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  • 1. Should You Drink the Kool-Aid? Venkatesh RaoWith contributions from:• Greg Rader• Kevin Simler• Jane Huang• BAR Group 11.27.2012 | USC Annenberg Innovation Lab
  • 2. If the odds of making it as a [rockstar | movie star | entrepreneur | best-selling author | President] are so completely awful, why do people still try?12/6/2012 Venkatesh G. Rao 2
  • 3. the usual answer: PASSION AND TRUE BELIEF the common motif is KOOL-AID12/6/2012 Venkatesh G. Rao 3
  • 4. …very hard to study… “Death wish” … PASSION + TRUE BELIEF IRONY “Acting Dead” – Bruce Sterling12/6/2012 Venkatesh G. Rao 4
  • 5. Speculative Simulation Fiction game theory models anecdata, gossip, TV shows, agent based models movies, cartoons, narrative long-term historical sims theories, personality theories We’ll mostly be what-ifs histories, biographies, hyann media stories, blog posts, Numbers Thick Description Stories Science Duckworth Grit scale interviews, longitudinal studies a la Vaillant institutional talent flow patterns embedded reporting macroeconomic studies fund-raising war stories Kauffman type research incubator lore correlations, distributions hacks, metis of startuppery Conservative12/6/2012 Venkatesh G. Rao 5
  • 6. Backstory: Gervais Principle (2009) True Believers12/6/2012 Venkatesh G. Rao 6
  • 7. initial attempt to map model to startups…circa 2009 VCs Founders Option Lottery Players12/6/2012 Venkatesh G. Rao 7
  • 8. long story short, 4 years later, this became… “Entrepreneurs are the New Labor” …to polarized reactions • “You nailed it!” • “That has not been my experience” • “This whole thing is stupid, you can’t analyze this way”12/6/2012 Venkatesh G. Rao 8
  • 9. not insiders vs. outsidersnot investors vs. foundersnot winners vs. losers only difference: different cognitive processes viewed different types of argument as valid12/6/2012 Venkatesh G. Rao 9
  • 10. The Clue at Quantico “We use Myers-Briggs/Keirsey here in the Marine Corps…most of us are SJ types… Guardian/Protector… very passionate, very emotional…”12/6/2012 Venkatesh G. Rao 10
  • 11. If an important decision is to be made [the Persians] discuss the question when they are drunk, and the following day the master of the house. . . submits their decision for reconsideration when they are sober. If they still approve it, it is adopted; if not, it is abandoned. Conversely, any decision they make when they are sober is reconsidered afterwards when they are drunk. – Herodotus12/6/2012 Venkatesh G. Rao 11
  • 12. Narrative Approach Character vs. Situation vs. Plot http://tempobook.com12/6/2012 Venkatesh G. Rao 12
  • 13. Probabilities don’t change when drunk…. What’s the point of this I should be thankful for so-called life? I might my good, secure job, as well die. I AM others have it even QUITTING worse. This startup idea TOMORROW AND is not worth the risk. DOING A STARTUP. But subjective utilities do…12/6/2012 Venkatesh G. Rao 13
  • 14. So what happens when* you fail? * rounded up from if12/6/2012 Venkatesh G. Rao 14
  • 15. Courage Wolf Meme12/6/2012 Venkatesh G. Rao 15
  • 16. Dutch Courage Wolf Meme12/6/2012 Venkatesh G. Rao 16
  • 17. Alan: Wait a minute, that’s your big secret? Alcohol? Charlie: Shhh. Don’t tell anybody. Alan: But isn’t that just a temporary solution. Charlie: It’s only temporary if you stop drinking. Alan: I like it. Something Salted and Twisted [3.10] - Two and a Half Men http://www.youtube.com/watch?v=AtituB9WRQU12/6/2012 Venkatesh G. Rao 17
  • 18. If an important decision is to be made [the Persians] discuss the question when they are drunk, and the following day the master of the house. . . submits their decision for reconsideration when they are sober. If they still approve it, it is adopted; if not, it is abandoned. Conversely, any decision they make when they are sober is reconsidered afterwards when they are drunk. – Herodotus what happens if you never sober up?12/6/2012 Venkatesh G. Rao 18
  • 19. The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man. – Shaw12/6/2012 Venkatesh G. Rao 19
  • 20. drunk = punch drunk? Dragline: Stay down. Youre beat. Luke: Youre gonna hafta kill me...12/6/2012 Venkatesh G. Rao 20
