Last week (on 3rd June 2017), I turned 30. I don’t have any bittersweet emotions about ageing and I certainly don’t feel old. In fact, I feel really good. Now I know more about the world and people than before. I have friends and family around me. Most importantly I married my best friend. So no qualms about turning 30. None at all.
But this date is semi-important to me for two reasons. One is because I recently realized that my life has been been blazing through and I haven’t been doing enough reflection on my mistakes or experiences. Sure, I used to (and still do) think about questions such as what is money, what philosophy is about and why freedom is important. But I haven’t reflected enough on my own life experiences and mistakes. I thought reflecting on my 20s will be a good start. ...Read the entire post →
In the last 2 years, I have picked up my reading speed to about 5 books per month. And since I mostly read non-fiction, the concepts and ideas keep swirling in my head, sometimes I get a dizzy sense of not understanding completely what I just read. I’m talking about that odd sense when someone asks you what is the book about and you feel while you understood the main ideas behind the book, you still struggle explaining the details. So taking “if you can’t explain it, you haven’t understood it” to its logical extreme, I will start summarizing books that I like. In addition to cementing my understanding of the book, hopefully it will help others decide whether they want to read the book or not. ...Read the entire post →
Happy New year folks! Someone asked a question on Hacker News on best books read in 2016. I put up my answer there and am cross posting the same here. Do check out the thread on HN, it contains a lot of interesting suggestions.
2016 was the year I ended up reading most books that I have ever read in any year of my life so far! I read a total of 60 books and you can find all of them on here (it has 59 books, one book that isn’t there is called Ray Dalio’s principles). The books I read in 2015 (a total of 34) is also on ShelfJoy. You can check out my all lists here shelfjoy.com/paraschopra. ...Read the entire post →
I’m a nihilist. I don’t believe there’s any externally given meaning to our lives. Some people find the lack of an authority like God depressing, but I find it liberating. Devoid of any external guidance, humans truly have limitless potential and can do amazing things. There’s no one to say: ‘hey, that’s not allowed’. Whatever Physics doesn’t forbid is doable.
For me, what gets me up from bed every morning is to create things than nobody else has thought of before. ...Read the entire post →
I’ve lived in India all my life, and I’m not proud of my people. But I’m not giving up.
Reality check for 1/7th of the world’s population
We Indians are 1.2 billion people on Earth. Yes, many of us are still extremely poor. But a lot of us in that fat middle and upper class have means beyond survival. Hundreds of millions of us have disposable incomes, we have weekends for ourselves when we go to movies and eat expensive popcorn. Yes, we have cars and ACs. Heck, now we even have Netflix, iPhones and Macbooks. ...Read the entire post →
I wanted to make money by myself and was pretty happy when people paid for the first version of VWO. I remember my goal was to make roughly USD 1000 (equivalent of the last monthly salary I had drawn at my employer). VWO ended up making me multiple times my initial goal.
Last month at Wingify, we hit a million dollars of recurring revenue. I’m very happy that the team has been able to achieve this milestone, especially because we’re entirely bootstrapped and haven’t raised any outside investment. There has been a lot of enthusiasm about the million-dollar-a-month figure, and all Wingifighters are pumped up to convert the ‘m’ into a ‘b’. Amidst all this, I want to take a moment to reflect on what really is money.
Is billion dollars enough money? How about a trillion dollars?
This question sounds strange because common sense immediately tells us: ‘of course, a trillion dollars is a big amount’. Imagine all the things one could buy with a trillion dollars – islands, space ships and perhaps even Switzerland. It’s indeed a lot of money.
What amazes me is this: if you had a billion dollars, you’d most probably never have a physical sensation of that money. You can’t keep it in your drawer, you can’t hold it, you can’t physically posses it. In fact, it is very likely that your billion dollars don’t even exist. Nobody has it. US Fed (as of 2016) says $1.46 trillion of cash is in circulation, while debt in US is more than $19 trillion (as of 2016). If everyone in US decides to physically possess the money they have, they will fall short of more than $17 trillion.
