Idealistic Innovation - Updated by Alan Kay

The forest fire now burning through the markets - with too many food delivery and payment offerings and too few value innovators - will clear the way for new growth.

Second Update: After asking Alan Kay to review this, I made a few corrections to the original. Then he made many more corrections and provided some great insights. I was going to update again but thought it best to let Alan’s words speak through directly.

This era gave us an enormous number of innovations that have shaped the modern-day world — both for the good like the technology in this article and the more destructive, like Shareholder Value Theory - but little is noted about the motives behind the people; their ideals often eclipsed by their work. One important note from Alan that stands throughout is he was not a single inventor but one of an extraordinary team of people building on the work of others. I will note the second set of corrections directly to highlight his thoughts.

Some new insights from Alan:

• "[L]ove of beauty that is part of some motivations for inventing and making things -- they are beautiful in themselves, and also can be very useful.”

• “A key phrase for ARPA/Parc is ‘The goodness of the results correlates most strongly with the goodness of the funders.’ It's this aspect that has gone most bad starting in the 80s.”

• “It's worth noting and pondering how and why ‘American Style Capitalism’ is a very poor -- even destructive -- version of how public ownership of enterprises can be done.”

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Stewart Brand’s 1972 Spacewar! article is a time capsule for the information age. Written by Brand for Rolling Stone, it’s a nostalgic piece not only for the technology but more for the attitude.

Superficially, Brand wrote about an early computer game tournament. Maybe the first but, if not, definitely the most interesting. There are mentions of everybody from J.C.R. Licklider and John von Neumann to a young Alan Kay working with others to build the first graphical user interface and object-oriented computer at Xerox PARC.

Alan: The Parc GUI was not the first GUI, but its overlapping windows and icons etc is the one that has been in use since the late 70s.

Annie Liebowitz took the photos and the author, Whole Earth Catalog publisher Brand, would go on to found The WELL, an early influential online forum.

Not long before the article was published, on December 9, 1968, Douglas Engelbart showed off The Mother of All Demos. Clad in a tie, which engineers wore back then, he demo’d the computer mouse, videoconferencing, cut/copy and paste, hypermedia, drag and drop, and a whole bunch of other stuff.

Alan: This demo did not have cut/copy/paste or drag and drop. His video collaboration was quite superior to that of today.

Engelbart was working for the Information Processing Techniques Office at the US Advanced Research Projects Agency (ARPA, now renamed DARPA), a division of the US military.

Alan: Worth explaining that the good stuff was done before the "D", and it was Congress that imposed the bad changes. Also, it is good to be clear about "ARPA" -- which was set up after Sputnik in 1957 to support "big things" for defense that might be needed per the Russians -- and ARPA-IPTO, which was set up by Lick to find powerful complimentary relationships between humans and computers for better thinking. There was so much money around back then that no one tried to rationalize this use beyond "advancing the science of information is likely to be good for the country."

Engelbart’s research was funded by then ARPA-IPTO head J.C.R. Licklider, who tasked scientists with creating “interactive computers amplifying human intellect pervasively networked worldwide.” ARPA-IPTO’s mission was not military, per se, except presumably with idea that a more enlightened world would start fewer wars.

Alan (and me, combined): They didn't actually think this way directly -- they generally thought about "good for the country in general". In any event, because of the Viet Nam war protests Congress was more focused on placating citizens in various ways and eventually forced ARPA to dump the research (not really, but it was reduced (for example, the Internet work was still funded) which and some of the larger visions were then taken up former -IPTO researchers at Xerox at their new Palo Alto Research Center, Xerox PARC.

There, Alan Kay worked with others on the development of the Xerox Alto, the first graphical computer, along with the creation of object-oriented programming. Robert Metcalfe was with a team that created Ethernet, the networking tech that glues the internet together to this day (WiFi is wireless Ethernet). Gary Starkweather invented the laser printer. Legendary manager Bob Taylor moved from ARPA to Xerox to oversee the entire shebang.

Alan recommends reading M. Mitchell Waldrop’s book The Dream Machine as an accurate and, I should add, engaging biography about the project and people. It’s a great book but one element conspicuously unexplored is attitude. What motivated those early computer pioneers? What turned their crank?

