David Solan's Atlas Hugged!!

David Sloan Wilson has written a new book "Atlas Hugged" (pun intended), a devastating critique of Ayn Rand’s philosophy of Objectivism and its impact on the world. Her philosophy has and continues to ruin millions of lives like any other addictive substance except addictive substances are usually objective but this one is purely subjective mythological magic. 

Atlas Hugged e-book is free or you can buy the paperback. 

Thank you, David. Thanks a million for fighting magic with fiction. 

We sapiens need a constant reminder that nothing is permanent; which means ideology is nothing but sheer magic which proclaims it can successfully "pin" time to be a constant. 

Check out a few hilarious excerpts here: 

Everyone knows about the existence of cults and their disturbing ability to steal minds.  Otherwise normal people give away everything to wait for the second coming of Jesus or aliens from outer space.  Midas and my grandfather would scoff at those irrational beliefs, but the society that they founded had all the earmarks of a cult.  The first structure that they erected was a giant gold-plated dollar sign atop a granite column.  They also invented an oath that members were required to recite at frequent intervals:  I SWEAR BY MY LIFE AND LOVE OF IT THAT I WILL NEVER LIVE FOR THE SAKE OF ANOTHER MAN, NOR ASK ANOTHER MAN TO LIVE FOR MINE.  The word “give” was banned from their vocabulary.  Every human transaction was paid for with the gold and silver coins minted on site.  Obviously, this was only possible thanks to the vast wealth of Midas Mulligan, who provided a bank account for each new member based on how much had been “stolen” from them in the form of taxes in the outside world.  While the members of other cults waited for Jesus or aliens from outer space, the Galtians waited for society to collapse while working to build a microcosm of the perfect society for themselves. 

[---]

The first person to leave the cult was my grandfather.  He simply disappeared, just as he had disappeared from his engineering job.  This time he didn’t even leave a note or a boastful proclamation.  My father, John Galt II, was two years old and grew up knowing only the legend of John Galt I.  Then other members started to drift away.  Finally Midas Mulligan reached his breaking point and withdrew his financial support, observing wryly that the Galtians were more heavily subsidized than any socialist society.  Like fleas shaken from the back of a dog, the Galtians were forced to make their way back to the society that they’d mocked and seek the forgiveness of family, friends, and former business associates.

The Galtian movement was a failure in every way but one.  It had not resulted in a widespread strike of doers.  The static electricity engine was a folly.  The microcosm of the perfect doer society went the way of so many other utopian visions.  But Ayn Rant’s better-than-real cosmology was a survivor that had been propagated around the world by The Speech.  Everyone who fell under its spell became convinced, as fervently as any religious believer, that the path to salvation was to concentrate exclusively on making money for oneself.

Modeling the Human Trajectory

I do not know whether most of the history of technological advance on Earth lies behind or ahead of us. I do know that it is far easier to imagine what has happened than what hasn’t. I think it would be a mistake to laugh off or dismiss the predictions of infinity emerging from good models of the past. Better to take them as stimulants to our imaginations. I believe the predictions of infinity tell us two key things. First, if the patterns of history continue, then some sort of economic explosion will take place again, the most plausible channel being AI. It wouldn’t reach infinity, but it could be big. Second, and more generally, I take the propensity for explosion as a sign of instability in the human trajectory. Gross world product, as a rough proxy for the scale of the human enterprise, might someday spike or plunge or follow a complicated path in between. The projections of explosion should be taken as indicators of the long-run tendency of the human system to diverge. They are hinting that realistic models of long-term development are unstable, and stable models of long-term development unrealistic. The credible range of future paths is indeed wide.

- More Here

What I've Been Reading

Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons, and World-Class Performers by Tim Ferris.

Here's my confession: For a long long time, I remained biased because of cheesy book titles and I never read Tim Ferris. This changed when my friend gave this book as a Holiday gift.  Man, what an impact it made on my health. This is one practical book that I am still working on implementing lot of stuff in everyday life. I have changed my diet, bought some of his recommendations since the start of the year and it has already made an impact on my health. Thank you Tim !

