The Transition from Knowledge Work to Entrepreneurship

In 1900, about 10% of American teenagers were enrolled in high school. By 2000, only about 10% were not.

Within the next 20 years, something similar will happen with the share of workers who become entrepreneurs.

For a generation or more, there have been two routes to financial prosperity. One was to become a knowledge worker with the right credentials: an engineering degree, an MBA, a law degree. The other was to become an entrepreneur, whether painting on a large canvas like the luminaries of Silicon Valley or working out of the limelight to build a business that quietly makes you a deca- or centimillionaire.

The percentage who take the second route today? Closer to 1900’s 10% than 2000’s 90%. That number is about to change, and so is the way people get there.

AI will do two things. It will make a career as a traditional knowledge worker more challenging, slowing or even reversing the growth in cognitive occupations. And agentic AI in particular will make it far easier to become an entrepreneur.

Which companies will become enormously valuable? The ones that realize they are no longer hiring and managing knowledge workers. They are building teams of people who combine their expertise with agentic AI to do what we used to call entrepreneurship.

What does an internal entrepreneur look like? Someone who finds a new market for an existing product, or creates a new product for existing customers.

What systems will support them? Picture companies regularly running their own version of Shark Tank: employees pitch initiatives, and sponsors inside the company, including fellow employees, decide whether to invest or pass.

In the 1900s, we built the norms, the institutions, and the investments that made education the default for young people. Successful companies and communities will now do the same for entrepreneurship, making it the default for the people we used to call employees.

Industrial equipment made manual work less necessary and knowledge work more necessary. AI will do the same to knowledge work and entrepreneurship.

You can be at the front of this parade or the back.

Four Americas Past and the Future America - a short video

 New Politics for the Next Economy high level ideas captured in 80 seconds of video.

Social Evolution, AI, and Human Possibility

 

A central idea within my new book, New Politics for the Next Economy.

Viral

 MAHA.

The folks who've made antivax go viral.

In Which Your Blogger Continues His Fascination With the Wildly Different Market Treatment of Nvidia and Tesla

The NASDAQ 100 has an average P/E of about 28. This table illustrates both the current reality of Tesla and Nvidia's share prices and what those stocks would be priced at today assuming their most recent earnings report was used to calculate current price at the typical P/E of 28.

Simply pricing the two stocks like every other NASDAQ stock would mean a drop in stock price of 93% for Tesla, and would mean a rise in stock price for Nvidia of 28%.

Snapshots of Possible Futures

Volatility in stock prices will be greater the wider the range possibilities. We're trying to value and define possible futures and those two tasks are entangled.

We look into the future through a device - our collective imagination, really - that behaves at times like a telescope and at other times like a kaleidoscope. One person looks into this market and sees utopia and another sees dystopia and another walks away with a black eye.

The market price is always just one snapshot in the ongoing, dynamic negotiation between possible futures. About the only certainty is that tomorrow's closing price will be different than today's. Every second the market has second thoughts about what it just paid and changes that price.

Bubbles to Bargains - Today's Closing Price of Selected Stocks

 

Bargains?
Micron & Nvidia

Discounted?
Alphabet - Google 

Fair price?
Coca-Cola

Over-priced?
Costco

Bubble?
Tesla

The older I get, the less I believe in the efficient market hypothesis. I think you just have to choose between the delusions and perceptions and then hope that the future no one knows about will tilt in your direction. 

More Than a Trillion Dollars In Value Liquidated

Nvidia has lost roughly $1.5 trillion in value in the last month.

Out of the roughly 50,000 companies publicly traded companies around the globe, only 10 are valued at more than one trillion dollars, and only 8 - including Nvidia - are valued as much as the $1.5 trillion Nvidia has lost in value since early October.

And yes, I have been very bullish on Nvidia.