What’s happening here?
Money is a promise that in future you will be able to claim the equivalent of value that you’ve created today
Who makes this promise? The government (but any mutually trusted 3rd party can do that; like in case of bitcoins where people put trust in blockchain).
Why we need a future promise in terms of money?
We require the idea of money because of two reasons:
Simple barter works where I make shoes and you make wheat. We exchange those objects and each one of us is happy. However, money is needed because a single individual is typically able to create far more value than s/he can consume personally. Larry Page and Sergey Brin created far more value in the world with the PageRank algorithm than their personal lifetime wheat and food requirements. Money is required for a fair exchange of value.
Simple barter may also work when I have a need for shoes right now and I’m willing to give you wheat. But what if I had a blockbuster wheat production this season, but don’t really want equivalent-value 10 pairs of shoes? In such cases, money is needed to store the value so the possessor is able to utilize it in future for something else.
Where does money derive its worth? Why is 1 dollar same for everyone?
One way to answer this question is to ask: ‘when does the other person decide to give you one dollar’. You get one dollar from others when you provide one dollar of value to them. Seems cyclical, but it isn’t. Imagine that you have a roadside stand with a banner that says: ‘Stuff for $1’. First, you put out a piece of crumbled paper on that stand and wait for customers. People come and go, they notice, but nobody buys. You wonder why is that so. After all, $1 is not a lot of money. You get frustrated and are just about to throw the crumbled paper into the trash before you spot an art collector running towards you with a $100 bill. She begs you to sell this piece of art to her and you, amazed, say why not. Being generous, you ask her if he wants 2 more crumbled papers free with that and he immediately backs off and asks you to sign an agreement that you will never make any more crumbled papers.
All this amazes you. Nobody wanted to pay $1 for a crumbled paper, but before you almost gave up, someone came up and bought it for $100. Not just that, she said she won’t buy it unless you promise not to create any more crumbled papers.
You then put out your second item for the $1 sale – this is your vintage 1921 model Rolls Royce. It’s the only one remaining in the world as the company has stopped making them. The minute you put keys + car’s photo on the stand, you see a rush of people, each with a dollar bill in hand trying to buy the car from you. Such a huge rush of people makes you anxious and you decide to go inside and catch a breath (and drink some lemonade). By the time you come back, you see someone offering you $10,000 for something you wanted to sell for $1. Before you knew, BBC covers this and you get an offer of $1 million from an unknown source. You had a thing for lots of zeros, so you immediately take the offer and hand over the keys.
What just happened? Why did someone gave you a million dollars when you actually wanted to just sell it for $1?
Why did the world make Wingify a million-dollars-a-month company when all I wanted to make was $1000?
The answer lies in this: money is a proxy for how much value you create for other humans
Money, be it a dollar, a million, billion or trillion dollars, is ultimately a proxy for amount of value you are creating in the world.
Someone decides to hand you X units of money because you provide them with X units of value. It’s as simple as that.
Watch the video on how economic machine works. I promise it’ll be the best 30 minutes you will spend today
How is additional money created?
In most cases, economies are zero-sum games. You get $100 for doing a job, you spend $90 on pizzas, video games and movies and put $10 in your bank. The $90 that you spent is someone else’s income (which they further spent, so no new money is created in a transaction), and $10 that you put in your bank is lent to someone who must give back $11 to the bank. If the economy was just limited to $100, where does this extra $1 in the come from?
What I’m talking about here is not money-as-cash (which is easy to create – just print additional money). Here, I’m talking about money-as-value. If most economic transactions are just exchange of value, where does additional value come from? The answer lies in the question: the additional money-as-value is created in the world when additional value is created in the world.
