Oracles, Empires, and Revolutions
How to Identify Technology Winners in Interregnum Periods
Audere Capital invests as the first checks into bold advanced technology companies. Our team of repeat founders and investors works directly with experienced entrepreneurs, corporate partners, and governments to build and scale cutting-edge startups. FOLLOW AUDERE ON LINKEDIN
Before we begin, we want to give special thanks to the Observer Research Foundation and the UAE’s Minister of State for Artificial Intelligence, Digital Economy and Remote Work Applications, His Excellency Omar Sultan Al Olama. They served as hosts and co-sponsors of last month’s Deep Tech Network in Dubai. It was an excellent gathering and we look forward to continued successes at future events.
Congratulations also to Second Front Systems on its Series C led by Salesforce Ventures and to Latent AI for its Series A. We are proud to be partnered with these and other exceptional innovators that are building a better future.
"If you cross the river, a great empire will fall."
- The Oracle at Delphi to King Croesus of Lydia
"There are decades where nothing happens; and there are weeks where decades happen."
- Vladimir Lenin
"Chaos isn't a pit. Chaos is a ladder. Many who try to climb it fail and never get to try again. The fall breaks them. And some are given a chance to climb, but they refuse. They cling to the realm, or the gods, or love. Illusions. Only the ladder is real. The climb is all there is."
- Petyr Baelish, Game of Thrones
IT’S THE END OF THE WORLD AS WE KNOW IT…AND I FEEL FINE
Over the last two months, we have travelled extensively around the world meeting with leading investors, technology founders, industry leaders, and government officials, to discuss the state of advanced technology innovation and changing commercial and geopolitical realities.
From Dubai to New Delhi, Ukraine to Montreal to Armenia, we have heard firsthand how rapidly longstanding norms and established relationships are being realigned, restructured, or removed.
We thought it would be helpful to share some perspective on the current state of world and our thinking about which technologies and startups are best positioned to achieve lasting success in the current turbulence.
THE PROBLEM WITH PREDICTIONS
In the 6th century BCE, King Croesus of Lydia (now modern Turkey) sought guidance from the Oracle at Delphi about whether to go to war with the rising Persian Empire. Croesus knew that as Persia’s influence and capabilities expanded, it would threaten his empire. He wanted to attack while he was still the stronger power.
The Oracle responded that if the King went to war, a great empire would be destroyed. Emboldened by the Oracle's ambiguous prediction, Croesus confidently launched a campaign that ended in disaster. It was his own empire, and not Persia, that was destroyed.
This anecdote serves as a poignant reminder of the perils of trying to predict the future, especially during times of great change. In fact, in some very real sense, there is no future until our choices make it. But what we can do is accurately understand the present.
We’ve discussed in a prior post (Fourteen Elephants on a Steel Bridge) how we think about three successive waves of early technology adoption. The first wave of initial adoption is driven by performance gains and cost efficiencies (Extract Wave). The second wave is driven by the emergence of new applications and markets (Expand Wave). The third wave is driven by standardization and scale of a technology as it becomes a foundational platform upon which further innovations and niche applications will be built (Entrench Wave). But there is a difference between technology waves and an outright turning of the tide. What we see in the world today is a broader interregnum.
Interregnum refers to a period of discontinuity or "gap" in governance, leadership, or control between two regimes, rulers, or other forms of authority. The term is often used historically to describe the time between the death of one monarch and the accession of another. It can also be applied more broadly to any temporary pause in government or institutional leadership, during which the normal functions of leadership are suspended or unclear.
An interregnum can lead to instability or uncertainty, as the authority structure during this gap is typically not clearly defined. In some cases, an interim or caretaker government may be established to maintain order until a new ruler or government takes power. In others, it is marked by significant internal strife (think War of the Roses).
What is always true in interregnum periods is that the old rules no longer apply and the new rules have not yet been written.
During interregnum periods the old rules no longer apply and the new rules have not yet been written.
