The Anthology of Balaji

We have to start talking more about our values than our valuations. Money is only a tool. What really matters is building something you can’t buy. That’s how we actually improve metrics like life expectancy.

Technology’s first law: whatever can be done over the internet will be done over the internet. (Though it might take a while for any given phenomenon to move online.) The statement might sound obvious, but the implications are far-reaching.

Uber and Airbnb showed it was true. The “next big thing” was being held back by those eighty-year-old regulations. Very, very few people were thinking about them. These things are so remarkable and hard to understand that they go unseen constantly.

Different mental models: Pass a law—force someone else to do something. Write some code—I will do something.

People want an extremely high level of safety, but they don’t realize we can be too conservative. Being too conservative on safety actually leads to systemic risk. Systemic risk happens when you stop taking risks and get stuck with a system that no longer improves.

The more things that can get done without you thinking about them, the more civilizational progress there has been.

If you’re doing information work, relative to your ancestors who worked with papyrus, paper, or typewriters, you are a golden god surfing on a sea of electrons. You can make things happen in seconds that would have taken them weeks, if they could do them at all.

As the fundamental medium changes, the form changes. Search engines and social networks are digital-native concepts that couldn’t exist offline. There are many other concepts where the digital-native and crypto-native equivalents are yet to exist.

It might take ten to twenty years, but as blockchains scale, every centralized service can become a decentralized protocol. Times have changed, and the economic terms of the agreement are changing. People are realizing they’re not in control and they’re not getting a cut. Crypto is a spinal transplant for the tech industry.

On disk → Online → On-chain. On-chain is like the third level of deployment. Files that only you care about stay on your local disk. Files that are important to others get put online. And files that are *really* important to others will get put on the blockchain

When you put information online, you get distribution, sharing, collaboration, etc. When you put it on-chain, you get immutability, verifiability, monetization, etc.

In 1990, for example, you couldn’t “live on the internet.” It was maybe barely doable in some US regions in the year 2000 and was still hard in 2010. Now digital America is everywhere, because the internet is everywhere.

Over time, more pieces are getting automated, so the backend becomes digital too. AI (in general) and virtual influencers (specifically) are obvious examples of this trend, where the human backend is no longer as necessary.

Imagine we divide physical America from digital America. Seen from this axis, much of the physical world is malfunctioning. Meanwhile, people migrate to the digital world because things “just work” there. Given the alternative, most pick the digital alternative.

Digital globalist, physical localist. Imagine we divide physical America from digital America. Seen from this axis, much of the physical world is malfunctioning. Meanwhile, people migrate to the digital world because things “just work” there. Given the alternative, most pick the digital alternative.

In theory, we could all just trust computer science. In practice, those who can’t code will fall back on trusting in a computer scientist. Decentralizing truth-finding means enabling as many people as possible to do the math themselves.

Many people think “peer review” means “independent replication and confirmation of results.” Peer review usually means months of delay while a few folks in your field write an email-length criticism of the paper and ask for more work. Peer review is not a panacea.

The problem is when the form and substance of science are mistaken. The form of science today is a peer-reviewed journal paper. But the substance of science is independent replication.

Science progresses by taking phenomena we think of as non-reproducible (and hence unpredictable), isolating key variables, and turning them into reproducible (and hence predictable) systems. A key example here is understanding that bacteria cause disease.

Science also progresses by improved instrumentation and better recordkeeping. Star charts enabled celestial navigation. Gregor Mendel’s careful counting of pea plants led to modern genetics. Johann Balmer’s documentation of the exact spacing of hydrogen’s emission spectra led to quantum mechanics.

Just by writing down what they observed, they created a huge leap forward.

In entrepreneurship, people often say it’s not the idea, it’s the execution. But that’s for trivial ideas. For great ideas like Maxwell’s equations or Newton’s laws, the idea itself really does bring us forward.

At first it seems like a trivial or weird statement, but the only thing more prestigious than science is math. They’re not normally juxtaposed, but I would say math is greater than science. Math is exact in a sense where science is approximate.

Politics masquerades as the search for truth, so people get taken in. But a truth that makes your tribe lose is a very unpopular truth. Truth is always beneficial in the long term. Copernican theory led to satellites. In the short term, though, you might have gotten burned at the stake.

