Invest Like the Best with Patrick O'Shaughnessy - Kevin Simler – Exploring the Frontier - [Invest Like the Best, EP.12]

Episode Date: November 22, 2016

Today’s episode features one of my favorite thinkers and writers: Kevin Simler.  Kevin has a background in technology and was one of the earliest employees at Palantir Technologies.  Palantir specializes in big data and has worked closely with clients ranging from the Department of Defense to the world’s largest hedge funds.  In this conversation, Patrick and Kevin explore startup culture, how to spark creativity, how social status functions like money, and how to think about the universe.  This will be one of the most unique conversations you will hear on this podcast.  Please Enjoy!   For comprehensive show notes on this episode go to investorfieldguide.com/simler/ For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag

Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Invest like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfield guide.com. Patrick O'Shaunisee is a principal and portfolio manager at O'Shaunicee Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaunacy Asset Management. This podcast is informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Ashanti Asset Management may maintain positions in the securities discussed in this podcast.

My guest this week is Kevin Simler, who along with the great Paul Graham is my favorite essay writer operating today. Like Graham, Simler has a background in technology. He was one of the earliest employees and engineers at Palantir Technologies, which specializes in big data and has worked closely with clients ranging from the Department of Defense to the world's largest hedge fund. months. We discuss a wide range of topics, including startup culture, how to spark creativity, how social status functions like money, and as you would expect from two philosophy majors, how to think about the universe. You can find show notes for this episode at investorfieldguide.com forward slash similar, S-I-M-L-E-R, which will include links to some of his best essays. Without further ado, please enjoy my conversation with Kevin Simler.

Maybe we could go into startup culture because this is going to be, at least for me, selfishly, the area that I know virtually nothing about. Obviously, you know a lot about, having worked at Palantir. Might also be one of the areas where I have put into practice some of my reading. Well, there you go. And I've seen you right that Palantir was and always will be a startup. So it has made my heart, right, maintained some essence of what startup culture allows to happen. So, for example, I work at a small business. We're certainly not a startup.

And maybe no small business stays small on purpose. But growth isn't always the ambition. And maybe it shouldn't be. And a lot of small businesses could probably benefit from a startup like culture, even if they're going to remain small. So sort of with a mind towards that as well. And I've heard you describe it as a frontier. Maybe flesh that idea out, that the difference between a frontier and something that's settled as a metaphor for startups.

At least in my mind, and this may not be true, but the frontier is, if not synonymous with growth, at least highly implicative of growth. The reason you go out to the frontier, the American frontier especially, was new opportunities. You were probably constrained in some way back home on the East Coast, and so you head out, and it's expansive and it's open, full of possibility. And so there's that growth mindset. think inherent in exploring the frontier. You know, certainly there must be some frontiers where, I mean, but the reason you go to it is to grow.

You wouldn't, no one would choose to go to the frontier unless they were hoping to get more than where they came from. So, so I wonder about that, the potential for growth as a determining factor in, in what is startup culture and that, that optimism and that feeling that you're at the beginning of something that's going to be bigger is. For me, it was a huge part of my experience, and I think it is part of everyone's experience who does a startup. And so I wonder about these smaller companies that don't have that, even if it's just a story,

a story of how they're going to be 10 times, 100 times bigger someday. We need all of these different parts of the economy. I also wonder, you know, I think Peter Thiel has some thesis about how democracy only works as long as the economy is growing, because as soon as something becomes like a zero, some situation, all of our institutions start to break down. Didn't he also say, was he the guy that said that, you know, his big thing is that we haven't made a lot of progress, especially in the physical sense, that the fact that we hit the Pacific and there was nothing really on earth, there's nothing left to, there is no physical frontier

anymore, that there is, that that impacts the way that we think. Do you think that's true or do you think that there's still, like in your experience, for example, at Pallantir, is there, are there still plenty of frontiers, digital, mental? Yeah, I think as long as there's, my, my guess is that as long as there's an economic frontier somewhere, our institutions will continue functioning as they have been, you know, whether that's, if space colonization were a huge economic possibility, that would suffice if tech is the big new thing that we have to go out and kind of domesticate all these technologies. and then spread them around and there's just so much value to unlock there, that suffices.

But I wonder what it's like to be. So this is my experience at Palantir was just one of pure growth. I think it was like employee number 20. And by the time I left, there was 1,000 employees and, you know, the revenue is growing comparably. And so everything was just up and up and up and to the right. And I think as someone who strives to understand how organizations work, I have this huge blind spot, which is what is the static trajectory, how does that feel over the long term? And also, what does it look like when the tide's going out and everything's coming down, that everyone just behaves differently there? So my experience

was how people behave when the trajectory is up into the right. And I think that does really affect the kind of culture that develops because you get a pass on a lot of things. You don't have to have all those hard conversations and make all those zero-sum trade-offs. And that it gives you leeway to just have a fun time. You know, you can just enjoy your coworkers without having to worry that they're going to stab you in the back. Can you describe for anyone that doesn't know, and I'm a little bit in the dark on this too, exactly what Palantir does and then what your specific role was there? This is bringing me back to my days when I would go try to recruit college students.

Yeah, so Palantir is a big data analytics company. they build products that help other groups analyze their data. So Palantir doesn't do any of the analysis themselves. They don't have any of the data themselves. They just build platforms that help government, different divisions within the government, Fortune 500 companies, nonprofits, whoever it is. If they have a bunch of data that they're trying to make sense of,

they use Palantir's products. So when I was there, this was 2007, 2006, 2013, I think. We were building a product for the financial markets. I believe that product is no longer, it's still out there a little bit, but it's not kind of evolved into a whole bunch of other things and fractured into different pieces that are still out there. So I was building, sometimes I try to describe it as like Excel on steroids. Okay.

