Capitalogix

Carl Sagan's Foresight from 1996

Carl Sagan was an astronomer and planetary scientist whose most enduring legacy lies in his extraordinary ability to communicate complex ideas to the general public.

Shortly before his death, he participated in an oddly prescient interview about short-form media and public attention. It is worth clicking to hear his clear thoughts about how governments will use ignorance of science and technology to control people.

 

via YouTube

He goes into more detail about this topic in his book, The Demon-Haunted World: Science as a Candle in the Dark."

“I have a foreboding of an America in my children’s or grandchildren’s time—when the United States is a service and information economy; when nearly all the key manufacturing industries have slipped away to other countries; when awesome technological powers are in the hands of a very few, and no one representing the public interest can even grasp the issues; when the people have lost the ability to set their own agendas or knowledgeably question those in authority; when, clutching our crystals and nervously consulting our horoscopes, our critical faculties in decline, unable to distinguish between what feels good and what’s true, we slide, almost without noticing, back into superstition and darkness ... the dumbing down of America is most evident in the slow decay of substantive content in the enormously influential media, the 30 second sound bites (now down to 10 seconds or less), lowest common denominator programming, credulous presentations on pseudoscience and superstition, but especially a kind of celebration of ignorance."  - Carl Sagan, The Demon-Haunted World

With the national outcry at TikTok's ban being upheld in the Supreme Court, this feels even more relevant. 

With TikTok, Instagram Reels, and YouTube Shorts, even 30 seconds of attention sounds generous. Smooth-sounding AI-generated slop only makes it worse.

In many ways, we've even forgotten how to be appropriately skeptical. It's not enough to question authority and look for trusted evidence; you must also question their detractors and replacements. Laziness and ignorance rarely lead to good outcomes.

There is room in life for faith, optimism, and belief. But when you question what's being pushed toward you, how influenced are you by your existing biases and beliefs? It's hard to reason someone out of a position that they did not reason themselves into. 

Do you think America is becoming more or less ignorant? If more, what do you think it would take to reverse that trend?

Here Are Some Links For Your Weekly Reading - January 12th, 2024

Here are some of the posts that caught my eye recently. Hope you find something interesting.

Lighter Links:

• Incarcerated Firefighters Play Key Role in Battling Los Angeles Wildfires. (Particle)
• Transition 2025: A Report the Incoming Trump Administration Should Read. (CFR)
• What Happened to Justin Trudeau? (RollingStone)
• How OpenAI’s Sam Altman is Thinking About AGI and Superintelligence in 2025. (Time)
• AI Could Crack Unsolvable Problems — And Humans Won't Be Able to Understand the Results. (LiveScience)

Trading Links:

• The Insurance Apocalypse – Fire, Money, and Who Gets Burned. (TheBulwark)
• US Top Court Leans Towards TikTok Ban Over Security Concerns. (BBC)
• VCs Say AI Companies Need Proprietary Data to Stand Out From the Pack. (TechCrunch)
• Wall Street Just Got Another Sign that Dealmaking is on the Rebound. (Finance)
• Dow Sees Worst Start to a Year Since 2016 as Fed Rate-Cut Hopes Fade for 2025. (MarketWatch)

How'd Markets Do In 2024

At the beginning of 2024, I asked the question - how did markets do in 2023?

It makes sense to ask the same question as we start 2025. 

Before I get started, it’s worth stating that the market is not the economy ... but with Trump about to step into office, I know people are wondering. 

I still think about the often-quoted quip “It's the economy, stupid” - coined by James Carville, a strategist in Bill Clinton’s successful 1992 U.S. presidential election against incumbent George H. W. Bush.

2022 was the worst year for the U.S. stock market since the 2008 financial crisis.

2023 was much better, but much of the gains came in concentrated sectors.  

2024 saw nearly every sector posting gains - driven primarily by AI enthusiasm and a robust U.S. economy. 

To help you get a sense of 2024 returns, VisualCapitalist put together a few helpful infographics.

 

via visualcapitalist

66% of companies on the S&P ended up in positive territory this year. The S&P also had its best two-year stretch since the late 90s. 

