Thursday, December 16, 2010

So What's an Entrepreneur?--The Sequel

I met up with Peter Worrell, Managing Director of the Bigelow Company, on a cold December day a few weeks ago at his office overlooking Portsmouth Harbor.  Despite a frigid wind whipping off the water, downtown Portsmouth was decorated for Christmas and bustling with shoppers.  
Pete's bio states that "Worrell has a particular interest in the intersection of psychology and finance and its relevance to building value in private capital markets."  In fact, Pete is a hugely accomplished M&A guy specializing, as does all of Bigelow, in addressing the particular (and often idiosyncratic) needs of the owner-entrepreneurs of privately-held companies.  

But Pete is also a serious academic, working hard to understand what makes entrepreneurs tick, and more importantly, what makes them successful.
As proof, in 2009 he published a paper which outlined the strengths of successful entrepreneurs.  The paper was conceived while he was attending the University of Pennsylvania in a psychology graduate degree program under advisor Martin E.P. Seligman, Ph.D., who works on positive psychology, learned helplessness, depression, and on optimism and pessimism. 
What says "entrepreneur" better than “learned helplessness” and “depression,” eh?  (Indeed, before I make too big a mess of Pete’s excellent work, a good summary of some of the paper’s key findings are on the Bigelow website here.) 
Pete worked with 200 seasoned, successful entrepreneurs and expert advisors (answering for successful entrepreneur clients) who completed an online survey measuring their character strengths, consistency of interest and persistence of interest.  These were people who had owned and operated businesses, created tens of millions of dollars of value, and employed hundreds of people over their working lifetimes. 
Now, think fast: What are the top two or three characteristics of successful entrepreneurs?  (Note that this is a very different question--"What is an entrepreneur?"--that we tackled earlier.)  Creativity, right?  Passion.  Focus. Risk-taking.
Here's the truth. Of 24 character traits, Pete’s survey found these to be the top five among successful entrepreneurs:
1.  Authenticity--speaking the truth, presenting oneself in a genuine way, without pretense.  This ranks far above the general population. (Pete: Some are "candid to the point of being blunt.")
What’s that you say?  Worked for one of those before?  Still pulling out the shrapnel?
2.      Leadership--encouraging a group to get things done while maintaining good relations within the group (which was also far above the general population).

3.      Zest--approaching life with excitement and energy, and the best predictor of "work as a calling."  Of the top measures, this characteristic shows the single greatest gap between successful entrepreneurs and the general population.  Because of zest, Peter writes, "The most successful entrepreneurs persist and adjust long after others might rationally call it a day."

4.      Fairness (about in line with the general population).

5.      Gratitude--being thankful for the good things that happen, which is also a predictor of life satisfaction.  (This is just slightly above the general population.)

Successful entrepreneurs show, by these strengths, Pete concludes, that they are strongly "outwardly focused."
The bottom five characteristics of the 24—which is not to say they are unimportant, but that they are less (and often far less)  important—are (24) religiousness/spirituality, (23) forgiveness/mercy, (22) creativity, (21) love of learning, and (20) appreciation of beauty.
I might point out that 19, 18 and 17 are self-regulation, modesty and prudence.  Except for creativity, does any of this “bottom list” surprise you?  
The other thing I learned from Peter’s work is that the single quality that may most distinguish successful entrepreneurs from everyone else is grit.  "Grit is perseverance and passion for long-term goals, working strenuously toward challenges, and maintaining effort and interest over years despite failure, adversity, and plateaus in progress."
Against the general population, entrepreneurs score high on grit and exceptionally high on "persistence of effort."  In fact, grit predicts the accomplishment of very high challenges among very high achievers better than self-discipline or intelligence.
And one other thing Pete discovered about entrepreneurs: “Profit motivated?  Hardly. . .They are more often occupied with trying to build sustaining organizations, ones that have longevity beyond themselves as mere individual owners."
I can think of lots of uses for this information, the most obvious being that an entrepreneur who knows himself or herself well could build a surrounding team that insures these key characteristics are well represented.
My thanks to Peter Worrell for a great piece of research, and taking the time to discuss it.

Tuesday, December 7, 2010

Catching an Edge

So this is how it happens.

It's the third or fourth day of your ski vacation.  It's been fantastic.  Superb conditions, long runs, no crashes.  This particular morning, had the snow not been so perfect, you might have rested your weary bones in bed and gone out for a late brunch.

Instead, you are on the slopes by 8, dodging the snowboarders and practically skiing up to the chairlift.  Again and again.  By 12 noon your stomach is growling but the lines are so long at the restaurant below that you just keep skiing, ignoring the burning thighs and desperately cold little toe.

Finally, at 1:30, you come off the mountain and head for lunch.  Feeling great.  You are king of the mountain.  You are Jean-Claude Killy.

And because of that, today is the day you finally go for the fries.  And the chocolate chip cookie.  And the hot chocolate, which courses through your veins like sap in spring.  (Whoa.)

And you think. . .Perfect day.  Time to head back, jump in the hot tub, take a nap, and have a great dinner.  Except someone, usually an offspring, begs to go back on the mountain.  "Just a few more runs." 


