Tag: complex systems
As I caught up this morning on the posts in my new Startup Community community (over 1,000 people have already joined – that was a pleasant surprise – click here to join us) I noticed one from a member from a founder in Adelaide. It was in response to a prompt from Tom Higley to kick off the Complex Systems topic discussion.
The response (one of many) was:
The video is an excellent short description of Complexity Science with an example of adopting a complexity science mindset to the problem of Urban Greening.
It immediately reminded me of Kimbal Musk and Hugo Matheson’s The Kitchen Community Learning Garden initiative (now Big Green) that has transformed a lot of schools in Boulder before starting to expand around the US.
I’m starting to feel like my answer to any question I get should be “It’s complex.”
My first reaction to this photo was “you’ve got to be fucking kidding me.” My next reaction was the title of this post, “Humans Just Don’t Understand Complex Systems.”
The Covid crisis is a complex system. I’ve had my head deep in complex systems for the past year as I worked with Ian Hathaway on our new book The Startup Community Way. We never anticipated that the framework we used for the book around complex systems would broadly apply to the world beyond startup communities, but we find ourselves in the middle of a moment where, as a species, our lack of ability to understand how complex systems work is causing accelerating misery all over the world.
We are about to launch the pre-order campaign for the book (if you are interested in it, now’s the time to go preorder The Startup Community Way) and I spent the morning finishing up some content that our PR firm asked for.
A few of the things I wrote jumped out to me in the context of the above photo. One of the phrases was:
“As complex systems, these communities go through tipping points or phase transitions, where the overall state suddenly goes through a radical transformation. Seemingly small actions produce dramatic success but are the result of the infinitesimal, often unseen changes happening over time.”
Sound relevant to this moment? It’s framed in the positive, but applies equally to the negative, where “Seemingly small actions produce dramatic failure but are the result of the infinitesimal, often unseen changes happening over time.”
I’ll end with my answer to the question: Why do we need startup communities now more than ever?
Sustainable economic growth has slowed in many parts of the world. The income and wealth divide within many countries has been dangerously accelerating, and with the Covid crisis, massive global economic dislocation is upon us. Entrepreneurship is the means for upward mobility and wealth creation. Startup communities are critical for improving the impact of entrepreneurship in local geographics and dramatically increase the probability of success of positive economic growth over a long period of time.
In this moment, I’ve decided to create a Startup Community community—a global network for anyone interested in or involved in startup communities around the world. I just spun up a Mighty Network community to experiment and see if that’s a good approach, vs. a Slack community or something else. If you are game to engage as an early alpha user to give me feedback, please jump in and join the Startup Community community.
Since mid-March, I have received endless letters from companies and funds I’m an investor in with their thoughts on the Covid crisis. One of the best was from Paul Kedrosky and Eric Norlin of SK Ventures (one of our Partner Fund investments).
Paul and Eric have given me permission to repost it here.
(First published May 15, 2020.)
To start, a few quotations as markers:
Then he heard the sand rumbling. Every Fremen knew the sound, could distinguish it immediately from the noises of worms or other desert life. Somewhere beneath him, the pre-spice mass had accumulated enough water and organic matter from the little makers, had reached the critical stage of wild growth. A gigantic bubble of carbon dioxide was forming deep in the sand, heaving upward in an enormous “blow” with a dust whirlpool at its center. It would exchange what had been formed deep in the sand for whatever lay on the surface.
– Frank Herbert, Dune
Chigurh: Just call it.
Shopkeeper: I didn’t put nothin up.
Chigurh: Yes you did. You’ve been putting it up your whole life. You just didn’t know it.
– Cormac McCarthy, No Country For Old Men
Unfortunately, most warning systems do not warn us that they can no longer warn us.
– Charles Perrow, Normal Accidents: Living with High Risk Technologies
Crises usually accelerate real trends in society and technology; they don’t create or refute them.
– Gary Kasparov
The opposite of fragile is something that actually gains from disorder.
