[00:00:02] Peter Thiel Create clip I thought it's gonna take a somewhat different attack today and try to talk a little bit about what I think the biggest single uh, philosophical question in all these uh startups and maybe even in life generally is that people have and it's um, it's whether uh is it all just a matter of luck or how much of this is luck and how much is, is not luck when you start one of these businesses and and and do do one of these things. And it's sort of this big question that underlies a lot of, a lot of these different ventures that people do. And I want to I want to try to tackle that question, at least indirectly today. I want to talk a little bit about, you know, a little bit about the question of luck, why? It's very hard to answer. I want to suggest to you that we live in a society where people are incredibly biased to thinking that things are dominated by luck. And I want to at least suggest that there are some alternate ways of thinking about the future that it's worth for us to explore. Um let me uh let me start with uh this is probably one of my my general uh my the general uh slide that I always have on the nature of progress, the nature of the future. Mm and when you think about how the 21st century is going to unfold, You can think that they're basically to access to the 21st century. There's a technology axis and the globalization axis. Um they're they're very different, people always use these words interchangeably, But globalization is basically about copying things that already work. Um, it's the story of china and the emerging world. Um, there's still much of the world, six billion out of seven billion people are still incredibly poor. And what they mainly have to do in the next few decades is just copy things that work. There's some things where they can avoid copying bad ideas from the developed nations, but a lot of it is this sort of horizontal or extensive progress And sort of going from 1 to end. But then there's also technology Doing new things vertical or intensive progress and it's sort of where you're the first person or business or inventor or artist in the history of the world to do to do something new, it's going from 0-1. And what I want to suggest is that there's there's something sort of very different about going from 0-1. um, instead of one to end one to end, is there sort of, is this law of large numbers and you can sort of run the experiment many times and sort of see how things work. But when you go from 0 to 1, there's a sense in which, you know, every, uh, every sort of event in the history of progress in the history of technology or science has something singular and non repeatable about it. And so, um, and so if we ask, you know, is a given invention, a given startup, given artistic achievement, um, was this something that would have happened anyway, is that something was a total fluke? Um it's actually really hard question to answer because you only have sort of a sample size of, of one to go on and you can sort of, you can sort of say that that with a sample size of one, you know, the variance becomes infinite, so it's almost impossible to know whether you were lucky or not. And I think that's probably ah, this sort of important starting point to have is that it's completely unclear whether or not, um it's luck or not and you can have certain biases on this, but in anything where you're going from 0 to 1, it's very, very hard to say now. Um there certainly is some very mild anecdotal evidence that uh, that you can give that uh, that certain that the anti luck argument is that there are certain people who have succeeded in doing various uh, businesses on a repeat basis, you know, there's probably perhaps most famously still chief steve jobs with Apple and Pixar, Jack Dorsey with square twitter, My colleague Helen from Paypal, who went on to start SpaceX and Tesla on was heavily involved in Solar City. Uh, of course, you know, there's always a counter narrative of these things, you can say, well this person, just each of these people had just one big breakthrough and then everything else was somehow leveraged off of that. So, you know, whenever you sort of, drill down on this question, was it luck, was it not luck? It's actually um it's actually really hard, it's really hard to say it is striking. However, how much the way we talk about this has changed, and so if you go um you know, if you go uh back in time, the classical way people used to talk about it was that luck was something to be overcome or to be mastered thomas, jefferson, I'm a great believer in luck and I find the harder I work, the more I have of it, which again suggests that it's, it's this uh it's this thing to um uh to overcome or to uh um you know, that's uh that doesn't dominate things or you know, even simpler, uh Samuel Goldwyn, the harder I work, the luckier I get. Um very much in contrast to that, you have something like uh today's dominant view where success stems stems from sort of this whole context, the context is random. You know, maybe you were a member of the lucky sperm club, the lucky egg club, you know, you're lucky, but where you were born and stuff like that, and that sort of is what drives everything and there's of course, you know, a version of this that applies to startups, that the successful ones were accidental. Um you know, it's pretty clear how big a role luck plays. I agree with paul Graham on an awful lot of things, but again, I think this is sort of a place where it's just automatically channeling our our default uh bias as a society and it's it's worth asking how much of this is true and how much is not true. What I want to focus on today is um is not so much um it's always are two different directions. You can go with this question of luck. One is sort of the past orientation, which is, you know, how did I get here? You know, what were the factors that