Daily Balajisms - Bundling, unbundling and rebundling
The Internet is to the US, what America was to Europe.
Jim Barksdale famously said that there are only two ways how to make money in business and on the internet – by bundling and unbundling. Balaji Srinivasan uses this example a lot, and adds a third phase of rebundling. In the same way he talks about centralization, decentralization and recentralization.
The Internet unbundled news articles into single tweets, and they got rebundled into a twitter feed or twitter lists. Albums got unbundled into individual MP3 and again rebundled into music playlists.
Internet increases variance, because it allows for peer-to-peer interactions, says Balaji. Uber rides are both much shorter and longer than traditional taxi rides. A tweet can make you go viral or get cancelled. With crypto, every user is a root user and can experience high upside, but also lose a fortune with a key stroke.
In the West, we experienced peak centralization around 1950s. Up until then, technological innovations, like printing press, radio and television favored centralization – media with a centralized hub-and-spoke topology that caused the Gell-Mann Amnesia, explains Balaji. But with computers and the commercial internet and social media we got technologies that favor decentralization.
Balaji says, that he is in favor of recentralization, which is the least favorite word today. Because many people in crypto and politics favor decentralization, and the old establishment thinks that the current centralized form of institutions are just fine.
But liberal democracies dance delicately between chaos and tyranny. Balaji thinks that we are currently headed for a future scenario which he calls the American Anarchy vs Chinese Control or a Decentralized West vs Centralized East, more broadly. The West will experience quite some unbundling before it can rebundle into something better, while the East is still in its centralizing arch.
Balaji thinks that India and countries like Israel and Singapore could play a role of International Intermediates – mediating between the chaotic US and digitally-authoritarian China and carrying the torch of Western pro-democracy and pro-capitalism values. And he sees a role for web3 and the future network states as the Recentralized Center – providing new sources of trust and conviviality trough both technological and moral innovations.
Progress happens on the z-axis, says Balaji, giving a metaphor of a helix for his helical theory of history. The libertarian founder starts a company but ends up rebuilding the state (bureaucracy). Dissatisfied employee leaves that company to launch a new startup. But the new boss is not the same as the old boss – in the same way as playlists are not albums, and twitter feed is not a newspaper.
The future is our past and the past is our future, but with opposite outcomes – which has some predictive power, says Balaji. When commerce became legal on the internet in 1991, the frontier reopened after 100 years, when it closed the US. The Internet is to the US, what America was to Europe. In the last century The West was centralizing, now it is decentralizing.
Back then the US became a hyperpower and the Soviets lost a war in Afghanistan. Now the US lost a war in Afghanistan and China is rising. Before 20th century we got railroad barons, now we have Elon Musk and Jeff Bezos competing in space industry. Before FDR defeated the Business Plot, recently Big Tech censored Trump. Before China was a junior partner to the USSR, now Russia is a junior partner to China.
Balaji lists many such stories where the outcomes are opposite to the past. If we can expect a greater decentralization and unbundling of the West in the near future, we need to build tech and moral innovations, that can catch us on the other side of that unbundling, and help us rebundle into highly-aligned communities and high-trust societies.