Let me give you an example. Suppose that in pre-Industrial age, you are in a sweater manufacturing business, making sweaters by hand and are the only one selling sweaters in the town. The maximum you are able to make are 10 sweaters a day, putting in $5 worth of wool and sell them for $10 each, making your daily profit of $50. Your limited capacity means that you are able to sell sweaters only to a limited number of people in your town. Some of them are able to buy, the others are left wanting. This inability to serve more people frustrates you because your money making potential is limited and you really want to see more people wearing your sweaters. So you set out to invent a machine to make sweaters.
After years of toiling on the part time, you see success – finally a machine that can make 100 sweaters in a day. You take a loan to get more wool and start producing sweaters. You are cautious first and only make 20 sweaters on day 1. Much to your surprise, even though you have 20 sweaters to sell, you are still only able to sell 10. People who didn’t buy tell you that while they’d love to buy sweaters, they have already spent all their savings on stuff they are used to paying for. They simply don’t have additional money to buy your sweaters. Next day you figure out that if you sell sweaters at a cheaper price, say $8, selling 20 of them will still make you a total of $60 daily profit – more than what you made before.
You slash your price to $8 and this is when value is created. People who had $10 budgets for your sweaters buy it for $8 and spend the remaining $2 on stuff that other people are selling. After buying all the stuff that they are used to buying, the other people now have an additional $2 to spend and in 4 days each one of them is able to buy your sweater. You give some part of $60 daily profit as interest to the loan you took but are still left with more daily profit than what you had before ($50). You have more money, your people in town are able to afford more sweaters. When everybody wins, it’s not a zero sum game and additional money-as-value is created in the world.
Money is created when you are able to satisfy more (or equivalent) of human needs while using equivalent (or less) resources and time. The freed up resources and time is then used to do other stuff that people value.
In other words, productivity drives economic growth. People value a lot of things – efficiency, leisure time, finding mates, being engrossed, mastering a skill. Satisfying all those needs using lesser resources than before (through technology, innovative policies, newly discovered resources) is how additional value is created.
Startups are in the business of creating value for others
Today’s startups are a world apart from the simple theoretical barter system of economy. The dot com hype of 1999 sent startups to stratosphere, where many of them IPOed and made lots of money for their founders and investors. Then they came crashing down and destroyed $5 trillion of value.
So, what does it mean to destroy $5 trillion? Didn’t that money go somewhere? Even if a founder got rich before her company crashed, she must have gained the money to spend somewhere – real estate, vacations, champagnes and so on. If money went back in the system, how exactly did value get destroyed? As Warren Buffet explains in this article, “value is destroyed by any business that makes losses in its lifetime”. Taking to the extreme, for example, if I start a business where the whole proposition is to pay employees for sitting idle, I’m destroying value. That’s because if my business didn’t exist, those employees would have been employed elsewhere, would have still gotten paid (so they can buy stuff) AND would have been creating something of value for other people. By not making people create something of value, I’m destroying value. They’re consuming but not giving back. This means inefficient businesses destroy value. Flop movies destroy value. Bad plans destroy value. Irrational exuberance destroys value.
In other words, a startup is in the business of creating value. Full stop.
If you are an entrepreneur and all that reading about exotic business models (aka Zenefits) or loss-making growth (aka most public SaaS companies) or hoped-for-advertising profits (aka Twitter) overwhelms and confuses you, take a deep breath and simply think about the fundamentals: are those startups better at creating value for a group of humans than anyone else in the world? How large is the group of humans who benefit? And by value, you clarify: are they in a business of creating something that other people want.