So, you stick your feet back in the hell that is your ski boots, bundle back up, and head for the lift.  Up you go.  Down the slope you start. 

But this time the sun is low and your old eyes can't see the terrain so well anymore.  Those damnable skiboarders have scraped the hillside to ice in little patches everywhere.  And that old hot chocolate is now coursing through your veins more like molasses in the dead of winter.  Your legs are so tired.  Your feet hurt.  Your tummy is pushing against your ski pants in a way that it didn't in the morning.  So you relax. 

And that's when it happens.

That's when you catch an edge.

That's when, with one boot now above your shoulders, your life flashes before your steamed-up goggles and you find yourself--if  you are lucky--in four feet of soft snow, ten feet left of and twelve feet below the ski run (that you mastered so handily this morning).  Among but not a part of the aspen and pine.

I used to have a Chief Operating Officer who would wonder, whenever we were in a bind, if we were on the verge or on the edge.

This question has, at least for now, been decided for you.  Indeed, if you really are lucky, both skis are still visible and within crawling distance.

And that's when you know, beyond a doubt, the most profound of life's few essential truths: You should be in a hot tub somewhere.

From now on, you swear, you will "know thyself" and  never catch an edge again--on the ski slope, at home or at work.  Tired is tired.  Done is done.  Retreat is not dishonor.  Men and women must have their cave and their cot and their mental-health day and their long weekend and even their occasional sabbatical.

Because, as Groucho might have said, a cold toe is a cold toe, but a great hot chocolate is still just a drink.

Thursday, December 2, 2010

So What's an Entrepreneur?

I was working on my book about entrepreneurs the other day when I had a brilliant (though tardy) insight: It might be a good idea to actually define the term.  After all, "entrepreneur" is used endlessly in the press, academia and in conversation, and we simply take it for granted that we're all talking about the same thing. 

But we're not.  Not even close.

Suppose I have a great job with IBM and can see my career path unfold over the next decade.  One day I decide I hate my boss.  So I quit my job, borrow money from my family, friends and 401K, mortgage my house, and open a McDonald's franchise in suburban Boston.  I have many a sleepless night.  If I'm unsuccessful I'm bankrupt and probably have to beg IBM for my old job.

Am I an entrepreneur?  After all, I'm willing to take on incredible risk.  I've put skin in the game.  I'll start my own business, work like a dog, and be my own boss.  Isn't that being an entrepreneur?

My bet is that many, or most people would agree.

I know that Scott Shane, author of The Illusions of Entrepreneurship (2008) agrees, writing that "I use. . .definitions of entrepreneur and entrepreneurship. . .most closely aligned with common sense. Entrepreneurship is. . .“the activity of organizing, managing, and assuming the risks of a business or enterprise.”

I enjoyed Shane's book, but found this definition of entrepreneur so broad as to be unhelpful.  In fact, by his own admission, it's hard to find anyone in the workforce who isn't, or won't be, an entrepreneur:
First, entrepreneurship is as a very common vocation, much more common than our myths suggest. . .In 2005, approximately 13 percent of people in the United States between the ages of 18 and 74 were in the process of starting a business.  In fact, each year in the United States, more people start a business than get married or have children.  And as much as 40 percent of the U.S. population will be self-employed for some part of their work life! . . .
The typical American entrepreneur is a married white man in his forties who attended but did not complete college. He lives in a place like Des Moines or Tampa, where he was born and has lived much of his life. His new business is a low-tech endeavor, like a construction company or an auto repair shop, in an industry where he has worked for years. The business that the typical entrepreneur has started is a sole proprietorship financed with $25,000 of his savings and maybe a bank loan that he guarantees personally. . .It. . .employs one person— the founder—and it isn’t innovative and has no intention, or prospects, of growing.
When most people say "entrepreneur," they are unintentionally describing a 40-something married white guy launching a low-tech endeavor that isn't innovative and probably won't grow.

Take the example above of the new McDonald's, the same location in suburban Boston, but this time it's launched, owned and operated by McDonald's Corporation.  Its placement is the result of a careful market study that shows, despite other McDonald's in the area, that this one can make money without cannibalizing nearby stores.  In other words, total McDonald's revenue in the area should increase.

Is that entrepreneurial?  It has precisely the same impact in the market as when our former IBMer does it on his own, creating precisely the same competitive dynamics and serving precisely the same consumers.  In fact, given the company's experience, it's likely McDonald's will make fewer mistakes, grow faster, and be more successful--a better "entrepreneur," as it were.

But here we get push back.   Having McDonald's simply open another restaurant seems hardly entrepreneurial.  Once a wildly entrepreneurial business, McDonald's is now simply repeating a formula that it's already perfected, in markets where it already does business?

You see the issue?  One person's entrepreneur is another person's Bacon Double Cheeseburger.

It Always Ends With Schumpeter

That's when I decided I'd better begin at the beginning.  That would be Richard Cantillon (1680-1734), an Irish-French economist who coined the word "entrepreneur," saying that entrepreneurship entails bearing the risk of buying at certain prices and selling at uncertain prices.  That's a good start, but still pretty much captures anyone who has gone into business.   A bit later, Jean Baptiste Say (1767-1832), a French merchant and economist, added that an entrepreneur shifts economic resources out of an area of lower into an area of higher productivity and greater yield.

