Bubbles as drivers of progress, modern imitations of religion, how the enlightenment ultimately stalled progress and the future of religion
Bubbles, financial and social ones, often get a bad rep for the enormous losses of capital and labels that associate you with a fringe cult ideology. Financial bubbles see soaring asset prices where stupid people are rewarded and the ‘rational actors’ are left with FOMO until it all comes crashing down with the Casandras shouting ‘I told you so’. A bubble is an irrational belief in some future outcome shared among many people. The difference between bubbles and regular markets are that normal markets usually have more formal metrics that everyone agrees upon. The commonality is that the price is based on future performance (present value of *future* cashflows) or the fact the price only goes up if someone is willingly to pay more for the asset in the future, rationally or irrationally. However, irrational is a very subjective term, irrational to who? A lot of our metrics for markets like PE ratios of 10, PS ratios of 50x for SaaS are just beliefs that have been held by the majority of people for a long time (Lindy effect), but that doesn’t make them rational, just consensus opinions. Broadly, these metrics price assets so that you can recoup enough money to enjoy before you die as time is the only true finite resource currently, but I digress. Lets’ say a bubble is an irrational belief in the future.
However, bubbly asset prices reflect people who choose to build and participate in an irrational future they believe in. The Dotcom bubble ended up being the greatest marketing campaign to get people interested in building, investing, and working in the internet industry and did result in a lot of investment in fiber cable to build up the infrastructure that would be integral in supporting the World Wide Web years later. Without such initial investment streaming videos online (Youtube/ Netflix), would never have been possible or would’ve require billionaires of dollars to not only build the website, but also connect everyone’s house to the internet. The garage startups like Square, Twitter, and Twilio to name a few are standing on the shoulders of these industry pioneers in the early 90s. The Dotcom bubble did wipe out of a lot of capital and those there for the money probably returned to their old jobs, but that is the whole idea behind risk capital. However the social bubble of belief in the internet helped co-ordinate the hardcore believers to find each other and work together on projects most people wouldn’t take seriously. We all know of uber, airbnb, and petsmart/chewy. But we often don’t hear about the early iterations of literally the same ideas, built in the aftermath of the Dotcom bubble bursting like pets.com, webvan, netscape, viaweb, and vrbo. Both the internet infrastructure companies and internet native services were building in anticipation of each other in 1999. The reality check came when both parties realized only a few million people used the internet and the real returns on their investments were years or even a decade out. The internet bubble or irrational belief in the future where everyone is online gave the VCs, the founders, the employees, and the infrastructure companies the faith to take each other seriously and invest their time, money, or both in seeing the future come true. The future did eventually come true just not as quickly as planed. So more preciously a bubble sounds like mismatched or inflated expectations.
Now in 2020, the new internet economy has won, and the starry-eyed pioneers of the 90s are vindicated. Amazon saved America during the ‘pandemic’, food delivery companies are doing billions in business, Airbnb has become preferable to hotels, getting in a strangers cars’ (Uber) is normal, internet transactions are in the trillions (Stripe), and selling pet food online is an actual profitable endeavor. None of this would have been possible without the initial investment in internet infrastructure starting in 2000 and all the people who turned down lucrative offers at established blue chip corporations to work on startups like myspace, VRBO, pets.com, webvan, which all eventually went bust. They weren’t wrong, just early. Unfortunately as we can’t live forever, timing does matter to an extent. Being off by a couple of years is tolerable, being off by a decade hurts, but being off by more than that is a charitable contribution to future generations.
Bubbles help do the impossible which is focus our attention and energy, our imagination, and our money into building the unfinanceable future. Unfinanceable because investors don’t want to waster their money and employees don’t want to waste their time. In addition to co-ordinating people, they help reduce co-ordination costs among participants, since they share a set of terminology, ideas, and vision of the future. In Venture Capital (VC) you see SAFEs, ridiculous valuations, and founders that tow the line between genius and arrogance or fraud. In corporate America, none of this would be tolerated, but in the VC industry they all take each other completely seriously in building and investing towards an unknowable future. They do however set benchmarks to make sure adequate progress is being made towards that future, it isn’t all vision and prayers. VC’s bet on the founder, team, idea or some combination of the above since there is no science behind valuing ideas or really shitty MVPs. VCs’ are the priests and they hold they power to anoint a founder with ‘founder authority’ (the ability to act like an Egyptian god) and fund them with boatloads of cash to make their vision a reality. Imagine Elon asking you for money to make rockets that can land and reused after being launched into space. It requires some level of blind faith and religious zeal to tackle and fund that project. In fact CEO of startups are really like cult or religious leaders. Their primary job is to convince some small or large set of people to follow them and help build their vision for the future, often referred to as a companies mission statement. Sometimes they fail or the honeymoon stage fades and the founders and investors are brought back to reality too soon and the company goes bankrupt or can’t raise the next round of funding and continues a subsistence form of life. Other times they succeed and the founder CEO, as the self appointed religious leader, builds the company and the culture (religion of the company) which end up having a tangible impact on the world. As Alan Kay says, “Don’t predict the future, invent it”. At a point the company becomes a movement, often outgrowing the founders direct control with the company culture driving most decisions, think Apple post Jobs. However culture is not self sustaining, it must be protected and maintained, also think Apple post Jobs and their gradual innovation decline. The reason it’s called founder authority is because only the founder can make bold cultural changes, his successor will always be justifying his actions in the context of the founders religion, again watch any Apple keynote post Jobs. This is why public companies get significant valuation premiums in the market for being founder led, having a good culture, or being able to explain how their product broadly reflects a secret about society or the world known to only them. This is why a founder is not only building a company, but also a culture, and even larger, a movement. After all, you have to suspend reality and almost join a revolution to sign over millions or billions of dollars to build VR, rockets, asteroid miners, space factories, 3d printers, or biotech projects.
