Stray thought here, prompted by listening to Derek Thompson's recent fireside chat with Astro Teller.
The whole concept behind X is a rational one: let's put our emotion aside and try to learn as quickly as possible whether a given moonshot idea is workable. Then we cut bait on the unworkable ones.
I think there may be a flaw in this concept.
Talking to hard tech startup founders, it seems the experience is 180 degrees different. It goes more like this:
- We have this awesome idea, let's raise some money to go do it.
- OK, so far no show stoppers, let's keep going (raise more money, hire more employees).
- Holy shit, this is way harder than I expected. It hurts. My world is crumbling. But we've got to keep going. So much has been invested in this that we can't give up now.
- In some cases, success. In others, failure.
- For successful founders: looking back on it now, if we had known at step 1 how hard it was going to be, we never would have done it.
A lot of successful first deployments of new technology may rely on company founders (or others in an analogous role) being a little naïve in step 1 and having strong emotional drive in step 3. Maybe even buying into a sunk cost fallacy.
A sober accounting of all the challenges an idea is going to face in deployment will very often lead to people not trying it.
This makes me wonder if X is cutting bait on projects that an initially naïve yet sufficiently driven team could get to work. More generally, maybe there are so many barriers to success that we need to cultivate a bit of foolishness to get people to surmount them.
In 1991, economic historian John Nye published an article called "Lucky Fools," which I wrote about in the wake of the dot-com bust (remember that?): https://vpostrel.com/articles/a-vital-economy-suffers-fools-gladly
The paper is hard to get online, so I'll quote myself:
Suppose we think of "the entrepreneur as the valiant, but overoptimistic investor rather than the heroic seer," he wrote. In this story, entrepreneurs miscalculate their odds of success. They start more businesses than they should, but those mistakes lead to social benefits....
If the few big wins cancel out the many losses, starting a business would be a risky, but rational, bet -- the sort of investment a "cautious businessman" might make. But Professor Nye argued that the wins and the losses probably don't cancel out. Even the biggest winners don't make enough money personally to cover the losses of all the individuals who went into businesses that failed.
The big winners are usually people who, based on rational calculations, shouldn't have bet their time, money and ideas. They overestimated their chances of striking it rich. But they were lucky and beat the odds.
Even more important, the lucky fools create huge spillover benefits for society: new sources of wealth, new jobs, new industries offering less-risky opportunities, new technologies that improve life. Entrepreneurship does generate net gains, but most of those gains don't go to the risk-takers. The gains are spread out to the rest of us. Capitalism, in this view, works by exploiting the capitalists themselves.
"We depend upon people continuing to open up new businesses for the success of industry and of the economy and for our health and well-being," Professor Nye said in an interview. "But on the whole it probably doesn't make sense for the average person to open up a business. Hence, the lucky-fools phenomenon."
Another framing is that X only works on easy-to-justify “lean ideas.” Which is entirely rational from a business perspective. So maybe it’s less / not just naïveté but simply an inability to legibly justify an idea. You could call that naive I suppose.
https://benjaminreinhardt.com/efficiency <— also inspired by talking to Astro 😂
Bezos once said he would keep funding a project as long as it had one high-judgment champion. Of course, that leaves open the meta-judgment of who is high-judgment, and then it allows them to be a champion without having a solid “rational” case for the project.
Isn't this already captured by the heuristic of executing ideas based on their expected value? If the potential impact of an idea is large enough, a sober accounting of all the barriers won't actually stop EV-minded founders from working on them. "Workability" in general isn't a clean concept; what matters is that an idea's probability of success is enough to be worthwhile given its impact if it succeeds.
Taleb writes the following for a hypothetical National Entrepreneur Day:
"Most of you will fail, disrespected, impoverished, but we are grateful for the risks you are taking and the sacrifices you are making for the sake of the economic growth of the planet and pulling others out of poverty. You are at the source of our antifragility. Our nation thanks you."
Rewarding innovators with non-economic goods just for trying.
I think there's a strong case that people exploring innovation in a startup way, including those who fail, should be driven in a semi-irrational way like war heroes or martyrs. Dedication is good for success, especially if the people in question are not dependent on zero-sum resources and society as a whole can afford to have multiple competing crazily driven people.
Yes, there are benefits to trying new hard things that are not captured by the entrepreneur, so we should want them to try even when the cost/benefit to them is marginal or even somewhat under water.
I agree with the gist of this but would formulate it differently. It's not about naivete, foolishness, or emotion. It's about vision.