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The Attention Span. “Bliss, Bubbles, and Blockchain.”

The Attention Span- from The Knall/Cohen/Pence Group.

Next Friday, March 19, at 1pm ET, we are hosting a webinar with Jaron Lanier. It’s the first in our “Most Interesting People In The World” series. It’s my opinion that Lanier has been many years ahead of the evolution of tech’s role in society at every turn. Rather than rehash the original invite, this week I’ve written a piece explaining how Lanier’s ideas may once again be anticipating the deeper meaning of this speculative bubble.

“Bliss, Bubbles, and Blockchain.”

[11 minute read]

“But we're never gonna survive, unless we get a little crazy”- Seal.

The endless discussion of when and how this speculative bubble ends is not interesting. Nobody seems to know, and if they know, they’re not telling.

It’s much, much more interesting to consider what this bubble might mean. Moreover, that could also tell us what will remain standing after the detonation.

As we’ve discussed before, there are now 4.6 billion people on the internet both consuming and generating effectively infinite information. Exponentially more people are now connected to the financial markets. Algorithms that optimize for user engagement are further concentrating focus on what the rest of the crowd is watching. As the GameStop saga has exemplified, when a huge number of those people decide to pay attention to the same thing at the same time, it can have absolutely wild results.

These coordinated price surges could just be entirely random speculations, like tulips or Beanie Babies. They are rising in price because they are rising in price. In bubbles, price moves from a source of information to a source of influence.

But maybe not.

Memes and stories travel infinitely faster than numbers and facts. And there’s now an infinite number of memes and stories. The most effective memes communicate maximum information in the minimum time. They also elicit powerful emotions. So what is it about these stories in particular that have so captured the crowd’s interest?

What we proactively pay attention to is a proxy for meaning.

One of the most quietly profound ideas I’ve ever encountered is that our broad attention operates as an exploratory guide for personal evolution. The sensation of whether an activity is meaningful is nature’s reward for pursuing a path of optimal personal growth. One of my favorite quotes, from one of my favorite books, is:

“I say, follow your bliss and don't be afraid, and doors will open where you didn't know they were going to be. If you follow your bliss, doors will open for you that wouldn't have opened for anyone else.”- Joseph Campbell, The Power of Myth.

Campbell’s sensation of “bliss” is a reward for engaging in behavior that evolves us on our uniquely personal growth path. It’s the kind of idea that can change your life, and is certainly the reason I find myself doing this job. [I have explored this topic in a lot more detail, and plan to revisit it in future as I believe it’s extraordinarily important.]

Meaningful interests and pursuits often seem irrational. But evolution often operates irrationally out of necessity. Just because an emergent behavior is currently beyond the event-horizon of intellectual rationality does not mean that it’s inexplicable, especially in retrospect. Entirely predictable things get killed by predators. In his delightful book Alchemy, Rory Sutherland makes the point that there are examples in nature where it’s even a disadvantage to have access to your unconscious direction.

“When a hare is being chased, it zigzags in a random pattern in an attempt to shake off the pursuer. This technique will be more reliable if it is genuinely random and not conscious, as it is better for the hare to have no foreknowledge of where it is going to jump next: if it knew where it was going to jump next, its posture might reveal clues to its pursuer. Over time, dogs would learn to anticipate these cues – with fatal consequences. Those hares with more self-awareness would tend to die out, so most modern hares are probably descended from those that had less self-knowledge.”

As the owner of an unpredictable rabbit, this checks out. The more rapidly an environment is changing, the more “randomly” an organism or group needs to behave. We are now experiencing by far the most rapidly-evolving landscape in human history. A few weeks ago, I flagged a wonderful story from Michael Mauboussin about ants.

When ants find food sources, they lay pheromone trails so that the rest of the colony can find it. Each subsequent ant reinforces the trail, and makes the signal stronger. And yet a certain number of ants peel-off the path, seemingly at random. The most remarkable and profound finding was that ants peel-off at a rate that’s directly proportional to the pace of change in the external environment. Essentially a more unstable environment requires more exploratory behavior so that the ants don’t get stuck with a single, depleted food source.

The same applies to startups- the range of outcomes, and asymmetrical returns, increases during volatile periods of accelerating change.

So you can probably anticipate the kicker here- seemingly “irrational, random” behavior, that we are seeing right now, all over the market, is a rational exploratory response to a rapidly changing environment.

The two anecdotes from nature imply that the price movements might be totally random; the asset classes in focus could be anything.

But there is a robust argument to be made that this is not the case.

I mentioned recently that Jaron Lanier’s 2011 Edge interview, The Local-Global Flip, was foundational for me in understanding the evolution of the information economy. Lanier’s insight was that the platform monopolies were going to concentrate wealth in a vanishingly small number of hands and decimate the middle classes:

“I think it’s the reason why the rise of networking has coincided with the loss of the middle class, instead of an expansion in general wealth, which is what should happen. But if you say we’re creating the information economy, except that we’re making information free, then what we’re saying is we’re destroying the economy.”

