you need to have a decent sense of what is happening on that front.


pages: 673 words: 164,804

Peer-to-Peer by Andy Oram

AltaVista, big-box store, c2.com, combinatorial explosion, commoditize, complexity theory, correlation coefficient, dark matter, Dennis Ritchie, fault tolerance, Free Software Foundation, Garrett Hardin, independent contractor, information retrieval, Kickstarter, Larry Wall, Marc Andreessen, moral hazard, Network effects, P = NP, P vs NP, p-value, packet switching, PalmPilot, peer-to-peer, peer-to-peer model, Ponzi scheme, power law, radical decentralization, rolodex, Ronald Coase, Search for Extraterrestrial Intelligence, semantic web, SETI@home, Silicon Valley, slashdot, statistical model, Tragedy of the Commons, UUNET, Vernor Vinge, web application, web of trust, Zimmermann PGP

HTML spread because it allowed ordinary users to build their own web pages, without requiring that they be software developers or even particularly savvy software users. All the confident predictions about the CD-ROM-driven multimedia future turned out to be meaningless in the face of user preference. This in turn led to network effects on adoption: once a certain number of users had adopted it, there were more people committed to making the Web better than there were people committed to making CD-ROM authoring easier for amateurs. The lesson of HTML’s astonishing rise for anyone trying to make sense of the social aspects of technology is simple: follow the users.


pages: 568 words: 164,014

Dawn of the Code War: America's Battle Against Russia, China, and the Rising Global Cyber Threat by John P. Carlin, Garrett M. Graff

1960s counterculture, A Declaration of the Independence of Cyberspace, Aaron Swartz, air gap, Andy Carvin, Apple II, Bay Area Rapid Transit, bitcoin, Brian Krebs, business climate, cloud computing, cotton gin, cryptocurrency, data acquisition, Deng Xiaoping, disinformation, driverless car, drone strike, dual-use technology, eat what you kill, Edward Snowden, fake news, false flag, Francis Fukuyama: the end of history, Hacker Ethic, information security, Internet of things, James Dyson, Jeff Bezos, John Gilmore, John Markoff, John Perry Barlow, Ken Thompson, Kevin Roose, Laura Poitras, Mark Zuckerberg, Menlo Park, millennium bug, Minecraft, Mitch Kapor, moral hazard, Morris worm, multilevel marketing, Network effects, new economy, Oklahoma City bombing, out of africa, packet switching, peer-to-peer, peer-to-peer model, performance metric, RAND corporation, ransomware, Reflections on Trusting Trust, Richard Stallman, Robert Metcalfe, Ronald Reagan, Saturday Night Live, self-driving car, shareholder value, side project, Silicon Valley, Silicon Valley startup, Skype, Snapchat, South China Sea, Steve Crocker, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, Stuxnet, The Hackers Conference, Tim Cook: Apple, trickle-down economics, Wargames Reagan, Whole Earth Catalog, Whole Earth Review, WikiLeaks, Y2K, zero day, zero-sum game

Coulter emailed McClure on Sunday morning: “They are fucked.”31 (Hackers often will encrypt and compress stolen files before exfiltrating them from a system, both to make them easier to move and to help defeat network monitoring tools that search for specific types of traffic. The encryption and compression also make it enormously difficult after the fact to reconstruct what was accessed and stolen, and to judge the full scope of the theft.) All told, OPM discovered more than 2,000 pieces of malware operating on its network, effectively one piece of malware for every five devices OPM possessed; only about ten were the advanced malware from Black Vine, known as PlugX—an advanced remote access tool (RAT) that allowed a hacker to enter the system.32 The variant of PlugX the hackers had installed allowed them to record keystrokes, modify or copy files, take screenshots or video of users, and do basic network administrative tasks like logging off users or restarting machines; in short, it gave the attackers “complete control over the [infected] system.”33 The systems where PlugX did exist, though, were more than sufficient to provide access to the entire OPM network.


pages: 584 words: 187,436

More Money Than God: Hedge Funds and the Making of a New Elite by Sebastian Mallaby

Alan Greenspan, Andrei Shleifer, Asian financial crisis, asset-backed security, automated trading system, bank run, barriers to entry, Bear Stearns, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, book value, Bretton Woods, business cycle, buy and hold, capital controls, Carmen Reinhart, collapse of Lehman Brothers, collateralized debt obligation, computerized trading, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency manipulation / currency intervention, currency peg, deal flow, do well by doing good, Elliott wave, Eugene Fama: efficient market hypothesis, failed state, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, financial intermediation, fixed income, full employment, German hyperinflation, High speed trading, index fund, Jim Simons, John Bogle, John Meriwether, junk bonds, Kenneth Rogoff, Kickstarter, Long Term Capital Management, low interest rates, machine translation, margin call, market bubble, market clearing, market fundamentalism, Market Wizards by Jack D. Schwager, Mary Meeker, merger arbitrage, Michael Milken, money market fund, moral hazard, Myron Scholes, natural language processing, Network effects, new economy, Nikolai Kondratiev, operational security, pattern recognition, Paul Samuelson, pre–internet, proprietary trading, public intellectual, quantitative hedge fund, quantitative trading / quantitative finance, random walk, Renaissance Technologies, Richard Thaler, risk-adjusted returns, risk/return, Robert Mercer, rolodex, Savings and loan crisis, Sharpe ratio, short selling, short squeeze, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical arbitrage, statistical model, survivorship bias, tail risk, technology bubble, The Great Moderation, The Myth of the Rational Market, the new new thing, too big to fail, transaction costs, two and twenty, uptick rule

These short-run dislocations created opportunities for alert traders to seize bargains, and Steinhardt seized them aggressively.36 Moreover, the great beauty of Steinhardt’s method was that it was hard to copy. Once Wall Street had understood the mechanics of the A. W. Jones model, two hundred imitators had sprung up. But Steinhardt’s block-trading business was protected by “network effects,” which created barriers to entry. Steinhardt got the big calls from the block-trading brokers because he had a reputation for getting the big calls. He could trade his way out of big purchases because he had the network of broker relationships that came with being a big trader. Would-be rivals faced a frustrating catch-22 as they scrambled to catch up with him.