Religion and cults as a measure of progress & Christianity as the origin of science
The shared traditions and almost zealous faith in certain future outcomes is not too dissimilar from religion. The shared beliefs, vocabulary, and traditions in each industry (category specific religion) lowers the cost of doing business by allowing people to communicate and coordinate faster as well as signaling your faith (it’s why insiders never criticize other insiders). These principles are usually they are directionally correct, if not optimally, but they help you skip reasoning everything from first principles, which gets mentally taxing and is why humans cannot exist without belief systems, reality is simply too brutal. The belief system are foundations upon which you specialize and add to.
However, religion often gets a bad rap because its deemed anti-rational and purely faith based. However, was buying stock in Amazon or Netflix in 2000 rational, or getting married, a lifetime commitment, to your soulmate in your 20s’ rational? These things require some blinding level of idealism.
My conservation of religion law states, “Religion doesn’t go away it just changes form”. Marriage, VC, startups, identity politics, the ‘believe science’ crowd, and even nihilism all have their shared vocabulary and traditions to signal your allegiance to a set of beliefs, some more cultish than others. It is actually profoundly irrational to be an atheist because in such a complex world not having any belief systems means you really haven’t thought about the hard or existential questions at all. In our hubris, we think that antiquity has nothing to teach us, but the very concept of religion or belief systems has been the foundation of progress for all of history and still is.
In fact Christianity is responsible for the enlightenment and modern science. Before Christianity we were all battling for survival in a big zero sum competition, there were no human rights, Genghis Khan brutally murdered his enemies, monarchs and tyrants reigned supreme. All people were not created equal, in fact only the strong survived, showing grace towards the weak or victims is a profoundly Christian idea, the idea that all men are created equal.
The first real scientist was Thomas aquinas. He used his faith as a reason to explore the secrets of nature to better understand God and his faith. Further Christianity’s idea of the sanctity of the victim allowed us to discover science. We didn’t stop burning witches because we discovered science, we discovered science because we stopped burning witches and explored other reasons as to why the crops weren’t growing. In the Bible it describes this mystical place, the garden of eden, that we are trying to get back to or recreate. We use science and technology to not only better understand the world around us, but to alleviate human suffering and return us to this utopian garden of eden. Various tenets and passages in the Bible discuss leaving stuff for your grandchildren etc. This encourages sacrificing for the future and long term thinking. Long term progress would be impossible if we were only trying to satisfy our day to day needs.
While Christianity has been a driving force for much of progress throughout human history and sowed the seeds for the Enlightenment, the Enlightenment sowed the seeds for the downfall of christianity. Instead of viewing the world as a wonder created by god for us to explore and discover truth, the Enlightenment altered this view where the world was just a bunch of external things that could be altered to suit human needs. Therefore intuitive emotional thinking and perception of the world took a backseat to the secular, ultra-logical and individualistic view. Our excessive hubris causes use to ignore the lessons of antiquity related to the more intuitive and spiritual part of human nature. The logical and spiritual nature of humans should be balanced and work in tandem, but currently the logical side rules us as a tyrant. The rise of atheism, ‘believe science’, BLM, Qanon and other various groups are direct evidence that we rejected one belief system only to replace it with various others not stopping to ask if we were getting an upgrade or downgrade. However, all these belief systems resemble pop psychology or pop culture more than a true religion or even a well thought out, all encompassing belief system like the samurai code. Hence I would argue Christianity or at the very least belief systems of antiquity did a better job teaching virtue, morality, and how to live the good life. These poor imitations directly relate to tribalism and why progress or innovation has stalled in general. Beyond failing to teach virtue, these new belief systems are so atomized to each persons filter bubble to the point where no one gets along. In fact the progress or health of a society can be measured by how religious it is or by how many cults there are. Every startup is a cult or conspiracy to change the world after all. In fact companies like Coinbase, a16z, and Robinhood have started media branches to tell their story and evangelize their company. More companies will look to form media branches to act as missionaries in taking control of the narrative around their company. Religion never goes away, it just changes forms as we develop different ways to navigate reality without going insane.