The book is divided into three parts - Health, Wealth and Wise (Wisdom). So far, I have implemented lot of stuff from Health. Other two, I already align with lot of Tim's thoughts but need to revisit them often.

take things like playfulness and purposelessness very seriously. . . . This is not meant to be light, but I think I would have somehow encouraged myself to let go a little bit more and hang in there and not pretend to know where this is all going. You don’t need to know where it’s all going.

Complexity & Work

Radical unpredictability is a characteristic of (organizational) life. One can no longer count on a certain input leading to a certain given output. The way complexity works is to escalate small changes, breaking any direct link between input an output.

There is no option but to act and learn.

Effective decision making in conditions of uncertainty would require a constant, active search for unintended developments, errors in thinking, wrong assumptions and willingness to respond, to learn from the consequences of our own actions.

This entails a huge change when it comes to our thinking about leaders and managers. Most of us are used to being judged on whether we made the right choice. If it turns out to be wrong, we assign time and energy to concealing the fact, or to justifying our original decision. “I was right; I did the right thing.” “It was a good strategy but the implementation sucked.”

Applying mainstream management approaches in conditions of uncertainty leads us unintentionally to avoid the search for learning and positive change. Being wrong is a common but very difficult proposition in organizations. Instead of seeing learning as a process of closing the gap between not-knowing and knowing, acknowledging being wrong might be the most important starting point for learning — because we mostly are!
The learning we need today starts from what we did yesterday and changes what we do today.

- More Here

Ethics in Business - Jonathan Haidt

I set up the argument by quoting Buddha’s version of the business case:

Set your heart on doing good.

Do it over and over again, and you will be filled with joy.

A fool is happy until his mischief turns against him.

And a good man may suffer until his goodness flowers.

I then organized the recent evidence into three categories:

• A good reputation is extremely valuable
• Illegal conduct can be extremely costly
• Ethical companies are more efficient

- More Here

Wisdom Of The Week

12.Trade up on trust even if it means you trade down on competency.

Should you start a company with friends? All things being equal, Reid says yes, because you can move more quickly with trusted friends because you already understand how each other thinks and talks. And moving quickly? That’s critical in the early days of a startup.

But what if all things aren’t equal? If you’re choosing between working with someone who’s a trusted friend and a 7 out of 10 on competence, versus a stranger who’s a 9 out of 10 on competence, who should you pick? Answer: if the trusted friend is a fast learner, pick the trusted friend.

Trade up on trust, even if it means you have to trade down on competency a bit. In other words, choose to work with someone you know who’s a fast learner over someone who’s a bit more qualified who you do not know. Assuming the person you know and trust is in Permanent Beta, he or she can round out their gaps in skills or experience in short order.

I benefitted from Reid’s philosophy on this personally. For some assignments, I was not the most qualified person in the world, or even the most qualified within his own network. But given that we a) completely trust each other, b) I have a good sense of his priorities and values and preferences and he has a good sense of my own priorities and values and preferences, and c) I’m a quick learner, we could move at lightning speed together on projects.

As with so many lessons, I have to continue to re-learn this one. The first time I learned this lesson the hard way at one of my early companies, when we hired someone who looked great on paper in terms of industry accomplishments but who none of us really knew or trusted. The moment we encountered a couple landmines, the lack of trust ruined any hopes at productive group problem solving. The second time I learned this the hard way was at a different company I co-founded, where I traded down on competency too much when bringing on one team member. The trust was all there, and the guy was a fast learner, but the tradeoff down in necessary expertise wasn’t worth it, and the project floundered.

- Ben Casnocha on 10,000 Hours with Reid Hoffman (read the whole thing, its phenomenal)

Ten Laws of the Physics of People

6. The Uncertainty Principle

The more you know about one topic, the stupider you become. Or, as my mom used to tell me, "never trust someone who has all the answers, especially yourself." Experts are dangerous, if they are not balanced by naive laymen. Diversity is more valuable than expertise.

