Y=MX^B
Each letter represents a number. Y is a function (the result); X is the variable (the thing you can change); B is the order of scaling (the exponent); and M is a constant (unchanging).
One of the characteristics of a complex system is that the behavior of the system differs from the simple addition of its parts... “the whole seems to take on a life of its own, almost dissociated from the specific characteristics of its individual building blocks.” Geoffrey West
emergent behavior = collective outcome, in which a system manifests significantly different characteristics from those resulting from simply adding up all of the contributions of its individual constituent parts,
diminishing returns = the point where more input yields progressively less output
Future Value = (Present Value)(1+i)^n
https://www.farnamstreetblog.com/2017/11/power-laws/
being stuck is part of the process.
“Then you have to stop,” Wiles said. “Let your mind relax a bit…. Your subconscious is making connections. And you start again—the next afternoon, the next day, the next week.”Patience, perseverance, acceptance—this is what defines a mathematician. (Andrew Wiles)
automaticity = monotonous productivity, a recipe, Method, the panacea, the answer key
grit = perseverance is a partly a matter of personality, of exhibiting the right characteristics: tenacity, determination, a sort of healthy native stubbornness.
fixed mindset = one’s intelligence and abilities are unchanging, stable traits.
growth mindset = effort fuels progress. The harder you work, the more you’ll learn. To be stuck is a transient state, which you overcome with patience and persistence.
perseverance is neither about personality (as with grit) nor belief (as with mindset). Rather, it’s about emotion.
delicate emotions of discovery = the immense release, the inner fireworks, of solving a problem at last.
Zero to One - Peter Thiel
the more we compete, the less we gain.
Higher education is the place where people who had big plans in high school get stuck in fierce rivalries with equally smart peers over conventional careers like management consulting and investment banking. For the privilege of being turned into conformists, students (or their families) pay hundreds of thousands of dollars in skyrocketing tuition that continues to outpace inflation. Why are we doing this to ourselves?
it’s competition, not business, that is like war: allegedly necessary, supposedly valiant, but ultimately destructive.
anyone would fight for things that matter; true heroes take their personal honor so seriously they will fight for things that don’t matter. This twisted logic is part of human nature, but it’s disastrous in business. If you can
recognize competition as a destructive force instead of a sign of value, you’re already more sane than most.
a great business is defined by its ability to generate cash flows in the future ... Simply stated, the value of a business today is the sum of all the money it will make in the future. (To properly value a business, you also have to discount those future cash flows to their present worth, since a given amount of money today is worth more than the same amount in the future.)...Comparing discounted cash flows shows the difference between low-growth businesses and highgrowth startups at its starkest. Most of the value of low-growth businesses is in the near term
For a company to be valuable it must grow and endure, ... will this business still be around a decade from now? Numbers alone won’t tell you the answer; instead you must think critically about the qualitative characteristics of your business.
Every startup is small at the start. Every monopoly dominates a large share of its market. Therefore, every startup should start with a very small market....The perfect target market for a startup is a small group of particular people concentrated together and served by few or no competitors.
You can expect the future to take a definite form or you can treat it as hazily uncertain. If you treat the
future as something definite, it makes sense to understand it in advance and to work to shape it. But if
you expect an indefinite future ruled by randomness, you’ll give up on trying to master it.
And monopoly businesses capture more value than millions of undifferentiated competitors
the power law—so named because exponential equations describe severely unequal distributions—is the law of the universe.
we don’t live in a normal world; we live under a power law
If you focus on diversification instead of single-minded pursuit of the very few companies that can become overwhelmingly valuable, you’ll miss those rare companies in the first place.
The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined.
Zero to One - Peter Thiel
the more we compete, the less we gain.
Higher education is the place where people who had big plans in high school get stuck in fierce rivalries with equally smart peers over conventional careers like management consulting and investment banking. For the privilege of being turned into conformists, students (or their families) pay hundreds of thousands of dollars in skyrocketing tuition that continues to outpace inflation. Why are we doing this to ourselves?
it’s competition, not business, that is like war: allegedly necessary, supposedly valiant, but ultimately destructive.
anyone would fight for things that matter; true heroes take their personal honor so seriously they will fight for things that don’t matter. This twisted logic is part of human nature, but it’s disastrous in business. If you can
recognize competition as a destructive force instead of a sign of value, you’re already more sane than most.
a great business is defined by its ability to generate cash flows in the future ... Simply stated, the value of a business today is the sum of all the money it will make in the future. (To properly value a business, you also have to discount those future cash flows to their present worth, since a given amount of money today is worth more than the same amount in the future.)...Comparing discounted cash flows shows the difference between low-growth businesses and highgrowth startups at its starkest. Most of the value of low-growth businesses is in the near term
For a company to be valuable it must grow and endure, ... will this business still be around a decade from now? Numbers alone won’t tell you the answer; instead you must think critically about the qualitative characteristics of your business.