Trump Broke the GOP

If Trump's political career had ended on January 6th when his people stormed the Capitol to halt the election, the Republican Party might have shared political power in DC for decades more. That is, if the GOP's response to Trump had been led by Mitt Romney, Liz Cheney and Adam Kinzinger rather than folks like Lindsey Graham and Mitch McConnell, the GOP would have had a chance to share power for another generation.

Given it did not, Trump has ended the GOP's influence as a national party. Having three times nominated him as the head of its party, the GOP's brand and philosophy is entangled with Trump's for the next generation. That will end its prospects for holding national power for decades. If it renounces Trump, it will lose his hardcore supporters, which will bar it from national victory. If it continues to praise Trump, it will lose the former Republican voters who are now so disillusioned by the man.

Given how out of synch Trump's worldview is with reality, there were three possibilities when he ran in 2016.

1. He could have destroyed his own political career in that run, dismissed as less a politician than a personality, someone closer to Rush Limbaugh than Ronald Reagan.

2. He could have be in power long enough to expose his worst policies and impulses, destroying the Republican Party brand as those policies made America worse, not greater, by which point Trump's reputation and the Republican brand were hopelessly entangled. Evidence for this would include Texas, which experienced a huge shift from red to blue in last week's election.

3. He could have permanently changed America, destroying its place as the hub of a vibrant global economy and a model of liberal democracy.

Ruin was inevitable. The only question is at which level: personal, political party or national. He seems to have ruined the Republican Party. I'm optimistic that he hasn't ruined the country yet, even if it will need repairs and remodeling once he is out of office.

Russia and Ukraine vs. US and Iran

Just one of the reasons a democracy is better than a dictatorship? A democracy doesn't have to lose half a million men before it changes policy.

Total Russian casualties from its invasion of Ukraine is approaching 1.6 million. In addition to missing or wounded, this includes nearly 500,000 killed.

Putin is a dictator. The fact that Russians may find this unacceptable has not led him to end this war.

Trump initiated a war against Iran that has killed about 25 Americans and wounded 865. Between that and what the war has meant for gas prices, Americans basically voted against Trump's party and his war. (And yes, I realize it will likely take time to extricate ourselves from Iran but last week's election accelerated the end of the war.)

Even if democracies were just as likely to make errors as dictatorships, they would win simply because they have better mechanisms for error correction and they have to please so many more people. A democracy is less likely to engage in activity that will hurt a lot of people and more likely to correct itself when it does. 

Electoral Dysfunction

At 80, Trump became the oldest president to face a midterm. Doctors say electoral dysfunction is common at that age.

Ask your doctor if a second term is right for you.

1776: Three Revolutions Later, Nobody Rides in the Trunk

1776.

250 years ago.

An inflection point in human history.

For most of the preceding centuries, economic output per person—and with it, material living standards—had changed remarkably little. Empires rose and fell. Kings conquered kingdoms. Civilizations flourished and collapsed. But the average person lived scarcely better than generations before.

Then something extraordinary happened.

Or, more precisely, three extraordinary things happened in the same year.

1. James Watt's steam engine began operation on March 8, 1776

2. 24 hours later, Adam Smith published The Wealth of Nations on March 9, 1776

3. Four months after that, Thomas Jefferson wrote the Declaration of Independence.

1. Thomas Jefferson wrote the Declaration of Independence.

A rebellion against King George III, certainly. But its revolutionary premise was much bigger: government should derive its authority from the people, not from kings or aristocrats.

The people, rather than their rulers, would determine how they were governed.

We call this modern democracy.

2. Adam Smith published The Wealth of Nations.

Smith's revolutionary premise was remarkably similar: economic life should be shaped by the choices of ordinary people, not dictated by kings, aristocrats, or government-granted monopolies.

Let people decide what work to pursue, what to produce, what to buy, and what to sell. Let countless independent decisions coordinate economic activity rather than relying on the commands of a privileged few.

We call this a market economy.