Communication Services usurped IT’s #1 spot, driven primarily by Meta & Google. Strong consumer spending and digital ad revenue brought ad spending to almost $400 billion. 

Materials was the only sector to see negative returns, hampered by China’s economic slowdown and increased interest rates. 

Here is a more global look at return by asset class.

 

via visualcapitalist

Driven by that end-of-year run, Bitcoin surged to all-time highs, and gold also saw its best performance in 14 years. Meanwhile, bonds suffered heavily amid reflationary concerns and a potential widening deficit under the Trump administration.

In 2024, I predicted a brief market correction, blamed on various geopolitical instabilities and partisan weaknesses, followed by a long and steady push higher as the November elections approached.

How did that prediction hold up? I'd say pretty well. 

On one level, I try not to think about or predict markets (because I know better). On another level, sometimes I can’t help myself ...

Part of me is so bullish about AI (and its impact on other things) that it’s hard to maintain objectivity. With that said, I think we’ll have another decent year. However, I expect increased volatility and noise.

What do you expect for 2025?

Do you think the continued investment into generative AI will impact these trends?

Will cryptocurrency continue to explode? What scenarios do you think have the potential to be force multipliers?

The World Economy Going Into 2025 ...

Are you a glass half full or a glass half empty person? The recent economic news cycle has certainly been playing on people's fears.

There is a lot of good news and reasons to be confident and excited about what's to come.

Sure, you can focus on the $100 trillion global debt ... but you could also focus on how U.S. states' GDPs compare to global GDPs.

Today, let's look at the $115 trillion global economy. For what it's worth, America is still the dominant force.

 

via VisualCapitalist

America has topped the list for over 100 years and will comfortably continue that reign in 2025. China comes in second, and together, they account for approximately two-fifths of global GDP. That said, China is comparatively a newcomer to their spot - with about 15 years here. 

While we top the list, the fastest-growing economies would go to countries like India, Australia, and Brazil - which are all expected to rise the ranks in the coming years. 

The trend to watch here is what will happen in the Middle East, with Syria overthrowing their government and the Israel-Palestine conflict continuing and impacting the supply chain of surrounding countries as well. 

It will also be interesting to see how Trump's re-election and the continuing Russia-Ukraine conflict affect global trends.

Looking beyond traditional economic metrics, I believe artificial intelligence will emerge as one of the most critical factors driving power, progress, and wealth creation in the coming years. It's likely to become both the most coveted resource and the capability we'll most actively seek to deny our adversaries.

The real story of 2025's global economy isn't just told with GDP rankings. While America and China dominate those numbers, traditional economic metrics are becoming less relevant in a world where regional conflicts, supply chain dynamics, and technological innovation can reshape global power dynamics overnight. In the longer term, birth rates and the growth of middle-class infrastructure are strong predictors of what lies ahead. GDP alone doesn't measure what truly matters in the modern global economy.

What indicators are you watching?

How AIs (Like ChatGPT) Learn

I first wrote about this video a few years ago, when artificial intelligence first captured the media's attention. Back then, we were impressed that algorithms could help you pick out your Christmas gifts on Amazon, suggest new music for you on Spotify, and do their best to capture your attention on websites. 

AI is seemingly everywhere now. And what is surprising to me isn't its prevalence or impact ... it is the speed and breadth of its adoption. Last night, at an early holiday dinner, we talked extensively about how easy to adopt and how accessible tools like ChatGPT are (and almost none of us were Nerds). 

With all that being said, I think it's wise to have a basic understanding of the things that most impact our lives. Even if you're not a big fan of AI, understanding its growing powers will benefit you. 

The video below is a bit simple in its explanations, but it describes some fundamental concepts worth understanding.

 

CGP Grey via Youtube

The video is engaging and easy to understand. It focuses on genetic algorithms (which is one type of machine learning) and ignores some of the other more complicated techniques and approaches. For example

In my experience, it is more useful for an executive to understand what tools like this can do rather than how they work. Likewise, it is better to understand when to use tools like this rather than knowing precisely how to use them. But, a cursory understanding like this video still adds value. 

