Speech: Peter Thiel on predicting the future

The penultimate speech: You Are Not a Lottery Ticket by Peter Thiel

The question of luck

  • Thiel believes there are two forces of progress. First, globalization (horizontal progress), copying things that already work, or “doing more with more”. Second, technology (vertical progress), doing things a different way, or “doing more with less.” Globalization is mathematically represented by going from 1 to n, technology is represented by going from 0 to 1.
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Thiel places Technology on the Y-axis, Globalization on the X-axis.
  • With technology, you are always doing something new. Since each moment of innovation occurs once, it has hard to tell how much it was down to luck, or whether the moment could have been engineered. We can’t test this; the sample size is one for each instance.
  • Mild anecdotal evidence: some people seem to succeeded with repeatability, like Elon Musk or Steve Jobs. However, you can argue that many of these types of people are simply coasting off of initial success.
  • In the past, people talked about luck as something to be overcome. In contrast, people today talk about success as spawning from the luck of the context.

Determinant vs. Indeterminate Futures

  • Thiel divides ideas about the future into 4 quadrants. Optimistic vs Pessimistic, and Determinate (predicable) vs Indeterminate.

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  • If you believe the future is determinate, you will act with conviction towards specific plans. If you believe it is indeterminate, you want to diversify. These approaches are, in some ways, self-fulfilling.

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  • We can place different countries, and different time periods, on this chart.

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  • Those country placements aren’t all guesswork. If you are optimistic, you save less, because you think the future will take care of itself. If you think the future is determinant, you invest more, because you are confident that specific ventures will turn a profit. (I think Thiel equates diversified investment with a type of saving. You have no idea what you are going to do with money, so you just put your money in everything.)

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  • You may notice that indeterminate optimism has both low savings and low investment. From the standpoint of economics, this is paradoxical. It’s certainly unstable.
  • Different occupations have different views towards the future:

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  • The determinate occupations work off the premise that the future will be different than the present, and vice versa.

Thiel gives example after example about the shift in the Western world from a determinate to indeterminate idea of the future:

  • The shift from Calculus to Statistics as the dominant math
  • The shift from substance to process
  • The shift from large, specific (and risky) infrastructure and public works projects to lack thereof. Some of these projects were wrong/misdirected, but they represented a different view of the future than what we have now
  • The shift in science fiction. Science Fiction used to be optimistic, and portray a future very different from the then-present. Modern Science Fiction tends to be anti-technology
  • The shift in the economy’s focus from engineering to finance
  • The shift of the view of money from a means to an end (because there are specific things we want to do with money) to an end in itself
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In indeterminate optimism, you never DO anything with money, it just moves around and accumulates. In a certain way, profitability just means that a company is “out of ideas” because they aren’t doing anything with their money.
  • The shift in our conversation about politics: the most important role has moved from the visionary to the pollster. The media doesn’t ask, “is that a good plan?” but instead “how have the polls moved?”
  • The shift in government spending from discretionary to non-discretionary (transfer payments)
  • The shift in Philosophy
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Nozick and Rawls have very different philosophies, but they are both indeterminate optimists. I believe Hagel and Marx were misguided, but they were ultimately optimistic
  • The shift in our view of death form a problem to be solved to an actuarial problem
  • The shift in policy discussions. Economics and environmentalism are both indeterminate philosophies: we are subject to “larger forces” (the market, nature)
  • The shifting view of business. Such as the attitude of encouraging incrementalism, which Thiel dislikes – I describe here; the most successful business do not fit this pattern.

Is Indeterminate Optimism Possible? 

“Could an iterative process lead, if not to the best of all possible worlds, at least to a world where there is a path of monotonic and potentially never-ending improvement?”

  • Evolution by natural selection is this. Evolution is an unpredictable process, but it leads to gradual improvement.
  • The problem, as I describe in this post, is that the process of evolution is incrementalist/anti-planning, and therefore a symptom of what I call “late culture change aversion”. It is fitting that the Western world, so overcome by these forces today, has adopted indeterminate optimism.
  • Failed cities present a problem for the indeterminate view of globalization: how to you incrementally improve slum land?

The Return of Design

In a determinate world, the most important thing is the robustness of the plan, what Thiel calls the “secret plan”.

In this post, I describe a problem: so many things are either so easy as to be unfulfilling, or so hard as to be undoable. But Thiel believes there are still doable and fulfilling strategies left, what he calls “secrets”. A successful business is a group of people with a “secret” plan.

The mark of a visionary CEO, according to Thiel, is that they do no sell their company. They have a secret plan for their company, from which they foresee future value that other so not. To them, their business is always undervalued by those without the secret.

I have to say, this speech sure does stay true to Thiel’s advocacy of raw substance. I have had to cut out detail.

Other Speech Highlights

Bret Weinstein explains cycles of civilizations

Robin Hanson explains human signaling

Jaan Tallin explains the singularity

Richard Dawkins explains the adaptive valley

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