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Book: Breaking Smart

Vikrant Duggal
Vikrant Duggal
• 18 min read

Last year I gifted this book to 10 readers of this blog and newsletter.

Breaking Smart is a 30,000 words broken up into numerous essays based on the research support by Andreesen-Horowitz in 2014. In 2011 Marc Andreesen wrote "software is eating the world".

For people who are wanting to break into software tech I think it's an eye opener to see how the world's leading venture capital firm is thinking. For those who want a peak into where software and technology are taking us I believe this will re-orient your mindset.

Below you will find all the highlights I made while reading.

Yet, time and again, people adapt in unpredictable ways to get the most out of new tech. (Location 24)

Note: Humans adapt to tech a lot

People change, then forget that they changed, and act as though they always behaved a certain way and could never change again. (Location 25)

In 2014, a few of us invited Venkatesh Rao to spend the year at Andreessen Horowitz as a consultant to explore the nature of such historic tech transformations. (Location 28)

Between both the breathless and despairing extremes of viewing the future, could an intellectually rigorous case be made for pragmatic optimism? (Location 29)

Note: This is the question they were asking

As this set of essays argues — many of them inspired by a series of intensive conversations Venkat and I had — there is indeed such a case, and it follows naturally from the basic premise that people can and do change. To “break smart” is to adapt intelligently to new technological possibilities. (Location 30)

Note: Yes there is a case for pragmatic optimism

Breaking Smart should be on your go-to list of resources for thinking about the future, even as you are busy trying to shape it. (Location 35)

Note: Book about thinking about the future

Only a handful of general-purpose technologies1 – electricity, steam power, precision clocks, written language, token currencies, iron metallurgy and agriculture among them – have impacted our world in the sort of deeply transformative way that deserves the description eating. (Location 41)

Sometime around the dot com crash of 2000, though, the nature of software, and its relationship with hardware, underwent a shift. It was a shift marked by accelerating growth in the software economy and a peaking in the relative prominence of hardware.2 The shift happened within the information technology industry first, and then began to spread across the rest of the economy. (Location 49)

Note: Remember JCI / slide decks always showed how IT budgets were increasing

Software eating the world is a story of the seen and the unseen: small, measurable effects that seem underwhelming or even negative, and large invisible and positive effects that are easy to miss, unless you know where to look. (Location 63)

By 2010, it had become clear that given connectivity to nearly limitless cloud computing power and advances in battery technologies, programming was no longer something only a trained engineer could do to a box connected to a screen and a keyboard. It was something even a teenager could do, to almost anything. (Location 78)

Note: By the time this became clear i had made the move to san francisco to break in to internet tech

The ridesharing future we are seeing emerge now is even more dramatic: the higher utilization of cars leads to lower demand for cars, and frees up resources for other kinds of consumption. Individual lifestyle costs are being lowered and insurance models are being reimagined. The future of road networks must now be reconsidered in light of greener and more efficient use of both vehicles and roads. (Location 89)

Note: Ripple effects of ride sharing

Meanwhile, the emerging software infrastructure created by ridesharing is starting to have a cascading impact on businesses, such as delivery services, that rely on urban transportation and logistics systems. And finally, by proving many key component technologies, the rideshare industry is paving the way for the next major development: driverless cars. (Location 91)

Note: Software infrastructure of ride sharing leads to driverless cars

And this dramatic reversal in our relationships to two important technologies – cars and smartphones – is being catalyzed by what was initially dismissed as “yet another trivial app.” (Location 98)

Note: Change in relationship to cars and smartphones

Similar impact patterns are unfolding in sector after sector. Prominent early examples include the publishing, education, cable television, aviation, postal mail and hotel sectors. The impact is more than economic. Every aspect of the global industrial social order is being transformed by the impact of software. (Location 99)

Note: Changes now coming to every industry

So to understand how software is eating the world, we have to ask why we have been systematically underestimating its impact, and how we can recalibrate our expectations for the future. (Location 112)

