The Republic of Venice was, undoubtedly, the most technologically advanced, financially sophisticated, and organizationally capable state of the 12th century. They primarily applied their capabilities to navigation and trade. Applying their capabilities allowed them to maintain them, as trade financed the fleet, and practicing nautical science continuously improved it. The Venetians were also pioneers in ship production, with their famous arsenal, where ships were manufactured in a Henry Ford-like assembly line, employing thousands of people and storing large quantities of vessels that could be quickly assembled and launched during emergencies. Their sailors were pioneers in the use and development of compasses, nautical charts, route books, and sailing close to the wind. It’s worth remembering that a ship is primarily a complex and expensive technological contraption that requires an ecosystem. The Venetians observed that at sea, the further you go, the deeper and more difficult and dangerous it becomes.
Technology itself is not necessarily useful or distinctive. A GPS, on its own, would have been a useless eccentricity on a Venetian galley because it requires electricity, a satellite constellation, and minimally qualified personnel to function. All technologies need the cost/benefit tetrahedron, people, solving a problem, and operating in an appropriate environment. They are vehicles that need these four wheels.
We can observe the same thing where there is maximum stress: on the battlefield. In Ukraine, there’s a missing wheel: the use of Western technology is limited by severe environmental deficits, specifically the lack of ammunition and land vehicles. These limitations mean that the Ukrainian armed forces are currently stagnant, and their objectives are dangerously fragile. In contrast, the Russians are effective today because, despite their technological limitations, they are supplementing their own ammunition deficits with old North Korean arsenals. As of now, they have four wheels, which aren’t very good, but they work.
Investors in technology would do well to remember that one must know what they’re investing in.
We can also observe how cost/benefit is key in technology. In the battlefield, missiles don’t compete well with drones in some areas for cost reasons. A missile is faster, carries a larger payload, and can travel farther, but it’s more expensive than a drone. If €400,000 missiles are used to shoot down €35,000 drones, victory becomes like that described by King Pyrrhus: “Another victory like this and I am lost.”
Sam Bankman-Fried created a cryptocurrency exchange, FTX, in the deregulated paradise of the Bahamas, a complex, almost psychedelic financial technology that is unclear what it solves. His market imploded because it lacked the tetrahedron, not due to technological problems or lack of vision. He has been sentenced to 25 years in prison for lying to investors and has gone, in a sneeze, from being a twenty-something billionaire with enviable hair, loved and universally admired, to being a convicted criminal, with no income, and abandoned by his friends and girlfriend, who testified against him. He is the crew member left semi-naked on a deserted island as punishment.
Investors in technology companies would do well to remember that one must know what they’re investing in and that technology itself has no value, nor is it a good investment without the tetrahedron. Never buy a car, no matter how good it is, if it doesn’t have four wheels.
Article written by Marc Murtra and published in La Vanguardia: Sam Bankman-Fried y el falso tetraedro