3. James Watt's improved steam engine began commercial operation.

In March 1776, one of the first commercial Boulton & Watt steam engines began pumping water from a British coal mine.

Watt hadn't invented the steam engine. He had made it dramatically more efficient. What began with pumping water from mines would eventually help power factories and transform transportation, production, and entire communities.

We call this the Industrial Revolution. You might also call it the process of continual invention.

Three extraordinary developments in one extraordinary year.

Democracy. Markets. Invention.

And here's the point: you don't have to choose between them.

In fact, you should want more of all three. Each is not really a check on the others. Each enables the others.

The more inventions we develop, the more possibilities we have for improving our lives.

The more dynamic and competitive our markets, the more choices people have, the more opportunities entrepreneurs have, and the more effectively innovations can spread.

And the more responsive our democracy, the more ways people have to shape their communities, protect their freedoms, establish fair rules, and invest in a shared future.

These aren't three competing visions of progress. They're three forces that can make one another stronger.

Consider how democracy can accelerate invention.

Near the end of World War II, Franklin Roosevelt asked his science adviser, Vannevar Bush, to consider how the extraordinary achievements of wartime research might be extended into peacetime.

That initiative helped inspire the creation of the National Science Foundation.

The premise was powerful. Basic research is expensive, uncertain, and often takes decades to produce a practical payoff. Even when it succeeds, the benefits may spread across society rather than flow to any one company. That makes it difficult for private businesses to justify funding enough of it.

But democratic government can invest in research whose benefits extend beyond the next quarterly earnings report.

Universities and researchers generate knowledge. Entrepreneurs and businesses transform discoveries into products and services. Profitable businesses generate jobs, wealth, and tax revenues. Those revenues help fund another round of research and education, creating still more possibilities for invention.

A virtuous cycle of public discovery and private innovation.

Specifically, we need Watt's invention to create new technologies that break the link between "progress" and depletion of our natural world. To do that properly will require a deft interplay of democracy, invention and markets that enable us to enjoy sustainable prosperity that promises an earth as bucolic and pleasant as any we've known while still enjoying "progress" as more narrowly defined by material prosperity. Doing that properly will require full engagement of all three of these forces that have so changed our world since 1776.

Jefferson's democracy enabling Watt's invention, which Smith's markets can then spread throughout society.

And the three of them, in turn, make one another more productive.

Which brings us to the election of 2026.

The great news is that voters have delivered a decisive rebuke to MAGA politics and returned control of Congress to Democrats.

For a movement whose supporters tried to overturn the 2020 election, and whose leaders have repeatedly sought to restrict voting, this is an encouraging reaffirmation of democracy. That’s great.

It's worth recalling that Jefferson's Declaration of Independence complained that King George had kept standing armies among the colonists, obstructed immigration, and cut off foreign trade. Some of the grievances against an eighteenth-century king sound remarkably contemporary.

After a long and troubling detour, we've brought Thomas Jefferson out of the trunk and put him back in the front seat.

But here's the bad news.

Some of the Democrats now returning to power seem eager to put Adam Smith in the trunk instead.

Markets, in the view of some Democrats, are less engines of opportunity than sources of inequality and exploitation. Businesses become adversaries rather than partners in progress in their minds. And technological disruption can become something to resist rather than something to shape and harness. (Yes. I am - among other things - talking about AI.)

That's a mistake.

Progress depends on three healthy forces at work, not taking turns between these three transformative forces. We want more democracy, more voice of the people in defining laws and policies. We want more market economy, the creation of more products and jobs, services and wealth. We want more invention, more options about how to work, play, learn and enjoy life. We want Jefferson, Watt and Smith riding up front, jointly defining where we are going.

None of the three are done yet.

Democracy and freedom: We abolished slavery, extended voting rights to women, and expanded political participation to people once excluded from power. More freedom. More people with a voice in how they're governed. More democracy. And we need more of that. Imagine public-sector entrepreneurship that would “draft” citizens into initiatives to improve their communities, stimulating and testing new ideas about how to improve quality of life. Giving a voice to the people to experiment their way into better public-sector institutions and projects. 