pages: 603 words: 182,781

Aerotropolis by John D. Kasarda, Greg Lindsay

3D printing, air freight, airline deregulation, airport security, Akira Okazaki, Alvin Toffler, An Inconvenient Truth, Asian financial crisis, back-to-the-land, barriers to entry, Bear Stearns, Berlin Wall, big-box store, blood diamond, Boeing 747, book value, borderless world, Boris Johnson, British Empire, business cycle, call centre, carbon footprint, Cesare Marchetti: Marchetti’s constant, Charles Lindbergh, Clayton Christensen, clean tech, cognitive dissonance, commoditize, company town, conceptual framework, credit crunch, David Brooks, David Ricardo: comparative advantage, Deng Xiaoping, deskilling, digital map, disruptive innovation, Dr. Strangelove, Dutch auction, Easter island, edge city, Edward Glaeser, Eyjafjallajökull, failed state, financial engineering, flag carrier, flying shuttle, food miles, Ford Model T, Ford paid five dollars a day, Frank Gehry, fudge factor, fulfillment center, full employment, future of work, Future Shock, General Motors Futurama, gentleman farmer, gentrification, Geoffrey West, Santa Fe Institute, George Gilder, global supply chain, global village, gravity well, Great Leap Forward, Haber-Bosch Process, Hernando de Soto, high-speed rail, hive mind, if you build it, they will come, illegal immigration, inflight wifi, intangible asset, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), intermodal, invention of the telephone, inventory management, invisible hand, Jane Jacobs, Jeff Bezos, Jevons paradox, Joan Didion, Kangaroo Route, Kickstarter, Kiva Systems, knowledge worker, kremlinology, land bank, Lewis Mumford, low cost airline, Marchetti’s constant, Marshall McLuhan, Masdar, mass immigration, McMansion, megacity, megaproject, Menlo Park, microcredit, military-industrial complex, Network effects, New Economic Geography, new economy, New Urbanism, oil shale / tar sands, oil shock, One Laptop per Child (OLPC), peak oil, Pearl River Delta, Peter Calthorpe, Peter Thiel, pets.com, pink-collar, planned obsolescence, pre–internet, RFID, Richard Florida, Ronald Coase, Ronald Reagan, Rubik’s Cube, savings glut, Seaside, Florida, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, SimCity, Skype, smart cities, smart grid, South China Sea, South Sea Bubble, sovereign wealth fund, special economic zone, spice trade, spinning jenny, starchitect, stem cell, Steve Jobs, Suez canal 1869, sunk-cost fallacy, supply-chain management, sustainable-tourism, tech worker, telepresence, the built environment, The Chicago School, The Death and Life of Great American Cities, the long tail, The Nature of the Firm, thinkpad, Thomas L Friedman, Thomas Malthus, Tony Hsieh, trade route, transcontinental railway, transit-oriented development, traveling salesman, trickle-down economics, upwardly mobile, urban planning, urban renewal, urban sprawl, vertical integration, Virgin Galactic, walkable city, warehouse robotics, white flight, white picket fence, Yogi Berra, zero-sum game

Given enough planes and enough runways, an airline could conceivably link every city in the country— some fifty thousand city pairs—from a centrally located one like Dallas. For cities, hubs meant dozens of new destinations and frequent service to them—more flights than they could have justified on their own. The airlines were learning about “network effects” and “first-mover advantage” long before the Internet escaped from the lab. American moved its headquarters to Dallas immediately after deregulation and opened its hub there two years later, filling the void left by Braniff. With concentration came immense economies of scale. Today, American is the largest private employer in the Metroplex, bigger than Walmart.


pages: 741 words: 179,454

Extreme Money: Masters of the Universe and the Cult of Risk by Satyajit Das

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", "there is no alternative" (TINA), "World Economic Forum" Davos, affirmative action, Alan Greenspan, Albert Einstein, algorithmic trading, Andy Kessler, AOL-Time Warner, Asian financial crisis, asset allocation, asset-backed security, bank run, banking crisis, banks create money, Basel III, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, bonus culture, book value, Bretton Woods, BRICs, British Empire, business cycle, buy the rumour, sell the news, capital asset pricing model, carbon credits, Carl Icahn, Carmen Reinhart, carried interest, Celtic Tiger, clean water, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate raider, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, Daniel Kahneman / Amos Tversky, deal flow, debt deflation, Deng Xiaoping, deskilling, discrete time, diversification, diversified portfolio, Doomsday Clock, Dr. Strangelove, Dutch auction, Edward Thorp, Emanuel Derman, en.wikipedia.org, Eugene Fama: efficient market hypothesis, eurozone crisis, Everybody Ought to Be Rich, Fall of the Berlin Wall, financial engineering, financial independence, financial innovation, financial thriller, fixed income, foreign exchange controls, full employment, Glass-Steagall Act, global reserve currency, Goldman Sachs: Vampire Squid, Goodhart's law, Gordon Gekko, greed is good, Greenspan put, happiness index / gross national happiness, haute cuisine, Herman Kahn, high net worth, Hyman Minsky, index fund, information asymmetry, interest rate swap, invention of the wheel, invisible hand, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", job automation, Johann Wolfgang von Goethe, John Bogle, John Meriwether, joint-stock company, Jones Act, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, laissez-faire capitalism, load shedding, locking in a profit, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, market bubble, market fundamentalism, Market Wizards by Jack D. Schwager, Marshall McLuhan, Martin Wolf, mega-rich, merger arbitrage, Michael Milken, Mikhail Gorbachev, Milgram experiment, military-industrial complex, Minsky moment, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, Myron Scholes, Naomi Klein, National Debt Clock, negative equity, NetJets, Network effects, new economy, Nick Leeson, Nixon shock, Northern Rock, nuclear winter, oil shock, Own Your Own Home, Paul Samuelson, pets.com, Philip Mirowski, Phillips curve, planned obsolescence, plutocrats, Ponzi scheme, price anchoring, price stability, profit maximization, proprietary trading, public intellectual, quantitative easing, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Ray Kurzweil, regulatory arbitrage, Reminiscences of a Stock Operator, rent control, rent-seeking, reserve currency, Richard Feynman, Richard Thaler, Right to Buy, risk free rate, risk-adjusted returns, risk/return, road to serfdom, Robert Shiller, Rod Stewart played at Stephen Schwarzman birthday party, rolodex, Ronald Reagan, Ronald Reagan: Tear down this wall, Satyajit Das, savings glut, shareholder value, Sharpe ratio, short selling, short squeeze, Silicon Valley, six sigma, Slavoj Žižek, South Sea Bubble, special economic zone, statistical model, Stephen Hawking, Steve Jobs, stock buybacks, survivorship bias, tail risk, Teledyne, The Chicago School, The Great Moderation, the market place, the medium is the message, The Myth of the Rational Market, The Nature of the Firm, the new new thing, The Predators' Ball, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trickle-down economics, Turing test, two and twenty, Upton Sinclair, value at risk, Yogi Berra, zero-coupon bond, zero-sum game

