Category: People

Life Advice: Be Careful of Life Advice

Nassim Taleb, the modern philosopher best known for his ideas on RandomnessThe Black Swan, and Antifragility, gave his first commencement address at an American University in Beirut.

Like him or not, Taleb is a unique and uncompromising mind. He doesn’t suffer any fools and doesn’t sacrifice his principles for money or fame, so far as one can tell anyways. He’s willing to take tremendous personal heat if he thinks he’s right. (Again, agree with him or not.) There’s a certain honor in his approach that must be admired.

The most interesting part of his commencement is on the idea of life advice itself. Commencement speeches are, obviously, meant to pass advice from a wise (and famous) person to a younger generation. But Nassim goes in a bit of a different direction: He advises the students to be careful of common life advice, for if he had followed it, he’d have never become the unique and interesting person he became.

I hesitate to give advice because every major single piece of advice I was given turned out to be wrong and I am glad I didn’t follow them. I was told to focus and I never did. I was told to never procrastinate and I waited 20 years for The Black Swan and it sold 3 million copies. I was told to avoid putting fictional characters in my books and I did put in Nero Tulip and Fat Tony because I got bored otherwise. I was told to not insult the New York Times and the Wall Street Journal; the more I insulted them the nicer they were to me and the more they solicited Op-Eds. I was told to avoid lifting weights for a back pain and became a weightlifter: never had a back problem since.

If I had to relive my life I would be even more stubborn and uncompromising than I have been.

The truth is, much of the advice you receive as a young person will be pretty good. Saving money works. Marrying the right person works. Avoiding drugs works. Etc. The obvious stuff is worth following. (You don’t always have to walk on your hands because everyone else walks on their feet.)

But there’s a host of more subjective wisdom that, generally speaking, leads you to become a lot more like other people. “Common wisdom,” insofar as it’s actually common, tends to reinforce cultural norms and values. If you want to lead a comfortable existence, that may work fine. But it won’t create another Nassim Taleb, or another Steve Jobs, or another Richard Feynman. They, and many others, embraced what made them different.

Of course, many less successful people embraced their oddities, too. The silent grave is chock full of candidates. This isn’t a “recipe for success” or some other nonsense — it’s more complicated than simply being different. (The narrative fallacy is always right around the corner.)

But one has to suspect that a more interesting and honorable life is led by those who are a bit uncompromising on the important values like integrity, self-education, and moral courage. If you can offset that by being extremely compromising on the unimportant stuff, you may have a shot at living an interesting and different life with a heaping scoop of integrity.

You can read the rest of the commencement here. If you’re still interested, check out a few other great commencement speeches.

Sol Price on Becoming Your Customer’s Best Friend

Sol Price is a legend in the retail business. Price founded one of the first discount retailers, FedMart, in the 1950s, and then later the pioneer warehouse club Price Club, which he later sold to Costco, a business started by his former protege Jim Sinegal. Price’s innovations would go on to change the retail landscape dramatically and permanently. Costco now does $120 billion in sales and Sam’s Club, owned by Wal-Mart, does about $60 billion. Adding in other smaller operations, warehouse retailing is at least a $200 billion business in the United States alone.

Price innovated in several ways: Membership fees, way fewer product SKUs in stock, much larger sizes, extremely low profit margins bordering on break-even, low employee turnover and a lean labor model. But these were all mere symptoms of his overall stance: Price’s fundamental innovation was his approach to the customer relationship.

Whereas most retailers saw customers as adversaries, bodies to be sold to, Price saw the world differently. He felt he was on the customers’ side. He felt his job as a retailer was to become the customer’s greatest friend and advocate, and in return, the customer would pledge his loyalty back. He understood that trust given is trust earned.

Sol Price Price Club

The idea was very simple: See the world through the eyes of the customer. His son Robert, influential in his own right, describes Price’s unusual attitude (which is still uncommon) in a book called Sol Price: Retail Revolutionary & Social Innovator:

Sol’s experience as an attorney representing clients, and his own moral code, became a foundational feature of the FedMart business. Sol described his business approach as “the professional fiduciary relationship between us (the retailer) and the member (the customer). We felt we were representing the customer. You had a duty to be very, very honest and fair with them and so we avoided sales and advertising. We have in effect said that the best advertising is by our members…the unsolicited testimonial of the satisfied customer.”

