Tag: peter thiel

Random facts 9 – things I learned recently – Hugh Howey: “I’ll write 2 books a year for 10 years. And at the end of that 10 years I’ll know if I’m a writer.

All of these costs will trend down until eventually it’s just like…the cloud. Like they’re all the same. You might use AWS or Oracle or IBM Cloud, they all have different purposes, but you don’t really care, but there might be lockin. You build your stack on AWS, it’s kinda expensive, you want to switch but it’s difficult… if I had to guess that’s how this plays out…
Turner Novak

Tunnel vision helps. Being a bit of a shit helps. A thick skin helps. Stamina is crucial, as is a capacity to work so hard that your best friends mock you, your lovers despair and the rest of your acquaintances watch furtively from the sidelines, half in awe and half in contempt. Luck helps—but only if you don’t seek it.

And the Portuguese rutter? That’s our death warrant, for of course it’s stolen. At least it was bought from a Portuguese traitor, and by their law any foreigner caught in possession of any rutter of theirs, let alone one that unlocks the Magellan, is to be put to death at once. And if the rutter is found aboard an enemy ship, the ship is to be burned and all aboard executed without mercy.

Alan Greenspan in 1966, when he was still in the private sector:
An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions…In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves

It is breathtaking how slow, substandard and unfocused many companies out there get through the day. And think nothing of it. The lack of energy is palatable. There is performance upside everywhere. As a leader, your opportunity is to reset in each of these dimensions. You do it in every single conversation, meeting, and encounter

In a system that depends on irresponsible government spending (especially for perpetual war) and fiat printing to cover that irresponsibility, alarm bells cannot be allowed to work. There must be no pure price signals. And above all, an alarm bell must not also serve as a life-raft that’s easily accessible to everyone, especially the general public, in the form of an ETF. There must be no escape hatch

The overall degree is negligible. In 2013, researchers found that the average degree of personalization in Google Search was 11.7%, of course varying widely by query and rank. Higher positions, for example, have a higher chance of being personalized than lower positions.11 A study from 2019 found that Google personalizes 2/10 results when searching for people and 4/10 for political parties. In other words, not much

When you’re healthy you have 10,000 needs, but when you’re sick you only have 1

marketplaces are fueled by two core properties: 1) discovery and curation (presenting things that users want to see and interact with), and 2) trust and reputation (providing assurances to users)

I think for most people who want to do great work, the right strategy is not to plan too much. At each stage do whatever seems most interesting and gives you the best options for the future. I call this approach “staying upwind.” This is how most people who’ve done great work seem to have done it

From Mercedes effectively renting you your accelerator pedal by the month to Internet of Things dishwashers that lock you into proprietary dish soap, enshittification is metastasising into every corner of our lives. Software doesn’t eat the world, it just enshittifies it.

Tyler Cowen, economist, professor, and founder of the popular blog Marginal Revolution, developed three laws while he was teaching macroeconomics. One: “There is something wrong with everything,” two: “There is a literature on everything” and three: “All propositions about real interest rates are wrong.”

Also, he changes one menu item every week. Has a massive spreadsheet that tells him what’s being ordered, profit margins on each item, etc. He gets rid of the least popular thing, tries something else. Every. Single. Week

The interesting thing about OnlyFans is that OF agencies use the models as image/video content to bait simps. However, many of the OF girls are unable to talk to so many simps at once and end up using virtual assistants who are following a script in an attempt to extract maximal value from simps by sending them prepared media from a google drive after the simp tips his final buck. Even if it is not real, it feels real to the end consumer and that is all that matters

They say movies are the shared dreams of the audience—that’s why they have to be experienced in the dark.

“Peter Thiel used to insist at PayPal that every single person could only do exactly one thing. And we all rebelled. You feel like it’s insulting to be asked to do just one thing.
But Peter would enforce this pretty strictly. He’d basically say: ‘I will not talk to you about anything else except for this one thing that I’ve assigned to you. I don’t want to hear about how great you’re doing in this other area. Just focus until you conquer this one problem.’…
The insight behind this is that most people will solve problems that they understand how to solve. Roughly speaking, they will solve B+ problems instead of A+ problems. A+ problems are high-impact problems for your company but they’re difficult–you don’t wake up in the morning with a solution to them, so you tend to procrastinate…
If you have a company that’s always solving B+ problems, you’ll never create the breakthrough idea because no one is spending 100% of their time banging their head against the wall every day until they solve it”

“Failure is the information you need to get where you’re going”
Every time in Delphi’s history when we expected or “needed” something to happen. It didn’t happen and ended up turning out for the better.
– We weren’t able to raise money to start our business so we bootstrapped it ourselves and today, Delphi is fully employee owned.
- We weren’t able to finish raising a fund, and today – Delphi Ventures is basically all prop capital.
- There were numerous times we *almost* got acquired and ended up saying no – and it’s resulted in us building up Delphi into a brand we’re proud to be building for the space first and foremost

When galaxies collide, the black holes at their center begin orbiting one another before merging, and astronomers have just identified the largest pair yet. Researchers estimate that the black holes at the center of elliptical galaxy B2 0402+379 (the Loop’s longtime favorite galaxy, obviously) weigh about 28 billion times the mass of the Sun.