Richard Feynman in a letter to Armando Garcia Jr (11 December 1985). 13. Attributed to Albert Einstein. 14. Attributed to Winston Churchill. 15. On CBS in October 2008, responding to a question to name another Supreme Court decision, she disagreed with other than Roe v. Wade, which legalized abortion in the USA. 16. “Network effects” (17 December 2009) The Economist. 17. Paul J. Bolster and Emery A. Trahan “Investing in mad money: price and style effects” (Spring 2009) Financial Services Review. 18. Robert Pari (1987) “Wall Street Week recommendations: yes or no?” Journal of Portfolio Management 14: 74–6; Jess Beltz and Robert Jennings (1997) “Recommendations: trading activity and performance: ‘Wall Street Week with Louis Rukeyser,”’ Review of Financial Economics 6: 15–27. 19.


pages: 816 words: 191,889

The Long Game: China's Grand Strategy to Displace American Order by Rush Doshi

"World Economic Forum" Davos, American ideology, anti-communist, Asian financial crisis, autonomous vehicles, Black Lives Matter, Bretton Woods, capital controls, coronavirus, COVID-19, crony capitalism, cross-border payments, cryptocurrency, defense in depth, deindustrialization, Deng Xiaoping, deplatforming, disinformation, Dissolution of the Soviet Union, Donald Trump, drone strike, energy security, European colonialism, eurozone crisis, financial innovation, George Floyd, global pandemic, global reserve currency, global supply chain, global value chain, Great Leap Forward, high-speed rail, Internet Archive, Internet of things, Kickstarter, kremlinology, Malacca Straits, middle-income trap, Mikhail Gorbachev, MITM: man-in-the-middle, Monroe Doctrine, Network effects, Nixon triggered the end of the Bretton Woods system, offshore financial centre, positional goods, post-truth, purchasing power parity, RAND corporation, reserve currency, rolodex, Ronald Reagan, South China Sea, special drawing rights, special economic zone, TikTok, trade liberalization, transaction costs, UNCLOS, UNCLOS, undersea cable, zero-sum game

Because SWIFT is an institution essentially intended to solve a coordination problem—the need for a universal and consistent messaging language to send money from one bank to another—there is little to no reason why any state would develop alternative standards and infrastructure once the coordination problem had been solved. The current system is economically vastly more attractive to an alternative because of network effects that make it far more liquid and fast-acting. In contrast, an alternative system would be more costly, and no specific constituency would benefit from the added difficulty of using it. In essence, there is no meaningful economic or interest group rationale for China to create its own alternative to SWIFT’s messaging apparatus.


pages: 775 words: 208,604

The Great Leveler: Violence and the History of Inequality From the Stone Age to the Twenty-First Century by Walter Scheidel

agricultural Revolution, assortative mating, basic income, Berlin Wall, Bernie Sanders, Branko Milanovic, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, classic study, collective bargaining, colonial rule, Columbian Exchange, conceptual framework, confounding variable, corporate governance, cosmological principle, CRISPR, crony capitalism, dark matter, declining real wages, democratizing finance, demographic transition, Dissolution of the Soviet Union, Downton Abbey, Edward Glaeser, failed state, Fall of the Berlin Wall, financial deregulation, fixed income, Francisco Pizarro, full employment, Gini coefficient, global pandemic, Great Leap Forward, guns versus butter model, hiring and firing, income inequality, John Markoff, knowledge worker, land reform, land tenure, low skilled workers, means of production, mega-rich, Network effects, nuclear winter, offshore financial centre, plutocrats, race to the bottom, recommendation engine, rent control, rent-seeking, road to serfdom, Robert Gordon, Ronald Reagan, Second Machine Age, Simon Kuznets, synthetic biology, The Future of Employment, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, transatlantic slave trade, universal basic income, very high income, working-age population, zero-sum game

McDougall, Ian, Brown, Francis H., and Fleagle, John G. 2005. “Stratigraphic placement and age of modern humans from Kibish, Ethiopia.” Nature 433: 733–736. McEvedy, Colin, and Jones, Richard. 1978. Atlas of world population history. New York: Penguin. McKenzie, David, and Rapoport, Hillel. 2007. “Network effects and the dynamics of migration and inequality: theory and evidence from Mexico.” Journal of Development Economics 84: 1–24. Medeiros, Marcelo, and Ferreira de Souza, Pedro H. G. 2013. “The state and income inequality in Brazil.” IRLE Working Paper No. 153–13. Medeiros, Marcelo, and Ferreira de Souza, Pedro H.


pages: 685 words: 203,949

The Organized Mind: Thinking Straight in the Age of Information Overload by Daniel J. Levitin

Abraham Maslow, airport security, Albert Einstein, Amazon Mechanical Turk, Anton Chekhov, autism spectrum disorder, Bayesian statistics, behavioural economics, big-box store, business process, call centre, Claude Shannon: information theory, cloud computing, cognitive bias, cognitive load, complexity theory, computer vision, conceptual framework, correlation does not imply causation, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, data science, deep learning, delayed gratification, Donald Trump, en.wikipedia.org, epigenetics, Eratosthenes, Exxon Valdez, framing effect, friendly fire, fundamental attribution error, Golden Gate Park, Google Glasses, GPS: selective availability, haute cuisine, How many piano tuners are there in Chicago?, human-factors engineering, if you see hoof prints, think horses—not zebras, impulse control, index card, indoor plumbing, information retrieval, information security, invention of writing, iterative process, jimmy wales, job satisfaction, Kickstarter, language acquisition, Lewis Mumford, life extension, longitudinal study, meta-analysis, more computing power than Apollo, Network effects, new economy, Nicholas Carr, optical character recognition, Pareto efficiency, pattern recognition, phenotype, placebo effect, pre–internet, profit motive, randomized controlled trial, Rubik’s Cube, Salesforce, shared worldview, Sheryl Sandberg, Skype, Snapchat, social intelligence, statistical model, Steve Jobs, supply-chain management, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Bayes, traumatic brain injury, Turing test, Twitter Arab Spring, ultimatum game, Wayback Machine, zero-sum game

