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Carlota Perez (a neo-Schumpeterian, and popular reading among Silicon Valley VCs) laid out the mechanisms by which this shift occurs, using examples from 5 technological revolutions going back to the early 1800s. She divided the adoption curve of a new technology into four phases - Irruption, Frenzy, Synergy, and Maturity - which are themselves divided into the Installation period (Irruption & Frenzy, where the infrastructure underlying the technological revolution is built) and the Deployment period (Synergy & Maturity, where knowledge of this new means of production spreads broadly through the population and it's applied to all sorts of different problems).

Her theory is that financial capital - startups and venture capital - dominates during the Installation phase, because knowledge of the new techniques of production is limited to a few visionary individuals and they're forced to take risks that few established companies or management structures are comfortable with. And then production capital (reinvested earnings of existing corporations, assigned toward R&D headcount) dominates during the Deployment phase, as management becomes both aware of and comfortable with the new technologies and they can readily find employees to do the work. The boundary between phases is marked by a financial crisis and oftentimes war, as the inflated expectations of the new technology (necessary to incite people to take risks) cannot be matched by its actual usage within the economy. A financial crisis then usually spurs regulation which is needed for broader adoption (and keeps out competition, entrenching production capital), while a war disseminates knowledge of the new techniques throughout the victorious power(s).

One thing the book doesn't get into is that technological revolutions are often fractal: for example, the technology of "software" enables more specific technologies of "the Internet" or "mobile apps", which themselves spawn whole industries and companies within those industries. And that implies that you might be in "frenzy" for the general technology of software (which I suspect we are; we haven't had our war yet), but the specific technology of "the WWW" had its financial crisis in 2001 and long since entered maturity. There are other technologies within software (eg. cryptocurrencies) that I'd argue are still within "irruption", and there are technologies within cryptocurrencies (eg. ICOs) that just had their financial crisis and are moving from "frenzy" to "synergy".




Carlota Perez (a neo-Schumpeterian, and popular reading among Silicon Valley VCs)

Interesting. I was not familiar with her work previously. Thanks for pointing that out. More stuff to read!




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