Now we're getting somewhere. 

But it wasn't until Joseph Schumpeter (1883-1950) that I had the breakthrough I needed.  His 1934 work, The Theory of Economic Development, considers entrepreneurship something that disrupts market equilibrium--say, by offering something novel, or in a novel way, or in a novel place--and is the essential ingredient in moving an economy forward.  Schumpeter says entrepreneurs can come from any function and any type of company so long as they practice the carrying out of new combinations.

By new combination, Schumpeter describes some very specific activities:

  1. Introducing a new product, or new quality product
  2. Introducing a new method of production, or of handling a commodity commercially
  3. Opening of a new market, whether or not the new market has existed before
  4. Exploiting a new source of supply of raw materials or half-manufactured goods, whether the source already exists or not
  5. Introducing a new way of organizing any industry
Schumpeter's definition makes it crystal clear why new combination--or what we might call today innovation--is so closely affiliated with entrepreneurship.  Without it, we may be launching a business, and we may be taking on risk, and we may show great courage and have many sleepless nights, but we're still not being an entrepreneur

In Innovation and Entrepreneurship (1985), Peter Drucker echoes Schumpeter: "Entrepreneurs. . .create something new, something different; they change or transmute values." This makes them different, Drucker says, than most new businesses.

Based on Schumpeter, I've elected as a shorthand definition the following: 

An entrepreneur combines resources in a novel way to disrupt the status quo of a market.

This might involve intent, but it might not; I believe I will be able to describe at least one remarkable entrepreneur in my book who had no intention of being entrepreneurial. 

Being a successful entrepreneur may involve certain personality traits, but it is not uncommon to have a single person involved in a series of business ventures, only some of which are tried, true and traditional, and some of which are entrepreneurial. 

Being an entrepreneur may involve taking on risk, but it might also be largely risk-free: Malcolm Gladwell's Feburary 2010 article in the New Yorker quoted a recent study by two French scholars who claim that an entrepreneur "occupies a 'structural hole,' a niche that gives him a unique perspective on a particular market. . .[and] looks for partners. . .who undervalue what they sell to him or overvalue what they buy from him in comparison to his own evaluation.  He moves decisively. He repeats the good deal over and over again, until the opportunity closes, and—most crucially—his focus throughout that sequence is on hedging his bets and minimizing his chances of failure. The truly successful businessman. . .is anything but a risk-taker. He is a predator, and predators seek to incur the least risk possible while hunting."
It's not intent, it's not personality, and it's not risk 
that defines an entrepreneur. 

It's offering an innovation that alters the status quo.  Leibenstein (1968) called it an entrepreneur's ability to destroy pockets of inefficiency.  That makes sense to me, and is different than simply opening another auto parts store, gas station, bowling alley or fast food restaurant.  

Do you know who are brilliant at finding entrepreneurs?  Venture capitalists. 

Shane writes: 
Since 1970, venture capitalists have funded an average of 820 new companies per year. These 820 start-ups—out of the more than 2 million efforts to start businesses in this country every year—have enormous economic impact. 
In 2003, companies that were backed by venture capitalists employed 10 million people, or 9.4 percent of the private sector labor force in the United States, and generated $1.8 trillion in sales, or 9.6 percent of business sales in this country.  
In 2000, the 2,180 publicly traded companies that received venture-capital backing between 1972 and 2000 comprised 20 percent of all public companies in the United States, 11 percent of their sales, 13 percent of their profits, 6 percent of their employees, and one-third of their market value, a figure in excess of $2.7 trillion dollars. 
Between 2003 and 2005, venture capital-backed start-ups made up 23 percent of the companies that went public.  In short, almost all of the value generated by start-ups comes from this handful of firms.
Here's the bottom line: The definition of entrepreneur begins and ends with market impact.  We care about entrepreneurs for one and only one reason: They offer an innovation that disrupts an economic flow.  It's an outside-in view that cuts through all the clutter and eliminates the drama.  

That's an especially good thing to remember when someone asks, "What does it take to be an entrepreneur?"  It's not passion.  It's not risk-taking.  It's not being an extrovert, and sometimes not even intent.  (Some of America's most influential entrepreneurs didn't even see it coming.)  And most of all--as much as I like 40-something white guys launching barber shops, dry cleaning stores and fast food restaurants--if we confuse it with "people starting businesses," we draw all the wrong conclusions.

Saturday, November 27, 2010

Steampunk in Pictures at the Charles River Museum of Industry

The Charles River Museum of Industry & Innovation sits on the former site of the Waltham Watch Company in Waltham, MA, one of the wonders of 19th-century American industry.  It's not far from the spot where Francis Cabot Lowell founded the first textile mill in America to manufacture cotton-to-finished cloth in one building, another wonder of American ingenuity.  In fact, if nearby Bunker Hill and Lexington/Concord are hallowed ground for the American Revolution, this spot in Waltham would be hallowed ground for the Industrial Revolution.  

