Roadmap to Today


I just finished reading Andy Kessler’s How We Got Here: A Slightly Irreverent History of Technology and Markets.  You can download a copy by clicking here (this is also the first book I’ve read entirely in its digital form).

The book is fascinating; Kessler has five creeds that he uses to comprehend the world and this book traces history from the Industrial Revolution to today to explain where these creeds come from.

Here are Kessler’s creeds:

1) Lower prices drive wealth

2) Intelligence moves out to the edge of the network

3) Horizontal beats vertical

4) Capital sloshes around seeking its highest return

5) The military drives commerce and vice versa

If you want to understand this, read the book (it’s only 218 pages long and he has an easy reading style).

One interesting passage quotes Edmund Cartwright, who in 1785 figured out how to create a mechanical loom. Cartwright wrote:

...the Manchester gentlemen unanimously agreed that the thing was impracticable; and in defense of their opinion, they adduced arguments which I certainly was incompetent to answer or even to comprehend, being totally ignorant of the subject, having never at that time seen a person weave. I controverted, however, the impracticability of the thing, by

remarking that there had lately been exhibited in London, an automaton figure, which played at chess. Now you will not assert, gentlemen, said I, that it is more difficult to construct a machine that shall weave, than one which shall make all the variety of moves

which are required in that complicated game.

Kessler doesn’t mention it (in fact, he asks “I wonder if the chess machine ever won?”), but this chess machine was actually the infamous Turk - one of the greatest frauds of all time.  Basically, it was a man inside a machine playing chess - and ironically this helped inspire the industrial revolution.

Beside Cartwright and the power loom, you’ll also learn some of these random facts:

People have always been resistant to change (most automation); it’s not just a 20th/21st century phenomenon.

- An early steam engine that could life items was invented in 1690 by Denis Papin; local boatmen (longshoremen) realized it would make them redundant so they destroyed it

- John Kay invented the flying shuttle in 1733 and improved the productivity of weaving; in 1755 a mob broke into his house and destroyed some of his looms

- James Hargreaves invented the Spinning Jenny in 1764, making sewing easier; local spinners broke into his Lancashire home and destroyed his first model, so he moved to Nottingham.

- It was in 1779 that Ned Ludd and a mob, in a village near Leicesterschire, broke into the home of a sock maker and destroyed several of his stocking frames.  They considered these a threat to them continuing to make socks by hand.  Hence the term Luddite for someone who feels threatened by technology

- Joseph-Marie Jacquard invented his eponymous punch card-powered automatic loom in 1801 and in 1806 one was destroyed in the public square in Lyon.  Incidentally, the term saboteurs comes from the tradition of French hand weavers throwing a wooden shoe - known as a sabot - into the looms to shut them down

One of the most worst examples of government-sponsored Ludditism was the destruction of the Colossus computer by the Brits after WWII.  This computer cracked the Enigma code, but the Brits were worried about its design falling into Russian hands so they destroyed it - and that’s why there’s no British computer industry worth speaking of.

The Americans did the exact opposite: less than a year after VJ Day they held a symposium known as the Moore School Lectures (technically the Theory and Techniques for Design of Electronic Digital Computers) to share everything known about how to build computers.  28 attendees from 20 different companies, universities and government labs attended...and America dominates computer manufacturing.

Ever wonder why stock markets trade on “bourses”?  It’s because Norwegians used to go to Bruges to trade currencies in front of the home of the Van de Beurses.

The transistor has provided us with some fascinating stories:

- It was actually patented in 1926 by Julius Edgar Lilienfeld, but the technology to build it didn’t exist and it wasn’t physically invented until 1947 by Bardeen, Brattain and Shockley

- They were working for AT&T, who would use the transistor for switching phone calls - but not for another decade as it had a ten year inventory of vacuum tubes

- Shockley realized that his transistor was going to be big so he moved to Palo Alto and opened up Shockley Semiconductors.  Silicon Valley was born (yes, HP was already there, but they weren’t really silicon...)

- Unfortunately he was such a bastard that his best people left to form Fairchild Semiconductor; a group there would realize that there was money to be made in memory and form Intel

- Intel actually had to buy its name from a motel chain

- On November 15, 1970, Intel - likely without realizing it - revolutionized the semiconductor industry by inventing the integrated circuit.  You could now program a chip.  As an aside, a Japanese company called Busicom had asked for Intel to design this chip - but they didn’t ask for ownership of the chip

- These integrated circuits enabled Intel to go public.  However, their business was so complex that they had to go shop their business to prospective investors.  This was the creation of the road show; now every company has to do it

- Intel would take some of the money from their IPO and use it to buy a watch company called Microma - they thought they could build better digital watches as they knew a lot about semiconductors.  They lost millions and sold the business in 1978; to this day Gordon Moore (their chairman) apparently wears one of these watches to remind himself never to be so stupid.  Horizontal, not vertical

It was Arthur C. Clarke who conceptualized satellites and he pictured them being in a geosynchronous orbit.  The military used this to create the NAVSTAR GPS system - although it was originally intended to monitor nuclear weapon explosions to enforce weapons treaties.

Incidentally, one of the “benefits” of GPS is precision targeted missiles; previously up to 99% of armaments missed their targets.  In World War II the psychologist BF Skinner tried to create precision targeting by training pigeons to fly towards the profiles of enemy ships; he could get the pigeons to turn a nose cone, but the navy was too skeptical to continue research.

The first computer network was created in 1940 by George Stibitz, who connected a teletype machine in Darmouth to a phone line so he could control his early computer, the Complex Number Calculator, in New York’s Bell Labs.

Incidentally, 80% of network traffic would be intra-network until the browser was invented in 1991 and flipped this ratio.  It was the router (originally invented in 1980 at Stanford by a few guys who would go on to form a company called “cisco”) that enabled your network to connect to others.

You may have heard of the operating system UNIX.  It was originally written in 1969 to resurrect an old client/server computer called a Multics.  It’s first name was UNICS - as in the system was a castrated version of Multics.

Wall Street had a huge crunch in 1969/70 as the NYSE had invested in automating their trades, but not clearing.  As a result, some companies literally could not clear their trades.  They couldn’t physically match the certificates between buyers and sellers.  In the end, the exchange shut for a day a week, but it didn’t work: brokerages ran out of cash and the exchange had to create digital records in place of physical share certificates

One of the first people to create fire insurance was... Benjamin Franklin in 1952.  Didn’t exist until he created it.

The stock market has always found a mania to invest in: turnpikes in the early 1800s, canals  from 1820-50, telegraphs from 1850, railways shortly after that


Thursday, April 12, 2007

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