‘Wealth (value) is not the same thing as money. Wealth is the fundamental thing. Wealth is stuff we want: food, clothes, houses, cars, gadgets, travel to interesting places, and so on. (To create wealth), you just have to do something people want.’ ~ Paul Graham
Closing thoughts: on future
I’ve been thinking about future of startups or economy in general. If we fast forward a 1000 years, how will our economy look like? Will we have the concept of money? There are two points worth exploring. The first one is that all the technological progress means that poverty is reducing everywhere and because of increased automation and productivity,
Peter Drucker is famously attributed to have said culture eats strategy for breakfast. Every time I have a discussion with my entrepreneur friends, the discussion quickly gravitates towards what we think is fundamentally important for business success. The factors usually include technical skills, marketing capabilities, culture, hiring quality, and funding. I used to think that it was the team and culture that was most important (and certainly at Wingify, we give a lot of emphasis on building the right culture). But is culture enough?
Culture is a necessary, but not sufficient
The way I see it (and manyothers agree), culture isn’t just free beer and gourmet lunch. (in fact, I think too many “free” things might attract the wrong sorts of folks to your team). Culture is having motivated employees who believe that by showing up at work every day, they are making the world a better place. Culture is being devoid of distracting office politics, culture is believing that morality trumps profits, culture is like a flywheel that like minded people make it self-reinforcing. Every company by definition has a culture. Getting the culture right means that two people add up to more than two people, while getting it wrong means people dragging each other down. Culture has very little to do with how fancy your office is.
Many companies get the culture right, yet they struggle. Take Yahoo – its employees rate 4+ on Indeed.com. Remember Grooveshark? The music streaming website that was shut down. Its Glassdoor reviews are telling. One says: “awesome culture” but “obviously the lack of future for the company.” I’d bet if you do a thorough review of culture at the companies that have failed, you’ll find many of them to have focused a lot on culture. Cuil, Color, Joost, Digg — all probably were great companies to work for.
I’ve thoroughly enjoyed reading two books recently. ‘How much is enough‘, the first one, is a sensible attack on money for money’s sake and the absurdity of it. The second one, ‘Zen and the Art of Motorcycle Maintenance‘ is a classic that I read for the second time. This time it became clear to me that the book on many levels was talking about the an ugly outcome of single-minded urbanization. It also questions the apparent superiority of intellect over aesthetics. Of course, the two books are about much more than what I’m describing here but the underlying thread was common – both books urged considering mankind’s total quality of experience, rather than just material wealth or technological / scientific progress.
The idea of rationality holding supreme power to describe the universe is a very strong one and has actually lead to a lot of progress in recent centuries in terms of increased lifespan and other comforts. However, does this mean that in terms of stacking order Science is the end answer to everything? The two books inspired me to try approaching this from a first principles perspective.
So I asked myself where should all human inquiry begin?
In other words.
What philosophy should be about?
We now know that humans are a type of mammal, organisms evolved just like any other we find on Earth. Every now and then since the recorded history, man (a human) has gradually dethroned himself from being the centre of the universe to now a collection of biological cells capable of thought. Every time a Copernican revolution happened in Science, humans got closer to their primate family.
It’s both scientifically proven and commonly observed that much of our behaviour is animal-like. We eat, we reproduce, we play, we take care of young ones. We do pretty much that all biological creatures exist for – passing on genetic information to the next generation.
However, human nature can be shaped.
The fantastic unique ability of humans for elaborate communication and exchange of thoughts makes us different from the rest of biological creatures. Avoidance of suffering is programmed into us (and all other creatures) through evolution. The drive for survival and food lead a creature into suffering-minimizing mode. The drive for reproduction and sex lead it to happiness-maximizing mode. All creatures including humans are programmed to minimise suffering and maximize happiness.
The only way for all biological creatures apart from humans to maximize survival and reproduction is through unconscious, programmed genetic evolution over generations. Humans are special in that regard. In addition to genetic record, we can record our experiences in oral and written form and teach the same generation on how to minimize suffering and maximize happiness — the drives that evolution wants us to optimize for.
I think this basic drive towards well being (where suffering is minimal and happiness is maximized) is what Pirsig refers to as Quality in his Zen and the Art of Motorcycle Maintenance. We can pass our experiences, experiments and thoughts to others in order to collectively achieve a high Quality life.
