The Optimistic Thought Experiment

Sunday, May 4th, 2008

In The Optimistic Thought Experiment, Peter Thiel emphasizes the following points:

  • Any investor who ignores the apocalyptic dimension of the modern world also will underestimate the strangeness of a twenty-first century in which there is no secular apocalypse.

  • There are no good investments in a twenty-first century where globalization fails.

  • Almost every financial bubble has involved nothing more nor less than a serious miscalculation about the true probability of successful globalization.

  • Financial bubbles and exaggerated stories about globalization are nearly synonymous because the greatest uncertainties about the future of the world have involved questions about the rate and the nature of globalization.

  • Because there is not much time left, the Great Boom, taken as a whole, either is not a bubble at all, or it is the final and greatest bubble in history.

  • There is no good scenario for the world in which China fails.

I’d consider myself more inclined than most to consider the catastrophic effects of low-proability disasters — but Thiel seems to find this thinking central to his “macro” view:

Because there is not much time left, the Great Boom, taken as a whole, either is not a bubble at all, or it is the final and greatest bubble in history .

But because we do not know how our story of globalization will end, we do not yet know which it is. Let us return to our thought experiment. Let us assume that, in the event of successful globalization, a given business would be worth $ 100/share, but that there is only an intermediate chance (say 1:10) of successful globalization. The other case is too terrible to consider. Theoretically, the share should be worth $10, but in every world where investors survive, it will be worth $100. Would it make sense to pay more than $10, and indeed any price up to $100? Whether in hope or desperation, the perceived lack of alternatives may push valuations to much greater extremes than in nonapocalyptic times.

The reverse version of this sort of investment would involve the writing of insurance and reinsurance policies for catastrophic global risk. In any world where investors survive, the issuers of these policies are likely to retain a significant portion of the premium — regardless of whether or not the risks were priced correctly ex ante. In this context, it is striking that Warren Buffett, often described as the greatest investor of all time, has shifted the Berkshire Hathaway portfolio from “value” investments (no internet, no growth, often just businesses with stable cash flows) to the global insurance and reinsurance industries (perhaps one of the purest bets on the optimistic thought experiment).

If the preceding line of analysis is correct, then the extreme valuations of recent times may be an indirect measure of the narrowness of the path set before us. Thus, to take but one recent example, in 1999 investors would not have risked as much on internet stocks if they still believed that there might be a future anywhere else. Employees of these companies (most of whom also were investors through stock option plans) took even greater risks, often leaving stable but unpromising jobs to gamble their life fortunes. It is often claimed that the mass delusion reached its peak in March 2000; but what if the opposite also were true, and this was in certain respects a peak of clarity? Perhaps with unprecedented clarity, at the market ’s peak investors and employees could see the farthest: They perceived that in the long run the Old Economy was surely doomed and believed that the New Economy, no matter what the risks, represented the only chance. Eventually, their hopes shifted elsewhere, to housing or China or hedge funds — but the unarticulated sense of anxiety has remained.

I like his take on China:

To say the least, there are many eerie parallels between the Chinese stock market of early 2007 and the Nasdaq of early 2000: an abstract story of long-term, exponential growth; rampant speculation; and unprofitable or overvalued companies.

One intermediate possibility is that the China of 2014 will be like the internet of 2007 — much larger, but with winners very different from the ones that investors today expect. The largest New Economy business is Google, a company that scarcely registered in early 2000. Might it also turn out that the greatest Chinese companies of 2014 will be concerns that are private and tightly controlled businesses today, rather than the high-profile and money-losing companies that have been floated by the Chinese state?

At the very least, outsiders need to understand that China is controlled for the benefit of insiders. The insiders know when to sell, and so one would expect the businesses that have been made available to the outside world systematically to underperform those ventures still controlled by card-carrying members of the Chinese Communist Party. “China” will underperform China, and a “China” bubble exists to the extent that investors underestimate the degree of this underperformance.