Curse of Knowledge: The inability to communicate your ideas because you wrongly assume others have the necessary background to understand what you’re talking about.

Compassion Fade: People have more compassion for small groups of victims than larger groups, because the smaller the group the easier it is to identify individual victims.

Bottom line: There is room up in organizations to boost performance by amping up the pace and intensity. Considerable slack naturally exists in organizations to perform at much higher levels. The role of leadership is to convert that lingering potential into superlative results
—
We see in professional sports all the time how teams go almost overnight from losing to winning with basically the same roster, but different leadership. Call it what you want, the X factor, whatever, it is real. Anybody can dial into this, but not many do.
—
It is not easy because you will drive people out of their comfort zones. There will be resistance. Change is hard. Some will vote with their feet. If you want to be popular as a leader, this may not be for you. The role of a leader is to change the status quo, step up the pace, and increase the intensity. Leaders are the energy bunnies and pacemakers of the organization. Some people drain energy from organizations; not leaders, they engulf organizations with energy.

Open Source vs. Proprietary Models: Zhu discusses the ongoing debate between open-source and proprietary AI models. He predicts that open-source models will eventually catch up with, if not surpass, their proprietary counterparts. This viewpoint reflects his belief in the democratization of AI technology and skepticism toward the long-term dominance of closed, proprietary systems.

If you’re not nervous it doesn’t mean anything to you — Justin Thomas

The inevitable direction of history is that the vast majority of AI systems will be built on top of open source platforms – Yann Lecun

“Deep learning, which is fundamentally a technique for recognizing patterns, is at its best when all we need are rough-ready results, where stakes are low and perfect results optional“ Still true

Your worst day is a chance to show your best qualities, to stand out, and to learn an enormous amount about yourself. Very few people plan or prepare for what they’ll do and how they’ll act during those times. Those who do might well end up turning their worst day into their best

In short, it will FEEL like a regular bear cycle, but in reality the game has changed for BTC and ETH – forever.
This means the window in time for the average non rich person to get generational exposure to BTC and ETH is closing, very rapidly
—
Essentially, most people will be priced out of owning 10 ETH or 1 BTC.
I also believe that going forward alts will be less appealing each cycle as people just prefer the concensus trade of BTC and ETH that are guaranteed to go up due to ETF flows + because of new market participants size, you could still get 20-50% per year, with way less downside risk.
As such I think people will be less interested in altcoins.
This mimics how the S&P500 works, with basically 4-6 massive tech firms, like Google, apple, amazon, meta etc. Propping up the entire thing

Hugh Howey (on Tim Ferriss): I’ll write 2 books a year for 10 years. And at the end of that 10 years I’ll know if I’m a writer.

The trouble with Xi Jinping is that he is 60 percent correct on all the problems he sees, while his government’s brute force solutions reliably worsen things. Are housing developers taking on too much debt? Yes, but driving many of them to default and triggering a collapse in the confidence of homebuyers hasn’t improved matters. Does big tech have too much power? Fine, but taking the scalps of entrepreneurs and stomping out their businesses isn’t boosting sentiment. Does the government need to rein in official corruption? Definitely, but terrorizing the bureaucracy has also made the policymaking apparatus more paralyzed and risk averse. It’s starting to feel like the only thing scarier than China’s problems are Beijing’s solutions.

“When you cook for yourself there’s love in there”

“resilience matters in success…I don’t know how to teach it to you except for, ‘I hope suffering happens to you’..greatness comes from character & character…is formed out of people who suffered..I wish upon you ample doses of pain & suffering” – Jensen Huang

We are in a “Tower of Babel” moment of AI research, where hundreds of thousands of scientists, engineers, and technologists are collectively using the same language to tackle every engineering problem under the sun.

As I usually do, I’ve appended our 1997 letter, our first letter to shareholders. It gets more interesting every year that goes by, in part because so little has changed. I especially draw your attention to the section entitled ‘‘It’s All About the Long Term.’’

that an effective technique of conversion consists basically in the inculcation and fixation of proclivities and responses indigenous to the frustrated mind.

A counterculture is blowback. It’s intentionally offensive to establishment beliefs. Find it repellent? Good, it’s meant to gatekeep you.