Along with its textile and watch exhibits, the Museum in October launched Steampunk Form & Function--an Exhibition of Innovation, Invention and Gadgetry which celebrates art, imagination and industry.  (If you are unfamiliar with steampunk, Wikipedia has a good summary here.  If you have some time over the upcoming holidays and want to sample a steampunk novel, begin at the source with William Gibson's and Bruce Sterling's The Difference Engine.)

I've captured a few images of this fun exhibit from a recent visit, and would encourage you also to visit the Museum and support this important historical site.

It's easy to see why this spot along the Charles River, not far from Boston, attracted industrialists.  Besides reliable water power, the entrepreneurs who founded the Waltham Watch Company were also seeking "clean air" (predecessor to the clean rooms we require for manufacturing), something hard to find in the rapidly-growing, smoky and filthy urban centers of mid-19th-century America.

A view of the Waltham Watch (and successor) site.  This now houses light industry, offices, artist lofts, the Museum and other uses compatible with its suburban neighborhood.

And off we go. . .

One of my favorites: a Steampunk Trans Foraminal Image Perambulator With Stand, something no home should be without.

This is a very cool pinball machine where a winning score creates life, something that is done from time to time (as is alchemy) in steampunk novels.

Better than a Harley.  Seat-warmer standard.

Just the new keyboard you need for Christmas.

Or maybe this steampunk iPhone docking station?

Or perhaps this steampunk clock for your mantel?

And what child wouldn't want a steampunk Etch-a-Sketch under the tree?

There's lots more, including additional steampunk exhibits (and lots of good background material), the Museum's superb watch exhibit, and great demonstrations on how the old factory distributed power among its machines.  Elln Hagney and her team do a terrific job maintaining and growing the Museum, even as they continue recovering from a foot of floodwater earlier this year.

One last one. . .

Eat your heart out, Lucille.

The Museum even has steampunk music available, and our tribe picked up a CD on the way out the door.  It wasn't exactly my or my wife's cup of tea (as we discovered on the drive home), but it sounds as if it's being loaded onto teenage MP3s around the house even as I write. . .

Sunday, November 14, 2010

Happy at Work? You Should Be 8 Feet Tall

Earlier this month the Boston Globe printed a glossy magazine insert entitled "Top Places to Work 2010."  Inside, segmented into "large, midsize and small," were dozens of companies ranked by the engagement and contentment of their employees.

These sorts of articles come out on a regular basis--top places to live, top lawyers, best schools and pizza and podiatrists--and are clearly designed to increase circulation and drive business to advertisers. Consequently, we shouldn't take these lists seriously, though the winners undoubtedly do.

In this case, the Globe invited 1,160 employers to participate.  236 companies had enough critical mass to complete the process to the point where confidential surveys were offered to 133 thousand of their employees, 82 thousand of whom elected to participate.  Criteria included Direction (confidence in leadership), Execution, Managers (listening, praising, etc.), Career (opportunity), Conditions, and Pay/Benefits.

That seems like a pretty good list, though I cannot help but think about the Acura service manager who badgers me in person, by phone and by email for ratings of "10" on the survey Acura corporate inevitably sends after one of my visits to get the oil changed.  I'm not sure I even know what a "10" oil change is.

Of the winners of the Globe survey, one company offered unlimited vacation. Another free catered lunches, Fridays off in the summer, an iPod for every new employee, and a "kegerator"--a refrigerator that dispenses beer from two kegs on Friday afternoons.  One arranges for a tricycle to deliver local produce every Thursday in the warm weather months.  Another placed a masseuse and manicurist on site.  Who wouldn't be happy with those sorts of benefits?

Height and Benefits: A Quick History

Bear with me for a moment.

In 1800, the average native-born American white male worked six days per week, ten-hours per day on the farm and averaged 5'8" tall, a full two inches taller than his English counterpart.  Some of this height advantage was from living in a dispersed population where contagion wasn't as devastating to the population.  Most, however, was likely from eating better food, especially more protein.  Of course, by modern standards, nobody in 1800 had a balanced diet.  If our 60 hour-per-week, 5'8" ancestor lived in the North, he/she ate lots of beef and wheat, and in the South tons of corn and pork.  All of this came with plenty of milk, cream and butter.  As one historian summarized, this diet was "monotonous and constipating."

Now, cast ahead about 140 years to World War II.  The average native-born American white male enlisting in the Army was--guess?--5'8" tall.  No change in 140 years.

Though, in fact, a funny thing happened on the way to WWII.

It was called the Industrial Revolution.  It meant the growth of high stress, smoky, dirty, dangerous factories and urban areas.  And part of this so-called "urban stress" was nutritional.  People on meager wages tended to pay their rent before they bought good food.  Reliable logistics from farm to city were still being invented.  

What happened?  The average height of the native-born U.S. male population fell by nearly two inches from 1800 to a low point in the 1880s, and did not recover to 5'8" until the 1920s.

At the same time--as you might expect--male life expectancy declined from about 47 in 1800 to 41 in 1850.  Women had it even worse; as a group, they went from 48 to 37.1 years--and undernourished women carrying smaller babies was probably the most direct link to a shorter population. 

