World-Building and the Early Internet
Hello everyone! This week in Dancoland, Jim O’Shaughnessy and I have a fresh podcast recording for your enjoyment.
You can listen to the whole episode at the link above. Here’s a lightly edited transcript that pulls out what we talked about in the first half of the show, which is all about:
-The difference between capital and sales in a world of scarcity versus a world of abundance
-Why everyone’s job is world-building now
-World-building on the early internet, and how the nerds got a 10 year cultural head start on everyone else
Jim: We’re going to talk about world-building and about your recent post, which I found very interesting because… and we’ll get to this part later, but it dovetails with kind of a thesis that I’m not done formulating and I’m sure I’ve got a lot wrong, but about the world is moving from the physical world to the digital world. And I really believe the skillset in the digital world will be materially different than the skillset that works in the physical world.
So for example, one of the things, and then I’m going to ask you your first question is this idea of non-linearity. I’m a huge believer that linear thought is not going to cut it in the digital world. And that so many people are programmed that way. It’s going to be a rough landing for a lot of people, but let’s start with the premise, your essay, which we’ll include in the show notes so that people who haven’t read it will be able to read it. But it’s fascinating because you did Dancoland, which I loved, but then you talked about, “Hey, we got to start constructing worlds. They’re going to be valuable and we can’t just exist without a world around it.” Bring us out.
Alex. So I’m glad you brought up Dancoland. Dancoland is a real place! So we should talk about that later on the show. It’s in Antarctica named after my ancestor, Emile Danco who was, I believe, the first recorded death in Antarctica. He was on a Belgian expedition that went down there, and when they got to Antartica he just died immediately. So they named a chunk of the Antarctic Coast after him. And here I am 120 years later.
Anyway. I want to actually get into this piece by going right after what seems to be your fundamental assumption about what we’re even talking about at all, which is this assertion that we’re going from the physical world to the digital world. And right off the bat, I want to ask you, is it really about the physical world versus the digital world? Or is it that we’re going from a world that is fundamentally defined in terms of scarcity to a world that isn’t? To a world that’s fundamentally defined in terms of abundance where new things become scarce, but they’re very different things.
Jim: Yes. I agree. I agree with that assessment.
Alex: So if you think about the world prior to recently, fundamentally the thing that was scarce was natural resources, right? Production, capital, factory capacity for making stuff. Everything was organized around this fundamental unit of, let’s just call it “production”, which we can call capital. The default is that you start with nothing and then you get something and that’s called capital and capital does things. It can be factory capital. It can be human capital. It can be brand capital. It could be a variety of different kinds of capital, but collectively this does something and capital has an output. And periodically makes things.
Let’s say, I have a widget factory and it makes three widgets an hour. And then those widgets per hour, it is just assumed that there’s demand for them at some price because everybody needs stuff. Capital is a limiting factor, right? So I can make widget factories. I sell them for something. It goes on my P&L. And then eventually if I make enough money on each widget that I can pay the cost of operating my factory and I can pay down the cost of my capital, then leftover I am, has something that’s valuable, right? This is the world according to scarcity. This is how you think about it.
Now, when you think about this world of Bits, as opposed to a world of Atoms and a world where we live in right now, where there are very little barriers to us communicating, we just hop on a Zoom and talk to each other. There’s relatively little barriers to finding products or in fact getting them sourced. Or there are very few barriers to getting a lot of work done, starting to get into this re-orientation where really, what is fundamentally valuable is not the unit of production or the unit of capital. Fundamentally, you can think of it as not just the unit of consumption, but it’s the unit of demand.
It’s the unit of desire, it’s what’s actually scarce and you can call it attention. You can call it affinity. You can call it loyalty. You can call it brand affiliation, whatever you want to call it. It’s like, what is starting to become scarce is people’s actual interest in you. And people’s interest in what you have to say, not your ability to say something or your ability to make something.
And so when we look at online, this world of the internet that initially, if you look at what the internet has done things to the first piece of the world that the internet did anything to was content, right? It took all the media companies and said, well, there used to be a limited supply of content. You had to turn on the TV to a specific channel at a specific time to get it. And now all the content is available all the time everywhere.
Well, we’re going to reorient around that around what’s actually scarce, which is what you care about and what you like and what you think and feel. That was the first reorientation. The next major thing that the internet has been re-orienting around is commerce. It used to be that there were only a certain number of stores in your town, or there were only a certain number of mail order catalogs that you could get in the mail. And so hence the ability to actually make and distribute was pretty… that was the limiting factor, that was capital, that’s what it did versus now with the internet.
