# Tag: Bill Gates

## Survivorship Bias: The Tale of Forgotten Failures

Survivorship bias is a common logical error that distorts our understanding of the world. It happens when we assume that success tells the whole story and when we don’t adequately consider past failures.

There are thousands, even tens of thousands of failures for every big success in the world. But stories of failure are not as sexy as stories of triumph, so they rarely get covered and shared. As we consume one story of success after another, we forget the base rates and overestimate the odds of real success.

“See,” says he, “you who deny a providence, how many have been saved by their prayers to the Gods.”

“Ay,” says Diagoras, “I see those who were saved, but where are those painted who were shipwrecked?”

— Cicero

## The Basics

A college dropout becomes a billionaire. Batuli Lamichhane, a chain-smoker, lives to the age of 118. Four young men are rejected by record labels and told “guitar groups are on the way out,” then go on to become the most successful band in history.

Bill Gates, Batuli Lamichhane, and the Beatles are oft-cited examples of people who broke the rules without the expected consequences. We like to focus on people like them—the result of a cognitive shortcut known as survivorship bias.

When we only pay attention to those who survive, we fail to account for base rates and end up misunderstanding how selection processes actually work. The base rate is the probability of a given result we can expect from a sample, expressed as a percentage. If you play roulette, for example, you can be expected to win one out of 38 games, or 2.63%, which is the base rate. The problem arises when we mistake the winners for the rule and not the exception. People like Gates, Lamichhane, and the Beatles are anomalies at one end of a distribution curve. While there is much to learn from them, it would be a mistake to expect the same results from doing the same things.

### A stupid decision that works out well becomes a brilliant decision in hindsight.

— Daniel Kahneman

## Cause and Effect

Can we achieve anything if we try hard enough? Not necessarily. Survivorship bias leads to an erroneous understanding of cause and effect. People see correlation in mere coincidence. We all love to hear stories of those who beat the odds and became successful, holding them up as proof that the impossible is possible. We ignore failures in pursuit of a coherent narrative about success.

Few would think to write the biography of a business person who goes bankrupt and spends their entire life in debt. Or a musician who tried again and again to get signed and was ignored by record labels. Or of someone who dreams of becoming an actor, moves to LA, and ends up returning a year later, defeated and broke. After all, who wants to hear that? We want the encouragement survivorship bias provides, and the subsequent belief in our own capabilities. The result is an inflated idea of how many people become successful.

The discouraging fact is that success is never guaranteed. Most businesses fail. Most people do not become rich or famous. Most leaps of faith go wrong. It does not mean we should not try, just that we should be realistic with our understanding of reality.

— Barnaby James

## Survivorship Bias in Business

Survivorship bias is particularly common in the world of business. Companies which fail early on are ignored, while the rare successes are lauded for decades. Studies of market performance often exclude companies which collapse. This can distort statistics and make success seem more probable than it truly is. Just as history is written by the winners, so is much of our knowledge about business. Those who end up broke and chastened lack a real voice. They may be blamed for their failures by those who ignore the role coincidence plays in the upward trajectories of the successful.

Nassim Taleb writes of our tendency to ignore the failures: “We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract.” Business books laud the rule-breakers who ignore conventional advice and still create profitable enterprises. For most entrepreneurs, taking excessive risks and eschewing all norms is an ill-advised gamble. Many of the misfit billionaires who are widely celebrated succeeded in spite of their unusual choices, not because of them. We also ignore the role of timing, luck, connections and socio-economic background. A person from a prosperous family, with valuable connections, who founds a business at a lucrative time has a greater chance of survival, even if they drop out of college or do something unconventional. Someone with a different background, acting at an inopportune time, will have less of a chance.

In No Startup Hipsters: Build Scalable Technology Companies, Samir Rath and Teodora Georgieva write:

Almost every single generic presentation for startups starts with “Ninety Five percent of all startups fail”, but very rarely do we pause for a moment and think “what does this really mean?” We nod our heads in somber acknowledgement and with great enthusiasm turn to the heroes who “made it” — Zuckerberg, Gates, etc. to absorb pearls of wisdom and find the Holy Grail of building successful companies. Learning from the successful is a much deeper problem and can reduce the probability of success more than we might imagine.

Examining the lives of successful entrepreneurs teaches us very little. We would do far better to analyze the causes of failure, then act accordingly. Even better would be learning from both failures and successes.

Focusing on successful outliers does not account for base rates. As Rath and Georgieva go on to write:

After any process that picks winners, the non-survivors are often destroyed or hidden or removed from public view. The huge failure rate for start-ups is a classic example; if failures become invisible, not only do we fail to recognise that missing instances hold important information, but we may also fail to acknowledge that there is any missing information at all.

They describe how this leads us to base our choices on inaccurate assumptions:

Often, as we revel in stories of start-up founders who struggled their way through on cups of ramen before the tide finally turned on viral product launches, high team performance or strategic partnerships, we forget how many other founders did the same thing, in the same industry and perished…The problem we mention is compounded by biographical or autobiographical narratives. The human brain is obsessed with building a cause and effect narrative. The problem arises when this cognitive machinery misfires and finds patterns where there are none.

These success narratives are created both by those within successful companies and those outside. Looking back on their ramen days, founders may believe they had a plan all along. They always knew everything would work out. In truth, they may lack an idea of the cause and effect relationships underlying their progress. When external observers hear their stories, they may, in a quasi-superstitious manner, spot “signs” of the success to come. As Daniel Kahneman has written, the only true similarity is luck.

## Consider What You Don’t See

When we read about survivorship bias, we usually come across the archetypical story of Abraham Wald, a statistician studying World War II airplanes. His research group at Columbia University was asked to figure out how to better protect airplanes from damage. The initial approach to the problem was to look at the planes coming back, seeing where they were hit the worst, then reinforcing that area.

