Mario Persona interviews Kevin Kelly, the author of "New Rules for the New Economy"
Portuguese | English

Mario Persona


Mario Persona: Your book "New Rules for the New Economy : 10 Radical Strategies for a Connected World" has been a guide to many who are looking for a path for their companies in the new economy. Considering that it was written few years ago (a long time by the Internet clock) and things are changing pretty fast, is there any correction you would do today?

Kevin Kelly: Amazingly there is nothing I would change, but there is plenty I would add -- mostly many more examples. But the laws I still stand behind. I think they are even more visible and more important now.

Mario Persona: Your idea is that technology should not be used just for managing information but it should be a medium for growing and cultivating relationships. We surely have not arrived to the experience of having satellite-connected chips in every lettuce in the garden, but if there is a starting step for any entrepreneur in the new economy, what would you suggest it should be?

Kevin Kelly: Put as much, if not all, of their transactions into electrons as they can. That is computerize all aspects, and realize that no matter what business they are in they are in the software and communication business. They can get free intranet services on the web. Use them.

Mario Persona: Your book talks about the emergence of a global network with decentralized points of control. The Napster experience has shown that those "decentralized points of control" might well be the big players using the power got from old economy rules. How do you see the landscape for the next years? Is this old versus new battle a transition event, or will it define the shape and the new rules that will effectively drive the economy?

Kevin Kelly: I think the dot.coms are only the first wave, not the whole show. Behind the dot.coms is the real revolution, which is peer-to-peer networks of all kinds like Linux, Napster, and Ebay.

Mario Persona: You believe that the network increases connections, which increase opportunities for growth. In a macro view, the network itself would act as a "brain". But when we take the idea to the micro cosmos of a company in its relationship with the market, we have seen many web companies that have created a network but could not identify how to use it for profit. This seems to show that connections and networks by themselves cannot do much if they don't have a mind controlling them. What do you think about this?

Kevin Kelly: I agree. The idea that ALL you needed to do was simply make a lot of connections and you'll get a brain is called "Connectionism" in AI (Artificial Intelligence), and it doesn't work. You need to connect in an intelligent, structured way -- which is how our brains do it in real life. Same for the web.

Mario Persona: Do you believe that technology ties value to plentitude rather than scarcity? If so, would this be applicable to any kind of product or just to information and intangible things?

Kevin Kelly: The point is the ONLY value of tangible things is now in their intangibles. The cost of the iron in a car is around $100. What you pay for is the intangibles in arranging those iron atoms. So all things will follow the laws of intangibles.

Mario Persona: You seem to believe that the acceleration of the innovation process makes it necessary to abandon the highly successful in order to escape obsolescence. How one would know the timing for doing so?

Kevin Kelly: Whenever your successes make letting go unthinkable and disastrous. That's when it's time. You become enslaved to your current customers and their PAST wishes.

Mario Persona: If turbulence becomes the norm, do you believe there is not much future for the big companies that are unable to follow the speed of changes?

Kevin Kelly: No, my point is that there are plenty of new spaces. But there will be many big companies, in a different kind of big. Big still has a role in making efficient what is found to work. Big will not go away.

Mario Persona: You have read many of the important works of economists, computer scientists and historians regarding the "new economy". Who were the authors that had more influence on your ideas?

Kevin Kelly: George Gilder, Peter Drucker, Hal Varian, Esther Dyson, John Barlow, Brad DeLong, Stuart Kauffman.

Mario Persona: Giving lots of things free has been an unsuccessful experience for many of the first generation web companies. Nevertheless, your book seems to teach this and it traces no borders for it. How an entrepreneur would identify where is the edge line where he should stop the "give it free" idea, before it becomes his/her company's suicide?

Kevin Kelly: I don't agree that giving things away for free has been unsucessful. Most of these companies had NO INTENTION of making money in their first years; and they haven't. Perhaps one of the most successful companies of all time gives away more stuff than any other -- Microsoft. So we can't judge the strategy of giving away yet.

Mario Persona: In a kind of "second round" of Web companies, we are watching investors tired of pouring "old economy" money into "new economy" profitless Internet ventures. It seems smaller companies that don't die by themselves will consolidate into larger ones until only a few large ones remain. Will this create a new way of control for the new network economy, with the rules coming from these huge companies that are being created?

Kevin Kelly: As I said, I don't think Big goes away. Consolidation is a very natural thing in networks because you want large networks, the larger the vastly better. (That's the N-squared effect, or Metcalf's law). I think we can expect further consolidation of the existing concepts; in fact that is a good place to put your bets. But as that consolidation is going on, new empires of chaos are being created (Napster as an example) where it will take several more years before consolidation makes sense.

Mario Persona: In your book you write that "In the new order, innovation is more important than price". Could you explain this better, now that profit, and not innovation, seems to be the main concern for investors just after the bad performance of the first breed of web companies?

Kevin Kelly: You can't sell on price, that is on only having cheaper products. In the end that is suicide. You can only sell on innovations, on having things people didn't even know they wanted. Price only is a dead end.

Mario Persona: Do you believe alliances among firms are increasing innovation?

Kevin Kelly: Yes, because learning how to alliance is so new, this requires innovation. Later on it may not increase innovation, but now it sure is.

Mario Persona: You quote best-selling authors, as well as well-known economists and futurologists, but not as many company examples and business cases as we see in other books. I guess this is because your book was miles ahead the implementation of those ideas. Now that we can see at least an embryo of what will be a completely networked economy, if you would write an addendum for your book, which would be the companies you believe are achieving success using your ideas?

Kevin Kelly: I could certainly trot out more "case studies" now, but in fact I could have written in more even when I wrote the book, but I deliberately choose not to for two reasons: 1) I think it dates the book too fast, and 2) it forces me to get at the underlying pattern, which is more useful for others I think.

Mario Persona: Any plans for a new book?

Kevin Kelly: Yes, but I don't know what it is about yet. I have only questions.