– Nassim Taleb
“There are decades where nothing happens, and there are weeks where decades happen.” That is Lenin’s line, and it has felt right in every way and, likely, in almost every country in the world these last eight weeks. And people—investors, in particular—are falling all over themselves trying to understand what it means. We all want to try to explain something this wrenching, and to explain how it feels.
We want to believe that we just lived through weeks where decades happened, as Lenin said. Except he didn’t say that. And as near as quote investigators can tell, he never said anything like it: the first example of the phrase only appeared a few decades ago. It has caught on partly because it’s well put, but mostly because it captures how we feel about what it’s like to have something come exploding into our consciousness and force us out of our usual amniotic now. We want an explanation, and we want it to explain where things go from here.
The reality, however, is that wildness has always lurked just beneath the surface. A combination of willful blindness, homeostasis, wishful thinking, and luck have let us skate past the holes in modernity’s ice and pretend nothing lurks beneath it. We have been making bets on smooth, thick ice for decades, and we stopped noticing, even if cracks open anytime in the thickest ice. Pandemics are a crack in our preferred reality, but they are nothing new, even if many countries, like the US, lack recent experience with them, and so pandemics hit harder and longer.
So, what changes? Post-pandemic, in the short-run, and contrary to many, we think very little changes, at least very little that is materially different from what we thought before. Rather than being a break with the past, we think people’s desperation for a return to normalcy—shopping! travel! work!—creates immense pressure to return to the recent past faster than anyone expects. There is inherent human-driven homeostasis, an almost inexorable need to bring things back to where they were before.
We think the biggest short-term effect will be an acceleration of existing trends. More things will go in the cloud; more things will be virtualized; more things will happen at the edge; more buying, selling, and entertaining will happen online: and so on. These trends will simply speed up.
What about, you wonder, the bigger changes people chatter about, like the death of commuting to work, the end of globalization, the collapse of professional sports, and the like? Not so much. Sure, we will see a paroxysm of people fighting the last war, much like how we armored commercial airliner cockpits after 9/11. In that light, expect a continuing run on contract tracing apps, thermal scanning, work from home chatter, N95 mask technologies, and that sort of thing. But that is extrapolative and impermanent, armoring metaphorical cockpits, rather than thinking about what this episode has taught us about the wildness that lurks beneath modernity.
We think a more useful analysis must go deeper rather than being merely extrapolative—it must be a thick description of how people live and die. This virus has been, both literally and metaphorically, a disease of modernity. Why? Because It attacks via the vectors of modernity: trade linkages, obesity, diabetes, air travel, mass transportation, urban density, social media, etc. Understanding long-run change requires understanding where modernity itself is under threat, and whether those threats will lead to meaningful—and investable—change.
Fundamental to the changing landscape is the realization that people have been shown how brittle their home structure is. For example, surveys show that New York and Shanghai apartment dwellers are realizing that giving up a balcony for a little more floor space in their aeries made them prisoners of quarantine: most buyers newly say they wouldn’t make the same decision again. Similarly, people all over the world are realizing that “preppers” aren’t nuts (at least, in their prepping), that there is merit in thinking in terms of how much inventory of critical things—food, water, and yes, toilet paper—you have.
Sociologist of risk Charles Perrow, long ago warned against the catastrophic risks created by tight coupling in society. To Perrow, tight coupling was any complex system where changes in inputs ripped quickly to new and unpredictable outputs, without an opportunity for meaningful intervention. Perrow would have called this current episode a reminder of tight coupling’s risks, and a forced re-introduction to loose coupling—an attempt to make your life less easily whipsawed by abrupt changes in the world around you. In that light, we think people—and companies—will carry more inventory of everything, that the scarring experience here will turn us into proto-preppers, less willing to be caromed around by the vagaries of life. This a big change, one that will ripple through supply chains, housing, travel, technology, education, and health.
Speaking of health, life sciences is at an unremarked inflection. There is the real potential for multiple new and effective vaccine and drug delivery platforms to emerge at once, something that has never happened in the history of pharmaceuticals. We not only could see multiple vaccines arrive, which is appealing, but, more importantly in the long run, multiple new platforms for delivering drugs, which would vastly increase the drug arsenal, transform human health, and add vastly to societal wealth via decreasing aggregate cost of illness.
