Kings and Priests: February 17, 2019 Snippets

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This week’s theme: A genuine taboo of Silicon Valley. What if, to build a good business, you have to do bad things? Plus a modest proposal in response to needed climate action: plant more trees!

Welcome back to our ongoing discussion around some of the hidden rules, norms and social structures that make the startup world tick. Last week, we suggested that “the hustle” — not outright fraud, exactly, but the ability to bend the truth a little when making plans, and exaggerating a little while fundraising, and make promises to your employees that aren’t quite materialized yet but will soon, that kind of thing — serves two important functions for the startup world. The first, as we said before, is that in a counterintuitive way it helps protect against bigger scams like Theranos or what we see in crypto. This week, we’re going to talk about the second way that the hustle is important to the ecosystem, and it has to do with our ongoing conversation around differentiation and undifferentiation. Specifically, we’re going to talk about a topic that’s sort of unpleasant and even taboo in Silicon Valley culture: the fact that founders sometimes lie.

Remember before when we said that the relationship between Founders and VCs was a little bit like the historical power dynamic between Kings and Priests? Well, now we’re going to explain what we mean by that. If you’re the king, then what makes you the king? Well, you’re the king if everybody else recognizes you as such; if everyone stops believing that you’re king, then you’ve lost your power. We talked about this at length the other week in our discussion about founders: founders have power that is less like a CEO (whose power comes from explicit hierarchy and managerial experience) and more like a king (whose power is more like something that is bestowed or sacred.) If you look across many different civilizations, both ancient and current, you’ll see all sorts of traditions and rituals that serve to continually reinforce the idea that the king is differentiated from the subjects. This can’t be something that only happens once; it has to be continually reinforced, week in and week out.

One ancient and powerful way that we create royal differentiation is by defining and reinforcing taboos. When a community establishes a rule that a particular object or action is explicitly forbidden, first of all it creates heightened (but hushed) interest in that subject: the minute something becomes forbidden, it becomes more interesting. Second, the king (or whoever is the modern-day equivalent of the king) is often granted an exception to the rule. They, and they alone, may violate the taboo. Historical tradition is full of rules like, “If you drink from the sacred well, you will be banished from the community; only the king may drink from the sacred well.” Now why is this so important? Well, think about it: every time that the citizenry sees the king violating the taboo, it reinforces that he is the king and you are not; the more interesting the taboo, the more powerfully this differentiation will be continuously felt among the subjects.

For this to work, it’s not enough to simply have a king and subjects; there needs to also be a separate group, with their own kind of influence, who have the power to define and enforce the rules around the sacred and the taboo. We can call them the priesthood. They have a power that is very different from the king’s power; their power does not come from the fact that they are differentiated; their power comes from their blessing of that differentiation as “good”, or alternately (if the winds change) their condemnation of that differentiation as bad. Kings may come and go, but the priesthood endures. They provide a “moral” continuity for why we praise and revere the king for drinking the sacred water when the king is ascendant, and then turn on a dime to revolt against the king and scapegoat him for having drank the sacred water when it comes time to bring him down. (There’s very little conflict between “He’s special because he and he alone can break the taboo” and “He is banished, because he broke the taboo.” The priesthood’s power comes from their ability to flip that switch, should they decide.)

To give you an example of one modern-day community that follows this rule around taboos, consider the academic science community. In science, one pretty rigidly observed taboo is the idea that “money and science don’t mix”. Money, especially from the likes of Big Pharma, is seen as a bad, corrupting influence on the “pure” practice of science. There’s only one problem with this, though; you obviously need money to do research! So the people who actually do bring in money come to be seen as little royalty figures: the principal investigators who bring in grant money, and more significantly those who do big research deals with industry, become differentiated like a type of king. The fact that they (and not you) are so fluently able to raise and spend money reinforces the fact that they (and not you) are the boss. Who provides these differentiated PIs with their blessing? The academic journal reviewers and editors, who hold a very priesthood-type of power: “Researchers may come and go, but the New England Journal of Medicine is forever, and we decide who is worthy of being differentiated.” They’re the ones who give their blessing to hotshot PIs who then sit on pharmaceutical boards, take industry money, and inspire jealous reverence in their subjects; they’re also the ones who can take them down, should they choose.