Bringing this thought back to technology:

As with the distinction between China and “China,” there also exists a critical distinction between technology and investments called “technology.” To take a particularly easy case from the prior technology bubble, a “technology” company that sells pet food online by purchasing Super Bowl advertisements offline may not be a technology company at all. The solutions to hard engineering problems are not necessarily valuable, but it is unusual for the solutions to easy engineering problems to have much value in the long term.

A more subtle “technology” bubble may be occurring this time. A large number of large capitalization companies are effectively short innovation: companies such as Microsoft, Dell, IBM, Cisco, HP, and others. They benefit by modest changes to the status quo, but are threatened by massive innovation. This does not mean there are not massively innovative companies out there: Google and Intel, to name the two best-known brands, are. Merely, there is a difference between technology and “technology.” After all, even GM uses an impressive amount of electronics and computers.

And on to hedge funds:

Hedge funds (and “hedge funds”) seek high returns without the regulations that hamstring mutual funds and using leverage unavailable to mutual funds and even (except to a limited extent) to individual investors. The difference between a hedge fund and a “hedge fund” is this: a hedge fund seeks to allocate capital from less efficient uses to more efficient uses; a “hedge fund” seeks trading strategies. Mostly, “hedge funds” merely seek to replicate successful strategies of the past until they don’t work.

Ouch. Thiel clearly dislikes the “micro” view:

The retreat towards tactical cleverness hides a lazy agnosticism about the most fundamental questions of our age. Because we find ourselves in a world of retail sanity and wholesale madness, the truly great opportunities exist in the wildly mispriced macro context — rather than in the ever-diminishing spreads on esoteric financial markets or products. Indeed, one could go even further: What is truly frightening about the twenty-first century is not merely that there exists a dangerous dimension to our time, but rather the unwillingness of the best and brightest to try and make any sense of this larger dimension.

Posted in Business, Economics, Peter Thiel | No Comments »

IFL Featherweight Champion Wagnney Fabiano

Sunday, May 4th, 2008

Wagnney Fabiano is a phenomenal grappler who has used his jiu-jitsu skills to defeat every single one of his International Fight League opponents by submission — in the first round. (OK, with one exception: John Gunderson lasted until the second round.)

I just watched his fight with L.C. Davis in the IFL Grand Prix Finals, and it’s hard to see why Davis is a finalist; Fabiano is that good:

(It takes a while for some of these fights to make it to TV. Fabiano beat Davis in December, and he has fought since then. I won’t spoil anything for you though.)

Posted in Martial Arts | No Comments »

A Final Farewell

Sunday, May 4th, 2008

Professor Randy Pausch became an “accidental celebrity” last year when he gave his “last lecture” not as a formality but knowing he was dying of pancreatic cancer. In A Final Farewell, Wall Street Journal writer Jeffrey Zaslow describes how he co-wrote The Last Lecture with Pausch:

Years ago, Jai had suggested that Randy compile his advice into a book for her and the kids. She wanted to call it “The Manual.” Now, in the wake of the lecture, others were also telling Randy that he had a book in him.

He resisted at first. Yes, there were things he felt an urge to express. But given his prognosis, he wanted to spend his limited time with his family.

Then he caught a break. Palliative chemotherapy stalled the growth of his tumors. “This will be the first book to ever list the drug Gemcitabine on the acknowledgments page,” he joked. But he still didn’t want the book to get in the way of his last months with his kids. So he came up with a plan.

Because exercise was crucial to his health, he would ride his bicycle around his neighborhood for an hour each day. This was time he couldn’t be with his kids, anyway. He and I agreed that he would wear a cellphone headset on these rides, and we’d talk about everything on his mind — the lecture, his life, his dreams for his family.

Every day, as soon as his bike ride came to an end, so did our conversation. “Gotta go!” he’d say, and I knew he felt an aching urge (and responsibility) to return to his family life.

But the next day, he’d be back on the bike, enthusiastic about the conversation. He confided in me that since his diagnosis, he had found himself feeling saddest when he was alone, driving his car or riding his bike. So I sensed that he enjoyed my company in his ears as he pedaled.