Neurons in the right hemisphere are more broadly tuned, with longer branches and more dendritic spines—they are able to collect information from a larger area of cortical space than left hemisphere neurons, and although they are less precise, they are better connected. When the brain is searching for an insight, these are the cells most likely to produce it. The second or so preceding insight is accompanied by a burst of gamma waves, which bind together disparate neural networks, effectively binding thoughts that were seemingly unrelated into a coherent new whole. For all this to work, the relaxation phase is crucial. That’s why so many insights happen during warm showers. Teachers and coaches always say to relax. This is why. If you’re engaged in any kind of creative pursuit, one of the goals in organizing your time is probably to maximize your creativity.


pages: 1,409 words: 205,237

Architecting Modern Data Platforms: A Guide to Enterprise Hadoop at Scale by Jan Kunigk, Ian Buss, Paul Wilkinson, Lars George

Amazon Web Services, barriers to entry, bitcoin, business intelligence, business logic, business process, cloud computing, commoditize, computer vision, continuous integration, create, read, update, delete, data science, database schema, Debian, deep learning, DevOps, domain-specific language, fault tolerance, Firefox, FOSDEM, functional programming, Google Chrome, Induced demand, information security, Infrastructure as a Service, Internet of things, job automation, Kickstarter, Kubernetes, level 1 cache, loose coupling, microservices, natural language processing, Network effects, platform as a service, single source of truth, source of truth, statistical model, vertical integration, web application

We may end up with some NodeManagers running slightly more tasks than others, and a small number of disks will end up with more than one writer thread and some with none. But, over a few runs, these effects should even out. Disk-only tests For the first test, we want to test pure disk performance, so we set the HDFS block replication to 1 such that mappers are writing to local disk only. This allows us to eliminate network effects. The general form of a TeraGen invocation is: $ yarn jar \ /path/to/lib/hadoop-mapreduce/hadoop-mapreduce-examples.jar \ teragen -Ddfs.replication=<REP> -Ddfs.blocksize=<BLOCKSIZE> \ -Dmapreduce.job.maps=<MAPS> <ROWS> <HDFS_OUTPUT_DIR> The following is an example invocation on CDH to write 1 TiB on a cluster with 50 nodes, each with 12 disks (for a total of 600 mappers): $ yarn jar \ /opt/cloudera/parcels/CDH/lib/hadoop-mapreduce/hadoop-*-examples.jar \ teragen -Ddfs.replication=1 -Ddfs.blocksize=536870912 \ -Dmapreduce.job.maps=600 11000000000 /user/ian/benchmarks/terasort-input It’s worth noting that YARN needs enough resources to run all 600 mappers at once—in this case, an allocation of at least 12 vcores per NodeManager.


pages: 562 words: 201,502

Elon Musk by Walter Isaacson

4chan, activist fund / activist shareholder / activist investor, Airbnb, Albert Einstein, AltaVista, Apollo 11, Apple II, Apple's 1984 Super Bowl advert, artificial general intelligence, autism spectrum disorder, autonomous vehicles, basic income, Big Tech, blockchain, Boston Dynamics, Burning Man, carbon footprint, ChatGPT, Chuck Templeton: OpenTable:, Clayton Christensen, clean tech, Colonization of Mars, computer vision, Computing Machinery and Intelligence, coronavirus, COVID-19, crowdsourcing, cryptocurrency, deep learning, DeepMind, Demis Hassabis, disinformation, Dogecoin, Donald Trump, Douglas Engelbart, drone strike, effective altruism, Elon Musk, estate planning, fail fast, fake news, game design, gigafactory, GPT-4, high-speed rail, hiring and firing, hive mind, Hyperloop, impulse control, industrial robot, information security, Jeff Bezos, Jeffrey Epstein, John Markoff, John von Neumann, Jony Ive, Kwajalein Atoll, lab leak, large language model, Larry Ellison, lockdown, low earth orbit, Marc Andreessen, Marc Benioff, Mars Society, Max Levchin, Michael Shellenberger, multiplanetary species, Neil Armstrong, Network effects, OpenAI, packet switching, Parler "social media", paypal mafia, peer-to-peer, Peter Thiel, QAnon, Ray Kurzweil, reality distortion field, remote working, rent control, risk tolerance, Rubik’s Cube, Salesforce, Sam Altman, Sam Bankman-Fried, San Francisco homelessness, Sand Hill Road, Saturday Night Live, self-driving car, seminal paper, short selling, Silicon Valley, Skype, SpaceX Starlink, Stephen Hawking, Steve Jobs, Steve Jurvetson, Steve Wozniak, Steven Levy, Streisand effect, supply-chain management, tech bro, TED Talk, Tesla Model S, the payments system, Tim Cook: Apple, universal basic income, Vernor Vinge, vertical integration, Virgin Galactic, wikimedia commons, William MacAskill, work culture , Y Combinator

“It was this crazy competition where we both had insane dollar bonuses to get customers to sign up and refer friends,” says Thiel. As Musk later put it, “It was a race to see who would run out of money last.” Musk was drawn to the fight with the intensity of a video-gamer. Thiel, on the contrary, liked to coolly calculate and mitigate risk. It soon became clear to both of them that the network effect—whichever company got bigger first would then grow even faster—meant that only one would survive. So it made sense to merge rather than turning the competition into a game of Mortal Kombat. Musk and his new CEO Bill Harris scheduled a meeting with Thiel and Levchin in the back room of Evvia, a Greek restaurant in Palo Alto.


pages: 726 words: 210,048

Hard Landing by Thomas Petzinger, Thomas Petzinger Jr.

