Panta Rei
Everything flows, and human action (still) governs the society.
An essential aspect of achieving anything is to adapt to interactions that lead to continuous change while constantly seeking new ways to learn, grow, and become.
In business, we pay a high price for the truth. Frequently, it appears too expensive or too much luxury, and we can't afford it. We tend to think lying, hiding, or omitting is easier. Trying to avoid it might seem intelligent, but we must face it. There is no escape. So, it's vital to relentlessly nurture principles, independent thinking, and testing to determine what is true and take action accordingly to stay in business.
Unlike the natural sciences, business involves navigating uncharted waters where objective truth is elusive. A startup is like braving the unpredictable tides of the ocean. Sometimes, the tide is in our favor, while it works against us on other occasions.
When founding a startup, we should try to discover the most general truths about our audience as fast as possible. The challenging aspect of understanding what customers want is that we first must dive into the "figuring out state of mind" and then act on it. Only through a common denominator of customer needs can we build our company.
Then, we must be correct, and our ideas must be new. Here, "new" means something people can't get from others. And it is "correct" only if we build something people want. And pay for it. So, it has to address a genuine problem and solve it.
1. The Most Important Question of All. "Why?"
We have an idea. How do we explain it to the world? How do we show we are the ones to do it? And how will it work? Behind all these questions lies the "why." We should always start with it, both personally and in business.
If we know why, we'll find the way.
If we think from first principles, we can take action and achieve the objective, making order out of chaos. They are the essential building blocks of an idea.
This essay is made of paragraphs, sentences, words, and letters. If I spell the letters accurately, words appear. If the words are connected, sentences are formed. If the sentences make sense, paragraphs take shape. And if the paragraphs convey meaning, the essay is worth reading.
It's the same in business; we have to build the foundation. First, we must gather data to demonstrate the reasoning. Human understanding is rooted in mathematics and logic. We can prove we are on the right path if the data is consistent and the methodology robust. Then, we can write a story to let the world know we are on to the next big thing.
"Why am I me?" is a philosophical question that has been a lifelong quest for many individuals. The Oracle of Delphi's expression "know thyself" (Gnothi seauton! in Greek or Temet nosce! in Latin) encourages self-reflection and self-awareness. We have to prove ourselves. Business is an entrepreneur's discovery journey that hopefully ends with a founder-market fit. Plus, we must convince a team, some investors, and a market niche to follow our lead. So, we have to know who we are first.
Then, we have to prove that we can execute. To do so, we get out of the building. To explain why it will work, we develop a hypothesis, which is tested through various means. The hypothesis is modified based on the outcome and is retested until it becomes consistent with observed phenomena and results.
This process should end with a Minimum Viable Product. Then, we should keep on iterating and testing relentlessly. This way, hypotheses are tools for gathering data and developing explanations or business decisions.
Pursuing "why" should never end because it will always lead us to write true sentences.
2. Start with One True Sentence
As Ernest Hemingway once said in A Moveable Feast, "The writer's job is to tell the truth," (...) "All you have to do is write one true sentence."...and the rest will follow. A writer is similar to an entrepreneur in this respect. After we know why, we need only one true sentence to build upon it.
When "It's in the game," "Think differently," and "Just do it!”
In the world of business, it is crucial to distinguish between what is true and what is merely fiction. We win and last by knowing the truth about our customers, the market, the niche, our capabilities, our position, our competitors, the economy, and the world.
But how can we do this? To succeed and continuously reach our goals, we must strive to accurately understand reality as it is rather than as we wish it to be. The most formidable challenge is to do so when it goes against what we love and against our core beliefs. Repeatedly, we want to hear, see, and know, but often, we prefer to believe (make-believe play).
Plus, our desire to be right can sometimes overshadow our need to discover what is true.
We may believe our own opinions without adequately testing them. Confronting our mistakes or character flaws can be frustrating, and we may feel offended and uncomfortable if someone points them out to us.
