🇺🇸 The second American century

The US is positioned to lead in the Exponential Age. But only if it sorts out its politics.

A lot could happen on November 5th. If the US avoids a debilitating political schism, it could continue on the path to creating the second American century. Today’s essay is all about what this American century has going for it – and how the US can double down on its advantage.

The second American century

As we reach the quarter point of the 21st century, it’s becoming increasingly clear it’s poised to be the century of exponential technologies, with AI and a new energy paradigm at its core. Solar power and batteries are leading an energy revolution, supported by other renewables and some nuclear power. Synthetic biology, advanced materials and new industrial technologies will reshape our industries, replacing 20th-century methods with precise, sustainable techniques. These will strengthen our hand in the fight against climate change and could deliver more widespread prosperity. In this context of rapid technological change, the United States is positioned to maintain its economic primacy – and that should be at the top of the next president’s in-tray.

My outlook challenges the widely held belief that the 21st century would belong to Asia, particularly China. Goldman Sachs’ prediction in 2003 that China would overtake the US economy by 2041 and The Economist’s even bolder 2011 forecast of this occurring by 2020 shaped a narrative of Asia’s inevitable ascendancy. China’s global influence was expected to grow through initiatives like the Belt and Road, technological advancements, and military expansion. Indeed, China is becoming the top force in sectors like electric vehicles, batteries and autonomous driving. Companies like BYD achieved remarkable growth. Their innovations have frightened Western car bosses; only Ford’s Jim Farley has been brutally honest about Chinese auto prowess. Cities like Wuhan are rivalling San Francisco in autonomous vehicle development. China’s strength in solar panels, batteries and the minerals that make them up is well understood. And some of what is going on in those industries occasionally seems magical. Consider Hithium’s newly announced four-hour storage which will run for 15,000 cycles over a 27-year lifespan (roughly 40 hours per week over a quarter of a century.) China’s military, particularly its navy, is becoming a competitive force. It is the undisputed leader in drones, a defining force multiplier in Ukraine, and much of it stems from its commercial industry. We shouldn’t ignore the substantial inroads made in media through Bytedance and commerce, with Shein and Temu creating a new sector. However, despite China’s impressive ongoing and future gains in many sectors, the 21st century is America’s to retain. In this essay, I’ll explain why I believe this to be true.

TL;DR: the source of America’s strength lies at the intersection of technological leadership, an innovation ecosystem, intellectual and personal freedom and a large but occasionally heterogeneous market. Each feeds into the other. 

Soaring Eagle, Hidden Dragon

In this century, value will be created by things we don’t yet know of, can’t conceive and haven’t built.

We’ll still make, buy and live with physical stuff. Car and battery firms, for instance, will matter. However, as I argued in my first book, value will migrate towards intangibles — software, data, know-how and brand. And those things will emerge from scientific research and entrepreneurial endeavour. In those areas, America still has no equal. 

Of the seven trillion-dollar companies, six are tech firms that are based on the West Coast of the US. The seventh, Saudi Aramco, will need to undergo the mother of all transformations as the oil industry dies. To build ten-trillion-dollar firms you need trillion-dollar ones. To build trillion-dollar ones you need hundred billion-dollar ones. America has more of those than any other country. Europe’s biggest company by market cap, Novo Nordisk, would come 14th in the world rankings and China’s Tencent 21st.

In the West, three privately held tech companies are worth more than $100 billion: Stripe, SpaceX and OpenAI. Bytedance is China’s sole privately held centi-billion dollar company.

The remainder of the 21st century will continue to be about vigorous entrepreneurial activity, startup creation and new concepts coming to market. So while the specific companies may change, it is a long journey for any nation’s champions to top this leaderboard.

With the most important family of technologies, artificial intelligence, American-controlled firms, such as OpenAI, DeepMind and others, are the undisputed leaders. AI is the technology that will underpin research advances, better strategy and improved execution for companies in the 21st century.

This does not mean there won’t be great entrepreneurs and huge opportunities for investors in other geographies. But that will happen against the backdrop of Silicon Valley as the primary concentration of winners.

At the same time, China isn’t helping itself.

Earlier this summer, I spent a few hours with a couple of dozen Chinese tech CEOs from public and private companies in self-driving, robotics, chips, AI, batteries and more. They were an incredibly impressive group of leaders running brilliant companies. It would be an understatement to describe them as world-class. There is talent there, but what is the environment like?