airline deregulation, Boeing 747, buy and hold, Carl Icahn, centralized clearinghouse, Charles Lindbergh, collective bargaining, cross-subsidies, desegregation, Donald Trump, emotional labour, feminist movement, index card, junk bonds, low cost airline, low skilled workers, Marshall McLuhan, means of production, Michael Milken, mutually assured destruction, Neil Armstrong, Network effects, offshore financial centre, oil shock, Ponzi scheme, postindustrial economy, price stability, profit motive, Ralph Nader, revenue passenger mile, Ronald Reagan, scientific management, Silicon Valley, strikebreaker, technological determinism, the medium is the message, The Predators' Ball, Thomas L Friedman, union organizing, yield management, zero-sum game

., March 6, 1991. ——. British Airways: “Go for It, America!” Promotion. Case 9-589-089. Cambridge, Mass., December 5, 1991. House of Commons, Transport Committee, The Future of the Air Services Between the United Kingdom and the United States of America. London, March 17, 1984. Kaspar, Daniel M. BA-US Air: Network Effects and Other Public Policy Considerations. Harbridge House, Inc., Boston, September 1992. Lazard Frères & Co. Pan American World Airways Inc., Financial Analysis. New York, January 31, 1985. Levine, Michael E. “Is Air Regulation Necessary?” Yale Law Journal. New Haven, July 1965. ——. “Alternatives to Regulation: Competition in Air Transportation and the Aviation Act of 1975.”


Designing Data-Intensive Applications: The Big Ideas Behind Reliable, Scalable, and Maintainable Systems by Martin Kleppmann

active measures, Amazon Web Services, billion-dollar mistake, bitcoin, blockchain, business intelligence, business logic, business process, c2.com, cloud computing, collaborative editing, commoditize, conceptual framework, cryptocurrency, data science, database schema, deep learning, DevOps, distributed ledger, Donald Knuth, Edward Snowden, end-to-end encryption, Ethereum, ethereum blockchain, exponential backoff, fake news, fault tolerance, finite state, Flash crash, Free Software Foundation, full text search, functional programming, general-purpose programming language, Hacker News, informal economy, information retrieval, Internet of things, iterative process, John von Neumann, Ken Thompson, Kubernetes, Large Hadron Collider, level 1 cache, loose coupling, machine readable, machine translation, Marc Andreessen, microservices, natural language processing, Network effects, no silver bullet, operational security, packet switching, peer-to-peer, performance metric, place-making, premature optimization, recommendation engine, Richard Feynman, self-driving car, semantic web, Shoshana Zuboff, social graph, social web, software as a service, software is eating the world, sorting algorithm, source of truth, SPARQL, speech recognition, SQL injection, statistical model, surveillance capitalism, systematic bias, systems thinking, Tragedy of the Commons, undersea cable, web application, WebSocket, wikimedia commons

But this choice is not free either: if a service is so popular that it is “regarded by most people as essential for basic social participation” [99], then it is not reasonable to expect people to opt out of this service—using it is de facto mandatory. For example, in most Western social communities, it has become the norm to carry a smartphone, to use Facebook for socializing, and to use Google for finding informa‐ tion. Especially when a service has network effects, there is a social cost to people choosing not to use it. Declining to use a service due to its tracking of users is only an option for the small number of people who are privileged enough to have the time and knowledge to understand its privacy policy, and who can afford to potentially miss out on social participation or professional opportunities that may have arisen if they had participa‐ ted in the service.


pages: 556 words: 46,885

The World's First Railway System: Enterprise, Competition, and Regulation on the Railway Network in Victorian Britain by Mark Casson

banking crisis, barriers to entry, Beeching cuts, British Empire, business cycle, classic study, combinatorial explosion, Corn Laws, corporate social responsibility, David Ricardo: comparative advantage, Garrett Hardin, gentrification, high-speed rail, independent contractor, intermodal, iterative process, joint-stock company, joint-stock limited liability company, Kickstarter, knowledge economy, linear programming, low interest rates, megaproject, Network effects, New Urbanism, performance metric, price elasticity of demand, railway mania, rent-seeking, strikebreaker, the market place, Tragedy of the Commons, transaction costs, vertical integration