This fiduciary relationship with the customer was similar to the Golden Rule; the way Sol put it—if you want to be successful in retail, just put yourself in the place of a cranky, demanding customer. In other words, see your business through the eyes of the customer.

Clearly, Sol Price followed Tussman’s dictum to understand the world and act accordingly, and understood the value of a win-win relationship. The success of Costco in his wake, and the continued loyalty of its customers in the face of a rapidly changing retail landscape, is a testimony to the value of his attitude.

Price had a few simple tenets in running FedMart and Price Club, which Sinegal would later adopt at Costco:

  1. Provide the best possible value to the customers, excellent quality products at the lowest possible prices.
  2. Pay good wages and provide good benefits, including health insurance to employees.
  3. Maintain honest business practices.
  4. Make money for investors.

Regarding the last point, it was clearly important to Price to make money, and if you look at Costco today, the model is obviously profitable. But it’s not that profitable. Costco makes solid returns but not incredible ones. And that is by choice.

Price — and Sinegal by extension — wanted a win-win relationship whereby he made his investors a reasonable return on their capital and the customer got a better deal than they could find elsewhere, while employees were paid well enough and treated well enough that they wouldn’t want to leave. In his words, “If you recognize you’re really a fiduciary for the customer, you shouldn’t make too much money.” This model has been tough to beat.

Price was so hardcore about his fairness philosophy that he wouldn’t even engage in loss-leader pricing, which is common in retail. Have you ever found yourself saying How can they make any money at this price? Well, they may not be — products are frequently priced below cost to induce you to buy other products at a more inflated profit margin. But Price wouldn’t do this: It meant he was selling some portion of his goods at inflated prices to make up for the loss leaders, and that he would not abide.

His customer advocacy went so far that if Price’s competitors were selling a competing product below cost, Price did one of the most unusual things I’ve ever heard: He put up signs telling his customers to go shop there.

In this way and many others, the life of Sol Price reinforces the truth of Munger’s philosophy for living a more effective life: “Take a simple idea, and take it seriously.”

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Still Interested? Check out the book in its entirety.

Ben Franklin and the Virtues and Ills of Pursuing Luxury

In a letter written in 1784 to his friend Benjamin Vaughan, Ben Franklin has a very interesting cogitation on the aggregate effect of the pursuit of luxuries beyond our needs.

Franklin displays a mastery of rational, balanced thought, and a deep understanding of human nature. Is the pursuit of luxury a net benefit or detriment to a country? Why do we pursue it?

The salient passages are below. (You can find his full writings here.) The last paragraph, in particular, is a gem, but taking 10 minutes to read it through is worth the time.

I have not, indeed yet thought of a Remedy for Luxury  I am not sure, that in a great State it is capable of a Remedy. Nor that the Evil is in itself always so great as it is represented.  Suppose we include in the Definition of Luxury all unnecessary Expence, and then let us consider whether Laws to prevent such Expence are possible to be executed in a great Country, and whether, if they could be executed, our People generally would be happier, or even richer. Is not the Hope of one day being able to purchase and enjoy Luxuries a great Spur to Labour and Industry? May not Luxury, therefore, produce more than it consumes, if without such a Spur People would be, as they are naturally enough inclined to be, lazy and indolent?

[…]

In our Commercial Towns upon the Seacoast, Fortunes will occasionally be made. Some of those who grow rich will be prudent, live within Bounds, and preserve what they have gained for their Posterity ; others, fond of showing their  Wealth, will be extravagant and ruin themselves. Laws  cannot prevent this; and perhaps it is not always an evil to the Publick. A Shilling spent idly by a Fool, may be picked up by a Wiser Person, who knows better what to do with it.  It is therefore not lost. A vain, silly Fellow builds a fine House, furnishes it richly, lives in it expensively, and in few years ruins himself; but the Masons, Carpenters, Smiths, and other honest Tradesmen have been by his Employ assisted in maintaining and raising their Families ; the Farmer has been paid for his labour, and encouraged, and the Estate is now in better Hands. In some Cases, indeed, certain Modes of Luxury may be a publick Evil, in the same Manner as it is a Private one. If there be a Nation, for Instance, that exports its Beef and Linnen, to pay for its Importation of Claret and Porter, while a great Part of its People live upon Potatoes, and wear no Shirts, wherein does it differ from the Sot, who lets his Family starve, and sells his Clothes to buy Drink? Our American Commerce is, I confess, a little in this way. We sell our Victuals to your Islands for Rum and Sugar; the substantial Necessaries of Life for Superfluities. But we have Plenty, and live well nevertheless, tho’ by being soberer, we might be richer.