Randy had a way of framing human experiences in his own distinctive way, mixing humor here, unexpected inspiration there, and wrapping it all in an uncommon optimism. In the three months after the lecture, he went on 53 long bike rides, and the stories he told became not just his book, but also part of his process of saying goodbye.

Watch the video:

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Tesla rolls out its long-awaited electric sports car

Saturday, May 3rd, 2008

Tesla rolls out its long-awaited electric sports car:

After several years of development, the Roadster — with sleek lines like a Ferrari or Porsche and a sticker price of $109,000 — officially moves from the drawing boards to the market next week when Tesla’s first store opens. It’s near the University of California, Los Angeles, in the city’s toney Westwood neighborhood where Beverly Hills, Brentwood and Hollywood practically intersect.

“Because it’s Hollywood and glamorous, this is the flagship store,” Snyder said.

The next store is to open in a couple months near Tesla’s headquarters in the Silicon Valley city of San Carlos, where the car was developed with venture capital of more than $40 million from such investors as Google Inc. founders Larry Page and Sergey Brin. More stores are planned for Chicago, New York and other cities by early next year.

Although a fully loaded model can set a buyer back as much as $124,000, that’s still cheap compared with a high-end Ferrari. And its 6,831-cell lithium-ion battery pack gives off no emissions.

The car goes from 0 to 60 mph in just under four seconds and tops out at 125 mph. It goes 225 miles on one charge and can be fully recharged in 3.5 hours, which Tesla officials say should allow most people to drive it to work and back and recharge it at night like a cell phone.

Driving from Los Angeles to San Francisco, however, would require stopping in, say, Fresno and plugging its adapter cord into a motel room wall socket.

Why would you say, “with sleek lines like a Ferrari or Porsche,” when the car is built on a Lotus chassis?

Anyway, “It will be awhile before anyone can walk in and drive a Tesla home off a lot”:

“Delivery is running about 15 months,” Allen said, adding the company was surprised by the demand.

Tesla began taking orders last year for the 600 Roadsters it planned to produce in 2008 and had sold all of them by October, Allen said. The first ones began rolling off the production line six weeks ago, and Allen said all of the 2008 models should be delivered to their owners by March of next year. The first ones should begin going out the door later this month.

Meanwhile, orders are being taken for 2009 models, with plans calling for production of about 1,500 cars.

Posted in Business, Technology | No Comments »

Omnidrive: Officially Cooked?

Saturday, May 3rd, 2008

Josh Catone at ReadWriteWeb asks if Omnidrive is officially cooked:

Omnidrive, the Australian-based online storage solution that we named “tops in its class” last summer and was once called the “clear leader” in the space by TechCrunch, appears to have quietly joined the deadpool. Last week, the site’s domain name expired and the site is now displaying a Network Solutions parking page with the notice “omnidrive.com expired on 04/24/2008 and is pending renewal or deletion.” This is not the first brush with the deadpool that the company has had, but it certainly appears to be the last.

If you don’t follow Web 2.0 startups, the news isn’t particularly interesting, I suppose, but this comment from one Clay Cook jumped out:

I am (or should that be was?) an Angel Investor in Omnidrive.

I personally have not heard from Nik for about 2 months, and suspect Omnidrive it is out of business/cash.

I will be blogging about my disappointing and frustrating experience in regards to Nik and Omnidrive soon. Will pop back in here and add a link when I do.

Wow.

Posted in Business, Technology | No Comments »

Reason Magazine Interviews Peter Thiel

Saturday, May 3rd, 2008

Reason Magazine Interviews Peter Thiel — and he’s even more impressive than I previously realized:

reason: You were a Stanford undergrad and law student. After you graduated, your career seemed to be taking a policy wonk direction.

Thiel: As an undergraduate at Stanford, I started The Stanford Review, which ended up being very engaged in the hot debates of the time: campus speech codes, questions about diversity on campus, all sorts of debates like that. I ended up writing a book on it, The Diversity Myth, the thesis of which was basically that there was no real diversity when you had a group of people who looked different but thought alike, and what really was needed was a diversity of ideas.