Politics at its root is about tribes, not truth. Politics masquerades as the search for truth, so people get taken in. But a truth that makes your tribe lose is a very unpopular truth. Truth is always beneficial in the long term.

This is the paradox of a free society. If it’s really free, it may allow ideologies to flourish that want to stamp out society.

The opinions of others are imperfect proxies for analyzing the data yourself. The more technical knowledge you have in an area, the less you need to rely on reputational signals. A few scientists publish a study; a few dozen people summarize it; a few million read the summaries. Then everyone argues with each other.

The opinions of others are imperfect proxies for analyzing the data yourself. The more technical knowledge you have in an area, the less you need to rely on reputational signals.

Most of the nodes involved in that scenario are signal repeaters. What actually matters for determining truth are signal sources

There is no point debating someone who can’t whip out plots, primary URLs, or raw data. Argue with signal sources, not signal repeaters.

Many people do not reason forward from logical premises, but backward from social consequences. This has its own logic because social capital is capital. Screaming at the outgroup is much cheaper than investing in the ingroup. Everybody

Many people do not reason forward from logical premises, but backward from social consequences. This has its own logic because social capital is capital. Screaming at the outgroup is much cheaper than investing in the ingroup

Everybody has strong opinions about people they’ve never met based on tales told by people they do not know.

You’re screaming these holy lies, but it doesn’t matter because other societies who found real truths have exceeded you technologically and economically. That’s why finding truths in a decentralized environment is important

The individual accountability of a prediction is critical. It gives people an incentive to be correct even if unpopular. Most people evaluate whether something is really true or false only when they stand to win or lose money.

Unpopular truth is a reliable source of profit. Behind every great fortune is a great thoughtcrime.

Now we have an answer to what literal truth is through cryptography. Cryptography and how the blockchain manages information online provide decentralized truth—mathematical truths, which anybody has access to.

To execute automatically through a smart contract on the blockchain, the contract needs access to data about the outside world, which is not purely financial. That’s what crypto oracles do.

Crypto oracles are more important than people think. Today it’s global consensus on price history; tomorrow it’s global consensus on history.

you are rebuilding your body with what you ingest with your mouth and rebuilding your brain with what you ingest with your eyes and ears. Put these two concepts together and you realize what you eat and what you read have enormous power over you.

If it enrages, it engages. Emotionally aligning people against something appears easier than economically aligning people for something. Many writers and TV producers these days are like boxing promoters.

This is an implicit hierarchy, where someone can do something to you and you cannot do it to them, but it’s not acknowledged explicitly. Once you look for this, you’ll see it a lot. You “harass,” but they “hold you accountable.” You are “doxxing,” but they are “investigating.”

ownership of many of these media corporations is inherited. The owners are pure nepotists who received the family businesses from their fathers’ fathers’ fathers’ fathers. Another aspect is they’re mostly American, as opposed to the mostly immigrant nature of tech. Tech is very global and has a more international purview

Giving free content to media corporations in the form of quotes and interviews no longer makes sense. You must build your own distribution to avoid distortion.

The one type of corporation a journalist will always defend is a media corporation. The one form of equality a journalist will always resist is the idea that everyone is now a journalist. A direct competitor is not a neutral arbiter.

Highly negative stories dominate headlines (if it bleeds, it leads), while highly positive outcomes determine returns (the power law).

Win and help win is actually the profit maximizing strategy in the long term. When crabs-in-a-bucket don’t have enough resources, nobody ends up with resources because everybody is getting pinched. Win and help win is actually how technology and venture capital works.

The closer value creation comes to pure authorship—symbols typed straight from the mind—the harder it is to deny the merit of the person who generated those symbols.

Money seems to be locally zero-sum (after a trade happens, Person A has –$1, Person B has +$1), but actually money is globally positive-sum. In a voluntary exchange, A and B both gain in wealth because they both get non-monetary benefit from making the trade.

Most of the value, though, is in the ordering of those materials. Often the value of raw materials is not anywhere near the value of the assembly process: the know-how, the machines, and the effort required to put the raw materials together.

