When currency gets burned in the streets, gather around the fire.
This is the final chapter of the Information Era - the Knowledge Chapter.
Playing Information Era economics entails maximization amidst scarcity, only to get undermined by technology. Where Settler’s of Catan would have you “trade, build, settle,” this game was “find, join, learn.” Find the data, join the network, learn the knowledge. Collect those cards in that order and you have the winning trifecta. Then press your advantage for as many hands as you can before technology shares your precious cards with the world at large.
Observing this pattern over history reveals its natural, imminent end - the Knowledge Chapter.
In the 1500s, Christianity’s data card was the bible and its network card was the few priests who had access to the data. Then came the printing press - open source’s original sin. All of a sudden, the masses were free to interpret the data themselves. Amidst the Protestant Reformation that followed, the Catholic Church’s Information Era advantage took a huge hit. As bibles got printed like COVID stimulus, the Vatican’s data and network cards saw hyperinflation. Alternative translations and interpretations of Christianity flourished.
And so the Information Era pattern repeats.
The compass brought a Reformation for the the navigation supremacy of the Portuguese and Venetians. Expedia took travel agents’ booking data and allowed anyone to access it and book themselves.
Clinging to data and network advantages is akin to hoarding Weimar notes in the 1930 while as they get used for kindling for fires in the streets. Zettabytes of data are produced each year. That’s twenty one zeros. Metcalfe’s law states that a network’s strength is equal to n-squared. With 5.5 billion people on the internet, that’s a network strength of 30.25 quadrillion. Centuries of the Information Era’s maximization function has hyper-inflated those cards for good.
The Vatican didn’t wither away however. The new Protestant upstarts lacked knowledge cards. Catholicism still had centuries of building community, credibility, and churches. Their earned knowledge cards kept them in the game.
So what makes this the last Chapter of the Information Era?
For the first time ever, it is not the just data or network cards going through hyperinflation. It is the knowledge cards too.
Just 3 years into public large language models, we have over a trillion parameters feeding responses. It won’t be long before you might as well give your knowledge cards to the kids outside and join them around the fire.
The first knowledge cards to go - white collar knowledge.
Blue collar knowledge will remain insulated. Electricians go behind drywall. Plumbers go into the crawl space. Artists go into our hearts.
The key is to go where computers can’t go.
White collar knowledge however, it is earned by diving into valuable datasets. Devs master code. Lawyers recall law. Accountants memorize accounting principles. Whether stored in language, logic, or math, they’re all just professions built upon dataset mastery.
LLMs can pass the bar. Write code. And please, any day now, take care of accounting and taxes.
What does this mean for little old finance?
It is nearing time to gather around the fire.
A free market relies on supply, demand, open and equal information, and lots of market actors. Acting with endless data, network nodes, and knowledge, Information Era economics will continue to play out - just without us. Ironically, less humans, the more free the market.
On the sidelines, the fires will be burning. Empty your pockets of those cards you’ve been hoarding. The crowds will appreciate the extra burst of heat. Then, strike up a conversation. This is the post-Information era playbook.
Chatting around a fire is only half metaphor.
As AI coopts the free market at the scale of zillions, we have 150. This is Dunbar’s number, the maximum number of relationships a human can maintain. It is a number small enough to implore you to strike up a real conversation. Empty your pockets of all of your old cards, share their warmth, and get to know your peers.
That is the post-Information Era playbook.
Lowercase Capital Fund I is regarded as the most successful venture fund in history, turning eight million dollars into a rumored two billion plus. It also foreshadowed how post-Information Era finance work for us lowly humans.
Lowercase’s founder, Chris Sacca, has a JD in law and technology. He took college math years ahead of time. He was flush with Information Era cards, yet they hardly mattered for his famous Fund I success.
Venture capital is worth examining because it has long abandoned ploys of knowledge supremacy. It is not won with algorithms, deal structuring, or any of the common markings of “finance.” It is won by being in the best deals, which means knowing the right people at the right time.
When Uber raised its first round, Sacca had already spent hours in Travis Kalanick’s hot tub. Whether or not they made it into the tub, Sacca’s social circle also included the founders of Kickstarter, Twitter, and more. His Dunbar 150 was chock full of high potential tech founders.
Does this mean the post-Information era game one of schmoozing and raising venture funds? Can LinkedIn handle another “your network is your net worth” post?
I hope not.
For Sacca to turn his hot tub connections into $2B, he had to raise $8M. It helped that he knew a who’s who of tech to invest already. Going forward however, keep in mind, that AI is running the world’s most efficient free market in the background. It is not crazy to say that one function of the agentified markets will be effectively allocating liquidity to all the healthy fireside connectors.
True, Sacca’s law degree and google pedigree helped him stand out for allocation. But in a world where that knowledge is left to the bots, the resume of a Sacca looks a lot different.
Have you ever walked down the street with someone who seems to know all the good stuff happening? They geek out on beer, meaning they know the brewer and all her nifty tricks. The guitarist playing tonight was their old roommate so they never miss a show. They never miss a chance to thank their kid’s teacher for a very human job well done. These are the people who win the post-Information era.
In this next era, appreciating each other becomes a hard skill.
The economy will remain a central tenet of our lives, but monetization will look a lot different. I won’t dare predict the myriad of forms it will take, but I do know where to start.
Will there be capital allocators? Maybe. AI handles all the structuring, paperwork, and spreadsheets. Chances are, “allocating” will sound like the job description of “typist” today. AI and the new free market will handle the numbers and legalese.
There are likely hundreds of other jobs that all boil down to human appreciation, so focus on your humanity.
Gather around the fire. Get in the tub.
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