Bismarck Analysis
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We help companies, governments, philanthropists, and investors in their vital role of advancing civilization. Since 2017. Founded by @SamoBurja.
San Francisco, CA
Joined March 2022
Three years ago, we launched Bismarck Brief. Since then, our analysts have written nearly 1 million words on emerging technologies, global industry, and the world's most influential individuals. Here are the 7 most important things we learned about how the world works in 2024:
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One year ago today, we launched Bismarck Brief. Since then, our analysts have written over 250,000 words on the state of the world—from China to the U.S. and everything in between. Here are the 11 most important things we learned about how the world works in 2022. 🧵THREAD:.
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Two years ago, we launched Bismarck Brief. Since then, our analysts have written half a million words on the state of technology, the U.S. government, Chinese industry, and the world. Here are the 9 most important things we learned about how the world works in 2023. 🧵THREAD:
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India has the third-highest number of unicorn startups worth over $1 billion, after the U.S. and China. But per capita, the unicorn distribution worldwide looks very different. Both China and India lag behind even Europe, while the U.S. is on par with Israel and Singapore.
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If billionaires are unduly influential by virtue of spending lots of money, then by the same metric the influence of bureaucracies or universities is a behemoth tidal wave. The Pentagon alone spends 4 Elon Musks each year. Billionaire spending is a few drops in the bucket: 🧵
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Breakout successes like Squid Game have created a false impression that Netflix is a platform for truly international cultural exchange. In reality, the data shows cultural flow is overwhelmingly one-way: American films and shows broadcast to a mostly foreign audience.🧵
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#1. The wealthiest people in the world are not motivated by money. They are motivated by idiosyncratic ideological, personal, and prestige goals. Often, they simply want to be the most powerful and important person in a field. As a side effect, they become rich.
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One of the most important maps for understanding Europe's internal politics. France and Germany, the EU's two biggest countries, disagree on whether nuclear energy should be considered renewable for the purposes of EU financing.
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Money is very useful. But it is infrequently the bottleneck it seems to be. Key bottlenecks are more likely to be in skill, time, knowledge, social capital, and social technology, rather than mere funds. Misunderstanding this leads to financial losses and no progress.
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Steel is the alloy that underpins all industrial civilization. It's needed for skyscrapers, bridges, highways, appliances, tools, missiles, machine guns, tanks, airplanes—you name it. No steel, no civilization. China produces a full 57% of the world's steel. Look it up.
Absolutely false. Once you start disaggregating data, you will see that China is an economic dwarf in too many chokepoint industries. Producing lots of consumption goods does not mean you are the industrial superpower. Will elaborate later.
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In 1997, 31% of Germany's electricity came from nuclear reactors. In 2021, it fell to 12%. Half of Germany's remaining nuclear reactors were shut down last year. The other half are scheduled to be shut down this year.
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#1. Most large companies are not mission-driven organizations designed and led to meet a technological or logistical goal and capture profit from the value they create. Rather, they are designed, managed, and treated as financial products optimized to meet financial metrics.
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There is one notable exception to this rule: dead players are genuinely motivated by money. The most profitable companies in the world are essentially state-owned oil companies and banks, plus Apple, Google, and Microsoft. No innovators.
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#2. Strategically, money is a surprisingly weak resource. No matter how many things you can buy with money, the list of things you cannot buy is even longer. This applies both to individuals and to organizations.
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A fact that is almost too incredible to believe:. One Netflix cofounder is related to Edward Bernays, "the father of modern propaganda," and Sigmund Freud. The other cofounder is related to Henry Stimson, the U.S. Secretary of War in both WWI and WWII.
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China and Saudi Arabia have similar problems. The Saudi Crown Prince is trying to invest his way into industrializing Saudi Arabia. China is trying to invest its way into industrializing Pakistan. Both plans are failing. You cannot buy industrialization with money.
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Each weekly Bismarck Brief brings us closer to creating an informational and intelligence product like no other: . The first-ever atlas of live players and institutions, capturing the shape and structure of our civilization and the people steering it in unprecedented detail. 🧵
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#1. Every feat of technological mastery has at least one unique, hard-to-replace tradition of knowledge behind it. Breakthroughs are not inevitable results of societal progress, but pinnacles of perhaps decades of hard work by geniuses. Artificial intelligence is no different.