[…]

It has been computed by some Political Arithmetician, that, if every Man and Woman would work for four Hours each Day on something useful, that Labour would produce sufficient to procure all the Necessaries and Comforts of Life, Want and Misery would be banished out of the World, and the rest of the 24 hours might be Leisure and Pleasure.

What occasions then so much Want and Misery? It is the Employment of Men and Women in Works, that produce neither the Necessaries nor Conveniences of Life, who, [along] with those who do nothing, consume the Necessaries raised by the Laborious.

To explain this.

The first Elements of Wealth are obtained by Labour, from the Earth and Waters. I have Land, and raise Corn. With this, if I feed a Family that does nothing, my Corn will be consum’d, and at the end of the Year I shall be no richer than I was at the beginning. But if, while I feed them, I employ them, some in Spinning, others in hewing Timber and sawing Boards, others in making Bricks, &c. for Building, the Value of my Corn will be arrested and remain with me, and at the end of the Year we may all be better clothed and better lodged. And if, instead of employing a Man I feed in making Bricks, I employ him in fiddling for me, the Corn he eats is gone, and no Part of his Manufacture remains to augment the Wealth and Convenience of the family; I shall therefore be the poorer for this fiddling Man, unless the rest of my Family work more, or eat less, to make up the Deficiency he occasions.

Look round the World and see the Millions employ’d in doing nothing, or in something that amounts to nothing, when the Necessaries and Conveniences of Life are in question. What is the Bulk of Commerce, for which we fight and destroy each other, but the Toil of Millions for Superfluities, to the great Hazard and Loss of many Lives by the constant Dangers of the Sea? How much labour is spent in Building and fitting great Ships, to go to China and Arabia for Tea and Coffee, to the West Indies for Sugar, to America for Tobacco! These things cannot be called the Necessaries of Life, for our Ancestors lived very comfortably without them.

A Question may be asked; Could all these People, now employed in raising, making, or carrying Superfluities, be subsisted by raising Necessaries? I think they might. The World is large, and a great Part of it still uncultivated. Many hundred Millions of Acres in Asia, Africa, and America are still Forest, and a great Deal even in Europe. On 100 Acres of this Forest a Man might become a substantial Farmer, and 100,000 Men, employed in clearing each his 100 Acres, would hardly brighten a Spot big enough to be Visible from the Moon, unless with HerschelTs Telescope ; so vast are the Regions still in Wood unimproved.

‘Tis however, some Comfort to reflect, that, upon the whole, the Quantity of Industry and Prudence among Mankind exceeds the Quantity of Idleness and Folly. Hence the Increase of good Buildings, Farms cultivated, and populous Cities filled with Wealth, all over Europe, which a few Ages since were only to be found on the Coasts of the Mediterranean; and this, notwithstanding the mad Wars continually raging, by which are often destroyed in one year the Works of many Years’ Peace. So that we may hope the Luxury of a few Merchants on the Seacoast will not be the Ruin of America.

One reflection more, and I will end this long, rambling Letter. Almost all the Parts of our Bodies require some Expence. The Feet demand Shoes; the Legs, Stockings; the rest of the Body, Clothing; and the Belly, a good deal of Victuals. Our Eyes, tho’ exceedingly useful, ask, when reasonable, only the cheap Assistance of Spectacles, which could not much impair our Finances. But the Eyes of other People are the Eyes that ruin us. If all but myself were blind, I should want neither fine Clothes, fine Houses, nor fine Furniture.

Adieu, my dear Friend, I am

Yours ever
B. FRANKLIN.

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Still Interested? Check out Franklin’s Rule for Decision Making, and check out the excellent book The Way to Wealth and Other Writings on Finance for an edited and condensed look at Franklin’s various essays on economics, business, and finance.