So Excel is a completely flexible platform that lets you do a data analysis in any way you want. We were also building that. It was just it let you deal with larger datasets and to let you have a lot more degrees of freedom. And to explore the financial universe in the way that, you as an analyst think of things, not just rows and columns, but you actually have like a set of dates that might be recession periods. That would be an object that you could manipulate sort of as a first full citizen in the ecosystem. And was that primarily something that did you build that thinking that, say, hedge funds would want to buy it? Or did hedge funds or whomever the client was come to you and say, we need something like this so you built it? Like what was the order? It was much more the former where we, We were building something that we expected would be useful, and it was useful, and clients paid us for it and were happy with it for many years. We hit some ceiling in getting new clients on that product. And that product itself, we wanted to bring it to the – we were building it before the web.

And bringing it to the web, then we just – it's sort of a rolling process. It wasn't like we ever scrapped the product. We just – it evolved into something else, and it evolved into something that was much less. financing. Those of us who were building it were never really from finance natively. We were just computer scientists and programmers and data people. And so we were always building it with an eye to being a really generic product. And that was a tradeoff that made it less useful for people in finance. When you and I first talked, one of my questions to you was, okay, so you've got this incredible team of engineers, computer science people who have incredible facility with data.

And arguably, a lot of the edge that exists in financial markets is harnessing the power of data. That's what we try to do. And the story you told me was pretty interesting. Would you mind kind of recounting how that may seem on the face of it, like you just take a bunch of really smart engineers and give them a lot of financial data and you're going to have a great hedge fund result about kind of what actually happened? Yeah, well, that was the thesis. I often describe the central thesis and hubris of Palantir as our founder's belief that you just get enough smart people. people in a room together and they will do the right thing and make the right things happen. And that has been responsible for all the success of Palantir and also all of the ways that

we got things wrong was through that. So yeah, we just had a bunch of mostly Stanford computer science grads working on this product and no one really cared about finance. You know, when we were building and trying to sell this in the financial markets and everyone just thought, oh, we would. trivialize the financial problems because no one was in the trenches, like dealing with the minutia that actually caused problems in the day-to-day work of a financial analyst. We were just like, oh, theoretically it should work this way.

And so we built this tool that theoretically worked correctly and in practice was not as useful as it should have been. Yeah. It's amazing how every time, this is a problem with maybe any business. Like something seems like it should work great. And then you get your hands dirty and there's just a million little thing. that without experience in that domain, it's very hard to appreciate. So it sounds, in many cases, like I'll hear investment styles,

pitches from other investors, portfolio managers, where it just sounds like I could replicate it. Like I could take five programmers and say, okay, build this out. But then when you really start peeling back the layers and the experience, the value of that experience in interpreting data and things like that, because I kind of had this cynical belief that at the end of the day, you can automate most things in the world, but we're certainly still not there in financial markets.

And the real talented, the people with skill, assuming skill exists, which is debatable, the real skill does seem to be borne out from a lot of mentorship, experience with markets, experience with the nuance of markets. So I was fascinated to learn that basically someone tried to get all the smartest people, stick them in a room with all the data, and the result was not tremendous returns. It was problems. Yeah, which I guess is it speaks. to wanting to have people passionate about what they're doing. And if you don't have that,

if your mind isn't attracted and fascinated by the domain, the problem that you're trying to solve, you won't be solving it in the optimal way. So you've mentioned that startups, obviously, probably part of the defining characteristic is this idea of growth, or at least the potential for enormous growth and the importance of culture.

So I'm very curious which way you think that goes, which causes the other because I've seen like Mark Andreessen say, you know, culture is about winning. Like if you're winning, you're going to have a good culture and maybe vice versa. So what direction do you think it goes? Do you think that the winning precipitates the good culture or some foundational kernel of good culture precipitates the winning or some combination? Certainly some combination. You know, if you're thinking about what differentiates startup culture from the culture of the old world traditional businesses, I think you have to look to the conditions of the ecosystem and the main condition there is the potential for 100x growth.

If you are looking within the startup world and you're asking why do some companies win and some companies lose, I think certainly culture plays a role. And it's not determinative. There are plenty of businesses that just had the right formula at the right time, and they had engineers that were capable of executing on that, and it just took them to the moon. But for every one of those, you have a few other companies where there are plenty of competitors, and the team that wins is the team that works best together.

Yeah, so I'm a big believer in that culture as an asset within a company. I mean, I just, this is, it comes from some of my reading, but it comes mostly from firsthand experience where that was what kept people at Palantir happy, working hard with their coworkers, loving it, working late, and motivated to really do their best. The reason I was motivated was, again, not because I was particularly passionate about building finance software,

but because I was surrounded by these great people in a culture that just worked, and I felt like the culture rewarded me for, doing the right things like morally and ethically and also doing the right things technically you know i was whatever i put into it palantir rewarded that in a certain way and that's that's the culture and and um where that comes from is you know it's slippery and it's hard it's like what's the magic formula i don't know if there is one but that has got to be part of the factors of success it seems like meritocracy then is maybe if not the most important one of the one of the key in

your opinion elements of a good culture is that is that fair and if So what other dimensions are, aside from it being a meritocracy, would you think are most important to establishing a good culture? Well, I feel necessary to disclaim that I am just a guy. And I worked at a great company. So I'm over-indexing a lot on my own experience on this. But yeah, I mean, a meritocracy is almost so obvious as not to be worth stating. Because if you don't reward people for doing what's good for the company, then they're going to be able to. going to do things that aren't good for the company. And that's just, you know, you're going to be

rowing around in circles or in the wrong direction. Other things that are really important, I think, team chemistry and just making sure that the environment is as apolitical as possible so that people don't have to be worried about rent seeking or backstabbing, just having the trust of your team. And that was a big motivating factor for me. And it's, you know, I, I see, see it at all these great companies. I'll throw this back to you. What are some other big factors in the finance world or elsewhere? I'm fascinated by meritocracy because it's not black and white, right? There's degrees of it. And I think a perfect meritocracy means that there are no personalities involved. And obviously that's not possible. So it seems like on a prior episode,

we were talking about before, we talked about Valve or Zappos, where they have ostensibly a completely flat structure, meaning literally even the founder of Valve has, he's got to convince people he can't tell people, right? So I find that incredibly intriguing because in my own personal experience, when I've been given the most freedom is when I've been the most productive.