Lesson: diversity is not a political slogan. It's the basis for collective intelligence.

7. Zipf's Law of Power Distributions
20% of any system always has 80% of the power. It applies to cities, languages, earthquakes, and economies. And organizations, and software systems. You'll spend most of your effort on a fraction of the software. Over-engineering code that isn't in the critical path is a waste of time.

Lesson: if shitty code solves the problem, it's not shitty code.

- More Here

What I've Been Reading

What Hedge Funds Really Do: An Introduction to Portfolio Management by Philip J. Romero and Tucker Balch.

Great book to learn the basics; highly recommended.

It is also common for hedge funds to provide lower cumulative returns compared to the bench mark, but also with significantly reduced volatility. This relative performance is common to the claims of many hedge funds; their strategies have lower volatility and lower returns in the rising markets, presumably because of the performance drag cause by hedges. But their risk-adjusted return as-measured by their Sharpe ratio or information ratio-is superior to unhedged long-only strategies. 

The Secret Goldman Sachs Tapes

Our financial regulatory system is obviously dysfunctional. But because the subject is so tedious, and the details so complicated, the public doesn't pay it much attention.

That may very well change today, for today -- Friday, Sept. 26 --- the radio program "This American Life" will air a jaw-dropping story about Wall Street regulation, and the public will have no trouble at all understanding it.

The reporter, Jake Bernstein, has obtained 46 hours of tape recordings, made secretly by a Federal Reserve employee, of conversations within the Fed, and between the Fed and Goldman Sachs. The Ray Rice video for the financial sector has arrived.

[---]

In early 2012, Segarra was assigned to regulate Goldman Sachs, and so was installed inside Goldman. (The people who regulate banks for the Fed are physically stationed inside the banks.)

The job right from the start seems to have been different from what she had imagined: In meetings, Fed employees would defer to the Goldman people; if one of the Goldman people said something revealing or even alarming, the other Fed employees in the meeting would either ignore or downplay it. For instance, in one meeting a Goldman employee expressed the view that "once clients are wealthy enough certain consumer laws don't apply to them." After that meeting, Segarra turned to a fellow Fed regulator and said how surprised she was by that statement -- to which the regulator replied, "You didn't hear that."

This sort of thing occurred often enough -- Fed regulators denying what had been said in meetings, Fed managers asking her to alter minutes of meetings after the fact -- that Segarra decided she needed to record what actually had been said. So she went to the Spy Store and bought a tiny tape recorder, then began to record her meetings at Goldman Sachs, until she was fired.

- Mike Lewis

Wisdom Of The Week

In the end the biggest lesson that I took away from meeting with Guy and reading his book is that we need to stop living our life through other people. I can play basketball every day for 18 hours and I’m never going to be Michael Jordan. I can study financial reports until I’m blue in the face and I’m never going to be the next Warren Buffett. 

In the end The Education of a Value Investor, is an important reminder that we need to be more authentic versions of ourselves. We need to do what is right for us and that might not be what is right for others. We need to stop pretending to be other people and compromising our internal standards or ethics. We need to find who we are and how we want to live. “Instead of trying to compete with Buffett,” Guy writes, “I should focus on the real opportunity, which is to become the best version of Guy Spier that I can be.”

- Farnam Street's notes on the book The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment by Guy Spier

How to Start a Startup

Sam Altman of Y Combinator will be sharing his insights starting September 23rd; sign up for the class here:

Everything we know about how to start a startup, for free, from some of the world experts.

CS183B is a class we’re teaching at Stanford. It’s designed to be a sort of one-class business course for people who want to start startups.

Videos of the lectures, associated reading materials, and assignments will all be available here. There will be 20 videos, some with a speaker or two and some with a small panel. It’ll be 1,000 minutes of content if you watch it all.

We’ll cover how to come up with ideas and evaluate them, how to get users and grow, how to do sales and marketing, how to hire, how to raise money, company culture, operations and management, business strategy, and more.