Instead, we should accept that lying is a destructive process that will falter ourselves. Hence, aim to be radically open-minded. We can make better decisions, learn more, and strive to realize our full potential by transforming accurate feedback into actionable steps.
Down the road, remember that there are a lot of mysteries, but the first step is always one true sentence.
3. The Blindspot Trap
As for the mysteries, it is a common fact that everyone has blind spots. I discovered this early on in life due to my poor eyesight. This made me aware that other people see things differently and, often, in a more precise way. Although I cannot fully grasp the extent of this, I acknowledge that it is the reality.
This realization has led me to understand that I may have mental blindspots, too. Everyone perceives the world around them differently because our brains are wired differently. Some individuals are better at seeing the big picture, while others excel at analyzing details. Some are creative but untrustworthy, while others are reliable but only duty fullfilers. Furthermore, some are linear thinkers, while others tend to think laterally. And so on.
What you don't see is what you get.
That's why it is essential to be aware that blindspots arise when we believe we can see everything. However, it is a simple fact that no one can see the complete picture of reality alone. We need a complementary team to cover all the angles. And that's an uphill battle.
Naturally, people cannot appreciate what they cannot see. So, we need to craft mental models to enhance our vision.
4. Mental Models
A decent starting point is looking for the Lindy Effect — the longer an idea is accurate, the longer its remaining validity. If a business can resist the test of time, the odds of prolonged longevity are greater.
The late Charlie Munger had a fantastic mind. He nurtured it by observing the world around him and running it against his mental models. He taught us that first, we need a meta-model, a model of models. Our minds should grow mental models, look for new ones, constantly adapt old ones, and amount to "worldly wisdom.”
"I would say you are not restricted to living people when picking your mentors. Some of the very best people are dead," Charlie said. And, to build a high reference level, we must select very carefully from whom we get information. He had around 100 models. I would only mention one here:
Invert. Always invert.
How to be miserable? Addictions, envy, greed, and resentment. How to fail? Be unreliable, do everything yourself, give up early, and don't ever invert.
"It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid instead of trying to be very intelligent." Charlie used to say.
When it's hard to find out how to start creating A, it's easier to understand non-A and how to avoid that. Vaguely right beats precisely wrong.
The underlying lesson here is that it's sane to be a contrarian and develop a new perspective. But not for the sake of it. You are not right or wrong because others agree or disagree with you. Only the facts and time will tell.
5. Game Theory Puts Everything in Perspective
We should play games to understand how facts and time work. These simulations are faster than life and unravel fundamental truths. Craving to reach Nash Equilibrium every day, in business or life, puts our circumstances in context, and we should focus on solving our own "Prisoner's Dilemma" by placing information in perspective.
Game theory takes us to the optimal decision when independent and competing actors are in a strategic setting. We learn it by playing many games, enabling us to encounter edge cases and put ourselves in difficult situations. A great way to make the best decisions is to be radically open-minded, believably weigh people's thinking, and search for causality.
When involved in games, remember what the Merovingian told us:
"You see, there is only one constant. One universal. It is the only real truth: Causality. Action, reaction. Cause and effect.”
The wise man knows what the right path is and takes it. But "knowing what to do" differs from "doing well one thing." Achieving wisdom requires discipline, whereas carefully selected self-indulgence is the key to gaining intelligence. While wisdom is universally applicable, intelligence is often specific to an individual.
While wisdom brings peace of mind and equilibrium, intelligence frequently results in dissatisfaction and hubris.
Many businesses run on hubris, often producing Catch-22s and colossal falls. From Bernard Madoff to Jordan Belfort, from Theranos to Enron or FTX, and the list continues. They all seemed to have an edge, but at the end of the day, it was just a charade. They played with game theory, and they lost.
An idea is choice or causality?
The question above is beyond our earthly way of knowing and will keep stirring disputes. Only the Matrix Architect himself can tell. He goes by the name Jim Simons — the one who cracked the code.