Markets: We've moved from economies dominated by agriculture and inherited privilege to economies in which millions of people can choose their work, start businesses, compete, and trade with people around the globe. More choices. More opportunities. More prosperity. More markets. That, too, is a process that isn’t done. AI promises to do for knowledge work what the industrial revolution did for manual work.

Invention: Steam engines powered railroads. Internal combustion engines transformed transportation. Now electric motors, increasingly powered by renewable energy, offer transportation with fewer emissions and less pollution. Each generation of invention expands what's possible, sometimes while reducing the costs and unintended consequences of what came before.

And none of this progress is finished. Democracy can do a better job of giving people a voice in their community than just letting them cast a vote every couple of years. Markets can create more opportunities for more people to create wealth, products and services that enhance lives. Inventions can solve problems and create new possibilities that once upon a time seemed unimaginable.

Progress isn't a destination. It's a process of continually expanding what's possible for more people. And it will always depend on the interplay of Watt, Smith and Jefferson and we need each to get stronger and not weaker over time.

And we should be greedy about it.

Greedy for more democracy, more competitive markets, and more invention.

Greedy for the opportunities they create, the problems they solve, and the ways each can improve the others.

At different times, one will take the lead. New inventions will disrupt markets. Markets will expose the need for new public rules and institutions. Democracy will fund discoveries and establish conditions that make markets more productive. And all three will sometimes disrupt comfortable arrangements that once seemed permanent.

That's not a failure of progress. That's how progress works.

The mistake is to declare any one of these forces the villain—or to imagine that one can substitute for the others.

Perhaps the simplest lesson of 1776 is that we should abandon nostalgia and its distortions of reality and embrace progress instead.

The future can be a place so much better than the past that, once we arrive, we wouldn't want to go back.

That has been the extraordinary promise of the last 250 years. Not that progress is automatic, or that everyone has shared equally in it, but that human beings can continually create better ways to live.

Progress isn't a destination. It's a process of continually expanding what's possible for more people. And it will always depend on the interplay of Watt, Smith and Jefferson and we need each to get stronger and not weaker over time. Nobody rides in the trunk.

Hip to the Jive

The cutting edge of culture over the decades.

Hip to the jive ...

Hippies ...

Hip hop ...
Hipsters ...
Hip replacements.

Identical Twins as a Novel Approach to Congressional Representation

Amy Klobuchar points out that the 2027 US Senate will have four Democrats who have an identical twin. That actually suggests a new model of representation. One twin could be in DC working on legislation and the other twin could be in the district focused on representation. It's a novel model that would have been even more impressive back in the days when legislators spent days on horseback shuttling between the capitol and their district.

Good Advice for Driving and Governing

 When I was learning to drive, my mom gave me some wonderful advice.

"Just be predictable," she told me. "Drive in a way that makes it easy for the cars around you to know what you're doing."

I still feel like that covers about 90% of what's needed to be a safe driver.

And I think this advice applies for governance as well. People are trying to make decisions about whether to buy a new car or invest in a stock or borrow for a used car, take out a loan or start a side business or any of a thousand decisions for which they need to make some assumptions about the next 3 months or 3 years. Change is complicated and has so many if-then considerations. One thing you want in a community is relative stability on a lot of the major variables, from inflation to regulation to tariffs and taxes and the cost of college.

One of the many great things about a democracy is that it usually takes time to make changes. Debate proceeds proposals proceeds elections proceeds policies that ripple through our lives. People have time to process, participate in and prepare for these changes. 