In parallel I was obviously on the law track. I worked at a law firm in New York very briefly. I’d always been good at math — I was a nationally ranked chess player as an undergraduate — and I shifted over into trading financial derivatives at Credit Suisse Financial Products in ’94.

reason: How did you make that transition?

Thiel: They gave me a math test, and I got all the questions right.

I moved back to California in ’96. I started a small fund and started investing in tech companies. In the course of that, I invested in PayPal in late ’98. I came on board as the interim CEO, and it evolved from four of us to a 900-person company. At this point, it’s up to about 7,000 people working for the PayPal division of eBay. Basically creating this new payment system from scratch, which was one of these Holy Grail type of things that a lot of people had been focused on. The basic thought was if you could lessen the control of government over money and somehow shift the ability of people to control the money that was in their wallets, this would be a truly revolutionary shift.

I suppose the actual topic of the interview is Thiel’s philanthropic support of the Singularity Institute.

Posted in Business, Peter Thiel, Policy, Technology | No Comments »

Elite Korean Schools, Forging Ivy League Skills

Saturday, May 3rd, 2008

Concern about competition from Japan is so last century. Now we’re worried about Korea. From Elite Korean Schools, Forging Ivy League Skills:

This spring, as in previous years, all but a few of the 133 graduates from Daewon Foreign Language High School who applied to selective American universities won admission.
[...]
Their formula is relatively simple. They take South Korea’s top-scoring middle school students, put those who aspire to an American university in English-language classes, taught by Korean and highly paid American and other foreign teachers, emphasize composition and other skills crucial to success on the SATs and college admissions essays, and — especially this — urge them on to unceasing study.
[...]
Korean applications to Harvard alone have tripled, to 213 this spring, up from 66 in 2003, said William R. Fitzsimmons, Harvard’s dean of admissions. Harvard has 37 Korean undergraduates, more than from any foreign country except Canada and Britain. Harvard, Yale and Princeton have a total of 103 Korean undergraduates; 34 graduated from Daewon or Minjok.

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A Classroom Path to Entrepreneurship

Saturday, May 3rd, 2008

Babson College in Wellesley, Mass. offers A Classroom Path to Entrepreneurship:

At Babson College in Wellesley, Mass., for example, entrepreneurship is part of the school’s identity. Always listed among the top business schools for entrepreneurship studies, Babson was a pioneer in the academic discipline as far back as the late 1970s.

Most colleges do not offer entrepreneurship courses until the junior or senior year. But at Babson, incoming freshmen take a yearlong course in which they are required to start and run a small business. Each class of 25 to 30 students is given $3,000 in seed money and is required to create a company to sell a real product that will exist for the school year. According to Professor Andrew Zacharakis, the students have never had a company fail to make back its initial financing. Most often, the companies make a profit, which is donated to charity.

“Our professors do a really good job of helping kids become active learners,” Professor Zacharakis said. “In high school, they sit back and listen to the teacher. Here, the professor is more of a coach. You are given a framework to think about how it works and you are expected to apply that.”

On Babson’s leafy suburban campus, budding upperclassmen entrepreneurs are the superstars, says Philip Tepfer, a 22-year-old senior who already has started his own apparel business, Sail (Proud), which sells clothes for sailing.

“Entrepreneurship is deep within the culture here,” Mr. Tepfer said. “They are always pushing us to go out and do something on our own.” Mr. Tepfer said his nascent business will reach $40,000 in sales in its first year and he projects more than $300,000 by Year 2. “Yes, there’s risk,” he said. “But it’s better than working at the campus coffee shop.”

Posted in Business, Education | No Comments »

The Braunstein Game

Saturday, May 3rd, 2008

The Braunstein Game paved the way from the world of classical war games to world of role-playing games:

In 1967 [David] Wesely served as referee for a Napoleonic wargame set in the fictional German town of Braunstein. As usual, two players acted as commanders of the opposing armies, but because he was interested in multi-player games, Wesely assigned additional, non-military roles. For example, he had players acting as town mayor, banker, and university chancellor. When two players challenged each other to a duel, Wesely found it necessary to improvise rules for the encounter on the spot. Though Wesely thought the results were chaotic and the experiment a failure, the other players enjoyed the role playing aspect and asked him to run another game.