Norwegian endurance training hack: high volume lactate threshold training. Train just below lactate threshold so you can do a lot more volume instead of at or above which requires a lot more recovery

More than a thousand years before Christ, Zarathustra preached the existence of a heaven and a hell, the idea of a bodily resurrection, the promise of a universal savior who would one day be miraculously born to a young maiden, and the expectation of a final cosmic battle that would take place at the end of time between the angelic forces of good and the demonic forces of evil.

in 2016, Google DeepMind’s AlphaGo AI challenged 14-time world champion Lee Sedol and won four out of five games. The next revision of AlphaGo was completely out of reach for human players: it won 60 straight games, taking down just about every notable Go player in the process.

the Bell Labs patent lawyers wanted to know why some people were so much more productive (in terms of patents) than others. After crunching a lot of data, they found that the only thing the productive employees had in common (other than having made it through the Bell Labs hiring process) was that “Workers with the most patents often shared lunch or breakfast with a Bell Labs electrical engineer named Harry Nyquist. It wasn’t the case that Nyquist gave them specific ideas. Rather, as one scientist recalled, ‘he drew people out, got them thinking'”

Once you make a decision, go all in.
Commit fully to your choices. Half-hearted efforts yield half-hearted results.
Indecision only leads to stagnation and missed opportunities.
Stay committed to your goals, even when faced with obstacles and setbacks. Perseverance is single-handedly the most important key to achieving a goals.

we’ll see Software 2.0 subsume more and more of the existing Software 1.0 stacks, resulting in more compact human-written codebases with the bulk of engineering complexity offloaded to data and learning. One of the most profound benefits of end-to-end machine learning is that it can drastically reduce the amount of code needed. Before deep learning, the AI backing Google Translate was roughly a 500,000-line codebase. After deep learning, a single neural network could be expressed in about 500 lines of TensorFlow code, with the bulk of “translation knowledge” now replaced with data.

Bezos shareholder letters
—
I invite you to please read the section entitled It’s All About the Long Term, as it is the best way I know to help make sure we’re the kind of company you want to be invested in. As we wrote there, we don’t claim it’s the right philosophy, we just claim it’s ours!
—
We are doubly-blessed. We have a market-size unconstrained opportunity in an area where the underlying foundational technology we employ improves every day. That is not normal.

Hayek would in particular focus on the function and effect of prices. Prices, he went on to explain in the following years, are the market’s decentralized and socially scalable means of communication. Although established as a simple function of supply and demand for goods and services in an economy, Hayek described how prices actually embed a wide array of relevant information that individuals require to make economic decisions.

Bitcoin is the most successful financial meme since gold and even at today’s all-time high, all the bitcoin in the world is still only worth about 1/14 of all the gold in the world.
Unlike the gold meme, which has infected about as many minds as it ever will, the bitcoin meme is growing — and it’s growing in a time when 1) people have more money than ever to invest and 2) people are more than ever looking for lottery-ticket type investments

Financial Nihilism goes hand in hand with Populism – a political approach that strives to appeal to ordinary people who feel that their concerns are disregarded by established elite groups

The dirty secret of influencer marketing: ~80%+ of influencers DO NOT CARE about anything but $
I see this happen 24/7 in my space. They don’t care about product quality, brand (theirs or the brand they’re repping), their audience, etc. They just want $$$
The reasons why are simple:
– They don’t make a lot of $ (even large accounts)
– This is usually their 1st business venture
– They suffer from extreme short-term thinking / high time preference
– They don’t understand how brand is built
– They can be quite entitled

Peter Thiel on The Power Law of Distribution:
“One distribution method is likely to be far more powerful than every other for any given business:
Distribution follows a power law of its own.
This is counterintuitive for most entrepreneurs, who assume that more is more. But the kitchen sink approach—employ a few salespeople, place some magazine ads, and try to add some kind of viral functionality to the product as an afterthought—doesn’t work. Most businesses get zero distribution channels to work. Poor sales rather than bad product is the most common cause of failure. If you can get just one distribution channel to work, you have a great business.”

Perhaps the most important insight NASA has gleaned from studying team dynamics—in space and on Earth—is the preciousness of one trait in particular: a sense of humour. Studies of crews overwintering at the South Pole show that a confined group needs people to fulfil various roles, including leader, storyteller and social secretary. But the most important task by far is that of the clown, a person who is funny and also wise enough to understand each member of the group and defuse tensions. Laughter, as much as courage, will sustain astronauts on their long quest to Mars.

The guy I know who is the best at friendships (also a spectacular salesman) keeps proposing plans. I asked him why once & he told me:
People get busy. If you want to be their friend, don’t take it personally & keep asking.
He did this with me & he eventually became one of the few genuine, lifelong friends I’ve made in adulthood.

Studies show that by adding physical activity to our lives, we become more socially active—it boosts our confidence and provides an opportunity to meet people. The vigor and motivation that exercise brings helps us establish and maintain social connections.

