By John MacDonald
Business will always be part of something larger than itself. To be successful, a startup must consider its role in this broader market. History shows that progress often consists of great revolutions that begin slowly but ultimately become democratized institutions. Often, the revolutionary idea is a solution waiting for a problem. Examples of these are: literacy, timekeeping, electrification, and communication. Each has experienced three sometimes overlapping phases of development. First is novelty; when cost is prohibitive and the service is available only to the very wealthy or otherwise well-connected. Over time, demand becomes prevalent as people recognize the benefit, even if they can’t pay for it. This leads to Phase 2: industry. Methods are developed to reduce cost, leading to widespread, but incomplete, availability. The third phase is institutionalism: public sentiment dictates that all people should be entitled, prompting governments to undertake infrastructure development which leads to complete democratization. The constant in all phases is demand: people want the service because they realize its public benefit.
Study of these great ideas reveals a complicated, centuries long dance taking place among innovators, industrialists, and the public. Business, in the sense of making products or services and trading them for common currency, is a partner in this overall human trajectory. It is interesting and informative to review a few of these great ideas that have shaped our world.
Literacy
For most of human history, literacy was regarded as unimportant but for a special class of philosophers and scribes. Invention of the movable-type printing press began a revolution in literacy and public education that has taken 550 years to become nearly fully institutionalized.
Gutenberg developed the movable-type printing press in the mid-15th century. There had been printing presses for hundreds of years prior to this, but his is regarded as the first to permit mass-production of books. Still, this was a solution in search of problem; namely, nobody knew how to read. What good was printing one hundred bibles if you could only sell two of them? The first decades after the invention were a novelty phase, as universities and government libraries began to have greater access to printed materials, while commoners still had none.
The industrial phase of literacy includes the development of low-cost manufacturing of cotton- and pulp based paper, the development of book-binding, and ink manufacturing. This was soon followed by authorship, which included science and educational texts, political discourse, and even fiction storytelling. The extremely wealthy could now send their children to school. There was rapid growth of science, philosophy, and mathematics, which led to further demand. But the businesses making and selling books were not equipped to teach everyone to read.
As people began to realize the tremendous value of literacy for all, governments were pressured to step in with new laws that encouraged it. Scotland has been regarded as the first nation to require compulsory education: in 1496, the Scottish parliament passed the first of a series of laws requiring the eldest sons of wealthy landowners to learn Latin. By 1633, they had mandated a public school in every parish, paid for by taxes [1]. Over the next 200 years, compulsory education in one form or another was established in most of Europe and the American colonies.
It took until the mid-19th century for the idea of universal public education to be deemed essential by most governments; the idea that every person should benefit from state-funded education. Massachusetts was the first state to standardize an educational curriculum, in 1837. By 1918 compulsory attendance through elementary school was the law in every U.S. State. Still, by 1920, only 30% of Americans had attended some form of high school. Today, about 90% of the world’s population is literate [2].
550 years, and we are on the cusp of 100% literacy. The story behind this revolution highlights the complementary roles of demand, business, and public policy created by a solution to what was once considered a nonexistent problem.
Timekeeping
As our society became involved in activities unrelated to agriculture, we needed the ability to quantify time. Later, we figured out how to package it into marketable slices.
For millennia, knowing when to plant crops or start the annual hunt was sufficiently high-tech for the lifestyle. Global exploration and transportation could not occur on a large scale until time could be quantified; not seasonally or even hourly, but to the minute and second.
Determining your position relative to the equator (latitude) is relatively straightforward by measuring the sun’s elevation. Determining your east-west location (longitude) is much harder. In order to avoid becoming lost, you must know what time it is relative to a standard, such as the Prime Meridian. This requires a clock that stays accurate for many months amid the difficulties of sea travel. Both public policy and innovation were required to solve this.