A Short History of American Capitalism adds:
The evidence so far indicates that females began to experience nutritional stress earlier than men during a downturn and were less likely to show improvements in an upswing. . .Social class and occupation also played a large part in the decline. . .In all studies without exception, the positive relationship between social status and physical stature has been consistently documented in various societies and at different times. . .
Out of nine industrialized capitalist countries, the United States experienced the longest decline in stature—sixty years.  The antebellum years constituted the bulk of this period. . .Growing inequality of wealth combined with rising food prices, and the falling birth weights of babies of poor women suggest that the quality of life may have decayed for the lower classes.
Clearly, when Americans made their move from farm to factory in the early years of the Industrial Revolution, they found working conditions tougher, sometimes much tougher, than on the farm.  And good, plentiful protein was harder to come by.  At the Chicopee Manufacturing Company, a Massachusetts textile mill that began operating in 1823, the average workday began at 5 a.m. and lasted until 7:30 p.m. with two half-hour breaks for breakfast and dinner.  13.5 hours of daily industrial misery.  Cotton fly filled the air, permanently damaging lungs.  Heat was oppressive.  Dangerous machinery sat everywhere.  When England limited children to 48-hour weeks, a factory manager complained that it became hard to get anything done.

Today, the average height for an American male is approaching 5' 10".  

Back to Today

Imagine, now, if you were employed by one of the Globe's "Top Places to Work."  Unlimited vacation.  Free catered protein.  A kegerator!  If poor work conditions and nutrition make you shorter, what would Top Work Conditions, Copious Protein and Beer Every Friday do for you?

You should be, what. . .about eight feet tall?!

Next time I'm in Boston, I'm finding the happy eight-footers walking the streets, following them to their offices, and dropping off a resume.  Those are clearly the companies we all should be working for.  Besides, this 5'8" stuff is for the birds.

Monday, November 1, 2010

A Weekend in Armageddon

I'm a little depressed this morning.

Every Saturday I read Peggy Noonan's column in the Wall Street Journal, and, generally speaking, find that the sky is falling somewhere that she's visited.  Mostly it's falling on Democrats, but it's falling for sure.  And usually I don't think twice about it because I grew up on Chicken Little and know it all ends well.  However, she kind of laid it on the line this weekend when she wrote that "We are in a crisis.  Our spending is ruinous, the demands of government are too great. . .We have only a short time to fix things, we have to move now."

So, we've got that Armageddon scenario going for us politically.

Then, my other favorite Jeremiah, Thomas Friedman, goes to bat every Sunday and often piles on a dose of technological and geopolitical Armageddon.  This Sunday it was the good folks in India lecturing us on the American dream.   Amazingly, when they talk they sound just like a Tom Friedman book, as when a "few Indian business leaders want to ask the president. . .Didn't America export to the world all the technologies and free market dogmas that created this increasingly flat, global economic playing field--and now you're turning them against us?"  Meanwhile, an Indian journalist wrote that our country has "worn-out infrastructure, [a] failing education system and lack of political consensus."  Another says we've lost our self-confidence.  Another wonders if we're going to cede our leadership to China.

All of which pales, frankly, in relation to the coming Singularity.  We tackled Ray Kurzweil and his followers just a while ago here.  Kurzweil says things like, "At the onset of the twenty-first century, humanity stands on the verge of the most transforming and the most thrilling period in its history. It will be an era in which the very nature of what it means to be human will be both enriched and challenged, as our species breaks the shackles of its genetic legacy and achieves inconceivable heights of intelligence, material progress, and longevity."

I'm here to say that I'm not sure I like any of this.  I can't decide if I'd rather have economic collapse, or be lectured to by non-Americans about the American dream, or allow my brain to turn to molten jello, or stand on the precipice of an era when we no longer even know what it means to be human. 

I have either seen the Four Horseman of the American Apocalypse this weekend, or I have seen the way modern mass media and publishing place absolutely everything on the brink to boost circulation.  

Either way, I'm going for another cup of coffee this morning. 

Sunday, October 24, 2010

Two Kinds of Inspiration

We held a Board retreat for the New England Historic Genealogical Society this glorious fall week at the historic, (and some say) haunted Colonial Inn in Concord, MA.  During the retreat we launched discussion around updating our strategic plan, a discipline (despite all the noise about strategic plans being dead) that has been extraordinarily beneficial to the Society over the last two decades.

This is mostly because, also in the last decade, good ol' traditional genealogy has gone digital, global and Hollywood, been IPO'd and social-networked, and today has some of its largest players giving away content for free.  It's like Alex Haley's Roots on a six pack of Red Bull.  The upshot is that non-profit players have either reinvented their business models, or they've simply given up and gone away.  Unfortunately, there are more examples of the latter than the former.

Wednesday, October 6, 2010

Shift Happens

We take as a given that the pace of our world is accelerating, and the word we most like to use for this acceleration is exponential.

This is mostly because we rely on a raft of technology "laws" to describe what we're feeling in our gut.  The most famous, Moore's Law, says that the number of transistors in a given integrated circuit doubles every 18 to 24 months.  Likewise, Haitz's Law predicts similar improvements for LEDs, while Bell's Law keys off Moore's to predict something we recognize during the Christmas season: A new, lower priced class of computers will come along to establish an entirely new industry about once a decade. 