You can’t teach everything necessary to succeed in starting a company, but I suspect we can teach a surprising amount. We’ve tried to take some of the best speakers from the past 9 years of Y Combinator dinners and arrange them in a way that will hopefully make sense.

We’re doing this because we believe helping a lot of people be better at starting companies will be good for everyone. It will hopefully be valuable even for people who don’t want to start startups.

Talks like these have really helped Y Combinator founders create their companies. We hope you find it helpful too!

-Sam

Peter Thiel on Reditt

Is Palantir a front for the CIA?
Peter Thiel: No, the CIA is a front for Palantir.

Which are your favourite books? (both fiction and nonfiction)
Peter Thiel: Lots and lots of them... I like the genre of past books written about the future, e.g.:

• New Atlantis and The Great Instauration by Francis Bacon
• The American Challenge by JJ Servan-Schreiber
• The Great Illusion; A Study of the Relation of Military Power to National Advantage by Norman Angell
• The Diamond Age by Neal Stephenson

- More Here

Interview with Peter Thiel

Peter Thiel talks about his new book Zero to One: Notes on Startups, or How to Build the Future
with Tim Ferris:

TIM: What is the book (or books) you’ve most often gifted to other people?

PETER: Books by René Girard, definitely — both because he’s the one writer who has influenced me the most and because many people haven’t heard of him.

Girard gives a sweeping view of the whole human experience on this planet — something captured in the title of his masterwork, Things Hidden Since the Foundation of the World — but it’s not just an academic philosophy. Once you learn about it, his view of imitation as the root of behavior is something you will see every day, not just in people around you but in yourself.

Why Founders Should Know How to Code

“By knowing things that exist, you can know that which does not exist.”

Book of Five Rings

A startup is not just about the idea, it’s about testing and then implementing the idea. A founding team without these skills is likely dead on arrival.

Lessons Learned:

• Startups are not just about the idea, they’re about testing and implementing the idea
• A founding web/mobile team without a coder past the initial stages of Customer Discovery is not a startup
• Everyone on the founding team ought to invest the time in a coding bootcamp
• Your odds of building a successful startup will increase

- More Here

Daphne Koller on MOOCs

Yet another excellent Econtalk interview (If you haven't already started listening to Russ Robert's podcast, you are missing out on Consilience: The Unity of Knowledge):

Russ: You mentioned Udacity. Sebastian Thrun launched Udacity with a great deal of fanfare, and a great deal of resources. And the early offerings, some of them were quite spectacular, and quite successful in the sense that a lot of people took the classes. And he got very demoralized by his experience in trying to take that material into a university. Do you understand why? I don't, fully. And as a result, as you said, they have shifted more toward corporate training and other areas. I don't get it. What are your thoughts?

Daphne: I think one of the experiences that caused Sebastian to shift away from the original trajectory was the experience that he had with San Jose State, where he tried to take some of the courses, or at least the philosophy behind this teaching, and apply it to remedial classes. I think the real struggle is that students in these remedial classes are ones for whom the educational system has largely failed. That is, they didn't develop in school, in high school, the study skills that they needed in order to succeed. Which is why they are in the developmental track. And if you take those students and you just plunk them in front of a computer, I don't think it's a great recipe for success. Whereas there are other populations of learners that this is a much more successful model for.

Russ: So, his discouragement was the fact that they didn't do very well in the tests and retention or whatever measures that were used. But I thought it's sure awfully early to be turning your back on this technology because of, really, one data point. I don't get it. Is there more to it than that? That you think?

Daphne: I agree with you; and that's why we have not turned our back on this technology. I think it's important to identify the right--you are not going to find a silver bullet to education. There's not going to be a single technology that works well for all types of content and all populations. So I think that particular instance was a mismatch between the technology and the kinds of learners at which it was aimed. I think those learners, and there are studies that prove that benefit tremendously from more blended learning approach; and some of the other results even in San Jose State as well as a number of our partners, show significant improvements in learning. Because when you do blended learning that involves both technology and some kind of face-to-face interaction, the technology that we're currently using in terms of the open access, the ones that go direct to consumers, they work really well for a different type of population. And that's great.

