JANNIK SCHILLING

Passing Thoughts On Leaving Germany

I have lived in Germany for most of my life and thought about leaving for a long time. The day has finally come, today is my first day living in the United States. I could not be more excited to begin this new chapter and I feel grateful for everyone who supported me along the way.¹

That being said, I feel sad because I am pretty certain that I had to leave Germany out of necessity.

In this brief² blog post, I want to offer a few passing thoughts on why I decided to leave Germany and how my argument fits into the broader question of what ambitious people choose to do with their lives, and where. Most of this essay will be purely descriptive and I suspect that similar observations apply broadly to other European countries, though the specifics will differ.

I shall caveat my argument by stating that I still love Germany³ and care deeply about it improving. But over time I have come to believe that Germany is in a state of disrepair and that there is no window of opportunity to turn things around, at this point in time.

I. The landscape for ambitious people, as I see it

It might be tempting for the modern reader to dismiss my case – that many ambitious people have to leave their home country to pursue their ambitions, elsewhere – by stating that almost every Western country has made it difficult for ambitious people to pursue ambitious projects, each for its own unique problems, rooted deeply in their culture, society, or political system. Beyond the argument’s intellectual laziness – for how could one ever disprove such a claim? – lies an uncomfortable kernel of truth.

Most Western countries have stagnated. Almost every single young and ambitious friend I know considers leaving their home country, mostly to the US, because they have the impression that it is too difficult, if not outright impossible, for them to pursue ambitious projects at home.

There are many aspects of this seemingly universal problem which we could discuss; I will limit myself to just stressing two.

Firstly, many – usually unintentionally – exaggerate just how uniquely hard it is for talented young people to pursue ambitious projects. In the spirit of the French philosopher Rene Girard, we shall quote Sayre’s law⁴: “In any dispute the intensity of feeling is inversely proportional to the value of the issues at stake. (…) That is why academic politics are so bitter.” We could speculate that maybe most modern countries make it very hard for ambitious people to do anything ambitious and that is why there is so fierce debate about which country makes it the hardest.

Secondly, we could ask why there are so many universal problems across so many different countries despite seemingly divergent cultures – think about how different Japan’s and Germany’s cultures are and yet, how similar many of their problems are. If unique cultural and societal forces of each country were the root cause for their stagnation, why would almost all countries face the same problems today? Why do many ambitious individuals feel similarly limited in what projects they can pursue? And why do we seem to be stuck in this seemingly stable equilibrium?

We need to look closely at the notable exception. Why do young ambitious individuals decide to move from a relatively wealthy country like Germany to the United States?

It is probably wrong to think of the US as a refuge or an oasis for young and ambitious people and it is even wrong to think of the entirety of the US as an exception to the rule that most places in the world make it very hard for ambitious people to pursue ambitious projects. There are only a few places in the US – think SF, LA, or NY – that have attracted sufficiently many ambitious individuals and found some mechanism through which they can actually put their ambitions and talents into practice – startups in SF, movies and music in LA, or fashion and finance in New York.⁵

Another way of saying this is that you always need both the right talents and the right opportunity in order to build something of significance.

The preliminary answer to why young ambitious people move from a wealthy country like Germany to the marginally wealthier United States is that the US is the only place in the world where ambitious individuals can pursue their ambitions to a sufficient extent.⁶

II. Modern Commercial Republics

I think the two questions – Why are so many countries in the West facing similar problems? And why do talented young people decide to move to the United States over all other countries? – are more similar than they seem at first sight.

A core argument is that we started to divert young and ambitious people from politics into the pursuit of commercial estates. If the acquisitiveness of human nature used to be channeled into acquiring new territories and fighting wars, it is now largely funneled into building great companies and personal fortunes. But that leaves politics to be stagnant.⁷

At the same time, American exceptionalism historically consisted, in part, of pioneering the ground rules for what we might call today Modern Commercial Republics.

Ambitious people and society

I will now analyze the decline of Germany by looking at the implicit agreement, some might want to call it social contract⁸, between ambitious young people and the society they find themselves in. In the modern West, this implicit social agreement between ambitious individuals and their society can be described in broad strokes as a society granting ambitious individuals the permission to build commercial estates that contribute to society through productivity growth and jobs, while the founders in turn do not interfere with politics too much and don’t break the laws.⁹

Germany has not witnessed the founding of great commercial estates in recent times. Despite this indicting fact, there are no other pathways¹⁰ for ambitious people without previous wealth to build great estates, outside of commercial estates, and thus we will focus only on those, even in the context of Germany.

It is almost correct to say that Germany has outlawed ambition. There is obviously no single law that reads “Germans shall not be ambitious, punishable by jail.” Yet, if you outlaw almost every single thing that an ambitious person might need to do for building a great commercial estate and enforce an altered social contract that punishes ambitious people through social relations¹¹, then you have in practice outlawed ambition.

Outlawing ambitions is a political project and thus I will briefly deviate from my focus on commercial republics and make one exception¹². The idea of power¹³ and power concentration is troubling for the modern reader, maybe because power is inherently unequal or because there is always the risk of abuses of power. However, power is a necessary component of government. Powerful elites still exist in countries like Germany – even if you choose to call them by different names – because we haven’t yet found a way to govern a country without them.¹⁴¹⁵¹⁶ That is not to say that power in itself is good or bad; controlling the ambitious and powerful is as important today as ever before. For instance, we shall consider the fact that the United States started a tradition of checking power through power and by splitting up power into three branches in the context of a modern republic. Another approach that other countries have taken, either intentionally or by accident, is closer to the idea of trying to reduce concentration of power, and thus, preventing ambitious individuals from acquiring too much power, whereas the question of how much is too much is obviously the important question.¹⁷ Germany tries to limit the maximal amount of (political) power someone could possibly acquire more than most countries.¹⁸¹⁹

Outlawing and limiting commercial ambitions

Outlawing ambitions thus requires regulating commercial ambitions and practices as well, so the theory goes, because there is some link between commercial fortunes and political power.

It is becoming increasingly hard to deny that Germany, and the EU, outlawed commercial practices that might have been necessary historically for building great commercial estates. If the reader has any doubt that this is the case, they should seriously consider the EU’s approach to AI regulation²⁰ or Germany’s Network Enforcement Act²¹. The obvious way to regulate commercial ambitions is to restrict or outlaw technologies that could lead to too powerful companies.

A less obvious way to limit commercial ambitions is to not help ambitious founders with the necessary knowledge. For instance, many Germans with similar criticism would call for “following the American example” more as the US has clearly found ways for ambitious individuals to build commercial fortunes. I think this call is misguided.

Germany imitates the US already to a striking extent, accelerated by eroding language and cultural barriers and defense dependence. At the same time, Germany is reluctant to admit the lack of originality and thus claims to give things a “German spin,” which makes matters worse because the spin almost never works.

Moreover, one might wonder how serious Germany takes giving things a spin in the first place, when one considers that it is a commonplace argument that many things happening now in Germany happened ten years ago in the US.

We should not concern ourselves with more than one complication of imitating the US extensively; namely imitating startup playbooks from the US. Unfortunately for Germany, the reality in Germany looks quite different to that in the US and you would need to adapt your thinking to that different reality. But as I just claimed, Germany is bad at this “German spin.”

Just consider how expensive business expansion to neighboring countries in Europe is, compared with much lower costs of expanding from CA to TX.

Germany is currently either unwilling to face this truth or accepts the truth but is unable or unwilling to reduce its dependence on the US. Thus, many conceptualize startup success in Germany in an almost absurd way. Ideas travel easily, but context doesn’t.

III. What happens with ambitious Germans?

Outlawing ambitions, either through laws or social-cultural practices does not remove ambitious people from the face of the earth, of course.

Unable to pursue their ambitions in their own country, they either risk pursuing them despite restrictions and potentially getting into trouble, leave the country to pursue them elsewhere, or engage in even more destabilizing pursuits aimed at legalizing their ambitions.

There is one path that I omitted that I find very painful to watch, which is not thinking about these questions at all, and blindly trying to build a great company in Germany, hoping that things will magically fix themselves.

There might very well be an opportunity to build a generational company in Germany at some point, but muddling-through (durchwursteln), lying to yourself, or even worse, being willfully blind about the nature of Germany, won’t get you there.

Some might object that most Americans don’t think about questions like these either. This essay has never been concerned with most and from my experience, the very best American founders do think about the important questions. Moreover, there are quite useful norms and social dynamics in the right circles of ambitious American founders that will be utilized by the right founders, even in the absence of deep thought.

Until Germany figures out a more productive way to deal with ambitious people, it is a strange but true reality that the United States is the only place in the world where you can build great commercial estates as an ambitious person. It is truly the greatest country in the world, in this sense.²²

Thanks to Sam Huang and Jack Gross-Whitaker for helpful discussions and editing.

Summer 2024: What I Have been Reading

This essay can also be found on my Substack, where you can also subscribe to my future writing.

In July and August, I read and thought about the history and theory of Conservatism, how some thinkers tried to justify and conceptualize eternal peace and one-world unity, and what makes a good American novel.

A good book. I am not aware of any English translations, unfortunately.

