Welcome to Citizen Scholar! Since launching three weeks ago, we’re already reaching hundreds of subscribers - thank you for your continued support. If you enjoy our writing and believe in our mission - to bring together a community of readers who value the study and discussion of important ideas - we humbly ask you to share Citizen Scholar with your family members and friends that may enjoy it. We’re grateful for your support and we look forward to continuing on this journey with you! The contents of the audio and text formats are identical and meant to accommodate your preferences.
Introduction to the Exponential Age
Few forces move today’s world as conspicuously as rapid technological progress. Most acknowledge this phenomenon, yet the public discourse around its interactions with society demonstrates less consensus. Contested topics include the regulation of speech on social media platforms, the implementation of advanced medical treatments in the fight against COVID-19, anti-trust enforcement against “Big Tech” market leaders and the status of “gig economy” workers, to name a few. In The Exponential Age, released earlier this month, entrepreneur and commentator Azeem Azhar presents a framework for approaching these issues. He has founded four tech companies, invested in thirty startups and continues to contribute to the tech ecosystem by investing, working with institutions that study the space and writing a widely read newsletter called Exponential View.
Azhar contends that we’re living through an unprecedented period of accelerating technological growth not wholly comparable to the Industrial Revolution or the premature promise of the 1990’s dot-com bubble. Instead, he asserts that between 2013 and 2017, we entered a period he refers to as the “Exponential Age”. The Exponential Age is characterized by technology being developed and scaled ever more quickly and cheaply – for example, the cost of sequencing a human genome has fallen from ~$100 million in 2001 to ~$1,000 today. While charting key measures of technological improvement yields an exponential curve, Azhar contends that institutions evolve in a more linear fashion and labels the resulting divergence the “exponential gap”. Throughout the book, he explains the mechanics underlying the exponential gap, argues for why he believes it’s problematic and offers potential policy solutions.
New Business Models
In 1965, the pioneering semiconductor engineer Gordon Moore observed the consistent doubling in processing power on an integrated circuit and predicted that the trend would continue, resulting in the formulation of the famous “Moore’s Law”. As time went on, Moore’s Law eventually came to mean that computer processing power would double roughly every eighteen months and continued to hold true into the late 2010’s. As a result, computing power became much cheaper over time. The cost of a transistor fell from $150 in 1958 to fifteen cents in 1972 and to a few billionths of a dollar by 2014, while trillions of transistors were produced per year (250 billion billions according to Azhar). Cheap and plentiful computing power became the core infrastructure that so many other tools were built on, enabling the rise of complementary businesses for smartphones, cloud computing and faster Wi-Fi among many other innovations.
While Moore’s Law has come under strain in the last few years due to physical constraints with adding further transistors to integrated circuits, segments other than computing are experiencing even faster bursts of improvement and material price declines. Azhar highlights advances in biology (genomics, bioengineering), renewable energy production / storage and additive manufacturing techniques such as 3-D printing exhibiting similar characteristics and improvements as computing has experienced over the last several decades. While he draws on theories of thinkers like Ray Kurzweil to explain the dynamics behind this rapid change, Azhar also arms the reader with economic and organizational theory to understand why the scaling of new tech platforms defies traditional wisdom about diminishing returns to scale. Most importantly, while large manufacturing and services businesses of old were eventually slowed down by organizational constraints at scale, platform technology businesses often benefit from network effects - each additional customer improves the existing network and gets to benefit from the addition of new customers in the future. For example, each additional Google Search customer feeds data into Google’s algorithms that makes Search work better over time. Additionally, this can be seen at other (somewhat) recent successful companies including: AirBnB, Amazon, Facebook, Tik Tok and Uber, to name a few.
Societal Implications
The microeconomic dynamics of innovative digital businesses aren’t just important in their own right. As Azhar notes about the expected outcomes in an Exponential Age:
“As of the early 2020’s, Exponential technology has become systematically important. Every service we access, whether in the richest country or the poorest, is likely to be mediated through a smartphone. Every interaction with a company or government is or soon will be handled by software powered by a machine learning algorithm. Our education and healthcare is increasingly delivered through AI-enabled technologies. Our manufactured products, be they household conveniences or houses, will soon be produced by 3D printers. Exponential technologies are becoming the medium through which we interact with each other, the state and the economy.”
The benefits we receive via these interactions are arguably underemphasized in public debate – in the book, Azhar also details some of the most important costs of these exponential technologies. Platforms that leverage network effects to triumph in “winner-take-most” scenarios create winners and losers amongst businesses and workers. Dominant tech giants can stifle innovation within their own core competencies and leverage their market positions to integrate new segments horizontally and vertically. Increasingly advanced surveillance tools are used to monitor remote and on-premise workers alike. Gig workers enjoy more flexibility than traditional employees but miss out on employee benefit packages and are at the whim of algorithms for the quality and frequency of gigs they receive. Additionally, U.S. anti-trust officials have struggled to regulate these newly dominant tech companies. They often don’t harm consumers in the traditional ways government has thought about monopolistic business practices - higher prices, price makers and single sellers. For example, Amazon typically offers the lowest price goods which may benefit consumers in the short term, but it also may push out competition because local sellers can’t compete with Amazon’s scale. This issue has also recently come under scrutiny as it relates to Apple’s app store and the 30% cut of sales it takes from app developers within the ecosystem.
Azhar makes the case that the only two ways to address these issues is to slow the rate of technological development - which would be difficult and of questionable desirability - or to boost the ability of institutions to grapple with the negative side-effects. Institutions are the systems that define how we live, whether they be formal bodies like governments and NGO’s or informal norms like social taboos that nevertheless influence how we relate to each other. As we continue to experience seemingly exponential technological advancement, why do these institutions struggle to cope with exponential change? They’re obviously formed by humans, who Azhar explains aren’t built to wrap their heads around exponential change. Humans are trained to think about linear processes that we’re more likely to encounter in a state of nature. By their nature, institutions evolve slowly and carefully to serve the needs of human beings. Azhar believes that institutions can adapt to new circumstances, and outlines policy options that include regulating tech companies’ inorganic growth via M&A as well as their organic growth, requiring pro-competitive features like interoperability between platforms, empowering labor unions to push back on poor treatment of workers and formulating governance structures that are more suited to the Exponential Age.
Final Reflections
Inevitably, we didn’t necessarily agree with every explanation or recommendation that the author had in the Exponential Age. However, we think it contains an excellent synthesis of existing strains of thought as well as helpful frameworks - it’s worth the read, especially for those who enjoy a book that serves to connect ideas about advanced technologies for a broad audience. The tools that Azhar provides the reader shed light on how we’ve arrived in such an exciting yet intimidating position, and how it may develop in the future. The Citizen Scholar team sympathizes with the argument about how intense the velocity and acceleration of innovation in our time is. We often worry that the car may be driving fast enough to lose its own wheels. Institutions will certainly need to either be reformed or created to avoid negative side effects of the Exponential Age. We’re hungry for more innovative solutions to institutional adaptation that can handle emerging issues across computing, biology, renewable energy and additive manufacturing - let us know in the comment section below if you have any proposals, or if you have any other thoughts about this topic!
All the best,
The Citizen Scholar Team
Discussion #7: The Exponential Age: How Accelerating Technology Is Transforming Business, Politics, and Society, by Azeem Azhar