Exponentiality: WTF is it and Why does it matter. Coperfield workshop at the Kaospilots Agenda Festival. September 2016. Contents: Concept, Characteristics of Exponentials, Exponential Organizations, Deconstructing the Exponentiality discourse, Questions for futher consideration.

1. WE Create
opportunities
for social good
Exponentiality: WTF is it and why it does matter
A contribution to the Kaospilot Festival
Aarhus, September 29th 2016
ricard@coperfield.org
xavier.jane@coperfield.org
(C) Coperfield for Social Good (2016)

2. ricard@coperfield.org
xavier.jane@coperfield.org

3. Intention Deconstruct / Reconstruct the dominant
narrative behind exponentiality.
Desired
Outcome
Alternative narratives / opportunities / impulses
Agenda ๏ A lecture of sorts
๏ An exercise on the exploration of possibilities
Rules & Roles
๏ Our role is to provoke questions and
reactions
๏ Your role is to act and react
Time About 1 hour for each item on the agenda

4. The nature of exponentialitiy
61

5. 0
100.000
200.000
300.000
400.000
500.000
600.000
Linear is additive
Exponential is multiplicative
f1(t+1) = f1(t) + K1
f2(t+1) = f2(t) * K2
Exponentiality arises from multiplicative growth

6. 0
100.000
200.000
300.000
400.000
500.000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Linear substracts
Exponential divides
f1(t+1) = f1(t) - K1
f2(t+1) = f2(t) / K2
Exponentiality can manifest itself in decay

7. 1
10
100
1.000
10.000
100.000
1.000.000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Exponential appears linear in a log-scale
For the mathematically inclined:
the exponential is the inverse of
the logarithm.
log-scale

8. Where do we find exponentials?
62

9. World population (millions)
0
2.000
4.000
6.000
8.000
Year
1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000
https://en.wikipedia.org/wiki/World_population

10. Compound interestCapital
0 €
5.000 €
10.000 €
15.000 €
20.000 €
25.000 €
30.000 €
35.000 €
Year
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
4%
15%
20%
Interest rate

11. Source: Wikipedia
Microchip density has been growing
exponentially (Moore’s law)

12. Computer power grows exponentially
Image Credit: Ray Kurzweil/The Singularity Is Near

13. Source: The Hamilton Project, Brookings Institution
Cost of computing has been
decreasing exponentially.

15. There are more technologies
exhibiting exponential behaviour
(Graph: Decreasing price per watt of photovoltaic cells)
https://medium.com/@PeterDiamandis/disrupting-energy-160d1cd8504#.7kejttyo7

16. There are more technologies exhibiting
exponential behaviour
https://chrissemsarian.files.wordpress.com/2012/06/the-sequencing-explosion1.jpg

17. Network effects lead to exponentials
Facebook Monthly Users (milions)
Millionusers
0
200
400
600
800
1.000
1.200
1.400
1.600
1.800
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Total
Mobile
Source: Facebook

18. Exponential sex?
Source: Peter Diamandis

19. Exponential sex?

20. Not all the exponentials are ‘fast’
http://www.collaborativefund.com/blog/when-you-change-the-world-and-no-one-notices
An index fund

21. Qualitative characteristics of
exponentials
63

22. They can be counter intuitive
A bacteria that doubles every 24 hours fills a pond in 60 days.
(A) How long does it take for the bacteria to fill half of the
pond?
(B) How full is the pond at day 30?
(C) Which initial concentration of the bacteria fills the pond in
exactly 60 days?
Answers:
(A) 59 days
(B) 0,000000093132 %
(C) 0,000000000000000173472 %

23. They can be puzzling

24. They are not sustainable
Q: If a chessboard were to have rice placed upon each
square such that one grain were placed on the first square,
two on the second, four on the third, and so on (doubling the
number of grains on each subsequent square), how many
grains of wheat would be on the chessboard at the finish?
๏ A: 18,446,744,073,709,551,615 grains
๏ This is the equivalent of 461,168,602,000 metric
tons of rice, around 1,000 times the global
production of rice in 2010 (464,000,000 metric
tons)
Source: The wikipedia

25. Ponzi frauds are exponential
You receive a list of 10 names,
three instructions and the
promise of a windfall:
๏ Send 1 € to the person on the
top of the list and remove her
from the list.
๏ Write your name at the bottom
of the new 10 names list.
๏ Send a copy of the new list,
along with the instructions to
10 of your contacts of friend.
Where is the catch?
Problem #1:
๏ People will break the chain
Problem #2: You run out of people
๏ Step #1: 10
๏ Step #2: 100
๏ …
๏ Step #5: 100.000
๏ …
๏ Step #10: 10.000.000.000

26. Exponentials are sensitive to parameters
0
50.000
100.000
150.000
200.000
250.000
300.000
350.000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
4%
15%
20%
Interest rate
• Rate of growth is the same
• The change of absolute values means much
175.000 €

27. A sensitive mechanical exponential
Displacement
0
2
4
6
8
10
Time
0 1 2 3 4 5 6 7 8 9 10
x(0)/L=0,1
x(0)/L=0,01
x(0)/L=0,001
X(0)

28. Summary: Characteristics of exponentials
Counter-intuitive
๏ We tend to think of linear behaviour as the natural one
Can take us by surprise
๏ After appearing to be flat for a time, they explode
Sustainability is an issue
๏ They end up bumping against constraints (physical,
social or others).
They are very sensitive to their two critical parameters
๏ Amplitude (i.e. your initial capital)
๏ Time constant (i.e. how long does it take to double)

29. The current exponential
narrative
64

30. Ray Kurzweil
“The future will be far more surprising than most
people realize, because few observers have truly
internalized the implications of the fact that the rate
of change itself is accelerating.”