Non-Fiction

1. Yoram Hazony: Conservatism: A Rediscovery. It’s relatively unsurprising that Peter Thiel’s review on the back of the book states that “the more intellectually forceful challenge to libertarianism comes not from progressives but from conservatives.” Many books written to criticize modernity, or usually a small aspect of modernity, think of Christopher Lasch, make correct observations, but fall short in attempting to provide solutions because they are way too narrow. Hazony offers a good introductory read for how different groups of conservatives think about the crisis of modernity and how they think about solutions, though I suspect that reading Burke would be a better foundation for the more intellectually-curious readers.
2. Yoram Hazony: The Virtue of Nationalism. Same author and similar arguments as above. This book precedes Conservatism, and makes an interesting argument for why we are not thinking about nationalism properly. Again, I think it is a good introductory read, but I would like to ask a lot of follow-up questions, pushback on some arguments, and stress others more strongly.
3. Roger Scruton: How To Be A Conservative. Similar class of book as the above two, though slightly more British.
4. Herbert Marcuse: One-Dimensional Man. Frankfurt School professor Herbert Marcuse explains his thesis that the modern, advanced society subordinates everything human to economic growth and exploitation, including human reason, leading to a totalitarian system with rights, like free speech, never used by choice of its members. Reading Marcuse is always a little bit painful, yet the thinking that Marcuse shares has been undeniably influential to the formation of the New Left. Many of his observations point towards deeper truths about human nature and the modern condition. Yet, I wish they were more substantiated and grounded in political philosophy and that the prescriptions would be deviating more from Marx and were more considerate across the board. The following passage shall be sufficient to demonstrate the spirit of his arguments: “The distinguishing feature of advanced industrial society is its effective suffocation of those needs which demand liberation—liberation also from that which is tolerable and rewarding and comfortable—while it sustains and absolves the destructive power and repressive function of the affluent society. Here, the social controls exact the overwhelming need for the production and consumption of waste; the need for stupefying work where it is no longer a real necessity; the need for modes of relaxation which soothe and prolong this stupefaction; the need for maintaining such deceptive liberties as free competition at administered prices, a free press which censors itself, free choice between brands and gadgets.”
5. Edmund Burke: Reflections on The French Revolution, Part I. It is not unreasonable to say that Edmund Burke is the founder of Conservatism, as we understand it today. Obvious recommendation.
6. William F. Buckley, Jr.: God and Man at Yale. This classic work, published in 1951, significantly influenced modern conservatism. A young Buckley critiques Yale University for what he perceives as its abandonment of religious and traditional values, arguing that the university has become secular and hostile to Christianity. He claims that while American society was historically rooted in Christian principles, Yale’s faculty have shifted toward secularism and collectivism, often undermining these values. Buckley controversially asserts that universities have a responsibility to their alumni, who he argues are generally more religious and conservative, and should therefore refrain from teaching doctrines like socialism, which he believes have been discredited. He also expresses concern that conservative and religious viewpoints are increasingly marginalized in academic discourse, leaving little room for debate or the inclusion of traditional perspectives.
7. Michael Gibson: Paper Belt On Fire. The book contains several good and timeless anecdotes about the Thiel Fellowship.
8. Philip Zelikow: The Road Less Traveled. Fascinating history book about the forgotten opportunity to call a conference for peace during the Winter of 1916/17 to end WWI. It teaches the attentive reader about the war aims of the British and there are several questions On War that I started looking into after reading the book.
9. Christopher Hitchens: Letters to a Young Contrarian. Massively overrated.
10. Vladimir Sergeyevich Solovyov: War, Progress, and the End of History. Recommended by Peter Thiel; I found it highly insightful. Solovyov is one of the Great Russian philosophers and Christian thinkers of the late 19th century that has been almost forgotten. I might read about it another time, but go read it in the meantime.
11. Tony Reinke: God, Technology, and The Christian Life.
12. Wendell Willkie: One World. Another recommendation by Peter Thiel; I enjoyed reading it. Former Republican presidential candidate Willkie worked with FDR. He traveled around the world and wrote about his observations of other countries and outlined his vision of a one-world government that seems quite dystopian to me.
13. Helmuth Plessner: Die Verspätete Nation (engl. The Belated Nation). Alex Karp analyzed parts of this book in his doctoral dissertation “Aggression in der Lebenswelt” (an English translation can be found here). The book paints a devastating picture on how Germany’s intellectual, cultural, and historical background led to the ideology of the Third Reich. Personally, I think Germany was a belated nation because it was still a monarchy in 1900 and never became a proper nation state before the wars.
14. Carl Schmitt: Gespräche über die Macht und den Zugang zum Machthaber (engl. Conversations about power and access to those in power).
15. Carl Schmitt: Die Tyrannei der Werte (engl. The Tyranny of Values). Written in 1960, this book offers a rarely heard but overly legalistic critique of the modern German constitution, arguing for a neutral legal order that – at least pretends – to tolerate diverging viewpoints instead of imposing “values” on its citizens. I’d caution against trusting Schmitt’s judgment in this specific work blindly, given his history of misjudgments, partially by being too legalistic, combined with the fact that Schmitt’s more famous writings criticized similar “neutral fictions” of the Weimarer Republik. The format of these short reviews is insufficient to trace the development of his political thought and speculate on the reasons for why he makes this turnaround in his stated thought, but such an inquiry seems beneficial.
16. Immanuel Kant: Zum Ewigen Frieden (engl. Perpetual Peace). I have studied Immanuel Kant reasonably deeply around six years ago; what is always most striking about reading Kant is how much trust he places in human reasoning and how his Copernian turn places free and sovereign individuals at the center of inquiry, trying to break away from imposing too many arbitrary restrictions from nature on them. This specific brief treatise must be understood in that light; he outlines how perpetual peace between sovereign individuals could be achieved and outlines what an international order and an enlightened international law needs to look like. It is fascinating how powerful this brief treatise has been; maybe one could even say that Kant was the intellectual founder of the UN. As mentioned previously, I am skeptical that a Kantian world order is achievable, as long as we don’t discover ways to alter human nature substantially, and as long as that is the case, there is quite a lot of danger in trying to implement it. And even if we could alter human nature, I am unsure whether that would be desirable, if the end goal is Kant’s vision of Perpetual Peace.
17. Ernst Jünger: Der Waldgang (engl. The Forest Passage). Jünger wrestles with the question of human nature in extreme situations, such as emergencies and catastrophes. As a conservative who opposed the Weimarer Republik but never joined the NSDAP, one can read the book as Jünger moving away from the political, narrowly understood, and as a part of his post-war reflection on individual resistance and inner emigration. Content aside, the prose is quite beautiful and can be considered a revival of forest mysticism in the mid-20th century.
18. Byung-Chul Han: Vom Verschwinden der Rituale (engl. The Disappearance of Rituals). Han is one of the more thought-provoking contemporary German philosophers, though I shall say that the bar for being thought-provoking in Germany is fairly low. His core argument – as I understand it – that rituals are a crucial aspect of the human experience and that a breakdown of rituals in modernity is causing human suffering and disorientation at large scale – seems certainly not too far-fetched to at least take seriously.
19. Byung-Chul Han: Psychopolitik (engl. Psychopolitics). 

Fiction

1. Richard Brautigan: In Watermelon Sugar. Maybe a little too post-modern and surreal for my taste.
2. John Williams. Stoner. I enjoyed this re-issued novel that is rightly considered to be one of the great American novels. It follows the quiet life of William Stoner, an English professor in Missouri, and does a great job of capturing the essence of an ordinary life. A good reminder that academic life is way too fierce, given the stakes involved, and how petty rivalries form.
3. Amin Maalouf: Samarkand. Great novel, especially if you haven’t thought about the Arab world in the early second millennium BC much.
4. Michel Houellebecq: Submission. I have had this controversial novel on my reading list for quite a while. I don’t think the narrative is fully descriptive or coherent, but I think it outlines what a potential muslim future for Europe could look like.
5. Kazuo Ishiguro: A Pale View of Hills.
6. Dan Brown: Origin. That one is quite cliche, but this is one of my favorite Dan Brown novels that I re-read recently.

I also re-read this speech that Tony Blair gave on globalization in 2005. Some of the essays I have been reading can be found on my bookshelf.

Spring 2024: What I Have been Reading

This essay can also be found on my Substack, where you can also subscribe to my future writing.

I have been reading more of the Great Books recently. I always had a propensity to get obsessed with a wide range of eclectic fields, such as cybernetics or differential geometry in the past, but only recently got into reading the Great Books more deeply. It now seems true that knowing the Great Books well has a high payoff – at the very least, it helps with thinking and writing.

Most of the books were recommended to me by friends based on my interests at the time. I have also been traveling a fair amount and visited a few bookstores, e.g. Daunt in London, Dog Eared Books in SF, and Unity Books in Auckland, where I picked books that seemed interesting. The former clearly leads to less quality variance and seems like the better approach, although visiting a bookstore like Daunt every now and then clearly seems worthwhile for getting exposure to different kinds of books.

I plan to share more of my readings every few months¹. If you know books that you think I should read, please DM me on Twitter. Note that none of my remarks are endorsements of the books, but rather commentary on my reading experience. If you would like to read longer book reviews in the future, let me know as well.