Future of bubbles and belief systems
Humans can’t function without religion or belief systems, they serve as abstractions to help us make sense of the world around us, rightly or wrongly. Hence bubbles will persist, but given the technology will take a radically different form.
Bubbles in the financial sense are markets were supply and demand become severely mismatched causing prices to break sharply in one direction, usually the excess demand coming from some sort of social bubble. However, the internet, real time communication and information flows, faster feedback loops, and reduced manufacturing and prototyping times allow us to better match supply and demand by both gauging demand more accurately and being able to dynamically adjust the supply side in almost real time. Just-in-time manufacturing, one of the reasons Tim Cook famous (No one likes sour milk) is exactly that and has only been possible to achieve rather recently. The lack of asymmetric information makes it hard for supply & demand to get too far out of sync. Assets may be mispriced, but this is due to asymmetric knowledge, because while the internet does make information symmetric, it can not make people uniformly intelligent.
Bubbles in a social sense are irrational belief systems that don’t persist for very long. Technology has allowed us to customize and personalize more aspects of our lives starting with social media and our newsfeed. Where as you used to get a dose of reality pretty fast, technology has allowed us to live in our walled gardens or custom asylums. This probably has a positive effect on small scale start up formation. You can pretty easily find and convince a small group of people to follow your vision and get small set of customers to start and maintain the business, but challenges arise as you start to scale. As any start up scales it has to ‘indoctrinate’ more people into its viewpoint of the world. Considering how fragmented Americans viewpoints are, this becomes hard. It also makes large scale accomplishments like the Apollo project or the Manhattan program hard if not impossible due to a lack of a nation wide meta narrative to co-ordinate millions of people or give America something to rally behind. Today could we convince Americans that we need to the moon to defeat the Soviets and stop the spread of communism? There is a significant minority of the population in the US that unironically believes in virtues of communism. I find it hard to convince 50% of Americans of anything and harder to believe that most people are educated enough to adopt a broad belief system, wide in scope, that is not a la carte. Specifically I find it hard to get our intellectual class, those anointed by university pieces of paper but unable to think as deeper than Onion articles, to serve a cause bigger than themselves or there constant need for virtue signaling. Our society lacks a real class of virtuous elites than can set a good example for everyone to follow. No one takes anything seriously mostly cause our leaders are hypocrites, laughing stocks, and just plain dumb. We should start by giving people a real education in the greek and roman classics, physics, mathematics, and history. The education of polymaths like Andreseen, Thiel, Collision, Sowell, or Cowen should be the gold standard to help rebuild some common belief system in the country. The task of creating a positive belief system or vision of the future with mass appeal is challenge fit for a god, which is why Christianity and the Samurai code are so fascinating. Works like the Bible strike me as divine inspiration. Overall I believe this to be important because it drives progress which helps create peace and a virtuous society. While all these narratives around God, Apollo program, etc may not be true, it would be a lot cooler if we pretended they were.
The problem with belief systems today is they sound like messages of false prophets. When people living talk of destiny, it sounds like snake oil. Tales of destiny usually only work when the person is dead. Lines like, ‘all our problems can be solved by building x,y,z companies’, ‘build back better’, or ‘revolutionizing food delivery to change the world and solve world hunger’ all sound nice, but also sound so fake. No one actually believes this. Most people are trying to figure out how to make a living, live good, honest, and noble lives for themselves, their family and possibly their friends. No one starts off life with the goal of fixing world hunger by building a Fortune 500 company. Most successful people will tell you something like, ‘do what you love’, ‘I had no idea this company would ever get so big’, ‘solve a problem important to you and your community’, ‘start small’, ‘I got lucky and I am blessed’. Big things have humble and unexpected beginnings. People often start of by solving problems that affect their life or community or researching topics / building products they are interested in. Eventually their small project or company will outgrow them and become a movement if other people also have that problem or demand that product. Most business advice boils down to those 2 sentences. Revisionist history is abundant, Steve Jobs story was anything but deterministic, not to say he didn’t work hard, wasn’t smart, or didn’t put himself in positions to get lucky, he did all of those things, but he hardly set off to change the world from birth. The reason most successful people say, ‘I could never have imagine i’d end up here’ is because that’s the cold hard truth.