 

12 Things Lee Kuan Yew Taught Me About the World

“It’s no accident that Singapore has a much better record, given where it started, than the United States. There, power was concentrated in one enormously talented person, Lee Kuan Yew, who was the Warren Buffett of Singapore.”
— Charlie Munger

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Singapore seemed destined for failure or subservience to a more powerful neighbor. The country is by far the smallest in Southeast Asia and was not gifted with many natural resources. Lee Kuan Yew thought otherwise. “His vision,” wrote Henry Kissinger, “was of a state that would not simply survive, but prevail by excelling. Superior intelligence, discipline, and ingenuity would substitute for resources.”

To give you an idea of the magnitude of success that Lee Kuan Yew achieved, when he took over, per capita income was about $400 and now, in only about two generations, it exceeds $50,000.

Here are 12 things I learned from Lee Kuan Yew about the world and the source of many of our present ills reading  Lee Kuan Yew: The Grand Master’s Insights on China, the United States, and the World.

  1. You need a free exchange of ideas. “China will inevitably catch up to the U.S. in absolute GDP. But its creativity may never match America’s, because its culture does not permit a free exchange and contest of ideas.”
  2. Technology will change how governance operates. “Technology is going to make (China’s) system of governance obsolete. By 2030, 70% or maybe 75% of their people will be in cities, small towns, big towns, mega big towns. They are going to have cell phones, Internet, satellite TV. They are going to be well-informed; they can organize themselves. You cannot govern them the way you are governing them now, where you just placate and monitor a few people, because the numbers will be so large.”
  3. Don’t try to install a democracy in a country that has never had one. “I do not believe you can impose on other countries standards which are alien and totally disconnected with their past. So to ask China to become a democracy, when in its 5,000 years of recorded history it never counted heads; all rulers ruled by right of being the emperor, and if you disagree, you chop off heads, not count heads.”
  4. Welcome the best the world has to offer. “Throughout history, all empires that succeeded have embraced and included in their midst people of other races, languages, religions, and cultures.”
  5. It’s about results, not promises. “When you have a popular democracy, to win voices you have to give more and more. And to beat your opponent in the next election, you have to promise to give more away. So it is a never-ending process of auctions—and the cost, the debt being paid for by the next generation. Presidents do not get reelected if they give a hard dose of medicine to their people. So, there is a tendency to procrastinate, to postpone unpopular policies in order to win elections. So problems such as budget deficits, debt, and high unmployment have been carried forward from one administration to the next.”
  6. Governments shouldn’t have an easy way out. “American and European governments believed that they could always afford to support the poor and the needy: widows, orphans, the old and homeless, disadvantaged minorities, unwed mothers. Their sociologists expounded the theory that hardship and failure were due not to the individual person’s character, but to flaws in the economic system. So charity became “entitlement,” and the stigma of living on charity disappeared. Unfortunately, welfare costs grew faster than the government’s ability to raise taxes to pay for it. The political cost of tax increases is high. Governments took the easy way out by borrowing to give higher benefits to the current generation of voters and passing the costs on to the future generations who were not yet voters. This resulted in persistent government budget deficits and high public debt.”
  7. What goes into a standard of living? “A people’s standard of living depends on a number of basic factors: first, the resources it has in relation to its population . . .; second, its level of technological competence and standards of industrial development; third, its educational and training standards; and fourth, the culture, the discipline and drive in the workforce.”
  8. The single most important factor to national competitiveness … “The quality of a nation’s manpower resources is the single most important factor determining national competitiveness. It is a people’s innovativeness, entrepreneurship, team work, and their work ethic that give them the sharp keen edge in competitiveness. Three attributes are vital in this competition—entrepreneurship to seek out new opportunities and to take calculated risks. Standing still is a sure way to extinction. . . . The second attribute, innovation, is what creates new products and processes that add value. . . . The third factor is good management. To grow, company managements have to open up new markets and create new distribution channels. The economy is driven by the new knowledge, new discoveries in science and technology, innovations that are taken to the market by entrepreneurs. So while the scholar is still the greatest factor in economic progress, he will be so only if he uses his brains—not in studying the great books, classical texts, and poetry, but in capturing and discovering new knowledge, applying himself in research and development, management and marketing, banking and finance, and the myriad of new subjects that need to be mastered.”
  9. Earning your place in history … “A nation is great not by its size alone. It is the will, the cohesion, the stamina, the discipline of its people, and the quality of their leaders which ensure it an honorable place in history.”
  10. Weak leaders rely on opinion polls. “I have never been overconcerned or obsessed with opinion polls or popularity polls. I think a leader who is, is a weak leader. If you are concerned with whether your rating will go up or down, then you are not a leader. You are just catching the wind … you will go where the wind is blowing. . . . Between being loved and feared, I have always believed Machiavelli was right. If nobody is afraid of me, I am meaningless. When I say something … I have to be taken very seriously.”
  11. We are fundamentally competitive. “Human beings are not born equal. They are highly competitive. Systems like Soviet and Chinese communism have failed, because they tried to equalize benefits. Then nobody works hard enough, but everyone wants to get as much as, if not more than, the other person.”
  12. The value of history: “If you do not know history, you think short term. If you know history, you think medium and long term.”