contributed to uh to success? Um but I want to focus instead um instead I want to focus on the future, question of what, you know, what you can do next and where you go, where you go from here, is this is there sort of, is the future? Um is that something that's fundamentally dominated by chance? Or is somehow thinking of this as being dominant by chance? Uh somewhat of a somewhat of a wrong way or an incomplete way to think about the future and want to offer the alternate alternate perspective on that. Now, I want to say a little bit about the structure of the future and how people can think about the future. And um and you can think of it, I think most simply as being determinate or indeterminate and in particular, I have this sort of two by two matrix for the future, it's sort of a consulting type type idea, but you can basically um most simplistically, you can say that the future is either optimistic or pessimistic and it's either determinate or indeterminate. An optimistic future is one where you believe things will be better than the present on. Whatever access defines better. Uh a pessimistic future is one where you think things will generally be worse. And then a determinant future is one where you can sort of map out reasonable amounts of it and plan against it. And then an indeterminant one is uh is where you have absolutely no clue and it's sort of just a random walk all the way uh certainly depending on which of these quadrants you believe is basically correct about the future. It tells you some very different, it leads to some very different approaches that you would pursue in terms of how you think about your life or the kinds of things you're doing. And I want to sort of try to develop this framework a little bit more um as we as we as we think about this. So for example, um most simply um a determinant versus indeterminant axis um you know, if you believe the future is determinant, um you will act with uh with some degree of conviction, you'll have specific ideas and you'll have some confidence to uh to uh to work towards those ideas. If it is indeterminant. Um the number one rule is to diversify because you have no idea what's going to work. And you should just try lots of different things and you should have some sort of a portfolio approach to the future. Um And so I think one of the things it's always very interesting when you think of this determinant versus indeterminant thing is that all these things that ultimately become self fulfilling. So if you if you think it's determinant and then you focus on doing one thing extremely well, that sort of leads to conviction and then maybe that becomes self fulfilling. If you think that it's fundamentally indeterminant, you end up with a portfolio approach, it's diversified and it has maybe that itself becomes self fulfilling and becomes um somewhat indeterminate. Uh and it becomes more indeterminate in a way. Um There's of course um you know, on the optimistic versus pessimistic axis. Um the simple one is just, you know, are you fundamentally afraid of it? Do you think it's fundamentally something that's going to be better and these sorts of uh perspectives also um lead to very different ways to act if you want to if you want to put this in sort of a historical context, I think That I'm going to try to develop, explain why it put these different zones in these quadrants, but I think the US in the 50s and 60s and maybe even before then was fundamentally optimistic and determine it. The future was clearly going to be better. People thought that every generation was going to be better off the generation that came before. And it was for the most part in very specific ways. There was a um there was a determinant way in which the frontier was going to be developed. There was a way that uh, you know, cars would get faster planes would get faster, rockets would get faster. Uh, there was sort of all these very specific ways that the future would get better from year to year and decade to decade. Uh I think um it's sort of a very different paradigm that the US had for a quarter century from 1982 to 2000 and seven where the future was going to be better. That was the official religion, It was still um sort of very optimistic, but if you asked how or why people had no good answer for it. And so it was just this, This mechanistic thing that would automatically get better in one form or another. And so we were sort of in this quadrant of extreme um indeterminant optimism, I would say for about a quarter of a century from the period of 82-2007. Um indeterminate pessimism is probably what characterizes most of the rest of the developed world. I would say Japan has been in the zone for For the last uh the last 20 years, people have a sense of the future is going to be not that great, maybe a little bit worse and nobody has an idea of what to do. And I think sort of Europe has weirdly drifted into this indeterminant pessimistic quadrant as well where people think the future is worse, but nobody has any idea what to do. Um You can sort of argue where you put China on this. Some people would put it in the determinant optimistic quadrant. Um I tend to put it on the uh determinant pessimistic quadrant. It's very determinant. People in China have a, they know what it's gonna look like in 20 years, they're gonna build out the highways and the city's. Um and for the most part it I think it is going to be a somewhat poorer version of the developed world. People will get old before they get rich. There's a very specific way to track against that. But um china comes out on this quadrant, that's very different from the U. S. 82 2 to 2000 2000 and seven. If you if you think of these quadrants in terms of in terms of um sort of financial way you could describe this, which is that if you're optimistic, you don't need to save a lot of money if you're pessimistic, you save a lot of money. So if