And again, if you can take this back to Shopify and sort of the purpose of what we do is re-orienting around this idea. It’s like, no, it’s actually scarce and valuable. It is this relationship that gets built between a buyer and a merchant. And that is actually the foundation of everything. That’s what pulls everything forward.
So coming back to your initial question, which is this idea of this world of Atoms versus this world of Bits or this world of scarcity orientation versus this world of abundance orientation or any number of ways you want to label this. You get to this question: what does it mean to sell? What does selling mean? Because ultimately everything is sales, right? Ultimately sales is what everything boils down to. I remember on… you know what just line has stuck with me. It lives rent-free in my head just for months and months and months was aligned as Nick Kokonas on Patrick’s podcast. One of the fantastic episodes where his iconic line was just, “Know what you are selling and then go sell it.”
Alex: As applied to everything in the universe.
Alex: Know what you’re selling and go sell it. Well, in a world of scarcity, what you are selling is “applied capital”. Neat, we’ve mostly figured this one out.
In a world of abundance, what is it that you are selling? And here’s where we introduced this concept, which I think we’re going to call World Building as a way of thinking about what it is you sell in a world of material plenty and plenty of opportunity and plenty of signal and plenty of stuff coming at you. What is it that you sell that actually works? So I would say, this is kind of the initiative for writing this piece that I wrote the other month of this idea of World Building, which says, “Look, the advice that you are given all the time is everyone’s job is in sales. Even if you don’t know it.” Find out what you’re selling.
This is good advice. You shouldn’t throw that piece of advice out, but what you should actually do is update it to say in this world of abundance on the internet, everyone’s job is World Building. Your job isn’t just to sell a thing and sell it, sell it, sell it hard. Your job is actually to create a world that is so interesting and so compelling and has a reason for people to go walk in and explore this world that they can go spend time in it, without you even having to be there. There is an understanding of why they want to explore it. They have an understanding of why they want to be there and what’s in it for them. And what’s there to learn.
And fundamentally, this frees you of your need to be there all the time. Again, the world of abundance, right? You can’t be out there talking to every single person. As a brand, you can’t be out there speaking to every single customer of yours or potential customer. You have to create a world that’s interesting for them that they can go walk into and explore.
There are some of the greatest companies, I think the first company, the first digital company that probably really applied this to its maximum potential, was Microsoft. They created a world: “a computer on every desktop, in every home, running Windows.” That’s not a product that they were selling. That was a world that they were selling, that they invited YOU – software developers, IT consultants, and consumers of every possible shape and size – to come in and explore and try to understand what this world meant for you.
‘What does it mean to have a computer on my desk? In my home? Oh, I don’t know. But I feel I can go explore those by buying a Gateway 2000 or a Compaq Presario.’ You could go buy one of these things and put it into your house and step into this world, right? I remember growing up, So again, I was born in 1988. So in 1994, 1995 beginning of the consumer internet-
Jim: Wait, wait, wait, wait, wait, wait. Stop, stop, stop, stop. You are younger than two my children. My son was born in 1985. My daughter was born in 1987. You’re just a punk kid. I mean, you’re doing very well for a punk kid. Kudos, but continue.
Alex: I was a part of this critical generation that remembers a time, briefly, before there was a computer in the house. And before there was the internet, I remember when we got the internet, I was young, but I remember. My sister doesn’t remember when we got the internet, she’s younger than I am, but I do. It was like, all of a sudden there was a computer in the house that you could turn on and walk into this world.
And Microsoft was running the operating system, but this is a world that I could explore to my heart’s content. This is a world that I could go in and not just the computer and Windows, but I think even more importantly, the internet with somewhere that you could go explore.
And so something what’s really just fascinating about this world that you can go into is that worlds are meaningful if they contain challenges for you. Easy worlds are boring and people leave, worlds need to have challenges in them and jungle gyms for people to climb on and go explore. I think what’s so remarkable about computers is that the early internet, especially all the message boards and all of these sort of pre-web services that were before my time, but I’ve heard about in lore, through The Internet History Podcast and things like that.
They were a challenge. It was hard to use them successfully. There was a learning curve. You had to learn the language. You had to learn how to log on. You had to learn how to interact with all these people, but it gave you something in return, which was that it gave you this incredible sense of accomplishment and community that you got in. And you were in with this group of mysterious people.
