November 2023 - Co-Opetition by Adam Brandenburger and Barry J. Nalebuff

This month we jump back to an older strategy book to think about pricing, partnerships, and negotiations.

Tech Themes

1. Pricing Printers Poorly. The late-80’s printer aisle looked like trench warfare. There were three types of desktop printers: Dot-matrix (low-end), ink-jets (mid-tier), and laser printers (high-end). The laser segment had the highest prices, best margins, and was growing the fastest. Epson, normally a dot-matrix manufacturer, decided it should enter the laser segment with a competitively priced product, the EPL-6000. One week later, Hewlett‑Packard came out with a printer priced signficantly below Epson’s EPL-6000. Epson further cut price in response. Although Epson gained market share, the damage was done: hardware profits collapsed, and suppliers shifted to a razor-and-blades model, where ink or toner carried gross margins of 60 % or more. But because pricing had come down across the low-end, mid-tier, and high-end, ink-jets started to overtake dot-matrix sales - a better printer for a similar price to a dot-matrix a few months ago. Epson had completely screwed over the segment it was most dominant in by introducing a new, effective competitor. “What was Epson’s mistake? It misunderstood the Scope of the printer game. By treating the laser printer game as separate from the dot-matrix printer game, Epson failed to see that low-price entry into the laser segment could jeopardize its core business.” Epson eventually discovered the peril of winning the wrong battle.

2. Bidding. In 1984, the FCC divided the country up into 306 separate markets and gave two cellular licenses to each market. Craig McCaw wanted a national cellular footprint before anyone else and went around buying up as many licenses as he could. Lin Broadcasting owned plum metro licenses—Los Angeles, Dallas, New York—that would knit perfectly into McCaw’s West‑Coast empire. In 1989, he made a hostile bid for LIN, conditional on LIN removing the poison pill anti-takeover clause in its shareholder rights plan. Poison Pill’s generally allow companies to issue extreme amounts of shares to dilute a potential acquirer’s interest, thereby making it uneconomic to buy shares in the company. BellSouth, already Lin’s roaming partner, had already crashed the party with a “white‑knight” merger plan and a special $40 dividend, arguing that its investment‑grade balance sheet trumped McCaw’s bidding frenzy. The challenge for BellSouth, was that McCaw had more aggresssive future assumptions for the value of Points of Presence (POPs, or consumers), and thus could justify a much higher bid than BellSouth. BellSouth saw an opportunity to “engage” in the bidding process, but only if LIN agreed to give it a $54m fee and cover $15m of BellSouth’s expenses. When McCaw raised his bid, LIN increased BellSouth’s expense cap to $25m. McCaw, wanting to move quickly to get LIN’s assets and aware of BellSouth’s lack of real interest in acquiring the company, quietly paid BellSouth $26m to stop bidding. McCaw then increased his bid to $6.3B (up from $5.85B) and won the deal. The takeaway here is that BellSouth understood there was some easy money to be gained by entering the bidding process. If it won at a fair price, it would be happy, if not, it would get $75m cash for doing a small amount of work. McCaw also understood that there weren’t any real rules governing BellSouth’s bid and that any payment between parties would be governed by contract law, avoiding any potential antitrust issues. A similar dance played out on Texas’ coast. Corpus Christi’s ABC, NBC, and CBS affiliates—founded decades earlier by local entrepreneurs who treated broadcasting like a civic duty—banded together in 1993 to demand per‑subscriber fees from cable giant TCI. John Malone, ever the game theorist, yanked their signals, flooded the market with distant‑signal substitutes, and quietly negotiated bundled carriage rights in nearby Beaumont before the stations blinked. When one of the entrepreneurs who owned a Beaumont station offered its signal for free, TCI refused. Here, TCI was linking the Beaumont decision to the Corpus Christi decision. By not carrying Beaumont, he was signaling that “how you play me in one city will impact how I do business with you in another.” The DOJ later sued the three broadcasters for collusion, but Malone still walked away having proven that controlling the pipe gives you leverage even when you’re shut out of content. In 2023, when carriage talks collapsed, Charter yanked ESPN and 17 other Disney channels from 14 million Spectrum homes, betting that broadband stickiness outweighed sports FOMO. Disney finally folded, granting free ad‑tier Disney+ access to Spectrum subs—a Malone‑esque outcome.