That’s why mottoes such as Google’s “Don’t be evil” and Facebook’s “Make the world more open and connected” mattered; they instilled a sense of mission in workers

Nothing is Something: “The most underutilized parenting strategy is doing nothing.”– Dr. Becky Kennedy

When Facebook was telling MySpace users they needed to escape Murdoch’s crapulent Australian social media panopticon, it didn’t just say to those Myspacers, “Screw your friends, come to Facebook and just hang out looking at the cool privacy policy until they get here.” It gave them a bot. You fed the bot your MySpace username and password, and it would login to MySpace and pretend to be you, scraping everything waiting in your inbox and copying it to your Facebook inbox
—
When Microsoft was choking off Apple’s market oxygen by refusing to ship a functional version of Microsoft Office for the Mac in the 1990s — so that offices were throwing away their designers’ Macs and giving them PCs with upgraded graphics cards and Windows versions of Photoshop and Illustrator — Steve Jobs didn’t beg Bill Gates to update Mac Office. He got his technologists to reverse-engineer Microsoft Office and make a compatible suite, the iWork Suite, whose apps, Pages, Numbers and Keynote could read and write Microsoft’s Word, Excel and PowerPoint files

Obviously the most exciting story to write will be the one you want to read. The reason I mention this case explicitly is that so many people get it wrong. Instead of making what they want, they try to make what some imaginary, more sophisticated audience wants. And once you go down that route, you’re lost

The signals have changed over the years: After horse equipage, it was Hermès trunks for traveling by rail, then large Hermès bags for day trips by automobile, and then small Hermès handbags for everyday use (originally sized to fit in the overhead bin of an airplane

The first modern LLM, Jeremy Howard’s ULMFit, was trained on Wikipedia. GPT was trained on a corpus of books. GPT-2 was trained on the reddit-curated “WebText,” corpus, i.e., a crawl of websites linked on Reddit. GPT-3 expanded the dataset scope to web text from CommonCrawl. Data selectivity trended downward as data volume and diversity requirements went up.

It is one of the main tasks of a real leader to mask the grim reality of dying and killing by evoking in his followers the illusion that they are participating in a grandiose spectacle…

Puzzlingly though, despite facing an increased risk of skin cancer, people who are exposed to lots of sun appear to have longer life expectancies, on average, than sun avoiders.

—

Prior editions:

Podcast notes – Peter Thiel on Uncommon Knowledge – “When do we go from wisdom of crowds to madness of crowds?”

Peter Thiel – Stanford + Stanford Law, PayPal cofounder, first Facebook investor

No ticker tape parades in NYC for individuals in 21st century – now it’s for groups like “healthcare professionals”, before it was for individuals like Charles Lindbergh

Prevailing view is heterodox thought no longer allowed, scared of putting individuals on pedestal

Believes in classic libertarian values – but it can be somewhat cowardly way of saying you’re a loser, you wanna be left alone
Acceptable for him to support Ron Paul for president, much more dangerous to support Donald Trump

When do we go from wisdom of crowds to madness of crowds?

If you win 99% of election, you’re in North Korea – you haven’t arrived at absolute truth but you’re in an insane totalitarian place

West has 2 philosophical traditions – Greco Roman and Judeo Christian

Covid – all kinds of things were asserted too dogmatically – and took hairpin turns

Science fights 2 front war against excess skepticism and excess dogmatism
Science thinks of itself as more fighting against dogmatism – “choose your enemies well because you’ll soon be like them” – now “science” can seem like a dogma, post-modern

Case of Jay Bhattacharya – example of sheer insanity – tenured Stanford professor, libertarian and heterodox thinker
He wrote article saying “there’s no high quality studies that prove wearing masks is effective” – triggered people, crazed campus reaction
Nuanced nature made it dangerous – supposed to think in clean bright line ideological terms
If you’re not allowed to say something, he has suspicion that not only should you say it, it’s simply true

Fauci: “When people criticize me, they’re really criticizing science because I represent science”
Science has become quite opposite from the exploration, open-debate that it should be
Real science doesn’t need to be called “science” – real chemistry, physics, etc – but eg “climate science” is like a tell in poker, exaggerating because it’s not quite there
Science with capital S seems like antonym of science lower case S

20 years of telling ourselves lies about Afghanistan – that it’s going wonderful, we’re nation building, form of epistemic closure
Believes Trump had a fundamentally correct view of Afghanistan – Trump said “Afghanistan is a shit country” – not rigorous or nice thing to say, but “when you limit yourselves to saying something that’s very nice, you can’t actually talk about anything at all”

Political correctness as misdirected form of politeness

Saying anything you want to — but remain civil

Fed Reserve
Inflation is common sense and everyone can see it – gas bill, grocery bill
Another case of epistemic closure – Fed seemed like last institution to register that inflation was accelerating
One of our most sacred institutions

MMT – everyone’s gravitated towards it at precise moment it should be questioned and challenged
Economics risks being very politicized – can twist the answers and go in strange direction
Not very precise a science, but when you violate everything, things will eventually go wrong

The hour is late for fiat money – clear signal is Bitcoin / Satoshi Nakamoto
Bitcoin is revolutionary anti-fiat money thing, a late warning like Trump’s warning on Afghanistan