He did it for the NSA and Renaissance Technologies, too. He assembled a fantastic team of brilliant people and created systems, models, and procedures that solved mathematical problems and removed anomalies, while the others only leveraged narratives. Simons' Medallion Fund used a scientific approach and massive computing power to discover, validate, and trade based on patterns. This is how he gained the most outstanding returns ever known. On his end, game theory worked.
Competing perceptions and ambiguity can lead to the Rashomon Effect, but progress comes from a quest to discover good explanations for what they purport to account for. And, if we cannot find the answer, maybe some valuable enemies can be very insightful.
6. Foes' Quantum of Truth
Our minds, not our foes, lure us to evil ways.
A suitable lens to watch through when we want to test the validity of a claim, a theory, or a business move is to check the foes of the one who made it.
For example, the US of A made a well-known bold move during the Cold War: the landing on the Moon. The conspiracy erupted, and the dispute is still on the table for many of us. But, if the biggest foe America ever faced — the Soviet Union — did not contest the affirmation, chances are that was a true story.
Another revelatory lens is checking an idea using foes to triangulate it. Find the three most relevant opposing actors who can have an opinion and see how they respond to it. Here, selecting three persons, companies, or even states that do not share a common interest (!) for your analysis is essential. If they have a common ground, count them as one and keep searching until you find the right fit. They often share the same opinion when they are in the same boat. It would help to triangulate an idea correctly if you diligently inquired about opposite sides.
For example, let's take a look at the infamous "birther movement" against President Barack Obama. In this case, Hillary Clinton (Obama's rival during the 2008 Democratic Party presidential primaries) and Republican senator John McCain (Obama's rival during the 2008 United States presidential election) affirmed that he was born in the USA. To complete the triangle, even Donald Trump conceded in 2016 that "President Barack Obama was born in the United States. Period." Having these three heavyweights arguing in his favor — while being his adversaries and without a shared interest — chances are there is no legit claim against Obama's birth certificate.
Now, we see that even foes can help us discover what is true. They might be troops of last resort, but the final frontier is always closer and lies within us.
7. Everybody Lies. Use Reason to See the Light
Dr. Gregory House — the antisocial maverick doctor — diagnosed the most complicated, inexplicable, and rare cases in the medical world. To solve those puzzles, he starts with a simple yet reliable idea: every patient has motives to hide information, even when their life is at stake.
Now, if everybody lies and it's never Lupus :-), he has to dive deeper to discover the root cause. He excels in using the Holmesian deduction to build up his reasoning, while he has a complementary team to challenge him in the differential diagnosis.
Dr. House's lesson is that the most reliable weapon is our reason.
It is both the first and the last tool in our quest toward becoming. We should employ reason to build a system, a structure that will offer us a way of seeing and interacting with the world.
Plus, we should constantly challenge that set of principles, iterate, and improve it. Wisdom is a consequence of action, not a prerequisite, and we must strive to achieve it because it will make us better persons at the end of the day.
We can only control our minds and how we react to what the world has to offer. Hence, we should continuously search for the truth in business and life. If we diligently do it and act based on it, chances are we will end up well off. Only reason sheds light when everybody lies.
Conclusion
Truth requires exploration, learning, and independent thinking. To drive positive outcomes, we must discover our why and write one true sentence based on it. Be aware of our blindspots and craft mental models. Test and use data to decide, practice game theory, check foes, and, most importantly, use reason to build a system of principles.
From understanding reality as it is, not as we wish it to be, to relentlessly seeking the truth and acting accordingly, we can achieve our goals and realize our potential. On this challenging yet rewarding journey, the thrill of novelty is ever-present. We must be radically open-minded and constantly adapt the lenses through which we look at the world.
The pursuit of truth is a fascinating path of becoming.
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Note: I only know a little about what is true. Therefore, I aim to learn how to deal with being behind the veil of ignorance. Hence, this essay intends to be exploratory, not exhaustive. I only discovered a few lenses through which I see things, and I hope they can be valuable to you, too.