The Chomp #051

The Disruption of Ambition, the Democratization of Upside, and More...

Hey Everyone,

Welcome back to The Chomp—your weekly dose of the best strategic thinking content and top emerging business trends from the internet and beyond. If you’ve been sent this email and you’re not a subscriber, you can join by clicking on the blue button below. 

With that, let’s dive into it.

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Quick Bite

Technology Entrepreneurship and the Disruption of Ambition: Digital technologies are general purpose. Whatever the focus of an individual’s ambition, digital technologies provide a means for achieving it. As Marc Andreessen says, software is eating the world. For example, taxis and hotels are hardly traditional high tech industries. But today the most important companies in both sectors are technology companies. This means that even people with no intrinsic interest in technology itself can and will turn to digital technologies to realize their ambitions.

It’s no secret that technology is both shaping and defining our future. This is a topic that’s been explored countless times, through multiple outcomes with varying degrees of success. One end of the spectrum posits a utopian future where technology replaces human labor, and we’re left with endless leisure time to pursue ‘meaningful work’. The other portrays a dystopian future where artificial intelligence runs amock and leads to the extinction of the human race.

In all likelihood, we’ll land somewhere in between—which has also been discussed ad nauseam. What hasn’t been explored in great detail though, is how technology is changing one of the most powerful forces that shape our society: ambition. Matt Clifford at Entrepreneur First took a crack at this in his new essay and raised a number of points worth exploring in further detail.

Front and center of Clifford’s argument is the idea that building technology companies will become the dominant global ambition in the 21st century. Led by the most ambitious people across the world, they will have a profound impact on nearly all facets of society. To understand why this is likely, it helps to look back on history and dig into previous “technologies of ambition” that enabled ambitious people to maximize their impact on the world.

In the essay, Clifford walks through three historical examples of these “technologies of ambition”. In the late medieval period, literacy became the dominant mode of ambition. In order to read and write at that time, you needed to join the Church. So, the most ambitious people of 1,000 years ago all joined the church. This wasn’t due to piety, it was a result of sheer ambition.

A few centuries later, literacy became commonplace and no longer reigned supreme as the technology of ambition. By the late 18th and early 19th century, military command came into vogue as its replacement. Commanding an army became the pinnacle of ambition, enabling the rise of Napoleon Bonaparte and the likes.

Following military command, finance took the crown and has yet to be dethroned. While tech has been gaining ground and has surpassed finance in Silicon Valley, finance still remains the ‘default’ path for many of the most ambitious people across the rest of the world. But according to Clifford, this will no longer be the case by the end of this century. And I agree with him.

Tech, and more specifically digital technologies, will ultimately surpass finance as the technology of ambition due to scale, scope, and cost. The internet has allowed businesses and ideas to reach a scale never before imagined. Around 2.7 billion use people each month worldwide. In terms of scope, digital technologies enable individuals to work on basically anything they want. Basically, every modern industry now has some form of software powering it.

And most importantly, the cost of starting a technology company is now next to nothing. Compared with the previous dominant technologies of ambition, digital technology is significantly less capital intensive. Through cloud services and the use of open-source code, one can launch a business for under $100.

Layer on the fact that digital technology is as equally accessible in rural Arkansas as it is in Silicon Valley, and it’s hard to argue with the notion that tomorrow’s most ambitious people will turn to it as their modality of choice.

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Deeper Dive

Fairmint & the Democratization of Upside: In the gig economy, users who contribute time and data are rewarded linearly — to earn more, an Uber driver needs to drive more. The platform grows exponentially, while the platform’s most important asset — the driver — earns linearly.

ownership and highlighted Nathan Schneider’s excellent article, Exit To Community. While I'm bullish on the idea of community/user ownership, I noted it was more of a thought experiment at the moment and wasn’t quite ready for the limelight. Fast forward to today and this still holds true, however, there has been meaningful progress made over the past few months.