Note: Questions To ask

Three independent estimates, all for the year 2020, help us calibrate the potential. Gartner estimates $1.9 trillion in value-add by 2020. Cisco estimates a value somewhere between $14 trillion and $19 trillion. IDC estimates a value around $8.9 trillion (source: a16z research staff). (Location 127)

There are four major reasons we underestimate the increasing power of software. (Location 133)

First, as futurist Roy Amara noted, “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” (Location 134)

Technological change unfolds exponentially, like compound interest, and we humans seem wired to think about exponential phenomena in flawed ways.1 In (Location 136)

Second, we have shifted gears from what economic historian Carlota Perez calls the installation phase of the software revolution, focused on basic infrastructure such as operating systems and networking protocols, to a deployment phase focused on consumer applications such as social networks, ridesharing and ebooks. (Location 141)

Third, a great deal of the impact of software today appears in a disguised form. (Location 147)

These three reasons for under-estimating the power of software had counterparts in previous technology revolutions. (Location 154)

The fourth reason we underestimate software, however, is a unique one: it is a revolution that is being led, in large measure, by brash young kids rather than sober adults. (Location 157)

But unlike most periods in history, young people today do not have to either “wait their turn” or directly confront a social order that is systematically stacked against them. (Location 164)

Chris Dixon captured this guerrilla pattern of the ongoing shift in political power with a succinct observation: what the smartest people do on the weekend is what everyone else will do during the week in ten years. (Location 176)

This does not mean, of course, that there are no political consequences. Software-driven transformations directly disrupt the middle-class life script, upon which the entire industrial social order is based. In its typical aspirational form, the traditional script is based on 12 years of regimented industrial schooling, an additional 4 years devoted to economic specialization, lifetime employment with predictable seniority-based promotions, and middle-class lifestyles. (Location 181)

One way to understand the shift from credentialist to hacker modes of social organization, via young people acquiring technological leverage, is through the mythological tale of Prometheus stealing fire from the heavens for human use. (Location 203)

Technologies capable of eating the world typically have a Promethean character: they emerge within a mature social order (a metaphoric “heaven” that is the preserve of older elites), but their true potential is unleashed by an emerging one (a metaphoric “earth” comprising creative marginal cultures, in particular youth cultures), which gains relative power as a result. (Location 205)

Promethean character was unleashed, starting with the early hacker movement, on the open Internet and through Silicon-Valley style startups. (Location 209)

result of a Promethean technology being unleashed, younger and older face a similar dilemma: should I abandon some of my investments in the industrial social order and join the dynamic new social order, or hold on to the status quo as long as possible? (Location 211)

But many who are young still choose the apparent safety of the credentialist scripts of their parents. These are what David Brooks called Organization Kids (after William Whyte’s 1956 classic, The Organization Man7): those who bet (or allow their “Tiger” parents8 to bet on their behalf) on the industrial social order. (Location 213)

being open to possibilities and embracing uncertainty is necessary for the actual future to unfold in positive ways. (Location 254)

The nature of problem-solving in the hacker mode, based on trial-and-error, iterative improvement, testing and adaptation (both automated and human-driven) allows us to identify four characteristics of how the future will emerge. (Location 266)

First, despite current pessimism about the continued global leadership of the United States, the US remains the single largest culture that embodies the pragmatic hacker ethos, (Location 267)

Second, the future will unfold through very small groups having very large impacts. (Location 271)

Third, the future will unfold through a gradual and continuous improvement of well-being and quality of life across the world, (Location 276)

Fourth, the future will unfold through rapid declines in the costs of solutions to problems, including in heavily regulated sectors historically resistant to cost-saving innovations, such as healthcare and higher education. (Location 279)

Putting these four characteristics together, we get a picture of messy, emergent progress that economist Bradford Delong calls “slouching towards utopia“: a condition of gradual, increasing quality of life available, at gradually declining cost, to a gradually expanding portion of the global population. (Location 282)

The urge to dictate and organize is destructive, because it leads architects to destroy the apparent chaos that is vital for success. (Location 417)

Software possesses an extremely strange property: it is possible to create high-value software products with effectively zero capital outlay. (Location 468)

Note: If i can bescome a writer then i can become a developer

Software though, is a medium that not only can, but must be approached with an abundance mindset. (Location 477)