3. Cheap Complements and Cheap Competition. When Electronic Arts founder Trip Hawkins launched the 3DO Interactive Multiplayer in 1993, he flipped the console model on its head: keep license fees tiny so developers flood the platform, outsource hardware to Panasonic and GoldStar, and collect a royalty on every game sold. Developers indeed piled in—over 300 titles were announced within 18 months—but the box debuted at a prohibitive $699, three times a Super NES. Consumers passed, inventories ballooned, and retailers slashed shelf space, proving that abundant complements can’t rescue a core product priced for plutocrats. Worse, the royalty stream never matured: with a sub‑million installed base, even best‑selling games shipped under 50k units. By 1996, Hawkins shuttered 3DO hardware, pivoted to software, and lost the ecosystem he had courted. Co‑opetition’s moral: complements add value only when they multiply an affordable core, not when they subsidize an unaffordable one. Apple’s $3,499 Vision Pro dazzles developers yet risks 3DO déjà vu: a high‑end box in search of an installed base big enough to justify killer apps. It seems like there isn’t actually a market there after all. Big Tech’s co‑opetition looks like a rotating tag‑team match: Apple and Google split roughly $20 billion a year in Safari search‑rent—cash Apple pockets while Google keeps iPhone eyeballs—yet the same pact boxes Microsoft’s Bing out of mobile search entirely. Microsoft struck back in 2023 by wiring OpenAI’s GPT‑4 into Bing Chat, forcing Google to scramble with Bard (now Gemini); each new model is less about revenue today than denying the other a toehold in AI mindshare. And sometimes a “friendly” move for one is a gut punch for another: Apple’s App‑Tracking‑Transparency switch won plaudits for privacy but wiped an estimated $12 billion off Meta’s 2022 ad revenue, reminding every platform that a partner today can set the rules tomorrow.

Business Themes

1. PARTS. Players, Added Value, Rules, Tactics, Scope. Players - List every party that can affect the game—not just obvious competitors but suppliers, complementors, customers, regulators, and would‑be entrants. Brandenburger and Nalebuff call this the “value net.” Miss a player and you misprice your leverage: Epson forgot ink suppliers; Trip Hawkins forgot retailers. Added  Value - Quantify how much value the game loses if you step out. Holland Sweetener added so little that NutraSweet could cut price to drive it out. Your bargaining power equals your added value, nothing more. Rules - These are the formal and informal contracts that shape payoffs—patents, standards, MFN clauses, or even industry norms. Changing a single rule (e.g., allowing distant‑signal import in Corpus Christi) can flip winners and losers overnight. Tactics - Moves and countermoves that alter perceptions or hide true intentions: McCaw’s escalating bids signaled resolve; BellSouth’s dividend sweetener signaled financial strength. In judo strategy, feints and timing matter as much as raw force. Scope - Decide which arenas the game covers—geography, product lines, time horizon. Sega narrowed scope to teens; Ryanair to short‑haul cheap UK-Ireland flights. Expanding or shrinking scope can turn a losing game into a winning one.

2. Added Value Reduction. Added value equals “pie with you” minus “pie without you.” Holland Sweetener stormed NutraSweet’s European aspartame stronghold in 1987, hoping to undercut Monsanto’s $70‑per‑pound monopoly. NutraSweet responded by chopping price to $22 and locking Coke and Pepsi into long‑term supply deals. Consumers enjoyed lower prices, but Holland’s new plant hemorrhaged cash and eventually shut down. The pie grew, yet Holland’s slice was negative—a textbook case of creating consumer surplus you can’t capture. IBM managed the opposite trick. Its open‑architecture PC spawned an army of Compaq‑ and Dell‑clones that used reverse‑engineered BIOS chips to deliver 95 % of the function at 60 % of the price. IBM had given up its added value by going both open and outsourcing the manufacturing of the computers, leaving very little IP or value add (outside of brand) to be monetized. By 1990 IBM’s own share of the “IBM‑compatible” market had cratered, and the company ultimately exited retail PCs, conceding de facto standards to the very cloners it had empowered. When your absence barely dents the ecosystem, your added value rounds to zero. OpenAI’s proprietary GPT models generate a lot of value, but Meta’s open-source Llama models enable startups to create custom copilots at near-zero licensing costs, potentially eroding GPT’s pricing umbrella much as Holland Sweetener eroded NutraSweet. Right now, Llama models are just not even close to as good as OpenAI’s models, so up to this point there has been no price erosion. However, price erosion may be the ultimate goal of Mark Zuckerberg, create an open, cheap, cost-competitive model that becomes a no brainer standard and hurts OpenAI’s position with proprietary models. Zuck knows that chatGPT is taking away device time from Instagram and see it as a long-term threat. The pie grows; who keeps the surplus is still up for grabs.