 

***

Lee Kuan Yew: The Grand Master’s Insights on China, the United States, and the World offers Yew’s timeless wisdom.

Towards a Greater Synthesis: Steven Pinker on How to Apply Science to the Humanities

The fundamental idea behind Farnam Street is to learn to think across disciplines and synthesize, using ideas in combination to solve problems in novel ways.

An easy example would be to take a fundamental idea of psychology like the concept of a near-miss (deprival super-reaction) and use it to help explain the success of a gambling enterprise. Or, similarly, using the idea of the endowment effect to help explain why lotteries are a lot more successful if you allow people to choose their own numbers. Sometimes we take ideas from hard science, like the idea of runaway feedback (think of a nuclear reaction gaining steam), to explain why small problems can become large problems or small advantages can become large ones.

This kind of reductionism and synthesis helps one understand the world at a fundamental level and solve new problems.

We’re sometimes asked about untapped ways that this thinking can be applied. In hearing this, it occasionally seems that people fall into the trap of believing all of the great cross-disciplinary thinking has been done. Or maybe even that all of the great thinking has been done, period.

Steven-Pinker-by-Rebecca-Goldstein

Harvard psychologist Steven Pinker is here to say we have a long way to go.

We’ve written before about Pinker’s ideas on a broad education and on writing, but he’s also got a great essay on Edge.org called Writing in the 21st Century wherein he addresses some of the central concepts of his book on writing — The Sense of Style. While the book’s ideas are wonderful, later in the article he moves to a more general point useful for our purposes: Systematic application of the “harder” sciences to the humanities is a huge untapped source of knowledge.

He provides some examples that are fascinating in their potential:

This combination of science and letters is emblematic of what I hope to be a larger trend we spoke of earlier, namely the application of science, particularly psychology and cognitive science, to the traditional domains of humanities. There’s no aspect of human communication and cultural creation that can’t benefit from a greater application of psychology and the other sciences of mind. We would have an exciting addition to literary studies, for example, if literary critics knew more about linguistics.Poetry analysts could apply phonology (the study of sound structure) and the cognitive psychology of metaphor. An analysis of plot in fiction could benefit from a greater understanding of the conflicts and confluences of ultimate interests in human social relationships. The genre of biography would be deepened by an understanding of the nature of human memory, particularly autobiographical memory. How much of the memory of our childhood is confabulated? Memory scientists have a lot to say about that. How much do we polish our image of ourselves in describing ourselves to others, and more importantly, recollecting our own histories? Do we edit our memories in an Orwellian manner to make ourselves more coherent in retrospect? Syntax and semantics are relevant as well. How does a writer use the tense system of English to convey a sense of immediacy or historical distance?

In music the sciences of auditory and speech perception have much to contribute to understanding how musicians accomplish their effects. The visual arts could revive an old method of analysis going back to Ernst Gombrich and Rudolf Arnheim in collaboration with the psychologist Richard Gregory. Indeed, even the art itself in the 1920s was influenced by psychology, thanks in part to Gertrude Stein, who as an undergraduate student of William James did a wonderful thesis on divided attention, and then went to Paris and brought the psychology of perception to the attention of artists like Picasso and Braque. Gestalt psychology may have influenced Paul Klee and the expressionists. Since then we have lost that wonderful synergy between the science of visual perception and the creation of visual art.