Broken market
Fed buying all the bonds
Inflation showing up in assets, crypto, art, stocks, bonds
If inflation is 6% and rates are 0%, that’s still 6% confiscation of your cash / earnings

Davos – he stopped attending – people are only there as representatives of corporations and governments – it hit him that there are no real individuals in the room
Davos as sense of global government, participate as part of larger structure
Wisdom of crowds – center left politically correct thing
Not a truth seeking place, not maximum surface area of debate
It’s a world with no dissenting views
Doesn’t believe we’re at end of history

China
Ray Dalio says it’s like family with strict parents
He frames China since 2013 as Putin is positive role model (vs when they used to believe Soviet Union was a negative role model)
China works for one individual – Mr. Xi
Doesn’t work for anyone else anymore
Jack Ma as remarkable example
Tech companies have been clobbered
No individuals allowed, no wealthy people allowed
Back to totalitarian playbook
Quite different from China in 70s, 80s
China like much worse version of Japan – for many decades it had great model of copying and catching up, and then hit the wall – China seems like stranger more dysfunctional version of Japan
For most part, China has not overtaken us
2021 – feels like China has gone haywire, more Marxist economy, totalitarian escalation
Friend said “Xi as best thing happening to West”

Why are we in such a collectivist moment (in America)?
Something went wrong, not an idiosyncratic thing, symptomatic of bigger problem
Should have ticker tape parade for Satoshi – so much healthier sign for country – just symbolic but symbols are important

Is renewable possible? Or is it just historic decline
He believes it’s not historicism, inevitable trends – it’s individuals that matter

Advice to new grads:
Can start companies
Shortage of talent in government
Society feels increasingly on auto-pilot — but he would take opposite bet

Five articles to recommend: Diamonds, Surveilled cities, Zero to One, PG, and Kevin Kelly’s countdown clock

Have you ever tried to sell a diamond? [The Atlantic]

Since “young men buy over 90% of all engagement rings” it would be crucial to inculcate in them the idea that diamonds were a gift of love: the larger and finer the diamond, the greater the expression of love. Similarly, young women had to be encouraged to view diamonds as an integral part of any romantic courtship

The most surveilled cities in the world [Statista]

The Chinese city of Taiyuan, located in the Shanxi province roughly 300 miles Southwest of Beijing, tops the list with 120 public CCTV cameras per 1,000 inhabitants. The highest-ranked non-Chinese city is London, also notorious for its strict surveillance of public spaces, with 67 cameras per 1,000 people, with Los Angeles the highest-ranked U.S. city in the ranking with 6 cameras per 1,000 inhabitants

What makes Zero to One a masterpiece? [Ellen Fishbein]

A great company: a conspiracy to change the world.
(A company’s) secret: a specific reason for success that other people don’t see.

Early Work [PG]

But even if Silicon Valley’s encouraging attitude is rooted in self-interest, it has over time actually grown into a sort of benevolence.

My Life Countdown [Kevin Kellyy]

My friend Stewart Brand, who is now 69, has been arranging his life in blocks of 5 years. Five years is what he says any project worth doing will take. From moment of inception to the last good-riddance, a book, a campaign, a new job, a start-up will take 5 years to play through. So, he asks himself, how many 5 years do I have left? He can count them on one hand even if he is lucky. So this clarifies his choices. If he has less than 5 big things he can do, what will they be?

62 highlights from The Sovereign Individual: “The morality of the Information Age will be the morality of the market”

Ok I didn’t actually count the number of highlights, but there are a lot. It’s a dense book, with fancy language, and I had to slog through sections. But the time invested was worth it. This is a book I’ll read again, particularly as I see some of its sweeping predictions come to fruition. It’s already helped me to better understand the American political and emotional climate, the rise of bitcoin and cryptocurrency, and the evolution in what it means to work and to have a career.

The lens through which they analyze world events:

the most important causes of change are not to be found in political manifestos or in the pronouncements of dead economists, but in the hidden factors that alter the boundaries where power is exercised.

The thesis of the book:

The massed power of the nationstate is destined to be privatized and commercialized.

…leading to the rise of what they call “The Sovereign Individual.” I think in the authors’ view, a good example of someone approaching Sovereign Individual status would be Peter Thiel: defensibly rich, tech savvy, an independent thinker, future oriented, and now with citizenship in multiple countries.

I thought this was well-written, if a bit pandering:

A system that routinely submits control over the largest, most deadly enterprises on earth to the winner of popularity contests between charismatic demagogues is bound to suffer for it in the long run.

Please note: I share all of these highlights not as surrogates for my own views, but as food for thought and examination. I read the book at the same time as Yuval Harari’s Homo Deus and there was quite a bit of overlap in how they see our future.

HIGHLIGHTS

All nationstates face bankruptcy and the rapid erosion of their authority. Mighty as they are, the power they retain is the power to obliterate, not to command.

Farming created stationary capital on an extensive scale, raising the payoff from violence and dramatically increasing the challenge of protecting assets. Farming made both crime and government paying propositions for the first time.