And I think that that's true of just about anyone that's doing interesting work and is motivated and curious about the world. But wouldn't you establish a business And one of my favorite aspects of the article you wrote on the frontier was that it's exploration and then colonization, right? And the colonization part is really important. And as companies get bigger, as relationships get longer, as time passes, there is the proverbial red tape and structures and systems and political hierarchies and rent-seeking behavior. All these things seem to be inevitable.

Now, there's, you know, maybe Valve is the exception that proves. that role. But I think that meritocracy is very easy to say you're going to insert into a business, and then it's very hard to actually do that constantly. For sure. I mean, it's an ideal to strive for, and there's no one gets it perfect, and there's no winning formula, but you can tell when you look at two different companies that one is more of a meritocracy than another, and then that's got to be good for it. I think that it's also more relevant in a high growth environment because it's more opportunity for feedback, right? So if you're growing fast, it's probably easier to tell who's actions or contributions have some relationship with that growth than in a more, let's call

it stable or low growth environment. Or I think it would be harder to parse, you know, person X is more or less responsible for this, especially in like sort of a tinkering phase of growth where you're trying a lot of different things and testing and amplifying what works. So it's tricky. I think that's a really tricky concept. And so I think from my perspective, the interpersonal is in many cases more important than the meritocracy. That liking who you work with, having complementary skill sets and and other curious people that are curious in different ways than you are. You know, you don't need 10 people that are interested in all the same things you are. That would be boring.

This guy, I spent a lot of time reading online Van Cat Rau of Ribbon Farm. It's a great blog. Amazing. It's just full of all sorts of new and fresh ideas. He has this old blog post about a crucible. That's his idea of this. I think he says, okay, you. You've got Dunbar's number at 150, but that's not the ideal size for a group where you're going to just really be fully engaged with them and kind of mutually learning from each other.

So he talks about having a crucible of maybe like 11 people where you're just, you're in it together and it's a trial by fire and there's a lot of energy. But just all that mutual respect and wanting to learn from. and be infected by the passion of others, and then also wanting to impress them. And so really just like that as a way of leveling up your skills is finding a little crucible of people that you can just work your ass off together with. Do you buy the idea that kind of you end up being the average of the people around you? Not be them, but let's say produce set a level, that you can be dragged up or down by, you know, the people that you're around?

For sure. Yeah. I guess, you know, there are always ways that you can break out of that. But there will be a tendency if other people around you are B or C players that's going to sap your motivation to be an A player. Sure. Because they won't even recognize you for your skills as an A player. And I think, I know, I might be over-indexing on my own psychology here, but I think the respect of one's peers is like really underappreciated. in these contexts. So much of what I did at work was not because my boss was measuring me on this

or because there was some key, some story I could tell myself about how if I do a really good job on this, that it'll translate down the line into success on the product and that that's my main goal and that's why everything I want in life. I can't be that focused on the ultimate prize. I'm much more focus on the near-term prize, which is if I do a shitty job with this, people are going to notice, I'm going to be ashamed. If I do a great job, hopefully the rewards will come from that. And I don't know what it's like working at a bigger company or at a low-growth company, but look to you maybe for some of that. How much do you think the role of peer evaluations plays in motivating people to do great work? I think it's probably very dependent on the person.

that some people are extremely motivated by that. And it's a positive. Some, it's a negative. And some are independent, where it's a nice to have, but it's not a driving factor in motivation or productivity. So I think it's probably less the institution and the growth rate for that factor than it is just the person. That's my experience.

Yeah, I'm absolutely. But it's interesting. And, you know, there's this, I think again, it was Teal. I love Peter Thiel's ideas, where he said, you know, you get kind of one chance at the beginning of a business to set sort of the defaults and the core elements of the culture. And you've got to get that right because it will amplify, right? And I think that it's very hard to reverse, to turn a battleship, to use that often use metaphor. And that to use a Paul Graham idea, you know, Paul Graham talks about, Startup says like a mosquito that's built for speed and attack versus like a bear that can take a lot of punches and it's got a lot of redundancies and disaster relief, you know, all that kind of thing.

But that those things are very different. So I am personally more drawn to the mosquito thing. I think that operating at a frontier is incredibly interesting, but it means also that you have to be, I think, less sensitive to what your peers think about you. or really what anyone thinks about you, that it's got to kind of come from, the motivation needs to be very internal. That's my guess. But of course, your experience at a startup

was that the peer, you know, the peer aspect of the thing was important. Well, I mean, there are all those examples of famous businesses where the leader told by everyone he talked to, this is not going to work, you're an idiot. Founders of Palantir like to tell these stories. So there is certainly,

if you are at the helm of one of these businesses, you cannot be doing it just to impress your investors or potential investors. I guess the dynamic I'm talking about is more within the company. Yeah, that makes sense. And there you, if you're not hiring people whose judgment you respect, then that's a problem. And if you do hire people whose judgment you respect,

then you should want to impress them. And certainly there are, lots of personality types. So some people are motivated by different things. You've got a book coming up, which I was lucky enough to read an advanced copy of, which was fantastic. And one of the core ideas, and you've written about, actually, I'll link to the actual essay that you wrote on this.

I think the essay is called The Economics of Social Status, which is such, so there's these ideas that I come across sometimes, which act as like a new lens to view the world, and this is one of them, where the core idea is your status. or maybe reputation is another word that you could use for status. Reputation is the polite word for it. Part of the problem is that talking about social status and I'm higher status than you or your highest than me or just it's a zero-sum game that seems to wig everyone out and makes these

gives people this mental block on thinking further through that idea. Can you talk through the basics of maybe a simple definition of kind of the economics of social status? What is this core idea? So there's social status is it's lots of ways to define it, but you can define it roughly as someone's influence over other people in a certain context. And that is a variable. We don't have units for it, but it is the kind of thing that has a magnitude. You can have more or less influence over other people.

And things that you do, actions, you take, interactions you have with people change that variable. So it then becomes possible, and in some cases productive, to look at this through the lens of an economy. People want more of this variable. What do they do to get it? And not only what do they do to get social status, but how can they spend their social status to get other things that they want. And so one example I use in this blog post, I think, is the way you might price favors with social status. So if you're asking someone for a favor, you're saying, I respect you, I like you, you're not necessarily higher social status than me, but I'm

temporarily elevating you with respect to me in exchange for this favor. If you just kind of make a request, it seems sort of neutral, whereas if you make a demand of someone, you're saying, you're kind of lowering their status a little bit, or you're trying to elevate your own, they may or may not respond well to that, but if they do just exceed to your demand, you've sort of recalibrated your relative statuses in exchange for this favor or request or whatever the action is.