you're super optimistic, you know the future is going to be better, There's no need to save any money And so you end up with a savings rate that's uh that's very low if you include a government borrowing in the us today, the US savings rate today stands at -6%. So we're still incredibly optimistic about the future. We don't need to save any money because the future will automatically be better. And so we're still maybe in an indian summer of indeterminate optimism. Um on the other hand, for example, I would describe China is quite pessimistic because it has a savings rate of something close to um 30, of GDP gets saved. And so people um even though there's some ways in which things are getting better from year to year, people still think they'll be um old before they get rich and therefore they need to save a lot of money. So you have this low savings to high savings access from optimism to pessimism. And then if you sort of that's like investing in cash or bonds or things like that um um saving in cash or bonds or things like that. If you invest in specific things, there's specific uh companies buildings ideas you invest in. Um If you have a definite determinant view, you'll have a high investment rate if it's indeterminant um you will not know what specific things to invest in. And so you end up with a low low investment um low investment rate. And so so one of the strange things about um indeterminant optimism is that it's the quadrant that has both low savings and low investment. And the question I will come back to towards the end is whether that's a state, that's whether that's a stable quadrant at all, is it possible for the future to be better when no one saves and no one invests, because no one's thinking and everyone's outsourcing all the thinking to other people. Um One of the other ways you can sort of describe this difference, um and once we get a few different axes for describing this shift from determinant indeterminate ways of the future, the mathematical version is that uh the dominant form of mathematics used to be calculus and it's shifted to probability and statistics. Uh The the structural way is that in the determinant world you're focused on substance, there's some specific substantive things you focus on in an indeterminant world, um all that you end up focusing on our processes. And so what people talk about in our world is what's the process for doing thing, something much more than what is the specific thing you're trying to do to talk about specific things is to definite and that seems to uh to uh to weirdly um two weirdly wrong in practice, you can sort of think of these very different types of quadrants that dominate the indeterminant optimistic world is dominated by finance and law, because these are the kinds of process oriented disciplines that you pursue, if you have no idea about the future, if it's fundamentally about making sure that the piping of the system it works, but you have the sense the system just sort of works automatically. Uh, in a determinant optimistic world. Um that's probably a world in which there's much more room for engineering art, you know, very specific things. It's people who have ideas about the future that are radically different from the present. It's people who have dreams about the future that nobody else shares and that they're willing to work towards and where the dreams of a substantively different and radically better world are not subsumed towards some sort of random process, you know, determinant pessimistic would be wartime rationing. You know, indeterminate pessimistic. All you end up doing is buying insurance. I've spoken in some context about there being a bubble in education and I think you can think of the education bubble as a form of indeterminant pessimism, where people are, they don't really know what the educations for, but it's fundamentally acts as an insurance policy to avoid falling through the larger and larger cracks in our society. Uh So anyway, you can sort of think about these different quadrants and depending on which one dominates their sort of very different kinds of industries that that end up dominating, you know, to have a picture of what definite optimism or determined optimism looked like, um, you know, we can we can go back to these classic examples from, from us history. So there are things like, like the construction of the transcontinental railroad In the 19th century, uh where it was a radically different future where uh, the world, you know, would be connected. It's a gigantic undertaking. By today's standards, nobody would do it. People would say, why are you building this railroad to know where it doesn't make any sense? Uh It's costing too much money. Um, but somehow, as it was built, the future sort of took care of itself. Uh you know, the classic mid 20th century example I always like to cite is uh, is robert moses, who was this uh somewhat forgotten figure. He was probably the most important person in in new york. Uh more powerful than the mayor or the governor of new york city, new york state, respectively. For about a quarter century. He started by becoming the parks commissioner. He ended up having 17 different positions in government. Um, and he sort of show up with his bulldozer and build parks and level some neighborhoods and build some highways. People could have access to the parks. He built all the sort of roadways on Long Island. The FDR Expressway. And there's sort of, you know, one thing after another that got rebuilt, It sort of stopped in the mid 19 sixties when he plan to build a highway connecting Brooklyn and New Jersey. It was going to go through the southern end of Manhattan, they're going to raise Greenwich village to the ground. The neighbors sort of objected. Uh, they start saying, we're not quite sure that the future actually is any better than the present. It was gonna be. This highway was