However, Wald realized there was a missing, yet valuable, source of evidence: Planes that were hit that did not make it back. Planes that went down, that weren’t surviving, had much better information to provide on areas that were most important to reinforce. Wald’s approach is an example of how to overcome survivorship bias. Don’t look just at what you can see. Consider all the things that started on the same path but didn’t make it. Try to figure out their story, as there is as much, if not more, to be learned from failure.

Considering survivorship bias when presented with examples of success is difficult. It is not instinctive to pause, reflect, and think through what the base rate odds of success are and whether you’re looking at an outlier or the expected outcome. And yet if you don’t know the real odds, if you don’t know if what you’re looking at is an example of survivorship bias, then you’ve got a blind spot.

Whenever you read about a success story in the media, think of all the people who tried to do what that person did and failed. Of course, understanding survivorship bias isn’t an excuse for not taking action, but rather an essential tool to help you cut through the noise and understand the world. If you’re going to do something, do it fully informed.

To learn more, consider reading Fooled By Randomness, or The Art of Thinking Clearly.

## Gates’ Law: How Progress Compounds and Why It Matters

“Most people overestimate what they can achieve in a year and underestimate what they can achieve in ten years.”

It’s unclear exactly who first made that statement, when they said it, or how it was phrased. The most probable source is Roy Amara, a Stanford computer scientist. In the 1960s, Amara told colleagues that he believed that “we overestimate the impact of technology in the short-term and underestimate the effect in the long run.” For this reason, variations on that phrase are often known as Amara’s Law. However, Bill Gates made a similar statement (possibly paraphrasing Amara), so it’s also known as Gates’s Law.

You may have seen the same phrase attributed to Arthur C. Clarke, Tony Robbins, or Peter Drucker. There’s a good reason why Amara’s words have been appropriated by so many thinkers—they apply to so much more than technology. Almost universally, we tend to overestimate what can happen in the short term and underestimate what can happen in the long term.

Thinking about the future does not require endless hyperbole or even forecasting, which is usually pointless anyway. Instead, there are patterns we can identify if we take a long-term perspective.

Let’s look at what Bill Gates meant and why it matters.

## Moore’s Law

Gates’s Law is often mentioned in conjunction with Moore’s Law. This is generally quoted as some variant of “the number of transistors on an inch of silicon doubles every eighteen months.” However, calling it Moore’s Law is misleading—at least if you think of laws as invariant. It’s more of an observation of a historical trend.

When Gordon Moore, co-founder of Fairchild Semiconductor and Intel, noticed in 1965 that the number of semiconductors on a chip doubled every year, he was not predicting that would continue in perpetuity. Indeed, Moore revised the doubling time to two years a decade later. But the world latched onto his words. Moore’s Law has been variously treated as a target, a limit, a self-fulfilling prophecy, and a physical law as certain as the laws of thermodynamics.

Moore’s Law is now considered to be outdated, after holding true for several decades. That doesn’t mean the concept has gone anywhere. Moore’s Law is often regarded as a general principle in technological development. Certain performance metrics have a defined doubling time, the opposite of a half-life.

## Why is Moore’s Law related to Amara’s Law?

Exponential growth is a concept we struggle to conceptualize. As University of Colorado physics professor Albert Allen Bartlett famously put it, “The greatest shortcoming of the human race is our inability to understand the exponential function.”

When we talk about Moore’s Law, we easily underestimate what happens when a value keeps doubling. Sure, it’s not that hard to imagine your laptop getting twice as fast in a year, for instance. Where it gets tricky is when we try to imagine what that means on a longer timescale. What does that mean for your laptop in 10 years? There is a reason your iPhone has more processing power than the first space shuttle.

One of the best illustrations of exponential growth is the legend about a peasant and the emperor of China. In the story, the peasant (sometimes said to be the inventor of chess), visits the emperor with a seemingly modest request: a chessboard with one grain of rice on the first square, then two on the second, four on the third and so on, doubling each time. The emperor agreed to this idiosyncratic request and ordered his men to start counting out rice grains.

### “Every fact of science was once damned. Every invention was considered impossible. Every discovery was a nervous shock to some orthodoxy. Every artistic innovation was denounced as fraud and folly. We would own no more, know no more, and be no more than the first apelike hominids if it were not for the rebellious, the recalcitrant, and the intransigent.”

— Robert Anton Wilson

If you haven’t heard this story before, it might seem like the peasant would end up with, at best, enough rice to feed their family that evening. In reality, the request was impossible to fulfill. Doubling one grain 63 times (the number of squares on a chessboard, minus the first one that only held one grain) would mean the emperor had to give the peasant over 18 million trillion grains of rice. To grow just half of that amount, he would have needed to drain the oceans and convert every bit of land on this planet into rice fields. And that’s for half.

In his essay “The Law of Accelerating Returns,” author and inventor Ray Kurzweil uses this story to show how we misunderstand the meaning of exponential growth in technology. For the first few squares, the growth was inconsequential, especially in the eyes of an emperor. It was only once they reached the halfway point that the rate began to snowball dramatically. (It’s no coincidence that Warren Buffett’s authorized biography is called The Snowball, and few people understand exponential growth better than Warren Buffett). It just so happens that by Kurzweil’s estimation, we’re at that inflection point in computing. Since the creation of the first computers, computation power has doubled roughly 32 times. We may underestimate the long-term impact because the idea of this continued doubling is so tricky to imagine.

## The Technology Hype Cycle

To understand how this plays out, let’s take a look at the cycle innovations go through after their invention. Known as the Gartner hype cycle, it primarily concerns our perception of technology—not its actual value in our lives.

Hype cycles are obvious in hindsight, but fiendishly difficult to spot while they are happening. It’s important to bear in mind that this model is one way of looking at reality and is not a prediction or a template. Sometimes a step gets missed, sometimes there is a substantial gap between steps, sometimes a step is deceptive.