Whenever technological change has divorced the old forms from the new moving forces of the economy, moral standards shift, and people begin to treat those in command of the old institutions with growing disdain.

From the vantage point of the Information Society, the spectacle of soldiers in the modern period traveling halfway around the world to entertain death out of loyalty to the nationstate will come to be seen as grotesque and silly.

[Adam] Smith explains how eighteen separate operations are employed to produce pins. Because of specialized technology and the division of labor, each employee could make 4,800 times more pins in a day than an individual could fabricate on his own.

It was rather a case of the Church as a predominant institution shaping moral, cultural, and legal constraints in ways that were closely fitted to the imperatives of feudalism. For this very reason, they were ill-suited to the needs of industrial society, just as the moral, cultural, and legal constraints of the modern nationstate are ill-suited to facilitating commerce in the Information Age.

For centuries, the nationstate made all outward-facing walls redundant and unnecessary. The level of monopoly that the state exercised over coercion in those areas where it first took hold made them both more peaceful internally and more formidable militarily than any sovereignties the world had seen before. The state used the resources extracted from a largely disarmed population to crush small-scale predators.

Suppose the phone company sent a bill for $50,000 for a call to London, just because you happened to conclude a deal worth $125,000 during a conversation. Neither you nor any other customer in his right mind would pay it. But that is exactly the basis upon which income taxes are assessed in every democratic welfare state.

Most democracies run chronic deficits. This is a fiscal policy characteristic of control by employees. Governments seem notably resistant to reducing the costs of their operations.

“Almost all warmaking states borrow extensively, raise taxes, and seize the means of combat-including men-from reluctant citizens who have other uses for their resources.” CHARLES TILLY

Nationalism made it easier to mobilize power and control large numbers of people. Nationstates formed by underlining and emphasizing characteristics that people held in common, particularly spoken language.

Information technology promises to alter dramatically the balance between protection and extortion, making protection of assets in many cases much easier, and extortion more difficult.

Most factory jobs could have been performed by almost anyone capable of showing up on time. They required little or no training, not even the ability to read or write. As recently as the 1980s, large fractions of the General Motors workforce were either illiterate, innumerate, or both. Until the 1990s, the typical assembly-line worker at GM received only one day of orientation before taking his place on the assembly line. A job you can learn in a single day is not skilled work.

Wherever societies have formed at a scale above bands and tribes, especially where trade routes brought different peoples into contact, specialists in violence have always emerged to plunder any surplus more peaceful people could produce.

governments have never established stable monopolies of coercion over the open sea. Think about it. No government’s laws have ever exclusively applied there. This is a matter of the utmost importance in understanding how the organization of violence and protection will evolve as the economy migrates into cyberspace, which has no physical existence at all.

A theme of elementary education in North America is that the colonists came from Europe seeking freedom and opportunity, which is true. What is seldom told, however, is how reluctant most people were to take the trip […] In the middle of the seventeenth century, inmates locked up in Bridewell, London’s notorious house of correction, revolted to show “their unwillingness to go to Virginia.” In 1720, there were riots in the streets of Paris to free vagabonds, thieves, and murderers scheduled for deportation to Louisiana.

Paper money is a distinctly industrial product. It would have been impractical before the printing press to duplicate receipts or certificates that became paper currency.

Cybermoney will be all but impossible to counterfeit in this way, officially or unofficially. The verifiability of the digital receipts rules out this classic expedient for expropriating wealth through inflation. The new digital money of the Information Age will return control over the medium of exchange to the owners of wealth, who wish to preserve it, rather than to nationstates that wish to spirit it away.

As Lane said, “I would like to suggest that the most weighty single factor in most periods of growth, if any one factor has been most important, has been a reduction in the proportion of resources devoted to war and police.”

the true obstacle to development in backward countries has been the one factor of production that could not be easily borrowed or imported from abroad, namely government

We also suspect that nationstates with a single major metropolis will remain coherent longer than those with several big cities, which imply multiple centers of interest

An intense and even violent nationalist reaction centered among those who lose status, income, and power when what they consider to be their “ordinary life” is disrupted by political devolution and new market arrangements.

Shaw and Wong focus on five identification devices used by modern nationstates to mobilize their populations against out-groups. These are: 1. a common language 2. a shared homeland 3. similar phenotypic characteristics 4. a shared religious heritage and 5. the belief of common descent

Information technology is also creating supraterritorial assets, which will help to subvert the embodiment of the in-group, the nationstate. Ironically, these new cyberassets will probably be of higher value precisely because they are established at a distance from home. All the more so if there is an invidious backlash of the kind we expect against the economic inequality arising from increasing penetration of information technology in the rich industrial countries.

Bethke Elshtain observed, nationstates indoctrinate citizens more for sacrifice than aggression: “The young man goes to war not so much to kill as to die, to forfeit his particular body for that of the large body, the body politic.”

