less directly about the startup world, and more about deep social trends that good startup founders will have to buck. One such trend – which Thiel approaches in a lot of different equivalent ways – is the loss of belief in secrets. People no longer believe that there are important things that they don’t know, but which they could discover if they tried a little harder.This fascinates me partly because it might be true to some extent about business but can, I think, lead to truly horrible thinking about politics. Of course it might be that billionaire entrepreneurs are mainly just lucky, not in the sense that they don't have good ideas or work hard but in the sense that other people have equally good ideas and work just as hard and the ones who become billionaires rather than just rich have simply won the lottery; but I can certainly see an appealing logic to what Thiel says.
Past scientific discoveries came from a belief in secrets. Isaac Newton wondered why apples fell, thought “Maybe if I work really hard on this problem, I can discover something nobody has ever learned before”, and then set out to do it. Modern people aren’t just less likely to think this way. They’re actively discouraged from it by a culture which mocks stories like Newton’s as “the myth of the lone genius”. Nowadays people get told that if they think they’ve figured out something about gravity, they’re probably a crackpot. Instead, they should wait for very large government-funded programs full of well-credentialled people to make incremental advances.
Good startups require a belief in secrets, where “secret” is equivalent to “violation of the efficient market hypothesis”. You believe you’ve discovered something that nobody else has: for example, that if you set up an online bookstore in such-and-such a way today, in thirty years you’ll be richer than God. This is an outrageously arrogant claim: that you have spotted a hundred-billion-dollar bill lying on the sidewalk that everyone else has missed. But only people who believe something like it can noncoincidentally found great companies. You must believe there are lucrative secrets hidden in plain sight. . . .
Belief in secrets is connected to belief in one’s own reasoning abilities. Modern conventional wisdom says armchair reasoning never works; any idea you prove true in your head is useless until it’s been exhaustively tested in real life, and you’re more likely to get some other (true) idea out of the exhaustive testing than to validate your armchair speculation. As a corollary, the more steps in your proof, the less likely it is, since each one exponentially increases the error rate of your final conclusion. Since your armchair reasoning is useless, you are unlikely to ever discover a secret (except perhaps by chance, if you randomly do experiments no one else has ever done). The only thing that might not be useless is large institutions working together to gradually advance knowledge with lots of testing, who effectively buy many lottery tickets hoping one will pay off.
Thiel is one of the world's leading libertarians, and also a great believer in social experiments. He is one of the main backers of the sea-steading movement. He assumes that these human-created islands would be libertarian paradises, but he has on occasion said that they will actually be laboratories in which people might try all sorts of different governments. Here we see the faith in armchair reasoning that Alexander highlighted: Thiel thinks some guy on an artificial island might just imagine a system of government as much better than any previous form as Amazon is better than Sears.
I, of course, think this is nonsense; I think that managing a society is a problem several orders of magnitude more complicated than anything done by Google, and that it is in fact a problem beyond the reach of human reason. All attempts to imagine a great form of government from scratch have failed; all successful revolutions preserve more than they destroy.
I say the only way to figure out how to govern a society is to look around the world and see what works. I acknowledge it is possible that some genius might one day come up with a radical social or political innovation that works brilliantly, but I consider it very, very unlikely.