A Book That Predicted the Future

What's up, everyone. This is Alex Lieberman, co-founder and Executive Chairman of Morning Brew. Welcome back to Founder’s Journal, my personal audio diary, where I give you, the business builder, the tools you need to think better in order to build better, whether that's building a business, a team, or a new product. Today, I am talking about A Book That Predicted the Future. You heard that right. Let's hop into it. 

What The Sovereign Individual predicted

I’m reading a book right now that absolutely blew my mind. It feels like the Grays Sports Almanac in Back to the Future. If you haven't seen the movie, Biff, who's, the villain of the series, gets hold of an almanac from the future that tells the results of every major sporting event for the next 50 years. And this is exactly how I feel reading a book called The Sovereign Individual. It's my first Founder Book Club book, which if you want to know how I put together a book club and everything that I learned from it, check out that past episode in the show notes. And I first heard about this book from two amazing entrepreneurs, Deval Ramakant and Balaji Srinivasan. It was written in 1997 by James Dale Davidson and Lord William Reese Mogg, the first an investor and the second a journalist. Now here's what I'm talking about. The book feels as though it has predicted what seems like every major societal shift since the millennium. It predicted a viral pandemic, the rise of e-commerce, the rise of remote work, the increased value of content curation, the rise of virtual culture, the rise of mobile banking, but that is just the tip of the iceberg. 

Now I want to share a few passages from the book that will probably sound familiar to you. Here's the first: ‘“As cyber commerce begins, it will lead inevitably to cyber money. A crucial part of this change will come about because of the effect of information technology in liberating the holders of wealth from expropriation through inflation. Unique, anonymous, and verifiable, this money will accommodate the largest transactions. It will also be divisible into the tiniest fraction of value. It will be tradable at a keystroke in a multi-trillion dollar wholesale market without borders.” So does that ring a bell? The principles and promise of Bitcoin hinge on much of what is said from protection against inflation to low cost, high-speed movement of money anywhere in the world. Here's another one: “As the bandwidth revolution unfolds, it will draw people more and more into the borderless virtual world of online communities and cyber commerce, a world with enough graphic density to become the metaverse, the kind of alternative cyberspace reality imagined by science fiction novelist Neil Stevenson.” Now only in recent years with Facebook's rebrand to Meta and Matthew Ball’s now-famous metaverse essays, has the metaverse become a hot topic, but for someone to talk about this idea of the metaverse becoming reality in 1997, it is pretty fricking wild. And here's one more on the shifting role of government: “In the age of the virtual corporation, individuals will choose to domicile their income earning activities in a jurisdiction that provides the best service at the lowest cost.” Now, if you're familiar with the recent trend of people moving from San Francisco to Miami, this passage sounds eerily similar. Government has less leverage than ever as government is able to provide its occupants less value than ever, which means citizens will increasingly move to the place where government adds the most value at the lowest cost. With lower crime and lower taxes to San Francisco, Miami looks like a pretty good alternative to the startup and investing crowd that are making this move. 

How did they call these shots? An explainer

Okay. Let's take a breather for a second. This is pretty crazy when you think about it Dozens of shots called by an investor and a journalist nearly 25 years ago, But here's what I'm really wondering. How can we all start calling shots like the authors did in The Sovereign Individual? I have broken down what I believe to be their three-step process for calling shots. And I believe with these three steps, you can start making more educated predictions of your own in your career, in your job, at the company that you run, etcetera. 

#1: Understand how technology is evolving

Let's start with step one: You need to understand how technology is evolving. There were so many examples of this, but here are some of the new technologies throughout history that they talk about in the book. There was the invention of the stirrup for horses. There was the invention of farming instead of foraging, and there was the invention of printing. So once you know how technology is evolving, step two is asking yourself: Based on those technological changes, how will people behave given their incentives? And quick side note, if you like this question about how do we behave based on incentives, you're going to want to listen to my whole Founder’s Journal episode on incentives that I’ve included in the show notes. 

#2: Think about what the changes in technology will yield

So now let's take those inventions I mentioned above and talk about what changes those inventions yielded because of how people were incentivized to behave. The invention of the stirrup: It led to the armed knight on horseback, which led to the popularization of the church, because there was a greater possibility of violence now that knights wielding swords could go and attack any locale. So people needed a greater source of protection and the church could provide that protection. Similar idea for farming, the invention of farming led to the advent of property rights for the first time, which meant for the first time, there were valuable assets that people wanted to protect. This created a newfound importance for government because government's primary function throughout history is protecting people from violence. Next up is printing. The invention of printing led to the mass production of books, which ended the church's monopoly on information and knowledge. People now saw that there were beliefs to be had outside of the church, which led to this change from chivalry being power and status in society to financial success being power and status in society. 

#3: Who wins and loses from changes in technology? 

That leads to the third and final step who wins and who loses from this change in technology and behavior? And how big are those wins or losses? Here are some quick rules of thumb that I believe the authors used to drive their predictions. First, if technology leads to the possibility of greater violence, like battle, plundering, or labor strikes, government becomes more important. If technology leads to the possibility of less violence, government becomes less important. Second, if technology creates division in power between government and the people, government becomes more important. If technology levels the playing field between government and the people, government becomes less important. Now these rules of thumb inform a view by the authors that because government no longer has monopoly over money like they have with the advent of cryptocurrency or Bitcoin, that government no longer has monopoly over the media with the advent of the internet and social media, and because things like the microprocessor have made individual people more capable and powerful than ever before, hence the word “sovereign individual,” government has less leverage and power than it ever has. Now, whether you agree with that view or not, I do think this framework for looking into the future to inform decisions you make today as a professional, an entrepreneur, or an investor is incredibly valuable. 

Recap

So to recap, there are three steps in the formula for making future views: One, understand how technology is evolving; two, understand people's incentives and how they will behave based on technology evolving; and three, determine who wins and loses based on the behaviors of people from changes in technology. Does government win or lose? Do companies win or lose? Do individuals win or lose? And what individuals win or lose? 

Thank you

With that, I hope you enjoyed this episode of Founder’s Journal, and a few housekeeping items before we finish up. First I need to say thank you to all of you. In December, Founder’s Journal grew by, get this, 33% from the previous month and the show cracked the Top Five in business on Apple and Spotify multiple times. Second, I want to keep the momentum going. So if you have a second, please head to Spotify, Apple, or the podcast player of your choice and subscribe and review the show. This is the number one way to grow any podcast. A always, thank you so much for listening and I'll catch you next episode.