R. 367 Clitheroe as secondary natural hub 83 Tab 3.4 Clyde River 199 Clyde Valley 156 coal industry 1, 50 exports 5 see also regional coalfields coal traffic 53, 182–3, 270 coalfield railways 127, 167 Coalville 187 Coatbridge 157 Cobden, Richard 37 Cockermouth 219 Colchester 69, 107, 108 Coldstream 158, 159 Colebrook 198 Colonial Office, British 48 Combe Down Tunnel 144 commerce, industry and railways 308 Index Commercial Railway Scheme, London 152, 154 Commission on the Merits of the Broad and Narrow Gauge 228 Tab 6.2 company law 42–3 competing local feeders 204–7 competition adverse effects of 221 adversarial 316–19 concept applied to railways 258–60 Duopolistic on networks 492–4 and duplication of routes 94 and excess capacity 477–97 excessive 16–19 and fare reduction 261–2 individual/multiple linkages 266, 267 inter-town 323–4 and invasions by competing companies 268–9, 273 and invasions in joint venture schemes (large) 166–73 and invasions in joint venture schemes (small) 173–8 network effects 262–4 principle of 221 and territorial strategy 286–7 wastage/inefficiency 162, 166 compulsory purchase of land 30, 223, 288 concavity principle 72, 82 connectivity and networks 2–3 Connel Ferry 161 construction costs 16–17 consultant engineers see civil engineers; mechanical engineers contour principle 72 contractors 301–2 Conway River 136 cooperation between companies 324–6 core and peripheral areas, UK 85 Fig 3.8 Corn Laws, Repeal (1846) 37, 110 Cornwall 152 Cornwall Railway 141 corporate social responsibility 311–13 corridor trains 311 Cosham 147, 190 Cotswold Hills 110, 111, 114, 149 counterfactual map of the railway network East Midlands 90 Fig 3.10 North of England 92 Fig 3.12 South East England 90 Fig 3.10 Wales 91 Fig 3.11 West of England 91 Fig 3.11 counterfactual railway network 4–29, 58–104 bypass principle 80–2, 89 and cities 306 concavity principle 82 continuous linear trunk network with coastal constraints 74 Fig 3.2 503 continuous linear trunk network with no coastal constraints 73 Fig 3.1 contour principle 87, 88 Fig 3.9 core and periphery principle 82–6, 84 Tab 3.5, 85 Fig 3.8 coverage of cities, town and villages 62–3 cross-country linkages on the symmetric network 100 Fig 3.19 cross-country routes 274 cut-off principle 80, 81 Fig 3.7, 89 cut-off principle with traffic weighting 81 Fig 3.7 Darlington core hub 89 Derby core hub 89 frequency of service 65–6 Gloucester as corner hub 82 heuristic principles of 10–12, 71–2 hubs 439–71, 440–9 Tab A5.1 hubs, configuration of 89, 94–103 hubs, size and distribution 95 Fig 3.13 Huddersfield core hub 89 influence of valleys and mountains 88 Fig 3.9 iterative process 64 Kirkby Lonsdale core hub 89 Leicester core hub 89 Lincolnshire region cross-country routes 119 London as corner hub 82 London terminals 155 loop principle 86–7 Melrose core hub 89, 158–9 mileage 437 Tab A4.4 Newcastle as corner hub 82 North-South linkages 148 North-South spine with ribs 75 Fig 3.3 objections to 12–14 optimality of the system 91–3 performance compared to actual system 64–5, 65 Tab 3.2 performance metrics 63–6 quality of network 392 Tab A4.1 and rational principles 322 Reading core hub 89 role of network 392, 393 Tab A4.2 route description 392–438, 393–436 Tab A4.3 and Severn Tunnel 112–14 Shoreham as corner hub 82 Southampton as corner hub 82 space-filling principle 87–9 Steiner solution 76 Fig 3.4 Steiner solution with traffic weighting 78 Fig 3.5 Stoke-on-Trent as corner hub 89 timetable 8, 89–90, 472–6, 474–6 Tab A6.1 timetable compared with actual 315–16 504 Index counterfactual railway network (cont.) traffic flows 66–71 traffic-weighting principle 77, 78 Fig 3.5 trial solution, first 89–91, 90 Fig 3.10, 91 Fig 3.11, 92 Fig 3.12 triangle principle 77–80, 79 Fig 3.6, 89, 96 triangle principle without traffic weighting 79 Fig 3.6 Trowbridge core hub 89 Warrington as corner hub 82 Wetherby core hub 122 country towns avoided by railway schemes 307–9 Coventry 68, 118, 135 Coventry Canal 117 Crafts, Nicholas F.


pages: 1,014 words: 237,531

Escape From Rome: The Failure of Empire and the Road to Prosperity by Walter Scheidel

agricultural Revolution, barriers to entry, British Empire, classic study, colonial rule, conceptual framework, creative destruction, currency manipulation / currency intervention, dark matter, disruptive innovation, Easter island, Eratosthenes, European colonialism, financial innovation, financial intermediation, flying shuttle, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Johann Wolfgang von Goethe, Johannes Kepler, joint-stock company, Joseph Schumpeter, knowledge economy, low interest rates, mandelbrot fractal, means of production, Multics, Network effects, out of africa, Peace of Westphalia, peer-to-peer lending, plutocrats, principal–agent problem, purchasing power parity, rent-seeking, Republic of Letters, secular stagnation, South China Sea, spinning jenny, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, trade route, transaction costs, vertical integration, zero-sum game

This was not a given: if Habsburg Spain or the Jesuits had prevailed, this dynamic might have been aborted. Mokyr thus plausibly contends that “had a single, centralized government been in charge of defending the intellectual status quo, many of the new ideas that eventually led to the Enlightenment would have been suppressed or possibly never even proposed.”11 But these networks effects also highlight the limits of fragmentation: although political pluralism was essential in ensuring free discourse, so was the relative ease of transnational intellectual communications. In the absence of some degree of underlying cultural unity, the costs of catering to a larger market of ideas would have been higher, limiting entry and competition and protecting incumbents from disruptive innovation.


pages: 1,237 words: 227,370

Designing Data-Intensive Applications: The Big Ideas Behind Reliable, Scalable, and Maintainable Systems by Martin Kleppmann

active measures, Amazon Web Services, billion-dollar mistake, bitcoin, blockchain, business intelligence, business logic, business process, c2.com, cloud computing, collaborative editing, commoditize, conceptual framework, cryptocurrency, data science, database schema, deep learning, DevOps, distributed ledger, Donald Knuth, Edward Snowden, end-to-end encryption, Ethereum, ethereum blockchain, exponential backoff, fake news, fault tolerance, finite state, Flash crash, Free Software Foundation, full text search, functional programming, general-purpose programming language, Hacker News, informal economy, information retrieval, Infrastructure as a Service, Internet of things, iterative process, John von Neumann, Ken Thompson, Kubernetes, Large Hadron Collider, level 1 cache, loose coupling, machine readable, machine translation, Marc Andreessen, microservices, natural language processing, Network effects, no silver bullet, operational security, packet switching, peer-to-peer, performance metric, place-making, premature optimization, recommendation engine, Richard Feynman, self-driving car, semantic web, Shoshana Zuboff, social graph, social web, software as a service, software is eating the world, sorting algorithm, source of truth, SPARQL, speech recognition, SQL injection, statistical model, surveillance capitalism, systematic bias, systems thinking, Tragedy of the Commons, undersea cable, web application, WebSocket, wikimedia commons

But this choice is not free either: if a service is so popular that it is “regarded by most people as essential for basic social participation” [99], then it is not reasonable to expect people to opt out of this service—using it is de facto mandatory. For example, in most Western social communities, it has become the norm to carry a smartphone, to use Facebook for socializing, and to use Google for finding information. Especially when a service has network effects, there is a social cost to people choosing not to use it. Declining to use a service due to its tracking of users is only an option for the small number of people who are privileged enough to have the time and knowledge to understand its privacy policy, and who can afford to potentially miss out on social participation or professional opportunities that may have arisen if they had participated in the service.