Fiction

1. Joan Didion: A Book of Common Prayer, Play It As It Lays, The Last Thing He Wanted, Democracy. Joan Didion is one of the best writers I have read so far. Although her New Journalism writing style lends itself better to non-fiction, I enjoyed all her fiction books as well. They are rather short and I finished every book in one sitting; Didion’s books are hard to put down.
2. Alan Paton: Cry, The Beloved Country. One of the best novels I have read this quarter. Paton is a Christian writer and the prose is beautiful with lots of stylistic overlap to the Bible. The plot is centered around families in South Africa shortly before the Apartheid regime and demonstrates the disorienting experience for tribal groups to settle into life in Johannesburg, the irrationality of gold markets, and the growing tensions between different social groups. Highly recommended.
3. Graham Greene: A Quiet American. I like Graham Greene as a writer but this book did not live up to my (evidently too high) expectations based on Greene’s experience as a war correspondent and my friends’ reception of the book. The plot is set in Vietnam after initial US involvement in the country. It contains a love triangle (some of the Great Books have much better articulations of them though, see Girard’s Deceit, Desire, and the Novel), American exceptionalism (Pley) and the experience of a journalist (like Greene). The book is not bad to be clear, but it did not seem outstanding to me either.
4. Hilary Mantel: An Experiment in Love. A coming-of-age book set in England in the 1960s, special emphasis on the complex class relations and the pressure to excel, from the perspective of Carmel, a poor English girl. A good summary can be found here. Thanks for the recommendation, Sam.
5. Werner Herzog: Vom Gehen im Eis (engl. Of Walking In Ice). Short and enjoyable reading experience, written by German movie director Werner Herzog. The book contains his diary entries for a walk from northern Germany to Paris after he learned that his friend Lotte Eisner is dying in Paris. Thanks for the recommendation, Demren.
6. David Benioff: City of Thieves. Good historical novel, set in WWII Leningrad. Not outstanding, but a fast and good read.
7. Donna Tartt: The Secret History. This is one of these books whose relevance I can conceptualize intellectually but cannot understand intuitively as a German; it is about the adventures of a small friend group studying the Classics with an eclectic professor at a liberal arts college. I do not love dark academia, but it is well-written. Thanks for the recommendation, Asher.
8. Daniel Suarez: Delta-v. A fine science-fiction book about asteroid mining with some interesting ideas, but shallow characters. I am probably going to finish the second book of the series eventually, but it is not a priority.

Non-Fiction

1. Joan Didion: The Year of Magical Thinking, Slouching Towards Bethlehem, The White Album, Blue Nights. All of them are great, but I like the first two the most. The Year of Magical Thinking is probably Didions’s most well-known book and a beautiful account of grief and mourning after the death of Didion’s husband; highly recommended. Slouching Towards Bethlehem is another well-known book on Counterculture in California by Didion; I first found the book through my interest in the history of SV and found it both beautifully written and insightful.
2. Annie Jacobsen: The Pentagon’s Brain, Nuclear War: A Scenario. Annie Jacobson is a great author and consistently picks topics around defense, security, and intelligence that capture the imagination of the masses. A key takeaway from Annie’s Nuclear War book is that “everyone loses” in the case of nuclear war. Highly recommended.
3. Leo Strauss: On Tyranny, Persecution and the Art of Writing.
4. Rene Girard: Resurrection from the Underground, Battling to The End. Resurrection: Girard’s interpretation of Dostoevsky’s texts remains timeless and made me put The Demon close to the top of my reading pile. Battling to The End: Strongly recommended for thinking about nuclear war in the 21st century and understanding Girard’s apocalyptic outlook on the future.
5. Karl Löwith: Meaning in History. Löwith introduces and comments on various historical accounts on the meaning of history and its theological implications. In contrast to most contemporary books, he works through these accounts anti-chronologically, which emphasizes how much our conception of history has changed over time, despite our belief in our omniscience about the nature and content of history.
6. Eric Voegelin: The New Science of Politics. Good book on Gnosticism and the problems of modern political theory.
7. Kishore Mahbubani: Has the West Lost It? A provocation by Singaporean Diplomat Mahbubani, who served as the President of the UN Security Council (2001/2). His theses seem more relevant today where we are facing an even stronger China and US foreign policy has come under more scrutiny.
8. Richard Sennett: The Corrosion of Character. Sennett follows-up to his book on American Class and argues that shorter tenure at American companies and more flexible working arrangements (time-wise and scope-wise), driven by automation, create severe problems for the modern Man. He observes that shorter economical processes infiltrate the family and the social life. It got me thinking about Communism in the current age: If Sennett is correct, why hasn’t there been a surge in Communist thought in a world of the “gig economy”? Is it because the rich paid off the poor?
9. Neema Parvini: Prophets of Doom. Similar to Löwith (but in chronological order), Parvini summarizes various accounts of “Grand history” with an emphasis on historians that theorize about the “lifecycle of civilisations”, including their eventual decline. It includes the thought of historians like Spengler or Toynbee. Pretty good although obviously inferior to reading the thinkers directly.
10. Neil Postman: Amusing Ourselves to Death. I have read some Neil Postman before and usually find his writing to summarize a pretty common sentiment in a more intellectual way. The same is true for Amusing Ourselves to Death, where Postman criticizes modern TV culture, how it creates a more shallow culture, and what the transition away from written culture to more oral culture means for us. Maybe we have less great novels published today because of TV?
11. Jennifer Pahlka: Recoding America. This is the kind of book that adds a lot of real-world context to a well-known problem: technological incompetence in the government. I usually don’t like these books; in this case, the context is actually useful because it emphasizes that conflicting and numerous regulations makes technological progress almost impossible. Thanks for the recommendation, Sam.
12. Marilynne Robinson: The Death of Adam. Robinson’s interview with Tyler is a good starting point if you have never thought about Calvinism before. The book contains ten essays on questions around Puritism (and why it is underrated) and religion and faith more broadly.
13. Keyu Jin: The New China Playbook. The first few chapters are useful for understanding China’s fertility crisis, how the one-child policy helped reduce career-related discrimination against women, and how state-owned enterprises work. The later chapters were not particularly interesting, mirroring common pro-China accounts. Reading views that one disagrees with seems underrated though.
14. A.C. Grayling: Who Owns the Moon? Not great for anyone with a basic understanding of space law, unfortunately. However, Grayling makes the important argument that (1) there is going to be fierce competition around moon resources and territory between different governments, (2) current treaties are an extraordinary achievement of international relations that could only be achieved in the political climate of the 1950s and 1960s but not today, and (3) these treaties are not sufficient to regulate or allocate moon resources and territories in the 21st century where the prospect of establishing infrastructure on the moon becomes more likely by the year.
15. James Dyson: Invention: A Life. I liked Dyson’s perspective on engineering, design, and being an entrepreneur in the UK.
16. Thomas Evan: The Road to Surrender. A 250-page account of how the US government thought about the Japan question after Germany’s surrender. It argues that nuking Japan was inevitable and illustrates how even after dropping the first nuke, Japanese government elites were highly reluctant to surrender unconditionally. The book could probably have been half the length.
17. Peter Thiel & David Sacks: The Diversity Myth.
18. Wang Huning: America Against America. Written by China’s “Chief Ideologue” and political scientist Wang Huning, the book reads like the Chinese version of Tocqueville’s Democracy in America. Huning writes about his visit to the US in the mid-1990s and mainly describes the tension between ideals and reality during his visit. Clearly influenced by Allan Bloom and somewhat reactionary, he presents himself as worried about American values, families, and tradition. He is puzzled by two phenomena: (1) How the US could rise to global dominance in less than 200 years, and (2) how the Chinese Empire with thousands of years of glory (stylized) decay so much. The translation in the printed version is terrible and most of Huning’s observations are banal; I enjoyed how he explains the concept of a credit card to Chinese people at home though. The most interesting parts of the book are the few critiques of America he offers from a Chinese perspective and how his thinking on this visit influenced his thinking on a Great Power Conflict. The book is apparently well-received and still widely-read in China.
19. Christian Brose: The Kill Chain. A good book; it argues that the DoD is not well-prepared for a Great Power conflict and that the US military is not taking sufficient action to leverage the information revolution.
20. Carl Schmitt: Land und Meer (engl. Land and Sea).
21. Heinrich Meier: Ein Dialog unter Anwesenden (engl. The Hidden Dialogue). Overrated and probably, at least partially, wrong and overstating the case. Robert Howse wrote a good rebuttal.
22. George Orwell: Books v. Cigarettes. Cute short stories by Orwell, recommended.
23. Norman Angell: The Great Illusion. The reason why this book is not commonly read today is that Angell (1872-1967) gets the future radically wrong. The 1933 Nobel Peace prize winner postulates in The Great Illusion, published in 1909, that the economic integration in Europe (mainly between Germany and the British empire) has grown so strong that a future war between them would be futile. He further argues that war would be economically and socially irrational, unlikely to ever start, and necessarily of short-lived nature. The most striking experience of engaging with the book was that a lot of contemporaries would not disagree with Angell’s arguments and perspectives, despite their historic track record.
24. Christopher Lasch: The Revolt of The Elites. Lasch offers a reasonably interesting critique of how modern elites share vices similar to past aristocratic elites but don’t share their virtues, while there is a growing disconnect and gap between the top and the bottom of the broader population. Written in the 1990s, the title is an antithesis to the 1929 essay The Revolt of the Masses and is still relevant today. Thanks for the recommendation, Linus.

