How We Got There A slightly Irreverent History Of Technology And Markets - Andy Kessler

212 Pages·2004·1.59 MB·English

by  Andy Kessler

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ALSO BY ANDY KESSLER
Wall Street Meat: Jack Grubman, Frank Quattrone, Mary Meeker,
Henry Blodget and me
Running Money: Hedge Fund Honchos, Monster Markets and My
Hunt for the Big Score
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HHooww WWee GGoott HHeerree
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.
A
History
of
Technology
And
Markets
Andy Kessler
ESCAPE VELOCITY PRESS
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Copyright © 2004 by Andy Kessler
All rights reserved,
including the right of reproduction in whole
or in part in any form.
Printed in the United States of America
Author photo by Claudia Marcelloni
Adobe Acrobat® Edition produced and distributed courtesy of
The Pragmatic Programmers, LLC.
Please visit www.PragmaticProgrammer.com
for more information on our Pragmatic Bookshelf titles.
Escape Velocity Press
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Printing 10 9 8 7 6 5 4 3 2
Printed edition published by HarperBusiness
available from Amazon.com
and fine bookstores everywhere.
Library of Congress Control Number:
Cataloging-in-Publication data is available.
ISBN 0-9727832-2-9
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For my Dad, who sparked my interest in technology
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Table of Contents
Foreword 5
Logic and Memory 7
Part 1: The Industrial Revolution 13
Cannons to Steam 15
Textiles 29
Positively Electric 37
Transportation Elasticity, Sea and Rail 43
Part 2: Early Capital Markets 57
Funding British Trade 59
Capital Markets and Bubbles 65
Fool’s Gold 73
Part 3: Components Needed for Computing 87
Communications 89
Power Generation 95
Part 4: Digital Computers 99
Ballistics, Codes and Bombs 101
Transistors and Integrated Circuits Provide Scale 117
Software and Networks 131
GPS 153
Part 5: Modern Capital Markets 159
Modern Gold 161
The Business of Wall Street 165
Insurance 177
The Modern Stock Market 187
Bibliography 203
About the Author 205
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FFoorreewwoorrdd
Talk about twisty-turny paths. I started life as an electrical engineer
and ended up running a billion dollar hedge fund on Wall Street. Like a
pinball bouncing off of bumpers, I’ve been a chip designer, programmer,
Wall Street analyst, investment banker, magazine columnist, venture
capitalist, op-ed writer, hedge fund manager and even a book author. My
mother thinks I can’t hold a job. Friends suggest I know very little about
everything and a lot about nothing. That’s hard to argue with. But throughout
it all, I learned over time to live by five simple creeds:
1. Lower prices drive wealth
2. Intelligence moves out to the edge of the network
3. Horizontal beats vertical
4. Capital sloshes around seeking its highest return
5. The military drives commerce and vice versa
I’m not entirely sure how I came up with this list, but it has worked.
I’ve invested by it and have read and understood the news by it. It has helped
explain the unexplainable and has helped me peer into the fog of the future.
I sat down with two different groups of people and tried to explain
why these creeds are so valuable. The first group, engineering students who
lived by math and science, were confused over how technology leads to
business, even though advancing technology has driven and continues to
drive most everything. The next group, business school students, was
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6 HOW WE GOT HERE
combative; they suggested that business and management skills trump
economics. Maybe so.
So both groups were equally skeptical, and barraged me with
questions like:
“How do you know they work?”
“How come we’ve never heard of these things?”
“Can you prove it?”
“What if you’re wrong?”
“You’re just making this up, right?”
To explain in 20 minutes what took 20 years to seep into my sinews,
I’d have to walk them through the history of the computer industry, from the
transition from telegraphs to gigabit fiber optic networks and show how we
moved from the industrial revolution to an intellectual property economy.
And that’s the easy stuff. Add money, and a diatribe turns into a dissertation.
I’d have to explain how stock markets came into being, and insurance and
the follies of gold standards. And then somewhere in this tale would have to
be the link between military doctrine and commerce.
I needed to answer a few too many burning questions.
What is the history of the computer industry? Of the communications
industry? Of the Internet?
Why does the U.S. dominate these businesses?
Didn’t the British rule the last big cycle? What happened to them?
Why do we have money? What is it backed by? What was the gold
standard all about? Do we still have a gold standard?
How did the stock market come into being and what is it for? Aren’t
banks good enough?
Who wins – money or ideas?
Does the military get its technology from industry or the other way
around? Did anything besides Velcro and Tang come out of the Space
Program?
Why does the U.S. have any industrial businesses left?
There are too many questions to answer. So instead, I wrote this
primer. Enjoy.
Send me feedback, ideas and suggestions at [email protected]
with HWGH in the subject.
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