The Alliance: Managing Talent in the Networked Age by Reid Hoffman, Ben Casnocha and Chris Yeh

Improving the microcosm of workplace relationships can have a major impact on society -- job by job, team by team, company by company. The alliance may seem like a small thing next to macroeconomic proposals like overhauling the education system or reforming our regulatory regime, but it's a small thing we can all adopt today that will generate big cumulative returns in the years to come.

Review of the new book by  The Alliance: Managing Talent in the Networked Age by Reid Hoffman, Ben Casnocha and Chris Yeh:

The Alliance shows how the workplace has changed in recent decades, and how these changes have broken down the trust in the relationship between employers and employees, to everyone's detriment. And then it shows a way forward so that all benefit.

Essentially, the authors write, we've gone from a model predicated on stable, longtime (if not lifetime) employment to one of constant flux and change. "The world changed, both philosophically and technologically," they write. "The rise of shareholder capitalism led companies and managers to focus on hitting short-term financial targets to boost stock prices."

As a result, the employer-employee relationship has become legalistic and transactional, characterized by mutual distrust and "based on a dishonest conversation." Employers still talk about the value of talent retention and use the language of "family" and "team," but when short-term and quarterly expectations aren't met, employees suddenly find themselves without a family, cut from the team. Since employees know this, they're -- not unreasonably -- always looking for a better gig and not fully committing to what they're doing now. "No one wants to risk being jilted," the authors write, "so no one invests in the long-term relationship."

When no one wants to make that investment, it's bad for everybody, including companies. And this isn't good for anyone:

A business without loyalty is a business without long-term thinking. A business without long-term thinking is a business that's unable to invest in the future. And a business that isn't investing in tomorrow's opportunities and technologies -- well, that's a company already in the process of dying.

Business Adventures

Both Bill Gates and Warren Buffet—according to an essay this week from Gates—count John Brooks’ Business Adventures as their single favorite book about business. Why is this compendium of 1960s New Yorker articles catnip for billionaires?

Perhaps the eeriest and most edifying piece to read from a modern-day perspective is Brooks’ look inside Xerox during a moment of transition. Here was a firm that experienced massive success at whiplash speeds, rising so far, so fast, that it wasn’t quite sure where to go next. Consider: In the mid-1950s, Americans made about 20 million copies annually, using bad technology that produced worse results. By 1964, after Xerox introduced xerography—a vastly superior, proprietary process that at last let copies be made on regular paper and with great velocity—that figure climbed to 9.5 billion. Two years later, we were making 14 billion copies a year.

Xerography was a technological revolution that some observers at the time put on par with the invention of the wheel. Brooks describes a burgeoning “mania” for copying—“a feeling that nothing can be of importance unless it is copied, or is a copy itself.” Marshall McLuhan fretted that xerography would “bring a reign of terror into the world of publishing,” and warned, “there is no possible protection from technology except by technology.”

In short, the arrival of xerography spurred hopes and fears not unlike those stirred up in the early days of the World Wide Web. It was a piece of tech that we might now call “disruptive.” It turned office culture on its head, changed the nature of text propagation more than anything since the days of Gutenberg, and coined a new dual noun/verb: I’ll Xerox it; let me make a Xerox. As for Xerox the company, it was generating so much profit that it seemed as though its copier drums were spitting out U.S. currency. When Brooks pays a visit to the corporate campus in Rochester, New York, he finds the executives’ biggest concerns revolve around Xerox’s charitable support for the United Nations—a cause the company championed but one that bore little relation to its core business.

At the height of its success, Xerox neglected to foresee its own demise. Then as now, disruption begat adaptation. Copying grew commonplace. Xerox plowed its revenue into R&D in a search for the next hit, but never managed to translate its breakthroughs into best-selling products.