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Qatar, Russia, Norway, Australia, and so on—we think of these countries as well-endowed by nature or luck with valuable natural resources. But in reality, they are actually just the countries with the most functional resource extraction institutions.
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#10. Many of the most important players in the global system of political economy are really, really old. Klaus Schwab is 84. George Soros is 92. Henry Kissinger is 99. These are not Baby Boomers. They’re even older; old enough to remember the 1930s and the start of World War 2
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At 80 or 90, an elderly live player may no longer be completely lucid. But they are a wealth of favors owed and promises kept. They know where the bodies are buried—bodies that everyone else has forgotten or never knew existed in the first place.
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Counterintuitively, societies are politically dominated by the old, not the young. How do low-energy elderly people enforce their will on everyone else?. An elegant explanation is that exercising power requires social capital. And the best measure of social capital is age.
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The idiosyncratic companies behind this innovation—TSMC, ASML, Zeiss—can practically be counted on one hand. At every layer of the hardware stack, there is effectively a monopoly or duopoly. It is not just a supply chain, but a chain of interlocking traditions of knowledge.
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We're happy to launch the official Bismarck Analysis twitter account! . You might know some members of our team such as the founder @SamoBurja, or senior analysts like @benlandautaylor. Follow this account to see all of our output in one place!.
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This leads to income equality, but not wealth equality. But it succeeds at aligning political and economic elites. Sweden is thus a very stable society. The most important family playing this role in Sweden is the Wallenberg family. Read the Brief here:
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A motivation for empire-building is frequently mistaken as a motivation for money. Jeff Bezos’ growth philosophy is similar to Foxconn’s Terry Gou. Both men prefer growth to profit, even in the long-term. They would never sell business empires for mere money!
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This suggests that global technological progress is more fragile than it looks. If quantum or AI turn out to be dead ends, then both China and the U.S. will suffer the same defeat. It also suggests that something or someone is intellectually upstream of both China and the U.S.
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Sweden is archetypal of one solution: social democracy. In short, the most important industrialists ally with political elites against small business and high-earning employees. Big business gets even bigger. In exchange, its bigger profits fund social programs.
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The U.S. government spends more on kidney dialysis in Medicare ($28B) than it allots to NASA ($25B). More federal money is spent each year on soda and sweetened drinks (~$10.5B) than Elon Musk could spend if he wanted to spend his whole fortune to the last penny before he died.
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Successful experiments by small states have outsized impacts on what large states think is feasible or acceptable. Dubai has shown new cities can still be built from scratch. Estonia that it is indeed possible to replace bureaucrats with computers. Or look at El Salvador…
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Masayoshi Son poured $150 billion into the global tech industry. After 5 years, there isn’t one clear example of a tech innovation that would not exist if that money had not been spent. The money just failed to drive innovation. Read the Brief here:
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Others have much stranger motivations. @ElonMusk really wants to colonize Mars. Larry Fink wants to control global economic decision-making. Masayoshi Son wants to make cyberpunk real. The Koch brothers really wanted to persuade everyone that libertarianism is good and true!
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The Moroccan royal family educates its princes in tiny classes with the other students selected from the smartest and most accomplished pupils in the whole country. The prince gains not just trustworthy friends, but accountability!. Read the Brief here:
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It is an open question how much of the economy is capitalism vs. custom. In 2022, gov't spending alone was 37% of U.S. GDP. Adding the guilds and cults, perhaps as low as only 10-20% of the U.S. economy is free markets. A very different economy from the one we are presented!
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When they finally die, that ledger of favors dies with them too. Old handshake deals are finally broken. Important secrets are lost to the grave. The consequences are difficult to track because they are by nature illegible to outsiders. But we can infer they exist.
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The explosion of software advances made by OpenAI or Midjourney or Tesla have one thing in common:. They are all enabled by hardware advances in manufacturing better and faster computer chips. It is more computation rather than novel architecture or new data that has driven it.
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#3. The economy runs on custom as much as it runs on capitalism. What economists call "distortions" in the free market are far too numerous and strong to be merely that. It is rather that alongside a market, there are also the same guilds, patrons, clients, and cults as ever.