Without a level of extensive trial-and-error and apparent waste that would bankrupt both traditional engineering and art, good software does not take shape. (Location 478)

scarcity-oriented thinkers have remained unable to grasp the essential nature of software for fifty years. (Location 480)

By contrast, tinkering is focused on steady progress rather than optimal end-states that realize a totalizing vision. (Location 487)

With Moore’s Law kicking in, pioneering computer scientist Alan Kay codified the idea of abundance orientation with the observation that programmers ought to “waste transistors” in order to truly unleash the power of computing. (Location 492)

Note: Abundance oriented approach

Like the protagonist in the movie Brewster’s Millions, who struggles to spend $30 million within thirty days in order to inherit $300 million, software engineers must unlearn habits born of scarcity before they can be productive in their medium. (Location 496)

The principle of rough consensus and running code is perhaps the essence of the abundance mindset in software. (Location 498)

By contrast, software development favors individuals with an autocratic streak, driven by an uncompromising sense of how things ought to be designed and built, which at first blush appears to contradict the idea of consensus. (Location 504)

rough consensus evolves through strong-minded individuals either truly coming to an agreement, or splitting off to pursue their own dissenting ideas. Conflicts are not sorted out through compromises that leave everybody unhappy. (Location 506)

Rough consensus favors people who, in traditional organizations, would be considered disruptive and stubborn: these are exactly the people prone to “breaking smart.” (Location 512)

Possibilities, however, tend to be intimidatingly vast. Resisting limiting visions, finding the most fertile direction, and allying with the right people become the primary challenges. (Location 514)

ideas that unleash the strongest flood of follow-on builds tend to be recognized as the most fertile and adopted as the consensus. (Location 516)

It is generally smarter to assume that problems that seem difficult and important today might become trivial or be rendered moot in the future. Behaviors that would be short-sighted in the context of scarcity become far-sighted in the context of abundance. (Location 528)

Underlying all such optimism about technology is an optimism about humans: a belief that those who come after us will be better informed and have more capabilities, and therefore able to make more creative decisions. (Location 532)

The consequences of this optimistic approach are radical. Traditional processes of consensus-seeking drive towards clarity in long-term visions but are usually fuzzy on immediate next steps. By contrast, rough consensus in software deliberately seeks ambiguity in long-term outcomes and extreme clarity in immediate next steps. It is a heuristic that helps correct the cognitive bias behind Amara’s Law. Clarity in next steps counteracts the tendency to overestimate what is possible in the short term, while comfort with ambiguity in visions counteracts the tendency to underestimate what is possible in the long term. (Location 534)

In other words, true north in software is often the direction that combines ambiguity and evidence of fertility in the most alluring way: the direction of maximal interestingness. (Location 540)

This ability to reorient and adopt new mental models quickly (what military strategists call a fast transient4) is at the heart of agility. (Location 549)

The response to new information is exactly the reverse in authoritarian development models. Because such models are based on detailed purist visions that grow more complex over time, it becomes increasingly harder to incorporate new data. (Location 551)

The biggest consequence is this: in the waterfall model, execution usually lags vision, leading to a deficit-driven process. By contrast, in working agile processes, running code races ahead, leaving vision to catch up, creating a surplus-driven process. (Location 563)

Both kinds of gaps contain lurking unknowns, but of very different sorts. The surplus in the case of working agile processes is the source of many pleasant surprises: serendipity. The deficit in the case of waterfall models is the source of what William Boyd called zemblanity: “unpleasant unsurprises.” (Location 565)

See the essay by Paul Graham, Hackers and Painters (Location 572)

Note: Read

The Gmail story contains an answer to the obvious question about agile models you might ask if you have only experienced waterfall models: How does anything ambitious get finished by groups of stubborn individuals heading in the foggiest possible direction of “maximal interestingness” with neither purist visions nor “customer needs” guiding them? (Location 602)

Truly agile models on the other hand, do more: they catalyze abundance. (Location 638)

The Promethean force of technology is today, and always has been, the force that has rescued humanity from its worst problems just when it seemed impossible to avert civilizational collapse. (Location 731)