Everything is going into the next compounding outcome—not just compounding money, though money is an important tool. Knowledge compounds on other knowledge. Impact, same thing.

Financial independence is also personal and ideological independence. If you have financial independence, the crowd can’t economically cancel you. If you have a financial cushion, which anybody can build by cutting consumption, you can ride out challenges.

Everything changes when a frontier opens up. A new realm of unoccupied space means resources are suddenly less scarce. An aggrieved group can choose flight rather than fight. The would-be revolutionary doesn’t have to try to overthrow the ruling class anymore. Those who don’t like the current order can leave for the frontier.

In the late 1800s, American

In the late 1800s, American historian Fredrick Jackson Turner gave an influential talk about the frontier as the driving force in American history. He said the frontier was crucial to the US in several ways: as a path for the ambitious to seek their fortunes, as a national aspiration (Manifest Destiny), and with bare land as a canvas for social experiments.

Closing the frontier took paths away from ambitious people because they couldn’t easily become founders on their own plots of land. They became union organizers, revolutionaries, or demagogues. Without the frontier, it all became zero-sum.

Creating frontiers is important. Frontiers give pioneers space to innovate without affecting those who don’t consent to the experiment.

In any functional society, you can just start yelling that 51 percent is oppressed by 49 percent. That will always work to get attention and arouse passion. You can find some unjust axis and start agitating that issue. Conflict gets attention, and attention

In any functional society, you can just start yelling that 51 percent is oppressed by 49 percent. That will always work to get attention and arouse passion. You can find some unjust axis and start agitating that issue.

The highest level of leadership is technology leadership. It’s not simple positive-sum capitalism; it also brings something new to the market. You’re literally moving humanity forward.

Don’t argue on Twitter. Build the future. The hard way to gain status is to build something, to accomplish something, to add value. The easy way to gain status is to accuse someone else of being a bad person.

Your critique of the existing system may be correct. But you need a product, not just a critique. Don’t argue about regulation. Build Uber. Don’t argue about monetary policy. Build Bitcoin.

Don’t argue with words. Build products based on truths many people can’t grasp. If it works, they’ll buy it. Their incomprehension is your moat

The point of doing a startup is to build something you can’t buy. Today money can’t buy you a trip to Mars. Or a neural implant. Or a medical tricorder.

So much stuff I saw as a scientist at Stanford worked in theory but not in practice. Many ideas are exactly the opposite. You can study some concepts only once you’ve actually built products

When trying to build something, many people who might otherwise have been caustic critics, supercilious scholars, or imperious bureaucrats suddenly learn how hard it is to build, manage people, and turn a profit—to be the one in the arena.

To influence the direction of tech, pick up a keyboard or put capital at risk. You can build something. Those who won’t build will just preach.

Founders are selected for legitimacy and competence. That’s different from being selected for legitimacy alone (through inheritance or an election). Founders start new systems from scratch.

The selection mechanism really, really matters because it is not simply the current state of the system but how that state was achieved that is important for leaders to understand.

You’re building the bridge between the qualitative and the quantitative. The qualitative is like the compass heading. The quantitative is measuring your progress along the compass heading. But you can’t use metrics to choose which direction to go.

Good founders don’t just have ideas; they have a bird’s eye view of the idea maze. Most of the time, people see only the journey and result of one company. They don’t see the paths not taken and don’t think at all about the companies that fell into various traps and died before reaching customers.

Searching out your own path is deeply underemphasized. Don’t just look at TechCrunch or Twitter. Some people are successful because they look at competitors and align around the competition. They are just fast followers.

The Gartner Hype Cycle is a fundamental concept in technology that I refer to often. You’ve got some trigger event, and people get really amped about a new technology. Then people try to use it and find out it’s hard, and everyone gets demoralized and quits. Then you’ve got the trough of disillusionment. Those who stick with it through the trough actually make things happen

The gap between stated preference (what is praised) and expressed preference (what is bought) is an inexhaustible source of startup ideas.

A framework I use often is the evolution from the physical version to the intermediate form, and then to the internet-native version. If you’re into electrical engineering, you can think of this as the evolution from analog to analog/digital, and then to native digital.

