Nitrogen Fixing Fern that Grows in Water

I’ve been looking at hydro/aqua-ponics lately and ran across Azolla. The only real economic reason for the fish is nitrogen. Azolla would be a possible substitute for the fish—need to figure out conversion ratios and space. Would think growing plants has to be more effective then feeding fish but might take up more space.

Azolla’s significance comes from its partnership with several species of bacteria that can manage a trick no plant finds possible by itself: extracting nitrogen from the air and “fixing” it into chemicals such as ammonia, so that it is available to make proteins. Asian rice farmers have known of Azolla’s fertilising properties for at least 1,500 years, and in many places the fern is encouraged to grow alongside rice in paddies—a sort of aquatic version of alfalfa. Dr Pryer’s primary pitch, therefore, is that understanding the genomes of Azolla and its associated bacteria (which she proposes to sequence at the same time) might assist the improvement of this process, and maybe aid its transfer to other plants.

Would work well for cleaning up water on dairy farms as well—solves the surplus phosphorous issue.

…grow at great speed – doubling its biomass every two to three days. The only known limiting factor on its growth is phosphorus, another essential mineral. An abundance of phosphorus, due for example to eutrophication or chemical runoff, often leads to Azolla blooms.”

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The Intersection of Big Ag and Big Data

Agriculture will be an interesting space to watch over the next couple of years — GPS-driven automated combines, fertilization by drones, custom seeds based on microclimate parameters, and real-time data from remote soil sensors. The real disruption will be figuring out how to move away from corn and beans.

From The Economist:

INNOVATION is a word that brings to mind small, nimble startups doing clever things with cutting-edge technology. But it is also vital in large, long-established industries—and they do not come much larger or older than agriculture. Farmers can be among the most hidebound of managers, so it is no surprise that they are nervous about a new idea called prescriptive planting, which is set to disrupt their business. In essence, it is a system that tells them with great precision which seeds to plant and how to cultivate them in each patch of land. It could be the biggest change to agriculture in rich countries since genetically modified crops. And it is proving nearly as controversial, since it raises profound questions about who owns the information on which the service is based. It also plunges stick-in-the-mud farmers into an unfamiliar world of “big data” and privacy battles.

Distributed Systems — Destruction of the Status Quo

One thing we can say for sure is that there will be a lot more start-ups. The monolithic, hierarchical companies of the mid-twentieth century are being replaced by networks of smaller companies. This process is not just something happening now in Silicon Valley. It started decades ago, and it’s happening as far afield as the car industry. It has a long way to run. —Paul Graham, Startup Investing Trends

This is one of my core beliefs, that the world is in the process of becoming much more distributed, that the traditional hierarchies (as articulated by Fred Wilson in his Le Web talk here) we’ve organized around are changing. It’s not just social or organizational hierarchies, though; enabled by technology, our infrastructure systems (energy, manufacturing, farming) are also becoming much more distributed. These newly formed distributed systems are having  profound consequences for large legacy institutions and creating opportunities for smaller start-up companies. What follows is a discussion of old versus new in myriad industries to illustrate this shift.

Mainframes vs. Data Centers

We’ve seen computation go from large mainframes in the 1960s (think of this as Big Computation) to personal computing in the 80s, with a desktop in every home and office, and now to data centers. We seem to have settled in on the right distributed size — distributed data centers with mostly laptops and mobile phones connected to them. And this pattern can be seen now in more traditional industries as well.

Power Plants vs. Distributed Generation

I think what happened to computers is a good analogy to understand what is happening in energy. In energy, we have Big Energy — giant nuclear, coal, and natural-gas plants that deliver our power over large transmission lines. These are the equivalent of the mainframe computers from the 1960s. Now we are seeing a large increase in demand for distributed generation, one form of which is rooftop solar — this is the personal computer of the 1980s. But it’s incredibly inefficient for each of us to build our own power plant. A similar thing happened to computers — rather than build your own data center, we are now moving to “the cloud.” The cloud is just a form of distributed computation — regional distributed data centers. My guess is that we’re going to end up with an integrated, multi-layered system of power generation that consists of regional distributed generation and small modules at the household level. This might mean that today’s rooftop solar companies will become the personal computer companies of tomorrow (whatever happened to Gateway?).