Thanks for the helpful edits, Zi. C. (Sam) Huang. And thanks to all my friends for recommending books to me.

Why Automation saves Manufacturing

At the close of the 20th century, the prevailing belief was that the era of manufacturing in Western countries had drawn to a close. Yet, here we stand, at the dawn of a renaissance in American manufacturing: reshoring to the US has surged in recent years. Suddenly, restoring American manufacturing and innovation in manufacturing are at the forefront for startups – even VCs such as Y-Combinator and A16Z are supporting it.

In this piece, I will argue:

1. Tacit knowledge is critical for traditional manufacturing success,

2. Outsourcing delays the destruction of manufacturing,

3. Traditional interventions to preserve manufacturing are often counterproductive, and

4. Automation is the only way to preserve tacit knowledge.

Tacit knowledge is critical for traditional manufacturing success

It is a well-established empirical observation that manufacturing prices drop with increasing manufacturing experience. In 1936, T. P. Wright introduced the concept of “experience curve effects” to describe human capital effects in the manufacturing process. Simply speaking, he assumed that the cost of production decreases by a constant percentage point every time the output produced doubles – this is mainly because learning effects from the repetition of a task. The so-called learning percent is calculated by 1-improvement per doubling and the higher the learning percent, the lower the gains from additional experience.

High-precision manufacturing in industries such as airplane manufacturing or defense technology has higher experience payoffs. For instance, airplane manufacturing costs roughly drop by 15% for every doubling in output, while the manufacturing of raw materials has only a drop in costs of 3-7%. For illustration, TSMC relies heavily on the experience of Taiwanese workers in building a new factory in Arizona to ensure a “fast ramp up”.

In traditional cost estimates, higher shares of machining assembly (lower shares of hand assembly) lead to weaker experience effects. However, modern machinery has rendered most “hand assembly” unnecessary, but large and expensive machines now require more skilled workers to run the machines and set up the production process.

In industries such as semiconductor manufacturing, there are only a few machines of one kind (think ASML EUV lithography systems) with incredibly high upfront capital needs, which implies that (1) there are only few highly-skilled workers that can operate these machines and (2) these machines only break even with low to no downtime. These factors are amplified by monopolies – there are certain machines only operated by ASML.

There are headwinds that American manufacturing has to fight against: outsourcing pressure because of cheaper labor in Asia and retiring machinists. Outsourcing might lower costs in the short term but at the cost of the West losing tacit knowledge. 

Moreover, this loss of tacit knowledge is permanent. The permanence is due to two reasons: First, as one outsources manufacturing, there is little demand for more manufacturing workers, which leads to few young people entering the field. Second, the workers that used to have manufacturing knowledge are retiring now and mostly leave without passing on their tacit knowledge to apprentices because there are none.

Contrast manufacturing knowledge to formal software or academic knowledge. Academia is well-respected and legible which ensures a growing inflow of young, talented students. Moreover, the knowledge itself is captured in universities and code bases (e.g. Github or internal documentation) and there is a robust process of senior faculty members passing on tacit knowledge to young scholars.

Manufacturing knowledge is arguably more important, but predominantly captured in the minds of retiring machinists. The knowledge required to operate these modern machines is tacit because many modern machines have so little quantities that the costs of formalizing knowledge would be high and we did not respect machinists enough to consider their knowledge as important enough to justify the cost. Moreover, there are supporting developments such as: Modern manufacturing systems are much more sensitive to minor mistakes, factories are often built with older and newer machines that are incompatible with each other, high fragmentation of the manufacturing markets require good working relationships with other factories, and better maintenance of machines drive profits because of longer depreciation periods.

Finally, Taylor’s scientific management arguably failed for high-precision manufacturing – the knowledge required to produce these components is not procedural but in the machinists’ heads. My conjecture for why it failed is that labor got so cheap that we did not invest enough in procedural manufacturing advances.

A future research question would explore whether reshoring advanced manufacturing with lower experience curve effects has lower payoffs given that the loss in tacit knowledge is less severe. However, my intuition is that reshoring the production of certain raw materials and rare earth minerals does have strategic payoffs.

Outsourcing delays the destruction of manufacturing

In a world where US companies would not have outsourced manufacturing in tech-heavy industries to Asia, I suspect we would have seen more technological innovation for manufacturing. Instead of reducing prices by hiring cheap labor in Asia, American manufacturing companies would have been forced to develop best practices, find ways to create more automation processes than previously possible, and engage in freer and more transfer of knowledge. If American labor costs are much higher, they can only win on prices if the labor productivity is higher.

To illustrate the argument, we can look to Japan or Germany – two major developed economies that found ways to build an economy based on manufacturing excellence. While both countries are protectionist, they made manufacturing in Western countries feasible by using social and technological inventions such as Germany’s apprenticeship program or Japan’s Lean Manufacturing System.

If manufacturing would have been more attended to by software engineers in Silicon Valley, there would have been more and earlier software automation. However, Silicon Valley is growing up and many software engineers are realizing that building the next SaaS company is unlikely to be important or profitable, but bringing back manufacturing and building hardtech is. In a better world, manufacturing startups like Hadrian could have existed decades ago.

Instead, Western companies focused on cutting costs as much as possible in the short-term without investing in technological innovation. What we got is critical manufacturing outside of the Western sphere of influence where China can lock up IP easily. A telling example is the Arm China IP Theft.

If companies agree to cut costs by outsourcing manufacturing from America to Asia once, they will do it again – once the labor costs in the original country are too high. I think this is one cause for a phenomenon which Dani Rodrik called “premature deindustrialisation,” where deindustrialisation in developing economies happens earlier than economically optimal for the country.

An example for premature deindustrialisation would be redirecting outsourcing from China to Vietnam or Bangladesh, as Chinese labor became more than 8x more expensive than the 2000 price level.

Traditional Western interventions are counterproductive

Historically, keeping manufacturing in one location led to the creation of interest groups that tend to focus on achieving a local maxima of success. Labor unions exercised power through social instruments such as codetermination, strikes, or protectionism. For instance, labor unions often limit automation potential or try to maximize the number of jobs filled by local workers, over foreign workers with more specialized knowledge that could help with knowledge transfer.

In 2022, the CHIPS Act was launched to revive semiconductor manufacturing in the US. Under the CHIPS Act, TSMC decided to construct a semiconductor factory in Phoenix, AZ. The company planned to bring in Taiwanese workers to assist in setting up the complex and costly machinery, but labor unions attempted to block the move, citing concerns over foreign workers undercutting domestic wages. They contended that Intel workers in the US possessed sufficient tacit knowledge. TSMC and labor unions reached a high-level agreement eventually, but TSMC had to postpone the launch due to a shortage of skilled workers.

A social motivation for labor unions exercising their power is ideology. Preserving the local maxima of labor-intensive manufacturing in a country often defaults to anti-tech sentiments. This creates cultural forces and memes that are harmful for keeping price-competitive manufacturing in the country in the long-term.

Germany is emblematic of these developments. Consider the EU’s degrowth ideology and a tendency towards natural fallacies on “organically” produced products and anti-nuclear sentiment.

As soon as a manufacturing-heavy economy stops investing in the automation of manufacturing, incumbents and conglomerates tend to build strong competitive advantages over more dynamic, but smaller firms.

Take Airbus versus Boeing as an example. Boeing tried to position their core competency as “an assembler” of aircraft components, rather than a producer of critical core components. However, Boeing’s engineers stated that engineering knowledge on the components is required to successfully assemble planes. An early example of outsourcing destroying tacit manufacturing knowledge in the Western world.

Automation is the only way to preserves tacit knowledge

If we accept the premise that manufacturing knowledge is crucial for Western Dynamism, we need to find ways to manufacture price-competitive in the US without losing tacit knowledge. If we also accept the premise that traditional manufacturing interventions are counterproductive, we face a need for new innovation to solve the critical issue of reviving Western Manufacturing.

The problem that is being ignored is the one all companies like Hadrian face: they are working against the ticking time bomb of mass retirement of a generation of machinists whose latent knowledge and processes will retire with them. Governments can capture the lost jobs with subsidies and protectionism but startups must capture the lost knowledge with technology.

Hadrian uses technology as an opportunity to lower the burden of the talent shortage by automating as many tasks as possible and making the skill acquisition for the remaining tasks as simple as possible.

In order to achieve the necessary levels of efficiency, Hadrian pairs a software engineer from an inhouse team with a machinist to develop software to automate the high-precision manufacturing process as much as possible. Chris Power, Founder of Hadrian, estimates that Hadrian’s internal tooling can automate around 60 to 80% of tasks. For the remaining tasks, Hadrian builds process-driven software to enable rapid training within 30 to 90 days for every hire – even ones with no prior manufacturing experience.

Manufacturing is pretty fast in adopting innovation

Technology innovation in manufacturing needs to be accompanied by adequate social innovation. For instance, automation fears among blue-collar labor can be addressed by changing their incentive structure.

For instance, Hadrian issues equity to all manufacturing workers to ensure that machinists benefit from sharing their knowledge. Moreover, some machinists report that their jobs become more interesting after the most repetitive components are automated away.

The rapid iteration in the manufacturing industry to enhance productivity is not new. Manufacturing productivity increases historically happened faster than innovation in a broader economic context.