In 1714, the U.K. Parliament offered a £20,000 reward for an instrument that would solve the longitude problem. In 1736, John Harrison successfully demonstrated the first of several versions of “chronometer” that was accurate to about 2 minutes over 6 weeks at sea [3]. This initiated the industrial phase, kick started by policy. Soon rugged, accurate clocks were readily available. But just like every clock, they needed to be set. This required a government-sized effort to maintain an accurate time standard at the Prime Meridian, now known as Greenwich Mean Time (GMT). “Time balls” were installed at naval observatories and major port cities. The large wooden ball at Portsmouth, U.K., for example, would drop every day at precisely 1 PM. Ships in the harbor could set their clocks to the dropping of the ball, like Times Square on New Year’s Eve, but without the revelry.
Industrialization of timekeeping began with the chronometer and proceeded to the railroads. The railroad problem required accurate time scheduling for arrivals and departures. Prior to standardization of time, each town managed its own local clock, often determined by the sun. In the northern temperate zones, these differences amounted to about 7½ minutes for every 100 miles east-west. The problem gets worse if there are multiple trains on one track.
As a matter of public policy, Britain adopted the use of “railway time” (as GMT) in the middle of the nineteenth century [4]. The U.S. adopted standard time zones along the entire east-west rail system in 1883 [5]
The demand for higher accuracy persists today. The radio station WWV began broadcasting frequency standards in 1922 and switched exclusively to broadcasting time standards in 1945. Loran, a system for naval and aircraft timekeeping and navigation, began in 1941 [6]. Government observatories across the globe now coordinate and synchronize their atomic clocks to ever-increasing accuracy. Every e-commerce transaction uses this global standard, known as UTC. Even the name UTC represents a public-policy compromise between French (Temps Universel Coordonné) and English (Coordinated Universal Time). All the while, industry develops and produces goods and services that utilize these public initiatives.
In the early 20th century, a secondary aspect of time began to emerge: the ability to package it into quantifiable economic bits. Frederick Taylor, working for Bethlehem Steel, pioneered the science of analyzing time as an economic resource, and is considered the father of Scientific Management. By carefully studying the work habits of steelworkers, Taylor was able to define, down to the second, the amount of time required to perform routine tasks. This led in turn to the standardization of work tools (prior to Taylor, workers often brought their own tools to the factories) and time sequencing, all in the name of maximizing efficiency. As Taylor wrote in The Principles of Scientific Management in 1911, “In the past the man has been first; in the future the system must be first.” For good or bad, time had become a commodity to be exchanged and managed like people and capital.
Today, GPS and other global positioning systems provide “free” time to the entire world, accurate to about 1 ns. The intent of GPS was military navigation, but industry quickly innovated increasingly sophisticated democratized solutions unforeseen by the original policy-makers. We may say the democratization of timekeeping is fairly complete. If marked by the naval chronometer, this revolution took about 250 years.
Electrification
On a quiet evening in 1881, at a private home in New York City, a simple on-off switch was thrown by Thomas Edison and in that instant, amid the cries of astonishment from the gathered dinner guests, the world changed forever. For the first time, a private home had been illuminated by electric light [7].
This wasn’t just any private home. It was J. P. Morgan’s mansion at 219 Madison Avenue. The cost of installing the on-site boiler, steam engine, and generator to produce the electricity was enormous. Would this remain just a novelty? Or was there a path toward illuminating every home, every street, every place of business or worship, everywhere? We know the answer now, but it was uncertain at the time.
There were gas lamps and arc lights that sort of half-illuminated homes and streets for two decades. But this was different. There was no dim flicker of a gas lamp, reminding you that it was really night time. And looking at an arc lamp…well, you didn’t do that because it would blind you. And no-one would put an arc lamp in their home. You could stare straight at these new electric light bulbs safely. And they would light up the room as if it were day. But therein was a solution to a problem that didn’t exist: everyone wanted to light up their house, but no-one had electricity. It’s like printing books that no-one knows how to read.
Niagra Falls, ON, CA: author’s collection
Edison’s main contribution wasn’t the light bulb, it was his distribution business model. He realized that the only way to sell light bulbs to people other than J. P. and his peers in the stratosphere was to distribute the electricity from a central location.