31. Acceleration seems to be indeed a
defining characteristic of modern
societies:
๏ Technological acceleration
๏ Acceleration of social change
๏ Acceleration of the pace of life
His guiding hypothesis: The acceleration that is a constitutive
part of modernity crosses a critical threshold in ‘late modernity’
beyond which the demand for societal syncronization and social
integration can no longer be met.

32. Time constants are getting smaller
Market Cap to a Billion
Source: “Exponential Organizations”

33. Silicon Valley promotes exponentialities
“The best way to become a billionaire is to solve a
billion-person problem.”

34. “An Exponential Organization is one
whose impact (or output) is
disproportionally large (at least 10x
larger) compared to its peers because
the use of new organizational
techniques that leverage accelerating
technologies.”

35. The architecture of ExO
Source: “Exponential Organizations”
Massive Transformative
Purpose

36. Strategic tenets
Everything is measurable
and anything is knowable.
Every industry will become
information-based.
Information accelerates
everything.
Disruption (exponentiality)
will be the new norm.
Platform size is the size
that matters.
Challenge the experts
Take disproportional risks
Keep lean and flexible
Demonetize supply
Monetize the platform

37. ExO strategy leverages five externalities
Staff on demand
๏ Outsource massively (& pay minimally)
Community and Crowd
๏ Leverage community as a (marketing) resource
Algorithms
๏ Gather data, Organize, Model and Apply, Expose
Leveraged Assets
๏ Rent everything, except the critical assets (like the
algorithms)
Engagement
๏ “Tap into the deep-rooted human desire to compete”.
Source: “Exponential Organizations”

38. An example of an information-leveraged asset
http://blog.netaffinity.com/airbnb-effect-on-hotels/

39. Deconstructing the exponential
narrative
65

40. An unlimited faith in technology

41. What lies behind the externalities?
Staff on demand
๏ “Nearly 3b more people and their brains will be available to
work via smartphones, tablets or at Internet cafes. The
capabilities that will be unleashed are beyond imagination.
Against this onslaught, what traditional organization, bogged
down with permanent, full-time employees, can endure?”
Leveraged assets
๏ “If your asset is information-based or commoditized at all, then
accessing is better than possessing.”
Community
๏ “At the top of every one of these communities is a benevolent
dictator.”
Source: “Exponential Organizations”

42. What lies behind the externalities?
๏ “New ‘Kodak Moments’ are the inevitable result of the 6Ds of
exponential growth.”
๏ “Exponential technology is not just putting linear companies out of
business, it’s also putting linear industries out of business.”
๏ Now, these technologies power multibillion-dollar companies
and affect billions of lives.”
๏ “Exponential advantages empower entrepreneurs like never
before.”
๏ “Airbnb and Uber are great examples of entrepreneurs taking
advantage of the expanding scale of exponential impact.”
๏ “Just as successful skunk works isolates the innovation team from
the greater organization, successful entrepreneurs need a buffer
between themselves and the rest of society.”
๏ Leverage on the ‘super-credibility’ of your MTP.
๏ Sell stone soup: https://en.wikipedia.org/wiki/Stone_Soup#Story

43. http://nyti.ms/1WZ8h6e
TECHNOLOGY
Uber Turns to Saudi Arabia for $3.5
Billion Cash Infusion
By MIKE ISAAC and MICHAEL J. de la MERCED JUNE 1, 2016
SAN FRANCISCO — In its quest to build a global empire, Uber has turn
Middle East for its biggest infusion of cash from a single
Uber said on Wednesday th
Public Investmela
abia for $3.5 Billion Cash Infusion - The ...
http://www.nytimes.com/2016/06/02/technolo
Exponentiality ain’t cheap

44. What do we make of all that?

45. Q1: What do you think about the
proposal of ExOs?
๏ What do you like? Why?
๏ What might you be wary of?

46. Our list of caveats
1. Ambiguity of the MTP might not reveal values and principles.
2. Exponential disruptors don’t take prisoners.
3. Cornering the market might preempt competition.
4. The ethics of collecting and exploiting information.
5. The ethics of accessing talent without a contract.
6. At the end of the day, some one has to invest in
commoditized and/or information-enabled assets.
7. Initial investment in algorithms, platforms and marketing
may become a significant entry barrier.

47. Q2: What would you consider doing
regarding the emergence of ExOs?

48. Assess your strategy
Guerrilla tactics
Corner a niche
Fight!
Accept / Adapt
Do your own,
but watch out
Your actual or potential strength
RelevanceoftheExOconceptto
yourpurpose
+
+-

49. Q3: Can you identify (M)TPs for
which the exponentiality framework
might be (even partially) relevant?

53. Thanks!
ricard@coperfield.org
xavier.jane@coperfield.org