The successful narrative that has evolved out of the last few years is in direct opposition to the astonishing centralization of wealth caused by the platform economy. For the last several years, Lanier has talked about the need to decentralize data and redistribute the gains of the information economy. And now over the last few weeks, you’ve had an absolute explosion of interest in Non Fungible Tokens (NFTs). NFTs are a blockchain-based technology that aims to make digital assets scarce, and in the process, put more concrete value on content that would otherwise be infinitely redistributable. That the early applications of NFTs have been focused around artistic endeavor confirms the view that this is all part of the same trend of returning previously-centralized wealth to the individual creator.

This is tantalizingly close to what Lanier describes as “data dignity”; the moral right to every piece of data that has been produced because you exist. It seemed utterly outlandish to me when he first proposed it several years ago, but… that’s the character of paradigm shifts!

Thus, when aspects of this speculative mania seem irrational, they may be reflecting the seeds of future growth areas, or a “productive bubble.” In hindsight, the dotcom bubble can be interpreted as an entirely correct anticipation of the technological potential of the Internet, just expressed in irrational ways. Even the catastrophic 1920’s market bubble helped accelerate the spread of radio, telephony, aviation, and electricity. The same with Railway Mania in the 1840s. The technologies were transformative, but the individual companies built on them often failed. This is typically how technological hype cycles work.

To be clear- Lanier himself is skeptical that blockchain will be sufficient to decentralize platform power. Instead, he has proposed the formation of “MIDs” or Mediators of Individual Data. Explained in considerable detail in a 2018 article in the Harvard Business Review, MIDs are [simplistically] bridges between creators and consumers, a sort of “digital’ union.” It’s a topic we hope to discuss in more detail with him.

The stimulus put more disposable income in the hands of a wider spectrum of society, then apps like Robinhood gave them easy access to the markets. It’s thus fascinating that a more populist market has resulted in an emergent trend toward themes that allow for wider participation in the digital economy. Multiple aspects of the current speculative bubble seem to be directly attacking the primary deficiency of information-monopoly capitalism. Reddit’s Wallstreetbets is coordinating attacks on Hedge Funds. The overall zeitgeist is that of grassroots participation in digital wealth creation. Even if none of these specific technologies prove viable, it’s a resounding endorsement of the success of the “decentralization” narrative.

This is the element of Lanier’s vision that seems utopian, but may perhaps be necessary:

“People will be paid for their data and will pay for services that require data from others. Individuals’ attention will be guided by their self-defined interests rather than by manipulative platforms beholden to advertisers or other third parties.”

Going full circle, returning the value of data to consumers is critical. But returning the direction of our attention to our own interests may be existential.

This is a topic we will continue to explore over the coming months and years, continuing next week with Jaron himself.

We’re excited for you to join us!

Two interesting thing this week:

  • Read: Lily Francus on “Trading Salience in a Hyperconnected Marketplace- Part 3” - (12 minute read)
  • Why read: Francus discusses many of the themes and ideas raised in today’s piece. She agrees that understanding memes and narrative is particularly critical to making sense of the markets right now. She examines what makes for “god memes” -or dominant ideas. She also references Alex Good who has highlighted the link between meme stocks and “memelords.” Essentially, people with a combination of high charisma and strong constitution who have rapidly come to dominate the social media discourse in both markets and politics. Like any good meme, they also tend to generate extreme emotional responses! Without naming names, you can easily see who they are with a glance at Twitter. You can even see something of a disintermediation of companies themselves with celebrity-backed Special Purpose Acquisition Companies actively trying to monetise clout and charisma. It’s all exhausting, and presumably, valuation will matter again one day.
  • Listen: Brian Roemmele on Jim O’Shaughnessy’s Infinite Loops (1 hour 42 minutes).
  • Why Listen: This was totally bonkers but so enjoyable. It introduced me to the remarkable book The User Illusion by Tor Nørretranders. The podcast kicked off a thought in me that I hope to explore, ideally with Brian himself. The movie “Her” is one of my all-time favourites. I think it resonates so deeply because it offers an alternative existence where the voice in your head is loving and compassionate. Roemmele’s vision is based around a voice-first interface where virtual assistants augment the quality of our existing experience. The next iterations of the attention economy (whether Metaverses or Mirrorworlds) are about increasing virtualization of the real world or manipulating your attention. Technology that goes the other way seems intrinsically more desirable. The evolution of podcasts and the emergence of Clubhouse seem to be an early indication that there’s plenty of demand for the audio-first format.

Quote of the week: “We should go out of our way to learn about investing by looking at things that have nothing to do with investing. And we should learn about things that have nothing to do with investing by looking at investing.”- Morgan Housel

Because this is a lot, here is one of the most beautiful pieces of music I have ever heard. Recomposed by Max Richter (On Spotify).

Have a wonderful weekend!


Tom Morgan
Director of Communications and Content
The Knall/Cohen/Pence Group

Work (317) 571-4525

Cell (917) 656-2742

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