Wesely thus contributed to the development of RPGs by introducing: (1) a one-to-one identification of player and character, and (2) open-ended rules allowing the players to perform any action, with the result of the action determined by the referee.

Wesely’s Braunstein drew inspiration from Diplomacy, a game requiring players to negotiate in between turns. The idea of a referee was derived from “Strategos: A Game of War” (1871,1880) by Charles Totten. Wesely also read and cited as influential “Conflict and Defense: A General Theory” (1962) by Kenneth E. Boulding and “The Compleat Strategyst” (1954) by J.D. Williams.

Wesely subsequently invented a new role playing scenario in which players attempt to stage or avert a coup in a small Latin American republic. Dave Arneson, another member of the MMSA, took over as referee for this scenario, which was also known as a ‘Braunstein’. In 1971 Arneson developed a Braunstein set in a fantasy world called Blackmoor, a precursor of Dungeons & Dragons.

I enjoyed these tidbits from a forum post by Wesely:

By the way, I did not like the term “role-playing game” when it appeared, as “role playing games” that had nothing to do with what we were doing, already existed: The term was already being used for (1) a tool used to train actors for improvisation (an example being the Cheese Shop Game since imortalized by Monty Python) and (2) a tool used for group therapy and psychiatric analysis (“Pretend you are an animal. What kind of an animal do you want to be? How does your aniimal feel about Janet?”) And using this already overloaded name did not help us look less nutty. I favored “Adventure Game” but that was siezed-upon at the time as a replacement for “Hobby Game” or “Adult Game”, and now we are stuck with “RPG”.

Even before I went off to the Army in 1970, Dave Arneson was re-running the Latin Amerca “Braunstein”, which we had set up at his house, and he soon started inventing new scenarios. Eventually, he expanded them to include ides from “the Lord of the Rings” and “Dark Shadows” which were the “in” book and TV show for us college students in 1968-1970. This led to Blackmoor and then D&D.

While I am beating my own drum, I would like to lay claim to having “invented” polyhedral dice. I was the first person to USE what were then being sold as “Models of the five regular polyhedra” (for mathematics teachers to show to their students), AS DICE. I have since seen a book that claims that the Japanese were already using three D-20s, numbered 0-9 twice, to generate 3-digit decimal random numbers at some time before 1976. So it may be that they also invented this use for polyhedra, but I was unaware of them so I am at least an independant re-inventor. And it was my introducing the D4, D8, D12 and D20 to our gaming group in 1965 that led to them being used in RPGs and D&D.
[...]
Back in 1965, I read the rules to a game published in 1880 that said one could use a “12-sided teetotum” instead of a 6-sided die, for resolving odds of 6:1, 7:1 etc up to 11:1, but did not explain what a teetotum was or how to make one. I had seen a set of models of the regular polyhedra in my High School trig class, and decided that a “12-sided teetotum” must be the 12-sdied thingy (a regular dodecahedron) I had seen in the set. Wanting to try out the game, I went to school, got out the “Edmund Scientific Supplies” catalog, and ordered one set of the polyhedra from them for $6.00 (gasolene was $ 0.20 /gallon then, so that would be about $66.00 in today’s money). This set of five polyhedra came with the faces already numbered, to make it easy to see that there were 12 sides on a dodacahedron, or 20 on an icosahedron, which made them easy to use as dice. So they became the ancestors of all the D4, D6, D8, D12 and D20 sets ever sold.

Posted in Games, War | No Comments »

Cannibalism Normal For Early Humans?

Saturday, May 3rd, 2008

Was cannibalism normal for early humans? Genetic evidence suggests yes:

Mead and colleagues began their investigation by looking at the Fore, an isolated indigenous people who live in the mountains of Papua New Guinea. The Fore, according to oral history, had a custom of consuming their dead at mortuary feasts.