sort of skyscrapers right on top of the highway and it's sort of, it's sort of stopped. And at that point people basically, uh you know, and once there was no longer a definite view of the future, um you also ended up with a place where people stopped building things in new york. And so um it's possible that moses was very wrong that most of the things were misdirected, but it did have this sort of powerful coordinating function. And uh and once the idea of the future disappeared and people no longer believed that there was a future that was, that looked very different from the present and that was radically better than the present. Um people stopped being able to build anything and nothing new in an infrastructure sense has been built in new york state for close to half a century on any meaningful scale. Um Again, to sort of illustrate how different past ideas of the future were for those of those, those of you familiar with the san Francisco bay area. Uh there was this thing called the rubber plan uh in sort of the late 19 forties, it was a plan to basically build two large earth and rock fill dams. One was between marin County and Richmond, the other between san Francisco and Oakland, it was going to turn the North Bay in the South Bay into two giant freshwater lakes. There'll be 20,000 acres of new landfill. There's gonna be a 32 lane highway built around the entire bay area. Um and you have sort of 30 story skyscraper is built around the entire san Francisco bay. Um you know, rubber was sort of a schoolteacher, amateur theater producer, But in the world of the 1950s, um this idea was taken seriously enough that you had congressional hearings. There was, you know, a giant mock up of the plan, it was concluded there would be too much evaporation and wouldn't quite work. And so people sort of gave up on it after a while. Um but again you cannot even imagine someone, someone who's a school teacher and amateur theater producer being able to um have a plan to just re engineer um a huge geographical area like this and uh and change and change the world in a, in a radical way. This is again sort of where we're in this World that's extremely different from the world of just 50 or 60 years ago. And of course, you know, all the classic, all the classic versions of uh science fiction cities, underwater cities on the moon, cities on mars cities and outer space sort of radically different. Um and very definite ideas of the future that would sort of become self fulfilling prophecies of one sort or another. Um And when you sort of look at these pictures today, these things look they don't look futuristic, they look dated, they look like uh they look like they really are um sort of from the past, which is sort of against with this very strange way in which things have changed. You know, the classic, by contrast, the classic version of indefinite optimism is portfolio investing theory. It is that you should invest in a in the stock market index. That's the way you get the highest risk adjusted returns, because the motion of um stocks is like the movement of atoms in the universe. It's fundamentally random. And we can't know anything about it. We can just actually, we can maybe describe the laws, the statistical laws that describe the randomness, but what specific stocks or specific companies or specific projects um you should invest in, you can never know. Um And but, you know, the stock market generally moves in a in a northeasterly direction. And therefore the most important thing is to find the way to get maximum diversification at minimum cost and uh and do something like a portfolio investing. Um you know, in this ship. One of the strange things that happens in the shift from definite indefinite views of the future is that there is this shift from engineering to finance. And uh and uh and one of the things that happens is that money somehow becomes much more important. And sort of the sound bite version of this is um in a definite world, money is a means to an end because there are specific things you want to do with money. In an indefinite world. Um You have no idea what to do with money. And some money simply becomes an end in itself, which seems always a little bit perverse. You just accumulate money and you have no idea what to do with it. That seems like a bit of a crazy thing to do. But I think that's actually what what happens a great deal. And so to illustrate one way that this flow might happen if you start a successful business. Um You know, you sell the company or you sell shares to investors in an I. P. O. You make some money question, what do you do with the money? You have no idea because nobody knows what to do with anything. And so you give the money to a large bank to help you do something, what does the bank do? It has no idea. So it gives the money to a portfolio of institutional investors. What do the institute, each institutional investor do? They have no idea. Um um And so they all just invest in a portfolio of stocks. Not too much in any single stock ever because that suggests you have opinions or you have ideas and that's very dangerous because it suggests that you're somehow not with it. And then what do the companies do that get the money? They've been told that all they should do is generate free cash flows, because if they were to actually invest the money in specific things that would suggest the companies had ideas about the future, and that would be very dangerous. And so, one of the worst things you can ever have is a company that's uh, that's not profitable um in in, in this indefinite world, and sort of, the contrarian idea that I always like saying is that, uh we always like investing in companies that are losing money. We don't like investing in companies that are making money because the companies that are not profitable are actually the companies that have a lot of ideas about what to do with