Yet blacks, as a group, are major beneficiaries of income transfers, affirmative action, and other fruits of political compulsion. They are also disproportionately represented in the U.S. military. Therefore, they are likely to emerge, along with blue-collar whites, as among the most fervent partisans of American nationalism.

By eliminating the beneficial impact of competition in challenging underachievers to conform to productive norms, the welfare state has helped to create legions of dysfunctional, paranoid, and poorly acculturated people, the social equivalent of a powder keg.

Predatory tax rates made the democratic state a de facto partner with a three-quarters to nine-tenths share in all earnings. This was not the same thing as state socialism, to be sure. But it was a close relation. The democratic state survived longer because it was more flexible and collected more prodigious quantities of resources compared to those available in Moscow or East Berlin.

A system that routinely submits control over the largest, most deadly enterprises on earth to the winner of popularity contests between charismatic demagogues is bound to suffer for it in the long run.

For human beings it is the struggle rather than the achievement that matters; we are made for action, and the achievement can prove to be a great disappointment.

We can see the history of public morality as a cycle between disorder and authoritarianism; the modern authoritarian moralities, both feminism and fundamentalism, have emerged as a cyclical response to the hedonism of the 1960s.

Like most elites, the cognitive elite tend to be a bit above themselves, are rather arrogant, and think they can set their own standards. They are alienated from society as a result.

In science, three thousand years completely changed what human knowledge is; in morality, we may actually have fallen back. The average psychotherapist probably gives the patient less good moral advice on how to lead his life than the average Jew would have received from his teacher in the period of Moses.

A good social morality has certain characteristics. It should contribute to the survival of society and of individuals, in a dynamic rather than static way. It should include tolerance and avoid self-righteousness. It should be religious, rather than merely agnostic. It should not pretend to decide questions of scientific fact. It should be neither anarchic nor authoritarian. It should be widely shared and deeply held. Such a social morality is particularly important to the family and to the raising of children as independent and responsible adults. It provides the focus of a good society.

The morality of the Information Age applauds efficiency, and recognizes the advantage of resources being dedicated to their highest-value uses. In other words, the morality of the Information Age will be the morality of the market.

Today most people believe that cultures are more matters of taste than sources of guidance for behavior that can mislead as well as inform. We are too keen to believe that all cultures are created equal, too slow to recognize the drawbacks of counterproductive cultures.

Protection will be more technological than juridical. Walling out troublemakers is an effective as well as traditional way of minimizing criminal violence in times of weak central authority.

Because incomes for the very rich will rise faster than for others in advanced economies, an area of growing demand will be services and products that cater to the needs of the very rich.

9 Highlights from Peter Thiel’s Startup Class Notes

I spent 4 hours reading through Blake Master’s notes from Peter Thiel’s startup class.

First, HUGE thanks to Blake for writing such detailed and thoughtful notes. After reading them, I *almost* felt like I was in the class, and I learned a TON in a short period of time.

In the spirit of being more mindful about what I consume & learn, here are some of my biggest takeaways:

1. True innovation is going from 0 to 1, not 1 to n. Google’s search technology was a 0 to 1 problem. They had to create something completely new, with relatively few precedents or comparables. The numerous Groupon clones are solving 1 to n problems, since the core product innovation has been accomplished.

Maybe we focus so much on going from 1 to n because that’s easier to do. There’s little doubt that going from 0 to 1 is qualitatively different, and almost always harder, than copying something n times. And even trying to achieve vertical, 0 to 1 progress presents the challenge of exceptionalism; any founder or inventor doing something new must wonder: am I sane? Or am I crazy?

Anyone on a mission tends to want to go from 0 to 1. You can only do that if you’re surrounded by others to want to go from 0 to 1.

2. Great companies create meaningful value that lasts, and they (ideally) capture a lot of that value.

Great companies do three things. First, they create value. Second, they are lasting or permanent in a meaningful way. Finally, they capture at least some of the value they create.

Consider great tech companies. Most have one decisive advantage—such as economies of scale or uniquely low production costs—that make them at least monopoly-esque in some important way. A drug company, for instance, might secure patent protection for a certain drug, thus enabling it to charge more than its costs of production. The really valuable businesses are monopoly businesses. They are the last movers who create value that can be sustained over time instead of being eroded away by competitive forces.

3. Start with a small, or new, market; dominate it; then expand to adjacent markets and grow larger over time

First, you want to find, create, or discover a new market. Second, you monopolize that market. Then you figure out how to expand that monopoly over time.

Markets that are too big are bad for all the reasons discussed above; it’s hard to get a handle on them and they are usually too competitive to make money.

The best kind of business is thus one where you can tell a compelling story about the future. The stories will all be different, but they take the same form: find a small target market, become the best in the world at serving it, take over immediately adjacent markets, widen the aperture of what you’re doing, and capture more and more. Once the operation is quite large, some combination of network effects, technology, scale advantages, or even brand should make it very hard for others to follow. That is the recipe for building valuable businesses.

