#93 Peter Diamandis and Steven Kotler

Peter Diamandis and Steven Kotler joined James Altucher to talk about the future, the 6 D’s, and how to be bold. Diamandis and Kotler wrote a book about being bold, Bold: How to Go Big, Create Wealth and Impact the World, which they say is like a roadmap for entrepreneurs to follow. It’s the how-to book that might follow their other book, Abundance, The Future is Better Than You Think.

The interview begins with the trio noting how exhausted they are of bad news. Peter and Steven have focused instead on the optimistic view that technology will solve a lot of the problems we have today. Today is really a great time to be alive, maybe the best time to be alive. Kotler points out that crime, poverty, and violence are at their lowest points in history.  Tom Shadyac (episode #15) found out the same thing – in his own way. When he went out to see what was wrong with the world, he really found out what was right with it.

About the bad news, James asks if there is a bias toward people want in to know what might go wrong and Kotler says that there is a bias toward negative news. James explored this idea in (episode #65) when he talked with Dan Ariely. Daniel Kahneman has also written about it, sharing this simple explanation.

The psychologist Paul Rozin, an expert on disgust, observed that a single cockroach will completely wreck the appeal of a bowl of cherries, but a cherry will do nothing at all for a bowl of cockroaches.

Diamandis and Kotler say this bad news is overdone and share a framework they say will “overrun the world” and it’s six D’s – Digitalization, Disruption, Deception, Demonetization, Dematerialization, and Democratization. This alliteration alluring and almost always allows us to remember associations, but will the ideas that overrun the world all rest upon the fourth letter of the alphabet? Let’s see the case they make.

1. Digitalization. Diamandis tells James that “the ability to duplicated at marginally zero cost is what makes this interesting.” These very podcast episodes are a prime example. Ten years ago you had no access to people like this. Beyond the quality of guests on this – or any great podcast – is the convenience of it. Fifteen years ago it took an hour to download a three-minute song. Ten years ago it was faster but the podcast structure wasn’t around. Five years ago things were similar to now, except there was no phone/wi-fi connection. Now these episodes arrive instantaneously. Why didn’t we see this coming?

2. Deceptive. “It was growing just as fast 20 years ago, but now we notice it.” James says to summarize this idea. Diamandis puts it another way, “we have a linear cognitive bias.”
What this means is that the changes we see in the world don’t ever come out of left, right, or center field. They are out there the entire time, we just don’t see them.

As football season just wrapped up, we’ll use the example of Tom Brady and the New England Patriots. Brady might be the greatest quarterback ever. He’s won 4 Super Bowls and he’s near the top of many league wide marks. But he was drafted in the sixth round. He was only the second string quarterback. How does the greatest quarterback of all time now get picked number one, not start playing on day one?

Diamandis makes the case that these things start small, but all that means is that in our scope of observation they take up very little room. I don’t have Uber service in my town, so it’s not on my radar. If I moved somewhere that had Uber, my guess is that I would jump on the bandwagon. So it goes for NFL quarterbacks. There are 32 teams, one starting quarterback to a team, and it’s easy for talented players to not get a chance to play.

In the interview Diamandis gives a nice heuristic for finding these growing ideas, look for friendly U/I he suggests. Ten years ago we had some version of 3-D printing, but only does it have a good user interface. Ditto for the internet.

James speculates that good U/I is a tipping point, that when a concept is easy for the masses to understand, use, manipulate, it will take off. He makes mention in the interview about Malcolm Gladwell’s The Tipping Point.

Gladwell has a more nuanced and social explanation. Rather than a clean U/I with a minimalist design and an Apple look and feel, he suggested there were three components. First, the law of the few, which means that things tip only when the right combination of a certain group of people coalesce around an idea. The stickiness factor where a concept is memorable. Finally, the power of context, we act a certain way in certain situations. For example, why do college students burn couches after a sporting victory?

Couches, bonfires, and their combination in an intersection has nothing to do with the game itself, but this has become a thing. Prior to September 2008, there wasn’t a single news headline about it. It fits Gladwells recipe. The few that are wild and crazy enough to do it. The stickiness factor, kids have seen it done before, if only on TV. The context, we’re in college and our team won! Woo Woo!

couchburninggoogletrend.bmp
Couch Burning as a Google Trend 2004 – 2015 (January)

Diamandis (I’m guessing here) defines a tipping point where people finally notice something that’s been happening at the same rate. If your salary increases 5% a year, that won’t seem like a major change until you buy a Lexus.

3. Dematerialization. The things we physically once had are now apps. In the book Diamandis and Kotler sum up that the apps on your phone, as actual devices in 1982 would cost $900K. That’s incredible. Not only has technology made something like this podcast available, but made it relatively cheap.

4. Demonetization. Coupled with #3, money will follow industries and when the industry moves online, the money will follow it. Kotler gives the examples of Kodak and Craigslist in the interview as a failure and success dichotomy.

It’s interesting to note that Kodak created the first digital camera, and yet were bankrupted in-part, because of it. A similar story is told about HP in the Steve Jobs biography. Walter Isaacson writes that Jobs went to HP headquarters to look at licensing one feature, but found another he wanted. This added item was equally if not more enticing. He ended up with both.

