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Entropy is the only constant
PvP and PvE / growth solves all problems
Part of getting old is realizing how much time we spend *fighting change*. I don't mean protesting mask mandates, I mean doing the dishes, vacuuming the floors, and performing back stretches. Yoga is no longer an optional supplemental exercise.
There were times in my life when I didn't really worry about entropy, though. When I interviewed for full-time jobs during senior year of college, I had a month where I spent more time in San Francisco than home, and I didn't do dishes or even laundry - just shipped new clothes and called it a day. Maybe this was a time period where I expected change and embraced it, or that the upside from being 1% better was so high that it was worth just incurring the buildup of Uniqlo tees.
I think the default state of most humans is to preserve what they have, especially if things are "okay." The exception is when times are good and we have growth - growth distracts us from what we have and instead invites us to ask, "what could we have"?
PvP and PvE
What happens when people are conditioned to growth, and growth goes away?
In DeFi, a bubble for "ponzicoins" popped recently. Ponzicoins, as an asset class, offered very high APY, as measured in their native token. These projects fundamentally floated on the tailwinds of growth. You buy the token, you do some game theory in your head to promise yourself (but mostly others) that you won't sell, price goes up (since you bought), other people see momentum and buy in, price goes up, and so on. For a while, things were "PvE," or players versus environment. (3, 3) relies on this assumption that people can cooperate together since they're fighting the broader world (the corrupt bankers or something, I dunno).
Wonderland Money is down 75% versus BTC/ETH in *two weeks*, Olympus is down a similar percentage since Thanksgiving two months ago, when I sold ✌️. In that time period it turns that Wonderland was managed by a convicted fraudster, which honestly is kind of bullish: he'd already run multiple successful ponzis! Most people stop after just one, I kind of respect him making a career out of it.
Now that there's no more growth (because the price stopped going up), crypto twitter has declared that it's now "PvP season,” or player vs player. Any large holder of these coins needed to exit quickly, and if you're going to panic, you should panic first.
Tuld: There are three ways to make a living in this business: be first; be smarter; or cheat. Now, I don't cheat. And although I like to think we have some pretty smart people in this building, it sure is a hell of a lot easier to just be first.
Rogers: But, John, if you do this, you will kill the market for years. It's over. And you're selling something that you know has no value.
Tuld: We are selling to willing buyers at the current fair market price -- so that we may survive.
Rogers: You will never sell anything to any of those people ever again.
Tuld: I understand.
Rogers: Do you?
Tuld: Do you? This is it! I'm telling you! This is it!
This is literally what one of the largest individual holders of some of the ponzi forks said (after selling $11m first). His coins are down about 75% since this tweet, wonder if he is still risk on?
The thing is that the ponzi fork game was always PvP! It is only in brief moments of growth and prosperity that we are able to suspend our disbelief and believe that we are PvE. We are not minting currency out of thin air, there is a fixed amount of capital and belief, but the only way to increase those pools to bring new people in. This doesn't beget a ponzi, you can of course "provide goods or services which people want" to attract new people versus trying to offer them a 100k APY.
org chart growth
I used to think about startups as cults, you need to suspend disbelief and put your faith in the CEO in order to make it work. The moment you start to question if the narrative is right, that's when things fall apart.
I still think that, but I think you can also think about startups through the above lens, that when things are growing fast, you can ignore almost all other problems. Tech debt? Who cares, either this works or we run out of funding, so just duct tape some Python in prod. Fundamentally flawed unit economics? Lead with the user acquisition charts. Harassment in the workplace? A fundraise should tighten those golden handcuffs!
So the synthesis, is to say that the rose-tinted glasses come off when growth stops.
This cult thesis applies not only to startups, but to BigCos where there shouldn't be as much of a cult. Being an engineer at Google or Facebook shouldn't be an identity in the same way being an engineer at some buzzy Series A could be (neither really should be an identity, but whatever).
There is a fixed amount of rewards (promotions, bonus pool, etc) available to employees of a company. When the company grows, it expands that pool, as you start building new products, which requires new teams, which requires new managers, which gets you a bigger mortgage. You bring in new blood and sell them the vision, that you are growing and will perpetually grow, and that they too could get a bigger mortgage soon, that you are PvE and winning. The career advice I always got was to work on ads at whatever GAMMA co, since ads had lots of metrics and you could clearly measure your impact. The missing piece I never saw was that, because ads has lots of metrics, ads leaders can clearly justify increased headcount and spending to their entire org, which justifies better outcomes for everyone in that org. Micro meet macro.
When growth stops, the PvE also turns to PvP. That reward pool is fixed or shrinking, so you have to compete for your manager's limited allocation. This encourages worse behavior, such as promo-driven development or just nakedly throwing others under the bus. This means that the VC-driven “growth at all costs” model actually makes sense for most companies beyond a certain size - without growth, there are insufficient incentives for employees to stay, which is (eventually) a death knell.
contractually obligated broader philosophical point
I think a lot about Mark Fisher in January, for some reason, he of "it is easier to imagine the end of the world than imagine the end of capitalism." Maybe it's because I get a new shot at reading books and Capitalist Realism is nice and short and I can juice those numbers. Maybe it's just that winter makes it very easy to imagine the end of the world.
One popular theory in western thought is that capitalism drives peace, that worldwide trade relationships bring people closer together, that McDonalds solves world peace, whatever.
Instead, let me posit: the default state of humans is in PvP conflict, and that growth enables us to stop fighting amongst ourselves, and instead focus on the frontier of what is possible.
This is admittedly quite half-baked, but probably still better than anything Friedman has ever written and too interesting to not include. This behavior is very obvious to me at the micro level, why shouldn't it also be true on a macro level? Some places I'd look to try and verify this kind of behavior:
Countries with negative GDP growth, e.g. post-Soviet republics or post-2008 austerity western Europe, should display more PvP characteristics. What these would be, I'm not sure...
Relatedly, immigrants to other countries tend to outperform - Nigerian Americans are the most educated group in the US, Asian model minority myths, Korean "American" League of Legends players, etc. The general story is people leave their homes to pursue greater opportunity (more growth), and the ones who are able to leave are the ones who were most successful in a PvP environment, and are then therefore overall better.
"Build in bear markets" - companies which are forced to compete during a PvP environment, and which manage to survive, are likely to have more durable advantages than the median company which is successful during a bull/PvE market.