So you can think about it like a bank account, right? That you've got a status account and you can earn and spend. I mean, in many ways it actually meets some of the definitions of money, which is obviously a lot more fuzzy than that. There's not like a hard unit of account.

Maybe that's the missing. I think that's probably the one missing variable that it's not pure money. But it's a fascinating way. to think about how people behave. Are there fun examples of things that are ways of earning social status that you think people practice intentionally or otherwise? It might behoove us to differentiate between prestige and dominance.

I've found that that helps. So there are a lot of thinkers who, when talking about social status, they want to make this particular distinction. So there's status that you earn by being kind of aggressive and threatening. and using the potential for violence ultimately, and that's dominant status. And when you use that form of status, other people are afraid of you

and they don't want to necessarily be around you. The other type of status is prestige, and that is the status of being impressive in some way and some non-threatening way, doing good things for others or having skills that give you the potential to do good things for other people, and that is other people are attracted to you

when you have prestige. And because of the attraction, avoidance and other dichotomies, these two types of status behave differently. So when we talk about the economics of social status and the way that you can spend and accumulate status, I think that's primarily the prestige component, reputation, respect, the softer kind of influence. Dominance probably factors in there a little bit, but the way that you earn dominance are by taking or beefing yourself up and then using that. that to just grab at things. And that seems less economic to me than military or something.

You know, there would be a different metaphor to be used there. So the prescient, we'll call it the prestige bank account. And the way I like to think about the different, maybe it's like, like dominance is the push and prestige is the pole where like prestige has like a gravity to it, which is, which is really interesting. When you were kind of thinking through this and writing the post and you write even more about it in the book. I think I love the example of Merrill Streep as like the perfect example of like high prestige bank account. We all love her, but she's non-threatening.

She's not going to club us over the head with anything. And it also seems like prestige, you don't, you can earn it and continually spend it without reducing the account. Is that fair, do you think? That is at the heart of the question of whether it's appropriate to look at status as an economic mechanism. If you can spend it without losing it, then it doesn't behave like money. So I completely grant that there are cases where on the basis of your prestige, good things happen for you, other people give you things and don't really expect much in return.

But I think that if you use your prestige to get things, to just get favors and favors and never repay them, you will slowly lose in this bank. account. Now, the bank account is not, it's not that there's this one value of your status that you keep with yourself. It's really spread out throughout the community. And so it's, it's what John thinks of you and Mary thinks of you and Sally thinks of you and how much influence you have over all of the people in your community. And so if you continually take more than you give from everyone in this community, each of the people that you take more from is going to slowly stop thinking you're the hot thing. And slowly that will erode your status.

It's kind of like the idea of Chaldini's idea of reciprocity as like one of the six influence principles. And like you can build up like little acts of giving, create like an unspoken debt, I guess, which you can call or not call later in the future. One of the one of the things that this has made me realize is this mere exposure effect for status. I'll give an example. So I've met people that are on CNBC. CNBC is on our office, you know, like any financial firm. We've got CNBC up every, all day, every day. So you see these same 10, 15 people. Usually it's on mute. Like, you don't even know what they're saying, you know, nothing about them. But just the fact that they're always there and on TV,

when I've met these people, like I feel like a little. bit of deference, which is insane. Like, that's not rational, but it's there. Yeah. And I saw you wrote about public speaking is another example. Like, if someone gets up and speaks, like you earn status somehow. Yeah. It's, this prestige thing is a fascinating way of thinking about the world. And I wonder why you think it's irrational for you to feel a little bit of deference to the CNBC talking heads. Well, I would think that the deference would come from the reason that I would say, you know, feel a certain way if I met Steve Jobs that I am incredibly impressed with, and maybe he's not the right analogy, but you get the idea.

Someone you really respect for their skills and their qualities as a person. Someone who is demonstrably impactful, maybe even superior to me in ways that I care about. So if I met, you know, T.S. Eliot or something like that, a fantastic writer. I would feel like in awe and sort of this like low status meeting high status kind of situation. And but that would be a product of their work, of their output. This is much more like, I don't even know what these people are saying. I have no idea what they believe, what they represent. If they're a great person, if they're a bad person, I know nothing.

And I still feel it. But they do have a, they have achieved something in the world. They have a platform and maybe more to the point, everyone else respects them. Or they have a position such that you can imagine that everyone else respects them. And that even if you don't personally feel, oh, this person is worthy of my respect and my attention because of their first order skills, they are still in a, they still have influence over a lot of other people. And you modeling that influence almost subconsciously, then think, okay, well, even if they don't have first order skills that I love, they have second order skills that I love, which is the ability to influence a lot of people. Like so many things, you know, it's hard to not come up with an, realize something interesting like this and think, well, okay, what's in it for me? How could I build some prestige? You know, is it Dale Carnegie courses? Is it, you know, probably that would be a great starting point. But it also seems like there's going to be get rich quick schemes. Like there's going to be, maybe it's like a social climber or someone like that that's trying to cheat, cheat the system. Cheat the status system. Yeah, you definitely get a lot of cheaters. People who want. to look at it as cheating, you first have to see that there are honest means of earning status,

which I like to think of as the things that are, it's like a meritocracy. What is good for the whole group or the community or the company or whatever it is? And if you're earning status for having skills or having done things that do improve everyone's lives, then that's a quote unquote honest or legitimate source of prestige. whereas if you are merely, you know, angling to get on TV or manipulate your image or, or, you know, God forbid, lying about your achievements, like these are dishonest forms of getting prestige. And you've written that honest signals are much more expensive, right?