Factories vs. 3D Printing

Manufacturing is about to be disrupted by 3D printing and automation driven by increases in artificial intelligence (AI). To date, labor gains have offset transportation costs in manufacturing. This is why the world’s manufacturing routinely moves to the lowest-cost labor markets — to China and now to Southeast Asia — despite the fact that these locations are thousands of miles from where the product will ultimately be distributed. With 3D printing, the costs of both manufacturing and the necessary investments will collapse. In addition, much of the assembly is already being automated by robotics and AI. So Big Manufacturing (factories and assembly lines) is already being disrupted and is about to be displaced by distributed manufacturing (3D printers and robotics). We talk of local food, but we’re on the verge of local everything — why produce our goods halfway around the world? Local will be cheap. If your economy is driven by cheap labor, you’re in trouble. (This phenomenon could also collapse trade, leading to more insular economies, but this is a discussion for another day.)

Big Farming vs. Farmers’ Markets

Food is slowly following energy into a more distributed system as well. We’ve seen it with the abundance of farmers’ markets, the return of gardens, and the movement to grow food in cities. To this point, it’s been more small-scale hobby-sized projects. But like manufacturing and energy, there will come a time where the cost to produce is less than the labor and transportation costs. You’ll see distributed farming systems, not unlike data centers, that deliver local, fresh produce year round. This will become even more pronounced as protein-based alternatives chip away at traditional meat demand.

Universities vs. Online Education

Big Education is on the verge of a massive disruption. The value of a degree seems to be collapsing as all the information anyone might need is available free and online provided by sites like Kahn Academy, among others. Universities are struggling with new models — put classes online for free, extend online degree programs, or ignore it all and hope it goes away. If we follow the other trends and apply them to education, it probably means fewer big universities and more small schools. Or perhaps we move even more closely to virtual education: one can easily imagine students in groups of 25-50 in towns around the world gathering together to take online classes from the very best professors. In fact, this is exactly what the Acumen, a patient-capital fund, is doing. My prediction is that the best universities, by changing their business models, have a chance to take market share from the middle tier — the best and the boutiques will be okay — but the middle is in trouble. We’ll also see a surge in start-up colleges and universities as the barriers to entry are gone.

The Paper vs. Twitter

I grew up in a house where my parents got the paper in the morning. They physically walked to the end of the driveway, which seems so odd, so archaic, now. My paper today is Twitter and RSS feeds. The decline of the newspaper industry has been well documented — print journalism is being replaced with a global distributed network of millions of bloggers and tweeters around the world. If I’m interested in a news event, I simply find and “turn on” the hashtag on Twitter.

Federal- and State-Level Governments vs. Cities

There has been a lot written about cities and their rise on the global stage. In a sense, government has become more distributed. Here in the US, it seems that cities are more important than ever and are increasingly the only governable unit — state and federal government seems to matter less and to be less effective. As Richard Florida has observed, we will have a “spikey” world with concentrations of people, wealth, and ideas in the best cities. The effective unit size to govern — just like a data center — has become a city.

We’re moving from a large, hierarchical, centralized world to one that is small, networked, and distributed. It’s as if each industry is homing in on their own Dunbar number — the perfectly sized data center, solar installation, or global classroom. The amazing thing to me is the breadth of this phenomenon, from education to utilities to manufacturing. Over the next 10-20 years, many of the institutions that have been in place for the last 100 years will be fundamentally altered. These systems will be smarter, stronger, and faster than the previous ones.

Monocultured Man—Specialization Leads to Fragility

I heard someone describe our current condition as “monocultured” last year, and the phrase has stuck with me. The systems we live in and create have become overspecialized over time. This makes sense in some aspects—the world is growing in information and complexity at a startling rate; it’s hard to be a generalist anymore. But while it’s impossible to absorb all of the changes, this increasing specialization has a price. To quote Gregor Macdonald, who writes on energy, “But as we have seen, highly optimized systems carry a latent fragility that is nearly certain to collapse, eventually.” Thus, there seems to be a trade-off between specialization and stability. If you relentlessly optimize each part with no awareness of the whole, the sum can never be greater than the parts. In fact, not only do you achieve the unintended effect of the component parts never coalescing into a greater whole, but you actually create a dangerous scenario where a small part can take down the whole. This leads to a key question: While our systems may be efficient, are they effective? It is surprising just how often this issue arises, even across a wide variety of disciplines.