their money. Um whereas a company that's massively profitable on some level is a company that's out of ideas. Um and especially crazy in a world where, where the interest rates are zero and you actually get paid less and less on the money, and then of course, the companies are profitable to generate cash flows. The cash flows eventually go back to people and you sort of cycle and repeat, and this is sort of, um this is the rough flow that happens in the world of indefinite optimism. Um the problem is, um, you know, it's somewhat of a, you know, this is a bit of an extreme picture, but in effect it's a hermetically closed loop. And at the end of the day no one's doing anything real with the money, it's completely abstracted. And what ends up happening is there are fewer and fewer things you can do. And and one of the uh one of the sort of financial ways to illustrate this um is if you look at the real interest rates on a 10 year bonds in the U. S. Which is this is a measure of how much interest do you earn on bonds uh minus um what the expected inflation rate is. And It's basically been trending steadily downwards today, it's at -0.6%. So ten-year bonds are yielding about 2%. Um the expected inflation for the next decade is 2.6%. So when you invest in bonds in real terms you're expecting to lose -0.6% a year for for a decade. Um And it shouldn't even be surprising because there's no one in the system who has any idea what to do with the money. Um This has been sort of a consistent uh critique of the huge deficits. The US is running, people constantly are saying, you know, there's a point where the bond market is going to blow up and the interest rates will go higher and one of the really big mysteries is that this has not happened for year after year. And I think the fundamental um the fundamental reason this has not happened is that people actually have no idea what to do with the money. The last big idea people had on what to do with the money that was not sort of circular was to buy houses and to invest in housing. And that was sort of the decade, the idea of the last decade. That idea has gone out of fashion now, that people no longer one of our houses, they have absolutely no ideas what to do with money. The interest rates, the real interest rates are going steadily more negative. Um And so there's some sense in which this system of indefinite optimism is um is gradually um uh sort of running out. There's a way in which um you know, one of the natural drift is for something from finance to insurance. Um I I tend to I'm not gonna give my whole uh anti Warren Buffett lecture here, but I think, I think there's a way in which Buffett was present and ahead of the curve and uh basically reoriented most of his businesses towards insurance companies in disguise, which is sort of the world of indefinite pessimism, and that's what what dominates in that sort of world. And we can sort of, see how this indeterminacy affects us in very, very many different fields. So, if we look at politics in an indeterminant world, um the most important position in politics is the pollster, and what do you do in politics? Nobody has a clue. But what you do is you take a poll. Um and um and the polls tell you what to do, they don't really tell you anything on a long term basis, but they sort of tell you incrementally, what do you do at any um any given time? And uh, and as we've tracked towards us more and more indeterminant world, there's a way in which, you know, poll taking has become more and more dominant. And so the way we talk about um political campaigns and elections is sort of, how are people doing in the polls much more than what ideas they're talking. It's sort of, you know, if martin Luther king were here and said, I have a dream about a future that's really different. Um, you know, the question, how does that poll? Um it uh, it would never, and and that's sort of the way we avoid this. There obviously are cases where this goes very badly wrong. My sort of exhibit a and my apology to all the Sarah Palin fans in the audience here, but, but uh, but you know, people always say it's this incredible mystery why McCain picked Palin in 2000 and eight, I think it's not a mystery at all. Um the basic heuristic was that, you, you looked at all the republican senators and governors in 2000 and eight republicans weren't very popular there mostly running around 40% in the polls, Palin was at 85% in Alaska Because when oil was $140 a barrel, Alaska was like Kuwait everybody was getting huge checks from the government of the state of Alaska. She was pulling extremely well. And so um there was no question that you would go with the person who pulled the highest. And so you went with uh you went with Palin even though perhaps um it couldn't scale to the U. S. As a whole because the U. S. Was not producing way more oil than it was consuming. Um and so, you know, and then they sort of are ways in which, you know, the 2012 reelection gets recast as a contact contest between say Nate Silver and Dick Morris Silver was a better poll taker. And so he won rather than that Obama had better ideas or the ideas resonated better or that's what people wanted to hear. It's not the substantive way that we talk about politics um To talk about government more generally. Um you know, um even though government spending is still about the same as it has been for the last uh 50 or 60 years as a percent of GDP more and more of it is shifted towards transfer payments which are of course a way of saying that the government has no ideas and what to do with the money, it simply moves it to other people and people. It's assumed that people have ideas, but you don't have specific ideas of what to do. Uh there's a way in which you can see indeterminacy and literature. If you take some classic science fiction, the 1960s Space Odyssey Classic. You know, the text was updated