One of the wonderful things about Democrats winning sweeping victories this week is that we'll be back to the more laborious process of debates, proposals, revisions, etc. that allow more people to participate in and shape the legislation that we all have to participate in and that does so much to shape us. What you don't want is governance that turns without signaling, slams on the brakes suddenly, or slows and accelerates like someone with a loose pet darting about the car. (And with Trump still in office another 2 years and able to veto legislation, there will be fewer changes than either Trump or Congress or Americans want. But that's another story.)

With 340 million Americans following your lead, it's a good thing to be predictable. 

Mitch McConnell Left Speechless by 2026 Election

This election. 

Rumor is that it left Mitch McConnell speechless.

5 November Stock Sell-Off And What That Might Mean for Musk

While Elon Musk was leading DOGE, his friend and SpaceX associate Jared Isaacman emerged as Trump's choice to run NASA. Isaacman was subsequently confirmed.

Then Musk took SpaceX public, helping propel his estimated wealth into trillionaire territory.

Today, following Tuesday's election, markets are falling sharply. Nvidia and SpaceX are both taking a beating.

But I'm not convinced that the election changes the long-term prospects for AI nearly as much as today's market reaction suggests.

Trump can veto federal legislation, and data centers can be built in many states. Still, governors, state legislatures, and local communities can make construction more difficult. That could slow investment even if demand for AI continues to grow.

Nvidia strikes me as an interesting case. Jensen Huang runs a company selling a foundational technology to customers around the world. If AI continues transforming the global economy, Nvidia has opportunities that extend far beyond any one administration or election. Demand for their product is considerably greater than just the US market.

Of course, a great company isn't necessarily a great investment at every price. Today's decline might represent an opportunity—or the beginning of a larger reassessment of AI valuations more broadly.

SpaceX presents a different question.

It has substantial commercial businesses, including Starlink and AI computing, so it would be wrong to suggest that it needs NASA contracts to remain profitable. But it also has significant relationships with the federal government, and those relationships are subject to political scrutiny.

Musk spent nearly half a billion dollars trying to influence this year's elections. Now he'll be dealing with a Congress containing many of the people he spent so much money trying to defeat.

That doesn't necessarily make SpaceX a poor investment. But it does introduce an interesting political risk.

Which brings me to a distinction I find fascinating.

Nvidia's future depends heavily on how much value AI creates. SpaceX's future partly depends on that but also on how successfully Musk navigates the commercial and political institutions on which his ambitions depend. And the half a billion dollar bet he took in his political alliances and contributions might cost him.

One of the world's most successful entrepreneurs may be about to discover that politics is a rather different kind of market.

CNN's Fear and Greed Index as of market close on 5 November:

Can We Believe What AI Tells us About AI?

 Curiously, I can have AI read me this story in the Economist about ... AI.

Nvidia's Forward P/E Suggests a Bargain Price

In the last 30 to 60 days, Nvidia's stock price has fallen about 15% to 20% even while analyst's estimates of its 12-month price target has climbed from about $290 to $322.

That is, its price has fallen even while its forecast profits have gone up.

Suggesting that today's price - about $186 - is a bargain.

As of the close today,
Nvidia's forward P/E is 13. (At a price of $181.60)
Micron's is 3. (At a price of $656.89.)
That's crazy.

Closing Scene of Trump the Musical

Trump: The Musical is going to be unbelievable.

And in the closing scene, Donald will be in his ballroom, the magnificent structure he built on the ruins of the White House's East Wing.

He will be dancing. Alone.

To music only he can hear.

After Yesterday's Election, Asset Prices Have ...

Today, after yesterday's election ....

Crude oil is DOWN about 8%.
The Dow was UP about 3%, and the S&P 500 and NASDAQ UP about half that.
Trump Media & Technology Group Corp. stock was DOWN nearly 25%.

11/5 addendum .... because you will NEVER have a final price for the market or people's assessment of its prospects ...
NASDAQ is down nearly 3.5% this morning, suggesting that either the market is going through its own re-pricing drama around the prospects of AI or is feeling terribly ambivalent about what a blue wave means.