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The Dutch tradition of knowledge in photolithography behind ASML dates back to the 1960s, with roots in the 19th century!. Replicating it is not a matter of funds, but of intangible knowledge. Read or listen to our publicly-available Brief on ASML here:
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In defense contracting, pharmaceuticals, and many more industries, the average company does not target tangible, useful goals in the real world, but intangible financial metrics or even social goals. Most companies are not even trying to be productive as commonly understood.
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DARPA is a canonical example. DARPA has driven technological advances in the internet, drones, stealth technology, and much more, with less than 200 employees and a fraction of a percent of the Pentagon’s budget. Read the Brief here:
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#3. Aligning political and economic elites is a problem in every society. By default, there seems to be low overlap between the most politically influential people and the most economically influential. A fractious elite leads to social strife and conflict. What’s the solution?.
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#4. Natural resources are very important. But their importance is not measured in estimated reserves, but in the functionality of the institutions that intend to extract them. Having lots of oil is worthless without wells, refineries, and pipelines—and technical experts.
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#5. Energy really matters. Where a society gets its energy determines its global relevance and political economy to a surprising degree. Each source of energy has notably different effects.
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#11. Finally, the last thing we learned: the succession problem is a big problem everywhere. Very few live players and institutions have clear and skilled successors.
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#6. The Middle East is surprisingly dense with live players. Turkey is suddenly a drone power. Israel is suddenly a cybersecurity power. Saudi Arabia is suddenly a global investing power. Many political leaders are also clearly live players, such as the King of Morocco.
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Perhaps an underrated factor in US-China rivalry is how many key players who brokered China’s reform and opening have died of old age in the last decade. The rest are likely to die in the next five years. Xi Jinping is, after all, the first Chinese leader born under communism.
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China is overwhelmingly dominant in rare earths because it set up the industrial ecosystem necessary to cheaply mine, refine, and manufacture components from rare earths. Not because of luck in natural deposits. Read the Brief here:
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#7. Functional institutions can be and are often small. Very small. The size of an organization, in terms of budgets, staff, and expenditures, is at best only a weak signal of functionality. Often large institutions are really subsidized by much smaller ones.
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#2. Technical succession failure kills companies. From Intel to Boeing to Sony, the story of once great technologically advanced companies dying begins with the ascendance of a CEO who is an outsider to the company's technical tradition of knowledge.
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Intel's first technical outsider CEO decided to stop experimenting with new chips—like for the iPhone. Boeing's decided to stop designing more ambitious planes, but re-release tweaked old ones to save money. Sony's decided to stop betting on new consumer electronics products.
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The only region where American films and shows aren't dominant on Netflix is Asia. Indian productions dominate the subcontinent, and South Korea, Japan, Thailand, and Indonesia all tend to watch their own shows in their own languages. But not Vietnam or Taiwan, in contrast.
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The term "industrialized" was quietly replaced with "developed" in order to paper over that industry in many cases had disappeared. Then intangible metrics like rule of law and respect for rights were added. But if developed doesn't mean industrialized, it means nothing much.
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Dynasties work well in large part because it is easier to transfer skill, knowledge, and power to a successor known as intimately as a child or sibling. The most successful family dynasties do not practice nepotism, but have invented unique social technologies to mitigate it.
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#2. Small states still matter. This may seem surprising in a world with one global superpower, the United States, and where even secondary powers like Russia or India often seem irrelevant in many domains. Yet experimentation in governance is far easier in a small state.
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#4. Many of the world's most powerful and important institutions are still actively run by an ancient social technology from time immemorial:. The family dynasty. No matter how large or complex societies have become, this social technology persists.
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To gain the fruits of a tradition of knowledge, you can either poach its practitioners or expensively attempt to learn all the knowledge from the ground up. And that is exactly what China has been trying to do, poaching many key people from Taiwan's TSMC.
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Estonia has backed up all its government systems and data on a sovereign server in Luxembourg in case of Russian invasion. A tantalizing possibility: the first "network state" in @balajis' terms is just Estonia, an actual state. Read the Brief here:
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The problem with such "portfolio" companies is that even if financially successful they are generally incapable of concentrating attention and resources to solving difficult technological or logistical problems that would increase wealth and drive forward progress.
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The purported nefarious spending by—for example—George Soros, Peter Thiel, or the Effective Altruists is literally too small to see on a chart next to the annual spending of bureaucracies, advertisers, or intelligence agencies. At $8.6B the Gates Foundation is at least visible.