automatically every hour. One could spend entire lifetime doing nothing but exhorting the ever changing flow of information from a new satellite. So specific, definite view of a radically different future, which you know, maps reasonably closely. Today's Internet Neuromancer, 1984, the sky above the port was the color of television tuned to a dead channel future is fundamentally static. Um if you think of it in terms of philosophy, uh they're sort of our different ways to to map these quadrants. But I would say the optimistic indeterminant quadrant is fundamentally. Um the quadrant of uh someone like Rolls or knows it. People only think of them as opposites, but they're they're really both in the same category. Nozick, it's sort of the libertarian version, you have no idea what to do and therefore the individual is paramount uh roles. Um you're in a veil of ignorance, you have no idea what society will be born in and therefore social democracy is paramount to get two very different ideas, but they both take their starting point from sort of complete indeterminacy about the state of the world. Um the classic determinant one, you could be on the left, you could be on the right, but it was, there was some sort of sort of marks, Hagel, all these people where there was even going back to bacon or lock, there was some sort of definite way that things would uh, would get uh better and you can sort of work towards a better future in one way or another. Um, and then of course you have, um, the determinant pessimistic, indeterminant pessimistic, I think tend to be more classical ones. The determinant pessimistic would be like plato and Aristotle. There's a definite way things happen, even though there's sort of limits and you can't be too hopeful about technology are really improving the state of the world in any fundamental way. And then probably the classic version of indeterminate pessimism. And I think this is sort of, the philosophical category that we're back in is sort of the epicurean Lucretius in view of the universe where there's nothing but atoms and the void, the atoms randomly moved throughout the void. They sometimes bump into each other. Stuff happens. Eventually they break apart, things fall apart. Chance roads everything. Um, there's nothing specifically you can do that makes any sense, everything event. Um, you know, things sort of all go to pot marijuana farming might be a good thing to go into in this world. Um, but basically, uh, this is actually, uh, this is actually in some ways become the dominant, uh, the dominant view and, and it ends up being sort of strangely stoic because there's really nothing you can do about these larger forces that will ultimately buffet you in the the most you can hope to achieve a certain amount of equanimity and indifference about the fundamental um randomness and meaninglessness of the universe. Um you know, indeterminacy and death. Um we think about the process of aging and death very differently from the way we used to sort of the classic early science version was that death was a specific problem to be solved. There were specific diseases to solve specific ways to conquer death. Um the contemporary way to think about it is fundamentally through the prism of insurance, which is again sort of indeterminate more on the pessimistic side. Um and the main thing we can do is the actuarial math, you know, what is the probability that you are going to die in a given year if you're that old? So if you're 30 years old, you have about a 1000 chance of dying in the next year, If you're 80 years old, you have a one in 10 chance of dying in the next year. And and all we can do is sort of describe these uh these probabilities and I'm not saying that, you know, by the way that this probabilistic view has nothing to it. I just want to sort of illustrate how it sort of dominates our thinking. And so instead of trying to find a cure for death or a solution to the problem of ageing, the best we can hope to do is figure out better ways to calculate the probabilities, better ways to give people sell people various life insurance policies and and thereby suggest the sort of pseudo mastery of a, of a process that's fundamentally random and indeterminant. Um of course, you know, the basic problem is that eventually the luck runs out, uh you see how this works plan, right, wait them out of here. About yeah, that's life, yeah, Okay, somewhere the most of your, almost all my life, most were oh, or just were needed, more info. Oh. Mhm. Yes. Prayer hall. I just did you know what? I think so. Right, okay, right, get you that again. Sorry. Yes, I think you know what I expected. Okay. You stand away everything call it. Yeah, it changes. Well, mhm sure. Playing the part of the change over work and everything worked on everybody, what will convince me with others? We just, Yes. So anyway, you know, at some point your luck runs out. Um and so I think I think this question of whether um you know, indeterminant optimism is possible in the long run, is this is this core question and is something like this, this frame that we've had, where it's just one coin toss after another and um you know, you're probably not going to die in the next hour or the next six months. You'll probably be lucky, It will probably land heads for the time being. Um but you never think very far about the future. Is that actually ultimately stable quadrant or not? And so uh so you know, if you want to sort of frame this is a general question, you could say, you know, could an iterative process lead if not to the best of all possible worlds at least to a world where there is a path of monotone IQ and potentially never ending improvement. That's sort of the core idea of this uh of this world of indeterminate or indefinite optimism. Um you know, the paradigmatic um pro um indeterminant optimist example is Darwin, Darwin's theory of evolution