As machine learning gets more complicated and evolves, it gets harder for humans to assess their output or process accurately. Here is something to consider:

How do you know that the answer it gives is the answer you seek?

Just because an algorithm responds quickly and confidently doesn't mean it's right.

While bots can deliver impressive results, their decision-making processes can be opaque. This presents both a risk and an opportunity. Artificial intelligence seems cool, but artificial stupidity is scary ... and making mistakes at light speed rarely results in good outcomes.

It's human nature to feel safer when we understand something. It's human nature to envision machines making human-like decisions, just faster. But we are quickly going beyond that ... way beyond that!

In the past, algorithms were static while data changed. But now we're in a different world - one where the algorithms themselves evolve and dramatically adapt to handle different types of data. While this might sound like a subtle distinction, it represents a fundamental shift in how AI systems learn and operate.

One of the challenges of understanding exponential technologies is that their progress isn't linear. This makes it difficult for humans to accurately gauge how rapidly these tools will advance in capability. As algorithms grow more complex, they will increasingly operate in ways that may not be fully understood by their developers (and even less so by their users). As a result, we'll likely find ourselves using AI to solve problems and accomplish tasks that aren't even on our radar today. 

It might sound strange, but it doesn't matter why a bot makes a decision or what inputs it uses to make the decision. What matters is whether it accomplishes its goal and how its performance and level of decision-making rank in relation to its prior performance and other options (and, perhaps, whether the bot is biased).

Part of what makes artificial intelligence exciting is that it can do a lot of things well that humans are really bad at. And, even when you're using an AI in your domain expertise, it can be a great first step to save you time and effort. 

It's a brave new world, and not only is Big Brother watching, but algorithms are, too.

Live long and prosper!

Why Leave The House When You Can Shop Online ...

The holidays are almost here! Time's running out to get your gifts in time. 

Luckily, it's never been easier to get stuff. On top of online shopping, Amazon has stewarded the switch to almost instantaneous shipping. 

I remember when malls were filled to the brim, and Black Friday led to stampedes and people dying. Now, it's brick-and-mortar stores that are dying.

Not only are the in-store deals not as good, but the best deals are online. Here's a chart showing the surge of online shopping.

 

via visualcapitalist

Online shopping now accounts for about 15% of consumer spending, up from 4.1% in 2010. 

In addition, Q4 always sees a massive spike, with online spending accounting for 17.1% of consumer spending in 2023. 

This year, Cyber Monday attracted over 64 million U.S. shoppers, three times the number who shopped in stores. 

You can find change everywhere, but one place to look hasn't changed. Amazon is all about infrastructure and disruption. 

• Amazon announced Rufus, a new generative AI-powered conversational shopping experience.
• Amazon announced a way to get your prescriptions online faster and cheaper than a traditional pharmacy.
• Now, you can even buy cars on Amazon.

It's interesting to consider how drastically this changes supply chain management. People now expect free and fast shipping and the ability to return items if they don't work out (instead of trying them in-store). Meanwhile, brands have high fixed costs due to their existing retail locations, yet they need to keep most of their stock in warehouses instead of their box stores to deal with the surplus of online orders. 

We're already seeing the failure of malls and the bust of commercial real estate. If this trend continues of work-from-home and online shopping, we could see a $250 billion decrease in commercial property value by 2026.  

What do you think it would take to stop the bleeding and encourage both consumers and employees to leave their homes?

Ready Fire Aim!

Michael Masterson wrote a book called Ready Fire Aim: Zero to $100 Million In No Time Flat. It is a practical guide for entrepreneurs and business leaders, focusing on the different stages of business growth and the key challenges and priorities at each stage.

A core message of the book is to start taking action quickly (instead of getting bogged down in over-planning) and use rapid iteration and real-world feedback to refine strategies.

The concept is presented in the context of growing a business – yet the lessons apply broadly. 

Swift action should be your focus ... not over-planning or perfect timing.

