Your Are Not A Lottery Ticket - Peter Thiel

One of the best talks I have heard in long long time (via here)

The sound bite version of this is:

• In a definite world , money is a means to an end because in order to do specific things you need money
• In an indefinite world, you have no idea what to do with money and so money simply becomes an end in itself. Seems perverse, you always accumulate money and no idea what to do with it.

If you start a successfully  business you sell the company or sell shares to investors in an IPO, you make some money.

What do you do with the money? 

You have no idea because nobody no knows to do with anything. And so you give the money to a large bank to help you do something.

What do the bank do? 

It has no idea, so it gives the money to portfolio of institutional investors.

What do the institutional investors do? 

They have no idea, so they all just invest in a portfolio of stocks. Not too much in any single stock ever because that suggests that you have opinions  or ideas. 

That’s very dangerous because it suggests that somehow not with it.

What do the companies that get the money do? 

They are told that all they should do is generate free cash flows because if they actually would invest the money in specific things that would suggest that the company had ideas about the future and that would be dangerous. So one of the worst things you can ever have is a company that’s not profitable in this indefinite world. Sort of a contrarian idea I like saying that we always like investing in companies that are losing money and we don’t like companies that are making money. Because the companies that not profitable are the companies that have lot of ideas about what to do with their money; where as a company that is massively profitable is at some level is a company that is out of ideas.

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