3. Playing Judo. Sega entered 1990 with 6 % U.S. console share; Nintendo held 94 %. Instead of matching Nintendo’s kids‑friendly catalog, Sega leaned into a teen demographic with Sonic the Hedgehog, faster 16‑bit hardware, and cheeky ads (“Genesis does what Nintendon’t”). Nintendo rushed the Super NES and loosened violence taboos, but by 1994 share was near‑parity. Eventually Nintendo’s stronger software pipeline reclaimed leadership, Sega exited hardware in 2001, and the market stabilized with clearly segmented audiences—a judo bout where the lighter fighter scored enough points before the heavyweight regained footing. Europe’s skies offer another judo masterclass. Ryanair slashed Dublin‑London fares from $150 to under $100 in 1991, betting that a no‑frills model, 30‑minute turnarounds, and a single 737 fleet would lure new flyers instead of stealing British Airways’ elite road‑warriors. BA could have matched fares system‑wide and bled billions; instead, it ceded price‑sensitive segments while defending long‑haul premium cabins. Today, Ryanair ferries more passengers than any other European airline, yet BA still dominates trans‑Atlantic business class. Sometimes, yielding the mat where you’re weakest is how you keep the championship belt.

   Dig Deeper

• The Making of Electronic Arts & 3DO - Trip Hawkins Interview

• Computer History - The History of IBM and the Clone Wars

• Michael O'Leary: Ryanair's Maverick CEO

• The Billion-Dollar Battle Between Red Bull and Monster

• What is a Most Favored Nation Clause? | Contract Central

July 2023 - The Myth of Capitalism by Jonathan Tepper with Denise Hearn

We learn about the fun history of many monopolies and anti-trust! While I can’t recommend this book because its long and poorly written, it does reasonably critique aspects of antitrust and monopoly formation. Its repetitive and so aggressively one-sided that it loses credibility. The fact that the author used to advise and now runs a hedge fund that owns monopoly businesses tells you all you need to know.

Tech Themes

1. Consumer Welfare. Tepper’s fundamental argument is that since the 1980s, driven by Regan’s deregulation push, the government has allowed corporate mergers and abuses of market power, leading to more market concentration, higher prices, greater inequality, worse worker conditions, and stymied innovation. Influenced by the Chicago School’s free market ideas and Robert Bork’s popular 1978 book Antitrust Paradox, the standard for antitrust enforcement morphed from breaking up market-abusing companies to “consumer welfare.” With this shift, antitrust enforcement became: “Does this harm the consumer?” A lot of things do not harm consumers. Broadcast Music, Inc. v. CBS, Inc. (1979) is widely regarded as one of the first antitrust cases that shifted the Rule of reason towards consumer welfare. CBS had sued Broadcast Music, alleging that blanket licenses constituted price fixing. Broadcast Music represented copyright holders and would grant licenses to media companies to use artist’s music on air. These deals were negotiated on behalf of many artists, and did not allow CBS to negotiate for selected works. The court sided with BMI because the blanket license process was simpler, lowered transaction costs by reducing the number of negotiations, and allowed broadcasters greater access to works. They even admitted that the blanket license may be a form of price setting, but concluded that it didn’t necessarily harm consumers and was more efficient, so they allowed it. The consumer welfare ideology has recently come under fire around the big tech companies - Apple, Microsoft, Google, Meta, and Amazon. Lina Khan, Commissioner of the Federal Trade Commission (FTC) wrote a powerful and aptly titled article, Amazon’s Antitrust Paradox, highlighting why in her view consumer welfare was not a strong enough stance on antitrust. “This Note argues that the current framework in antitrust—specifically its pegging competition to “consumer welfare,” defined as short-term price effects—is unequipped to capture the architecture of market power in the modern economy.” The note argues that Amazon’s willingness to offer unsustainably low prices and their role as a marketplace platform and a seller on that marketplace allow it crush competition. Google is currently being sued by the Department of Justice over illegal monopolization of adtech and its dominance in the search engine market. The government is attempting to shift antitrust back to a more aggressive approach regarding monopolistic behavior. From a consumer welfare perspective, there is no doubt that all of these companies have created situations that benefit consumers (“free” services, low prices) and hurt competition. The question is: “Is it illegal?”