Much has been written about the acrimony between Edison and Tesla, and I for one will not wade into that arena here. Suffice it to say that Edison figured out the business model (central distribution), while Tesla figured out the distance problem (high voltage 3-phase AC). The industrial phase began in earnest once Tesla’s brainchild, the Niagara Falls hydroelectric generating station, began operation. This was a project of enormous scope that had never been attempted in the history of the world. In November, 1896, 3-phase AC current was delivered to Buffalo, NY, 25 miles away [8]. This was not the first time that water had been harnessed for power, but it was for the first time done on this enormous scale. And that power didn’t care whether you were a multi-acre manufacturing plant or a humble residence – there was light for everyone.
In the U.S., while the production of electricity increased rapidly, from 5.9 GWh in 1907 to 75.4 GWh in 1927 [9], it did not take long for the industry to run out of markets. Most service was located in urban or suburban areas; it was not economical to deliver electricity rurally. At the same time, the human benefit of electricity had rapidly grown in the consciousness, and people demanded it as a matter of public policy.
In order to provide electrical service, companies had to build generating stations large enough to power a good portion of a city. In order to be cost-effective, the company needed to sell to most of the people within reach of the station. Competition did not work – multiple companies building multiple stations in one locality would all fail. In the early phase of industrialization, providers would purchase exclusive franchise rights in each locality. However, this quickly led to bidding wars among competing electricity providers, graft, and bribery involving countless unscrupulous city officials, threatening the enterprise entirely.
The solution in the U. S. was for utility companies to partner with the public. State governments formed regulation boards to oversee infrastructure and determine standardized rates. In return, the utilities were granted a statewide franchise. In effect, utilities would be controlled by government in exchange for a monopoly. By 1914, 43 states had such commissions. Without these public-business compromises, democratized electrification would likely have failed [10].
Still, rural markets were left mostly unserved. This solution required federal-level public spending over many decades. In the United States, in 1930, only 10% of rural areas were electrified. By 1939, it had risen to 25%. From a global perspective, access has taken longer, but progress continues. In 1994, 76% of the world’s population was electrified. By 2016, that number had increased to 89% [11]. Lack of access is still mostly rural.
It has taken a little over 100 years since the switch was thrown at Niagara Falls to almost total democratization of electricity.
Communications
We are in the midst of the communications revolution now, even though it may be considered the oldest idea, and is likely to continue to be institutionalized for a long time. It has also taken many forms. Grunting and pointing. Fire-signaling along the Great Wall. Smoke signals. Semaphores and time balls. For much of human history, communication was confined to visual sight-lines.
In more modern times, we can trace the availability of longdistance information transfer to the first practical electric telegraph, invented by Samuel Morse in 1837. Unlike the printing press, the railroad, and to some extent the light bulb, the telegraph was a solution to a problem that did exist; that of sending messages over long distances. Still, telegraph began as a novelty, for economic reasons. Only large corporations and governments had access. Few, if any, had a telegraph in their home.
The industrial phase ramped up after the development of the telephone. Demand existed, and industry developed cost-effective solutions. It took only about 100 years to completely democratize telephone service in the U.S. In 1920, 35% of homes had a telephone; by 2000, 98% [12]. Rural distribution was an easier economic hurdle for industry to undertake compared to electricity—just put up a wooden pole and string low-voltage wires.
In many ways, broadcast radio is the first real example of the democratization of information, followed by television. Cutting the cord meant cutting the infrastructure cost. However, broadcast is still one-way. The institutionalization continues with each advancement in two-way communication. After 150 years, we are on the verge of institutionalizing interpersonal communications. Public policy has been shaping this progress for over 100 years.
Perhaps one of the most important aspects of public policy as it relates to wireless communications is the legal concept that frequency spectrum is a natural resource to be managed by government (the people). Companies rent spectrum and in return agree to develop it. An example is the transfer of development rights in the obsolete UHF TV spectrum to wireless carriers who develop mobile telephony. This policy has led to a largely successful marriage between private enterprise and public trust.