Growth: From Microorganisms to Megacities by Vaclav Smil

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, agricultural Revolution, air freight, Alan Greenspan, American Society of Civil Engineers: Report Card, Anthropocene, Apollo 11, Apollo Guidance Computer, autonomous vehicles, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Boeing 747, Bretton Woods, British Empire, business cycle, caloric restriction, caloric restriction, carbon tax, circular economy, colonial rule, complexity theory, coronavirus, decarbonisation, degrowth, deindustrialization, dematerialisation, demographic dividend, demographic transition, Deng Xiaoping, disruptive innovation, Dissolution of the Soviet Union, Easter island, endogenous growth, energy transition, epigenetics, Fairchild Semiconductor, Ford Model T, general purpose technology, Gregor Mendel, happiness index / gross national happiness, Helicobacter pylori, high-speed rail, hydraulic fracturing, hydrogen economy, Hyperloop, illegal immigration, income inequality, income per capita, industrial robot, Intergovernmental Panel on Climate Change (IPCC), invention of movable type, Isaac Newton, James Watt: steam engine, knowledge economy, Kondratiev cycle, labor-force participation, Law of Accelerating Returns, longitudinal study, low interest rates, mandelbrot fractal, market bubble, mass immigration, McMansion, megacity, megaproject, megastructure, meta-analysis, microbiome, microplastics / micro fibres, moral hazard, Network effects, new economy, New Urbanism, old age dependency ratio, optical character recognition, out of africa, peak oil, Pearl River Delta, phenotype, Pierre-Simon Laplace, planetary scale, Ponzi scheme, power law, Productivity paradox, profit motive, purchasing power parity, random walk, Ray Kurzweil, Report Card for America’s Infrastructure, Republic of Letters, rolodex, Silicon Valley, Simon Kuznets, social distancing, South China Sea, synthetic biology, techno-determinism, technoutopianism, the market place, The Rise and Fall of American Growth, three-masted sailing ship, total factor productivity, trade liberalization, trade route, urban sprawl, Vilfredo Pareto, yield curve

I stand by my conclusion that the two generations preceding WWI were the most exceptional innovative period in history and that its contributions have been far more consequential than the advances of the last two generations (Smil 2005). Similarly, Ferguson (2012, 2) based his refusal to believe in the techno-optimistic hype on contrasting recent achievements with past accomplishments and by offering “simple lessons from history: More and faster information is not good in itself. Knowledge is not always the cure. And network effects are not always positive.” In contrast, Mokyr (2016) stresses that progress is not a natural phenomenon but a relatively recent human invention and that the alternative to technical progress “is always worse.” Ultimately, it comes down to the biosphere’s capacity to support an expanding population consuming at higher rates.


pages: 1,261 words: 294,715

Behave: The Biology of Humans at Our Best and Worst by Robert M. Sapolsky

autism spectrum disorder, autonomous vehicles, behavioural economics, Bernie Madoff, biofilm, blood diamond, British Empire, Broken windows theory, Brownian motion, car-free, classic study, clean water, cognitive dissonance, cognitive load, corporate personhood, corporate social responsibility, Daniel Kahneman / Amos Tversky, delayed gratification, desegregation, different worldview, domesticated silver fox, double helix, Drosophila, Edward Snowden, en.wikipedia.org, epigenetics, Flynn Effect, framing effect, fudge factor, George Santayana, global pandemic, Golden arches theory, Great Leap Forward, hiring and firing, illegal immigration, impulse control, income inequality, intentional community, John von Neumann, Loma Prieta earthquake, long peace, longitudinal study, loss aversion, Mahatma Gandhi, meta-analysis, microaggression, mirror neurons, Mohammed Bouazizi, Monkeys Reject Unequal Pay, mouse model, mutually assured destruction, Nelson Mandela, Network effects, nocebo, out of africa, Peter Singer: altruism, phenotype, Philippa Foot, placebo effect, publication bias, RAND corporation, risk tolerance, Rosa Parks, selective serotonin reuptake inhibitor (SSRI), self-driving car, Silicon Valley, Skinner box, social contagion, social distancing, social intelligence, Stanford marshmallow experiment, Stanford prison experiment, stem cell, Steven Pinker, strikebreaker, theory of mind, Tragedy of the Commons, transatlantic slave trade, traveling salesman, trickle-down economics, trolley problem, twin studies, ultimatum game, Walter Mischel, wikimedia commons, zero-sum game, zoonotic diseases

But what mechanisms of molecular evolution explain rapid, dramatic change and long periods of stasis? As we saw in chapter 8, recent decades have provided many possible molecular mechanisms for rapid change. This is the world of macromutations: (a) traditional point, insertion, and deletion mutations in genes whose proteins have amplifying network effects (transcription factors, splicing enzymes, transposes) in an exon expressed in multiple proteins in genes for enzymes involved in epigenetics; (b) traditional mutations in promoters, transforming the when/where/how-much of gene expression (remember that promoter change that makes polygamous voles monogamous); (c) untraditional mutations such as the duplication or deletion of entire genes.


pages: 956 words: 288,981

Ghost Wars: The Secret History of the CIA, Afghanistan, and Bin Laden, from the Soviet Invasion to September 10, 2011 by Steve Coll

airport security, Ayatollah Khomeini, Berlin Wall, Boeing 747, Boycotts of Israel, centre right, colonial rule, computer age, disinformation, energy security, failed state, Fall of the Berlin Wall, illegal immigration, index card, Islamic Golden Age, Khyber Pass, Mikhail Gorbachev, Network effects, Oklahoma City bombing, operational security, RAND corporation, Ronald Reagan, Timothy McVeigh, trade route, upwardly mobile, urban planning, women in the workforce

What Clinton said about Massoud and what he recalled about the analysis he received at the time is from a senior administration official who reviewed the subject with Clinton in 2003. For the February memo, see National Commission final report, p. 139. 33. Interviews with U.S. officials and Massoud aides. As part of this network the CIA installed a secure phone in the suburban basement of Daoud Mir, Massoud's envoy in Washington. The network effectively put the CIA in real-time contact with Massoud agents who placed radio sets as far forward into Taliban territory as Kabul and Jalalabad, according to Massoud intelligence aides. 34. The quotation is from author's interview. 35. "American solution" is from an interview with a U.S. official. 36.