From an infinite game perspective, software eating the world is in fact the best thing that can happen to the world. (Location 742)

Tim O’Reilly captured the essence of this phenomenon with the principle, “create more value than you capture.” For the highest-impact products, the societal value created dwarfs the value captured. (Location 846)

With software eating the world, we are again witnessing predictable calls for pastoralist development models. Once again, the challenge is to resist the easy answers on offer. (Location 899)

In art, the term pastoral refers to a genre of painting and literature based on romanticized and idealized portrayals of a pastoral lifestyle, usually for urban audiences with no direct experience of the actual squalor and oppression of pre-industrial rural life. (Location 929)

In 2012, thanks largely to these developments, for the first time in history there were over a billion international tourist arrivals worldwide. (Location 956)

Today, software is continuing to eat airplanes in deeper ways, driving the current explosion in drone technology. (Location 958)

Software eating aerospace technology allowed it to continue progressing in the direction of maximum potential. (Location 967)

During the same period, Hamilton’s ideas, through their overwhelming success, evolved from a vague sense of direction in the 1790s into a rapidly maturing industrial social order by the 1890s. (Location 979)

One indicator of the freezing of the sense of direction is that many contemporary American politicians still remain focused on physical manufacturing the way Alexander Hamilton was in 1791. (Location 983)

But where we have lost our irrational attachment to the Jeffersonian Pastoral, the World Fairs pastoral is still too real to let go. (Location 985)

We get attached to pastorals because they offer a present condition of certainty and stability and a utopian future promise of absolutely perfected certainty and stability. (Location 986)

The dark side, of course, is that pastorals also represent fantasies of absolute and eternal power over the fate of society: absolute utopias for believers that necessarily represent dystopias for disbelievers. (Location 989)

The Jeffersonian pastoral was a nightmare for black Americans. (Location 991)

Greek philosopher Plato1 (who lamented the invention of writing in the 4th century BC) (Location 1011)

Chinese scholar, Zhang Xian Wu2 (who lamented the invention of printing in the 12th century AD), (Location 1012)

Once we remove pastoral blinders, it becomes obvious that the future of work lies in the unexpected and degenerate-seeming behaviors of today. (Location 1035)

Others, such as dietary preferences, are becoming increasingly individualized and weaken the very idea of a single “official food pyramid” pastoral script for all. (Location 1092)

The past cannot “determine” the future at all, because the future is more complex and diverse. It embodies new knowledge about the world and new moral wisdom, in the form of a more pluralistic and technologically sophisticated society. (Location 1106)

Prometheans who discover high-leverage unexpected possibilities enter a zone of serendipity. The universe seems to conspire to magnify their agency to superhuman levels. Pastoralists who reject change altogether as profanity turn lack of agency into a self-fulfilling prophecy, and enter a zone of zemblanity. The universe seems to conspire to diminish whatever agency they do have, resulting in the perception that technology diminishes agency. (Location 1121)

The broader lesson of the principle of generative pluralism is this: through technology, societies become intellectually capable of handling progressively more complex value-based conflicts. As societies gradually awaken to resolution mechanisms that do not require authoritarian control over the lives of others, they gradually substitute intelligence and information for power and coercion. (Location 1134)

So far, we have tried to convey a visceral sense of what is essentially an uneven global condition of explosive positive change. Change that is progressing at all levels from individual to business to communities to the global societal order. Perhaps most important part of the change is that we are experiencing a systematic substitution of intelligence for brute authoritarian power in problem solving, allowing a condition of vastly increased pluralism to emerge. (Location 1148)

Much of our collective sense of looming chaos and paradises being lost is in fact a clear and unambiguous sign of positive change in the world. (Location 1153)

Genuine progress feels like onrushing obscenity and profanity, and also requires new technological capabilities to drive it. (Location 1159)

The subjective psychological feel of this evolutionary process is what Marshall McLuhan described in terms of a rear-view mirror effect: “we see the world through a rear-view mirror. We march backwards into the future.” (Location 1159)