The hype cycle happens like this:

• New technology: The media picks up on the existence of a new technology which may not exist in a usable form yet. Nonetheless, the publicity leads to significant interest. At this point, people working on research and development are probably not making any money from it. Lots of mistakes are made. In Everett Rogers’s diffusion of innovations theory, this is known as the innovation stage. If it seems like something new will have a dramatic payoff, it probably won’t last. If it seems we have found the perfect use for a brand-new technology, we may be wrong.
• The peak of inflated expectations: A few well-publicized success stories lead to inflated expectations. Hype builds and new companies pop up to anticipate the demand. There may be a burst of funding for research and development. Scammers looking to make a quick buck may move into the area. Rogers calls this the syndication stage. It’s here that we overestimate the future applications and impact of the technology.
• The trough of disillusionment: Prominent failures or a lack of progress break through the hype and lead to disillusionment. People become pessimistic about technology’s potential and mostly lose interest. Reports of scams may contribute to this, as the media uses this as a reason to describe the technology as a fraud. If it seems like new technology is dying, it may just be that its public perception has changed and the technology itself is still developing. Hype does not correlate directly with functionality.
• The slope of enlightenment: As time passes, people continue to improve technology and find better uses for it. Eventually, it’s clear how it can improve our lives, and mainstream adoption begins. Mechanisms for preventing scams or lawbreaking emerge.
• The plateau of productivity: The technology becomes mainstream. Development slows. It becomes part of our lives and ceases to seem novel. Those who move into the now saturated market tend to struggle, as a few dominant players take the lion’s share of the available profits. Rogers calls this the diffusion stage.

When we are cresting the peak of inflated expectations, we imagine that the new development will transform our lives within months. In the depths of the trough of disillusionment, we don’t expect it to get anywhere, even allowing years for it to improve. We typically fail to anticipate the significance of the plateau of productivity, even if it exceeds our initial expectations.

Smart people can usually see through the initial hype. But only a handful of people can—through foresight, stubbornness or perhaps pure luck—see through the trough of disillusionment. Most of the initial skeptics feel vindicated by the dramatic drop in interest and expect the innovation to disappear. It takes far greater expertise to support an unpopular technology than to deride a popular one.

Correctly spotting the cycle as it unfolds can be immensely profitable. Misreading it can be devastating. First movers in a new area often struggle to survive the trough, even if they are the ones who do the essential research and development. We tend to assume current trends will continue, so we expect sustained growth during the peak and expect linear decline during the trough.

If we are trying to assess the future impact of a new technology, we need to separate its true value from its public perception. When something is new, the mainstream hype is likely to be more noise than signal. After all, the peak of inflated expectations often happens before the technology is available in a usable form. It’s almost always before the public has access to it. Hype serves a real purpose in the early days: it draws interest, secures funding, attracts people with the right talents to move things forward and generates new ideas. Not all hype is equally important, because not all opinions are equally important. If there’s intense interest within a niche group with relevant expertise, that’s more telling than a general enthusiasm.

The hype cycle doesn’t just happen with technology. It plays out all over the place, and we’re usually fooled by it. Discrepancies between our short- and long-term estimates of achievement are everywhere. Consider the following situations. They’re hypothetical, but similar situations are common.

• A musician releases an acclaimed debut album which creates enormous interest in their work. When their second album proves disappointing (or never materializes), most people lose interest. Over time, the performer develops a loyal, sustained following of people who accurately assess the merits of their music, not the hype.
• A promising new pharmaceutical receives considerable attention—until it becomes apparent that there are unexpected side effects, or it isn’t as powerful as expected. With time, clinical trials find alternate uses which may prove even more beneficial. For example, a side effect could be helpful for another use. It’s estimated that over 20% of pharmaceuticals are prescribed for a different purpose than they were initially approved for, with that figure rising as high as 60% in some areas.
• A propitious start-up receives an inflated valuation after a run of positive media attention. Its founders are lauded and extensively profiled and investors race to get involved. Then there’s an obvious failure—perhaps due to the overconfidence caused by hype—or early products fall flat or take too long to create. Interest wanes. The media gleefully dissects the company’s apparent demise. But the product continues to improve and ultimately becomes a part of our everyday lives.

In the short run, the world is a voting machine affected by whims and marketing. In the long run, it’s a weighing machine where quality and product matter.

## The Adjacent Possible

Now that we know how Amara’s Law plays out in real life, the next question is: why does this happen? Why does technology grow in complexity at an exponential rate? And why don’t we see it coming?

One explanation is what Stuart Kauffman describes as “the adjacent possible.” Each new innovation adds to the number of achievable possible (future) innovations. It opens up adjacent possibilities which didn’t exist before, because better tools can be used to make even better tools.

Humanity is about expanding the realm of the possible. Discovering fire meant our ancestors could use the heat to soften or harden materials and make better tools. Inventing the wheel meant the ability to move resources around, which meant new possibilities such as the construction of more advanced buildings using materials from other areas. Domesticating animals meant a way to pull wheeled vehicles with less effort, meaning heavier loads, greater distances and more advanced construction. The invention of writing led to new ways of recording, sharing and developing knowledge which could then foster further innovation. The internet continues to give us countless new opportunities for innovation. Anyone with a new idea can access endless free information, find supporters, discuss their ideas and obtain resources. New doors to the adjacent possible open every day as we find different uses for technology.

### “We like to think of our ideas as \$40,000 incubators shipped directly from the factory, but in reality, they’ve been cobbled together with spare parts that happened to be sitting in the garage.”

— Steven Johnson, Where Good Ideas Come From

Take the case of GPS, an invention that was itself built out of the debris of its predecessors. In recent years, GPS has opened up new possibilities that didn’t exist before. The system was developed by the US government for military usage. In the 1980s, they decided to start allowing other organizations and individuals to use it. Civilian access to GPS gave us new options. Since then, it has led to numerous innovations that incorporate the system into old ideas: self-driving cars, mobile phone tracking (very useful for solving crime or finding people in emergency situations), tectonic plate trackers that help predict earthquakes, personal navigation systems, self-navigating robots, and many others. None of these would have been possible without some sort of global positioning system. With the invention of GPS, human innovation sped up a little more.