In fact, Gordon Moore, the co-founder and former CEO of Intel, once joked that his "Law" had apparently been given to everything and anything that changes exponentially: "I say, if Gore invented the Internet, I invented the exponential."

Of course, it doesn't take a law to know that our world is barreling ahead at breakneck speed.  Worldwatch estimated that folks born in the mid-20th century had seen more population growth during their lifetimes than occurred during the preceding four million years.  In his latest book, A Short History of Private Life, Bill Bryson notes that of the total energy produced on Earth since the Industrial Revolution began, half has been consumed in just the last twenty years.  In this week's Wall Street Journal we learned that Fujitsu is expected to create a computer by 2012 that will handle 10 quadrillion calculations per second, which is 5X faster than the top Cray supercomputer. 

Think about the size of your first mobile phone.  Think about, if you are old enough, running code by submitting decks of punch cards to the University's computer departments, hoping that one card wouldn't be bent so that the entire job would have to be re-run the next night.  

I even see a blur of speed on the mornings that I drop our daughters off at their high school and observe their peers emerge from cars with iPods in their ears and industrial-sized coffee from Dunkin Donuts and Starbucks.  We are apparently driving exponential change by bringing up a generation of habitually underslept and self-medicated kids.

A good video (from 2007, and hence, already a bit dated) is The Power of Technology: Reasons Why You Should Fear the Information Age. The video asks, "Did you know?  We are living in exponential times?" It continues, "It is estimated that a week's worth of New York Times contains more information than a person was likely to come across in a lifetime in the 18th century."  It tells us "The amount of technical information is doubling every two years."  It suggests that maybe the industrial-sized coffee in high school isn't a bad idea, as "We are currently preparing students for jobs that don't yet exist, using technologies that haven't yet been invented, in order to solve problems we don't even know are problems yet."

The video concludes: "Shift happens."

The guru of accelerated change is undoubtedly Ray Kurzweil, who extends exponential growth to its logical conclusion in The Singularity is Near--the "singularity" being that moment when we launch "an era in which our intelligence will become increasingly nonbiological and trillions of times more powerful than it is today—the dawning of a new civilization that will enable us to transcend our biological limitations and amplify our creativity." 

One "singularity" was the move from hunting and gathering to farming communities; population shot up, as did innovation of all sorts.  Another was the industrial revolution, when we traded human power for machine power; population and innovation shot up again.  If the tea leaves are right, by about 2045 (give or take) we will begin making machines that are smart enough to improve themselves (without our help); once that happens, the pace of technological change will increase again, but this time to the point where human being are essentially excluded from the process.

Now that's acceleration.  That's also history, at least Western history.  In Inheriting the Revolution, historian Joyce Appleby tells us that "Since the invention of the printing press and voyages of exploration, European society has moved through a succession of irreversible developments that have given each generation the strong feeling that theirs has been the great period of change, or even the principal divide between the traditional and modern.  The sense of transformative change is no doubt real, but the repetition of such experiences warns us off the notion that there has been one singular period in the long, arduous, and fateful move away from the world of custom.”

The poster child for this change in America, of course, is Washington Irving's Rip Van Winkle, who fell asleep before the American Revolution and awoke after to find his "very village was altered; it was larger and more populous. There were rows of houses which he had never seen before, and those which had been his familiar haunts had disappeared. Strange names were over the doors—strange faces at the windows—everything was strange...the very character of the people seemed changed. There was a busy, bustling disputatious tone about it...A fellow...was haranguing vehemently about rights of citizens—elections—members of Congress —liberty...and other words which were a perfect Babylonish jargon. . . .:"

A contemporary of Irving's, Daniel Webster, gave a speech at the 50th anniversary of Bunker Hill, saying, "Events so various and so important that they might distinguish centuries are compressed within the compass of a single life.  When has it happened that history had so much to record in the same term of years, as since the 17th of June, 1775?"
In The Education of Henry Adams, first circulated in 1907, the grandson of John Quincy Adams and great-grandson of John Adams wrote about the wrenching passage from the 18th to the 20th century in America: "For him, alone, the old universe was thrown into the ash-heap and a new one created. He and his eighteenth-century, troglodytic Boston were suddenly cut apart - separated forever - in act if not in sentiment, by the opening of the Boston and Albany Railroad; the appearance of the first Cunard steamers in the bay; and the telegraphic messages which carried from Baltimore to Washington the news that Henry Clay and James K. Polk were nominated for the Presidency. This was in May, 1844; he was six years old ; his new world was ready for use, and only fragments of the old met his eyes."