There is also, however, the real potential for multiple massive drug failures setting the industry back decades. Not just because current vaccine efforts could fail, proving that, in economist Robert Gordon’s terms, we are stuck on an undulating plateau of stalled (drug) innovation, but, more insidiously, that multiple billion-dollar vaccine programs could hit the market at once, all lose money, and re-convince pharma companies that vaccines are a terrible business, making the next pandemic even more therapeutically fraught.
Which will it be? We are optimists, and we strongly believe it will be the former, but it’s important to keep in mind that it is by no means a foregone conclusion.
Turning to other deeper changes, machine learning and big data are getting a real run-out here, and given our investments, we are glad to see it. In areas like medical imaging where machine learning continues to acquit itself well, throwing ample shade at human experts. This is overdue, important, and necessary.
On the other hand, naïve application of “big data” models is being shown for the dangerous practice that it is. Epidemiological models continue to acquit themselves poorly, in part because it’s hard, but also and importantly, to abstract away from this pandemic, because most interesting systems involve humans, and humans adapt and change in ways that work to make models’ predictions fail. As the old capital markets saying goes, “at inflections, markets move in whatever direction will cause the most pain to the most participants.” Big data models suffer no better fate at similar points, as people are belatedly discovering. We are hopeful that this new wisdom will lead to better, more flexible, more adaptive, and more useful analytical models, across finance, medicine, sports, risk, and so on.
Overall, we believe we will quickly return to a state much like where we were before recent events. It will be less different than many pundits expect. Under the surface, however, wildness will lurk—our society will merely be subcritical. This will be, of course, normal, not abnormal. Most of human history has been this way, unlike recent times, which were anomalously placid, a state that’s now ending as we return to subscriticality. We think that making this state visible and manageable will be one of the keys to investing moving forward.
There will be explosive economic, biological, and technological moves, much more explosive than in the recent past, in part because the ground has been cleared for them, but also because our new, over-excited society has collective scar tissue making it predisposed to jump sooner, further, and faster. This will lead to more rapid technology adoption, faster cycles, and great gains for investors willing to embrace the emergency of subcritical society. Platforms and tools that embrace this—enabling looser coupling, warning when legacy warning systems can’t warn, systems made stronger by volatility—are the emerging investments that we will be digging into as we move forward.
To summarize, here is our current state of thinking:
- In the short-run, less will change than people think
- In longer-run, we will see a complete rethinking of risk, slack, and societal coupling
- We are interested in investments that acknowledge, track, and even gain from the wildness and disorder lurking under the thin ice of a newly subcritical society.
While everyone I know feels the weight of being in the midst of the Covid crisis, we are actually dealing with the overlap of three linked crises. Understanding this, and putting it in historical context, has been helpful to me as I process real-time inputs and prioritize my activities.
The three crises are (1) a health crisis (Covid-19) that has generated a (2) financial crisis, each of which has generated massive societal disruption which will generate a (3) mental health crisis.
In addition, these are both localized (in a community), at a state level, a national level, and a global level.
Yeah – that’s a lot.
Very few people alive today have experienced a health crisis like Covid-19. The closest one that people seem to reference is the 1918 Spanish Flu. That was 102 years ago. Assuming that you have to be about 8 years old to even remember this, that puts the age of people alive who remember this at 110. There are only around 100 people alive on the planet today who are 110 or older.
I’m 54. The closest analogy I have to this is HIV / AIDS, which broke out when I was in college (I was an undergraduate from 1983 – 1987). I lived in Boston, one of the cities where HIV / AIDS was visible, and the social dynamics, politics, and stigma around it were front and center. I had several close friends with HIV and my fraternity big brother died of AIDS in 1990. Around 700,000 people have died of AIDS in the US since it emerged in the early 1980s, which is a large number. However, in contrast to Covid-19, it was a very slow-moving virus, so the experience has echoes for me, but it’s not equivalent.