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The original successful small state, Singapore, directly inspired Dubai and others. Today it remains one of the single wealthiest societies in the world, whose sovereign wealth funds alter social trends in the rest of the world. Read the Brief here:
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The environmentalist preoccupation with wind and solar power is less about reducing carbon emissions than what is perceived as excess energy consumption. This is why nuclear power is paradoxically not considered "green.". Read the Brief here:
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#9. The means to make energy abundant and cheap, even effectively infinite and free, already exist. But nobody needs or wants that much energy. So it isn't. This is the true reason why nuclear power, fusion, geothermal, fracking, and more are not pursued to their full extent.
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Asia is run by families. Singapore by the Lees. A different Lee family in South Korea runs Samsung; as are many other Korean conglomerates. Despite egalitarian optics, the families of both Shinzo Abe in Japan and Xi Jinping in China are full of past political leaders!
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China has another solution. Cooperative economic elites, like Tencent’s Pony Ma, are drafted into ceremonial political positions and given official titles. Uncooperative ones, like Alibaba’s Jack Ma, are punished by regulators and sometimes “disappeared” from the public eye.
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#8. Global technological priorities are surprisingly uniform. World powers are not operating on siloed traditions of knowledge that guide decisions on scientific and technological progress. Rather they seem to imitate each other, competing in a few narrow areas.
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The succession problem is simple but hard to solve: . A live player in charge of an institution must find a successor who both has the skill to achieve the institution’s mission, and the power to actually control the institution. Read more here:
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The centerpiece of progress has been the GPU, which means "graphics processing unit.". After all, it was originally designed by Nvidia to power video games, not AI!. Yet the live player behind it knew what else it could be used for. Read the Brief here:
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China’s model is interesting compared to the U.S. model. Rather than drafting its billionaires into formal government positions, U.S. billionaires are expected to sponsor political proceedings with their money. This is complained about, but no serious alternative is proposed.
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As live players retire or die without being replaced, the world’s institutions will become more rigid, less responsive to changes, and thereby more brittle. The succession problem has been a problem since time immemorial. And it will be a major problem in the future.
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But there will be no appetite for 10x'ing or 100x'ing the energy production of the human species, until there is a vision for what such energy could be used for. Whether it is AI, robotics, space exploration, something else, or all of the above, it is the key prerequisite.
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#9. A focus on dysfunctional institutions obscures the fact that Western institutions are still surprisingly functional in both large and small ways. The U.S. is still a global hegemon. Not just because of inertia, but because of functional institutions.
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With 35-45% of U.S. GDP spent by the government, and perhaps another 10% spent by nonprofits, it is possible that a majority of U.S. GDP is spent outside of the market, without regard to market signals or forces. It is perhaps time to rethink what we call this economic system.
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Twitter itself is proving to be an example. @ElonMusk has reportedly cut Twitter’s staff by over 50% in just a few weeks. The site still functions. A 24/7 public forum for 8 billion people run by just a few hundred people. Small and functional.
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. the Guild delivers macroeconomic stability, helps enforce the government's will abroad, and polices the worst abuses in its own ranks. In exchange, the government defends the Guild's privileges and profits, including via bailouts with taxpayer funds or newly-printed money.
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Defense contractor Raytheon, for example, is now a new corporation with the explicit goal of achieving financial stability through bundling unrelated businesses into a single corporate entity. Not building better weapons or radars. Read the Brief here:
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Successful and attempted military coups in Francophone Africa since 2020. The sudden wave of coup attempts is a result of France pulling its military and economic commitments to the region.
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Density of live players is not necessarily correlated to wealth or stability. Europe is wealthy, but seems to lack live players. Silicon Valley is dense with both wealth and live players, but the former is only a result of the latter.
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There is no better example of this than the U.S. financial sector, which is more like a self-regulating financial guild than an "industry.". The "revolving door" is not just simple bribery of government officials by financiers, but a major alliance….
