The Great Reset: Technology

The King is Dead. Long Live the King. In 1959 two engineers at Texas Instruments, Jack Kilby and Robert Noyce, changed the world in the most profound way since the internal combustion engine. The microchip had been born, and with it every aspect of military and consumer technology would be changed in ways no one prior to that moment could have imagined. In the 62 years that have followed, the microchip has been the absolute center of innovation, from guided missiles, GPS, digital cameras, personal computers, smart phones, and all the services enabled by the internet. It is an enabling technology, the Core Technology of this era. It has changed our entire world, and brought all human knowledge into our pockets... and it is not going to get significantly better for the foreseeable future. The microchip has become mature technology, like the internal combustion engine or electric lighting, and innovation will come much slower from here on out.

This is going to be the most bitter pill for entrepreneurs and investors to swallow in the coming decade: the days of digital computing being high-tech are over. Transistors have been shrunk to near their theoretical limit, with that innovation in software has slowed to a crawl, and with that productivity in the United States has declined over the last decade and will continue to do so for at least the remainder of the 2020s. The iPhone was the last significant innovation in digital computing, and it is now more than a decade old. New innovations have been little more than improved services competing for existing markets, and genuine attempts to push the envelope of digital technology have largely hit dead ends. Does anyone seriously think the Apple Watch, or Oculus Rift, or "Internet of Things" products are anything more than novelties? We are at the beginning of a period of consumer technology stagnation, not unlike the late 1960s and 70s was for internal combustion. The futility of trying to push the envelope of digital innovation won't be felt by the majority of people until Silicon Valley creates for the microchip what the Concord and the Cadillac Eldorado were for internal combustion. By that point, we should hopefully see whatever will be the next revolution's Altair 8800.

So the question is: What's next? What is the next revolution in technology that will rewrite our perspective of the world. Such a question seems impossible to answer. Trying to imagine the next revolution in 2020 is not unlike someone in 1970 trying to understand how a room sized computer your bank uses to transfer account information between other banks is going to lead to you being able to watch videos on devices small enough to fit in your pocket. To have any hope of seeing where the next revolution will come from, we must look to the past cycles of innovation, and see how previous Core Technologies emerged.

Core Technology

Core Technologies are innovations that are at the center of every innovation of their era. The microchip didn't just bring you twitter, it brought you the human genome project, the moon landing, and virtually every innovation to the service industry. But each core technology followed the same cycle of development, and each fundamentally changed the way nature of human existence. Puddling Iron created the market revolution by making inexpensive high quality tools readily available to the masses, including complex machines that would create the 18th century textile industry, and with it the concept of a "job" as the main source of personal income. High pressure steam engines defined much of the innovation of the 19th century and created a world where humans could traverse great distances without the aid of the wind or livestock, and with that more interconnected societies that in turn gave rise to nationalism and large colonial empires. Electricity took back the night and made instantaneous communication across the world possible, and made cities more livable by eliminating coal burning heat sources. Internal combustion brought the world closer together, allowed humans to conquer the air, compelled us to divide our societies into suburbs, and created everything from the tourist industry to McDonalds. All of these technologies completely revolutionized our world, and each was radically different from the last (though by no means possible without the innovations that came before). And all had a common cycle that propelled them forward.

The Core Technology Cycle

The cycle of development to implementation and maturation of technology tends to follow a familiar pattern from the laboratory, to heavy investment and R&D by the government out of national interest, before eventually entering the consumer market. The time between each phase varies between innovations, but in general the following is a good guideline for understanding the cycle:

• Lab - A core technology often starts out as little more than theory, or simply not be possible to implement because other technologies have not yet been developed. Basic research often begins centuries before the technology has any practical application.
• Government - Technology often finds its first applications in matters of national interest. This does not just mean military applications, NASA was just as much an early source of R&D funding for the microchip as the Defense Department. At this point rapid development occurs often with near exclusive use by the government. For much of modern history, this phase in a new technology's evolution lasts about 20 years, with limited implementation to non-military users who are able to marshal the capital costs required of early adopters, usually financial institutions and the super-rich.
• Consumer - After about a generation of use by the military and a handful of private institutions, technology transfer inevitably occurs, be it through university grants, government tech-transfer programs, or collaborative R&D projects with private businesses. At this point we can see smaller phases within the Consumer phase:
• Market Entry - An explosion of applications from private businesses and universities typically lasting around 20-30 years as a new generation of entrepreneurs and investors takes advantage of the market opportunities afforded by the new core technology. This phase includes a significant degree of private sector R&D that leads to steady improvements to stay competitive. 
• Commoditization - Eventually improvements begin to slow down as the technology reaches its limits within the laws of physics and the constraints of cost. Those innovations that do come forward are less groundbreaking than in the previous phase, and less efficient innovators begin to fall away as the technology reaches a point of commoditization.
• Maturation - Once the technology has reached a point of maturation, usually after about ten to twenty years after the end of the boom, productivity begins to decline. Investments in new companies yields diminishing rates of return, if any return at all for entrepreneurs. New applications seldom reach a mass market. It is at this point you get a "Concord;" something that solves a problem only for the wealthy, and even then is in no way worth the money. After the Concord moment there is a point of genuine maturation, in which a more practical product emerges that sets the tone for a less innovative era, like the Chrysler K-Car.

The Next Revolution

In each of the phases of the Core Technology Cycle we typically see the military development of new technology begin around 20 years prior to the point of maturation of the current core technology. The Microchip was introduced 17 years before the "No Replacement For Displacement" era of the automobile in the US, for example. Thus, if the iPhone was the point where maturation began, and 2020 marks the dead end for innovation, we can surmise that the new core technology began its life as a government project in the 1990s and 2000s that was distinct from the current core technology. And only one project of that era is currently on the crest of market entry: genetic engineering.

In 1990 the US Government launched the Human Genome Project, the largest and most concerted effort yet to map the human genome. A working draft of the human genome was first published in 2001, and a more complete draft in 2003, formally concluding the project. It wasn't until May of 2021 that the last 5 gaps of rDNA were found and published, albeit with 0.3% containing some errors, and the Y chromosome still hasn't been fully sequenced. Despite these setbacks, the work completed in 2003 launched a wave of biotech projects either by or on behalf of the US and other major governments. In the 18 years since the working draft of the human genome was published, gene sequencing technologies have gotten faster and cheaper with each passing year. What took 13 years and $2.7 Billion, now takes 2 days and costs about $200. CRISPR Cas9 has revolutionized genetic research and engineering techniques, while mRNA technology allowed Modern to stand up a COVID vaccine in just 2 days with a mandate by the government.