For illustration, consider the invention of the steam engine or “scientific management” in manufacturing. Both innovations replaced old processes and had an immediate impact on manufacturing productivity, lowering costs. Furthermore, manufacturing has historically faced low burdens of adoption, such as regulation, leading to more rapid adoption as a result.

Moreover, manufacturing advances can happen without major technological breakthroughs, while “Deep Tech” needs actual technological progress. In a world where technological progress is scarce, innovation happens through process- and business model-innovation. Lean Manufacturing was developed from the 1940s onwards and got its name in the 1980s.

The fact that startups can feasibly change incentive structures, combined with the industry’s historical quick adaptation to technological changes, makes me optimistic about the feasibility of reviving American manufacturing.

Conclusions

First, the outsourcing waves of the 20th century were disastrous for engineering companies such as Boeing and national security interests – F35 jets were only mission-capable 55% of the time because of unreliable replacement component supply.

Second, technology now has the potential of saving American manufacturing and in turn providing stable prosperity to machinists that SWE jobs once did.

Third, I think American manufacturing matters for “Deep Tech” startups because startups like Hadrian will enable faster feedback loops and increase reliability for startups producing hardware. We can’t move fast and break things if there’s not enough to move or break.

Thanks to Zi C. (Sam) Huang for extensive collaboration and editing.

Technology, Lawfare, and Finance in the Birth of Electricity

“The American way is to make money by creating wealth, not by suing people.” –Paul Graham

In the late 19th century, it was an open technological and economical question if the US electrical grid would be built with alternating current (AC) or direct current (DC). Both sides had strong inventors and financiers, with Thomas Edison backed by J.P. Morgan strongly favoring a DC grid, while Nikola Tesla and George Westinghouse favoring an AC grid.

Despite the pressure of patents, financiers, and the public, I argue that the technology intrinsics are determinative and drive the other pivot points in the path to infrastructure paradigm shifts. The adoption of AC could have looked very different, but I argue that AC would win no matter what as it was the superior technology at the time.

This is not to say that developing great technology would be sufficient for lasting success. Capturing value and a smart use of social technologies matter just as much in the process of commercialisation. This is exemplified by the rivalry between Edison and Westinghouse and their respective companies.

I think young technologists should look to history for how different social arrangements at the time shaped the way technology was developed and adopted and how actors used these social technologies for their advantage. In writing this piece, I hope to show that there is a push-pull relationship between the invention of technology and the creation of social devices – technology can lead to the creation of new social devices and social devices can lead to the invention of new technology. But in the end, technology always wins.

Backstory: The War on the Currents

“The War on the Currents” refers to the historical battle from around 1886 to 1892 between the proponents of direct current and alternating current in deciding which technology to adopt for building the electrical grid of the United States.

Presently, most consumer electronics like cellphones, LI batteries, or electric vehicles use DC. We use AC mostly to transmit electricity over long distances via high voltage lines.

In the early 1800s, electric light had not yet been invented in the United States. From the 1820s onwards, gas lamps were installed in public places in major cities across the United States. However, gas lamps could not be installed in homes at scale and needed a constant supply of gas.

Moreover, our understanding of electricity transmission was still in its early stages in the early 1800s. For instance, electromagnetic induction and self-induction were only discovered in 1831 and 1832 respectively, and turned out to be crucial in our understanding of electricity transmission.

Building on these discoveries, from the 1870s onwards, Thomas Edison and George Westinghouse competed for supremacy in the nascent electricity industry, engaging in battles over lightbulb patents, advocating for their respective standards in electricity transmission (DC for Edison and AC for Westinghouse/Tesla), and introducing new electric devices leveraging their chosen electricity standard (for instance, arc lamp street lighting for AC and incandescent lighting for DC).

The rivalry aimed not only at establishing an efficient electric grid but also at fulfilling the broader societal aspiration of bringing electric light to every home in the United States.

Technological Intrinsics: AC versus DC

The core challenge of building the energy grid of the United States was figuring out a way to transfer electricity over long distances without energy losses rendering it economically and technically infeasible. Energy transmission always involves losses because of resistive, capacitive, and inductive line losses. Transferring electricity over hundreds of miles requires small losses which were not technically achievable using DC at the time. This is what was called the distance problem of energy transmission.

We can demonstrate the severity of the distance problem by comparing the voltage losses between a cable with 12V 5A DC and another cable with 120V 0.5A DC. As a rule of thumb, the first cable experiences a loss of approximately 4% of its initial voltage over a distance of only one hundred meters (330 feet). In contrast, the second cable experiences only a 0.07% loss of the initial voltage. Evidently, high-voltage and low-current electricity exhibit lower losses for long-distance transmission.

For illustration of this observation, we can use Joule’s Law and Ohm’s Law. Joule’s Law states that \(P=I^2*R,\) where \(P\) is the power loss in an electrical circuit, \(I\) is the electric current, and \(R\) the resistance. The lower the electric current, the lower the resistive losses in a conductor. Combining this with Ohm’s law \(R=\frac{U}{I},\) we get that an increase in voltage leads to a decrease in electric current, keeping the resistance equal.

Today, we use voltages for long-distance AC transmission in the 100kV to 1MV range. However, household applications need voltages in the 100-300V range. If we want to leverage high voltages for long-distance transmission, we need an electric device that can increase and decrease the voltage as needed.

In the late 19th century, such a device did exist: the transformer. Transformers can be used to transform low-voltage, high-current electricity to high-voltage, low-current electricity, and vice versa. 

However, the transformers of the late 19th century had one major limitation: They only worked with alternating current and not with direct current. An equivalent device for DC, called DC-to-DC converter, was only invented in the 20th century.

Without the ability to use transformers, direct current was economically and technically doomed because the energy losses of transmitting DC at voltages in the household range were just too high. So high, in fact, that Thomas Edison needed a new power plant every mile or so to ensure that all households connected to it would receive sufficient energy to run a lightbulb.

As a result, DC won the War of the Currents. In 1902, the United States had 61% of generating capacity based on AC which increased to 95% in 1917.

Today, we use high-voltage DC (HVDC) electricity transmission. It works because we have found ways to increase and decrease the voltage for DC current using tools like a DC-to-DC converter. For long distances, DC lines are sometimes more effective than AC lines because AC lines have higher inductive resistance at long distances.

Another challenge for today’s AC-based electric grid is a growing share of DC generating capacity through renewable energy sources – like solar panels – and a growing DC consumption through new mass-market products like electric vehicles (EVs) with DC batteries. Reconciling the growing supply and demand of DC with a predominately AC-based grid, we need to transform DC to AC and AC to DC more frequently, resulting in increased energy losses.

For illustration, using an AC battery to save the excess energy of solar panels at down hours we need two of those transformations. Initially, the DC generated by the solar panels must be transformed into AC for storage. Subsequently, when the stored electricity is utilized, it undergoes a transformation from AC back to DC.

One way to increase the cost-effectiveness of renewable energy has been to build DC-based micro-grids for industrial complexes, residential areas, or energy-intensive industries such as manufacturing or semiconductors. One startup in the space is Direct Energy Partners.

Why was there a “War of the Currents” if AC was superior?

In hindsight, it is obvious that AC would have won the War of the Currents every time. AC was not only technologically superior for the reasons mentioned above but there was also no realistic pathway to make DC economically viable at the time – especially for areas less dense than cities like NYC. 

Edison’s bet on DC despite the superiority of AC might have been motivated by his large commercial interests in DC winning and his accumulation of non-technological assets: He held most of the relevant patents for DC, had a first-mover advantage, better financing through J.P. Morgan, more lobbying power in the US, and used public relations in an attempt to associate AC with the cruelty of the electric chair.

Specifically, Edison fought AC’s economic and technological superiority on three fronts using social technologies: patents, financiers, and in public opinion.

In the following, I will unpack how these different advantages looked like for Edison, how they shaped the fight around technology adoption, and why they were not sufficient in the end.

DC gains initial traction in the early 1880s

When Edison’s patent for an incandescent light bulb was granted in 1879, there was very limited infrastructure for electricity transmission in New York City. Previous infrastructure for energy transmission (e.g., steam, gas, and coal) did not aid in mass adoption and severely limited the range for energy transmission.

In 1882, the Edison Illuminating Company set up its first power station in Pearl Street, Manhattan in 1882 with a capacity to power 800 light bulbs. It was expanded to around 13,000 around a year later. 

But the early adoption of DC already proved to be challenging: It required a large generator that could power only small regions of New York City and they needed to connect houses with thick copper wires to reduce even stronger energy losses along the way of transportation.

Initially, Edison appeared unusually well-positioned to succeed as he was backed by the legendary financier J.P. Morgan. Morgan was among the first financiers willing to bet on technological breakthroughs and took high risks both by investing in Edison’s company and being the first to successfully electrify his home and to install Edison’s light bulbs in his home and office building. When Morgan hosted a large gathering with members of NYC’s elite, some ordered the electrification of their home immediately afterwards.

Financial backing was pivotal for Edison’s initial success, as the demand for the lightbulb induced demand for the electrification of homes. Edison’s lightbulb was among the first devices that required electricity in homes, whereas the arc light was exclusively used for outside lighting and only required electric lines over the streets.