Most notably, a belief in distributed equity caught fire and has created a tailwind for fast-growing companies like Fairmint. With their technology, Fairmint has developed programmable equity through the creation of a Continuous Agreement for Future Equity (CAFE). Simply put, Fairmint is building software that enables businesses to continuously raise capital from anyone who uses or supports their product.

While Fairmint’s product doesn’t quite reach the scale of full community/user ownership, it gets us much closer to the realization of that vision. Through the use of a CAFE, ownership in a private company is no longer restricted to accredited investors and VCs. Had Uber raised money through a CAFE, drivers would have been able to purchase equity and share in the upside of the business as it scaled to colossal heights. Early hosts on Airbnb could have bought in and gained a seat at the equity table as the company grew.

Through a CAFE, influencers on Instagram and TikTok wouldn't be limited to linear monetization through ad dollars and partnerships. They could purchase equity and share in the exponential upside that is typically reserved for employees along with early-stage and growth investors. Beyond product users and community members, CAFEs can also be leveraged for employee equity. In place of a traditional vesting program, equity could be doled out through a CAFE based on contributions to the company.

By creating programmable equity through a CAFE, Fairmint is laying the foundation for a future with more equal economic alignment between a platform and its users. Many challenges lay ahead in realizing this future, yet it's exciting to see real progress underway.

To go deeper on Fairmint and the democratization of upside, check out this recent collaborative essay from Packy McCormick and Sari Azout.

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Chum Bucket

• Top 10 Emerging Technologies of 2020 (Scientific American)

• Stripe’s Valuation May Top $70 Billion in New Round (The Information)

• Early Work (Paul Graham)

• The Idea Adoption Curve (Stratechery)

• Who’s a Very Good Pandemic Business? Chewy Is. Oh, Yes It Is (Bloomberg)

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Tweet of the Week

Ryan Holiday @RyanHoliday

Most successful people are people you've never heard of. They want it that way.

Song of the Week

Apple Music Link

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Books

Currently Reading

Recently Read

• I finally finished up Grant after chugging through it over the past couple of months. At 1,097 pages in length, it certainly doesn’t skirt any details on the whirlwind life of Ulysses S. Grant. In Grant, Ron Chernow does an epic job of chronicling the—often misunderstood—life and legacy of America’s 18th President and Civil War hero. While I wouldn’t quite put Chernow on the pedal stool of Robert Caro, he’s right up there with other great modern biographers like Walter Isaacson. Despite its length, I remained engaged throughout the book and would highly recommend Grant to any American history buffs as well as fans of politics and military history more generally. (4.5/5)

• This book was weird as fuck. There’s really no other language that would do the weirdness of this book justice. That being said, I couldn’t quit reading it. Despite being completely lost for more than half the book, I was enthralled and sucked into Vandermeer’s universe. This book is positioned as a standalone entry in the Borne series, but I urge you to avoid it at all costs if you haven’t read Borne. Even if you have, and loved Borne (as I did), proceed with caution. (3/5)

• This was my second time reading Zen Mind Beginner's Mind, and I’m glad I went back to it. I have no doubt I’ll return for a third read at some point as well. Prior to reading this book the first time two years ago, I had dabbled with zen meditation but never found consistency. I gave it another go this year and now finally have a consistent daily practice. Shunryu Suzuki’s words have been incredibly helpful for me in getting there. Even if you’re not interested in meditation, I still think this is worth a read. There are countless quips throughout you’ll find yourself reading over and over again. (4.5/5)

Parting Thoughts

This Week in History

• On November 22, 1995, Pixar released Toy Story. Toy Story was the first major motion picture created completely by computer-generated animation and catapulted Pixar into a household name. (Source)

"Once you have crafted lenses that change your perspective, it is a great temptation to look at everything through the same spectacles.”

— James C. Scott

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-CM

This newsletter is created and authored by Cody McCauley and is published and provided for informational purposes only. The information in the newsletter solely constitutes Cody’s own opinions. None of the information contained in the newsletter constitutes—or should be construed as—investment advice.