Going beyond the arts, the social sciences, such as political science could benefit from a greater understanding of human moral and social instincts, such as the psychology of dominance, the psychology of revenge and forgiveness, and the psychology of gratitude and social competition. All of them are relevant, for example, to international negotiations. We talk about one country being friendly to another or allying or competing, but countries themselves don’t have feelings. It’s the elites and leaders who do, and a lot of international politics is driven by the psychology of its leaders.

In this short section alone, Pinker offers realistically that we can apply:

  • Linguistics to literature
  • Phonology and psychology to poetry
  • The biology of groups to understand fiction
  • The biology of memory to understand biography
  • Semantics to understand historical writing
  • Psychology and biology to understand art and music
  • Psychology and biology to understand politics

Turns out, there’s a huge amount of thinking left to be done. Effectively, Pinker is asking us to imitate the scientist Linus Pauling, who sought to systematically understand chemistry by using the next most fundamental discipline, physics, an approach which led to great breakthroughs and a consilience of knowledge in the two fields which is taken for granted in modern science.

Towards a Greater Synthesis

Even if we’re not trying to make great scientific advances, think about how we could apply this idea to all of our lives. Fields like basic mathematics, statistics, biology, physics, and psychology provide deep insight into the “higher level” functions of humanity like law, medicine, politics, business, and social groups. Or, as Munger has put it, “When you get down to it, you’ll find worldly wisdom looks pretty darn academic.” And it isn’t as hard as it sounds: We don’t need to understand the deep math of relativity to grasp the idea that two observers can see the same event in a different way depending on perspective. The rest of the world’s models are similar, although having some mathematical fluency is necessary.

Pinker, like Munger, doesn’t stop there. He also believes in what Munger calls the ethos of hard science, which is a way of rigorously considering the problems of the practical world.

Even beyond applying the findings of psychology and cognitive science and social and affective neuroscience, it’s the mindset of science that ought to be exported to cultural and intellectual life as a whole. That consists in increased skepticism and scrutiny about factual conventional wisdom: How much of what you think is true really is true if you go to the numbers? For me this has been a salient issue in analyzing violence, because the conventional wisdom is that we’re living in extraordinarily violent times.

But if you take into account the psychology of risk perception, as pioneered by Daniel Kahneman, Amos Tversky, Paul Slovic, Gerd Gigerenzer, and others, you realize that the conventional wisdom is systematically distorted by the source of our information about the world, namely the news. News is about the stuff that happens; it’s not about the stuff that doesn’t happen. Human risk perception is affected by memorable examples, according to Tversky and Kahneman’s availability heuristic. No matter what the rate of violence is objectively, there are always enough examples to fill the news. And since our perception of risk is influenced by memorable examples, we’ll always think we’re living in violent times. It’s only when you apply the scientific mindset to world events, to political science and history, and try to count how many people are killed now as opposed to ten years ago, a hundred years ago, or a thousand years ago that you get an accurate picture about the state of the world and the direction that it’s going, which is largely downward. That conclusion only came from applying an empirical mindset to the traditional subject matter of history and political science.

Nassim Taleb has been on a similar hunt for a long time (although, amusingly, he doesn’t like Pinker’s book on violence at all). The question is relatively straightforward: How do we know what we know? Traditionally, what we know has simply been based on what we can see, something now called the availability bias. In other words, because we see our grandmother live to 95 years old while eating carrots every day, we think carrots prevent cancer. (A conflation of correlation and causation.)

But Pinker and Taleb call for a higher standard called empiricism, which requires pushing beyond anecdote into an accumulation of sound data to support a theory, with disconfirming examples weighted as heavily as confirming ones. This shift from anecdote to empiricism led humanity to make some of its greatest leaps of understanding, yet we’re still falling into the trap regularly, an outcome which itself can be explained by evolutionary biology and modern psychology. (Hint: It’s in the deep structure of our minds to extrapolate.)

Learning to Ask Why

Pinker continues with a claim that Munger would dearly appreciate: The search for explanations is how we push into new ideas. The deeper we push, the better we understand.

