h/t @Kap_Attack_ for a fantastic must read book recommendation
"The following pages are in fact the result of a constructive effort to detect, know and thus possibly neutralize one of the most powerful, dark forces which hinder the growth of human welfare and happiness"
First Law: Always and inevitably everyone underestimates the number of stupid individuals in circulation.
First Law Explained:
σ
Second Law: The probability that a certain person be stupid is independent of any other characteristic of that person.
Second Law Explained
🚨 TECHNICAL INTERLUDE 🚨
Figure #1!
Each one of us has a current balance with everybody else. From action or inaction each one of us derives a gain or a loss and at the same time one causes a gain or a loss to someone else. Gains and losses can be conveniently charted on a graph.
Third ( 🪙 Golden 🪙 ) Law
A stupid person is a person who causes losses to another person or to a group of persons while himself deriving no gain and even possibly incurring losses
Third ( 🪙 Golden 🪙 ) Law Explained
Four Basic Categories
H = Helpless
I = Intelligent
B = Bandit
S = Stupid
🚨 TECHNICAL INTERLUDE 🚨
Figure #2!
The Bandit gains something from harming you, the more they gain the closer they are to intelligent (above line M), the less they gain the closer they are to stupid (below line M). Think of a general who causes vast destruction and casualties in return for a promotion or medal.
Bandit vs. Stupid vs. Super-Stupid:
The majority of stupid people are basically and unwaveringly stupid... Stupid people cause harm to you and gain nothing themselves, but there is a next level... a *super-stupid* person, who causes harm to you AND harm to themsleves.
Stupidity and Power:
The Question that reasonable people often raise is how and why stupid people can reach positions of power and consequence.
The Power of Stupidity:
When confronted with a stupid individual you are completely at his mercy.
The Fourth Law: Non-stupid people always underestimate the damaging power of stupid individuals. Non-stupid people constantly forget that at all times and places under any circumstances to deal and/or associate with stupid people infallibly turns out to be a costly mistake.
The Fourth Law Explained: You can't outmanoeuvre stupid
The Fifth Law: A stupid person is the most dangerous type of person. A stupid person is more dangerous than a bandit.
Nobody wants to say it out loud because the Stripe mafia, but the primary reason for lower employee costs at Adyen vs Stripe is because the people running Stripe run it with VC dollars and owners run Adyen.
Does that explain all the differences? No of course not but it is absolutely one of the most important aspects of the company. Watching Stripe hire and fire during the bubble vs Adyen patiently waiting is absolutely core to employee cost differential.
Lastly bottoms up disruption mental model doesn't apply in payments. You're never going to sign up enough SMBs to get scale, you sign up ecom aggregators like Shopify, substack, Etsy, eBay etc... and what does that sale smotion look like? Exact same as enterprise? Would love to know why you think this is wrong @benthompson
TikTok ban is great example of LT vs. St thinking. ST traders would likely buy but in no way is it a LT positive for $META.
Banning TT will only modestly increase reels consumption over maybe a year or two. Why modestly? Because it only modestly (if any?) decreased consumption thus far.
What actually matters is TT ushered in SFV. SFV kneecaped Facebook. TT proved the bears right. Social graph value went to zero as the AI algo took over. LT TT ban doesn't change the fact that SFV is a no moat capital intensive biz which will see multiple new entrants.
Pretty wild how political Naval, someone who claims to be peaceful and open minded is. One of the smartest people I've ever learned from, whose brain utterly destroyed by politics. It truly is hard to be the person he pretends to be, even he can't do it!
Naval the Nutcase.
"Impossible to understand macro economics" - Naval
Yet here I have five sentences explaining the current inflation paradigm that's absolutely incorrect and based on my political leanings rather than logic or without the nuance of complexity.
"Interpreting ratings as a due diligence mechanism is intuitive but anachronistic... Ratings serve to mitigate information asymmetries between institutional investors, clients, and regulators through independent risk estimates" $SPGI $MCO h/t @rhunterh
"When ratings drastically change, market actors are forced to make hasty changes to their portfolios to adhere to the stipulations of the contracts and regulations that bind them."
"any competitor able to offer more reliably accurate indicators of credit risk should have the potential to supplant the Big Three. But reliably accurate indicators of credit risk are a mirage... it is not possible to accurately account for all possible contingencies"