The problem may be in the analog-to-digital interaction. If we want to actualize as fast as we can compute, zero-delay robotic task completion will be the true productivity unlock. We haven’t gone full digital yet. As long as humans are still in the loop, we won’t get the full benefits of digital productivity.

A good question for a software company is: what’s your billion-dollar function? For Facebook, it’s arguably the function that allows advertisers to put ads in front of users. The defensibility comes from its database.

Each successful platform has to have one “killer application.” For mobile phones, it was texting and visual voicemail. Those things pushed people over the threshold to purchase an iPhone, which was a new platform.

The best entrepreneurs are logical enough to think of unpopular truths and then social enough to make those truths popular.

Replacing just one layer of an outdated legacy stack is hard. Customer acquisition and integration costs can kill you. That’s when you go full stack. You can reinvent and reintegrate multiple pieces of an old industry and make better margins. Consider “restaurant powered by technology” versus “tech for restaurants.”

You cannot automate something until you’ve done it manually many times. Control all of the factors and show technology cuts costs.

Remember, for many legacy companies, information technology is only a cost center. They only adopted the code. You were born in it, molded by it. A full-stack entrant into a new vertical is formidably protean. You can morph your product just by hitting keys. Tesla’s over-the-air updates for its cars are a fantastic example.

If the goal is full stack, always talk to executives in the field early on. A few words can save years of work to identify key cost centers and hard parts. You can start all of these as “just” a new clinic/restaurant/accountant/architect/law firm. Think big, start small. Prove, then scale.

Anything founded before the internet may not be able to survive the internet.

Free or heavily discounted customers generally don’t value the product as much and are counterintuitively the most troublesome. Paying customers often are more tolerant of bugs. They feel invested in the product.

This is why startups must pursue large markets. Even if you can build a product with economies of scale, you need to ensure the market is large enough to reach those economies.

Product—What are you selling? Person—To whom? Purpose—Why are they buying it? Pricing—At what price? Priority—Why now? Prestige—And why from you?

That’s the bit to remember: most hatred is a mile wide and an inch deep. Strip away the negative adjectives and distill legitimate criticism into bugs to fix. Then just plow on. With

That’s the bit to remember: most hatred is a mile wide and an inch deep. Strip away the negative adjectives and distill legitimate criticism into bugs to fix. Then just plow on.

The key point: expect peak hatred just as servers are melting. Survive to the utility stage and you win! Prepare yourself for the U-curve.

But from a price-performance standpoint, you want geniuses no one knows yet. When you give somebody the biggest opportunity they’ve ever had, they’re hungry.

There’s a difference between casual conversation versus writing something for instructions. To be effective, pull key information to the beginning and communicate it in the headline. Then you should communicate it again in the subtitle, communicate it again in a slightly different way in the opening sentence, and expand on it in the opening paragraph.

To be effective, pull key information to the beginning and communicate it in the headline. Then you should communicate it again in the subtitle, communicate it again in a slightly different way in the opening sentence, and expand on it in the opening paragraph.

LinkedIn founder Reid Hoffman’s concept of the initial employer-employee compact as a “tour of duty” is useful because a company is not a family. A family is about unconditional love. That’s not how a company is. A good company works on conditional love—you have to deliver

Politics is about the disposition of shared resources. The less that is collectively shared, the less room there is for politics. A startup has few politics because there is nothing to loot within the organization. All resources are outside

At an individual level, minimize politics by acquiring resources externally by coding or closing a deal versus requesting them internally. One of the reasons an external focus helps to minimize politics is there is much less dispute over ownership. Eat what you kill. Scale increases the size of the pie, which decreases economic alignment. As team size increases, payoff functions begin diverging and politics arises.

At an individual level, minimize politics by acquiring resources externally by coding or closing a deal versus requesting them internally. One of the reasons an external focus helps to minimize politics is there is much less dispute over ownership. Eat what you kill. Scale increases the size of the pie, which decreases economic alignment.

At an individual level, minimize politics by acquiring resources externally by coding or closing a deal versus requesting them internally. One of the reasons an external focus helps to minimize politics is there is much less dispute over ownership. Eat what you kill

Your job: ensure each person wins more when all others win. Off-diagonal incentives will kill organizations. Politics arises when one person’s biggest win involves (or requires!) another person’s loss.