2. The ACTs - Sherman and Clayton. The Sherman Antitrust Act, passed in 1890, was the first major federal law aimed at curbing monopolies and promoting competition. The late 19th century, often referred to as the Gilded Age, saw the rise of powerful industrialists like J.P. Morgan, John D. Rockefeller, and Cornelius Vanderbilt, whose massive corporations threatened to dominate key sectors of the economy. Public outcry over the potential for these monopolies to stifle competition and exploit consumers led to the passage of the Sherman Act. Senator John Sherman, intended the law to protect the public from the negative consequences of concentrated economic power. The Sherman Act broadly prohibited anticompetitive agreements and monopolization, empowering the government to break up monopolies and prevent practices that restrained trade. However, the Sherman Act's broad language left it open to interpretation, and its early enforcement was inconsistent. President Theodore Roosevelt, a proponent of trust-busting, used the Sherman Act to challenge powerful monopolies, such as the Northern Securities Company, a railroad conglomerate controlled by J.P. Morgan. The Supreme Court's decision in the Standard Oil case in 1911 further shaped the interpretation of the Sherman Act, establishing the "rule of reason" as the standard for evaluating antitrust violations. This meant that not all restraints of trade were illegal, only those that were deemed "unreasonable" in their impact on competition. The Clayton Antitrust Act, passed in 1914, was designed to strengthen and clarify the Sherman Act. It specifically targeted practices not explicitly covered by the Sherman Act, such as mergers and acquisitions that could lessen competition, price discrimination, and interlocking directorates. The Clayton Act also sought to protect labor unions, which had been subject to antitrust prosecution under the Sherman Act. The passage of these acts led to a wave of significant antitrust cases. Prominent examples include: United States v. American Tobacco Co. (1911): This case resulted in the breakup of the American Tobacco Company, a dominant force in the tobacco industry, demonstrating the government's commitment to using antitrust laws to dismantle powerful monopolies. United States v. Paramount Pictures, Inc. (1948): This case challenged the vertical integration of the film industry, where major studios controlled production, distribution, and exhibition. The court's decision led to significant changes in the industry's structure. United States v. AT&T Co. (1982): This landmark case resulted in the breakup of AT&T, a telecommunications giant, into smaller, regional companies. This case marked a major victory for antitrust enforcement and had a lasting impact on the telecommunications industry.

3. Microsoft. The Microsoft antitrust case, initiated in October 1998, saw the U.S. government accusing Microsoft of abusing its monopoly power in the personal computer operating systems market. The government, represented by David Boies (yes, Theranos David Boies), argued that Microsoft, led by Bill Gates, had engaged in anti-competitive practices to stifle competition, particularly in the web browser market. Gates was famously deposed and shockingly (not really) came away from the deposition looking like an asshole. The government alleged that Microsoft violated the Sherman Act by: Bundling its Internet Explorer (IE) web browser with its Windows operating system, thereby hindering competing browsers like Netscape Navigator, manipulating application programming interfaces to favor IE, and enforcing restrictive licensing agreements with original equipment manufacturers, compelling them to include IE with Windows. Judge Thomas Jackson presided over the case at the United States District Court for the District of Columbia. In 1999, he ruled in favor of the government, finding that Microsoft held a monopoly and had acted to maintain it. He ordered Microsoft to be split into two units, one for operating systems and the other for software components. Microsoft appealed the decision. The Appeals Court overturned the breakup order, partly due to Judge Jackson's inappropriate discussions with the media. While upholding the finding of Microsoft's monopolistic practices, the court deemed traditional antitrust analysis unsuitable for software issues. The case was remanded to Judge Colleen Kollar-Kotelly, and ultimately, a settlement was reached in 2001. The settlement mandated Microsoft to share its application programming interfaces with third-party companies and grant a panel access to its systems for compliance monitoring. However, it did not require Microsoft to change its code or bar future software bundling with Windows. This led to criticism that the settlement was inadequate in curbing Microsoft's anti-competitive behavior. History doesn’t repeat itself, but it does rhyme and Microsoft is doing the exact same bundling strategy again with its Teams app.

