Welcome to a new week.
Knowledge
Mimetic Markets + Feedback Loops
This past week was rife with talk of taking from the rich and giving to the poor.
If people weren’t racing to buy $GME shares, they were sharing takes on gamma squeezes, behavioral economics, and bubbles. Twitter was a hall of mirrors. Robinhood and Reddit boomed.
Aside from a handful of early winners, there’s two types of participants in this panopticon:
1) The players (power to them). These are the people with skin in the game, who actually jumped into the market madness. Why? Almost certainly not because it was a value play. They did it because other people were doing it.
2) The spectators. These are the people who were entertained by the commotion, but had no horse in the race. Content consumers who always have an opinion about the latest news — an opinion that they’re inclined to share with others for reasons unknown.
What do the players and spectators have in common? The fact that they wouldn’t be participating unless other people were. To quote Rene Girard:
Man is the creature who does not know what to desire, and he turns to others in order to make up his mind. We desire what others desire because we imitate their desires.
Mimetic behavior is human nature. It’s always driven markets, especially during periods of volatility (see: The Mimetic Market). Our inclination to do what other people are doing creates compounding cycles of behavior, or feedback loops, that reinforces the behavior and produces more and more of it. Mimetic loops are dangerous when the stakes are high — they can crescendo into an explosive moment.
A vivid example of an animal extinction feedback loop:
It’s simple: As the number of elephants declines, tusks become rare. Rarity pushes prices up. High prices make hunters excited about how much money they can make if they find an elephant. So they work overtime. Then fewer elephants remain, tusk prices rise even more, more hunters catch on, they work triple-time, on and on until the number of hunters explodes as everyone chases the last herd of elephants whose super-rare tusks are suddenly worth a fortune.
Resisting mimesis is hard, especially with glory and riches at stake. The winners saw this coming. Everyone else piled in simply because that’s what other people were doing. Reactionary games are dangerous. It’s far better to know the land before you traverse it.
Victorious warriors win first and then go to war. Defeated warriors go to war first and then seek to win.
— Lao Tzu, Art of War
Wisdom
Personal Monopolies + DICE
The idea of personal monopolies excites me more than I can say. It’s a framework for anyone to become incredibly successful simply by leaning into what they’re good at. Jack Butcher and David Perell are leading the charge in this space. They recently gave an awesome walkthrough of the subject.
When you pull it all together, you end up with a path toward transforming your identity into an advantage no one can compete with.
It goes like this:
1) Find your genius. It sits at the intersection of curiosity, competence, and character. Figure out what you care about, what you’re good at, and who you are. Plot the answers against each other to find the overlap.
2) The overlap is so unique to you that there’s virtually no competition. All you need to do is execute. Start building a product that leverages your genius. Make it real before you make it perfect.
3) Roll the dice. The DICE framework is my favorite part of this talk. It looks like this:
Here’s how David breaks it down:
1) Divergence: Collect experiences and discover ideas.
2) Convergence: String together what you learn to make yourself unique.
3) Emergence: Boost reach by doubling down on your Personal Monopoly.
What’s your personal monopoly?
Inspiration
You’re already in it
If you’ve ever questioned what all this stuff you’re doing is building toward: you’re not alone.
Bewilderment is a symptom of ambition. When you’re moving fast, the edges start to blur. It’s only in retrospect that you realize: you were in it all along.
Check out this wonderful exploration of life, career, and purpose by Reggie James.
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Weekly Vibe
Honorable Mentions
Twitter, Facebook, Instagram, TikTok: each of these apps has been designed to keep people engaged for as long as possible. Capturing attention was also the goal of print, radio, and television, but the Twentieth Century was an age before machine learning, which greatly amplified our ability to give people what they really want — or, at least, what they really want right now. The progression was natural, but inevitable. Social media companies replaced a small, elitist cabal of mass media truth arbiters (who have by the way never forgiven them) with the seething, chaotic human Id, individual by individual, at the scale of hundreds of millions or even billions. In aggregate, this tends to present as a ravenous, drug-addicted digital mob.
Intelligence is usually seen as the ability to think and learn, but in a rapidly changing world, there’s another set of cognitive skills that might matter more: the ability to rethink and unlearn. In our daily lives, too many of us favor the comfort of conviction over the discomfort of doubt. We listen to opinions that make us feel good, instead of ideas that make us think hard. We see disagreement as a threat to our egos, rather than an opportunity to learn. We surround ourselves with people who agree with our conclusions, when we should be gravitating toward those who challenge our thought process.