I believe that’s what human inquiry should be about – provided that we’re a biological creature, what should we do in order to lead a good life, a life with maximum well-being, a happy and satisfactory life.
The nature of goodness needs elaboration. Goodness for biological creatures relates to their survival and reproduction. Sure, evolution had made our brain seek goodness and rewards it with dopamine whenever it is achieved and punishes it with pain whenever it’s not. However, an argument could be made that if humans succeed in isolating pure consciousness that is unencumbered from biological constraints, what would that consciousness do (or seek)? What would a Philosophy for pure consciousness look like. I doubt we can ever isolate pure consciousness or that it exists but let’s assume it as a thought experiment. This is akin to making a computer which exhibits signs of consciousness. What would such a pure consciousness do?
Suppose there are then multiple such pure consciousness, multiple metaphysical entities. Since we don’t know what such pure consciousness would be bothered about let’s assume that different entities exhibit different behaviours. Some randomly drift. Some dissipate. Some replicate and spread. Interestingly, given multiple varieties of entities, eventually only the entities that replicate and spread will remain and dominate others in the population. In other words, we can hazard a guess that another evolution may kickstart for this hypothetical scenario and that evolution will also lead the dominating consciousness to seek some sort of goodness. The nature of that goodness is uncertain, but in my opinion there’s a tantalising possibility of a universal state that is preferable than other states. In the world of pure consciousness, such metaphysical entities will philosophize on how to achieve that good state.
Hence, given the underlying nature of the beings or entities, Philosophy should really be concerned about maximizing well-being, goodness or whatever else it is called in respective contexts.
Why is there anything at all?
We humans have cognizance of the universe and unlike other creatures we can’t help but wonder why is there a universe in the first place. Why anything exists at all? The fact that there is something rather than nothing and we don’t know why proves that there is a gap in our understanding and experience. Science and rationality cannot be expected to answer the why question. They answer what and how.
No matter how much scientists say that the question of why anything exists is meaningless or impractical, the void always nags and points to limitations of science. Perhaps that void can only be filled with a direct (spiritual?) experience and not through intellectual understanding?
Since the void nags and reduces well being for many (including me), Philosophy should also aim at taking a stab at how such a void can be filled. Perhaps the answer is arts, poetry, morality or beauty. I’m not sure what it is but any valid Philosophy should attempt to provide a total satisfaction – including these nagging questions.
In summary, if you have to begin an inquiry, here’s where you could begin:
Given that human is a biological creature, a product of evolution, what can we do to maximize well being. Bonus points for answering why anything exists at all?
You can then derive answers as to why you sometimes feel enslaved by modern urban life, what is the nature of morality, how much money is enough, is democracy the right form of government and many such questions like that from time to time.
First, watch this video titled ‘Humans Need Not Apply’.
Now answer this question: =&0=&
The scenario of nobody having a job might seem fancy and theoretical at first, but it’s becoming more realistic with each passing day. Google, Uber, BMW, and a lot of other organizations are on track to release self driving vehicles as soon as next year. And as the video demonstrates so beautifully, this is not just happening to the transportation industry. Automation will impact every sphere of human activity – be it creative, mechanical, cognitive or managerial.
We live in a world of machine learning, APIs, exponentially improving technology, billion dollar disruptions. A lot of such innovations are about making humans redundant.
What will millions of jobless people do?
Taking transportation as an example again, as self-driving cars become commonplace we will rapidly have millions of jobless drivers who are unskilled. As manual labor gets replaced with automation and machines, such unskilled people would find it increasingly difficult find other jobs. Even if they get skilled, gradually automation will reduce the number of jobs available for skilled people. I concur with the video that this wave of people with no jobs will swell into a huge tsunami. Are governments prepared to handle this? In the short term, this will have a very real impact of worsening standard of living for a lot of people. They simply wouldn’t have any money to pay for even basic stuff.