Too many companies get stuck in a cycle of brainstorming, getting internal feedback, making changes, and failing to release the product.

Even for released products, too many fail because they took too long to launch or ignored market feedback. 

Masterson stresses that the value of live performance is that it helps you course-correct. He also cautions that there is no such thing as perfect timing. The best timing is almost always ‘Now!’

Now, let’s extrapolate. 

Let’s say you’re pondering a tricky work problem. You know you need to figure it out before the end of the week ... but your brain keeps going in circles. 

You don’t believe you can take decisive action and course-correct because you feel you have to get it right. 

So, what can you do? Write it out. Write out the potential paths, ramifications, and worst-case scenarios as holistically as possible. 

You’ll find that simply by writing it out instead of just ‘thinking,’ you end up more creative with more insight. 

Writing aids in organizing and clarifying your thoughts. 

AI As Your ‘Action’ Partner 

AI can make this process easier, faster, and more manageable. Tools like ChatGPT can help you explore complex topics, run scenarios for you, and provide external feedback. 

It’s not the same as real-world feedback, but it can shorten the ‘Aim’ part of the process. 

As you externalize your thoughts in writing them to whatever AI you choose, you also get the same benefit you did writing your thoughts out in our previous example. 

The business environment is changing faster than ever. Technology is advancing faster, adoption is getting easier, and the average Joe is becoming bullish on AI. Because of that, Masterson’s book is even more relevant now than it was in 2007. Here are a few of the other key takeaways from Ready, Fire, Aim.

• Adapt Your Role: As a company scales, leaders must shift from “doing” to guiding and from tactics to strategy.
• Be Sales-Focused: Keep revenue generation as a core priority, especially in the early stages.
• Build Scalable Systems: Invest in operations and leadership at the right time to support sustainable growth.
• Innovate Continuously: Avoid complacency by fostering an organizational culture that balances efficiency with creativity.

AI and exponential technologies are going to compress cycle types. What used to be long-term planning will just be planning. You have to act fast, not only to capitalize on these trends but also to avoid being wiped out by them. 

Are you keeping up?

Finding The Path Of Least Resistance ...

There’s a concept in design and transportation called Desire Paths. 

A Desire Path is the path users take instead of the path intended by the builder. 

Here’s a great example. 

Reddit via itstartswithani

If you are interested, there is an active online community forum that shares examples of Desire Paths. It may give you some ideas and knowing laughs.

I am a creature of habit, and even though much of what I think, feel, or do seems to be happening based on real-time choices or decisions, much of that is just a well-worn rut of unconscious behavior.

As a subtle reminder to my son, who just got married, expect many of your existing Desire Paths to change (even if you don’t want them to).

The lesson ... It’s often easier to account for or take advantage of human nature (or nature) than to fight against it. 

Here is a short video on how this relates to your business and tech adoption. I call it Functional Mapping. Check it out. 

 

The video provides additional depth and detail beyond what’s covered in this post. I encourage you to watch it for a more complete perspective.

Understanding the natural path for both technology and people makes it easier to understand and anticipate the capabilities, constraints, and milestones that define your path forward.   That means you actually have to understand the different types of users and what they expect to do. Here’s a diagram that explains how we build AI-enabled applications.

Each stage is really about the opportunity to scale desired capabilities and automation.

It isn’t really about building the technology; instead, it is about supporting the desire.

You don’t have to get it right. You just have to create momentum in the right direction.   Meaning ... if you can anticipate what is coming, you don’t have to build it. Instead, you should figure out where you want to build or create something that will move things in the right direction to help make that happen or benefit from it when it happens.

You’ve probably heard me talk about how Capabilities become Prototypes. Then, Prototypes become Products. And, ultimately, Products become Platforms.

This model is fractal. That means it works on many levels of magnification or iteration.

What first looks like a product is later seen as a prototype for something bigger.

SpaceX’s goal to get to Mars feels like their North Star right now ... but once it’s achieved, it becomes the foundation for new goals.

This Framework helps you validate capabilities before sinking resources into them. 