The tradition is believed to have begun at the end of the 19th century and persisted until Western settlers abolished the practice in the 1950s. Men ate the best meat, the muscle, while women and children munched the brain.

From approximately 1920 through the 1960s an epidemic of the prion disease kuru swept through the Fore, killing upwards of 200 people a year. One symptom of infection was uncontrollable laughter, which gave the affliction the nickname “laughing disease.”

Women and children were most vulnerable to the disease because they ate the most contaminated parts of the body — the brains. The scientists report that kuru has not been found in any Fore born after the late 1950s.

Mead and colleagues studied Fore women who had participated in the mortuary feasts and found that 23 out of the 30 women they tested had one normal copy of the prion gene and one with the M129V polymorphism, suggesting that those who survived the kuru epidemic had a genetic resistance to the disease.

The researchers then sequenced and analyzed the prion protein gene in more than 2,000 chromosome samples selected to represent worldwide genetic diversity. They found either the M129K or E219K polymorphism in every population.

Based on additional comparisons across cultures and with DNA from chimpanzees, Mead and colleagues estimate the polymorphisms arose more than 500,000 years ago, suggesting that prion diseases were widespread in early human history. The cause of these diseases is unknown, but the researchers suggest cannibalism as a likely candidate.

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Giant Stingrays Found Near Thai City

Saturday, May 3rd, 2008

Giant Stingrays Found Near Thai City — in the river:

Recreational fishers and biologist Zeb Hogan (wearing cap) hold a live, 14-foot-long (4.3-meter-long) giant freshwater stingray the fishers caught in the Bang Pakong River in Chachoengsao, Thailand, on March 31, 2008.

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How the Brain Learns to Read Can Depend on the Language

Saturday, May 3rd, 2008

How the Brain Learns to Read Can Depend on the Language:

Dyslexia, in which the mind scrambles letters or stumbles over text, is twice as prevalent in the U.S., where it affects about 10 million children, as in Italy, where the written word more closely corresponds to its spoken sound. “Dyslexia exists only because we invented reading,” said Tufts University cognitive neuroscientist Maryanne Wolf, author of “Proust and the Squid: The Story and Science of the Reading Brain.”

Among children raised to read and write Chinese, the demands of reading draw on parts of the brain untouched by the English alphabet, new neuroimaging studies reveal. It’s the same with dyslexia, psychologist Li Hai Tan at Hong Kong Research University and his colleagues reported last month in the Proceedings of the National Academy of Sciences. The problems occur in areas not involved in reading other alphabets.

Posted in Linguistics, Science | No Comments »

Pursuing the Next Level of Artificial Intelligence

Saturday, May 3rd, 2008

Daphne Koller, who’s pursuing the “next level” of artificial intelligence, using Bayesian methods, has just received an award from the ACM and the Infosys Foundation, the philanthropic arm of the Indian computer services firm. Anyway, I found her bio interesting:

Ms. Koller grew up in an academic family in Israel, the daughter of a botanist and an English professor. While her father spent a year at Stanford in 1981 when she was 12, she began programming on a Radio Shack PC that she shared with another student.

When her family returned to Israel the next year, she told her father, the botanist, that she was bored with high school and wanted to pursue something more stimulating in college. After half a year, she persuaded him to let her enter Hebrew University, where she studied computer science and mathematics.

By 17, she was teaching a database course at the university. The next year she received her master’s degree and then joined the Israeli Army before coming to the United States to study for a Ph.D. at Stanford.

She didn’t spend her time looking at a computer monitor. “I find it distressing that the view of the field is that you sit in your office by yourself surrounded by old pizza boxes and cans of Coke, hacking away at the bowels of the Windows operating system,” she said. “I spend most of my time thinking about things like how does a cell work or how do we understand images in the world around us?”

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J.K. Rowling, Lexicon and Oz

Friday, May 2nd, 2008

In J.K. Rowling, Lexicon and Oz, Orson Scott Card excoriates Rowling for her hypocrisy:

Can you believe that J.K. Rowling is suing a small publisher because she claims their 10,000-copy edition of The Harry Potter Lexicon, a book about Rowling’s hugely successful novel series, is just a “rearrangement” of her own material.