where, you know, you basically over billions of years developed this proliferation of different life forms and that's sort of the that's the paradigmatic example that we apply to all these different fields and we think that things like that work. Now, I do think there are some paradigmatic counter examples. The one that I want to um sort of highlight is the paradigmatic counter example of failed and determinism are is failed cities. And uh and you can sort of uh you can certainly give various examples. There's you know, Los Angeles which probably should have been the greatest city in the United States with fantastic weather. Uh And somehow, you know, everything gradually went wrong with the sprawl L. A. Is still one of the better places in the world. Uh there's the example of Sao Paulo, I was there for a day about a year ago. Uh, It's about a 12 mile drive from the main downtown area to the airport. Um, it takes about 35 minutes if there's no traffic four hours, if there's traffic on the nine lane highways, uh sort of take the helicopter at dusk was just sort of endless lines of red lit uh cars backed up bumper to bumper. Um, it's sort of 30 million people living in enclaves of a quarter to half a million each. Um, and of course, Sao Paulo is still, you know, vastly better than places like Mumbai or Lagos, Nigeria or places like that. And uh if you had to sort of give a single reason why the convergence theory of globalization is probably going to fail, is that most cities in the developing world look something like this and um and they will not actually be improved in any incremental step by step way. Um sorry, there's there's no actual incremental way to improve something. Um, something like this. Um, and, you know, if you look at the populations, most of the people in the world at this point are are living in these sorts of places. The sort of policy debates we have at this point are things like economics versus environmentalism, which we we describe as these radically different perspectives on the world, but they're really just different views of different indefinite futures. It's uh sort of, maybe economics can be a little bit more optimistic. Environmentalism is a little bit more pessimistic. I I personally think that as long as that's the frame um environmentalism will always win because indefinite, you know, optimism is unstable. And the ecological critique of economic thinking is that uh is that uh the economists says we don't need to think about the environment because people will solve problems every step of the way. And then the counter argument is this this probably does not work. But of course, the the issue with both is that somehow you're subject to these these much much larger forces, it's the market, it's nature. Um they're fundamentally uh sort of random, unknowable statistical and uh and you can't think about them coherently in one way or another. Um And of course, this kind of approach is also sort of very endemic to the way people think about when they start businesses. Just a sort of segue back to that. Uh and uh what one sees most commonly are sort of this this methodology where you have no idea what you're doing, but it should basically be and never ending form of a B testing, um darwinist IQ A B testing might work if you have billions of years, but in practice, you tend to run out of money well before then. And the problem is that somehow the search space um um of all businesses is much bigger than the search space of great businesses. So it's somehow the A. B testing, I think generally is a somewhat too inefficient process and the sort of iteration process. But you end up with this question, you just end up on some very low hanging hill where the iteration is gonna do something that incrementally improves things at every step in time, but maybe you just end up, you know, in a slightly better part of an infinitely large slum or something like that to use the failed city example. There's no machine learning and they're sort of all these different ways where you do not think about the future, it's most character strongly characterized, I think in a way by the very short time horizons. And I think one of the things that's true both on the startup side and maybe even more true on the side of people who invest in startups, is that anything that takes longer than a year is considered unreal and fake because we can have no opinions about the future. And so everything has to be on a super short time horizon. And um, and uh, and we're sort of dominated by um by people who, who do do these kinds of things. And there's a question, you know, how well, how well does this actually work? And this is this is this is the official religion that we have today. Um, and I'm not, you know, I'm, I don't believe in the official religion. Um, but I think, uh, you know, I think, I, I just want, I want people just to at least be aware that this is, this is the religion that uh, that, uh, it's all statistical, it's all luck driven. And I do think the, the most striking thing is that the most successful businesses in some ways don't quite seem to fit this pattern, even though, um, you know, we end up talking about it. And so, you know, the, you know, the, um, you know, after the 2000 and seven crash, we have seen this return to technology. Um, but it was characterized by, um, it was most characterized by businesses that had very definite ideas, I think the, the iconic one for, uh, for the last number of years at least till jobs passed away was Apple, which was of course, um very much the opposite of, you know, an indeterminant business. Apple was one where there was a multiyear vision of the future that was sort of being executed against um, there are legitimate concerns whether it still has that vision now, that jobs is, is no longer there, but that's really what is going on. And of course that's not really the way we typically