In other words, our basic answer to the non-question of “inequality, surveillance and everything” is this: the best way through it is through it. It is an answer similar in spirit to the stoic principle that “the obstacle is the way” and the Finnish concept of sisu: meeting adversity head-on by cultivating a capacity for managing stress, rather than figuring out schemes to get around it. Seemingly easier paths, as the twentieth century’s utopian experiments showed, create a great deal more pain in the long run. (Location 1192)

Broken though they might seem, the mechanisms we need for working through “inequality, surveillance and everything” are the generative, pluralist ones we have been refining over the last century: liberal democracy, innovation, entrepreneurship, functional markets and the most thoughtful and limited new institutions we can design. (Location 1196)

This answer will strike many as deeply unsatisfactory and perhaps even callous. Yet, time and again, when the world has been faced with seemingly impossible problems, these mechanisms have delivered. (Location 1199)

Like the aliens, we may not be satisfied with the answers we find to timeless questions, but simply by asking the questions and attempting to answer them, we are bootstrapping our way to a more advanced society. (Location 1220)

The networked world is not new. It is at least as old as the oldest trade routes, which have been spreading subversive ideas alongside valuable commodities throughout history. What is new is its growing ability to dominate the geographic world. The story of software eating the world is the also the story of networks eating geography. (Location 1268)

As a result of this new and self-reinforcing normal in problem-solving, the technological foundation of our planet is evolving with extraordinary rapidity. The process is a branching, continuous one rather than the staged, sequential process suggested by labels like Web 2.0 and Web 3.01, which reflect an attempt to understand it in somewhat industrial terms. Some recently sprouted extensions and branches have already been identified and named: the Mobile Web, the Internet of Things (IoT), streaming media, Virtual Reality (VR), Augmented Reality (AR) and the blockchain. Others will no doubt emerge in profusion, further blurring the line between real and virtual. (Location 1289)

Crashing storage costs and continuously upgraded datacenter hardware allows corporations to indefinitely save all the data they generate. This is turning out to be cheaper than deciding what to do with it3 in real time, resulting in the Big Data approach to business. (Location 1299)

In other words, we don’t just live on a networked planet. We live on a planet networked by software, a distinction that makes all the difference. (Location 1311)

The Star Trek “holodeck” is almost here: our realities can stay digitally alive long after they are gone in the physical world. (Location 1334)

In 1964, only the “Big 3” network television crews had the ability to film the civil rights riots in America, making the establishment record of events the only one. (Location 1336)

When software eats the world, “social media,” including both human and machine elements, becomes the entire Internet. “The Internet” in turn becomes the entire world. And in this fusion of digital and physical, it is the digital that dominates. (Location 1353)

What we are living through today is a hardware and software upgrade for all of civilization. It is, in principle no different from buying a new smartphone and moving music, photos, files and contacts to it. And like a new smartphone, our new planet-scale hardware comes with powerful, but disorienting new capabilities. Capabilities that test our ability to adapt. And of all the ways we are adapting, the single most important one is the adaptation in our problem-solving behaviors. (Location 1375)

Wherever bits begin to dominate atoms, we solve problems differently. Instead of defining and pursuing goals we create and exploit luck. (Location 1379)

Since 1974, the year of peak centralization, we have been trading in a world whose functioning is driven by atoms in geography for one whose functioning is driven by bits on networks. The process has been something like vines growing all over an aging building, creeping in through the smallest cracks in the masonry to establish a new architectural logic. (Location 1401)

We have already explored the limitations of this approach in previous essays, so we can just summarize them here. Choosing a problem based on “importance” means uncritically accepting pastoral problem frames and priorities. Constraining the solution with an alluring “vision” of success means limiting creative possibilities for those who come later. Innovation is severely limited: You cannot act on unexpected ideas that solve different problems with the given resources, let alone pursue the direction of maximal interestingness indefinitely. This means unseen opportunity costs can be higher than visible benefits. You also cannot easily pursue solutions that require different (and possibly much cheaper) resources than the ones you competed for: problems must be solved in pre-approved ways. (Location 1416)

The networked world approach is based on a very different idea. It does not begin with utopian goals or resources captured through specific promises or threats. Instead it begins with open-ended, pragmatic tinkering that thrives on the unexpected. (Location 1425)

