I have just finished reading the book “The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould and J.P. Morgan Invented the American Supereconomy” by Charles R. Morris. It is a fascinating book about these entrepreneurs and the growth of the rail, steel and banking industries. Each of these men had their own style in business strategies and business relationships, cautious to aggressive, bully to patrician. Each of these industries went through their boom and bust cycles, none more than the railroads.

The similarities between railroads and telecommunications are striking. Both carry the most important and valuable goods of their time. Both require huge capital investments before income is generated. Both benefit from interconnections that increase their reach and both tend towards mergers into a few providers. To encourage the development of the railroads, the U.S. government provided huge incentives of land grants. Millions of acres were provided to railroad developers and as a result, railroads were built well ahead of demand for service providing the U.S. with a superior infrastructure to anywhere else in the world.

The downside was that with a lack of demand and a plethora of financial shenanigans, many railroads did go bankrupt. The upside for the U.S. economy was that this abundance of rail capacity enabled our agricultural economy to thrive, becoming a source of huge exports for the U.S. and driving the development of industrial development. The railroad infrastructure provided the U.S. with a competitive advantage that lasted for years.

By not matching other country’s investments in FTTP technologies, the railroads of our time, how is the U.S. and Minnesota sabotaging our future? Which places will have the competitive advantage for this century? How can we avoid the financial turbulence that came with railroads while gain the advantages of aggressive investment? Patient capital will be a key component.