This week we sat down for an interview with Azheem Azhar, an entrepreneur, strategist and writer who produces the influential newsletter Exponential View and hosts the Harvard Business Review podcast of the same name.
Today he published his new book, “The Exponential Age: How Accelerating Technology is Transforming Business, Politics and Society”.
What first got you interested in the idea of exponential growth?
I’ve been thinking about [it] for a really long time – in fact, probably since I was a child. I was introduced by my mother to the works of the economist Thomas Malthus, who was worried about the exponential growth of populations and their ability to overfeed on the land.
In parallel I’ve always been interested in computing, and followed with great interest the emergence of the PC in the 70s and early 80s. The idea of the exponential function has always sat there in the back-drop for me.
In what areas do you think the concept of exponential growth will have the biggest impact in the next decade?
I think there are four key domains where we’ll see exponential technologies: computing, energy, biology and manufacturing.
In computing we’ve already seen it in the area of the silicon chip, and we’re starting to see it emerge in other areas, like storage, bandwidth and so on.
In biology we’re able to sequence the human genome for less than a thousand dollars, where, 20 or so years ago, it cost $400 million.
In energy we see it in production, where, surprisingly to many, things like wind turbines, and solar photo-voltaic farms, and even battery storage, are all demonstrating a price-performance improvement that puts them on an exponential curve.
Manufacturing is the area that is perhaps the most tangible, and on the opposite side of shifting bits and bytes through a computer. 3D-printing, or “additive manufacturing,” is on an accelerating exponential curve, which means that every year it’s getting upwards of 30 percent more performance for the same price. And of course, that’s going to compound, so 3D-printers will be a tool of really broad utility soon enough.
Given how rapidly the costs of renewable technologies have been falling, why haven’t they had more mainstream success in replacing other forms of energy?
I think one of the primary reasons that I inspect in my book is that, in the exponential age, it’s quite hard for people and organizations to look at processes that are changing rapidly. We tend to extrapolate linearly rather than exponentially, so you get into this negative feedback loop where market analysts predict more pessimistically, and investors look at that and think, “It’s not growing very fast, and it’s expensive,” and the lack of investment on their part would result in costs not reducing as fast as they otherwise might.
What innovations do you expect to happen as a result of exponential advances in biology?
Biology will be one of the most fruitful areas for entrepreneurship, innovation, discovery, and commercialization. Over the last 20 or 30 years we’ve greatly improved our understanding of protein engineering, genomics and epigenomics – the way that we express proteins, the way that our microbiota behaves, and much more. That’s enabled heavily by computation, but it’s also about having the theory. I’m really interested in being able to harness our better understanding of biology with the work of computer engineering to come up with ways of helping us tackle climate change, manage water resources, create materials more sustainably and improve health outcomes like obesity, diabetes, and food insecurity.
In “The Exponential Age” you lay out the argument that this era has expedited the monopolistic “winner-take-all” economy. What are the most important significant implications of this dynamic?
Well, think about social networks. One of the first social networks was actually a Cornell spin-off called “The Globe” founded in 1996. Of course, looking at it now, in terms of general friends’ networks, after Facebook who’s really number two? There isn’t one.
But it’s not just social networks – it happens in so many other domains. Think about travel bookings, where the number one player has a really dominant market share. The reason is that there are network effects at play. These businesses are platforms – they have “providers” and “users” on either side, and arbitrate between the two, and end up securing all of the transactions. If you want to buy a whatever it is, you go to wherever the sellers are, and if you want to sell whatever it is, you go to wherever all the buyers are, and that network effect is probably the single most important driver of the winner-take-all market.
It’s also compounded by machine learning that learns from data and helps computer programs get better and better. Where do you get data from? You get it from having lots of users that interact with each other. So the moment you get a small early advantage, and then apply AI to that problem, you build a better venue that becomes more attractive for buyers and more attractive for sellers.
You talk in the book about the challenge of the “exponential gap.” You write that, if the primary cause of it is the inability of people to predict exponential change, then the secondary cause is the fact that they’re unwilling or unable to adapt. What kinds of companies or industries do you feel have failed to adapt?
Well, it’s so broad across so many industries. You only have to look at what’s happened to newspapers and how powerless they are in the face of digital publishing and social networks – that’s what happens when you misperceive the value of the asset that you’re sitting on.
It’s been easier for companies we might think of as much less digital, whether it’s mining, or healthcare, or aviation, because they haven’t been swept by the tidal wave. They’ve been able to see what happens to industries that don’t understand exponential reality. If you’re an aircraft manufacturer, and you look at what happened in newspapers, you have very few reasons not to say, “Well, we should prepare for a zero-carbon future.” But the earlier you were facing the tidal wave of exponential reality, the less chance you had to put your strategies in place.
What might the exponential age do for education, in terms of changes to the ways that we consume knowledge?
It’s incredibly important to try to use some of these exponential technologies to widen access to education, whether it’s through remote learning, blended learning, massively open online courses (MOOCs), or even through YouTube or TikTok videos. There’s really interesting and heartwarming data from decades-long studies in China about the ability to deliver remote learning to foreign and rural students in a way that’s improving educational and life outcomes.
At the same time, while one can learn useful skills through “snacking” on YouTube videos and the occasional lecture PDF, one doesn’t really approach any level of mastery with a subject or any level of critical engagement with it, unless they are able to practice it, either “in the field” or under the tutelage of a great academic institution. It takes time to learn and make mistakes.
There’s a tremendous potential with these new technologies, particularly to broaden shallow understanding of subjects. But when we look at deep understanding of any discipline, it’s got to be rooted in the practical practice of someone putting those skills to use on a day-to-day basis over many years.
What’s it been like to think about these issues in the midst of maybe the most exponentially-oriented event of our lifetime?
It certainly has made the world more aware of the idea of a runaway function – an exponential that’s very boring one day and out of control within a few days.
One thing that did come out of the pandemic was that companies that had already said that computation, robotics, and engineering approaches to biology were going to be important, have ended up growing incredibly quickly, and are continuing to hire and continuing to win market share.