The other aspect of the scientific mindset that ought to be exported to the rest of intellectual life is the search for explanations. That is, not to just say that history is one damn thing after another, that stuff happens, and there’s nothing we can do to explain why, but to relate phenomena to more basic or general phenomena … and to try to explain those phenomena with still more basic phenomena. We’ve repeatedly seen that happen in the sciences, where, for example, biological phenomena were explained in part at the level of molecules, which were explained by chemistry, which was explained by physics.

There’s no reason that that this process of explanation can’t continue. Biology gives us a grasp of the brain, and human nature is a product of the organization of the brain, and societies unfold as they do because they consist of brains interacting with other brains and negotiating arrangements to coordinate their behavior, and so on.

This idea certainly takes heat. The biologist E.O. Wilson calls it Consilience, and has gone as far as saying that all human knowledge can eventually be reduced to extreme fundamentals like mathematics and particle physics. (Leading to something like The Atomic Explanation of the Civil War.)

Whether or not you take it to such an extreme depends on your boldness and your confidence in the mental acuity of human beings. But even if you think Wilson is crazy, you can still learn deeply from the more fundamental knowledge in the world. This push to reduce things to their simplest explanations (but not simpler) is how we array all new knowledge and experience on a latticework of mental models.

For example, instead of taking Warren Buffett’s dictum that markets are irrational on its face, try to understand why. What about human nature and the dynamics of human groups leads to that outcome? What about biology itself leads to human nature? And so on. You’ll eventually hit a wall, that’s a certainty, but the further you push, the more fundamentally you understand the world. Elon Musk calls this first principles thinking and credits it with helping him do things in engineering and business that almost everyone considered impossible.

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From there, Pinker concludes with a thought that hits near and dear to our hearts:

There is no “conflict between the sciences and humanities,” or at least there shouldn’t be. There should be no turf battle as to who gets to speak about what matters. What matters are ideas. We should seek the ideas that give us the deepest, richest, best-informed understanding of the human condition, regardless of which people or what discipline originates them. That has to include the sciences, but it can’t come only from the sciences. The focus should be on ideas, not on people, disciplines, or academic traditions.


Still Interested?
Start building your mental models and read some more Pinker for more goodness.

Elon Musk and the Question of Overconfidence

Ashlee Vance’s book on Elon Musk is well read for a good reason: It’s a fascinating look at a fascinating person.

You can interpret the book however you like. It’s a tale of genius. It’s a tale of someone driven beyond all reason to succeed. It’s a tale of a brilliant, talented engineer/entrepreneur. It’s the tale of someone trying to overcome a difficult childhood by setting audacious goals for himself and accomplishing them. It’s the tale of someone creating the future instead of waiting for it. It’s the tale of a deluded, arrogant, thrice-divorced jerk. It’s the tale of a guy with an IQ of 190 who thinks it’s 250. (Munger made that claim a few years ago — we were there.)

Frankly, it doesn’t matter how you see Musk — he is who he is (which brings to mind Eminem’s lyrics: I am, whatever you say I am. If I wasn’t, why would you say I am). But however you choose to read the book, and read it you should, there’s one part of the tale that it would be hard to disagree with: The guy is chasing larger goals than essentially anyone else, he’s made a surprising amount of progress towards achieving them in such a very short time.

His mind is different than yours or mine.

Which begs a good question: Why would Charlie Munger, an admitted science/engineering nut, the guy with a fanatical devotion to the Chinese firm BYD for its engineering culture and its aggressively entrepreneurial CEO, accuse Musk of attempting too much? (“Personally, I’m scared of the guy,” Munger added.)

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As Vance describes in the book, in 2001 Musk came to aerospace engineer Jim Cantrell with his most audacious question to date: How do we become a multi-planetary species? 

Musk wanted to know how we could create a sustainable colony on Mars, a sort of “backup plan” for humanity.

That launched (puns!) Musk’s now 14-year old venture SpaceX, a private business dedicated to putting a sustainable human colony on Mars. (Yes, really.) That would require first figuring out a low-cost method of launching rockets into space, to get us and our supplies to the colony.

Prior to SpaceX, Musk was best known for co-founding Paypal — he was considered a bright software engineer and an up-and-coming entrepreneur, but Rocket Man? Not so much. To that end, someone recently asked a good question on QuoraHow did Elon Musk learn enough about rockets to run SpaceX? 