pages: 993 words: 318,161

Fall; Or, Dodge in Hell by Neal Stephenson

Ada Lovelace, augmented reality, autonomous vehicles, back-to-the-land, bitcoin, blockchain, cloud computing, coherent worldview, computer vision, crisis actor, crossover SUV, cryptocurrency, defense in depth, demographic transition, distributed ledger, drone strike, easy for humans, difficult for computers, fake news, false flag, game design, gamification, index fund, Jaron Lanier, life extension, messenger bag, microaggression, microbiome, Neal Stephenson, Network effects, no-fly zone, off grid, off-the-grid, offshore financial centre, pattern recognition, planetary scale, ride hailing / ride sharing, sensible shoes, short selling, Silicon Valley, Snow Crash, tech bro, telepresence, telepresence robot, telerobotics, The Hackers Conference, Turing test, Works Progress Administration

Sophia accepted it in the same spirit but pushed back a little. “Right, but there was a technical basis for those personal feelings.” “Which was?” C-plus asked. “I couldn’t think of any intermediate steps to take next. It makes sense to simulate one neuron. Two neurons talking to each other. Fine. Beyond that, it’s a network. Network effects are all that matter. Simulating, say, a thousand neurons doesn’t break any new ground. People have been doing that for decades. The fact that the connectome of those thousand neurons was arbitrarily cut and pasted from DB is completely meaningless—it might as well have come from a mouse brain.”


Engineering Security by Peter Gutmann

active measures, address space layout randomization, air gap, algorithmic trading, Amazon Web Services, Asperger Syndrome, bank run, barriers to entry, bitcoin, Brian Krebs, business process, call centre, card file, cloud computing, cognitive bias, cognitive dissonance, cognitive load, combinatorial explosion, Credit Default Swap, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, Debian, domain-specific language, Donald Davies, Donald Knuth, double helix, Dr. Strangelove, Dunning–Kruger effect, en.wikipedia.org, endowment effect, false flag, fault tolerance, Firefox, fundamental attribution error, George Akerlof, glass ceiling, GnuPG, Google Chrome, Hacker News, information security, iterative process, Jacob Appelbaum, Jane Jacobs, Jeff Bezos, John Conway, John Gilmore, John Markoff, John von Neumann, Ken Thompson, Kickstarter, lake wobegon effect, Laplace demon, linear programming, litecoin, load shedding, MITM: man-in-the-middle, Multics, Network effects, nocebo, operational security, Paradox of Choice, Parkinson's law, pattern recognition, peer-to-peer, Pierre-Simon Laplace, place-making, post-materialism, QR code, quantum cryptography, race to the bottom, random walk, recommendation engine, RFID, risk tolerance, Robert Metcalfe, rolling blackouts, Ruby on Rails, Sapir-Whorf hypothesis, Satoshi Nakamoto, security theater, semantic web, seminal paper, Skype, slashdot, smart meter, social intelligence, speech recognition, SQL injection, statistical model, Steve Jobs, Steven Pinker, Stuxnet, sunk-cost fallacy, supply-chain attack, telemarketer, text mining, the built environment, The Death and Life of Great American Cities, The Market for Lemons, the payments system, Therac-25, too big to fail, Tragedy of the Commons, Turing complete, Turing machine, Turing test, Wayback Machine, web application, web of trust, x509 certificate, Y2K, zero day, Zimmermann PGP

References 511 [129] “Psychology in Economics and Business: An Introduction to Economic Psychology”, Gerrit Antonides, Springer-Verlag, 1996. [130] “Framing, probability distortions, and insurance decisions”, Eric Johnson, John Hershey, Jacqueline Meszaros and Howard Kunreuther, Journal of Risk and Uncertainty, Vol.7, No.1 (August 1993), p.35. [131] “The role of the physician as an information source on mammography”, Lisa Metsch, Clyde McCoy, H. Virginia McCoy, Margaret Pereyra, Edward Trapido and Christine Miles, Cancer Practice, Vol.6, No.4 (July-August 1998), p.229. [132] “Anonymity Loves Company: Usability and the Network Effect”, Roger Dingledine and Nick Mathewson, in “Security and Usability: Designing Secure Systems That People Can Use”, O’Reilly, 2005, p.547. [133] “Predictors of Home-Based Wireless Security”, Matthew Hottell, Drew Carter and Matthew Deniszczuk, Proceedings of the 5th Workshop on the Economics of Information Security (WEIS’06), June 2006, http://weis2006.econinfosec.org/docs/51.pdf. [134] “Code and Other Laws of Cyberspace”, Lawrence Lessig, Basic Books, 1999. [135] “The Economist as Therapist: Methodological Ramifications of ‘Light’ Paternalism”, George Loewenstein and Emily Haisley, in “The Foundations of Positive and Normative Economics: A Handbook”, Oxford University Press, 2008. [136] “Software Defaults as De Facto Regulation: The Case of Wireless APs”, Rajiv Shah and Christian Sandvig, Proceedings of the 33rd Research Conference on Communication, Information and Internet Policy (TPRC’07), September 2005, reprinted in Information, Communication, and Society, Vol.11, No.1 (February 2008), p.25. [137] “Breathing New Life Into Old Features”, Jensen Harris, 24 April 2006, http://blogs.msdn.com/jensenh/archive/2006/04/24/582154.aspx. [138] “Deploying and Using Public Key Technology: Lessons Learned in Real Life”, Richard Guida, Robert Stahl, Thomas Bunt, Gary Secrest and Joseph Moorcones, IEEE Security and Privacy, Vol.2, No.4 (July/August 2004), p.67. [139] “A Quantitative Study of Firewall Configuration Errors”, Avishai Wool, IEEE Computer, Vol.37, No.6 (June 2004), p.62. [140] “musings”, Rik Farrow, ;login, Vol.25, No.3 (June 2000), p.38. [141] “Users are not dependable — how to make security indicators to better protect them”, Min Wu, Proceedings of the First Workshop on Trustworthy Interfaces for Passwords and Personal Information, June 2005. [142] “An Investigation of the Therac-25 Accidents” Nancy Leveson and Clark Turner, IEEE Computer, Vol.26, No.7 (Jul 1993), p.18. [143] “Fighting Phishing at the User Interface”, Robert Miller and Min Wu, in “Security and Usability: Designing Secure Systems That People Can Use”, O’Reilly, 2005, p.275. [144] “Usability Analysis of Secure Pairing Methods”, Ersin Uzun, Kristiina Karvonen and N.