Additionally, light bulb sales mattered in the early days of electricity adoption because it brought in critical revenue for future infrastructure and R&D investments and to achieve profitability to stay in business. In 1881, there were only a handful of electrified homes while a lightbulb cost around $1 which equates to around $30 today adjusted for inflation – broadly equivalent to a worker’s daily pay. In 1910, less than 15% of American homes were electrified but the cost for a lightbulb had fallen by more than 80% to only 17 cents (around $5.50 today).

What later turned out to be the biggest problems for DC adoption – the distance problem and the high costs – were circumvented in the early 1880s as distribution was initially limited to elites in NYC who could afford to pay the relatively high price for a lightbulb and lived within a dense area.

As we will see, Thomas Edison’s strong initial position did not lead to success as the impact of DC’s disadvantages became stronger over time as distribution widened.

The Rapid Rise of AC

AC saw a rapid rise in the late 19th century in the US. In 1882, AC electricity transmission and AC devices had not been shown to work in the US yet. In 1893, Westinghouse won two incredibly important bids with his AC technology: The electrification of The Chicago World’s Fair in 1893 and the Niagara Falls generation project in 1893. By 1902, the AC system installed at the Niagara Falls provided one-fifth of the American electric power supply. How was this rapid rise of AC possible?

Not surprisingly, AC proved to be cheaper than DC. For the Chicago Fair, General Electric’s DC bid was $554,000 while Westinghouse’s AC bid was just $399,000. For the Niagara Falls, AC was useful because it could easily transport the electricity over 26 miles to power Buffalo, NY.

Moreover, AC found powerful backers – both financial and technological. Among them, the most prominent actors were inventor Nikolai Tesla who worked with entrepreneur and engineer George Westinghouse in later years, and businessman Charles Coffin from the Thomas-Houston Electric Company who competed with Westinghouse and later merged with Edison’s company.

Initially, Westinghouse was working on DC products himself. However, a patent lawsuit with Edison made it increasingly hard for Westinghouse to come up with products that were sufficiently differentiated from Edison’s products to avoid patent infringements.

In 1885, Westinghouse became aware of the new European alternating current systems and began experimenting with AC networks in Pittsburgh.

He became increasingly committed to AC for economic and legal reasons. First, he noticed potential economies of scale advantages: Using AC, he could potentially serve larger areas at lower costs than Edison. Second, switching his products to AC would avoid most legal risks and would massively reduce the threat of Edison’s impending lawsuit that could force him to stop selling his DC products, if successful.

Nikola Tesla was originally Thomas Edison’s apprentice. However, Tesla left the company after only six months in 1885. In 1888, Tesla started working with Westinghouse after Westinghouse recognised his technical finesse and ambition. Westinghouse agreed to a generous licensing deal that allowed him to use Tesla’s patents for his AC motor and transformer designs.

With that in place, Westinghouse had assembled most critical pieces required to start building an AC-based electrical grid. His bet on AC was rewarded in the years that followed and led to his victory over Edison.

Edison’s Anti-AC PR Battle

Building the electric grid and the AC/DC rivalry naturally attracted much public attention. But electricity was not just another invention, it had a unique effect on public psychology.

Electricity was poorly understood by the American public at the time and the “invisible force” of electricity could have disastrous effects if not used cautiously. Furthermore, harnessing electricity for everyday use for many felt like a Prometheus-like act.

Public fear was further increased by accidental electrocutions of construction workers. Within a two-year period in New York, ninety accidental electrocutions occured.  These accidents resulted in public resentment against high voltage AC and Brush Electric’s corporate practices. The accidental electrocution of line worker John Feeks in front of a crowd in New York City is called the “Electric Wire Panic” and was probably the peak in public fear.

Building on these existing fears, Edison found fertile ground to try amplifying anti-AC sentiments in the population using propaganda and misinformation. If he could redirect public outcry over electricity risks to AC risks, Edison expected he could further stigmatize AC or potentially get AC banned entirely.

Edison likely colluded with engineer Harold P. Brown who demonstrated the alleged dangers of AC by publicly electrocuting animals. Brown also lobbied to limit AC transmission line voltages to 300 volts which would have massively reduced its superiority over AC.

The Electric Chair 

For the government at the time, these instantaneous deaths were turned from a bug to a feature with the invention of the electric chair.

In an attempt to associate AC with executions, Edison and Brown lobbied for the adoption of an electric chair running on AC – despite Edison’s stance against capital punishments. Edison went as far to suggest replacing the term electrocution with being “Westinghoused” and said that AC would kill a man “in the ten-thousandth part of a second.”

A friend of Westinghouse’s, William Cockran, filed an appeal to the Supreme Court in an attempt to stop the use of an electric chair running on AC and argued that the punishment was “cruel and unusual” punishment which is against the US constitutions.

The appeal failed and Kemmler was executed using an electric chair running on AC on August 6, 1890. However, the procedure was not finished in microseconds but took eight minutes instead. It was described as cruel and inhumane and Kemmler died an incredibly slow and painful death as he was basically cooked alive.

After 1889, public opinion started to slowly turn against Edison as Edison’s smear tactics were exposed to the public and the economic and technological superiority of AC became more and more obvious.

The Age of Patents and Lawyers

The War of the Currents involved various lawsuits and indicates a clear tendency for corporate competition to become more legalized.

Patent Monopolies

In the late 19th century, the US saw a series of inventions with the potential to change the day-to-day of every American – the telegraph, the telephone, the lightbulb, and electricity, etc.

For each of these inventions, there was more than one inventor working on a similar technology and competition to get to market first. Competition between inventors was increased by a permissive patent office. Approved patents often had a wide-reaching scope of what counted as patent infringement.

The wide-reaching scope of patents and the libertarian patent policies of the time also led to an increase in patent lawsuits. Some of these lawsuits are still used as precedents today.

For instance, the lawsuit Hotchkiss v. Greenwood in 1850 established the concept that a new invention that seeks patent protection cannot be obvious to a person of average skill in the craft.

It is unclear which way the casual relationship goes between patents and innovation in this case.

The opportunity to start an electricity monopoly from scratch protected by wide-reaching patents was one reason for Edison’s dogmatic stance for DC as well as J.P. Morgan’s generous financial backing. 

These incentives were also reason enough to pursue numerous and more complex patent lawsuits for competitors of patent holders in an attempt to prevent or break their monopolies.

Edison’s Patent Infringement Lawsuit

In Edison’s attempt to build a DC monopoly, Edison sued Westinghouse in 1888 over patent infringements for the incandescent light bulb in an attempt to take Westinghouse’s products off the market. 

As outlined above, lightbulb sales brought in critical revenue for future investments. Edison wanted to cut Westinghouse off from this critical revenue from lightbulb sales and drive him out of business this way. His legal strategy was to overwhelm Westinghouse with paperwork – filing a total of 312 lawsuits against Westinghouse and his suppliers and friends.

In response, Westinghouse fought the patent battles on two grounds:

First, he acquired patents for alternative lightbulb concepts to come up with lightbulbs that he could continue to sell in the case he lost the lawsuit against Edison. For that purpose, in 1888, Westinghouse acquired a company called Consolidated Electric Light which included the patents filed by the two inventors William Sawyer and Albon Man. They hold patents for a so-called “stopper lamp” that had been held up in court against Edison’s patents.

Second, Westinghouse and his lawyer tried prolonging the lawsuit as much as possible. A delayed verdict was a victory for Westinghouse as in the interim he could continue to sell his light bulbs during that time – as there was no injunction.

Legal Innovation: The Cravath System

George Westinghouse appointed the young Paul Drennan Cravath to be his lawyer in the patent lawsuit. Cravath would later become a partner of the law firm that is known today as Cravath, Swaine & Moore. In order to handle the unprecedented amount of paperwork involved in these trials, Cravath came up with what is known today as the “Cravath System”.

The core strategy of the Cravath system was to hire associates that were assigned to a partner for a limited amount of time. In that capacity, the partner would translate a complex case into smaller pieces of schlep work that would be executed by an associate. Many law firms still rely on successors of the Cravath system.

In late 1895, Westinghouse and Cravath lost the lawsuit in the Supreme Court. The court ruled that the patents that Westinghouse acquired “are too indefinite to be the subject of a valid monopoly”.

However, the victory in court was a pyrrhic victory for Edison because the Edison patent was due to expire in early 1897 after the lawsuit had dragged on for years. Moreover, the court affirmed that Westinghouse’s alternative lightbulb designs were not protected by the Edison patent. As Westinghouse had finished the development of an alternative lightbulb design at the time of the verdict, the result of the lawsuit had only limited impact on the Westinghouse business.

While patent lawsuits were not unique to the nascent electrical industry, patent lawsuits did become central to the strategy of each electricity company because the commercial opportunity of an electricity monopoly protected by patents was incredibly appealing. For illustration, the patent lawsuit Edison vs. Westinghouse had damages estimated at around one billion dollars (around $25bn today).

However, electricity companies could afford to appeal the rulings of every instance while continuing to violate patents as the lawsuit dragged on – the benefit of continuing to sell lightbulbs in the markets was higher than the anticipated legal costs.

As a result, these lawsuits became more complex and had higher stakes than ever before and gave birth to patent litigation as an industry.