  • 21. “Learn to fetishize the pain of learning something new” -- Andrea Kuszewski12/6/2012 Venkatesh G. Rao 21
  • 22. more than a death-wish though… What’s the point of this so-called life? I might as well die. I AM QUITTING TOMORROW AND DOING A STARTUP.12/6/2012 Venkatesh G. Rao 22
  • 23. Grit* unwavering P urpose an UNFALSIFIABLE mission that cannot be invalidated by any amount of A/B testing or “customer development” or reframed away with “pivots” *Google “Duckworth grit scale…” for a more empiricist take…12/6/2012 Venkatesh G. Rao 23
  • 24. Mattie Ross: Whos the best Marshal? Sheriff: Hmm, Id have to think on that….12/6/2012 Venkatesh G. Rao 24
  • 25. “Bill Waters is the best tracker. Hes part Comanche; it is a pure joy to watch him cut for sign.” This is the hacker-entrepreneur, see THE TURPENTINE EFFECT /12/6/2012 Venkatesh G. Rao 25
  • 26. “…The meanest is Rooster Cogburn; a pitiless man, double tough. Fear dont enter into his thinking….”12/6/2012 Venkatesh G. Rao 26
  • 27. “…Id have to say the fairest is L.T. Quinn; he always brings in his prisoners alive. Now, he might let one slip by every now and then, but...” This is the PRAGMATIC actor who sees no problem with ACQUI-HIRING and other REASONABLE ADAPTATION models12/6/2012 Venkatesh G. Rao 27
  • 28. Mattie Ross: Where would I find this Rooster?12/6/2012 Venkatesh G. Rao 28
  • 29. to achieve unreasonable things, find someone with a death-wish and leash them to a Purpose12/6/2012 Venkatesh G. Rao 29
  • 30. BUT… What happens when DOZENS of Matti Rosses need HUNDREDS of Rooster Cogburns?12/6/2012 Venkatesh G. Rao 30
  • 31. can true grit be scaled?12/6/2012 Venkatesh G. Rao 31
  • 32. • Ancestor of Matti Ross • Founder of cult of assassins • Originator of fedayeen* "They call him Shaykh-al-Hashishim.** He is their Elder, and upon his command all of the men of the mountain come out or go in... they are believers of the word of their elder and everyone everywhere fears them, because they even kill kings." Hassan-i Sabbah (1050 – 1124) - Benjamin of Tudela*from Wikipedia: “someone who redeems himself by risking or sacrificing his life”** etymology/story of assassin == hashashin == hashish possibly apocryphal, but military-political-guerrilla tactics are not12/6/2012 Venkatesh G. Rao 32
  • 33. Kool-Aid Characterized Cognitive capture by a nascent organization at the edge of existing institutions defined by us-versus-them discourses based on boundaries created out of trial-by-fire bonding experiences12/6/2012 Venkatesh G. Rao 33
  • 34. The passion is sacred patterns of argumentation that threaten it are systematically delegitimized this is both a strength and a weakness12/6/2012 Venkatesh G. Rao 34
  • 35. Code RED: extra-judicial killings We use words like honor, code, loyalty. We use these words as the backbone of a life spent defending something. You use them as a punchline. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very freedom that I provide, and then questions the manner in which I provide it. -- Col. Jessup12/6/2012 Venkatesh G. Rao 35
  • 36. In the 1960s and 1970s, classic social psychological studies were conducted thatprovided evidence that even normal, decent people can engage in acts of extremecruelty when instructed to do so by others. However, in an essay published November20 in the open access journal PLOS Biology, Professors Alex Haslam and StephenReicher revisit these studies conclusions and explain how awful acts involve not justobedience, but enthusiasm too—challenging the long-held belief that human beingsare programmed for conformity.http://medicalxpress.com/news/2012-11-human-obedience-myth-conformity.html#jCp12/6/2012 Venkatesh G. Rao 36
  • 37. Sociopath moral code Kool-Aid law (no institutions) (emerging institutions) The meanest is Rooster Cogburn; a pitiless man, double tough. Fear dont enter into his thinking…. Rule of law (established institutions) …Id have to say the fairest is L.T. Quinn; he always brings in his prisoners alive. Now, he might let one slip by every now and then, but...12/6/2012 Venkatesh G. Rao 37