Steven Johnson gives one example of how this happens in Where Good Ideas Come From. In 2008, MIT professor Timothy Presto visited a hospital in Indonesia and found that all eight of the incubators for newborn babies were broken. The incubators had been donated to the hospital by relief organizations, but the staff didn’t know how to fix them. Plus, the incubators were poorly suited to the humid climate and the repair instructions only came in English. Presto realized that donating medical equipment was pointless if local people couldn’t fix it. He and his team began working on designing an incubator that could save the lives of babies for a lot longer than a couple of months.

Instead of continuing to tweak existing designs, Presto and his team devised a completely new incubator that used car parts. While the local people didn’t know how to fix an incubator, they were extremely adept at keeping their cars working no matter what. Named the NeoNurture, it used headlights for warmth, dashboard fans for ventilation, and a motorcycle battery for power. Hospital staff just needed to find someone who was good with cars to fix it—the principles were the same.

Even more, telling is the origin of the incubators Presto and his team reconceptualized. The first incubator for newborn babies was designed by Stephane Tarnier in the late 19th century. While visiting a zoo on his day off, Tarnier noted that newborn chicks were kept in heated boxes. It’s not a big leap to imagine that the issue of infant mortality was permanently on his mind. Tarnier was an obstetrician, working at a time when the infant mortality rate for premature babies was about 66%. He must have been eager to try anything that could reduce that figure and its emotional toll. Tarnier’s rudimentary incubator immediately halved that mortality rate. The technology was right there, in the zoo. It just took someone to connect the dots and realize human babies aren’t that different from chicken babies.

Johnson explains the significance of this: “Good ideas are like the NeoNurture device. They are, inevitably, constrained by the parts and skills that surround them…ideas are works of bricolage; they’re built out of that detritus.” Tarnier could invent the incubator only because someone else had already invented a similar device. Presto and his team could only invent the NeoNurture because Tarnier had come up with the incubator in the first place.

This happens in our lives, as well. If you learn a new skill, the number of skills you could potentially learn increases because some elements may be transferable. If you are introduced to a new person, the number of people you could meet grows, because they may introduce you to others. If you start learning a language, native speakers may be more willing to have conversations with you in it, meaning you can get a broader understanding. If you read a new book, you may find it easier to read other books by linking together the information in them. The list is endless. We can’t imagine what we’re capable of achieving in ten years because we forget about the adjacent possibilities that will emerge.

## Accelerating Change

The adjacent possible has been expanding ever since the first person picked up a stone and started shaping it into a tool. Just look at what written and oral forms of communication made possible—no longer did each generation have to learn everything from scratch. Suddenly we could build upon what had come before us.

Some (annoying) people claim that there’s nothing new left. There are no new ideas to be had, no new creations to invent, no new options to explore. In fact, the opposite is true. Innovation is a non-zero-sum game. A crowded market actually means more opportunities to create something new than a barren one. Technology is a feedback loop. The creation of something new begets the creation of something even newer and so on.

Progress is exponential, not linear. So we overestimate the impact of a new technology during the early days when it is just finding its feet, then underestimate its impact in a decade or so when its full uses are emerging. As old limits and constraints melt away, our options explode. The exponential growth of technology is known as accelerating change. It’s a common belief among experts that the rate of change is speeding up and society will change dramatically alongside it.

### “Ideas borrow, blend, subvert, develop and bounce off other ideas.”

— John Hegarty, Hegarty On Creativity

In 1999, author and inventor Ray Kurzweil posited the Law of Accelerating Change — that evolutionary systems develop at an exponential rate. While this is most obvious for technology, Kurzweil hypothesized that the principle is relevant in numerous other areas. Moore’s Law, initially referring only to semiconductors, has wider implications.

In an essay on the topic, he writes:

An analysis of the history of technology shows that technological change is exponential, contrary to the common-sense “intuitive linear” view. So we won’t experience 100 years of progress in the 21st century—it will be more like 20,000 years of progress (at today’s rate). The “returns,” such as chip speed and cost-effectiveness, also increase exponentially. There’s even exponential growth in the rate of exponential growth.

Progress is tricky to predict or even to notice as it happens. It’s hard to notice things in a system that we are part of. And it’s hard to notice the incremental change because it lacks stark contrast. The current pace of change is our norm, and we adjust to it. In hindsight, we can see how Amara’s Law plays out.

Look at where the internet was just twenty years ago. A report from the Pew Research Center shows us how to change compounds. In 1998, a mere 41% of Americans used the internet at all—and the report expresses surprise that the users were beginning to include “people without college training, those with modest incomes, and women.” Less than a third of users had bought something online, email was predominantly just for work, and only a third of users looked at online news at least once per week. That’s a third of the 41% using the internet by the way, not of the general population. Wikipedia and Gmail didn’t exist. Internet users in the late nineties reported that their main problem was finding what they needed online.

That is perhaps the biggest change and one we may not have anticipated: the move towards personalization. Finding what we need is no longer a problem. Most of us have the opposite problem and struggle with information overwhelm. Twenty years ago, filter bubbles were barely a problem (at least, not online.) Now, almost everything we encounter online is personalized to ensure it’s ridiculously easy to find what we want. Newsletters, websites, and apps greet us by name. Newsfeeds are organized by our interests. Shopping sites recommend other products we might like. This has increased the amount the internet does for us to a level that would have been hard to imagine in the late 90s. Kevin Kelly, writing in The Inevitable,  describes filtering as one of the key forces that will shape the future.