Every startup is small at the start. Every monopoly dominates a large share of its market. Therefore, every startup should start with a very small market....The perfect target market for a startup is a small group of particular people concentrated together and served by few or no competitors.
You can expect the future to take a definite form or you can treat it as hazily uncertain. If you treat the
future as something definite, it makes sense to understand it in advance and to work to shape it. But if
you expect an indefinite future ruled by randomness, you’ll give up on trying to master it.
And monopoly businesses capture more value than millions of undifferentiated competitors
the power law—so named because exponential equations describe severely unequal distributions—is the law of the universe.
we don’t live in a normal world; we live under a power law
If you focus on diversification instead of single-minded pursuit of the very few companies that can become overwhelmingly valuable, you’ll miss those rare companies in the first place.
The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined.
since nobody wants to give up on an investment, VCs usually spend even more time on the most problematic companies than they do on the most obviously successful.
The power law is not just important to investors; rather, it’s important to everybody because
everybody is an investor.
Religious fundamentalism, for example, allows no middle ground for hard questions: there are easy truths that children are expected to rattle off, and then there are the mysteries of God, which can’t be explained. In between—the zone of hard truths—lies heresy.
Every injustice necessarily involves a moral truth that very few people recognize early on: in a democratic
society, a wrongful practice persists only when most people don’t perceive it to be unjust.
“if men were angels, no government would be necessary.” James Madison
anyone who doesn’t own stock options or draw a regular salary from your company is fundamentally misaligned.
A company does better the less it pays the CEO—that’s one of the single clearest patterns I’ve noticed from investing in hundreds of startups ... High pay incentivizes him to defend the status quo along with his salary, not to work with everyone else to surface problems and fix them aggressively. A cash-poor executive, by contrast, will focus on increasing the value of the company as a whole.
If a CEO doesn’t set an example by taking the lowest salary in the company, he can do the same thing
by drawing the highest salary. So long as that figure is still modest, it sets an effective ceiling on cash
compensation....high cash compensation teaches workers to claim value from the company as
it already exists instead of investing their time to create new value in the future. A cash bonus is
slightly better than a cash salary—at least it’s contingent on a job well done. But even so-called
incentive pay encourages short-term thinking and value grabbing. Any kind of cash is more about the
present than the future.... Equity is the one form of compensation that can effectively orient people toward
creating value in the future.
Religious fundamentalism, for example, allows no middle ground for hard questions: there are easy truths that children are expected to rattle off, and then there are the mysteries of God, which can’t be explained. In between—the zone of hard truths—lies heresy.
Every injustice necessarily involves a moral truth that very few people recognize early on: in a democratic
society, a wrongful practice persists only when most people don’t perceive it to be unjust.
“if men were angels, no government would be necessary.” James Madison
anyone who doesn’t own stock options or draw a regular salary from your company is fundamentally misaligned.
A company does better the less it pays the CEO—that’s one of the single clearest patterns I’ve noticed from investing in hundreds of startups ... High pay incentivizes him to defend the status quo along with his salary, not to work with everyone else to surface problems and fix them aggressively. A cash-poor executive, by contrast, will focus on increasing the value of the company as a whole.
If a CEO doesn’t set an example by taking the lowest salary in the company, he can do the same thing
by drawing the highest salary. So long as that figure is still modest, it sets an effective ceiling on cash
compensation....high cash compensation teaches workers to claim value from the company as
it already exists instead of investing their time to create new value in the future. A cash bonus is
slightly better than a cash salary—at least it’s contingent on a job well done. But even so-called
incentive pay encourages short-term thinking and value grabbing. Any kind of cash is more about the
present than the future.... Equity is the one form of compensation that can effectively orient people toward
creating value in the future.
The most valuable kind of company maintains an openness to invention that is most characteristic
of beginnings. This leads to a second, less obvious understanding of the founding: it lasts as long as a
company is creating new things, and it ends when creation stops.
no company has a culture; every company is a culture
job assignments aren’t just about the relationships between workers and tasks; they’re also about relationships between employees.... Eliminating competition makes it easier for everyone to
build the kinds of long-term relationships that transcend mere professionalism....every company is also its own ecosystem, and factional strife makes it vulnerable to outside threats. Internal conflict is like an
autoimmune disease: the technical cause of death may be pneumonia, but the real cause remains hidden from plain view.
The best startups might be considered slightly less extreme kinds of cults. The biggest difference is
that cults tend to be fanatically wrong about something important. People at a successful startup are
fanatically right about something those outside it have missed.
advertising matters because it works. It works on nerds, and it works
on you. You may think that you’re an exception; that your preferences are authentic, and advertising
only works on other people. It’s easy to resist the most obvious sales pitches, so we entertain a false
confidence in our own independence of mind. But advertising doesn’t exist to make you buy a product
right away; it exists to embed subtle impressions that will drive sales later. Anyone who can’t
acknowledge its likely effect on himself is doubly deceived.