Because they need to be legitimate. Maybe expand on that idea a little bit of, like, what an honest signal is and kind of how that reflects back on, like, the natural world. Yeah, oh, this is a whole, there's a whole pregnant, uh, few. field of ideas here. So this is not my work at all. This is, you know, this huge literature on this signaling theory. So signaling is where I'm trying to show certain qualities about myself to another person or to an audience. So some examples from like the biological world are birds who have shiny feathers are healthy. And so they're using their feathers to sort of show off

their health to other birds. You have, you know, a gorilla who like gets up on its hind legs and beats its chest, it's showing that it's big and powerful. And, you know, the beating of the chest shows that it just has this big body cavity, is making this nice hollow sound. And the principle of honesty here are the ways that you are trying to communicate a certain quality of yours to others that cannot be faked because it's too expensive or because the mechanics of the way that you're communicating it are such that it's just impossible to lie. So the gorilla beating its chest, that's a perfect example. It's pounding the fists against the rib cage. That just makes the sound.

Another animal will see that, and it's not that the animals are doing some conscious calculation of, is that fake or not, but the way that natural selection and the feedback processes work is, if that were a dishonest signal or a signal that it was possible to fake, then some gorillas would evolve to fake that signal, and then other animals would evolve to not trust that signal. And so really almost all the signals we find in nature are,

at least have a basis for honesty. And there's always some gamesmanship, but the honesty is this, it keeps the game. Honestly. So dishonesty would be like a shortcut if I wanted to think about it in shorthand that you could produce the same result,

something's scared of you or something's attracted to you or whatever it is without doing the work or without having the actual reality to back it up. And that works, it can work for a long time. And then obviously if it's ever poked, it crumbles. Yeah, so like an example of a dishonest signal in the biological world, it starts out as not necessarily an honest signal, but a signal that is true. It's a snake that has a certain warning coloration scheme and that it evolves. It's unique and high contrast.

And because it's poisonous, other animals quickly learn to avoid it. but there's nothing intrinsically tying those warning colors to the fangs and the venom. And so another snake can just, why not, evolve the same colors? And then that's a mimic. And there's always some sort of ecological balance between these two. Because if there's too many mimics, then all the predators will learn, this is not a scary thing. And then they'll be able to snack on all the mimics. but then their population decreases and the actual venomous snake then becomes more prevalent

relative to the mimic. And so there's just always, depending on all the variables, some tension between these two populations. It seems like the same thing happens in businesses, right? And in human interaction, that there is this, maybe there's an equilibrium and there's always going to be like a group of cheats, we'll call them. Because why not? There's always going to be paths of least resistance.

And if the population is acceptably small of cheats, it's going to work. Yeah. I think that's a pregnant insight into the world. One of the topics I was reading about recently is sociopaths. And just viewing them through the lens of people who specialize in cheating in human interaction. And not as a lot of people view sociopaths as a clinical disease that certain brains fall into as though it were a mistake that nature made some brains that are sociopathic. Whereas I think the more interesting way to look at it is there's always a niche for cheating

and there will always be some brains that either have the right genes that cause them to be built that way or certain triggers in early environment cause their brains to grow to fill that niche. Is there research, I haven't done the reading on sociopaths, sounds like a really interesting area to be looking into. My guess would be that their IQs on average are much higher. Is there any research on something like that? I think so. I have in my head that that's true. Because it seems like they would need to first understand the system. So they'd need to be like a systematic and maybe very cold type thinker. Yeah. And then realize like where to where to manipulate. So lying is hard and that's why most of us don't do more of it. And in order to then have a

successful strategy where you're lying a lot of the time and keeping track of those lies and saying them with a straight face and remembering whom you've told what to you have to have a brain that's capable of that and so it it would be a losing strategy to build the lying sociopathic brain around a low IQ I think it seems plausible what was your most memorable day at Palantir I don't know if I uh any one day stands out we did have and this ties back to some of the the ways that I, some of my reading and some of my experiences at Palantir seem to harmonize with each other. We had a lot of, for lack of a better word, rituals that we would enact and participate in and invent. And one of those was a sort of week-long festival where people who

wanted to totally optional, whoever wanted to could just sleep at the office for a week. and it was kind of maybe inspired by Burning Man. Not that I think a lot of people had gone to it at that point, but just the idea that you kind of set aside a week in the desert and build interesting things and make art and in our case, you know, trying to make our office space more than just desks and computers and conference rooms, like a place that we had incubated some culture in

And so making art and putting it on the walls or kind of sculpturing things that we would put out in the lobby. And having activities during this week that were like, oh, we're going to have office mini golf. So that's both an art project and an activity. Create the course and play it. And just the amount of creative energy that went into this. It was more or less an annual thing that we tried to do over many years. that probably stands out as one of the highlights of my time there. So I've never experienced something like this,

but sometimes the flack that startups will get is, this is probably a very thin line, right, between stuff that is actually conducive to really interesting bonding and team building and maybe even productive from like a product standpoint versus like fluff, you know, BS, kind bars for everyone, overspending. So how do you think about the line

between those two things. I mean, it seems like this one for sure was productive. I was very fond of it. Do you sleep on cots? Is it like cots rolled out or something? Where do you sleep? We were sleeping little shanties that we made out of cardboard. They evolved out of it.

The time that we decided to do this the first time was we were moving from an office space. This is my team. This is not all of Palantir. So we were a small tight-knit team, about 11 people at that point, I think. and we had inhabited this octagonally shaped building that just had all these interesting angles and great light and it felt like a studio rather than a factory. That's the term I always used.

The desks were at interesting angles relative to each other and the lighting was like soft incandescent lighting rather than harsh overhead fluorescent lighting. So we're moving from this great space where we had just bonded in this little crucible. And we were moving to kind of an office building with a lot less character, just had different floors and fluorescent lights overhead and all the angles were rectilinear.

And we were just kind of bummed about that. And so this was our way of saying, okay, we're going to reclaim this space as ours. Even if it's not perfect, we're going to make it our home. So we had moved and there was all this packaging material. And so we would kind of build these sleeping arrangements for us. It was called Chantytown. And, you know, it wasn't comfortable. But that's also part of the charm is like,

Like Burning Man is out in the desert and the environment is hostile and it's uncomfortable. You have to bring all your own, I haven't been. So I'm speaking just from hearing my friends talk about it. But there's something about being in that harsh climate and suffering together that makes even more of an interesting social experience. Because it's not, there's some New York Times article I read once. one of the columnists talks about this calls it Hamish.