Luckily, Musk’s friend and SpaceX co-founder Jim Cantrell took note and left an interesting response, interesting because Cantrell doesn’t really answer the stated question so much as (what seems to us) a better one:

Elon Musk and the Question of Overconfidence

What allows Musk to attempt and complete projects everyone else considers impossible? 

Those projects would include designing rockets from scratch, creating a successful private company to put them into orbit (it hadn’t been done), starting a car company from scratch (it hadn’t been done in the U.S. since 1925), designing a fully electric vehicle that was also considered cool and desirable, and selling cars directly to consumers, among other projects.

We reprint Cantrell’s Quora answer, and recommend you take a minute to consider the merits and demerits of his approach to life.

What I found from working with Elon is that he starts by defining a goal and he puts a lot of effort into understanding what that goal is and why it is a good and valid goal.  His goal, as I see it, has not changed from the day he first called me in August of 2001.  I still hear it in his speeches.  His goal was to make mankind a multi planetary species and to do that he had to first solve the transportation problem.

Once he has a goal, his next step is to learn as much about the topic at hand as possible from as many sources as possible.  He is by far the single smartest person that I have ever worked with …  period.  I can’t estimate his IQ but he is very very intelligent.  And not the typical egg head kind of smart.  He has a real applied mind.  He literally sucks the knowledge and experience out of people that he is around.  He borrowed all of my college texts on rocket propulsion when we first started working together in 2001.  We also hired as many of my colleagues in the rocket and spacecraft business that were willing to consult with him.  It was like a gigantic spaceapalooza.  At that point we were not  talking about building a rocket ourselves, only launching a privately  funded mission to Mars.  I found out later that he was talking to a  bunch of other people about rocket designs and collaborating on some spreadsheet level systems designs for launchers.  Once our dealings with the Russians fell apart, he decided to build his own rocket and this was the genesis of SpaceX.

So I am going to suggest that he is successful not because his visions are  grand, not because he is extraordinarily smart and not because he works incredibly hard.  All of those things are true.  The one major important distinction that sets him apart is his inability to consider failure.  It simply is not even in his thought process.  He cannot conceive of  failure and that is truly remarkable.  It doesn’t matter if its going up against the banking system (Paypal), going up against the entire  aerospace industry (SpaceX) or going up against the US auto industry (Tesla). He can’t imagine NOT succeeding and that is a very critical  trait that leads him ultimately to success. He and I had very similar upbringings, very similar interests and very similar early histories.  He was a bit of a loner and so was I.  He decided to start a software company at age 13.  I decided to design and build my own stereo amplifier system at age 13.  Both of us succeeded at it.  We both had engineers for fathers and were extremely driven kids.  What separated us, I believe, was his lack of even being able to conceive failure.  I know this because this is where we parted ways at SpaceX.  We got to a point where I could not see it succeeding and walked away.  He didn’t and succeeded.  I have 25 years experience building space hardware and he had none at the time.  So much for experience.

I recently wrote an op-ed piece for Space News where I also suggest that his ruthlessly efficient way to deploy capital is another great reason for his success.  He can almost smell the right way through a problem and he drives his staff and his organization hard to achieve it.  The results speak for themselves.  The article is here End of WWII Model Shakes Up Aerospace Industry.

In the end I think that we are seeing a very fundamental shift in the way our world takes on the big challenges facing humanity and Elon’s Way as I call it will be considered the tip of the spear.  My hat’s off to the man.

Our hats off to him too. For sure. But this first-hand account does solve the Munger puzzle to an extent.

Here’s Munger in 1998, in a speech to a group of foundation CIOs, including representatives from the Hilton Foundation and the Getty Trust.

Similarly, the hedge fund known as ‘Long-Term Capital Management’ recently collapsed, through overconfidence in its highly leveraged methods, despite I.Q.’s of its principals that must have averaged 160. Smart, hard-working people aren’t exempted from professional disasters from overconfidence. Often, they just go aground in the more difficult voyages they choose, relying on their self-appraisals that they have superior talents and methods.

We’ll leave it up to you to judge whether Musk may go aground in his various ventures — SpaceX, Tesla, and SolarCity among them, but it’s hard not to be impressed at the work completed so far. The world needs more people like him, not fewer.
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Still Interested? 
Check out Musk’s thoughts on regulators, the 12 books he recommended in 2014, or his system of first-principles thinking.