It helps you anticipate which potential outcomes you want to accelerate. Rather than simply figuring out the easiest next step … you have to figure out which path is the best next step to your desired outcome.

The world is changing fast! Hope you’re riding the wave instead of getting caught in the riptide!

Onwards.

How Hard Is It To Run A Business In America?

Running a business is hard. Of course, most people know that – but now VisualCapitalist has put together a chart to help visualize that sentiment. 

 

via visualcapitalist

20% of companies tracked failed in the first year ... and only one-third last a decade.

The numbers are worse than that in tech, mining, and oil & gas. Interestingly, those industries receive some of the largest government subsidies. 

But, if you are reading this, chances are that you are a survivor. So, take pride in knowing the odds you've overcome ... and be thankful. 

It is Thanksgiving this week.

Onwards! 

The World Is In $100 Trillion Dollars of Debt ...

The world is swimming in debt ... well, to be more specific ... the world's governments are swimming in debt — $100 Trillion of it. 

via Barrons

To put that in perspective, here's an illustration to give you a sense of the enormity of that number.

via Barrons

The U.S. accounts for just over 34% of that number. Meanwhile, I remember writing about the Republican National Convention marking the moment our national debt crossed the $16 Trillion level in 2012. 

To put the current number in context, if our national debt were divided among individuals, we'd each owe more than $100K ... and if the ten wealthiest people donated their entire fortunes, we'd only have covered about 5%. 

The concept of "Debt" can be confusing to a layman. Most people understand what it means when they take on debt with a local bank, but it can be harder to understand the role debt plays in global economics.

Compounding the confusion, the implications of debt change on a macro level. 

Many worry that our "excessive" government debt levels impact economic stability, the strength of our currency, and unemployment. The national debt can only be reduced through five mechanisms: increased taxation, reduced spending, debt restructuring, monetization of the debt, or default. 

The idea behind our current global debt structure is that if two nations are mutually obligated and dependent on each other, they are less likely to go to war. And that has held relatively true so far. Of course, it's not a perfect system (and it could break down), but it's working better than previous systems (such as the balance of power).

In some ways, it's fake money, so our debts don't seem insurmountable or fatal. Our economy is so reliable that we're allowed to continue borrowing. Debt is an integral part of the economic machine - it can be argued that we wouldn't have money without debt. 

Ray Dalio created a simple (but not simplistic) and relatively easy-to-follow 30-minute animated video that answers the question, "How does the economy really work?"  Click to watch.

via Ray Dalio

The global economy has grown enormously during the last 50 years as developing nations prosper. The average global GDP per capita has gone from ~$1000 to over $10,000 in my lifetime.

So, it makes sense that the amount of debt is also increasing with the size of the money supply required to conduct all the transactions in the global economy.

But, even though you may not need to be immediately worried about that number, I still think it's worth trying to put it in context. 

Humans are notoriously bad at large numbers. It's hard to wrap our minds around something of that scale. We're wired to think locally and linearly, not exponentially (it's one of the reasons I love AI so much). Here are a couple of ways to help you understand a trillion dollars. 

via AskOpinion

First, let's look at spending over time. If you were to spend a dollar every second for an entire day, you would spend $86,400 per day. If you have a million dollars, you can do that for approximately twelve days. With a billion dollars, you can do that for over 31 years. With a trillion dollars, you can do that for 31,000+ years. That means it would take over 300 thousand years to spend the global public debt at that rate. 

I'm sure many of you make over six figures a year. But, it would still take you 10 million years - if you spent none of it - to make $1 trillion, let alone $100 trillion. 

Let's try explaining it through time. Fifty thousand seconds is just under 14 hours. A million seconds was 11 days ago. A billion seconds ago from today? 1992. One trillion seconds is slightly over 31,688 years. That would have been around 29,679 B.C., which is roughly 24,000 years before the earliest civilizations began to take shape. Pretty crazy. 

Here's a video from the 1970s that helps you understand scale through the power of tens and an exploration of our universe. 

Eames Office via BetterExplained

Hopefully, that was disturbing and helpful!