talk about it. We typically talk about and we look at, you know, how mean jobs was to all the employees. And uh, and so we, you know, there are people I know who are running businesses and they sort of um handout, they hound out hand out books describing how bad jobs was to his employees to make their employees feel better about themselves. And uh, and so, um, and I think the real question you need to ask about something like Apple is, you know, why did the people put up with this bad behavior? And I think it was because it was actually this very countervailing narrative of the future that in a determinant world, you know, one of the most important metrics is the robustness of the plan. What I often call the secret plan that you're working against, you know, the um, the kinds of companies that we've looked at it, founder spent over the years, the ones that have done best have been ones that have somehow tracked against this, uh, this very, very long term vision of the future. Um, and I think sort of the one, the one closing thought I would have on this is that um, the one most characteristic thing of, of companies with a plan is that they do not sell and they're often are times that you should sell businesses, you know, I started Paypal, there were reasons that we, Uh, there were reasons that it was the right decision for us to sell the business um when we did in 2002 to ebay, but uh, but I do think that the most successful businesses somehow have an idea of the future that's uh, that's very different from the present um it's not fully valued and therefore there is, there's no point at which you should sell. I've told this anecdote before but the the most important moment in my mind in the history of facebook Um occurred in July of 2006. The company has been around for about two years Um at the time was still just a college site, maybe eight or 9 million uh People on the site. The revenues were I think tracking to about 30 million no profits and we got, we received an acquisition offer from yahoo for a billion dollars and so we had the board meeting on monday morning On July 2006, 3 of us on the board, Zuckerberg myself Jim Breyer um and you know full disclosure I think that both Breyer and myself on balance thought we probably should take the money and run um but but Zuckerberg started the meeting And first thing he said was well you know um it's kind of a formality, we have to have a quick board meeting, shouldn't take more than 10 minutes, you know we're obviously not gonna sell here and then we said you know we should actually talk about this a little bit more billion dollars is a lot of money And we in some ways rehashed the entire the entire uh discussion we had today here, it was like you know um you know you own like 25% of the company, there's so much you could do with all the money you'd make. Well, I don't really know what I do with the money. Um, you know, I just start another social networking site, but I kind of like the one I already have, so why should I sell? And it was in some ways sort of an encapsulation of this, of this entire uh, of this entire discussion. And of course, you know, you never sort of, you know, the the immediate aftermath was that, uh, there was, you know, an almost infinite number of, not infinite, but there was sort of a large number of, you know, sort of stories about how, how in the world could you have a Ceo who was so crazy that he wouldn't sell the company Who didn't know that you should take a billion dollars. This is what you got when you had someone who was 22 years old, when you didn't have any adults in the company. Um, you know, it probably, you know, it was just the worst decision anybody had ever made. Um, the best best ration, you know, I was a little bit worried about it. We had our, you know, the sort of founders fund ideology we had was that we should always back the ceo we should always back the founder and so we went, we we just went with with that as a, as a framework. Um, but I think sort of the one, you know, the one partial rationalization I was able to come up with for not taking the money was that I, you know, I looked at the history and yahoo had um there had been two other companies where they had offered a billion dollars that had been turned down. Uh It was Ebay and Google and so I concluded that at least you could actually make a pseudo scientific argument that every case where someone had been offered a billion dollars and had rejected it, it had been the correct thing to do. Um but I do think this is uh but the, you know, the argument that Zuckerberg finally, you know, finally uh finally came came down on was that um you know, there were all these new things that we were going to build at facebook and it was clear that yahoo wasn't valuing any of the products that had not yet been released and he wanted to have a chance to build those products and since he was pretty confident that yahoo had and I want to, this is not an anti, yahoo thinks is, I think would be true of almost all these companies that they had no um definite idea about the future and therefore did not properly value things that did not yet exist. Um They were therefore undervaluing um undervaluing the business and I think this is sort of um this is sort of um the challenge all of us have is to uh to work towards the future that's not just static, like a dead channel on television, but that's that's a definite future, and that is a radically better future that can that can motivate and coordinate and inspire um a number of people to change the world and to go to a world where we uh where um where luck is something uh for us to overcome and to deal with as we as we go along the way, but but not for something that becomes uh this absolute dominating force that uh that stops all thought before it even starts. Um Thank you very much, and I'm not gonna say best of luck, thank you. Mhm. Yeah.