4. Founders, and founding moments, are crucial to a company’s long-term success

The insight that foundings are crucial is what is behind the Founders Fund name. Founders and founding moments are very important in determining what comes next for a given business. If you focus on the founding and get it right, you have a chance. If you don’t, you’ll be lucky at best, and probably not even that.

The ideal is the combination of high trust people with a structure that provides a high degree of alignment. People trust each other and together create a good culture. But there’s good structure to it, too. People are rowing in the same direction, and not by accident.

5. Power law dynamics and exponential things are more common, and more powerful, than we think. For VCs to make money, a single investment must return the fund. Remember this when you’re pitching!!

If you look at Founders Fund’s 2005 fund, the best investment ended up being worth about as much as all the rest combined. And the investment in the second best company was about as valuable as number three through the rest. This same dynamic generally held true throughout the fund. This is the power law distribution in practice. To a first approximation, a VC portfolio will only make money if your best company investment ends up being worth more than your whole fund.

Despite being rooted in middle school math, exponential thinking is hard. We live in a world where we normally don’t experience anything exponentially. Our general life experience is pretty linear. We vastly underestimate exponential things. If you backtest Founders Fund’s portfolios, one heuristic that’s worked shockingly well is that you should always exercise your pro rata participation rights whenever a smart VC was leading a portfolio company’s up round. Conversely, the test showed that you should never increase your investment on a flat or down round.

6. Distribution is vastly underestimated among startup success factors. Build it and they will not come. CLV > CAC

But for whatever reason, people do not get distribution. They tend to overlook it. It is the single topic whose importance people understand least. Even if you have an incredibly fantastic product, you still have to get it out to people. The engineering bias blinds people to this simple fact. The conventional thinking is that great products sell themselves; if you have great product, it will inevitably reach consumers. But nothing is further from the truth.

It is very likely that one channel is optimal. Most businesses actually get zero distribution channels to work. Poor distribution—not product—is the number one cause of failure. If you can get even a single distribution channel to work, you have great business. If you try for several but don’t nail one, you’re finished.

Distribution isn’t just about getting your product to users. It’s also about selling your company to employees and investors. The familiar anti-distribution theory is: the product is so good it sells itself. That, again, is simply wrong.

7. What’s your secret?

What important truth do very few people agree with you on?

What great company is no one starting?

The focus should be on the secrets that matter: the big secrets that are true.

8. Are you a pessimist or optimist? Do you view the world as determinate or indeterminate? SUCH a powerful framework…

If you believe that the future is fundamentally indeterminate, you would stress diversification. This is true whether you’re optimistic or pessimistic. And indeed, chasing optionality seems to be what most everybody does. People go to junior high and then high school. They do all sorts of activities and join lots of clubs along the way. They basically spend 10 years building a diverse resume. They are preparing for a completely unknowable future. Whatever winds up happening, the diversely prepared can find something in their resume to build on.

In a strange way, China falls squarely in the determinate pessimistic quadrant. It is the opposite of the U.S.’s optimistic indeterminacy.

But the indeterminate future is somehow one in which probability and statistics are the dominant modality for making sense of the world. Bell curves and random walks define what the future is going to look like. The standard pedagogical argument is that high schools should get rid of calculus and replace it with statistics, which is really important and actually useful. There has been a powerful shift toward the idea that statistical ways of thinking are going to drive the future.

9. Great people throughout history have been both extreme insiders and extreme outsiders. Things go great (ie, you’re the King) until they don’t (ie, you get killed). Some analogues with startup founders

The dynamic might work like this. People start out being different. They are nurtured to develop their already somewhat extreme traits. Those traits become more important, and they learn to exaggerate them. Others perceive that inflated importance and exaggerate in turn. The founders thus end up being even more different than they were before. And we cycle and repeat.

And we’ll end with a powerful excerpt from Abe Lincoln:

The question then is, Can that gratification be found in supporting and maintaining an edifice that has been erected by others? Most certainly it cannot. Many great and good men, sufficiently qualified for any task they should undertake, may ever be found whose ambition would aspire to nothing beyond a seat in Congress, a gubernatorial or a presidential chair; but such belong not to the family of the lion or the tribe of the eagle. What! think you these places would satisfy an Alexander, a Caesar, or a Napoleon? Never! Towering genius disdains a beaten path. It seeks regions hitherto unexplored. It sees no distinction in adding story to story upon the monuments of fame erected to the memory of others. It denies that it is glory enough to serve under any chief. It scorns to tread in the footsteps of any predecessor, however illustrious. It thirsts and burns for distinction; and if possible, it will have it, whether at the expense of emancipating slaves or enslaving freemen. Is it unreasonable, then, to expect that some man possessed of the loftiest genius, coupled with ambition sufficient to push it to its utmost stretch, will at some time spring up among us?

Hope you enjoyed these snippets. Read the full notes on Blake’s site.