Skip ahead three generations to a Time magazine essay from 1973 which compares the Van Winkle of the Revolution with those of Vietnam:
WASHINGTON IRVING set his story in the late 18th century, when it took 20 years and an American Revolution to bring about such alterations. With contemporary efficiency and such time-saving devices as the Viet Nam War, change now occurs at quintuple speed. The returning P.O.W.s have been away an average of four years; it is long enough to make them a new breed of Van Winkle, blinking at a world that can hardly believe how profoundly it has changed. . . .
The little things are what the ex-prisoner will notice first, phenomena that civilians have long since absorbed. That local double bill, for example: Suburban Wives and Tower of Screaming Virgins. Four years ago, it would have been restricted to a few downtown grind-houses. Today, blue-movie palaces are as much a part of the suburbs as the wildly proliferating McDonald'ses.
Shaking his head, the new Van Winkle heads for a newsstand. Here, there is still more catching up to do. A copy of Look? No way. Life? No more. How about a copy of Crawdaddy, Screw, Money, Rolling Stone? Rip has heard of none of them. He looks, dazed, at the roster of more undreamt of magazines: Oui, Penthouse, World, Ms. "Pronounced Miz," says the proprietor who starts to elucidate, then drops the subject and the magazine. Who, after all, could explain Gloria Steinem?
He peers in the window of a unisex shop, and then, holding fast to the corner of a building to maintain his balance, he seeks stability at a furniture store. Surely this window will yield a glimpse of the familiar. After all, what is furniture but chairs, tables—and waterbeds? It is time, he feels, to cross the street.
Jesus freaks are gathered at the corner, mixing freely with other louder groups. They carry the perennial banners of militancy, each inscribed with the device, Liberation. Over it are the words Gay, Black, Women's, Chicano and People's. These are the remnants of a great tidal wave of protest that broke in Rip's absence, still sporadically coursing through the streets and campuses. The year 1968 was at once its crest and ebb. Rip was gone when Martin Luther King was assassinated in Memphis and when 172 cities went up in smoke, when 3,500 were injured and 27,000 arrested. He was gone when Bobby Kennedy was murdered two months later, and when two months afterward, the city of Chicago seemed to become the epicenter for every disaffected demonstrator in America.
A striped pole catches Rip's eye. He settles into a chair—only to hear a fresh diatribe from the barber—who now calls himself a stylist. Once, long hair was the exclusive property of the hippies; they have gone but the hair has remained. Now all the straights sport it. The barber talks on about a world gone into reverse. Nixon has toured Communist China, which is now in the U.N. The Empire State Building is no longer the tallest building in the world. The World Trade Center is. Eighteen-year-olds can vote. The New York Giants will soon play in New Jersey. In the American League, pitchers will no longer bat.
The stock market, Rip learns, has hit 1000, yet the go-go funds and glamour conglomerates are a sere and withered group. Unfamiliar newsworthies are summoned to his attention: Mary Jo Kopechne, Clifford Irving, Arthur Bremer, Vida Blue, Archie Bunker, Angela Davis, Daniel Ellsberg.
Rip wanders from the bar in search of nourishment. Next door is a restaurant; it is not until he examines the menu that he sees the words "health foods"—and by then it is a little late to run. On the shelves are strange labels: Granola, mung beans, Tiger's Milk, lecithin, all at nonsensical prices. Vitamin E, he learns, is expected to cure everything but the common cold; Vitamin C takes care of that. . . ."
 And on and on.  It's important to recognize that, what seems quaint now, was startling then to those who lived it. 

Which means, to echo Appleby, that the pace of life in the West has always seemed rapid, even exponential.  In fact, when things don't accelerate as expected, we pick on them.  The joke, often (wrongly) attributed to Bill Gates, is that if "GM kept up with technology the way the computer industry has, we would all be driving $25 cars that get 1000 miles to the gallon."  Over the years this has led to a sea of comic reactions (supposedly) from the auto industry, best summed up by this: "Yes, but it would crash twice a day."

So, we accept the fact that our world today is moving faster than the world in 1990, which was moving much faster than the post WWII world of 1950, which was racing along compared to 1900 or 1800.  That would help to explain, at least in part, our stress, the vague looks into our laptops at 3 p.m. in the afternoon, our fractured resumes, our full calendars and endless to-do lists, and that sense of cognitive dissonance we experience when we try to order at the Starbuck's counter.

Now, though, let's take the argument a little further--say, by looking again at the automobile. 

A 1920 Model T Ford's top speed was 40-45 MPH.  Compare that to a 2010 Honda Accord, with a top speed of 140-145MPH.  A simplistic view of speed would suggest that the Honda is a far riskier, unpredictable and inherently dangerous machine, several factors more stressful to drive than a Model T. 

Of course, we know that to be untrue.  Witness this 2008 driver wrestling with a Model T:
First, you must start it with a crank handle. Hold this the wrong way and your opposable thumb will follow Tin Lizzie into the history books. . .Second, the T creeps forward as soon as you start, so you have to scuttle round quickly to get in. . .Then you get in. . .I found myself hopelessly in a tin tizzy. You have to use a lever and a pedal to change up and down all of two gears (plus another pedal for reverse) and the throttle is where the indicators ought to be. There is no clutch. . .if you're unlucky enough to panic when unexpectedly approached by a speeding bus, and slam the same pedals you would in a Focus, you may find yourself travelling very fast indeed in reverse. . .Majestically enthroned, you're really far too exposed for comfort. Look down and a brass bolt tops the cast iron steering column pointed directly at your heart, while your bottom nestles directly above the petrol tank. When you took your "flivver" on the road a hundred years ago, you did without the benefit of air bags and with no seat belts, no heater, no speedometer, no windscreen wiper, no rear view mirror, no temperature gauge, no side windows, no cup holders. . .
So, it's clear that speed is a component of stress, but hardly the only one. 