Monopolization and The Age of Financiers

The major inventors of their time – Edison, Westinghouse, Tesla, Bell, among others – were all bankrolled by members of the financial elite of the East Coast. The financial backing was necessary to fund required initial investments.

Around 1888, most electricity companies were still operating at losses. R&D and infrastructure investments were capital-intensive and only yielded returns years later. To build up initial demand, the electricity companies often subsidized their products in the hope that scaling effects would recur in costs as more customers were connected to the grid.

At the same time, there were around fifteen relevant electric companies competing for market share in the nascent electricity market. The three major companies at the time were: Westinghouse, Edison General Electric, and Thomson-Houston. High competition increased pricing pressure even more.

In this highly competitive environment, Edison was struggling to realize the monopoly he envisioned when he filed for his patents years earlier and J.P. Morgan grew increasingly frustrated with his investment.

Consolidation Driven by Financier’s interests

In 1889, Edison lost majority control of his company in a merger that led to the formation of Edison General Electric. In the same year, some subsidiaries of his company started to lobby for the use of AC technology and in 1890, Edison Machine Works began developing AC-based equipment.

In 1890, Thomas Edison’s dogmatic stance against AC was the main reason for the continuation of the War of the Currents. However, it slowly became obvious that Edison’s decisions were actively hurting his electricity company as Edison’s profits were much lower than Westinghouse’s profits. Edison was under increasing pressure from inside the company and increasingly from J.P. Morgan himself.

Three years later in 1892, Edison’s financier J.P. Morgan decided to oust Edison. Morgan engineered a deal behind the backs of the management of Edison General Electric and Thomas Edison to merge with AC-proponent Thomson-Houston. He put Thomson-Houston’s board in charge of the new company that was now called General Electric. Edison’s name was removed and the new management decided that General Electric would use AC in the future.

The rapid consolidation between 1888 and 1893 was driven by a financial downturn in 1890/91, the Baring crisis, that caused all electricity companies major cash flow issues as lenders called back their loans.

The War of the Currents ends and Monopolies Emerge

The removal of Edison and GE’s turn to AC effectively ended the War of the Currents as there was no company left that favored DC.

In 1896, after a long and costly patent litigation battle and failed takeover attempts, General Electric and Westinghouse signed a patent sharing agreement to avoid further litigation and the high costs involved.

Westinghouse and GE granted each other licensing agreements for all patents, other than GE’s lightbulb patents. The agreement was in GE’s favor and was a first step in GE’s rise to dominance. Later, GE established a monopoly in the lighting market which led to an immediate price increase of around 30%. But this is an episode that is outside the scope of this post.

Did Thomas Edison actually know that AC was superior? After some research, there seems to be little consensus among different biographers and historians.

Conclusions

In closing, here are my thoughts on what we can learn about the link between technological progress and new social technologies from the War of the Currents.

First, patent fights, associate systems, and public relations battles waged by technologists are downstream from technology development. For instance, Cravath’s law firm reacted to the changing needs of George Westinghouse by inventing new social technologies such as the Cravath system.

Although these social inventions seem determinative in the fog of war, the characteristics of technology itself carves the path for technology adoption. As contemporaries, we cannot trust that initially successful social institutions are good predictors of technological superiority and it is easy to overstate their importance. However, we can trust that newly emerging social institutions are usually good predictors of a change in the way companies compete – the emergence of the associate system pointed to a legalized future of competition in the electricity business.

Moreover, the War of the Currents is a counterexample to the argument that only social innovations – such as the creation of the Limited Liability Company – lead to technological innovation – like the emergence of VCs.

Second, public infrastructure projects create different competitive dynamics. Given the wide reach of patents at the time, we would expect less competition on priors. However, the market opportunity of creating the electric grid for the United States was huge. These high stakes were strong enough reasons for commercial actors to invent new social technologies to sidestep regulatory constraints for market entry. Successful social institutions matter for market entry and commercialisation of technology. But if the technological basis is inferior, there is only so much ground they can cover.

Third, American inventors and their financiers in the late 19th century seem underrated or missing entirely in common accounts of the history of risk-capital. Instead, accounts go from the Whaling industry right to the American military complex, the VC firms around East Coast Families, and Arthur Rock.

However, private financiers like J.P. Morgan made investments into the telephone, the lightbulb, and the electric grid in the late 19th century. Although their investment structure and the investments themselves did not have the structure that is now common for Venture Capital, they are illustrative of the core characteristics of venture: investment in nascent technology that is driven by one entrepreneur with a high risk of failure.

Fourth, the rivalry between technology firms at the time involved more violent means, but were fought at similar fronts to modern corporate rivalries. The story is also a testament to the need to meet competitor’s attacks using adequate countermeasures – like Westinghouse who fought against the electric chair in the Supreme Court and entered alliances with engineers such as the one with Nikola Tesla to win.

Lastly, there are long-distance DC lines and DC microgrids today. Technological determinism is often a local maxima, with each advancement a new moat forms and an old one falls.

Maybe Thomas Edison was not too wrong after all.

Thanks to Zi C. (Sam) Huang for extensive collaboration and editing.

Suggested Readings

1. Graham Moore, The Last Days of Night.

2. Jill Jonnes, Empires of Light: Edison, Tesla, Westinghouse, and the Race to Electrify the World.

3. Tim Wu, The Master Switch: The Rise and Fall of Information Empires.

An Early Studies Bildungsroman

When I get asked to introduce myself, there are a few different stories I tell depending on the context and the audience. The one that piques the highest amount of curiosity is the one about my early adolescent education: I started taking advanced university courses in theoretical physics when I was thirteen years old – shortly after I had skipped a grade.

In my day-to-day life as an investor, I meet many (highly) gifted and talented individuals and many are curious about this part of my life as well. As a researcher, I have done some light research on gifted education and talent search.

Taking university courses early was one of the best decisions I made. I think there are many more students out there that would benefit from it, but there are constraints that hinder it. In writing this, I hope my experience can illuminate a path for others hoping to take university courses early.

Please have a very low bar to reaching out to me at janniklschilling (at) gmail.com. I would be particularly interested in hearing from you, if your experience was fundamentally different or you have thoughts on gifted education in other regions or with different institutions.

What happened at age thirteen?

I learned how to code when I was around nine years old. I got into it because I was curious about computers and had done some basic hardware experiments with an Arduino. So, I asked my dad to buy me a book to learn how to code. He got me an introductory book to learn Python.

Over the next two years, I became decent at doing small-ish projects in Python. I learned more programming languages for other applications, like Java for some OOP.

Over time, I came across much more interesting problems. But I realized they were beyond my mathematical ability at the time. So, I started learning advanced math when I was around 12 years old. I think I completed the entire high school math curriculum around six months later.

At this time, I was not aware of the possibility yet that I could take advanced math courses at a local university, the University of Hamburg. One has to go through a somewhat lengthy process, so instead, I watched online lectures on topics that I was interested in.

I had also skipped a grade when I was around that age. In hindsight, this was a crucial experience for me as I finally had an opportunity to prove to myself that I could learn very fast on my own, even outside of formal structures. I think I have always been an autodidact, so these things came fairly natural to me.

Why not earlier? In primary school, I had realized that I finished every task much faster than everyone around me, but I still lacked the meta-cognitive abilities to draw the right conclusion and start looking for the right things to learn online. At the time, I was quite reluctant to learn content that was broadly ahead of the age-appropriate content because I knew I would be even more bored three months or one year later.

However, I was doing some other fun math things with my dad. In second grade – I must have been around eight or nine years old –, I asked my parents to give me a graphical calculator (the Texas Instruments TI-84 Plus C Silver Edition) for my birthday. We wrote some programs on it to calculate the volume of various bodies in our house. For that, we derived the formulas together and afterwards confirmed that they were correct in a formula collection (“The Bronstein Handbook of Mathematics”). Through that, I saw lots of other formulas and got interested in other areas of Maths. For instance, when I was in third grade, I found the “TAN” button on my calculator and asked my dad to explain what that was.

Why not later? I was impatient and had the feeling that I lacked something to take my studies to the next level. I was also quite bored with normal courses in my school. And I knew that I could do much more demanding studies.

Would there be benefits from starting later? Not really. Maybe I would have spent more time socializing with students, but I don’t really feel as if I was missing out.

In hindsight, the biggest benefit of taking university courses so early was not what I learnt itself, but the information it provided me about myself. Most people who learn about my past are surprised that I did not end up as an academic. And I think that is reasonable, as becoming an academic clearly seems to be the default path for most child prodigies. When I was 14, I worked with a research group on Star Formation and Galaxy Simulations. While the work was certainly intellectually interesting, I realized pretty fast that I was not the type for the kind of meticulous work on small projects within a highly specialized area that might never lead to new discoveries. Additionally, the kind of theoretical physics I was most interested in (a subset of General Relativity Theory) was not taught or researched at the University, partly because there is not that much research interest these days.

How did I decide early studies was for me?

I just knew it was right for me. It is not that I was not worried about this decision, but I knew this was basically my only chance to make the next five years in school bearable.

There is a distinct memory that I can point to about when it became clear to me that I could not just sit in school and nod-along with the curriculum. Right after I skipped a grade, I was really into math and wanted to learn more. So I asked my teacher about the things I was interested in – how to solve easy integrals, etc. – and they said that I should not be interested in these questions because I would be bored four years later. That day, I started watching lots of explanatory math videos.