Sales is..: an orchestrated campaign to change surface appearances without changing the underlying reality.
The most fundamental reason that even businesspeople underestimate the importance of sales is the systematic effort to hide it at every level of every field in a world secretly driven by it.
Superior sales and distribution by itself can create a monopoly, even with no product differentiation.
The converse is not true.
Will a machine replace you?
Futurists can seem like they hope the answer is yes. Luddites are so worried about being replaced
that they would rather we stop building new technology altogether. Neither side questions the premise
that better computers will necessarily replace human workers. But that premise is wrong: computers
are complements for humans, not substitutes. The most valuable businesses of coming decades will be
built by entrepreneurs who seek to empower people rather than try to make them obsolete.
people compete for jobs and for resources; computers compete for neither.
computers are far more different from people than any two people are different from each other: men and machines are good at fundamentally different things. People have intentionality—we form plans and make decisions in complicated situations. We’re less good at making sense of enormous amounts of data. Computers are exactly the opposite: they excel at efficient data processing, but they struggle to make basic judgments that would be simple for any human
1. The Engineering Question
Can you create breakthrough technology instead of incremental improvements?
2. The Timing Question
Is now the right time to start your particular business?
3. The Monopoly Question
Are you starting with a big share of a small market?
4. The People Question
Do you have the right team?
5. The Distribution Question
Do you have a way to not just create but deliver your product?
6. The Durability Question
Will your market position be defensible 10 and 20 years into the future?
7. The Secret Question
Have you identified a unique opportunity that others don’t see?
cleantech executives were running around wearing suits and ties. This was a huge red flag, because real technologists wear T-shirts and jeans. So we instituted a blanket rule: pass on any company whose founders dressed up for pitch meetings.never invest in a tech CEO that wears a suit—got us to the truth a lot faster. The best sales is hidden. There’s nothing wrong with a CEO who can sell, but if he actually looks like a salesman, he’s probably bad at sales and worse at tech
job assignments aren’t just about the relationships between workers and tasks; they’re also about relationships between employees.... Eliminating competition makes it easier for everyone to
build the kinds of long-term relationships that transcend mere professionalism....every company is also its own ecosystem, and factional strife makes it vulnerable to outside threats. Internal conflict is like an
autoimmune disease: the technical cause of death may be pneumonia, but the real cause remains hidden from plain view.
The best startups might be considered slightly less extreme kinds of cults. The biggest difference is
that cults tend to be fanatically wrong about something important. People at a successful startup are
fanatically right about something those outside it have missed.
advertising matters because it works. It works on nerds, and it works
on you. You may think that you’re an exception; that your preferences are authentic, and advertising
only works on other people. It’s easy to resist the most obvious sales pitches, so we entertain a false
confidence in our own independence of mind. But advertising doesn’t exist to make you buy a product
right away; it exists to embed subtle impressions that will drive sales later. Anyone who can’t
acknowledge its likely effect on himself is doubly deceived.
Sales is..: an orchestrated campaign to change surface appearances without changing the underlying reality.
The most fundamental reason that even businesspeople underestimate the importance of sales is the systematic effort to hide it at every level of every field in a world secretly driven by it.
Superior sales and distribution by itself can create a monopoly, even with no product differentiation.
The converse is not true.
Will a machine replace you?
Futurists can seem like they hope the answer is yes. Luddites are so worried about being replaced
that they would rather we stop building new technology altogether. Neither side questions the premise
that better computers will necessarily replace human workers. But that premise is wrong: computers
are complements for humans, not substitutes. The most valuable businesses of coming decades will be
built by entrepreneurs who seek to empower people rather than try to make them obsolete.
people compete for jobs and for resources; computers compete for neither.
computers are far more different from people than any two people are different from each other: men and machines are good at fundamentally different things. People have intentionality—we form plans and make decisions in complicated situations. We’re less good at making sense of enormous amounts of data. Computers are exactly the opposite: they excel at efficient data processing, but they struggle to make basic judgments that would be simple for any human
1. The Engineering Question
Can you create breakthrough technology instead of incremental improvements?
2. The Timing Question
Is now the right time to start your particular business?
3. The Monopoly Question
Are you starting with a big share of a small market?
4. The People Question
Do you have the right team?
5. The Distribution Question
Do you have a way to not just create but deliver your product?
6. The Durability Question
Will your market position be defensible 10 and 20 years into the future?
7. The Secret Question
Have you identified a unique opportunity that others don’t see?
cleantech executives were running around wearing suits and ties. This was a huge red flag, because real technologists wear T-shirts and jeans. So we instituted a blanket rule: pass on any company whose founders dressed up for pitch meetings.never invest in a tech CEO that wears a suit—got us to the truth a lot faster. The best sales is hidden. There’s nothing wrong with a CEO who can sell, but if he actually looks like a salesman, he’s probably bad at sales and worse at tech
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