We'll see if that's the right term later. There's a bell for me. It's that feeling of kind of intimacy that you don't get when you're spending money to have like a big room all on your own

in a big anonymous hotel and then a wait staff that waits on you anonymously but like this like a smaller little bed and breakfast where you get to know the proprietor

and the space is a little tighter and you can maybe hear through the walls but it creates this intimacy. And I feel like we had this intimacy that comes from, you know, waking up in the morning in our pajamas or regular clothes or whatever and brushing your teeth with your coworkers. I mean, that's not something you normally do.

And so it's certainly weird. There's no getting around that. But it's also that was the kind of thing that really forged what I think is an amazing team. And so I like to think that that was useful. You know, that it was good for the company for us to put our energies into that. But whether it was or it wasn't, it's not like we were stealing time from the company to do it. Right. You know, so it seems like it was just a win there.

And it's also the only the kind of thing that someone only in their 20s or maybe early 30s is going to really want to do. And so it's not something that Bank of America should be adopting. It reminds me, maybe this was something you wrote too, about the difference between, we'll call it a growth mindset. maybe a startup mindset and a more like fixed or status quo mindset where our brains are really good at creating like subroutines habits patterns every day that let a lot of time pass without anything new happening you know you just kind of go through the motions and like you could you could short circuit this by you know driving a different way to work or you know doing something differently even if it's small to like trigger a different mindset yeah this sounds like that writ really

really large. Like you're basically upending everything and like reprogramming yourself but with the people that you need to be tight with. Yeah. I think that's a great way of thinking about it. I think there's this anthropological concept of carnival where it's a time set aside to upend all the usual rules of society. I never knew that was like the meaning of the term. Yeah. I mean I guess there's like I don't know where that term comes from but there's carnival in Brazil. There's Burning Man is one of these. a Halloween, even in the U.S., you, it's a place where you can play with the boundaries of culture and reset some things or just get a different feel for how people behave. I mean, lots of things fall under this definition, I think.

You know, just having rowdy drinking with your buddies is kind of you let go of certain strictures of society and obviously abiding by many of them as well. So you get to see which of the degrees of culture are flexified. and which ones are absolutely, you know, you can't be violent even during these events. So that's a bedrock rule, but all these other ones kind of give a little bit. And so it also creates, I felt like doing all of these extracurriculars with my coworkers, created a much flatter organization because it's not the kind of thing that you normally do with your boss. Or your D.

Yeah, right. It's hard to be really, oh, I'm your manager. and you're my subordinate when you're hanging out in this way. So something that's really making me think hard about is companies do off-sites, right, which are meant to be team building and it's often kind of generic. Maybe the best way to improve those would be to introduce kind of a lawlessness that or some way of like at least getting up against boundaries, like traditional boundaries, whether they'd be like relationships or, you know, what you're trying to achieve or anything.

Like get away from goals and just kind of mess around a little bit. I don't have experience doing anything like that. I'm sure most businesses don't in their off-sites, and maybe they should. It's hard to graft that onto it. Nothing that extreme could be grafted onto an existing culture, but elements of it can be. And I think you're absolutely right that traditional off-sides feel wrong in all sorts of. I mean, it's nice to get away, and you play with a certain dimensions a little bit,

and you get a feel for your coworkers in different situations. But the more radical you can make that experience for people, the more interesting it's going to be, and the more it will legitimately facilitate team bonding. There's also, I think, this is a big part of the philosophy of how those of us who were planning these rituals or whatever you want to call them at Palantir was that they needed to be bottom-up grassroots endeavors,

not top-down, oh, HR says, you know, you need to have an off-site once every six months, or whatever it is. If it's planned sort of in this bureaucratic way, it just won't feel right for all sorts of reasons. It has to be an organic expression of the people and what they want to do. And so our weird one was sleeping in the office.

It doesn't have to be that. It probably shouldn't be that for any other group. But whatever people naturally feel would be fun, play, just having a good time, it can't be, that can't be forced on you. The ski trip is not forced on you, but it just feels like, well, everyone goes on a ski trip, so I guess we'll do that too. Whereas if there's some creative energy that goes into this, someone, you have to have the right person or people on the team. And I was fortunate enough to have a coworker who, for whom this was his singular gift. He was just a source of like endless creative ideas and the end of the

to put them together and to corral other people and say, like, let's, this sounds weird, but let's do this. You have to have one of those people and you have to facilitate that, or reward them. The company can't say, you don't do that. It's dangerous, the liability. I mean, the company has to say some of those things, but the more leeway it can give people for that, like, organic expression of the joy of being on a team, the more joyful the team will be. Yeah. Pretty amazing idea. Something that I'm definitely going to try to steal aspects of at the very least, just to shake up minds a little bit. Yeah.

Who are some of your most formative, or what are some of your most formative books, writers, essays, you know, authors, generally speaking? Oh, yeah. I thought you might ask this question. So I was kind of prepping myself in my bookshelf over there. I feel like each of these books that I love are just these old friends that I cherish dearly. So all of the books that really do it for me are these conceptual books that have loaded some new idea into my head or some new way, more than a new idea it's in my head as though my head were a container is a new way of looking at the world. So like these new lenses that I can use to see how things work.

I think just, I don't think you can be a person in the modern world who thinks carefully about things without understanding evolution and natural selection. sexual selection. And so, like, a really formative early book for me was Darwin's Dangerous Idea by Daniel Dennett. He's a philosopher, but he's written this book about evolution. And it's kind of a college-level courses worth of information and ideas. And if you just read that, you'll be completely up to speed on how to think in evolutionary terms and how that whole thing works.