Coming back to Silicon Valley and the startup hustle, I think you can probably get where I’m going with this. The scammy nature of the hustle isn’t just something we grudgingly put up with; it’s something that’s actually quite taboo, and it gives founders power. One of the most interesting, unspoken paradoxes of startup culture lies around honesty. In many ways, Silicon Valley is an unusually honest place. We generally don’t sign NDAs; we don’t have noncompetes (at least in California); bad behaviour on the part of investors is quickly relayed through founder networks. In many ways, Silicon Valley runs on the honour system, and dishonesty is tolerated even less than elsewhere. But there’s a meaningful exception: if you want to create a startup out of nothing, you’re going to need to leverage everything you have in your possession, and that often means leveraging some not-quite-truths in order to make progress. Bill Janeway even calls this the Golden Rule of Startups: “All entrepreneurs lie.” The way I interpret it, that’s not meant as a criticism of founders! It’s simply stating the obvious: if you’re trying to create something from nothing, sometimes it helps if you can tell people there’s something there already. But this is something we don’t talk about in polite conversation. It’s quite hushed.

The real taboo subject of Silicon Valley is this: founders acquire and project power by being uniquely permitted to lie. When a VC “blesses” a founder with a signed term sheet, and later on with a blog post that talks about how great and special and differentiated the founder is, they’re performing a rite of the priesthood: giving the founder their blessing to keep hustling. It helps give the founder that aura, to be envied by many but copied by none, which gives you the power to use that leverage: stretching your forward momentum a little bit more and a little bit more, and maybe breaking some other little rules along the way (which you’ll be praised for doing, by the way). It’s all in the interest of building a legitimate business that is real, but on the way we dig deeper into that reservoir of overreach that lets founders promise the moon and the stars. And it compels other people — business partners, prospective employees, following investors, whomever — to say, “Hey, the moon and the stars sound pretty good! This sounds a bit too good to be true, but who am I to not give the benefit of the doubt here?” But you can’t cheat too much; if you do, your power can be taken away from you. You can get scapegoated, and in a matter of weeks go from being the darling of the tech world to being a pariah that everyone agrees is horrible and unethical and “a stain on the good image of startups” and whatever. All while nothing changed! Such is the power of the taboo: that which is given to you can be taken away just as quickly.

I want to close this week with a note about this whole “Founders as Kings” metaphor in keeping with where we’re headed. I had a couple people reach out by email and ask, “Is there a particular reason why you’re using the word ‘king’, and not something more gender inclusive? Please be more considerate.” Thank you for sending these emails; they’re absolutely on the money, and next week I’m going to talk about why the word ‘king’ was used on purpose. It has to do with the dark side of all these rules and social codes around differentiation that we’ve been talking about: why Silicon Valley can be so unusually toxic around diversity and inclusion.

NASA’s Opportunity Rover has been put to rest after losing power and shutting down in a sandstorm, following 15 years of loyal service:

Mars rover Opportunity is dead after record-breaking 15 years on the Red Planet | Mike Wall,

The Mars rover Opportunity is dead. Here’s what it gave humankind | Michael Greshko, National Geographic

Lost Opportunity: after a 15-year odyssey, NASA’s trailblazing Mars rover approaches its end | Rebecca Boyle, Scientific American

Amazon broke up with New York City on Valentines day; somehow, absolutely everyone came out of it looking terrible:

Update on plans for New York City headquarters | Amazon

New York’s rejection of Amazon is the start of a movement | Sarah Holder, CityLab

Politicians point fingers after Amazon ditches NYC headquarters | Nolan Hicks & Carl Campinale, NY Post

Quinnipiac polling on New York City voters’ approval of Amazon HQ2 plans (December 2018) | Quinnipiac University

Some cheered, others “sickened” over Amazon news in Long Island City, NY | Charles Passy & Katie Honan, WSJ

Podcast episodes for your listening enjoyment:

How far out can we predict the weather, and an ocean robot that monitors food webs | Sarah Crespi, Meagan Cantwell & Paul Voosen, Science Podcasts

Why Exponent isn’t on Spotify: Spotify’s move into podcasts; integration and modularity in value chains | Ben Thompson & James Allworth,

Fern Mallis discusses the fashion industry | Masters in Business with Barry Ritholtz

Also, I sat down for a podcast recording with Patrick O’Shaughnessy, and I think it came out really well. Take a listen here:

Alex Danco: Scarcity, Abundance and Bubbles | Investor’s Field Guide

A major study shows that ridesharing services like Uber and Lyft are killing public transit ridership, but not all agree:

Who’s On Board? 2019 Executive Summary | TransitCenter

Americans are abandoning public transit — but don’t blame Uber | Aarian Marshall, Wired

Other reading from around the Internet:

US science agencies set for budget boost in deal to avert government shutdown | Lauren Morello, Sara Reardon, Emiliano Rodriguez Mega, Jeff Tollefson & Alexandra Witze, Nature