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A failure to align political and economic elites can be very costly. In France, it seems that a conflict between the President and France’s formerly most important logistics magnate has cost France much of its influence in Africa. Read the Brief here:
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Ironically, it was Silicon Valley memes that changed this—when adopted by Chinese startup founders!. DJI's Frank Wang or TikTok's Zhang Yiming were dorm-room hackers inspired by the likes of Steve Jobs to build great global, rather than local, companies:
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Importantly, these firms are different from conglomerates, although they look similar:. Conglomerates, like Hyundai, intentionally "diversify" to achieve strategic capabilities and optionality, not to optimize financial metrics. Read the Brief here:
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New and nimble companies led by live players tend to have clear and charismatic goals, whether one thinks of Amazon's "everything store," OpenAI's aim to create artificial general intelligence, or SpaceX's mission to settle Mars. But what is the rest of the economy doing?
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Israel’s Unit 8200 is another example. With a few thousand personnel, Unit 8200 maintains Israel’s expansive cyberwarfare capabilities & produces a stream of tech founders and highly skilled experts who enter the private sector. Read the Brief here:
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Coal is a localizing force. It is generally burned for energy where it is mined. China still uses coal for a majority of its energy. Oil, however, is a globalizing force. It is easily stored and transported. Oil exporters use it as leverage in foreign diplomacy with success.
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Every country in Europe by largest source of electricity in 2022. Both Central Europe and the Balkans are still powered by coal! Scandinavia and the Alps mainly by hydropower. Gas is preferred by a variety of countries. And if we just look at majority-source. (cont'd.)
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It is not a given that someone will figure out how to exploit any resources that happen to exist. Even in developed countries, the potential for resource extraction is often missed or wasted. The United Kingdom is a good example. Read the Brief here:
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AI is a similar story. And in the private sector, electric vehicles are now fashionable for both upstarts and established giants. Rather than a diversity of frontiers of knowledge, we seem to see global consensus on what the most promising new technologies are.
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Free market logic describes how the laws of supply and demand incentivize providing the best goods at the lowest prices. But custom means economic decisions are made unthinkingly, outsourced to tradition, which might be political, ideological, or even aesthetic in origin.
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In contrast, the semiconductor manufacturer Broadcom targets growth and profitability. But not through inventing and releasing transformative products, but rather savvy acquisitions and cost-cutting. Read the Brief here:
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One of the most interesting things about the European Union is that it is capable of criticizing the United States. This is because the EU's strategic priorities are esoterically different from U.S. priorities. 🧵A short thread below:
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The key resource suppliers of the future are likely going to be different from today’s. In living memory, increased U.S. oil/gas production obsoleted a generation of theories about wars for oil. China sees major potential in Africa. The Mediterranean is now being drilled for gas
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In tech and science, the U.S. is still home to top performers: DARPA, Amazon, Tesla, SpaceX, Nvidia, OpenAI, and many more. China’s rise does not mean Chinese global hegemony is fait accompli. Western institutions are not all bad; many are still worth observing carefully.
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For an in-depth investigation of George Soros’ philanthropic empire and its legacy, read or listen to our publicly-available Brief on the topic here:
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And, of course, in one very notable recent example, FTX’s Sam Bankman-Fried was motivated by funneling as much money as possible into the Effective Altruism movement. You can read our publicly-released Brief on that topic here:
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The Pentagon actually does a decent job of supplying the world’s largest military. It’s slow and cannot adapt quickly. But it can adapt slowly. For peacetime, this works well enough to maintain U.S. military might. Read the Brief here:
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The figures for proven and estimated reserves of natural resources are not issued by an omnipotent deity. They are issued by technical experts, paid and equipped to do surveys and make judgments. They are often wrong, and often underestimate reserves. Exploration matters.
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By law and in practice, the entire U.S. banking system has been fully guaranteed by the U.S. government for decades. The free market logic for how banks grow the economy simply no longer applies. They are doing something else now. Read the Brief here:
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Often the key ingredient to making some new idea for governance work is simply the prestige and legitimacy of the state. It is not enough to have a deal or understanding with a state; one must *be* the state. The trick is that any state will do, no matter how small!.
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Energy usage per capita has stagnated or declined in Western countries for decades. In the U.S., it peaked all the way back in 1973!. Populations are on the path to decline, not further growth, which suggests even less energy will be needed in the future.
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Bismarck Brief outperforms the stock market. Three years of data show the share price performance of publicly-traded companies after they are profiled in Bismarck Brief. Live player-led companies (+105%) outperformed the S&P 500 (+25%) by far. 🧵
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