Why Geniuses Move in Packs: What Edinburgh and Silicon Valley Teach Us About Alpha
Have you ever wondered why genius isn't evenly distributed?
Edinburgh—a city of just 600,000—was once the "exploding center" of European thought. Within a few decades, it produced Adam Smith, David Hume, Charles Darwin, and Alexander Graham Bell. Today, we see the same "high-pressure zone" of creativity in Silicon Valley.
But here’s the kicker: Genius isn't a solo miracle. It’s a systemic byproduct.
The "Cultural Operating System"
Whether it’s the coffee houses of 18th-century Scotland or the garages of Palo Alto, the recipe for a "Genius Cluster" remains the same:
1. High-Density Friction: People must be close enough to collide.
2. Egalitarian Debate: Ideas must flow across hierarchies.
3. Tolerance for Failure: Risk-taking is celebrated; failure isn't stigmatized.
4. Open Borders: Innovation thrives where talent—and ideas—can move freely.
The Moat Paradox in Investing
In finance, we love the word "Moat." It sounds safe, defensive, and permanent. But history tells a different story:
• Creativity is highly mobile and temporary.
• The most dangerous trap is mistaking a "temporary environmental dividend" for "eternal capability."
• When an organization (or a region) begins to reward compliance over questioning and order over exploration, its "Moat" is already drying up.
Why "Perfect" Markets Lack Alpha
Real innovation—and real investment Alpha—is rarely found in "rational, efficient, risk-free" environments.
True Alpha is born in the noise, the friction, and the mess. It thrives in the "non-consensus" zones where trial and error are permitted.
As investors, if we obsess over "Historical Centers" or "Fixed Moats," we miss the next migration of creativity. Baillie Gifford learned this the hard way before pivoting their focus to where the friction was highest: Silicon Valley and China.
The takeaway? Don't just look for great individuals. Look for the soil that allows them to grow. Look for the places where "restless people" are gathering.
Where do you see the next "High-Pressure Zone" of creativity forming today? Is it a specific city, a digital community, or a new industry sector?
