Prologue: What Is the Singularity and Why Should I Care?

HUMAN BEINGS ARE genetically and mentally wired to think in straight lines rather than curves, and this is best exemplified by our expectations for the future. Back in days of prehistory the condition of the world-everything from its climate to the way a person found food and shelter-changed so slowly that the world into which you were born looked and felt exactly the same as it would when you died.

As humans developed technologies, such as the wheel, fire, iron and bronze smelting, and farming implements, those developments had major impacts on society, but they still took centuries to evolve. Because of that, the change was imperceptible during a persons' lifetime. By the period of classical antiquity in ancient Greece and Rome, new inventions and techniques gave technology a slope. Things might have changed between a person's birth and death, but the changes were not noticeable to the average person.

It wasn't until the late Industrial Revolution that inventions were coming fast and furiously, and so continuously that a reasonable person could expect that things would change for the better during their lifetime, and the line's slope became visible.

As the world entered the 20th century, not only was change expected but also an entire class of literature developed to imagine what technological developments the future would bring: science fiction.

Following World War II, the pace of technological change exploded as humanity moved from the first airplane flight to the first person walking on the moon in only 65 years . less than the average American life expectancy.

With the development of transistors, computers, integrated circuits, global wired and later wireless communications networks, autopiloted planes and self-driving cars, and eventually artificial intelligence (AI) software so "smart" that it could graduate from college, the slope of the line appeared to get ever steeper.

But our human perceptions are all wrong! The development of technology-and thus its effect on the world in which we live-is not linear. It is not flat, not sloped, not even steeply sloped. It is, instead, an exponential power curve.

If you go one step up for every one step you take forward (thus tracing a straight line), after 30 steps forward you will be 30 steps higher. But if instead of adding one step up for each step forward, you were to double the number of steps you take up each time, then after 30 steps forward you would not be 30 steps up . you would be one billion steps up!

Today, with the power of technology doubling every one to two years, futurists such as Ray Kurzweil project that the next major technological paradigm shift will arrive no later than 2045. And what will that be? They predict that less than 20 years from now, as I write these words, humans and computers will merge with each other! That is what is known as the technological singularity, because when that happens things will be so mind-bogglingly different from the world as we know it that we can't possibly even conceive what it would look like.

Ray first made that remarkable prediction in 2005 in a seminal book, The Singularity Is Near, the new version of which, The Singularity Is Nearer, should be required reading for anyone founding a new company. The resulting discussions spawned the creation of a unique organization, part think tank and part executive training program, originally called Singularity University, with support from organizations including Google, NASA, Nokia, and LinkedIn. Ray Kurzweil was the chancellor, Peter Diamandis (the founder of the X Prize Foundation) was chairman, Salim Ismail was the program director, and I was the founding Track Chair for Finance, Entrepreneurship, & Economics.

Why is all this important? Because at the time I made the following rather brash statement: "Any company designed for success in the 20th century is doomed to failure in the 21st." While that may sound overdramatic, the ensuing decade and a half has born me out. Companies such as Blockbuster, Sears, Toys R Us, Borders, Circuit City, and Radio Shack are no longer around, while other major names including General Motors, Chrysler, Delta, American Airlines, Kodak, Brooks Brothers, Neiman Marcus, J.C. Penney, and Hertz, have all filed for bankruptcy since 2000.

Reid Hoffman, in his book, Superagency, notes that there is a spectrum of attitudes toward where explosive growth in the power of AI will take us. At one end are the Doomers. They believe AI is an existential threat that could bring about catastrophic consequences. Then come the Gloomers, who are skeptical and advocate for stringent regulatory controls but stop short of outright rejection. Zoomers, by contrast, are those who champion rapid AI expansion without much concern for potential risks and are often anti-regulation. Reid and I, however, identify ourselves as Bloomers, those who believe that AI (and exponentially advancing technologies across the board), when properly guided by intelligent risk management, can be an overwhelmingly positive force for humanity.

While reading this book, keep in mind that in this world of exponential technological growth, everything is changing literally every day. That's why you need to be completely flexible and understand that things that might seem immutable today may completely evaporate tomorrow. As an entrepreneur, you must be mentally prepared to take advantage of those changes, rather than be overwhelmed by them.

One way to do this is to ensure that from the very first instant of ideation, to the final exit, you design, build, and operate your new venture as an Exponential Organization (ExO).

The Exponential Organization

An ExO is a purpose-driven, agile, and scalable organization that uses accelerating technologies to digitize, dematerialize, democratize, and demonetize its products and services, resulting in a 10× performance increase over its non-ExO peers.

As Salim Ismail and Peter Diamandis observed in the latest edition of their definitive book on the subject, between 2014 and 2021 the top 10 most ExO-friendly companies in the Fortune 100 blew away the bottom 10 least ExO-friendly by the following metrics:

• Revenue growth: 2.6 times higher
• Profitability: 6.8 times higher
• Return on assets: 11.7 times higher
• Total shareholders return (CAGR): 40 times higher

Therefore, when building your new venture, be sure that you continually ensure that it has all the attributes of an ExO. Here is the list from Salim's and Peter's latest book, Exponential Organizations 2.0, available free online at https://openexo.com/book:

The first stands alone: Massive Transformative Purpose (MTP). As the name suggests, MTP is the ExO's core reason for existing. MTP is the foundation upon which all company actions take place. It establishes a long-term goal for the company so sweeping and profound that it is always within reach yet always unreachable. It sets a moral foundation for all company interactions between all stakeholders. It keeps the company disciplined and on target. It inspires employees and customers. And it galvanizes employee morale and retention.

Beyond MTP, 10 key attributes define and power ExOs. The first five characteristics are the "outward-facing" traits of an ExO and are encapsulated by the acronym SCALE.

SCALE: Outward-Facing Characteristics

1. Staff on Demand: Increasing speed and functionality by leveraging external workers according to need rather than hiring internal employees.
2. Community and Crowd: Attracting, engaging, and leveraging communities and the crowd, whose like-mindedness adds to creativity, validation, and even funding efforts.
3. AI & Algorithms: Leveraging automated functions (machine learning, deep learning, etc.) to obtain new insights and automate operations and services.
4. Leveraged Assets: Accessing, sharing, renting, or otherwise outsourcing assets to remain nimble and reduce capital expenditures.
5. Engagement: Leveraging outside interest through gamification, digital reputation systems, incentive programs, and crypto economics to create network effects and positive feedback loops.

The next five attributes of an ExO are inward-facing. They are encapsulated by the acronym IDEAS.

IDEAS: Inward-Facing Characteristics

1. Interfaces: Different ways of interacting, processing, and automating the SCALE attributes so the organization is doing the right work at the right time.
2. Dashboards: Making real-time information, with essential company and employee metrics based on Objectives and Key Results (OKRs), accessible to everyone internally, with short feedback loops.
3. Experimentation: Introducing lean startup methodology in all departments, with new ideas and processes, culturally enabling rapid, validated learning.
4. Autonomy: Instituting a flat structure that allows individual employees or multidisciplinary teams to operate independently and effectively.
5. Social Technologies: Leveraging peer-to-peer collaborative tools to facilitate transparent, real-time conversations across the organization.

Keep these attributes in mind as you navigate through the chapters that follow, and continually view everything you do through the lens of exponentially advancing technology. It will stand you in very good stead and help to "future proof" your...