Things like Apple running over HP isn’t odd, it actually should be expected. Diamandis tells James that there’s a good reason big companies fall to small ones, “The day before something’s a breakthrough it’s a crazy idea.” he says. Kodak couldn’t experiment on something that might save Kodak because they were Kodak.

In the interview Diamandis says that the hyperloop idea proposed by Elon Musk won’t be solved by Boeing or the government. It will come from someone small. The solution will come from one, or a few but many will try and fail to solve the problem. Nassim Taleb suggests we celebrate them. He writes about a National Entrepreneur Day:

Most of you will fail, disrespected, impoverished, but we are grateful for the risks you are taking and the sacrifices you are making for the sake of economic growth of the planet and pulling others out of poverty. You are the source of our antifragility. Our nation thanks you.

This is the antifragility of systems, which depends on the fragility of others. Let me take one more moment to explain this because it took me so long to understand it myself. Systems are better when they are antifragile (get stronger/better/improved by chaos/destruction/pain) My daughter was reading a science book to me and it said that honey bees die after stinging something. This is the antifragility of the system (hive of bees) at the expense of the fragility of the individual (the bee which drives away the threat). The same goes for companies. Our success in making a hyperloop will also be in part due to the companies that failed. Okay, enough Taleb (for the moment).

Diamandis says that were are now 3-D printing cars and apartment buildings. In the interview this didn’t strike me, but after watching this short video <1min, it’s pretty cool.

One part of this better future is that it will require constant surveillance for optimal data input. Diamandis says that the hullabaloo about privacy isn’t that big of a deal, especially because we’ve already started changing in response to it and we will continue to do so.

James comments that this sounds like big brother, but it’s not. This new frontier will be explored and marked as we go. For example, Disney offers a Magic Band, an RFID device that acts as your park ticket, charging card, room key, and fast pass for shorter ride lines. It also knows where you are in the park. It reunites lost parents. It knows when you ride a roller coaster with a new camera it sends a picture from that camera to you. You can order food ahead of time, cross a digital perimeter and have your food begin to be cooked before you even sit down. About this collection of data, Diamandis says that companies that aren’t data driven, “ain’t gonna survive.”

Don’t get all nostalgic about this though. We tend to look to the past with rose-colored lenses and remember only the good things. Past guest Jack Canfield (episode #90) might say the past was what it was.

A good heuristic comes up in the next part of the interview when the trio talk about Amazon and Jeff Bezos. Diamandis says that part of their success, is that Bezos looked around and found something that wasn’t going to change in the next ten years. People will want things shipped to them, and quickly, the thinking goes. Ditto for Google and search. Ditto for Microsoft and their cloud services. These companies see these things as remaining unchanged, but they invest in “exponential change.”

Taleb, you knew we would come back to him, writes that this is a form of barbell thinking and it too is antifragile.

It is why Amazon made a phone, why Google made a car, why Apple is making a (insert Apple rumor of the moment, in February 2015, it happens to be a car). Each of these companies is focused on their entrenched business plus their “positive Black Swans.”

This is the boiled-down version of the investment conclusions that Tony Robbins (episode #62) also comes to. Have some money that is almost entirely secure, annuities or treasuries. Have other assets that can ride the wave up with very little drag: index funds. Skip everything in the middle.

Elon Musk comes up and Diamandis says “he’s driven by the desire to make things better.” Wait, is that all it takes, a strong desire? You know what else Elon Musk is? Smart and hard-working. He reads and learns like crazy, in part to:

… view knowledge as sort of a semantic tree — make sure you understand the fundamental principles, ie the trunk and big branches, before you get into the leaves/details or there is nothing for them to hang on to.

Gary Vaynerchuk (episode #2) talked to James about this, and writes about it in his books, that you should be passionate about the thing you want to pursue but don’t stop there. Remember that passion is the fuel that has to go into an engine and a person with passion but no hustle is the same as car with no engine.

The interview concludes with some far out stuff. James says, “the science of today was the magic of yesterday.” It’s not a direct quote from Arthur C. Clarke but is similar to law #3 of his prediction formula; “Any sufficiently advanced technology is indistinguishable from magic.”

There’s also a big at the end about how great virtual reality will be. If this idea appeals to you, you must go read Jane McGonigal’s Reality is Broken. There she writes about how games (virtual and real) do a much better job of guiding us to act in a way we want.


Thanks for reading. I’m on Twitter, @MikeDariano

A few small parting notes:

  • If you are interested in joining the Antifragile Book Club I’m starting, please get in touch. We’ll read a chapter or two a week and I’ll offer additional material to supplement the book. This is for anyone who hasn’t yet, but wants to read it. If you want to chime in as a moderator/instructor please let me know.
  • I’ve not read Bold, but the interview between James, Steven, and Peter focused heavily on rockstars. Jobs, Bezos, Musk, Uber, etc. and we should remember the survivorship bias. Under this heuristic we should ask, #1 what did these rockstars avoid doing and #2, the people who started in similar positions and failed, what did they do? Does Bezos avoid checking his email, does Musk choose to walk to work rather than spend time at the gym? What about the grocery delivery website CEO that started the same time as Amazon, what did he do?
    This is not saying the conclusions are wrong, just incomplete from the interview.
  • Of course the 3-D printing of a building happened in China. It’ll make this a lot easier now.
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