Dawkins' selfish gene is another one of these that's, I don't think I could get by without having read those two books. Jane's, Julian Jane's, the origin of consciousness in the breakdown of the bicameral mind. I think I got that title right. You got it. It's a mouthful and the title doesn't make sense

until after you've read it. But that's, it's not that the ideas in that book are so fundamental or even true that you need to understand those things. It's that reading it expands, expanded my mind in ways that are extremely useful

for thinking about other questions and thinking about consciousness and cognitive psychology and just what it's like to be a person. We have this notion of that it's, we have our experiences and other people have their experiences and all the people we interact with are within this narrow range of the human experience

and Jane's like helps you see how there are like radical breaks from that. At least that's one of the things that I really got from him. You're the one that turned me on to this book. I read it probably a year and a half ago, two years ago now. And the idea is, at the face of it, absurd, which is that a couple thousand years ago, we effectively acted according to voices in our heads, gods, telling us kind of what to do. Or at least that's a component of the book. There's a lot, a lot more than that. But that's a key

part of the book. And which, hearing that, you're probably thinking yourself, there's no way I'm going to read that. But it was the most mind-expanding book, I think, maybe I've ever read. And it was, we mentioned at the beginning of the conversation, but I'll mention it again because it means so much to me. It cemented this idea of collecting bits of understanding and then the way that we learn is recursive. So we're referring back to something we understand already. And that starts with physical and sensory realities. And then learning is just building on like one thing referring back to another in a long chain. And more abstract things referring back to more concrete.

things. Yeah, that's a much better way of putting it. Abstract things that you're trying to understand, referring back to concrete things that you do understand. And that's how you learn. And after reading Janes, I was thinking, okay, what that means is, if I want to understand more interesting abstract things, it means I need to collect a lot more concrete things.

And they need to be in a lot of different fields. And I mean, that book was, I seconded the book. It was incredible, incredible. Maybe one more, one more formative book. I guess mentioned improv by Keith Johnstone. It was certainly formative for me. It's also a cult classic. Everyone I've recommended this book to seems to just really get off on it.

And somehow it became popular recently, even though I think it was published decades ago. And it's a obscure improv teacher writing a sort of handbook almost for other improv. of teachers for how exercises for their students to do to get better at improvisational comedy. And so it has no business being this amazing, useful book that business people read and get a lot of value out of. But it has been for me and for many other people. I think there's like five chapters in this book. And each one of them is totally different and totally delicious in a different way.

one of them is him talking about his early educational experiences and just the way that he's a the author is such a contrarian independent thinker it's fun to hear him talk about the teachers and the way they would teach and whether that was helpful to his kind of mind or not the second chapter is probably the chapter that gets the most play out in the world which is the chapter on status

which just forces you to think about this thing that we're doing with each other all the time, but we're not fully conscious of. That chapter will make you fully conscious of it for better or for worse. That chapter is the one where, and I do this all the time as an experiment now, he describes how military generals or superiors are trained to not move their head when they talk. Yes. And it conveys this authority that really works. And once you read that and you go out of the world and try this, one, you'll realize that if someone else does it, it works,

but two, it is almost impossible to talk without moving your head. And it's like unnatural. And little tricks, like the book is full of stuff like that. We're just like, oh my God, this is such a cool way of looking at the world and how people interact. And once you see it, you can't unsee it. Yes. And you will forever be self-conscious about certain things after reading, especially that status chapter. I've got a relative who, I guess he's technically a cousin or second cousin once removed, something like that.

He's probably in his 60s. who's had an incredible entrepreneurial life across a lot of crazy fields all over the world. He was like the first guy to do deals with Russian oligarchs when they were opening up their oil fields. Like this guy has just an unbelievable story. And I was talking to him over email recently. And he said one of his main ideas for life is this idea of fire, ready aim, instead of ready aim fire. meaning like get in there, don't plan. Don't do anything top down.

Immerse yourself and just like play around. And then like figure out the particulars afterwards. It's kind of a nice bookend. I've got a couple more questions, but kind of a nice bookend to this frontier idea where it's like you're at the edge of something. You don't really know what's going to happen. You just need to get in there.

And fire. And fire. And then you can colonize. then you can ready and aim. But given this guy's life, actually I'd love to have him on the podcast someday. It's the most incredible business story you'll ever hear. But given his success, that model seems so interesting.

And it seems like kind of applicable to the improv too, of just kind of letting go a little bit. Yeah. An amazing book. Such an amazing book. Well, since we're two, I think you're the first other philosophy major I've had on the show. I'd be remiss to not talk a little bit about some of the meta, you know, metaphysics and stuff like that that us philosophy majors can't help but return to.

So you wrote a piece recently called, what was something about nihilism, basically, or kind of. A nihilist's guide to meaning. So what's the short version of that? What is your, and we talked about motivation at the beginning, but if meaning is kind of synonymous with motivation or related to motivation. How do you think about meaning? Is it a drive? Is it a process? Is it an endpoint? How do you think about it? Yeah. Well, so this essay for me was an attempt to make sense of how other people use this term and why they seem so caught up on questions of whether their life is or isn't meaningful or in what ways it might be meaningful. So for me, I've never really cared about that question. It just never seemed to bother me that my life did not seem meaningful in some grand epic sense or some

large, you know, trying to get outside myself and do something bigger than myself. That was never a major motivational factor for me. And so this essay was my attempt to figure out why other people care so much about it. And I don't know what I figured out exactly, other than the fact that it's probably an adaptive drive for us to try to have influence on on things that are larger than us. And if you are ever trapped in a environment or a work, a job, something that feels meaningless, it's probably because you are intuiting that the overall effects of your actions are going nowhere. And that's really useful so that you can break out of that job and find a more meaningful job, which is going to be more impactful, which will hopefully benefit you somehow in the future.

But to apply that lens to a human life or to humanity at large doesn't seem particularly important to me. Does meaning, do you think that this meeting as a useful tool or as a steering function for people is something that contributes to reproductive success? Is this something that has been selected for this search for meeting, or is it some weird vestigial byproduct? I was certainly speculating that it was adaptive in that way of having been selected for. That said, complete speculation. And there's no, as far as I know, there's no evolutionary psychology literature about the quest for meaning. So it's easy to tell a just-so story about how this is useful.