I’ve been through multiple financial crises. I remember Black Monday in 1987 (I was running my first company – Feld Technologies – in Boston.) I was decimated in the collapse of the Internet bubble and had an extremely rough business experience from 2001 – 2006 (which I lovingly refer to as “The Grind”). We started Foundry Group and Techstars just prior to the Global Financial Crisis of 2008 – 2009 and when I look back, was the moment in time our business world shifted from massive hierarchies to a different long term system that included networks, entrepreneurship, and the democratization of innovation. Oh, and the emergence of startup communities around the world.
I’ve been through many of my own mental health struggles and learned many things about how to manage my own issues, as well as being sensitive, empathetic, and understanding of others.
That said, we are in a moment when all three are colliding against a backdrop of fear, uncertainty, and isolation. Historical rules about things are being thrown away daily as we all try to adapt and adjust to an extremely fast-moving disease that is impacting every nook and cranny of our lives.
If your level of disorientation and anxiety feels extreme relative to what you’ve experienced, understand that we are – collectively as a society – trying to deal with three crises at the same time.
I’m involved in many things around this and am trying to help wherever I can. But, as several of my partners have reminded me, you have to take care of yourself first to be able to help anyone else. I’m fortunate to have Amy by my side, working hard also, but paying attention to what we both need to sustain our energy and focus through this.
Finally, this is not just going to “be over.” That’s magical thinking. There will be many different phases of this, but if you prepare for a long-term experience, you’ll be in a much healthier emotional place. I personally believe that April is going to be an awful month in the United States as the true extent of the health crisis finally hits in our country. The actions we are taking right now will determine whether April is the worst of it, but know that May will be rough, and the summer will be unlike “a normal summer” as, even in the best case, we being existing in the context of meaningful long-term societal adjustments.
This rant was meant to be pragramatic, not alarmist. I’m fundamentally optimistic about humanity, and especially optimistic about the United States over the long-term. But, I believe acting aggressively and with urgency today, and having an expectation that this will last for a while, is a healthy way to approach all three of these crises.
I was at a dinner event last night in Denver where, predictably, coronavirus (which I’ve been trying to call Covid-19, but everyone seems to default back to coronavirus) came up.
I’ve tried to avoid being “that person” who has a strong opinion because so much is changing so quickly. Instead, I’ve tried to have a “clear opinion” based on what I currently know and how it’s impacting my world. I was particularly sensitized to this since, at a board meeting earlier in the day where it came up, someone asked me directly, “How do you think coronavirus will impact things?” A few minutes later I realized I was stuck in exactly the kind of rant that I was trying to avoid.
Over the past year, as Ian Hathaway and I worked on our upcoming book The Startup Community Way, I’ve thought a lot about complex systems. We based our conceptual framework on the theory of complex adaptive systems (which we’ve shorted to complex systems in the book for ease of reading) and it has been a really enjoyable intellectual rabbit hole to go down with Ian.
How Covid-19 is playing out is a classic example of a complex system. One of the key attributes that we discuss is contagion – both positive and negative. And, with Covid-19, we are seeing negative contagion at multiple different levels, most notably biological and economic. But, there are several others including one I’ll label hysteria.
Here’s an example. When a large technology company in a city shuts down its offices, cancels all travel, and insists everyone works remotely from home, other large technology companies around the world and other companies in the city pay attention to this. Suddenly, there is a conversation going on everywhere that is the equivalent of “should we do the same thing?” The emotional cadence of this conversation is high, so companies over-index on trying to figure out the right answer, where there isn’t really one given the nature of a complex system. Rational thinking generally aligns with “we’ll do whatever the CDC is suggesting we do”, but anyone who either doesn’t trust the government or authority figures won’t be satisfied with this. They will become more agitated (negative contagion on hysteria), which will generate more conversations and potential actions. Regardless of the actions, the cost of the conversations will be high, generate more uncertainty and agitation, and the negative contagion will continue.
I’m not suggesting that Covid-19 is no big deal. I’m not asserting that companies shouldn’t shut down offices or people shouldn’t work for home. Rather, I’m giving an example of negative contagion on a dimension (hysteria) that is appearing in complex systems that I’m involved in.
Intellectually, it’s fascinating. Emotionally, it’s challenging.