You see it in economics in a variety of forms. When a country’s economy is based solely on commodities, it becomes particularly unstable, an economic phenomenon referred to as the Dutch disease (named after a crisis in the Netherlands in the 1960s wherein the discovery of vast natural gas deposits in the North Sea caused the value of the Dutch currency to rise but made exports of non-oil-related products far less competitive worldwide, leading to overall economic decline). In effect, a lack of industrial diversity leaves an economy vulnerable to collapse. Likewise, when a society’s distribution of income becomes too polarized, that society becomes unstable. Economists use an index called the Gini coefficient to measure income distribution. When the Gini for a country is 0, all wealth is divided evenly, and when it’s 100, one person has all the wealth. For the US, the Gini hit a high of 45 in 1929 and then surpassed that in 2006 when it reached 47. So the two highest Gini coefficients were followed by economic collapse. And the financial crisis was spurred by a distinct lack of diversity—banks, homeowners, and insurance companies all owned the same assets; portfolios weren’t diversified; and everyone was overleveraged.

It’s not just economics though; the Gini concept has been applied to biodiversity as well. Below a certain threshold of biodiversity, land ecosystems collapse. E.O. Wilson discusses this fragility in much of his work, explaining how the strength of our ecosystems is proportional to the strength of biodiversity. You see this in the positive ripple effects on vegetation and other animals when an endangered species is reintroduced to an area, such as when wolves were reintroduced to Yellowstone. It applies to our crops as well; we’re seeing larger and larger crop failures around the world due to disease and insects. We’ve engineered an overly specialized system based largely on a single crop, optimized with chemicals, that provides the majority of calories to the world. So now our diet is monocultured as well, which is evident in the abundance of calories we get from corn. Nutritional research shows that diversity in diet reduces cancer risk, meaning, inversely, that fragility of diet, or overspecialization, contributes to cancer.

We see the problem in the organizations we build. When companies cannibalize a market, it can leave them vulnerable. When organizations become large, specialized structures, they tend to lose their innovation. In politics, the lack of a stable middle class contributes to the fall of governments, while a strong, diverse middle class leads to stronger democracies. When our political discourse is severely polarized, there is little debate, and our government becomes unstable. Writing on future predictions in The Economist World in 2011, Nassim Taleb had this to say:

Connectivity and operational leverage are making cultural and economic events cascade faster and deeper. Anything fragile today will be broken by then.

The great top-down nation states will only be cosmetically alive, weakened by deficits, politicians misalignment of interests and the magnification of errors by centralized systems. The pre-modernist robust model of city-states and statelings will prevail, with obsessive fiscal prudence.

The mathematician, Benoit Mandelbrot, most famous for his work on fractals and their relevance to many disciplines, had a term for this type of diversity—roughness. When the systems we build become specialized and ultraefficient—to continue Mandelbrot’s theme, when they become smooth—they tend to collapse. To counter this, we need to think in systems more generally and to introduce a little more roughness into them. Nature does this automatically—random mutations coupled with selection have built beautiful structures, from the simplicity of the fruit fly to the biocomplexity of man.

There’s a movement for more “design thinking” and a call for more designers. Tim Brown calls these people “T-shaped people” for their breadth of knowledge (the horizontal top of the T) and their depth of skill and ability to “drill deep” (the long, vertical stem of the T). Seth Godin speaks of the need to be an artist, and Malcolm Gladwell talks of mavens, who educate themselves in diverse areas of interest and share that information with others. Aristotle talked about the superiority of the “mastery sciences”—the highest disciplines that put all the pieces together—and Isiah Berlin famously illustrated the difference between the foxes and hedgehogs of the world, the first being all-seeing generalists while the latter are tunnel-visioned specialists.

It seems then that some of the brightest minds are calling for a step back from specialization. What we need is more complexity, more polymaths, jacks of all trades, and systems thinkers. In financial terms, a little more beta and a little less alpha would do the world good. To quote Paola Antonelli, writing in The Economist World in 2011:

Theoretical designers will be exquisite generalists—a bit like French philosophers, but ready to roll up their sleeves. Applied designers will visualize complex infrastructures and systems so that scientists, policy makers, and the general public can manage and influence them; they will bring economy and common sense to the production of consumer goods.

So let’s step back and embrace the complexity. Let’s think about platforms, not just products, and systems, not just individual solutions. We have the tools, technology, and infrastructure to connect the dots like never before. Though it is true that it’s easier to put the pieces together than ever before, it is simultaneously potentially overwhelming—however, the imperative is clear. Let’s make the choice to solve the big problems, to introduce diversity, to be, in effect, polycultured.

Over the course of this year, I hope to write more routinely. In the coming weeks I’ll outline a handful of trends that I see and post related topics on Twitter (#mono for this theme).