Croesus stood at the brink of an interregnum period. He accurately identified a very real threat and correctly understood the strategic importance of the moment. Even more significantly, he realized that the stakes were existential; it was indeed a time when empires would rise or fall. His downfall was in interpreting the Oracle’s prediction as his victory being guaranteed, when in fact, it was the opposite.
And there are critical lessons to learn from this story about how to operate in interregnum moments:
Change is guaranteed. Success is not.
Strengths can suddenly and unexpectedly turn to weaknesses.
The first ones to understand new realities will dominate them.
THE INTERREGNUM: WHEN DECADES HAPPEN IN DAYS
When we look at the world today, we see a massive interregnum period - a time of transition where prevailing norms in geopolitics, commerce, society, and technology are undergoing profound upheaval and realignment.
From unexpected and previously inconceivable land wars in Europe to seismic shifts in domestic political norms to the disruptive force of AI, we're witnessing Lenin's observation in real-time: decades of change compressed into weeks. The post WWII rules-based order is over, the post-cold-war order is ending, and something new will emerge. It is a new chapter in history, with new risks and new opportunities.
Interregnum periods are the crucibles in which the next generation of dominant enterprises are forged. Among the titans of today’s technology landscape are multiple $10B+ businesses that emerged from the carnage of the 2001 and the 2008 crashes.
It is obvious to identify systems in decline but much harder to anticipate what is still under construction.
In both of those crashes, the common wisdom was that, in some form or another, the world was ending. It is obvious to see existing systems in decline but much harder to anticipate what has not yet been constructed. And as a result, chaos more often generates fear instead of determination and the courage to act.
These are exactly the circumstances where we are today. Interregnum periods are where the next generation of technology defining companies start. And this makes understanding these unique transitional periods particularly important.
(Source: Audere Global Intelligence)
HALLMARKS OF AN INTERREGNUM PERIOD
Interregnum periods are, by their nature, times of significant transition. But what are the telltale signs that we've entered such a period? In prior posts we have talked about the agricultural revolution (Rockstars and Revolutions) and there are some key consistent patterns in that and other transitions that serve as indicators:
Rapid Technological Advancements: When multiple technologies seem to be reaching maturity simultaneously, often converging in unexpected ways, it's a sign of an interregnum. Think of the current confluence of AI, quantum computing, and biotechnology. Or, fast internet and smart phones opening e-commerce, social media, apps, streaming, IoT, remote work, and more.
Economic Volatility: Unusual market behavior, including rapid shifts in dominant business models and the sudden obsolescence of entire industries, are indications of an interregnum. Think video rental stores with DVD delivery and later streaming, horse drawn wagons after cars, whaling for oil, feudal armor after the longbow.
Shifting Geopolitical Landscapes: Major changes in global power dynamics, such as the rise of new superpowers or the decline of established ones, often mark interregnum periods.
Institutional Instability: When longstanding institutions (political, economic, or social) begin to lose legitimacy or effectiveness, it often signals an interregnum.
Increased Uncertainty and Anxiety: A pervasive sense of uncertainty about the future, coupled with both excitement and fear about rapid changes, often characterizes interregnum periods.
Social and Cultural Upheaval: Significant changes in societal norms, values, or ways of living can be a hallmark of interregnum periods.
Emergence of New Paradigms: The rise of new ways of thinking or organizing society, often in conflict with established norms, is a key indicator.
In our current period, there are even more factors that are fueling disorder. Added to the above checklist are emerging great power conflicts; increasing environmental disruptions; an expanding social distrust; and a global health pandemic… and now we’ve got a real party!
So yes, it’s safe to say we’re not going back. Whatever else it is, the future will be different…
ABNORMAL BUT NOT UNUSUAL
Change is uncomfortable because our lives, our companies, and our societies are optimized for consistency. However — and it’s a big however — while interregnum periods may be abnormal, they are NOT unusual. In fact, interregnum periods are a very common occurrence throughout history that mark the onset of pivotal moments of large-scale transformation.