Great Awakening 4.0
The crisis of the modern world is that Christianity helped deliver us the enlightenment and scientific revolution, which fueled the abandonment of thought towards meta or existential questions and the rise of hedonistic pleasures, short term thinking, hyper-individualism, and general lack of any belief systems that we have today. We have sinned by taking rationality to the point of hyper rationality (Excess: Titus 2:11-12). Aristotle preached trying to understand ‘the whole’ or entire systems and not to remake entire systems or areas of life by applying your knowledge of a specific area or field. Since we have used science to make great material advances and reshape our world no longer believe religious myths. Physical innovation eventually leads to cultural and spiritual innovation as well. By innovation I mean creating something new not necessarily better. However since we have ‘innovated on the morality of Bible’ we can no longer belief those ‘myths’ as they feel forced on us and not backed by our new god of science. (Christians and myself personally would disagree here, but i’ll assume for arguments sake) Like inception, you have to believe the idea was your own in order to live by it, otherwise it feels like a third party is coercing you. We claim that secular society is evidence of our march of progress to utopia, however it has stagnated in recent years. Thiel’s classic line is, “we were promised flying cars and energy too cheap to meter and got 140 characters (Twitter)”. We lack a coherent belief system to unite us, paint an image for a better future, help guide us there, and set a model for how to be virtuous in our lives. We are plagued by a disease of relativism stemming from filter bubbles and nihilism. Additionally we struggle with a society that lacks any moral compass or any virtuous leaders for role models. Most believe bubbles are bad, but I believe they hold the keys to the future, to progress and to future belief systems for society. We need more bubbles, more religions, and more cults and less nihilism. Perhaps, considering flirting with some startup, religions, or cults; these may finally give you that long overdue education and give you a purpose that extends beyond trying to police society to conform to your filter bubble. Maybe Christianity will have its next Great Awakening or maybe something else will take its place. I believe technology will become so advanced as to border on magic and superstition, which in turns spawns a new religion of the masses, not too dissimilar from the Orange Catholic Bible of Dune. While science is insanely helpful our priestly class of college educated elites believe they have it all figure out when really that is just a “tale told by an idiot, full of sound and fury, signifying nothing”. This is all a long winded way of saying, Bitcoin.
-Bobby Lee
Questions to ponder
When evaluating bubbles here are some things to consider
1) will whatever trend persist or is it a fad (is video conferencing replacing the office or just a temporary annoyance)
2) how fast is this trend moving, how fast is the feedback loop? will my vision of the future take 5,10,20 years or more to come to furition and how fast can I get updated data points
3) how committed are the people, if asset prices drop will the builders still build?
4) what is the end state unit economics, will it every make money or capture value or go the way or airlines / uber eats
5) bubbles and sci-fi are like art, it might not happen but the endeavor is good art. VC is sci-fi with a plan
Pardonne mon français . . . Je suis obligé d'écrire dans plusieurs langues parce que: 1. La plupart des gens aux États-Unis ont subi un lavage de cerveau leur faisant croire que les Juifs sont leur salut; et 2., leur anglais est de la merde et ils ne peuvent pas rester silencieux assez longtemps pour entendre ou voir ce qui se passe évidemment autour d'eux . . .
Le judéo-messianisme répand parmi nous son message empoisonné depuis près de deux mille ans. Les universalismes démocratique et communiste sont plus récents, mais ils n’ont fait que renforcer le vieux récit juif. Ce sont les mêmes idéaux.
Les idéaux transnationaux, transraciaux, transsexuels, transculturels que ces idéologies nous prêchent (au-delà des peuples, des races, des cultures) et qui sont le subsistance quotidienne de nos écoles, dans nos médias, dans notre culture populaire, à nos universités, et sur nos rues, ont fini par réduire notre identité biosymbolique et notre fierté ethnique à leur expression minimale.
Le judaïsme, le christianisme, et l’islam sont des cultes de mort originaires du Moyen-Orient et totalement étrangers à l’Europe et à ses peuples.
On se demande parfois pourquoi la gauche européenne s’entend si bien avec les musulmans. Pourquoi un mouvement souvent ouvertement antireligieux prend-il le parti d’une religiosité farouche qui semble s’opposer à presque tout ce que la gauche a toujours prétendu défendre ? Une partie de l’explication réside dans le fait que l’Islam et le marxisme ont une racine idéologique commune: le judaïsme.
Don Rumsfeld avait raison lorsqu’il disait: «L’Europe s’est décalé sur son axe», c’est le mauvais côté qui a gagné la Seconde Guerre mondiale, et cela devient chaque jour plus clair . . . Qu’a fait l’OTAN pour défendre l’Europe? Absolument rien . . . Mes ennemis ne sont pas à Moscou, à Damas, à Téhéran, à Riyad ou dans quelque croque-mitaine teutonique éthéré, mes ennemis sont à Washington, Bruxelles et Tel Aviv.
https://cwspangle.substack.com/p/pardonne-mon-francais-va-te-faire