History reveals an extraordinary acceleration of technological progress. Establishing the precise history of technology is problematic as some inventions occurred in several places at varying times, archaeological records are inevitably incomplete, and dating methods are imperfect. However, accelerating change is a clear pattern. To truly understand the principle of accelerating change, we need to take a quick look at a simple overview of the history of technology.

Early innovations happened slowly. It took us about 30,000 years to invent clothing and about 120,000 years to invent jewelry. It took us about 130,000 years to invent art and about 136,000 years to come up with the bow and arrow. But things began to speed up in the Upper Paleolithic period. Between 50,000 and 10,000 years ago, we developed more sophisticated tools with specialized uses—think harpoons, darts, fishing tools, and needles—early musical instruments, pottery, and the first domesticated animals. Between roughly 11,000 years and the 18th century, the pace truly accelerated. That period essentially led to the creation of civilization, with the foundations of our current world.

More recently, the Industrial Revolution changed everything because it moved us significantly further away from relying on the strength of people and domesticated animals to power means of production. Steam engines and machinery replaced backbreaking labor, meaning more production at a lower cost. The number of adjacent possibilities began to snowball. Machinery enabled mass production and interchangeable parts. Steam-powered trains meant people could move around far more easily, allowing people from different areas to mix together and share ideas. Improved communications did the same. It’s pointless to even try listing the ways technology has changed since then. Regardless of age, we’ve all lived through it and seen the acceleration. Few people dispute that the change is snowballing. The only question is how far that will go.

As Stephen Hawking put it in 1993:

For millions of years, mankind lived just like the animals. Then something happened which unleashed the power of our imagination. We learned to talk and we learned to listen. Speech has allowed the communication of ideas, enabling human beings to work together to build the impossible. Mankind’s greatest achievements have come about by talking, and its greatest failures by not talking. It doesn’t have to be like this. Our greatest hopes could become reality in the future. With the technology at our disposal, the possibilities are unbounded. All we need to do is make sure we keep talking.

But, as we saw with Moore’s Law, exponential growth cannot continue forever. Eventually, we run into fundamental constraints. Hours in the day, people on the planet, availability of a resource, smallest possible size of a semiconductor, attention—there’s always a bottleneck we can’t eliminate.  We reach the point of diminishing returns. Growth slows or stops altogether. We must then either look at alternative routes to improvement or leave things as they are. In Everett Rogers’s diffusion of innovation theory, this is known as the substitution stage, when usage declines and we start looking for substitutes.

This process is not linear. We can’t predict the future because there’s no way to take into account the tiny factors that will have a disproportionate impact in the long-run.

###### Footnotes
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Image credit: tec_estromberg

## Fiction that Influences and Inspires

Reading nonfiction is a fantastic way to expand your mind and give you an edge in this world. It’s especially useful when we have a specific idea or concept that we’d like to learn more about. However, it’s important not to over-look everything we can learn from fiction.

Fiction resonates with us because it shows us truths about the human condition through great storytelling and compelling narratives. Through an engaging story we can be introduced to big ideas that just don’t resonate the same way in nonfiction: the medium allows for freedom of thought through creativity.

With this short book list, we’d like to take a look at a handful of novels that have inspired some truly extraordinary thinkers, especially today’s leaders in technology. Some of these you’re probably already aware of. Some not. But they’re all worth a look.

***

The Great Gatsby by F. Scott Fitzgerald

Considered one of Fitzgerald’s greatest works, the novel follows the story of the wealthy Jay Gatsby and his love for Daisy Buchanan during the roaring 1920s. With its focus on wealth, excess, status and privilege some have called this a cautionary tale regarding the great American dream.  It’s also just a hell of a yarn.

This is one of Bill and Melinda Gates favorite books. Mr. Gates says it’s “the novel that I reread the most. Melinda and I love one line so much that we had it painted on a wall in our house: ‘His dream must have seemed so close that he could hardly fail to grasp it.’”

It’s not only the Gateses who adore this book, the author Haruki Murakami has called it one of his favorites and Chuck Palahnuik has said it was a source of inspiration for Fight Club. “It showed me how to write a ‘hero’ story by using an apostle as the narrator. Really it’s the basis of the triangle of two men and one woman in my book, Fight Club. I read the book at least once a year and it continues to surprise me with layers of emotion.”

The Remains of the Day by Kazuo Ishiguro

The story paints a spiritual portrait of the quintessential English butler as his world changes from World War I era to the 1950s. The themes of professionalism and dignity versus authenticity are prevalent throughout the novel.

This is Jeff Bezos favorite book. “If you read The Remains of the Day, which is my favorite book of all time, you can’t help but come away and think, I just spent 10 hours living an alternate life and I learned something about life and about regret.”

Actress and UN Goodwill Ambassador Emma Watson has also cited this book as one of her favorites. “When I was growing up, my family, particularly my father, were very stoic. Part of me is very resentful of this British mentality that it’s not good to express feelings of any kind – that it’s not proper or brave.” She has said she appreciates the book for how it expressed the consequences of this type of discretion.

Catcher in the Rye by J.D. Salinger

The book that introduced us to the ever loved and ever hated Holden Caulfield. The unique narrative gives us a glimpse into the mind of a 16 year old boy and the events surrounding his expulsion from prep school.

Bill Gates has said, “I read this when I was 13. It’s my favorite book. It acknowledges that young people are a little confused, but can be smart, and see things that adults don’t.”

Salman Khan, founder of Khan Academy, also lists this as one of his favorite books.

A Wrinkle in Time by Madeleine L’Engle

The second book centered around a teenager is A Wrinkle in Time, which brings us into Science Fiction. Some of the most innovative ideas of the last two centuries (trains, planes, robots) were considered science fiction at one point and made appearances in stories before they came about in real life. Science fiction is thus a window into our visions of the future, and tells us a great deal about what people of certain eras were both looking forward to and afraid of.