Some have called this the Information Age. I think that’s a misnomer. I think it’s the Communication Age. Who will deny there’s more “stuff” being shared? But how much of it is information? Perhaps that’s a question for Claude Shannon. The father of information theory defined communication with this classic bit of understatement (emphasis mine) [13]:
The fundamental problem of communication is that of reproducing at one point either exactly or approximately a message selected at another point. Frequently the messages have meaning…
Today, ever-increasing public demand drives access to highspeed, reliable wireless communications. Many still lack such access. We are engaged in public discourse about how to provide that access, and increasingly we see it as an entitlement. We are repeating the process of democratization that took place with literacy, timekeeping, electrification, and many other great ideas.
Summary
Many of history’s great ideas began from a solution without a problem. The printing press (nobody can read). The railroad network (we can’t schedule service). The light bulb (nobody has electricity). But in each case, demand led to institutionalization, requiring a combination of innovative industry and public policy finally providing complete access. Business is an important partner, but ultimately it is the people that determine whether an idea is truly great.
Entrepreneurs and business development people constantly strategize about where to place limited investment resources to maximize results. Understanding the complicated interplay between innovation, industry, and public policy should be part of every informed decision. What will the next great revolution look like?
About the Author
John MacDonald is President of ZPoynt Systems, an engineering/business-development consulting firm located in Southeastern Pennsylvania. Z-Poynt provides services for photonics and fiber optics, satellite equipment design and manufacturing, RF and microwave communications, and general engineering consulting.
Mr. MacDonald co-founded Linear Photonics, LLC in 2004 and built it into the dominant market provider of microwaveover-fiber solutions for government and commercial applications. These systems enable long-distance communication of ultra-broadband information signals, as well as the distribution of ultra precise time and frequency standards
Prior to Z-Poynt and Linear Photonics, John was Engineering Manager at Lockheed Martin Space Systems company, responsible for satellite payload equipment, and Product Line Manager at JDS Uniphase, specializing in photonics communications systems.
Mr. MacDonald is also a serial entrepreneur, having founded or co-founded 5 startups ranging from computer development and service, photonics and fiber optics, satellite communications and engineering consulting.
John holds a BSEE degree from the Rochester Institute of Technology, and an MSEE from Syracuse University, and serves as adjunct professor of engineering at The College of New Jersey.
For questions or comments, John can be reached via email
at zpoynt@outlook.com
References
[1] Arthur Herman, How the Scots Invented the Modern World, (2001) MJF Books, NY.
[2] “American Public Education: An Origin Story”, (April 16, 2013) Education News, education news.org.
[3] G. J. Whitrow, Time in History: Views of Time from Prehistory to the Present Day, (2004) Oxford University Press, pp. 141-142.
[4] Ibid., pp. 161.
[5] “Railway Time Belts,” (Oct. 10, 1883), NY Times article.
[6] J. A. Pierce; A. A. McKenzie; R. H. Woodward, R. H. (eds.), (1948) LORAN: Long Range Navigation, New York: McGraw Hill, pp. 19–51.
[7] Maury Klein, The Power Makers (2008), Bloomsbury Press, NY, pp 169-172.
[8] W. Bernard Carlson, Tesla: Inventor of the Electrical Age, (2013) Princeton University Press, pp. 162-175.
[9] https://americanhistory.si.edu/powering/past/h1main.htm
[10]Ibid.
[11] https://data.worldbank.org/indicator/EG.ELC.ACCS.ZS
[12]www.statista.com
[13] Claude E. Shannon, A Mathematical Theory of Communication,
(1948) The Bell System Technical Journal, Vol. 27, pp. 379.
About This Column
This is a regular column that explores business aspects of technology-oriented companies and in particular, the demanding business aspects of photonics startups. The column touches on a broad range of topics such as financing, business plan, product development methodology, program management, hiring and retention, sales methodology and risk management. That is to say, we include all the pains and successes of living the photonics startup life.
This column is written sometimes by Daniel Renner, the column editor, and sometimes by invited participants, so that we can share multiple points of view coming from the full spectrum of individuals that have something to say on this topic. At the same time, this is a conversation with you, the reader. We welcome questions, other opinions and suggestions for specific topics to be addressed in the future.
The expectation for this column is to provide useful business-related information for those who intend to start, join, improve the operation, fund, acquire or sell a photonic startup. A fascinating area that can provide enormous professional reward to those engaged in it.