Jim: So I was, I think as you know, a very early adopter of all technologies. I had the in quotes internet when it was still CompuServe and it wasn’t really the internet, it was a walled garden. But the whole thing that was like “you were really all that and a bag of chips” if your CompuServe had a long numeric identifier with a comma, and if you had two digits after that, that meant you were one of the first hundred people.
So, my son Patrick, born 1985, he didn’t have what you had because when he was old enough to fool around and walk into where we had our computer, which was an office here at the house we still live in, it was there. But another mark that I’ve been thinking about that someone told me that I actually think also delineates well, is: did you have a cell phone in eighth grade? And if the answer is “No” like it was for my son Patrick and my daughter Kate, then you’re not a digital native.
Alex: Me, neither. I got my first cell phone when I went to college. I’m pre-that era.
Jim: Yep. And as was Patrick as was Kate. And then we got cell phones for them that they didn’t want… This is the real irony and so funny: they didn’t want to use them. Because at that time they were showy, right? If you had a cell phone, I meant”Oh, wow.”
Alex: Oh, sure. It was a combination of “I’m showing off” and “My parents track me.”
Jim: Exactly. And so we said, “You don’t have to turn it on. We just want you to have it in case something… The shit hits the fan, so you can reach us.” And even then there was huge pushback against even bringing it with them. So I just find that so deliciously ironic.
Alex: It is funny thinking back that, I don’t know when I was in grade 11 or 12 or something like that, the idea that sometime in the summer I would just skip town and go on a bike ride for a couple of days to go visit some people and come home, ride a couple of hundred miles over the course of a weekend, without a phone. Right? It truly seems ludicrous to me now to think that this is a thing that was just normal and kudos to my parents, but also all parents more or less because that’s just the way it worked.
Jim: So, I mean, there are no coincidences. So the podcast that drops this Thursday is with Tren Griffin and, and Tren turn the tables on me and basically became my co-hosts and started asking me a bunch of questions. But one of the things that we both agreed upon was we had it a lot easier as kids because he said in his case, “Hey mom, can I borrow the station wagon? I’m going to drive to California for two weeks with my friends and then I’m going to come back.” And the mother was like, “Yeah, sure. Have fun.” And I, I had a similar experience when I was driving to the University of California with my brother, no phones, no nothing. And my mom was like, “Yeah, call when you get settled.”
Alex: In this generation where that sentiment was turning a little bit, you had this group of kids for whom “free-range” meant the internet. You could just go online and go explore everywhere. And some of it was bad for you, but most of it was just different and strange. You had go to figure out what it was. And it does come back to the sense of challenge. Where it’s like challenge and difficulty that you embrace and overcome, that gives you a sense of identity about yourself. Is this really important part of what makes worlds interesting and captivating to you. That’s what makes you want to come back in.
Jim: So, again, here we are and who are we going to reference? We’re going to reference Joseph Campbell, The Hero’s Journey, right? We’re going to reference the movie, The Matrix, right? Because they tried all of these perfect worlds and humans rebelled at them, they wouldn’t take.
And then the other one, when you were giving your introductory statement about world building, you know who really saw this way ahead of everyone else was Bucky Fuller. Basically Bucky Fuller was talking about “Capital is ideas.”
Alex: Yeah, so he really coined the term abstraction. But it was called ephemerality, I believe. It was this idea of ephemerality, that was a precursor to the whole idea of software. And software engineers as capital, basically.
Jim: Yeah, absolutely.
Alex: You probably remember this phrase. Do you know what the phrase “Eternal September” means?
Jim: No, I don’t.
Alex: This was before my time, I only know about this second hand. So what Eternal September means is that on all these early internet forums and message boards and places like that, what would happen is you had this crusty group of users who had figured out how it works and figured out all the etiquette. And they knew what words meant and they knew what the abbreviations meant and things like that. But then every September there’d be this crop of noobs that would show up and be clueless. Right? Why? Because that’s when school starts.
Jim: Ok I do know. Yep, I didn’t remember that term, but yes.
Alex: So, what would happen is every September, this new batch of kids would become freshmen in college and that was how you got onto the internet at that point in time, because nobody had internet, but the universities did. So they would get on and they would all flood… A certain number of the AV Club kids would flood onto the internet and go show up and be clueless about all these places and all the crusty people would complain. And it became this yearly cycle for a few years of every September there’d be this group of kids that would come on and would have to learn the ropes.
