Zizo Bahnasy

I recently read a book that had a deep impact on the way I understand what makes an enduring and worthwhile strategic contribution to the world, especially at a time when many of our society’s most entrenched institutions are being upended. William Kirby’s Empires of Ideas is a book on the shift in global power since the industrial revolution through the formation of the world’s most productive universities, which have played a key industrial and societal role in bringing together talent and resources in the pursuit of novel research. At a glance, it’s a story of soft power and intellectual freedom on a geographic axis, but at a different level, it’s a story of what it takes to build enduring institutions that attract the world’s most talented people and which serve the critical mission of mobilizing resources to enable the advancement of knowledge and, consequently, real economic growth.

These universities have become critical engines for development across large swathes of society, and in the process they’ve become an important benchmark by which we measure the power of a society.

Even intuitively, when you try to think of the world’s most dynamic nations as an investor or an entrepreneur or a researcher, what immediately comes to mind is their roster and depth of universities. America is not one of the most powerful countries in history solely on the basis of its military might — it’s one of the most powerful countries in history on the basis of its ability to attract the most talented people from every country on the planet to invest their lives in its society and economy through its universities and their affiliated ecosystems. These institutions cyclically come to exist from clusters of human capital, financial capital, and trusted governance that give people the room they need to explore new ideas and pursue them courageously and creatively — it is this environment, which precedes supply chains and lives principally in the realm of study and experimentation, that gives rise to the most rigorous innovation. It’s no coincidence that many of our great universities started as small academies and came to exist in their current form by meeting the needs of the industrial revolution before later powering the digital one through this combination of factors, a good example of which is surfaced in the rise of Silicon Valley through its relationship with Stanford.

And yet, importantly, the distribution of power — defined by the prevalence of these enduring institutions that foster innovative research — is shifting. There’s a geographic shift to the East, which is where the book limits the bounds of the argument, but there’s also, in my view, a shift from the formal university to industrial organizations that share many of the same key features and which solve an incentive problem endemic to the university itself.

Talented researchers who would otherwise traditionally build their career doing research at a university are instead going into industry and building companies or raising capital from private sources. This is because of the funding problem that threatens American universities existentially — as novel research becomes harder to do, it requires more money for experimentation, and it begins to require different incentives in order to minimize the opportunity cost for the researcher — as well as a new environment that makes it easier for somebody with strong technical ideas to build or contribute to a commercial product.

This is highly apparent with AI researchers, where a sufficient budget for the most cutting-edge research exists only at private companies that are able to commercialize the advancement, but it’s also apparent across most other innovative fields, where researchers are building usable products in order to use the real world as a zone of experimentation and simultaneously able to disseminate their knowledge through new, less bureaucratic channels. This shift also happens to create room for new institutions that are focused specifically on enabling researchers to build companies or applied research programs.

How is this relevant to me and my thinking process? Upon reflection, my goals in life have always been to build great institutions that move the needle on society’s development. This book changed my perspective on what makes a great organization and the scope of my goals by presenting case studies on the institutions that have defined the last two centuries of unprecedented economic growth. It’s not really about funding or product or mission (granted, these things certainly matter) — what creates a deeply enduring system is the development of a magnet for highly talented people, who then go on to do great things within your system in a way that accrues to the sum. This is true for countries, where the nations with the best universities dominate technology and industry; it’s true for cities, where the best universities’ nurturing of dense clusters of human capital produces places like Silicon Valley; and it’s true for companies and communities, where the best are the ones who are able to offer talented people an environment where they would thrive as part of a network or ecosystem. Whereas I once framed many of my goals in terms of specific products or incremental outcomes, this book actually changed my perspective on what I should be working on over the course of my life, which is building institutions that have deep societal implications by way of their ability to create these incentives for other people. There is no deeper moat than an environment that people want to invest their lives in, and this will define the distribution of global power in the decades to come.

I think there is a unique opportunity for industrial organizations — private investors and philanthropies who have increasingly long time horizons — to step up to the plate and fill the gap left by American universities. The problem we have discussed is compounded by the recent erosion of federal funding for scientific research, which has historically been as uniquely powerful as it is due to its ability to invest in basic research on the timescale of several decades, but which is now victim to the political whims of an increasingly polarized office.