Commoncog

a newsletter on accelerating business expertise

Commoncog This Week

This week's Commoncog case is members-only, though the following post is free; next week's piece will be free.

What is a Tech Bubble Anyway? — This week's publicly available post is an accompaniment to The Rise and Fall of Data General, a members-only case.

If you are a Commoncog member, you might also want to read my forum summary of the tech bubble framework presented in Engines That Move Markets. This will eventually get turned into a post, though not this year. (Note that the above link will not show up if you're not logged in, or not a member).

I'm quite pleased with this week's case. The Rise and Fall of Data General is about the namesake minicomputer company that lived from 1968 to 1999. It was made famous by Tracy Kidder's 1981 book The Soul of a New Machine, which won the 1982 Pulitzer Prize for General Nonfiction. But the case also includes an abbreviated history of the computer industry from the 1940s through to the late 60s, with enough colour to hopefully feel similar to our current AI moment.

The main point I want to make is that throwing around the phrase 'bubble' is not useful enough. The minicomputer boom is a relatively unknown boom — and nice to calibrate on, because it did not involve a public equities boom and bust like the '99 bubble did.

It's probably more important to calibrate on the beats of a tech cycle, as opposed to calling something a bubble or not; this week's case hopefully makes that point clearly.

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Member Discussions

The Commoncog members-only forum is a private place for sensemaking on business and markets.

Here are a couple of members-only discussions I'd like to draw attention to:

Some members did an Unofficial NYC meet up. If you'd like to organise one in your city, I'm happy to give that some airtime here. (Previously: Sydney, SF)
A member links to a report on how simple prompts enabled GPT-4 to outperform research-backed classroom instruction in a Harvard physics study; what seems surprising is how basic the "well-designed AI tutor" actually was. Further down, in the same thread, another member links to a remarkable AI field report from Honda.
How American Profits built Chinese Power; worth reading because of the pushback.
Quick question: Audiobooks vs Reading? Which works better for you? Does this affect reading comprehension or learning?
AI making inefficient processes worse 💯
Getting Better at Using LLMs to Write Code — A member argues that code reviews are largely useless and most people do them as cargo cult behavior or to meet compliance requirements.
An excellent example of basic balance sheet analysis.
Seeking Cases of Good Careers in Bad Companies — we discuss the phenomenon of lousy execs who fail upwards.
Links to the recording of the members Q&A with Jerry Neumann are now up! (This is quickly followed by more discussion of bubbles, very topical).
Given Engines, Perez and Neumann on AI, How Do You Win? — some new comments after the Neumann Q&A.

Note that you'll have to be logged in as a member to view many of these threads. You may login here.

Elsewhere On The Web

The Great Reckoning — One of the principles of Commoncog is to see the present moment clearly. This is a good piece by Kaiser Kuo that describes the current vibe shift around China. (It's made somewhat more believable by his subsequent interview with Foreign Affairs editor Daniel Kurtz-Phelan, who can comment credibly on the shift in Washington). Of course, this immediately brings to mind two things: first, that the vibe shift exists is probably more a reflection of America’s own angsts and worries, and second, since a new consensus is developing, the vibe shift is likely going to be overdone: America is not as bad as folks think.

Dumb Money Triumphant — I know I just said that "is this a bubble" debates are not that useful, but this piece by Owen Lamont from Acadian Asset Management was a fun one.

When market prices get dumb, the dumb money gets rich. The initial success of the first wave of dumb money motivates a second wave of dumb money, which pushes up prices further.

Wait till you get to the bit about waiters.

Memories of an Enron Summer — Giusepe 'Gappy' Paleologo (who is a little famous) has a nice little remembrance on Enron on his new Substack.

What Enron showed me was to prove that very good people can make very bad decisions, not because they are instructed to do so, but because of short-range interactions. In this respect, I disagree with “The Smartest Guys in the Room”. They explain the failure using the Milgram experiment, which shows how a person can overcome his reservations when he is being instructed by a superior (Skilling, according to the movie). Instead, to me Enron’s failure is better explained by the Lucifer Effect. It was self-organizing bad behavior.

Some cases are easy to produce. Some cases are hard. This week's Data General case was hard — it's difficult to get folks to care about a defunct category of computers from back in the 50s.

I'm not entirely sure I succeeded, but then this case is members-only for a reason.

Warmly,

Cedric

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