Another nice article by Andy Kessler
Things always seem dark and desperate before a new age of innovation kicks off.
Maybe it’s because of that experience that whenever I think of the ’70s, I shiver. The Dow Jones Industrial Average closed that afternoon at 852.41. Four years later it was basically the same. The skies were always gray and smoggy. Beyond air pollution there was destitution in 1975: 8% unemployment. And while inflation was dropping, it was still running hot at 7%. Garbage piled up on the streets. New York City was bankrupt. In October, the Daily News ran the headline: “FORD TO CITY: DROP DEAD.” Punk bands would soon be singing “No Future.” They were desolate times. In vitro fertilization, stents and recombinant DNA human insulin were still years away.
Oh, and I forgot to mention, on the way into New York we took the Pulaski Skyway over the industrial wastelands of Jersey City to avoid paying tolls on the New Jersey Turnpike. Back then, the skyway was often enveloped in smog and always smelled. No one knew why. It turns out that from the late ’60s until 1985, underground fires burned in the PJP Landfill on the south side of the bridge. If ever there was a metaphor for the ’70s, there it was: a smoldering garbage-dump fire.
Back in Times Square, it was definitely a three-dog night. Did you know the band’s name comes from how many dogs need to climb into your bed to keep you warm? Forget Jeremiah, at the start of the ’70s, Three Dog Night sang in “Good Time Living”: “Air pollution, revolution, you know I’ve had my fill. Advertisin’, computerizin’, don’t understand it and I never will.” If you squinted hard enough through the smog and cigar smoke you could see the computerizin’ digital future. But no one wanted to believe it.
Intel had invented microprocessors only four years earlier. Memory for computers cost maybe a half penny a bit. Eight kilobytes ran around $300. Your current 256-gigabyte iPhone would have cost more than $10 billion. My high school had just installed a clanky Teletype machine with a paper-tape punch and reader and a 110-baud modem to dial into the district’s computer. In the first of many flips, I showed teachers how to use it.
Meanwhile, with a few friends, I worked on building my own home computer based on a Zilog Z80 microprocessor, with 8K of memory and a Panasonic cassette player for storage. That same year,
, of all companies, invested in Zilog, buying it outright in 1981 before destroying it.A few years later I created my own version of the then-popular Dominoes arcade game, manipulating bits on my 32x16 display. I would flip through the pages of the Z80 manual to understand registers and eight-bit instructions and then write code by hand in binary. I eventually shared this story with
co-founder Steve Wozniak. He smiled and told me, “Hands-on is the only way to learn.”I remember seeing an ad in 1976 in Byte magazine, the bible for homebrew enthusiasts, for a $666 Apple computer. It was more of a circuit board and looked limited. My friends and I were already on our way to starting our own company, MicroTek, to sell our home computers. We were all in, until our parents said we had to go to college.
I could dream of counterfactuals all day, though my parents were probably right. But here’s the thing: Peering through the thick smoldering smog of the ’70s, you could barely make out the dawn of this new era of opportunity. Amid fears of Paul Ehrlich’s “population bomb” and global cooling, 50 years of amazing innovation and invention were about to begin.
Back then, multimillion-dollar mainframe computers with punched cards and dot-matrix printouts ran corporations. Minicomputers cost tens of thousands of dollars and sat in scientific labs. My homebrew machine cost me $700, funded by several years of various jobs including slinging Stewart’s Root Beer. That was a lot of money. Minimum wage was $2.10.
A lot was happening: Seven months earlier, Wall Street ended the practice of charging fixed commissions, often 75 cents a share, to trade stocks. This killed old-school Wall Street and ushered in a more robust version. It took seven more years for a new bull market to start when trading volume and the finance industry exploded as individual investors joined institutions in buying stocks. Today, commissions are fractions of a penny. Don’t believe the zero commission-claims of
and others. You pay in other ways.
Money-market and mutual funds took off as cheaper computers enabled companies like Fidelity and T. Rowe Price to slice and dice stocks into funds and price them daily. They started taking market share from big bank trust departments seemingly shrouded in spider webs.
So yes, out of the depths of the inflation-riddled ’70s came the democratization of computing and finance. It feels to me as if we’re at a similar point. What’s going to be democratized next?
To be fair, there isn’t quite the same level of despair and smoggy dreams. But there is plenty of skepticism. Start with quantum computing, autonomous vehicles and delivery drones. Even the once-in-a-generation innovation of machine learning and artificial intelligence is generating fear and doubt. Like homebrew computers, we’re at the rudimentary stage. Squint a little to see the future.
Especially in medicine. Healthcare pricing, billing and reimbursements are completely nonsensical. ObamaCare made it worse, but change is beginning. Pandemic-enabled telemedicine is a crack in the old way’s armor. Self-directed healthcare will grow. Ozempic and magic pills are changing lives. Crispr gene editing is also rudimentary but could extend healthy life expectancies. Add precision oncology, computational biology, focused ultrasound and more. The upside is endless.
AI will usher in knowledgeable and friendly automated customer service any day now. But there is so much else on the innovation horizon: osmotic energy, geothermal, nuclear fusion, autonomous farming, photonic computing, human longevity. Plus all the stuff in research labs we haven’t heard of yet, let alone invented and brought to market. Remember that generative AI spent a long time incubating in labs and has been out only a year. Critics dismissed mRNA until it could provide rapid-response vaccines.
Every industry is about to change, which will defy skeptics. Figure out how, and then, as Mr. Wozniak suggests, get your hands dirty. As always, the pain point is cost. Look for things that get cheaper—that’s the only way to clear the smoke and get new marvels into global consumer hands. The democratization of every sector will proceed in mysterious ways. Happy hunting for opportunities. And stay warm this New Year’s.
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