A Wrinkle in Time follows high schooler Meg Murry as she travels through space and time on a quest to save her father. The novel uses Meg’s extreme/out of this world situations as a way to explore the very real trials of teenagers.

Sheryl Sandberg, COO of Facebook, has called A Wrinkle in Time her favorite book as a child.

I wanted to be Meg Murry, the admittedly geeky heroine of “A Wrinkle in Time,” by Madeleine L’Engle. I loved how she worked with others to fight against an unjust system and how she fought to save her family against very long odds. I was also captivated by the concept of time travel. I keep asking Facebook’s engineers to build me a tesseract so I, too, could fold the fabric of time and space. But so far no one has even tried. Jeff Bezos also loved the book. “I remember in fourth grade we had this wonderful contest — there was some prize — whoever could read the most Newbery Award winners in a year. I didn’t end up winning. I think I read like 30 Newbery Award winners that year, but somebody else read more. The standout there is the old classic that I think so many people have read and enjoyed, A Wrinkle in Time, and I just remember loving that book.”

Seveneves / Snow Crash / Cryptnomicon by Neal Stephenson

The sci-fi author Neal Stephenson comes up multiple times in the reading lists of some incredibly successful individuals. Above are three that seemed to come up the most.

Bill Gates has said that Stephenson’s novel Seveneves rekindled his love for sci-fci, a genre he thinks can be used as a vehicle to help people think about big ideas. With Seveneves in particular, he was struck by “the way the book pushes you to think big and long-term. If everyone learned that the world would end two days from now, there would be global panic, plus a big dose of hedonism. But what if it were ending two years from now? Would people keep going to work? Would kids go to school? If they did, what would you teach them?

The novel gives us an idea of what might happen if the world were ending and we were forced to escape to space. If that idea wasn’t interesting enough, the book also shoots forward 5,000 years and has the humans going back to what once was Earth.

Larry Page, co-founder of Google, has Stephenson’s Snow Crash in his list of favorite books.

That story takes place in a future America where our protagonist Hiro is a hacker/pizza delivery boy for the mafia in reality and a warrior prince in the Metaverse. Stephenson gives us a glimpse of a what a world would look like where much of our time and definition of self is explored in a shared virtual space and effortlessly weaves together concepts of religion, economics, politics, linguistics and computer science.

Meanwhile, Samuel Arbesman, the complexity scientist and author of The Half-Life of Facts (whom we interviewed recently), told us that Stephenson’s Cryptnomicon is one of the best books he’s ever read, saying:

The idea that there can be a book that weaves together an amazing plot as well as some really really profound ideas on philosophy and computer science and technology together, that was, I think one of the first times I had seen a book that had really done this. There were these unbelievably informational pieces. It’s also an unbelievable fun read. I’m a big fan of most of Stephenson’s work. I love his stuff, but I would say Cryptonomicon was one in particular that really demonstrated that you could do this kind of thing together.

The Foundation Trilogy by Isaac Asimov

Isaac Asimov was another author who appeared on multiple lists, his Foundation Series in particular has influenced an extraordinary number of people. The novel centers on a group of academics (The Foundation) as they struggle to preserve civilization during the fall of the Galactic Empire.

In more than one interview, Elon Musk has expressed that he was greatly influenced by the Foundation Series. He said the books taught him, “The lessons of history would suggest that civilizations move in cycles. You can track that back quite far — the Babylonians, the Sumerians, followed by the Egyptians, the Romans, China. We’re obviously in a very upward cycle right now and hopefully that remains the case. But it may not. There could be some series of events that cause that technology level to decline. Given that this is the first time in 4.5bn years where it’s been possible for humanity to extend life beyond Earth, it seems like we’d be wise to act while the window was open and not count on the fact it will be open a long time.”

The series also influenced the likes of George Lucas and Douglas Adams. Speaking of…

The Hitchhiker’s Guide to the Galaxy by Douglas Adams

The story chronicles earthling Arthur Dents’ amazing voyage through space after he escapes the destruction of Earth.

Elon Musk considers Douglas Adams one of the great modern philosophers. It was Adams that taught him that “The question is harder than the answer. When we ask questions they come along with our biases. You should really ask, ‘Is this the right question?’ And that’s hard to figure out.

It’s interesting to note that Musk happened upon the book at a time that he says he was going through and existential crisis (between the ages of 12 to 15). He first turned to Friedrich Nietzsche and Arthur Schopenhauer but found what he needed through Douglas instead. Salman Khan, founder of Khan Academy also lists this as one of his favorite books.

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This is in no way an exhaustive list of fiction that has influenced people whom we admire, but we hope that it has inspired you to find more places for those big ideas. Happy Reading!

If you enjoyed this post, check out a few other book recommendation lists we’ve put out recently:

Book Recommendations by the Legendary Washington Post CEO Don Graham – Among his answers are his favourite fiction and non-fiction books and the book that will stay with him forever.

A Short List of Books for Doing New Things – Andrew Ng thinks innovation and creativity can be learned — that they are pattern-recognition and combinatorial creativity exercises which can be performed by an intelligent and devoted practitioner with the right approach. He also encourages the creation of new things; new businesses, new technologies. And on that topic, Ng has a few book recommendations.

## The Seven Books Bill Gates Thinks You Should Read This Summer

Bill Gates is out with his annual summer reading list and, while longer than last year’s, it’s a great place to kick off your summer reading.

“Each of these books,” Gates writes, “made me think or laugh or, in some cases, do both. I hope you find something to your liking here.”

Hyperbole and a Half, by Allie Brosh.

The book, based on Brosh’s wildly popular website, consists of brief vignettes and comic drawings about her young life. The adventures she recounts are mostly inside her head, where we hear and see the kind of inner thoughts most of us are too timid to let out in public. You will rip through it in three hours, tops. But you’ll wish it went on longer, because it’s funny and smart as hell. I must have interrupted Melinda a dozen times to read to her passages that made me laugh out loud.

