GoKawiilWhen all is said and done, and the final accounting is made of all human ambitions and achievements and follies, and the final historian turns to that strange realm of human endeavor that we call “computing,” that strange enterprise that gradually grew to encompass an unbelievable share of human life and redefine the entire world around its logic: what will that final historian have to say? Probably they will start with the forerunners, with Llull and Babbage and Lovelace; and then turn to the true pioneers, to Turing and Church and Shannon and von Neumann; and then the masters of hardware, Noyce and Kilby, and of software too, Ritchie and Dijkstra; and eventually they will arrive at PageRank, recommendation systems, neural nets, the transformer architecture, and whichever system ended up bootstrapping itself into superintelligence and thus inaugurating an entirely new epoch of history. But somewhere in their chronicle of this grand arc, for at least a few pages, they will have to talk about the electronic spreadsheet.
The electronic spreadsheet. Is there any tool as ubiquitous and yet so unloved? It would not be an exaggeration to say that Microsoft Excel, the product that today defines the spreadsheet category, is the most successful piece of application software ever made, counting about a sixth of humanity among its users and deciding the terms on which trillions of dollars in capital are allocated. And yet you will struggle to find people who love the spreadsheet. You will find people who wax poetic about the beauty and elegance of certain pieces of software—about Linux, or Rust, or particularly fast Python package managers. But you will be hard-pressed to find a true admirer of Excel.
And indeed that is a marker of a truly great tool. It is so ubiquitous that it has become, in a strange way, anonymous. But you cannot really understand the transformation of the American economy over the last few decades without understanding the spreadsheet.
This is a story about how a piece of software transformed the way that American businesses understood themselves, and how they were understood by others; how it enabled the rise of financial engineering and the entire apparatus of Wall Street dealmaking; how it helped reshape the American corporation from an organization that built things into an organization that optimized numbers; and how it offers us a lesson, and a warning, about how artificial intelligence will transform economic life.
But we should start with the world before Excel.
The world before the spreadsheet
A company is a group of people who have agreed to coordinate their activities under a unified authority in order to produce something. In any company, there are people at the top, the managers. The managers exist, at the most basic level, as information processors: they process information, use that information to make decisions about the allocation of resources, and then issue orders to the people below them based on those decisions. They are “the brain of the firm.”
And every company is bottlenecked by the processing power of its brain. The managers can only keep track of so many things at once; every new employee or project or division adds another node to the network of things that management has to keep track of, and the complexity of that network grows much faster than the number of nodes. So the capacity of its management to process information and coordinate action sets a natural limit on the size and complexity of any firm.
This is why, in the premodern world—when processing information and coordinating action were both extraordinarily expensive, because communication was slow and coordination outside of relatively small kinship groups was difficult—firms tended to be local concerns, centered either around families or similarly high-trust networks like monasteries. Almost every business in the world was a family business.
This changed with the rise of the steam engine. The mechanical power that the steam engine allowed people to harness brought a dramatic acceleration in the speed and volume and complexity of economic life: it greatly expanded opportunities for profit, but—because of its inherent danger and complexity—also demanded a great deal of control. You needed to be able to process all the complexity that the factory generated. And so, between the 1840s and 1920s, we see the emergence of technologies designed to communicate information and coordinate action at scale—the telegraph, the rotary power printer, the filing cabinet, the typewriter, the telephone, the punch-card processor, and the columnar pad.
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