From Bell’s Invention to AI: How the U.S. Keeps Winning with Institutions

Here’s something I’ve been mulling over lately. The U.S. has this knack for taking an idea and turning it into a world-shaking industry. It’s a pattern that goes way beyond just inventing something cool. It’s about setting up the right institutions to make these inventions really take off. Think about Alexander Graham Bell’s telephone. It wasn’t just the gadget itself that changed the game, but the whole setup around it that made telephony a staple in our lives.

The Mechanics of Institutional Success

Take Bell’s telephone demonstration in 1876. Sure, the invention wowed the crowd. But what really made it a success was the infrastructure built around it. Bell Telephone Company, formed in 1877, didn’t just sell telephones. They leased them, secured vital patents, and even squared off with Western Union to carve out their place in the industry. By the next decade, they built the manufacturing and long-distance infrastructure that scaled the telephone nationwide. This was more than a tech victory. It was a masterclass in creating a commercial powerhouse.

Fast forward to 1946. Georges Doriot took another leap by founding the American Research and Development Corporation with $3.5 million. This wasn’t about loans. It was about providing equity capital to risky, early-stage tech from universities and wartime labs. One shining example was Digital Equipment Corporation, which revolutionized computing and scored a 500x return for ARD after its IPO in 1966. The innovation wasn’t just in what they funded but in how they did it: staged financing, equity stakes, and managerial oversight.

The Broader Implications: Lessons for Today

Let’s bring this full circle to today’s AI boom. The U.S. and China are neck-and-neck in AI research output, but their approaches to commercialization couldn’t be more different. In the U.S., thousands of startups, fueled by venture capital, are chasing new AI applications. This decentralized experimentation contrasts sharply with China’s model, where efforts are channeled through a handful of national champions.

So, what does this mean for the growing field of crypto? Just like AI, crypto needs more than just technological breakthroughs. It needs reliable institutions to nurture its potential. The current crypto scene could take a page from history. Build institutions that make sure these innovations don’t just exist but thrive commercially. Who wins in crypto? Those who don’t just bet on the tech but also on building the right environment around it.

What Should We Do?

Here’s the thing. The lesson from 250 years of American innovation is clear: it’s the institutional reflex, not just the tech, that makes the difference. For crypto to truly change the game, it needs more than just killer apps. It needs ecosystems, or rather, institutions that support sustained growth and adoption. But can crypto replicate the same decentralized, serendipitous success story? That’s the big question.

Crypto enthusiasts should focus on infrastructure. Think about how to connect the dots between innovation and commercialization. Venture capital in crypto has to embrace risk, much like Doriot did, with a willingness to fund the long play. Maybe it’s time for a crypto version of Bell Telephone Company or ARD. If nobody would play it without the token, the token won’t save it. The game comes first. The economy comes second.