Zillow wants to flip your house: a new breed of high-stakes real estate, at massive scale | Patrick Clark, Zillow

Why America’s new apartment buildings all look the same | Justin Fox, Bloomberg Businessweek

Atlantic City really is going under this time. Can an entire city donate its body to science? | Rebecca McCarthy

The Two Migrations: into San Francisco, and out of it | Diana Helmuth, Curbed SF

The new scabs: stars who “cross the picket line” | Soraya Roberts

Amidst this week’s discussion around climate change, the green new deal, and the urgency to act now, Jay wrote a blog post that you should read. We’re going to repost it here:

Our climate needs us. Our most recent climate report demands that we act, urgently. In its aftermath, we’ve seen some audacious, inspiring and even crazy ideas: dimming the sun by using aerosols, using mechanical scrubbers to remove carbon dioxide and beyond. Perhaps they are necessary to help solve the problem of climate change; but we have a more humble request that’s equally audacious, but much simpler. Plant more trees!

In the four and half billion years of Planet Earth’s existence we’ve seen three “versions” of our atmosphere. And our current atmosphere was created by the miracle of photosynthesis — an evolutionary experiment that has already done this once before.

Let’s do some quick math. We’re currently at 400 ppm (parts per million) of carbon dioxide in our atmosphere. This represents around 5 X 1⁰¹² tons of carbon dioxide in the atmosphere today. We add about 40 billion tons of carbon dioxide every year. In order to level off at 400 ppm we have to follow a two-pronged approach: (1) control emissions per current goals (global commitment to move to renewable energy, incentivize green infrastructure development, cut carbon emissions 60–80% by 2050) and (2) increase our carbon sink capacity to absorb 8 billion tons of carbon dioxide every year.

We’re left with the choice of using chemical, mechanical and biological means for carbon sinks. If you ignore the likelihood of unintended consequences from chemical and mechanical means and just consider the cost to use them, they are far too expensive — $500–1000 / ton and at very high efficiencies could come down to $250 / ton with improvements to technology. This is insane, we’d need to spend $2–8 trillion to absorb all the excess carbon dioxide we produce on an annual basis.

There is no better means to do this than biology. After all, this has already been done at scale once before, by trees. Here’s the kicker — we’ve roughly vented 400 billion tons of carbon dioxide into the atmosphere since the start of the industrial revolution (the year 1760) but we’ve also scaled back enough forest to have lost the ability to absorb 180 billion tons in that time!

An acre of managed forest absorbs about 15–20 tons of carbon dioxide per year. We could absorb 8 billion tons of carbon dioxide with an additional four hundred million acres of forest land. Sound insane? Perhaps, but there are ten billion acres of forest land on our planet today, and that has crept down from thirteen billion acres pre-industrial revolution. So, this is well short of what we know has existed in recorded history. But, even if we wanted to undertake such an effort how would we even start doing this? Is it possible? Our current options are limited or brutal:

  1. The largest timber companies plant at most one million acres a year.
  2. Tree planting is manual and brutal and it takes a lot to do relatively little in terms of scale.

So how do we solve this problem?

Enter DroneSeed — an innovative company in Seattle, who weI’ve had the pleasure of working with over the past three years. They’ve been using swarms of drones to replant forest land in post-wildfire scenarios. A 3-drone swarm can plant 35 acres of forest land per day and each hangar can hold 3–6 swarms. They’re focused on sharpening their ability to scale to one million acres of forest land (hundred million trees) in a relatively short time. What’s more, with a cost of $350 — $750 / acre to plant and monitor forests, DroneSeed is the most cost effective solution at $25–100 per absorbed ton of carbon dioxide versus $500–1000 by chemical or mechanical means.

Ok, so we’re running as fast as we can but could use your help in four possible ways:

  1. DroneSeed is partnering with the The Nature Conservancy to reforest land today. If you happen to be an organization that undertakes such projects, please contact us right away. We’re in the process of signing up three partners to begin scaling up our efforts as soon as September of this year.
  2. We’ve partnered with foundations who realize that only 1% of conversation and 3% of climate funding goes to reforestation. If you happen to be one of those foundations we’d love to partner with you, especially now that we have a solution that works!
  3. If you’re an engineer or scientist and want to make a difference come join us. There is no more important problem to tackle today — and you get to play with huge 55 pound drones, sensors, sensor fusion, routing, machine vision and all the cool tech you can think of.
  4. If you’re interested in reforestation, and our journey as we tackle this problem follow us as we build out our company.

Have a great week,

Alex & the team from Social Capital

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Weekly news and notes from the Social Capital family

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