What were my other options and why did I eliminate them?

Looking back, here are some of the options I considered and my thinking about them.

Why do most people decide not to do early studies?

For a suitable student, someone with the ability and aptitude, there are three common reasons for why students do not end up taking university courses early:

1. Not knowing about early studies,
2. Administrative and logistical constraints,
3. Permission constraints and social dynamics (parents, teachers, peers).

The biggest constraint seems to be the first – that too few people know about this. If you know someone who would benefit from knowing about early studies, please feel free to share my email and/or this blog. Just one more teacher, parent, or student who counterfactually knows and can experience the same enrichment I did makes this post worth it.

The second and third constraints seem rarer to me, but are more annoying. In the following, I will share what the application process looked like and some general ideas on how to navigate the school system.

When I applied for early studies in 2018, the process I took looked something like this (stylised for brevity):

1. Get my parent’s approval,
2. Get my headmaster’s written approval and recommendation,
3. Get a teacher to write a recommendation letter,
4. Submit an online application,
5. Get an appointment with a student advisor for an interview. She asked me questions around physics, how I would handle the workload, what my motivations were etc. I suspect that my interview was particularly long because I was so young. For context: most students that end up doing early studies are around 17 years old.
6. Approval by the faculty and enrollment in courses.

I think the process itself is generally quite straightforward. Unfortunately, some high schools make it unnecessarily hard and I have heard from one case where the headmaster vetoed this. Building a good relationship with my headmaster through engagement with the school has been helpful for me. For most schools, there is no precedent and this process can feel quite tedious. 

For the interview, I think the best advice is having good grades, a clear plan for how to navigate the school system, and good subject understanding (someone got rejected from doing early studies in Philosophy because they had never read a Kant before).

Logistics

Most of my early studies experience was in 2018 and 2019. I attended University around 2-3 times a week to attend lectures and tutorials. I attended an information seminar in November 2017, applied in January 2018, and started studying in March 2018.

1. Transport: I took the train from my school to the City of Hamburg which takes around 1hr.
2. Safety: Germany is quite safe. I rarely felt in any kind of danger. I was mostly taking the same train rides every single time and soon knew what to avoid.
3. Parental involvement: My parents accompanied me to an information session in the beginning. They made sure that I knew the way and had all the things I needed in the beginning (enough money, my ID card, etc.), but overall they were willing to give me a lot of responsibility.

4. Failing classes: It does not seem to be super common to fail lots of classes when doing early studies based on my friends’ experiences (n=5).

5. Balancing high school and early studies: In order to do early studies, my school (including the headmaster and all my teachers) ultimately had to agree to me doing this. After I had the approval from my headmaster, it was much easier to convince my teachers. I was going to school regularly for around two days a week, where I just attended the normal lessons (although I took the 11th grade math lessons when I was in 7th grade). Because I was quite well read, I found school to be really low effort and spent hardly any time on homework each week. For the 3-ish days that I was missing, I had my friends send me the material and looked at what they did. For most subjects, this was sufficient as long as I got a great grade at the exams that I had to attend. Often, I had to do a project as make-up work and to substitute my oral participation. This took a few hours, but thankfully happened only twice a year. As I took advanced courses in the natural sciences, I never had to do any work for any natural science, cs, or math because I knew the material inside-out. With some of my teachers, I also had a gentleman’s agreement that I did not have to participate in their lessons (i.e., just sit in the back and do PSets), unless there was a hard problem that only I could solve.

As a note of caution, these arrangements only worked because I was still getting perfect grades in basically every subject. I would have gotten a lot of pushback if I would have started to get substantially worse grades.

How was the early studies experience different from that of regular university students?

I was a non-degree seeking student. That means that I was not eligible for discounted meals, any scholarships, or even most of the student discounts that regular students can use.

On the flipside, one could fail exams as often as needed (whereas regular students get exmatriculated after a failed third attempt for any given one exam) and could retake exams as a regular student, if one wishes to do so. Obviously, one does not have to take them again if one is satisfied with the results.

Considering the social aspects, there was clearly a difference in interests and life stage between me and most of the other students. However, I think this is more a feature of the German university sorting system and this would not have been substantially different five years later. I socialized with a very limited set of students who were mostly academically successful. Personally, I did not feel that I was missing out on a lot, but I never had a strong desire for parties or similar activities.

In terms of soft skills, I learned a fair amount – like giving academic presentations, some mild teaching, and research – but I suspect I would have learned marginally more as a regular student. I could not be a paid TA/RA because of child labor protection regulation, for instance.

What were the constraints for making this much more effective?

If your benchmark for this is another gifted student in Germany, my school experience was superb. If your benchmark is the best case for child prodigies that is sometimes achieved in other countries, there are lots of low-hanging fruits to make early studies much more effective. If you face any of these constraints, please let me know and I might be able to help.

1. Financial constraints: As a child, you have limited pocket money that is most likely not sufficient for self-funding this. You kind of need your parents to pay for arising expenses. Textbooks are quite expensive –  I think my parents spend around $1k for various textbooks. Because I was a non degree-seeking student, I was not eligible for any scholarships.

2. Lack of tacit knowledge: For early studies students, there are more obstacles that regular students do not face. There is also much less explicit support and I had to figure out most things on my own. I would have benefited a lot from knowing someone with a lot of tacit knowledge. This knowledge is mainly tacit because there are so few people that are confronted with these problems.

3. Specific problems that arise here: How much prerequisite knowledge should you know before starting studies? How do you acquire knowledge when you are missing lots of the regular university lectures? How can you convince professors to make exceptions for you because of your constraints? – i.e., not turning up to hand in PSets but sending them via email, etc.

4. Lack of a community of similarly-minded people: Although I participated in most (?) of the gifted education offerings in Germany, I don’t think I met anyone who had similar levels of talent to me until I was around 17 or 18 years old and went to a fellowship program in the United States. There was a lack of connection between other students that did early studies and most were much older and less talented – because they used the program to test what they would study six months later and not because they were deeply curious and prodigious. In turn, transfer of tacit knowledge, strategizing on how to deal with administrative and bureaucratic constraints, etc. are limited and concentrated on a grade 12 student testing for fit instead of a 13 year old pushing their limits.

Next steps

In closing, I want to emphasize how important and trajectory-changing early studies can be. They were for me. They not only showed me how beautiful theoretical physics is and taught me an awful lot of math. But early studies also helped me figure out that I don’t want to become a theoretical physicist and helped me prove my academic potential to myself.

Acknowledging all of the barriers outlines earlier, and that I was an anomaly, here are some things that I would like to do in the future:

First, I would love to help more young students figure out how they can push their aptitudes and aspirations – both in Germany and elsewhere. If there is anything I could be helpful with, please reach out to me. I know many students that were prodigious and have advice and guidance on how to navigate different education systems and self-study different subjects. I also know some funding opportunities and organizations that support gifted children.

Second, I think it would be valuable to compile more resources on what areas of science prodigies can look at, where they can find great textbooks and lectures, how they can navigate the university system in different countries, etc. This piece is hopefully the first step in this.

Third, I would like to learn more from the experiences of others and build support systems for them – especially those in contexts like Germany where the systems are idiosyncratic. If you’re interested in this too, please reach out.

Thanks to Zi C. (Sam) Huang for helpful contributions and editing.

From Germany to Silicon Valley

I am currently in the process of obtaining a visa to move to the Bay Area. I was recently reflecting on all the ways this was not inevitable and how much my relationship to Silicon Valley has changed in the past five years.

Growing up in Germany, I dismissed Silicon Valley when I was around age 14. Having never left Europe, I found its allure to many smart people quite puzzling. The aesthetics seemed off, the discourse overly simplistic, and the underlying ideology a bit strange. I was sceptical of Silicon Valley’s reputation for agglomerating exceptional talent.

Around the same time, I was extensively searching for exceptional peers within Germany. The results were disappointing, in part because I confined my search to talent clusters that seemed legible to me then. This limitation hindered my ability to find the kind of talent I was looking for.

I remember taking the notion seriously that Silicon Valley was a key driver of progress. However, I considered the unique dynamics surrounding it to be mere coincidences, rather than essential elements to its success.

It turns out that they are not coincidences and I was wrong. In fact, I believe that this was one of my substantial intellectual mistakes so far, as I risked not being embedded in what I now view as the world’s best place for weird people interested in starting technology companies. Many of my talented friends today live in the Bay Area.

What did I miss? It now seems true that the most important peer groups of their time often appear strange in their own unique ways to outsiders. Because of that fact, there’s immense power in a group of talented individuals sharing a set of ideas, norms, and values that seems self-evident internally but weird externally. I think that very notion is quite hard for most Germans to understand, until they have experienced it.

This matters, as Germany does not naturally guide its talented towards important peer groups.

I hope that this blog is helpful for some young, talented people in Germany to understand the dynamics they are embedded within, and hopefully helps them notice the real potential of their talents.

Reading about these ideas never felt sufficient, so I thought about ways to help young talent in Germany get started on a journey similar to mine. I am hosting a get together in Germany to discuss these ideas and share experiences. If you are reading this and want to join, please send me a short email at janniklschilling@gmail.com.

Thanks to Arnaud Schenk and Matt Clifford for insightful conversations and edits.