The Magic of Reality, by Richard Dawkins.

Dawkins, an evolutionary biologist at Oxford, has a gift for making science enjoyable. This book is as accessible as the TV series Cosmos is for younger audiences—and as relevant for older audiences. It’s an engaging, well-illustrated science textbook offering compelling answers to big questions, like “how did the universe form?” and “what causes earthquakes?” It’s also a plea for readers of all ages to approach mysteries with rigor and curiosity. Dawkins’s antagonistic (and, to me, overzealous) view of religion has earned him a lot of angry critics, but I consider him to be one of the great scientific writer/explainers of all time.

What If?, by Randall Munroe.

The subtitle of the book is “Serious Scientific Answers to Absurd Hypothetical Questions,” and that’s exactly what it is. People write Munroe with questions that range over all fields of science: physics, chemistry, biology. Questions like, “From what height would you need to drop a steak for it to be cooked when it hit the ground?” (The answer, it turns out, is “high enough that it would disintegrate before it hit the ground.”) Munroe’s explanations are funny, but the science underpinning his answers is very accurate. It’s an entertaining read, and you’ll also learn a bit about things like ballistics, DNA, the oceans, the atmosphere, and lightning along the way.

XKCD, by Randall Munroe.

A collection of posts from Munroe’s blog XKCD, which is made up of cartoons he draws making fun of things—mostly scientists and computers, but lots of other things too. There’s one about scientists holding a press conference to reveal their discovery that life is arsenic-based. They research press conferences and find out that sometimes it’s good to serve food that’s related to the subject of the conference. The last panel is all the reporters dead on the floor because they ate arsenic. It’s that kind of humor, which not everybody loves, but I do.

On Immunity, by Eula Biss.

When I stumbled across this book on the Internet, I thought it might be a worthwhile read. I had no idea what a pleasure reading it would be. Biss, an essayist and university lecturer, examines what lies behind people’s fears of vaccinating their children. Like many of us, she concludes that vaccines are safe, effective, and almost miraculous tools for protecting children against needless suffering. But she is not out to demonize anyone who holds opposing views. This is a thoughtful and beautifully written book about a very important topic.

How to Lie With Statistics, by Darrell Huff.

I picked up this short, easy-to-read book after seeing it on a Wall Street Journal list of good books for investors. I enjoyed it so much that it was one of a handful of books I recommended to everyone at TED this year. It was first published in 1954, but aside from a few anachronistic examples (it has been a long time since bread cost 5 cents a loaf in the United States), it doesn’t feel dated. One chapter shows you how visuals can be used to exaggerate trends and give distorted comparisons—a timely reminder, given how often infographics show up in your Facebook and Twitter feeds these days. A useful introduction to the use of statistics, and a helpful refresher for anyone who is already well versed in it.

Should We Eat Meat?, by Vaclav Smil.

The richer the world gets, the more meat it eats. And the more meat it eats, the bigger the threat to the planet. How do we square this circle? Vaclav Smil takes his usual clear-eyed view of the whole landscape, from meat’s role in human evolution to hard questions about animal cruelty. While it would be great if people wanted to eat less meat, I don’t think we can expect large numbers of people to make drastic reductions. I’m betting on innovation, including higher agricultural productivity and the development of meat substitutes, to help the world meet its need for meat. A timely book, though probably the least beach-friendly one on this list.

Here is the video gates showed explaining the reads:

## The Six Books Bill Gates Thinks You Should Read This Summer

Bill Gates is out with his annual summer reading list and, while shorter than last year’s, it’s nonetheless full of interesting reads.

I ended up ordering two of them, one of which is considered to be “the best business book I’ve ever read” by both Warren Buffett and Gates.

Gates writes “I read them all earlier this year and think each one is terrific. Only one, The Rosie Project, qualifies as a typical beach read. But all six are deeply informative and beautifully written.”

Warren Buffett recommended this book to me back in 1991, and it’s still the best business book I’ve ever read. Even though Brooks wrote more than four decades ago, he offers sharp insights into timeless fundamentals of business, like the challenge of building a large organization, hiring people with the right skills, and listening to customers’ feedback. He is also a masterful storyteller, peppering his articles with compelling portraits of everyone from General Electric executives to the founder of Piggly Wiggly groceries. His article on the fate of the Ford Motor Company’s Edsel is a classic. Business Adventures is out of print in hardcover and paperback (not true, after a recommendation from Gates they ran another print, which is due out in Sept.), but you can now buy it in e-book form. And you can download chapter 5, “Xerox Xerox Xerox Xerox,” free. I wish all business writing were half as good.

2. Stress Test, by Timothy F. Geithner.

The central irony of Stress Test is that a guy who was accused of being a lousy communicator as U.S. Treasury Secretary has penned a book that is such a good read. Geithner paints a compelling human portrait of what it was like to be fighting a global financial meltdown while at the same time fighting critics inside and outside the Administration as well as his own severe guilt over his near-total absence from his family. The politics of fighting financial crises will always be ugly. But it helps if the public knows a little more about the subject—what’s at stake, what the options are, what has worked in similar situations—so that the loud talkers resonate a bit less and the knowledgeable ones a bit more. …

3. The Bully Pulpit: Theodore Roosevelt, William Howard Taft, and the Golden Age of Journalism, by Doris Kearns Goodwin.

I read a lot about Teddy Roosevelt last year, around the time Melinda and I took our kids to the Panama Canal. He was instrumental in getting the canal built, and I’d assumed it was the highlight of his career. But it wasn’t. It’s a testament to the breadth and depth of Roosevelt’s accomplishments that the canal warrants only a handful of mentions in this biography. There’s just too much other fascinating material competing for space, from Roosevelt’s relationship with the press and his friendship with William Howard Taft (who was brilliant in his own right) to his efforts to fight corruption and reform the political system.