But then a few years later, AOL showed up and all of a sudden it was no longer in every September thing, it was just this flood of new people continuously coming onto the internet. So that was called Eternal September. That was the complaint. It’s like, “Ah, shut it down. It’s all over.” Party’s over internet, the Internet’s the mainstream now, it’s sucks.
Jim: So now, as you were saying that, as you know I have journals going back to when I was 18 years old in 1978. I was just rereading one from 1982, I think, the year I got married and it was a dialogue that I was having with a guy on CompuServe who went under the name, Sir Bruce. And we were discussing philosophy and everything. But then I saw a note, it was like… Basically, I’ll tell you what the note said “A bunch of noobies are here and they’re idiots.”
Alex: So, okay. So, you had this experience of the early internet where it was this completely wide open world to go homestead but nobody knew what it was. Everybody just understood that this is where a particular set of, again, the AV club kids started to hang out and this is where they would be on weekends with all their spare time. And at some point it got filled and filled and filled and filled and eventually people realized that it wasn’t going to get full. It was actually going to keep growing faster than you could fill it. And the reason why it keeps growing by the way is because the ability to create challenges on the internet is unlimited, right? This is where people started to realize that just because the internet is this place of bits that have no cost to them.
I mean, there was actually substantial costs to everything from bandwidth to hard drive space back then. But nonetheless, this is this thing where you can just mess around. And you could make websites that had no purpose, just because it was fun. You could go do things for no reason, other than that they were fun. But what would make other people come in and participate in them is whether they would challenge you. And, often, challenging you meant it was this particular brand of weird humour. I remember… This is fast forwarding a couple years after this, but if you look at some of the early content sites, I’m thinking of Homestar Runner specifically and websites like that, or even… I don’t know why this is what’s coming to my head right now, but do you remember Maddox?
Alex: That guy who got famous by criticizing all the kids’ drawings and then had this strange… Early instance of a single, super, super negative person going viral for being funny and being a horrible person. Anyway. So a lot of the challenge of the internet that kept people coming back and coming back was that it took a lot of effort to actually understand why this was funny. And you understood when you started interacting with it immediately that this is going to take work. And it said something about you that you actually spent all your time in these weird websites.
Jim: I feel seen here.
Alex: So the learning curve for getting this to feel rewarding to you, as opposed to only challenging, took some time. A lot of people abandoned it or they didn’t come back or they got into other things. But for some people, when it really sort of compounded into this, “I’ve made so much investment that this is starting to feel rewarding because I have created this mountain for myself to scale” that became the internet culture. That is what it was. And if you want to fast forward to… If you want to look at honestly what this was like today, Twitter is just like this, right? Because Twitter is very, very hard to start using. There is a huge investment to get any of it, but once you have put in that investment then everything is funny and you can never leave.
Alex: Twitter is still almost a look back on the early internet in that specific sense. And it is fairly hostile to new users, but once you’re in, you’re in. Anyway, but nonetheless. There’s this window of time, which you can just call the mid nineties or something like mid to late nineties, where the following conditions were met:
One, the internet was still somewhat difficult to use. Not everybody was on, it wasn’t now when everybody’s on their iPhone’s, on the internet all the time.
Two: there was a critical mass of people there and a critical mass of stuff to do, that if you were naturally interested in it, there was enough for you to do.
So the world had been built… A sufficient amount of the world had been built that people were starting to spontaneously come in and find things that they wanted to explore more or less immediately.
Jim: And/or change.
Alex: And/or change, change and change and make and… participate in the world.
But Three, the difficulty level was still high enough that not everybody found this. A large number of people did not participate yet, because it’s so hence it’s selected for a particular type of nerd who got an enormous head start on building the… Not only the skill set, like the literal skill set in terms of knowing how to write code and be a computer programmer, but also the social skill set of understanding this new world of absolute abundance and total leverage.
Alex: This particular group of people got a 10 year head start on everybody else in the cultural fluency of how online worked. They became the very online before everyone else was very online. And they had 10 years for those muscles to build and for all of that internet cultural capital to compound, right? And it’s not just your internet cultural capital, it’s your confidence. They had a 10 year head start in their confidence of knowing how to interact with this world over everybody else. And so that created the most unfair advantage in modern history in terms of people having a head start on being in the mindset of how to build and how to do and how to act in this new environment, because the stakes were so high.
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