A former board member at Sensitech and good friend, Dr. Rafik Bishara, is a leader in the global Life Science quality arena.  We were talking one day a few years ago about Quality at the company and I was obviously not getting the point.  He asked me, "Do you know why a sports car can go fast?"  Thinking this to be a trick question I hesitated, wondering "a big ego?"  Dr. Bishara then stated the obvious, which happened to also be the profound: "Because it has good brakes."

This gets to the heart of my argument about pace and exponential growth, which I'll now call Bishara's First Law of Speed: "We can accept almost unlimited speed and acceleration, so long as the brakes remain at least as good as the engine."

Here's another way to think about it.  The other day on ESPN Ray Lewis was interviewed by Colin Cowherd.  Lewis, a linebacker, has been one of the elite players in the NFL for a decade.  Cowherd asked him what had changed in the last ten years and Lewis said, the game is slower than it was ten years ago.


Even a casual observer of pro football knows that new recruits are bigger, better trained and much faster than they were ten years ago.  The entire game is now a blur.

But listen to how Lewis explained himself:  In the old days he worried about "speed, speed, speed," but "nowadays the game has slowed down so much; it's like, when I sit and watch film from ten years ago, and I watch now, I think, wow, why would I read it that way, why would I take that step, or why would I even go that way?"

"I'm not running the 40 yard dash. . .It's all about angles, it's all about beating the person to the punch, it's all about knowing where the players are going to come before they even think about doing it, it's about recognizing the formations. . . ."

So, in Lewis's world, experience, information, and the ability to anticipate act as a kind of brake (and bumper, strut and airbag).  Lewis, in a sense, has the best of all worlds: He is playing the game of football at the fastest pace and the highest level ever, but feels the game has slowed down. That explains why he finds so much opportunity on the field to make big plays.

That, I think, is pretty much was has happened in our world as well.

If our personal and business lives are accelerating, then so too is our ability to analyze, anticipate, forecast, predict, integrate and disseminate information.  In fact, if LED's don't become increasingly cheaper and better as Haitz predicted, we yawn.  If the Japanese can't do 10 quadrillion calculations in 2012 we'll be disappointed.  (And even moreso if Cray doesn't punch back with something faster by 2015.)  And, if global temperatures warm, oceans rise and California tumbles into the sea, we won't like it, but we can't say that scientists (and Steely Dan) didn't tell us so.

For every person working to disrupt our lives with accelerated technology, there seem to be 20 trying to describe, map, forecast and analyze that disruption, and three (Gladwell and Friedman and Dowd, oh my) who parse through it all to bring us some measure of sanity.  In fact, the discussion about exponential growth is growing exponentially.  And, to Ray Lewis's point, it makes all of this acceleration seem so tame sometimes. 

We've learned the formations.  We recognize the angles.

Conversely, Washington Irving's family business was rocked when the charter of the U.S. central bank was allowed to lapse, leaving nobody to offer specie or help oversee the economy.  It was rocked by non-importation acts and the War of 1812.  It took months for him to know if his books were popular.  One brother was often incapacitated by a disease we can cure today.  There was no stable currency, no Fed, no econometrics, no copyrights, no Social Security, no CNN or Fox, and no Tylenol.  And always, in the background, there was a growing sense that the country was about to blow apart over slavery.

Two hundred years ago the country was--by our measures--moving far slower than today but seemed, to its residents, faster; now it's moving faster but often seems to us slower.  Or maybe a better way of saying it: faster but eminently manageable. 

Heck, I just opened my October issue of the Harvard Business Review, wherein I found: a slideshow on the future of smart energy, an ad from Stanford offering an executive program designed to "discover the catalyst of future success" and one from MIT reminding me that the species that survive are the "most responsive to change," a book telling me how to merge "innovative employees with eager customers and new technologies," an article on how to change my outdated phone surveys for web panels, and another how to open-source my strategy.  The list of schools, articles, books and consultants offering to help me deal with speed and the future is, shall we say, exponential?

So, in the 21st century we find ourselves in the unique position of owning a sportscar with unparalleled acceleration and unparalleled brakes. 

The result for a modern entrepreneur: Unparalleled opportunity.  Our ability to go out and create, with a kind of information safety net woven beneath us (not to mention food on our table, medicine in our cabinet, and a couch at our parents' if we crash and burn) is like nothing ever experienced before in America. 

Along with Ray Lewis we get to play the fastest game in the history of the world and still feel like we're in control.

So, I stand firmly by Bishara's First Law of Speed: "We can accept almost unlimited speed and acceleration, so long as the brakes remain at least as good as the engine."

But, just to be safe, I will also give you Eric's Rollercoaster Corollary to Bishara's First Law of Speed: "It's still a good idea to keep your hands and feet inside at all times while the car is in motion."