Rowling “feels like her words were stolen,” said lawyer Dan Shallman.

Well, heck, I feel like the plot of my novel Ender’s Game was stolen by J.K. Rowling.

A young kid growing up in an oppressive family situation suddenly learns that he is one of a special class of children with special abilities, who are to be educated in a remote training facility where student life is dominated by an intense game played by teams flying in midair, at which this kid turns out to be exceptionally talented and a natural leader. He trains other kids in unauthorized extra sessions, which enrages his enemies, who attack him with the intention of killing him; but he is protected by his loyal, brilliant friends and gains strength from the love of some of his family members. He is given special guidance by an older man of legendary accomplishments who previously kept the enemy at bay. He goes on to become the crucial figure in a struggle against an unseen enemy who threatens the whole world.

This paragraph lists only the most prominent similarities between Ender’s Game and the Harry Potter series. My book was published in England many years before Rowling began writing about Harry Potter. Rowling was known to be reading widely in speculative fiction during the era after the publication of my book.

I can get on the stand and cry, too, Ms. Rowling, and talk about feeling “personally violated.”

The difference between us is that I actually make enough money from Ender’s Game to be content, without having to try to punish other people whose creativity might have been inspired by something I wrote.

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Larry Page on how to change the world

Thursday, May 1st, 2008

I enjoyed Fortune‘s talk with Larry Page on how to change the world:

What are you thinking about these days?

If you ask an economist what’s driven economic growth, it’s been major advances in things that mattered – the mechanization of farming, mass manufacturing, things like that. The problem is, our society is not organized around doing that. People are not working on things that could have that kind of influence. We forget that it really does matter that we don’t have to carry our water; it’s not that much fun to walk miles and miles to try to find water and then carry it back under human power. And our ability to generate clean, accessible water is based on basic technologies: Do we have energy? Can we make things? My argument is that people aren’t thinking that way.

Instead, it’s sort of like “We are captives of the world, and whatever happens, happens.” That’s not the case at all. It really matters whether people are working on generating clean energy or improving transportation or making the Internet work better and all those things. And small groups of people can have a really huge impact.

How can we increase the number of people doing such work?

There are a number of barriers in place. Let me give an example. In our first founders’ letter in 2004, we talked about the risk profile with respect to doing new innovations. We said we would do some things that would have only a 10% chance of making $1 billion over the long term. But we don’t put many people on those things; 90% work on everything else. So that’s not a big risk. And if you look at where many of our new features come from, it’s from these riskier investments.

Even when we started Google, we thought, “Oh, we might fail,” and we almost didn’t do it. The reason we started is that Stanford said, “You guys can come back and finish your Ph.D.s if you don’t succeed.” Probably that one decision caused Google to be created. It’s not clear we would have done it otherwise. We had all this internal risk we had just invented. It’s not that we were going to starve or not get jobs or not have a good life or whatever, but you have this fear of failing and of doing something new, which is very natural. In order to do stuff that matters, you need to overcome that.

He goes on to discuss automotive safety and geothermal and solar-thermal energy, before making a point about who solves “big” problems:

What kind of background do you think is required to push these kinds of changes?

I think you need an engineering education where you can evaluate the alternatives. For example, are fuel cells a reasonable way to go or not? For that, you need a pretty general engineering and scientific education, which is not traditionally what happens. That’s not how I was trained. I was trained as a computer engineer. So I understand how to build computers, how to make software. I’ve learned on my own a lot of other things. If you look at the people who have high impact, they have pretty general knowledge. They don’t have a really narrowly focused education.

You also need some leadership skills. You don’t want to be Tesla. He was one of the greatest inventors, but it’s a sad, sad story. He couldn’t commercialize anything, he could barely fund his own research. You’d want to be more like Edison. If you invent something, that doesn’t necessarily help anybody. You’ve got to actually get it into the world; you’ve got to produce, make money doing it so you can fund it.

Posted in Business, Technology | No Comments »

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