Among the many examples of interregnum periods that have reshaped society, technology, and the global economy three that are useful examples are the Renaissance, the Industrial Revolution, and the ongoing Digital Revolution.
THE RENAISSANCE (14th to 17th centuries)
The Renaissance emerged from the ashes of the medieval world, catalyzed by the devastating impact of the Black Death and the gradual decline of feudalism. These forces created a power vacuum and disrupted traditional social structures, setting the stage for a period of remarkable transformation.
(Source: Audere Global Intelligence)
The Renaissance marked a pivotal transition from the Medieval to the Modern era, fundamentally reshaping European society, culture, and thought. Its impact continues to influence our world today, from our approach to art and science to our economic systems.
THE INDUSTRIAL REVOLUTION (18th to 19th centuries)
The Industrial Revolution was born from the convergence of the agricultural revolution and the discovery of new energy sources, particularly coal and steam power. These advancements rendered traditional manufacturing methods obsolete and paved the way for unprecedented change.
(Source: Audere Global Intelligence)
This revolution fundamentally altered economic systems, social structures, and the relationship between humans and their environment. Its effects rippled across the globe, setting the stage for modern industrial societies and global trade networks.
THE DIGITAL REVOLUTION (Late 20th century to present)
The Digital Revolution was ignited by the invention of the microprocessor and the subsequent exponential growth in computing power. These advancements rapidly made analog technologies and traditional business models obsolete, ushering in a new era of digital dominance.
(Source: Audere Global Intelligence)
The Digital Revolution is reshaping every aspect of human life, from how we work and communicate to how we learn and entertain ourselves. Its full impact is still unfolding, promising further disruptions and opportunities in the years to come.
COMMERCIAL AND TECHNOLOGY WAVES
The patterns we observe in these grand historical transitions are mirrored in more recent commercial and technological interregnum periods. Each of these periods, like their larger counterparts, involves the obsolescence of existing paradigms, rapid innovation, and fundamental restructuring of industries and markets.
(Source: Audere Global Intelligence)
These commercial interregnums demonstrate how technological advancements can rapidly reshape entire industries. They highlight the importance of adaptability and innovation in navigating periods of intense change, lessons that are crucial for businesses and investors alike in our current era of digital transformation.
WHO WINS IN INTERREGNUM PERIODS?
Earlier this year we shared our view on why pirates make excellent tech startup founders (see our post on Priests, Prophets, Pirates, and Pedestrians).
Seen through a macro lens, a similar construct helps explain who wins and who loses as markets move through an interregnum transition. We use a simple 2x2 framework based on two key factors: Fitness for the new environment and capacity to adapt.
(Source: Audere Global Intelligence)
In interregnum periods, it's not enough to be big; companies must also be agile. Conversely, small companies can triumph if they're highly adaptable, even with limited initial resources. In periods of rapid change, the strong do not defeat the weak; the fast defeat the slow.
In periods of rapid change, the strong do not defeat the weak; the fast defeat the slow.
SUCCESS IN THE PRESENT MOMENT
Because we recognize the world is moving through an interregnum period, it is important to approach investments with both ambition and cautious humility. After all, King Croesus was right about the nature of the moment and the size of the potential opportunity and was still led to ruin. As Nobel Physicist Richard Feynman wisely cautioned, "The first principle is that you must not fool yourself—and you are the easiest person to fool."
The good news is that we are not just observers of this interregnum period we are also all active participants in determining what comes next. We have inherited our past; we are engaged in our present; but we can shape our futures.
From our perspective, we remain focused on our core mission: to deliver exceptional financial performance by investing in game-changing commercial and security technologies that have real-world impact. Every decision we make, every company we back, and every relationship we build, is in service of this goal. And in our view, that has never been more exciting or more important than today.
As always, build boldly and dare to be first.
Peter & Maggie