Leaders should focus on creating, quantifying, and communicating alignment as much as possible. Doing so is complementary to daily management. Alignment is why people do things even without assigned to-dos.

Distribution is about connections. Anyone can get commodity distribution (by paying for Google ads or Facebook ads). The art is to find some distribution arbitrage in your time and place. Find an inexpensive customer acquisition channel and pile up users through an underpriced angle others haven’t realized yet.

One reason startups are stressful is small sample sizes. You have a small number of employees, investors, and customers. If you’re an enterprise company with ten customers and one of them cancels, 10 percent of your revenue is gone.

In terms of execution heuristics, perhaps the best is Peter Thiel’s “one thing.” Everyone in the company is responsible for one thing. Each person should at all times know what their one thing is, and everyone should know everyone else’s too.

“It’s not the idea; it’s the execution” is an excellent reminder, a mantra to keep ourselves in a state of focus. It’s especially useful for startup novices or dreamers. Novices tend to assign far too much importance to patents or seemingly brilliant ideas without working prototypes

A startup is willing something into existence. Elon has a saying about startups: “It’s like chewing broken glass and staring into the abyss.” The reason is there’s no place to hide. You cannot blame somebody else. You just have to figure it out. There is no safety net. Your company could die, everything could go to zero, and you could be humiliated in public by the haters.

(Haters actually just hate themselves, though. They are rooting for somebody else’s failure because they don’t have the courage to try themselves. They can no longer make calculated bets because, to protect their egos, they’ve convinced themselves everything is going to fail

In building a startup, you cannot be purely economically motivated. At least I couldn’t, because many times the rational thing to do is quit. The rational thing to do is quit and get a decent job where they pay you well and you don’t have as much responsibility. There’s nothing wrong with that. If you’re a rational human being, that’s probably a pretty good thing to do.

You need some degree of idealism and determination. In building a startup, you cannot be purely economically motivated. At least I couldn’t, because many times the rational thing to do is quit.

The reason to do a startup is to build something you can’t buy. Elon cannot buy a trip to Mars.

“Nobody cares, just coach your team” might be the best CEO advice ever. Because, you see, nobody cares. When things go wrong in your company, nobody cares. The press doesn’t care, your investors don’t care, your board doesn’t care, your employees don’t care, even your mama doesn’t care. Nobody cares.

Write out your goals. It’s amazing how few people do. By writing out your goals, you prevent a random walk through life. So many people just wander through life.

I always have a broad mission or direction, and everything I learn gets mapped onto it. My brain has sort of a single-threaded worldview, which is a funny thing to say because you might think I hop around a lot. But it all has context. If I can’t fit something in, I tend to not remember it.

I lie awake at night and think, Okay, here’s what I’ve learned today. How does that fit into my broad collection of ideas? Where are the contradictions, overlaps, and so on? Most people do not do this. They just compartmentalize. They’ll learn something, but they won’t try to propagate it through other things they know to see if it conflicts with other ideas.

“Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.”

You have 168 hours per week, ~112 awake. Substitute capital for time, technology for both. Avoid travel. Cancel meetings. Focus on doing.

Sacrificing your physical fitness or health will also impoverish your team in the medium run. You can tap into that short-term health sacrifice for only so long. In the same way that a short-term optimization in engineering means taking on technical debt, you are taking on physical debt if you are not working out and eating right each day.

took me a while to realize this was actually a false dichotomy. Sacrificing your physical fitness or health will also impoverish your team in the medium run. You can tap into that short-term health sacrifice for only so long. In the same way that a short-term optimization in engineering means taking on technical debt, you are taking on physical debt if you are not working out and eating right each day.

What you choose to load into your brain first thing in the morning is the most precious, precious space. Perhaps your first few hours should be offline with pen and paper, writing things out. Some offline time is good, so you don’t just immediately jack into the internet.

The newest technical papers and the oldest books are the best sources of arbitrage. They contain the least popular facts and the most monetizable truths.

At each stage of life, I used my current skill and applied it in a new domain to learn another skill. I never started completely at zero; I was always building from a previous skill