- More Here

Wisdom Of The Week

Brilliant profile of Elizabeth Holmes - CEO of Theranos was a refreshing read; yet another human being deeply influenced by Stoicism via Marcus Aurelius:

Elizabeth and her brother–who is now director of product management at Theranos–had both been intrigued by their father’s work in China. So when Elizabeth was about 9, her parents found them both a tutor to teach them Mandarin on Saturdays. Elizabeth then supplemented those lessons with summer language programs at Stanford and, later, at two universities in Beijing. Captivated by computer programming in high school, she was struck by how the Chinese universities’ information technology facilities lagged behind what she was used to. To rectify that situation, she started her first business while still in high school, selling C++ compilers to Chinese universities.

Whether it grew out of her father’s experiences at Tenneco or family lore–they are descendants of a founder of the Fleischmann’s Yeast company–Elizabeth grew up admiring private industry. “At a relatively early age I began to believe that building a business was perhaps the greatest opportunity for making an impact,” she says, “because it’s a tool for making a change in the world.”

Holmes was admitted by early decision to Stanford. As she headed off to college, her father gave her a copy of Meditations, by the Roman emperor and Stoic philosopher Marcus Aurelius. “I wanted it to reinforce the message of a purposeful life,” her father explained to me. “I think it really affected her.”

What I've Been Reading

If the science of statistics can benefit me in anything, I will use it. If it poses a threat, then I will not. I want to take the best of what the past can give me without its dangers. Accordingly, I will use statistics and inductive methods to make aggressive bets, but I will not use them to manage my risks and exposure. Surprisingly , all the surviving traders I know seem to have done the same. They trade on ideas based on some observation (that includes past history) but, like the Popperian scientists, they make sure that the costs of being wrong are limited (and their probability is not derived from past data). Unlike Carlos and John, they know before getting involved in the trading strategy which events would prove their conjecture wrong and allow for it. They would then terminate their trade. This is called a stop loss, a predetermined exit point , a protection from the black swan. I find it rarely practiced.

Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets (Incerto) by Nassim Nicholas Taleb. Believe it or not, I have never read Taleb's first book and I think, this is his best book (call it recency effect, ask me again when I re-read Antifragile & Black Swan)

• Note also that the implication that wealth does not count so much into one’s well-being as the route one uses to get to it. Some so-called wise and rational persons often blame me for “ignoring” possible valuable information in the daily newspaper and refusing to discount the details of the noise as “short-term events.” Some of my employers have blamed me for living on a different planet. My problem is that I am not rational and I am extremely prone to drown in randomness and to incur emotional torture. I am aware of my need to ruminate on park benches and in cafés away from information, but I can only do so if I am somewhat deprived of it. My sole advantage in life is that I know some of my weaknesses, mostly that I am incapable of taming my emotions facing news and incapable of seeing a performance with a clear head. Silence is far better.
• There are instances where I like to be fooled by randomness. My allergy to nonsense and verbiage dissipates when it comes to art and poetry. On the one hand, I try to define myself and behave officially as a no-nonsense hyperrealist ferreting out the role of chance; on the other, I have no qualms indulging in all manner of personal superstitions. Where do I draw the line? The answer is aesthetics. Some aesthetic forms appeal to something in our biology, whether or not they originate in random associations or plain hallucination. Something in our human genes is deeply moved by the fuzziness and ambiguity of language; then why fight it?
• Karl Popper came up with a major answer to the problem of induction. No man has influenced the way scientists do science more than Sir Karl— in spite of the fact that many of his fellow professional philosophers find him quite naive (to his credit, in my opinion). Popper’s idea is that science is not to be taken as seriously as it sounds (Popper when meeting Einstein did not take him as the demigod he thought he was). There are only two types of theories: 1. Theories that are known to be wrong, as they were tested and adequately rejected (he calls them falsified). 2. Theories that have not yet been known to be wrong, not falsified yet, but are exposed to be proved wrong. Why is a theory never right? Because we will never know if all the swans are white (Popper borrowed the Kantian idea of the flaws in our mechanisms of perception). The testing mechanism may be faulty. However, the statement that there is a black swan is possible to make. A theory cannot be verified. To paraphrase baseball coach Yogi Berra again, past data has a lot of good in it, but it is the bad side that is bad. It can only be provisionally accepted. A theory that falls outside of these two categories is not a theory. A theory that does not present a set of conditions under which it would be considered wrong would be termed charlatanism— it-would be impossible to reject otherwise. Why? Because the astrologist can always find a reason to fit the past event, by saying that Mars was probably in line but not too much so (likewise to me a trader who does not have a point that would make him change his mind is not a trader). Indeed the difference between Newtonian physics, which was falsified by Einstein’s relativity, and astrology lies in the following irony . Newtonian physics is scientific because it allowed us to falsify it, as we know that it is wrong, while astrology is not because it does not offer conditions under which we could reject it. Astrology cannot be disproved, owing to the auxiliary hypotheses that come into play. Such point lies at the basis of the demarcation between science and nonsense (called “the problem of demarcation”).