For all I know, it's a byproduct of, of other adaptations. Can I ask you, sure. Why is meaning important to you? And if so, how or why? I don't think that meaning, maybe like you,

I don't know that meaning is the right thing, the right word or the right thing to be searching for. Sam Harris, who's an interesting writer, kind of one of these new atheists, but has also written a book called The Moral Landscape. And his, so, you know,

I always think about, like, you know, what you measure determines what you do or how you manage things. And so what are you optimizing towards? And his term was, well-being. And that could obviously mean a bunch of different things. But he's basically saying it's not so much meaning, because meaning to me seems to apply like some sort of maybe an endpoint, which I don't ever like. I like something that's ongoing.

And so well-being seems more pervasive and ongoing. So I think of, okay, what can improve my way? well-being. And I do think that that is a meaningful search, I shouldn't use that word, but a search worth doing to improve your well-being, and that my personal belief is that it's based on things you really enjoy in a, not like a high and low sense, like eating a cookie or something, but something that you really enjoy that you can do virtually every day so that well-being is habitual. Like Aristotle said, you know, excellence isn't a skill. It's a habit or something like that. And so that's that's what I think about it. And you know, we don't have to get too deep into like

the religious aspect of meaning. But I think for a lot of people, that's the key, the key component is is a sense that this isn't it, that there's something else and that through whatever good deeds you get to participate in that something else. And I, I would fall much more like the Gnostic Christianity or Eastern philosophy camp of that something else is already here. You can participate in it and experience it and that that is a component of well-being. Yeah. If that makes sense. Yeah.

The thing that I worry about when I hear other people talk about meaning is that if they are to reject some ultimate meaning, that then they have to become hedonists, where hedonism is about well-being, but it's this very narrow sense. You almost want to use it in a derogatory way where it's just like food, sex, money, you know, just like this. let me, you'll become this animal or something. And that's a way of kind of narrowing the question of well-being. But if you understand it more expansively as like human flourishing, like our, our brains weren't just built for food and sex. They were built for, for collaborating with other people or

exploring or making art. Like all of these things are part of well-being. And you want to be able to enjoy all those experiences and participate in them. And so you don't have to, it's not a question of just this narrow hedonism versus what God's purpose for me. There's a lot of sort of middle ground, or you can reject this idea of meaning without rejecting all the other things that humans value. Another way of looking at it would be, and this has been useful for me,

if you think about there being like one underlying truth, God or something, if you instead said that underlying truth is play, then you can act, or make decisions in ways that basically the question you'd ask is is this impeding my ability to play and I love that so much and that I don't know if you're getting that from Alan Watts but I would that's where I was introduced to this idea that you can just look at the universe as playful in some deep underlying truthy way I always cringe a little bit when people talk about the

the true nature of reality is playful if they said something like that because the true nature of reality is, it's a heavy term to use. And if there is any answer to that, it's just like atoms in the void as far as I'm concerned. But there are these ways that you can look at, at the world or human experience where if you just chose almost on a lark to say, what if I decided to think of the world as fundamentally playful, then it gives you a whole new appreciation for what's going on. What are the different games that we're participating in? Nothing's all that serious. Why don't I just make some art because that's part of the game? you don't have to then have this, it frees you from the need to have these reasons for doing

everything that leads you ultimately to whatever. What is that? That's the obsession that gets you to, well, is there a God or isn't there? Or what's the meaning of life? Like, if you're just happy doing and experimenting and playing, then it's kind of liberating. You know those ads with Matthew McConaughey where he's for Lincoln cars or it's like these ridiculous ads? Jim Carrey did this spoof. Have you seen this on SNL. I think so. And so he says something like, you know, why does anyone buy a Lincoln? Why does anyone do anything? We're just bugs on a rock and a void. I love that because that's like the nihilist, right? World view. And like you said, I think there needs to be a middle ground. And that middle ground for me, I think it makes sense for it to be play versus like

an anthropomorphic god or something or like pure existence on the other end of that pole. And so it wasn't lots where I got this kind of core idea. It was this old Hindu myth about the universe is effectively God playing hide and seek with himself. That he kind of creates these stories and people and consciousnesses and whatever. And is playing hide and seek. And then gets so deep into the game, he forgets that he's God. And then wakes up. And this is a cycle, right?

So in the east, everything's all. That's why you see so many circles. So it's this big game of play that gets started. started for that reason alone just to play, and then he gets lost, and then he gets found. So that's where the idea comes from. Which I think was probably where Alan Watts got it. I'm sure. That's how it got into my brain. The first few hundred times I heard that idea, because I used to listen to these Alan Watts lectures when I was a kid. I would just listen to this one lecture over and over again, because it did something for me. I wasn't, I didn't really believe it.

He's got a great voice and he's got this great sense of humor, so he's worth listening to. And I'm sorry to hear this idea that the universe is fundamentally playful, that God is playing hide and secret themselves, as though that were some reality, as though there were some real God who was doing that. I was like, this is nonsense. And it has taken me a lot of growing up and loosening up to be able to appreciate that idea as a metaphor. And I don't know in its native culture if it's taken literally or not, but taken metaphorically, it is so enchanting. Yes. And Alan Watts contrasts that metaphor with the dominant metaphor we have in the west of our creation myth. It's not God playing height and seek with himself for the fun of it. It's God making a machine for a certain purpose, which is unspecified.

But it is this mechanical view of, it's like God. Very top down. Top down. And first he does the earth and he does the ocean, then he does the light. I don't remember the order. And then he does man and woman and breathes life into them. And it's this like piece of clockwork. And that's an interesting metaphor.

I'm not trying to be disparaging of that metaphor because that plausibly is what led the West to Newton and Einstein and all these, you know, ideas about how we can use math to unlock the inner workings of the world. And that's great. But if that's how you think of the world as fundamentally mechanical, there's a disconnect between that and everything it means to be human. Yes. which we don't like to think of as mechanical,

even though there must be some story that connects those two. But if you think of the world as fundamentally playful, which is just a metaphor, it's no more or less true than being fundamentally an artifact because in both cases there's probably no gods who've made it in a certain way. But if you think it as playful, it's more fun to be in. Well, this has been a blast.

Thank you. Thanks for taking this time to do this with me. Yeah, thanks for having me better. And we will definitely keep bouncing these ideas off each other. I love it. Take care. Hey, everyone. Patrick here again.

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