Business Themes

1. Monopoly Markets. Tepper lays out all of the markets that he believes are monopoly, duopoly, or oligopoly markets. Cable/high speed internet (Comcast, Verizon, AT&T, Charter (Spectrum)) - pretty much the same, Computer Operating Systems (Microsoft) - pretty much the same but iOS and Linux are probably bigger, Social Networks (Facebook with 75% share). Since then Tiktok, Twitter, Pinterest, and Snap have all put a small dent in Facebook’s share. Search (Google), Milk (Dean Foods), Railroads (BNSF, NSC, CSX, Union Pacific, Kansas City Southern), Seeds (Bayer/Monsanto, Syngenta/ChemChina, Dow/DuPont), Microprocessors (Intel 80%, AMD 20%), Funeral Homes (Service Corporation International) all join the monopoly club. The duopoly club consists of Payment Systems (Visa, Mastercard), Beer (AB Inbev, Heineken), Phone Operating Systems (iOS, Android), Online Advertising (Google, Facebook), Kidney Dialysis (DaVita), and Glasses (Luxottica). The oligopoly club is Credit Reporting Bureaus (Transunion, Experian, FICO), Tax Preparation (H&R Block, Intuit), Airlines (American, Delta, United, Southwest, Alaska), Phone Companies (Verizon, Sprint, T-Mobile, AT&T), Banks (JP Morgan Chase, Bank of America, Citigroup, Wells Fargo), Health Insurance (UnitedHealthcare, Centene, Humana, Aetna), Medical Care (HCA, Encompass, Ascension, Universal Health), Group Purchasing Organizations (Vizient, Premier, HealthTrust, Intaler), Pharmacy Benefit Managers (Express Scripts, CVS Caremark, Optum/UnitedHealthcare), Drug Wholesalers (Cencora, McKesson, Cardinal Health), Agriculture (ADM, Bunge, Cargill, Louis Dreyfus), Media (Walt Disney, Time Warner, CBS, Viacom, NBC Universal, News Corp), Title Insurance (Fidelity National, First American, Stewart, and Old Republic). Since the book was published in 2018, there has been even more consolidation - Canadian Pacific bought Kansas City Southern for $31B, Essilor merged with Luxottica in 2018 in a $49B deal, Sprint merged with T-Mobile in a $26B deal, and CBS and Viacom merged in a $30B deal. Tepper’s anger towards lackadaisical enforcement of antitrust is palpable. He encourages greater antitrust speed and transparency, the unwinding of now clear market consolidating mergers, and the breakup of local monopolies.

2. Conglomeration and De-Conglomeration. Market Concentration. The conglomerate boom, primarily occurring in the 1960s, saw a surge in the formation of large corporations encompassing diverse, often unrelated businesses. This era was fueled by low interest rates and a fluctuating stock market, creating favorable conditions for leveraged buyouts. A key driver of this trend was the Celler-Kefauver Act of 1950, which, by prohibiting companies from acquiring their competitors or suppliers, pushed them towards diversification through acquiring businesses in unrelated fields. The prevailing motive was to achieve rapid growth, even if it meant prioritizing revenue growth over profit growth. Conglomerates were seen as a means to mitigate risk through diversification and achieve operational economies of scale. Many conglomerates formed that operated across completely different industries: Gulf and Western (Paramount Pictures, Simon & Schuster, Sega, Madison Square Garden), ITT (Telephone companies, Avis, Wonder Bread, Hartford Insurance, and Sheraton), and Henry Singleton’s Teledyne. However, the conglomerate era ultimately waned. The government took a more proactive approach to acquisitions in the late 1960s, curbing the aggressive approaches. The FTC sued Proctor & Gamble over its potential acquisition of Clorox and merger guidelines were revised in 1968, setting out more rules against market share and concentration. Rising interest rates in the 1970s strained these sprawling enterprises, forcing them to divest many of their acquisitions. The belief in the inherent efficiency of conglomerates was challenged as businesses increasingly favored specialization over sprawling, unwieldy structures. The concept of synergy, once touted as a key advantage of conglomerates, came under scrutiny. Ultimately, the conglomerate era was marked by performance dilution, value erosion, and the realization that strong performance in one business did not guarantee success in unrelated sectors.