What governments need to do?
Automation leads to concentration of wealth into certain corporations and individuals. A single innovation in automation by a specific company or individual can replace thousands and millions of jobs. Where income earlier used to go to many people doing the job, now the same (somewhat reduced) income will go to one company that developed that specific automation. This concentration of wealth will be sharper because of the network effects (the winner takes it all) and rich getting richer. Consider how Google is using technology to swell its cash reserves and revenues quarter after quarter. If earlier many thousands of cartographers used to get paid to map cities, now Google can just pay for fuel and have its self-driving car + maps software to automatically generate city maps at a detail no human cartographer can match.
Governments will eventually realize the irony of companies like Apple and Google having billions in cash reserves while millions being jobless due to no fault of their own and being unable to afford basic amenities of life. Governments could realize this fact by themselves or protests, activism or even vandalism can make them wake up to this fact.
Higher taxation and “Citizen wage”
As wealth gap increases (more so due to automation concentrating wealth in some hands), governments will have to step in to rectify the situation. I side with the (semi-popular) view of higher corporate and individual taxation. The taxes that are collected from wealthy firms will go back to individual citizens as a wage just for existing. Consider citizen wage like a basic income that everyone gets from the government. This re-distribution of wealth from wealthy corporations to individuals will be justified because lack of jobs is a situation that corporations created. Poverty is not a choice people opt for.
Will higher taxes stifle innovation?
The main argument about capitalism is that it promotes innovation. The lure of money leads people to compete, innovate and provide better services. If taxes are high, why would any corporation care to bring new products in the market? If a government guarantees a good standard of living to everyone for free, why would anyone do anything? Won’t this lead to a lazy, complacent society?
I doubt that people will get lazy. Individuals drive corporations and individuals are typically driven much more by non-monetary factors like satisfaction and having an impact on society. Think Elon Musk, Steve Jobs, Larry Page – are they doing this for money or they’re doing this for their own satisfaction? Imagine if everyone is satisfied with a basic standard of living, won’t people come together and still innovate because they like innovating? In fact, if we take money out of the equation and have some other metric to track individual and societal progress, it may increase overall happiness and accelerate the pace of innovation because everyone will be guaranteed a decent standard of living, so people can do what they’re best at without worrying about how they’re going to pay for dinner. Think of all the poets who are forced to drive taxis.
Co-operation between countries
Countries are increasingly interdependent for their economies. Outsourcing of services and manufacturing has left many countries dependent on exports. What would happen when automation causes some countries to become self sufficient? Take India’s scenario – millions of young engineers are dependent on outsourcing of IT services and BPO, both of which are easy targets for automation. This would lead to disproportionate job losses in India. Same would happen to China if manufacturing cost due to automation gets cheaper than the human labor.
Even if one country recognises the inevitability of automation and gives its citizens a wage for existing, other governments might not be in agreement and their citizens will suffer (due to automation-led job losses). I’m not sure if any outside government would be concerned about loss of jobs in India due to automation. India would have to tackle this problem by itself. This tackling could happen in two ways: one is to recognise that automation is real and is here to stay. This means establishing “citizen wage” (just like other governments are doing). The other way for government would be to shut its door to all “imported” automation. This is a very real possibility – there are potentially hundreds of millions of jobs stake and some countries (like India) that are very labour driven could succumb to this. This “banning” of automation will make some countries go backward, become more and more inefficient and less productive, while other countries march forward, becoming more and more productive.
We will reach there
Automation is a strong force and I think the possibility of most human jobs getting automated is very real. This would lead to citizen wage, where people will work whatever they feel interested in, rather than being forced to work in order to survive. However, in the interim, as pointed out in this reddit thread, there will be chaos. In some countries, it might take vandalism and violence to drive home the point. Others might just handle this very smoothly. A perfect outcome requires individuals, corporations and governments work together and admit that basic human survival is at stake.