What I've Been Reading

Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel with Blake Masters. The book is scheduled to release in September but they were kind enough to send an "advance reader's edition" !!

This book was derived from Blake Masters CS813 notes but Thiel has added more of his wisdom. Highly recommended - each chapter has its own unique "Thielian" insight.  You can pre-order the book here.

Secrets

Back in class one, we identified a very key question that you should continually ask yourself: 
What important truth do very few people agree with you on? To a first approximation, the correct answer is going to be a secret. Secrets are unpopular or unconventional truths. So if you come up with a good answer, that’s your secret.

How many secrets are there in the world? Recall that, reframed in a business context, the key question is: what great company is no one starting? If there are many possible answers, it means that there are many great companies that could be created. If there are no good answers, it’s probably a very bad idea to start a company. From this perspective, the question of how many secrets exist in our world is roughly equivalent to how many startups people should start.

How hard it is to obtain the truth is a key factor to consider when thinking about secrets. Easy truths are simply accepted conventions. Pretty much everybody knows them. On the other side of the spectrum are things that are impossible to figure out. These are mysteries, not secrets. Take superstring theory in physics, for instance. You can’t really design experiments to test it. The big criticism is that no one could ever actually figure it out. But is it just really hard? Or is it a fool’s errand? This distinction is important. Intermediate, difficult things are at least possible. Impossible things are not. Knowing the difference is the difference between pursuing lucrative ventures and guaranteed failure.

Discovery is the process of exposing secrets. The secrets are dis- covered; the cover is removed from the secret. Triangle math was hard for Pythagoras to discover. There were various Pythagorean mystery cults where the initiated learned about crazy new things like irrational numbers. But then it all became convention.

It can also work the other way, too. Conventions can get covered up and become secrets again. It’s often the case that people stop believing things that they or previous generations had believed in the past.

Some secrets are small and incremental. Others are very big. Some secrets—gossip, for instance—are just silly. And of course there are esoteric secrets—the stuff of tarot cards and numerology. Silly and esoteric secrets don’t matter much. And small secrets are of small importance. The focus should be on the secrets that matter: the big secrets that are true.

The purpose of this class is to share and discuss some secrets about starting companies. The big ones so far have involved monopoly vs. competition, the power law, and the importance of distribution.

“Capitalism and competition are antonyms.” That is a secret; it is an important truth, and most people disagree with it. People generally believe that the differences between firms are pretty small. They miss the big monopoly secret because they don’t see through the human secrets behind it. Monopolists pretend that they’re not monopolists (“Don’t regulate us!”) and non-monopolists pretend that they are (“We are so big and important!”). Things only tend to look similar on the surface.

The power law secret operates similarly. In one sense it’s a secret about finance. Startup outcomes are not evenly distributed; the follow a power law distribution. But in another sense it’s a very human secret. People are uncomfortable talking about inequality, so they either ignore it or rationalize it away. It is psychologically difficult for investors to admit that their best investment is worth more than the rest of their portfolio companies combined. So they ignore or hide that fact, and it becomes a secret.