3. Industry Concentration. A central pillar to Tepper’s argument that the capitalism game isn’t being played fairly or appropriately, is that rising industry concentration is worrisome and indicative of a broken market system. He uses the Herfindahl-Hirschman Index (HHI) to discuss levels of industry concentration. According to the Antitrust Division at the DOJ: “The HHI is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For example, for a market consisting of four firms with shares of 30, 30, 20, and 20 percent, the HHI is 2,600 (302 + 302 + 202 + 202 = 2,600). The agencies generally consider markets in which the HHI is between 1,000 and 1,800 points to be moderately concentrated, and consider markets in which the HHI is in excess of 1,800 points to be highly concentrated.” The HHI index is relatively straightforward to calculate. It can be a quick test to see if a potential merger creates a more significantly concentrated market. However, it still falls prey to some issues. For example, market definitions are extremely important in antitrust cases and a poorly or narrowly defined market can cause the HHI to look overly concentrated. In the ongoing Kroger-Albertson’s Merger case, the FTC is proposing a somewhat narrow definition of supermarkets, which excludes large supermarket players like Walmart, Costco, Aldi, and Whole Foods. If Whole Foods isn’t a super market, I’m not sure what is. And sure, maybe they narrowly define the market because Kroger and Albertsons serve a particular niche where substitutes are not easily available. Whole Foods may be more expensive, Aldi may have limited assortment, and Costco portion sizes may be too big. However, if you have a market that has Kroger, Walmart, Costco, Aldi, and Whole Foods serving a reasonable size population, I can almost guarantee the prices are likely to remain competitive. In some cases, high industry concentration does not mean monopolistic behavior. However, it can lead to monopolistic or monopsonistic behavior including: higher prices, lower worker’s wages, lower growth, and greater inequality.

   Dig Deeper

• Microsoft Volume II: The Complete History and Strategy of the Ballmer Years

• Lecture Antitrust 1 Rise of Standard Oil | Walter Isaacson

• Anti-Monopoly Timeline

• How Xerox Lost Half its Market Share

• (Anti)Trust Issues: Harvard Law Bulletin

November 2021 - Ender's Game by Orson Scott Card

This month we check out the futuristic sci-fi war drama, Ender’s Game. While the book is meant for kids, its a quick read and a great story.

Tech Themes

1. The Metaverse. During Ender's time at Battle School, he interacts with the Mind Game, an individual game reflecting the thoughts and experiences of each person. Later, as he preps for battle, Ender uses a simulator to learn and practice commanding an army of battleships. These experiences in the simulator are completely personalized, driven by a supercomputer that can do whatever it wants to serve up experiences in the game: "You don't understand, sir. Our Battle School computer is only a part of the IF network. lf we want a picture, we have to get a requisition, but if the mind game program determines that the picture is necessary--it can just go take it." These hyper-personalized mind game experiences are similar to the latest ideas surrounding the Metaverse. The Metaverse is an unclear vision of cyberspace where individuals can interact in virtual reality, mixed reality, or augmented reality in a new computing paradigm. Facebook was so excited about the Metaverse that the company announced it was going to invest $10B in building out its virtual reality platform and changed its name to Meta Platforms, Inc. Matthew Ball has covered the Metaverse since 2018 and has penned his own definition: "The Metaverse is a massively scaled and interoperable network of real-time rendered 3D virtual worlds which can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments." This is reminiscent of the world we explored in our September 2019 book, Ready Player One, and somewhat similar to the 1990s promise of the information superhighway. It will be interesting to see how the Metaverse develops in the coming years.

2. Anonymity on the Internet. As Ender continues his training at Battle School, Peter and Valentine hatch a plot to create division throughout the world. The two decide the best way to take over the world as young, intelligent children is to write blog posts under a pseudonym and gain a mass following, eventually exercising their political influence. To avoid suspicion, Peter and Valentine switch emotional positions and take on the roles of historical figures aligning with their viewpoints. Peter becomes John Locke, a liberal philosopher, and inventor of the Social Contract, while Valentine becomes Demosthenes, an Athenian hellbent on inciting a war against Macedonia. While the idea of two teenage children starting war by writing on the internet is comical now, the specter might have been possible in the pre-mass internet era of 1985, the year Ender was published. This also raises the contentious shield of anonymity offered by the internet. While some argue that complete anonymity could mean the end of rational society, others say that anonymity must be preserved. This concept of anonymity is extended further in the over-hyped decentralized, crypto/web3 world of the future, where 15-word recovery phrases might become the norm for ultimate secrecy. Internet security and anonymity are likely to evolve if we move to a decentralized computing world - whether this is good or bad remains a matter of view.