The process is not even recognizable as a problem-solving mechanism at first glance: Immersion in relevant streams of ideas, people and free capabilities Experimentation to uncover new possibilities through trial and error Leverage to double down on whatever works unexpectedly well (Location 1427)

Ideas born of tinkering are not targeted solutions aimed at specific problems, such as “climate change” or “save the middle class,” so they can be applied more broadly. As a result, not only do current problems get solved in unexpected ways, but new value is created through surplus and spillover. The clearest early sign of such serendipity at work is unexpectedly rapid growth in the adoption of a new capability. This indicates that it is being used in many unanticipated ways, solving both (Location 1456)

Venture capital is ultimately the business of detecting such signs of serendipity early and investing to accelerate it. This makes Silicon Valley the first economic culture to fully and consciously embrace the natural logic of networks. When the process works well, resources flow naturally towards whatever effort is growing and generating serendipity the fastest. The better this works, the more resources flow in ways that minimize opportunity costs. (Location 1460)

So while both Wall Street and Silicon Valley can often seem tone-deaf and unresponsive to pressing and urgent pains while minting new billionaires with boring frequency, the causes are different. The problems of Wall Street are real, and symptomatic of a true crisis of social and economic mobility in the geographic world. Those of Silicon Valley on the other hand, exist because not everybody is sufficiently plugged into the networked world yet, limiting its power. The best response we have come up with for the former is periodic bailouts for “too big to fail” organizations in both the public and private sector. The problem of connectivity on the other hand, is slowly and serendipitously solving itself as smartphones proliferate. (Location 1475)

With software eating the world, this is changing. Tinkering is becoming much more than a minority activity pursued by the lucky few with access to well-stocked garages and junkyards. It is becoming the driver of a global mass flourishing. (Location 1579)

As Karl Marx himself realized, the end-state of industrial capitalism is in fact the condition where the means of production become increasingly available to all. (Location 1581)

Chandler’s principle of structure following strategy allows us to understand what is happening as a result. If non-free people, ideas and means of production result in a world of container-like organizations, free people, ideas and means of production result in a world of streams. (Location 1585)

What is new is the idea of a digital stream created by software. While geography dominates physical streams, digital streams can dominate geography. Access to the stream of innovation that is Silicon Valley is limited by geographic factors such as cost of living and immigration barriers. Access to the stream of innovation that is Github is not. On a busy main street, you can only run into friends who also happen to be out that evening, but with Augmented Reality glasses on, you might also “run into” friends from around the world and share your physical experiences with them. (Location 1610)

By contrast, when you are sitting in a traditional office, working with a laptop configured exclusively for work use by an IT department, you receive updates only from one context, and can only view them against the backdrop of a single, exclusive and totalizing context. (Location 1631)

When organizations work well and there are no streams, we view reality in what behavioral psychologists call functionally fixed 3 ways: people, ideas and things have fixed, single meanings. This makes them less capable of solving new problems in creative ways. In a dystopian stream-free world, the most valuable places are the innermost sanctums: these are typically the oldest organizations, most insulated from new information. But they are also the locus of the most wealth, and offer the most freedom for occupants. In China, for instance, the innermost recesses of the Communist Party are still the best place to be. In a Fortune 500 company, the best place to be is still the senior executive floor. (Location 1639)

What we do not understand as instinctively is that streams are problem-solving and wealth-creation engines. We view streams as zones of play and entertainment, through the lens of the geographic-dualist assumption that play cannot also be work. (Location 1653)

In our Tale of Two Computers, the networked world will become firmly established as the dominant planetary computer when this idea becomes instinctive, and work and play become impossible to tell apart. (Location 1654)

An observation due to Arthur C. Clarke offers a way to understand this second trajectory: any sufficiently advanced technology is indistinguishable from magic. The networked world evolves so rapidly through innovation, it seems like a frontier of endless magic. (Location 1677)

social media theorist Seb Paquet, which captures the moral we drew from our Tale of Two Computers: any sufficiently advanced kind of work is indistinguishable from play. (Location 1682)