I’m especially interested in the central question that Goodwin raises: How does social change happen? Can it be driven by a single inspirational leader, or do other factors have to lay the groundwork first? Sometimes a single leader can make a big difference: In the field of global health, Jim Grant almost singlehandedly created a global constituency for children, sparking a movement to double vaccination rates and save millions of lives. But Roosevelt’s case was different. Although he tried to push through a number of political reforms earlier in his career, he wasn’t really successful until journalists at McClure’s and other publications had rallied public support for change.

I loved Goodwin’s Team of Rivals and highly recommend this one too.

4. The Rosie Project: A Novel, by Graeme Simsion.

Melinda picked up this novel earlier this year, and she loved it so much that she kept stopping to read passages to me. I started it myself at 11 p.m. one Saturday and stayed up with it until 3 the next morning. Anyone who occasionally gets overly logical will identify with the hero, a genetics professor with Asperger’s Syndrome who goes looking for a wife. (Melinda thought I would appreciate the parts where he’s a little too obsessed with optimizing his schedule. She was right.) It’s a funny and profound book about being comfortable with who you are and what you’re good at. I’m sending copies to several friends and hope to re-read it later this year. It is one of the most enjoyable novels I’ve read in a long time.

5. The Sixth Extinction: An Unnatural History, by Elizabeth Kolbert.

Climate change is a big problem—one of the biggest we’ll face this century—but it’s not the only environmental concern on the horizon. Humans are putting down massive amounts of pavement, moving species around the planet, over-fishing and acidifying the oceans, changing the chemical composition of rivers, and more. Natural scientists posit that there have been five extinction events in the Earth’s history (think of the asteroid that wiped out the dinosaurs), and Kolbert makes a compelling case that human activity is leading to the sixth. Unlike a lot of people who write about the environment, Kolbert doesn’t resort to hype. She just lays out the facts and wraps them in memorable anecdotes. It’s a sobering but engaging and informative read.

6. Reinventing American Health Care: How the Affordable Care Act Will Improve Our Terribly Complex, Blatantly Unjust, Outrageously Expensive, Grossly Inefficient, Error Prone System, by Ezekiel J. Emanuel.

One of the architects of the Affordable Care Act (a.k.a. Obamacare) makes the case for why the U.S. health care system needed reform and how Obamacare sets out to fix the problems. Although he was deeply involved in its creation, Emanuel is good about making it clear when he’s educating you about the history of health care and when he’s advocating for his ideas. He calls out a few things he disagreed with in Obamacare, like the creation of a separate health-insurance exchange for small businesses. And unlike a lot of experts, he’s willing to make predictions about how health care will change in the coming years. …

And Gates also included a video explaining the reads

## Bill Gates — The Seven Best Books I Read in 2013

Bill Gates presents his 7 top reads in 2013.

Commenting on the lack of novels on the list, Gates writes:

It’s not that I don’t enjoy fiction. I’ve read The Catcher in the Rye a bunch of times—it’s one of my favorite books ever (and I enjoyed Salinger, the documentary that came out this year). I did read Gary Shteyngart’s Super Sad True Love Story, which was entertaining though it didn’t have as much science fiction as I expected.

But I read mostly nonfiction because I always want to learn more about how the world works. And reading is how I learn best.

That’s an interesting statement coming from Gates, especially in light of recent posts on using literature to study decision making under ignorance.

With that said, Gates is an excellent source of reading material for me. His top reads of 2012 led me to order Behind the Beautiful Forevers, a book I added to my antilibrary. And his summer reading list, along with the recommendations of readers, encouraged me to read The Box, a surprisingly enjoyable read on the history of the shipping container. This book shows up again on the end of year list of his top reads.

Here are his picks, in no particular order:

The Box, by Marc Levinson

“You might think you don’t want to read a whole book about shipping containers… But he makes a good case that the move to containerized shipping had an enormous impact on the global economy and changed the way the world does business. And he turns it into a very readable narrative. I won’t look at a cargo ship in quite the same way again.”

The Most Powerful Idea in the World, by William Rosen

“A bit like The Box, except it’s about steam engines… I’d wanted to know more about steam engines since the summer of 2009, when my son and I spent a lot of time hanging out at the Science Museum in London.”

Harvesting the Biosphere, by Vaclav Smil

“Here he gives as clear and as numeric a picture as is possible of how humans have altered the biosphere. The book is a bit dry and I had to look up a number of terms that were unfamiliar to me, but it tells a critical story if you care about the impact we’re having on the planet.”

The World Until Yesterday, by Jared Diamond

“Diamond finds fascinating anecdotes about what life is like for hunter-gatherers and asks which ones might apply to our modern lifestyles. He doesn’t make some grand pronouncement or romanticize tribal life. He just wants to find the best practices and share them.”

Poor Numbers, by Morten Jerven

“Jerven, an economist, spent four years digging into how African nations get their statistics and the challenges they face in turning them into GDP estimates. He makes a strong case that a lot of GDP measurements we thought were accurate are far from it.”

Why Does College Cost So Much?, by Robert B. Archibald and David H. Feldman

“The authors are good about not pointing fingers but instead talking about how America’s labor market affects the cost of college. My view is that as long as there’s a scarcity of college graduates, a college degree will be quite valuable. So people will pay more to get one. And if they will pay more, then colleges and universities — whose labor is provided mostly by people who paid a lot for their own degrees — can ask for more. Until you get an excess supply of graduates, then you don’t really get any price competition.”

The Bet, by Paul Sabin

“Sabin chronicles the public debate about whether the world is headed for an environmental catastrophe. He centers the story on Paul Ehrlich and Julian Simon, who wagered \$1,000 on whether human welfare would improve or get worse over time. Without ridiculing either proponent, Sabin shows how their extreme views contributed to the polarized debate over climate change and other issues that continues today.”

Gates’ list is a happy addition to the 2013 collection of reading lists.

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