How much is Google worth? Many said the share price was too high at $85. Many say it’s undervalued at $400. This is an Elizabethan problem.

The problem is one of scale and unreliable assumptions. It is hard to keep any sense of proportion when things scale up rapidly from $85 to $400.

It is our sense of proportion that serves us an early warning device. This is where are our instincts are rooted. When we get accustomed to thinking in the $100 range, $200 is manifestly too much. Grudgingly, we adjust, but when the share price goes to $400, we have to reset yet again. Our instincts, our "blink" ability, as Gladwell might call it, is now unreliable, no sooner adjusted than exploded. Our blinks have become twitches.

This is what made it so hard to say "when" when money was pouring into our accounts in the late 1990s.  Yes, it was all madness.  Our instincts said, "stop."  But, no, this is what they said six months ago, and if I had listened to them then, I would have missed a great runup of value. 

Elizabethans had this problem…not so much with share prices as with whales. Here is Thomas Fuller referred to

the mighty whales which swim in a sea of water, and have a sea of oil swimming in them.

Like the Google share price, whales were hard to think about. And this was the problem of scale. A whale, very large, was contained in a limitless world. A whale, pretty small, contained a limitless world within. Hmmm.

It wasn’t just whales. The Reformation was, among other things, a massive adjustment of spiritual scale. It stripped away all the intermediaries between God and the believer. The hierarchy of saints, angles and prelates collapsed and took scale with them. Fundamental questions became hard to think. How large was God? Had we drawn closer? Or were we very far away.

The geographic discoveries, those of the new world, were hard to think as well. The "West Indies" was a very long away, but it proved to be not nearly far enough. "India: proved to be another ocean or two away. And then there was the problem of all that Spanish wealth (by which we mean South American gold and silver). It was enough to elevate Drake, float the nation, and dwarf local notions of wealth out of all recognition.  Hmmm.

Sir Francis Beacon was prepared to stand at the gates of knowledge (as pictured) and observe what happened when certain assumptions were abandoned. The Mediterranean, he said, was once a useful metaphor for knowledge, but now, clearly, not all the oceans, even with all their whales, would serve.

In a sense, the Elizabethans were working on the problem of problems. What was the unit of analysis? What were the actual and possible relationships between these units? What was the field in which to located units and their relationships? What scales applied here? What was the best concepts/assumptions with which to see the present and the possible? What in short was a problem?

We have the problem of problems in the very worst way. The Social Architecture meetings at Berkman last week was awash with them. My favorite: the "is this something or nothing" test. Someone tells you about new software (www.pubsub.com). It searches the future not the past! And you have to decide whether this is something or nothing. And if we are a VC or an analyst, we can’t just be guessing. But until we have decided what Google is (merely a way of searching the past?), who knows?

The second problem, which assumptions did I just use to reach my conclusion? The thing about assumptions is that they are hard to unearth. We make them assumptions for a very good reason, so that they can serve us as subroutines, small compact understandings that we can run quickly without much effort. But now we have to root them out, lay them bare, test them thoroughly, and then decide how Humpty Dumpty goes back together again. Oi! (The Yiddish one, not the Skinhead one.)

And if things really get messy, then it’s right down to basics, as above. What are the units, relationships, fields, concepts? Double oi! All I want to know is whether to invest in subpub (now that I’ve given up on subpop). And it turns out that what I have to do is reinvent the universe. It’s as if there is no such thing as a small or simple problem. They all seem to spiral back to basics, to scale up to head-wrenching complexity.

Here’s the biggest question. Will this get better or will it get worse?

The "better" scenario: Someday the world will settle down. We won’t have to think about every thing to think about some thing. We will develop new intellectual appliances and subroutines with which to deal with the new world (and all that silver). There will be some people who engage with, and some problems that demand that we engage with, the problem of problems. But for the most of us most of the time, we may return to that sense that the world is, give or take, an intelligible place.

The "worse" scenario: Don’t count on it. Things are going to get curiouser and curiouser. The world will explode into a diversity and dynamism, and subroutines be damned. We will carry on and occasionally we will catch up. Occasionally, there will be Mandelbrotian masteries of scale, for instance. But usually, every problem will have to be addressed de novo with a down-to-the-ground scrutiny of all the possibilities.

So is Google worth $400? Well, see, it depends.

References

I got the Fuller and Milton quotes from the opening pages of Melville’s Moby Dick.  (No, he doesn’t give a source either accept to say the first is from the Holy and Profane State and the second, Paradise Lost.  I hate it when that happens.  )

Milton (a near Elizabethan) called the whale "a moving land [which] spouts out a sea."