3. Technology and Governments. The International Force (IF) is a space army designed by the world to fight against the evil Buggers. The surprising thing about this International Force is how it unifies different governments: "Val, it was bound to happen. Right now there's a vast international fleet and army in existence, with American hegemony. When the bugger wars are over, all that power will vanish, because it's all built on fear of the buggers. And suddenly we'll look around and discover that all the old alliances are gone, dead and gone, except one, the Warsaw Pact." The Warsaw Pact was the agreement between the Soviet Union and several neighboring states following the creation of NATO. Funnily enough, the Warsaw Pact disbanded in 1991 with the fall of the Soviet Union, six years following the publication of Ender's Game. After Ender defeats the Buggers, the world immediately descends into political chaos until Peter comes to power. A once unified world with incredible technology like real-time technological communication through the Ansible is now torn apart by politics. These events bring up the broader role of government in the technological landscape. As we saw earlier this year, global non-US tech superpowers like Bytedance (owner of Tiktok) can cause immense political tension. Furthermore, companies like Taiwan Semiconductor (TSMC), that offer a unique product in a politically contentious region can even provoke the potential for war. Technology enables globalization while also raising the question of who owns non-physical products - the government, a company, or the world?

Business Themes

1. Lonely at the Top. Card paints a world where the entire universe's future lies on children's shoulders. Ender becomes commander of the International Fleet, put in the challenging position as leader of older kids. He has to generate empathy while maintaining command. But Ender is just an intelligent child, and throughout the book, he finds himself in bad situations. He eventually grows to be the leader of his launch group and then the leader of his own Dragon Army. As Ender gains in stature, he loses touch with his friends. In one instance, he fears battle school enemies might jump him in the hallway and chastises Petra when she asks him to chat: "'Petra, if you had actually taken me aside just now, there are about a dozen boys following along who would have taken me in the corridor. Can you tell me you didn't notice them?' Suddenly her face flushed. "No. I didn't. How can you think I did? Don't you know who your friends are?" Many CEOs describe that the job can be lonely because you are naturally the final decision-maker. Even as a young child, Ender was forced to become a leader and suffered the mental instability of the job.

2. Sending a Message. The IF chooses Ender because he is a mix of his two siblings, Peter, who represents extreme violence, and Valentine, who represents empathy. Violence is a recurring theme throughout the book - personal violence between individuals, violence between nations, and violence between civilizations (humans and buggers). In two dramatic sequences, older boys try to corner an unsuspecting Ender. Ender uses his brains to evade an attack but severely injures the attacker to send a message: "They were all wondering if he was dead. Ender, however, was trying to figure out a way to forestall vengeance. To keep them from taking him in a pack tomorrow. I have to win this now, and for all time, or I'll fight it every day and it will get worse and worse. Ender knew the unspoken rules of manly warfare, even though he was only six." Ender thought he needed to message all of his potential attackers. However, these beatings weigh on him constantly, and he spends the rest of his life regretting them. The violent nature of these attacks is reprehensible and difficult to compare to the business world. But it does raise how some executives act with emotion to humiliate or denigrate employees. Recently the CEO of online mortgage startup Better.com fired 900 people over a zoom video call. Beyond the act, the message it sends to employees is even worse. These events can follow executives, with media coverage continuing for over five years after the event itself. Actions send messages. They should be taken with caution when emotion or retaliation is involved.

3. Self-Managed Teams. Ender is a tactical magician and completely changes the Battle Game. Ender's approach is novel: "He had the army drill in eight-man toon maneuvers and four-man half-toons, so that at a single command, his army could be assigned as many as ten separate maneuvers and carry them out at once. No army had ever fragmented itself like that before, but Ender was not planning to do anything that had been done before, either. Most armies practiced mass maneuvers, performed strategies. Ender had none. Instead, he trained his toon leaders to use their small units effectively in achieving limited goals. Unsupported, alone, on their own initiative." This approach is called Self-Managed Teams. The autonomy offered by allowing individuals to manage themselves gives extreme ownership to employees. Self-Managed teams work well in places with repeated work, where employees trust each other and have high self-awareness. This exciting concept has worked well in several businesses, including Facebook and Google.

Dig Deeper

• Ender’s Game (the Movie)

• Demosthenes and Locke - An Essay by Alyssa Rosenberg at the Atlantic

• An Interview with Orson Scott Card

• The Department of Defense is issuing AI ethics guidelines for tech

• Peter and Valentine Wiggin in Ender’s Game