  • 38. “If you’re not actually doing a startup, you don’t get to talk…or at least, I don’t have to listen to you.” often “big company people” “building” “passion” We use words like honor, code, loyalty. We use these words as the backbone of a life spent defending something. You use them as a punchline. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very freedom that I provide, and then questions the manner in which I provide it. “wealth/jobs”12/6/2012 Venkatesh G. Rao 38
  • 39. “You can’t handle the truthiness”12/6/2012 Venkatesh G. Rao 39
  • 40. True wolves are rare Sheep+Kool-Aid creates scalability 4012/6/2012 Venkatesh G. Rao
  • 41. Jung for “Startup Scene” (with help from Greg Rader)ESFJ ENFJ ESTP ENTP Pillar of Social Player Inventor Community Revolutionary (Se/Ti) (Ne/Ti) (Fe/Si) (Fe/Ni)ESTJ ENTJ ESFP ENFP “New Labor” Hustler Promoter Conference Goer (Te/Si) (Te/Ni) (Se/Fi) (Ne/Fi)ISTJ INTJ ISFP INFP New Org Rank+File Hacker Loyalist “Sharing Economy” (Si/Te) (Ni/Te) (Fi/Se) (Fi/Ne)ISFJ INFJ ISTP INTP Pillar of Idealist Organization Man Armchair Thinker Community (Ni/Fe) (Ti/Se) (Ti/Ne) (Si/Fe) 12/6/2012 Venkatesh G. Rao 41
  • 42. http://www.xeromag.com/fun/personality.htmlESFJ ENFJ ESTP ENTP Control Freak Cult Leader Conman Mad Scientist (Fe/Si) (Fe/Ni) (Se/Ti) (Ne/Ti)ESTJ ENTJ ESFP ENFP Bureaucrat Evil Overlord National Enquirer Scientologist (Te/Si) (Te/Ni) Headline (Ne/Fi) (Se/Fi)ISTJ INTJ ISFP INFP Thought Police Outside Crackpot Idealist (Si/Te) Contractor (Fi/Se) (Fi/Ne) (Ni/Te)ISFJ INFJ ISTP INTP Martyr Conspiracy Psycho Vigilante Egghead (Si/Fe) Theorist (Ti/Se) (Ti/Ne) (Ni/Fe) 12/6/2012 Venkatesh G. Rao 42
  • 43. WARNING: neither prescriptive nor descriptive Jung/Myers-Briggs measures preferences You don’t always get what you want….12/6/2012 Venkatesh G. Rao 43
  • 44. Belief TypesOUTSIDERS OLD INSTITUTION STEWARDS OUTSIDERSNon-Drinkers Champagne Kool-Aid Home-brewersVANGUARD TRUE BELIEVERS VANGUARDHappy hour Koolaidaholics Party drinkersOUTSIDE OLD INSTITUTION STEWARDS OUTSIDERSNon-Drinkers Social drinkers Non-Drinkers12/6/2012 Venkatesh G. Rao 44
  • 45. Tragedy Farce (early part of an economic age) (late part…)12/6/2012 Venkatesh G. Rao 45
  • 46. Col. Jessep: You want answers? Kaffee: I think Im entitled to… Col. Jessep: *You want answers?* Kaffee: *I want the truth!* Col. Jessep: *You cant handle the truth!* …. Either way, I dont give a damn what you think you are entitled to.12/6/2012 Venkatesh G. Rao 46
  • 47. “In the work and its profits the Nation was an essential partner and equally entitled with the individual to share in the dividends.” -- Andrew Carnegie, Gospel of Wealth II (1906)12/6/2012 Venkatesh G. Rao 47
  • 48. Which side is right? For every complex problem there is an answer that is clear, simple, and wrong. – H. L. Mencken12/6/2012 Venkatesh G. Rao 48
  • 49. For every complex problem there is an answer that is clear, simple, and wrong. – H. L. Mencken In the spirit of phillosophical bipartisanship, it would be pleasant to conclude that each of these traditions of political economy [Hamiltonian and Jeffersonian] has made its own valuable contribution to the success of the American economy… but that would not be true. What is good about the American economy is largely the result of the Hamiltonian developmental tradition, and what is bad about it is largely the result of the Jeffersonian producerist school -- Michael Lind, Land of Opportunity12/6/2012 Venkatesh G. Rao 49
  • 50. H NASA Big Military, Big Corps, National Parks Big Banks Rockefeller FDR J. P. Morgan Big Welfare State Carnegie Eisenhower Hoover Teddy Roosevelt GI Bill Morrill OSRD-DARPA NSF, NIH #Occupy L R Startup Scene Reagan Manifest Destiny Hippie Homestead Act Movement Thomas Jefferson Transition/Permaculture Tea Party Locavorism Andrew Jackson J Startups are weird because they start out Jeffersonian but nurse deep Hamiltonian ambitions12/6/2012 Venkatesh G. Rao 50
  • 51. Planned 2014 http://gameofpickaxes.com/12/6/2012 Venkatesh G. Rao 51
  • 52. Tentative Conclusions• Kool-Aid is how you scale true grit• It works through cognitive capture• Takes unironic passion, not all can do it• It drives institutional creative destruction• Transient phase moral hazard12/6/2012 Venkatesh G. Rao 52