Evolution of human societies and the organization of ventures

 I Survey of human societies:

The earliest human functional groups were hunter-gatherer tribes of 100-150 people. This is several extended family groups banded together. The core characteristics of the hunter-gatherer tribe unit were:

  1. small and tight-knit: Each individual can still understand the relationship and politics between any two individuals in the tribe (see Dunbar’s number).
  2. relative equality: each person was expected to contribute towards the basic need of food production either through hunting or gathering food. No individual contributor was orders of magnitude more efficient that any other individual e.g. a really efficient berry picker doesn’t pick 10x more berries than a bad berry picker.
  3. information symmetry: information was quickly distributed amongst a tribe since the bearer of news was within a hop or two of everyone else in the tribe.
  4. social over explicit currency: everyone was more willing to help their tribe members out because there was a social expectation that they’d be helped out in the inverse scenario. As within a group of friends and family today, people are generally OK to track expenses and favors loosely and informally.

Around 10,000 - 12,000 years ago, humans around the Fertile Crescent (area contained within modern-day Iraq, Kuwait, and portions of Iran and Turkey) discovered that they were surrounded by what are now known as the eight “founder crops” (or the basic cereals that are known today as emmer wheat, einkorn, barley, flax, chick pea, pea, lentil, bitter vetch), and four of the five most important domesticated animals (cows, goats, sheep, pigs, with the fifth species, the horse, living nearby). The serendipitous act of simply settling down and taking advantage of their local biodiversity set off a cascade of competitive advantages over hunter-gatherers that formed the foundations of human civilization today.

Because farming provided a more stable food base and produced a higher caloric density per unit land, human groups didn’t need to cover large swathes of land to feed. Thus, the number of humans per unit of land ramped upwards. Because more and more people were subsisting in closer and closer proximities and food production no longer required all hands on deck, professional managers and specialists arose from the masses. The increased process and organization allowed farming societies to be more sophisticated and long-term focused than hunter-gatherers who could only really plot out their route to their next watering / feeding grounds. Farming communities swelled into functional groups of towns and cities. Neighbors were now strangers, hierarchical officials and specialists now provided different types and levels of contribution to society (and expected their outsized compensation for it), a rapid information asymmetry developed between different segments of the population, and transactions quickly became based around explicit markets instead of informally tracked favors.

While the framework of society changed a lot from hunter-gather to farming, the productivity per human really did not. For most of human history, the leverage of single human was relatively small. Muscle power scales linearly with the number of people you have. Thought leadership was mostly parochial. To keep scaling up, societies and organizations simply kept adding to headcount. While this was progressive for society as a whole, individuals didn’t necessarily inherit the fruits of progress. Quality of life as measured by dietary variety, average height, weight for peasants and serfs which formed the bulk of society was lower than their more primitive hunter-gatherer ancestors. It didn’t matter for the individual though because large, hierarchical societies dominated and enveloped small, loosely organized hunter-gathering ones. To put in other words, the benefits of a small, tight-knit society were far outweighed by the raw scale that sheer numbers provide (regardless of the dipped quality of each component individual). Typical corporate looks like this. See all commentaries in art, film, writing about the corporate office job as a soul-crushing existence, the contemporary analogue of medieval serfdom.

 II Modern ventures:

Technology over the centuries has incrementally increased the leverage of a single person. This has ramped up exponentially in the last couple decades with the rise of virtually free, instantaneous global communication, widespread ubiquitous access to the entire corpus of human thought and knowledge at one’s fingertips, and increasing automation and abstractions at all levels of production (manufacturing, fulfillment, distribution, marketing). This is why we see smaller and smaller groups of people demonstratably creating more and more value. Small, lean organizations with highly leveraged individuals retain the advantages of a tribe (the tight-knittedness, equality, information symmetry, and a sense of social contract) with the scale of piecing together special skills and specialization that traditionally only big corporations could pull together. In early 2014, Whatsapp sold for almost USD 600M per employee (35 employees at a USD 19B market capitalization). This would be unfathomable even a decade ago. Today’s functional business division of hundreds if not thousands in your typical Fortune 500’s will be run and operated by a single person wielding a suite of technology and contractors tomorrow. The future will be dominated by such tribes.

On the surface, this trend of consolidation of productivity and power to a smaller and smaller group of people may seem recent, but it’s not. Real power has always been consolidated in a small tribe at the top. In nation-states and large corporations today, the top tier executives are true first order actors. Labor and specialists are really just instruments of the brain trust. As the leverage of individuals increase, second tier functions will be replaced by technology, automation, and contracts. In a way, the reduced need for head count is actually just a truer reflection of how many actual heads there actually are. What has changed, however, is the reduced barrier of entry to become a power player. Problems only contemplatable by governments or existing aristocrats can now be approached by private individuals with smaller initial power bases. You no longer need to start life with a 10,000 man powerbase to begin solving some real problems in space exploration, creating cost-efficient non-hydrocarbon-based energy, healthcare, mass communication, etc.

 III The future:

I predict a bifurcation of organization size. Leaders of top organizations especially in Silicon Valley where the cycles of creation and disruption are quicker and tighter understand (at the very least from an academic standpoint) “innovator’s dilemma”. There will be a handful of ecosystem creators, a few select companies and governments that set the ground rules who’ll remain large because they’ll acquire and absorb every potentially threatening tribe that arises. More and more leaders will follow Mark Zuckerberg’s example i.e. the aggressive acquisitions of speculatively disruptive threats: Instagram, Whatsapp, and Oculus. Every other player will be a small nimble tribe looking to nip into opportunities not yet dominated. It will be increasingly hard (but not impossible) for new companies to make the leap from a single tribe into an empire as today’s empire runners become more and more aggressive with pre-emptive acquisitions. In the long run, I expect the world to look like a few monoliths with cadres of specialists keeping the empires smoothly running, a swathe of small, nimble tribes all trying to create their own empires, and everyone else, consumers.

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