Alan Kay clarified the motive wasn’t money. “The motive was not making money is quite accurate,” he wrote. Those brainiac hippies at Xerox PARC weren’t much interested in Xerox’s profitability. Alan: (We wanted Xerox to succeed and to make products out of the Parc inventions -- it was the PARC scientists who were not motivated by making money)

So what exactly motivated these engineers to focus on this type of incremental technology rather than, say, taking more lucrative gigs developing plastics?

I have a theory based on personal experience: they wanted to improve the world and believed — correctly, for the most part — that a quantum leap in technology would make that happen. Alan: I think you have to couple this with "love of beauty" that is part of some motivations for inventing and making things -- they are beautiful in themselves, and also can be very useful. (Michael, after these updates: Extraordinary insight: I wish Silicon Valley, and the rest of the world, would focus more on the love of beauty).

These were largely idealists who envisioned a technology-enabled utopic future: a web of near-infinite information to build things like electric cars, search engines, rockets, and maybe exchange cat pictures. They’re the type of people who, years later, streamed the first concert to the internet: their in-house band Severe Tire Damage (a year later they became the unannounced opener for The Rolling Stones stream).

Alan: A key phrase for ARPA/Parc is "The goodness of the results correlates most strongly with the goodness of the funders". It's this aspect that has gone most bad starting in the 80s.

Compare and contrast that to the present day where young people in the field openly discuss that their primary motive is to make money. Will a FAANG company or a startup yield more cash seems to be a common question that, not long ago, would’ve been seen as gauche. Build interesting and valuable things — try to leave the world a better place than you found it — and the finances will fall into place was the Silicon Valley mantra. People who disagreed would be more comfortable on the east coast with ties and suits and generally better bagels went the line of thought.

Not that money was unimportant: these are smart people and it wasn’t lost on them that their work was likely to unlock enormous value and wealth. It just wasn’t their central focus but seems to have become so over the past years as young people flock to work at a never-ending stream of me-too food delivery, taxi, payment, and other well-funded but dull copycat businesses.

It’s not far-fetched to hypothesize this breakdown in a search for value is the root cause of the current meltdown, the reason for the runup and predictable collapse.

I’ve written lots about how Shareholder Value Theory, Milton Friedan’s misguided idea delivered to GM that nothing mattered beyond increasing share price. GM listened, along with countless other businesses, eventually bankrupting both the business and shareholders. Despite that outcome, many managers still follow Friedman’s advice with similar long-term results. Real profits flow from creative talented people who create value, not shenanigans in the finance department.

However, where we thought Friedman’s get-mine-today then get out ideas were confined only to high-paid suits maybe the short-termism thinking leaked from the usual suspects in the boardroom to the employees they hired. Gordon Gekko’s Friedman-inspired Greed is Good what’s in it for me mantra may have polluted every facet of business and now needs to be cleaned out like one fumigates a house.

That’s not to say money isn’t important: it is, and there is no system better than capitalism for moving the world forward. But much like a nuclear power plant can generate enormous amounts of clean energy if run safely and carefully (admittedly, a big if), so too must businesses run their internal affairs safely and carefully. Not just at the top, where attention is largely focused, but at all levels. Why? Because a meltdown — like we’re seeing now — destroys the public’s confidence in capitalism itself.

Alan: It's worth noting and pondering how and why "American Style Capitalism" is a very poor -- even destructive -- version of how public ownerships of enterprises can be done.

We’re entering a new, challenging, and exciting time. There is no mistaking the destruction in the financial markets. Countless businesses are likely to be shuttered or acquired for pennies by the time it’s over. But, historically, the most interesting businesses tend to come to life during downturns. Everything from GE, HP, and McKinsey to Electronic Arts, Google, Uber, and Airbnb either started or gained steam during wretched economic times. The lack of capital seems to focus the mind away from the trivial, forcing a pivot from me-too red oceans to new blue oceans.

We’re entering a well-charted but often uncomfortable place for status quo businesses. Many will fail. But forest fires enable new growth, opening the door to new businesses and startups offering genuine value. This is where real blue oceans are often formed. The future looks painful but promising.