The Interesting Times: Ancient Rivers of Money

Articles and Podcasts

Ancient Rivers of Money [Article]

Ribbonfarm

I’ve probably re-read this article every couple of years for the past decade and find it’s one of the core metaphors for how I think about markets and business.

The metaphor likens cash flows to rivers—some ancient and deep, others young and shallow—emphasizing their age, stability, and the slow but significant ways they shift over time. It reframes cash flow not as a transient, momentary phenomenon but as part of a long-standing system that evolves gradually, much like how a river slowly changes its course over decades. (Sometimes I visualize it like the tunnels under Gringott's bank in the Harry Potter movies)

Certain cash flows, like those tied to taxes or essential goods, are among the most ancient and stable, something akin to the Nile or Mississippi Rivers. These "old rivers" provide predictable and enduring revenue streams (death and taxes), which explains why businesses and governments often anchor themselves along these flows.

You can think of startups as attempts to carve out new rivers or settle along under-appreciated and growing tributaries of existing ones.

Older rivers, while stable, may be harder to disrupt, whereas younger, less entrenched flows might offer opportunities for innovation or growth. For instance, the shift in cash flows from IBM to Microsoft to Apple in the computing industry illustrates how these rivers can change course over decades, gradually reshaping the economic landscape.

Practically, I use the metaphor as a strategic tool. It encourages examining the "rivers of cash flow" within an industry to identify which are growing, which are drying up, and where opportunities for settlement or disruption might exist.

For instance, a lot of failed businesses can be boiled down to either "trying to start a new river" or "trying to reroute the Mississippi." This is very hard and does not work.

However, sometimes you have the equivalent of earthquakes (Often a new technology like AI or crypto, sometimes a cultural or political shift like COVID) and that creates new opportunities. Is there a break in the damn that can be settled and will grow over time?

You can think of how to structure financing based on the type of river you need. The cable industry, with its high upfront costs but predictable long-term revenues, exemplifies a business model that thrives on the stability of such cash flows and can support more debt financing - the river is likely to be there to pay the debt.

On the other side, something like pharma is maybe more akin to throwing a bunch of dynamite into an existing river. It probably doesn’t create a new fork, but it will be worth a lot if it does.

I like the metaphor because it aligns with a broader principle of thinking about markets as systems of stocks and flows in dynamic systems, where interconnected elements like employment, investment, and demand influence one another in complex ways. By contrast, I find the more common metaphor is to think about markets and business mechanically which tends to lead to a more impoverished way of thinking.

Marshall McLuhan Intervew from Playboy, 1969 [Article]

This 1969 Playboy (not a typo! I guess people did read it for the articles!) interview with Marshall McLuhan offers a fascinating intro into the mind of one of the most influential media theorists of the 20th century. McLuhan, known for coining phrases like "the medium is the message," explores how technological innovations—particularly media—reshape human perception, societal structures, and cultural values. His central thesis is that media are not mere tools for communication but extensions of human senses that fundamentally alter our sensory balance and, consequently, the way we experience the world.

McLuhan traces the evolution of media through three major technological shifts: the phonetic alphabet, the printing press, and electronic media. Each innovation, he argues, reconfigures human perception and societal organization. For instance, he argues the printing press was actually the key innovation that led to the Industrial Revolution.

The most important quality of print is its repeatability; it is a visual statement that can be reproduced indefinitely, and repeatability is the root of the mechanical principle that has transformed the world since Gutenberg.

Typography, by producing the first uniformly repeatable commodity, also created Henry Ford, the first assembly line and the first mass production. Movable type was the archetype and prototype for all subsequent industrial development.

Without phonetic literacy and the printing press, modern industrialism would be impossible. It is necessary to recognize literacy as typographic technology, shaping not only production and marketing procedures but all other areas of life, from education to city planning.

He saw the beginning of how electronic media, like television and computers, were retribalizing humanity, creating a "global village" where sensory integration and collective consciousness would come to dominate. Though he didn’t live to see it, thinking of social media (e.g. memes) as a form of collective consciousness seems directionally correct. I took a stab a few years ago at thinking about how blockchains would impact social structures. Time will tell how I fared.

Bet on it: Zvi Mowshowitz on professional gambling, trading, and AI futures [Podcast]

Complex Systems

An exploration of how probabilistic thinking and strategic decision-making can be applied across different domains like sports betting, pandemic analysis, and AI development.

I first found Zvi when he started a weekly blog update on COVID which tracked case numbers, deaths, and policy changes with a level of clarity and rigor that was often missing from official sources.

One particular example is his critique of an early official COVID-19 model which assumed that social distancing measures were basically magic. Essentially, it argued that all you have to do to stop Covid-19 is any three of: Close schools, close non-essential businesses, tell people to stay at home, or impose travel restrictions. Under these assumptions, COVID should have been nonexistent within a month. (Spoiler: this did not work)

I think COVID was an awakening for many people of how naive certain attempts at modeling can be and how seemingly small assumptions (e.g. the exact viral coefficient of COVID under particular social distancing measures) have huge implications.

An alternative explanation, and probably more likely, was that there was political pressure to do a certain thing and models were created which made this political proclamation into "Science." Note that this is not "all models are wrong" or "social distancing did(n’t) work" but a more nuanced way of looking at margin of error and the implications of certain modeling approaches.

Here are a few more things you might find interesting:

Interesting Essays: Read my best, free essays on topics like bitcoin, investing, decision making and marketing.

Consulting & Advising: Are you looking for help with making decisions around scaling your company from $500k to $5 million? I’ve been working with authors, entrepreneurs, and startups for half a decade to help them get more out of their businesses.

Internet Business Toolkit: An exhaustive list of all the online tools I use to be more productive.