Why is there only one Elon Musk? Why is there so much low-hanging fruit?

Discuss this post on my forum.


Number of people

One of the things I’ve always been confused by is the efficient market hypothesis. There are almost 8 billion people on the planet – why is there so much low-hanging fruit? Why is there so much stuff to work on? Why is there only one Elon Musk?

Recently I’ve been thinking about this as follows: In order to become Elon Musk, one needs to be in

These all are probably somewhat correlated, however I also probably forgot a bunch of important variables, so I think it’s reasonable to say that we just have 5 independent random variables in which one needs to be in 99th percentile.

Now, multiplying the probability of a person being at the intersection of these 5 by the number of people alive we get: $$ 0.01^5\times10^{10}=1 \text{ person} $$

This model is clearly extremely bad, but I think there’s a good range of plausible parameters that give approximately this result and that explain why there are so few Elon Musks.

Number of problems

As technology advances, the number of problems to work on increases. More technologies mean more businesses to be built around them and more scientific problems to work on, as most scientific discoveries enable further discoveries. Between 1920 and 2020 the Earth’s population has increased by about 4x. The number of big tractable problems has probably increased by 100x.

Has nobody ever thought about X before? Why has nobody built a company out of X already?

There are many smart people around. There are many ambitious people around. There are many people with big visions. There are very few people who are all of those things combined. Thus, we shouldn’t be surprised there’s so many big interesting things left to do, so many thoughts to be thought, and so many companies to be built.

Very few problems can afford having Elon Musks working on them.

Notes

Common objections

“Musk is also very lucky”

Yes, as many people have pointed out, luck is also very important. I was not aiming to be exhaustive in the list of 99th percentile variables I provided.

“Elon Musk was born into wealth and is therefore a bad example of what it takes to reach extraordinary achievement”

Two points: the vast majority of people born into wealth do not do anything interesting with their lives. And he wasn’t (a):

Some of his most vocal detractors have promoted the idea that Musk, like Trump, began his career backed by the deep pockets of dear old dad. Errol Musk, an engineer, owned a small percentage of an emerald mine and had a couple of good years before the mine went bust and wiped out his investment. Musk readily jumps onto Twitter to refute the charges that his empire was forged with the aid of family wealth, and part of the reason he wanted to talk to me—rather comically given the rocket launch and, well, trolls—was because the jabs bug him, and he hopes to set the record straight. For what it’s worth, my reporting, based on conversations with hundreds of people, confirms Musk’s story. Regardless of your opinion of him, he is a self-made billionaire.

“I paid my own way through college—through student loans, scholarships, working jobs—and ended up with $100,000 of student debt,” Musk says. “I started my first company with $2,500, and I had one computer and a car that I bought for $1,400, and all that debt. It would have been great if someone was paying for my college, but my dad had neither the ability nor the inclination to do so.”

Scott Alexander’s review of Peter Thiel’s Zero to One (a):

Past scientific discoveries came from a belief in secrets. Isaac Newton wondered why apples fell, thought “Maybe if I work really hard on this problem, I can discover something nobody has ever learned before”, and then set out to do it. Modern people aren’t just less likely to think this way. They’re actively discouraged from it by a culture which mocks stories like Newton’s as “the myth of the lone genius”. Nowadays people get told that if they think they’ve figured out something about gravity, they’re probably a crackpot. Instead, they should wait for very large government-funded programs full of well-credentialled people to make incremental advances.

Good startups require a belief in secrets, where “secret” is equivalent to “violation of the efficient market hypothesis”. You believe you’ve discovered something that nobody else has: for example, that if you set up an online bookstore in such-and-such a way today, in thirty years you’ll be richer than God. This is an outrageously arrogant claim: that you have spotted a hundred-billion-dollar bill lying on the sidewalk that everyone else has missed. But only people who believe something like it can noncoincidentally found great companies. You must believe there are lucrative secrets hidden in plain sight.

The modern skepticism about secrets and reasoning implies a similar skepticism about planning. If the argument against multi-step reasoning is right, then a mildly Internet-famous scene from Harry Potter And The Methods Of Rationality is right too:

Father had told Draco about the Rule of Three, which was that any plot which required more than three different things to happen would never work in real life. Father had further explained that since only a fool would attempt a plot that was as complicated as possible, the real limit was two. …

But Thiel says the most successful visionaries of the past did the opposite of this. They knew what they wanted, planned a strategy, and achieved it. The Apollo Program wasn’t run by vague optimism and “keeping your options open”. It was run by some people who wanted to land on the moon, planned out how to make that happen, and followed the plan. Not slavishly, and certainly they were responsive to evidence that they should change tactics on specific points. But they had a firm vision of the goal in their minds, an approximate vision of what steps they would take to achieve it, and a belief that acheiving an ambitious long-term plan was the sort of thing that people could be expected to do. And great startups like SpaceX are much the same. Elon Musk started with a n-step plan to get to Mars, and he’s currently about halfway through.

[By having every smart teenager in mid 2010s read it, HPMOR might’ve destroyed trillions worth of value just by this single line]

“I feel like people consistently overestimate how widely distributed individual technologies are, even where those technologies are clearly better than alternatives, easy to implement, and have minimal downside risk or cost to reverse adoption.” (a):

My Is anything inherently difficult?

Why do people not resist being put into gas chambers? (a)

“a major human component [..is..] responsibility avoidance. (a):

I am reluctant to call this a “natural” thing, but I imagine if I thought about it long enough I could generate a plausibly evo-psych backdrop for it. Regardless, it is observably true that many people will go to great lengths to avoid being held responsible for anything at all. What bureaucracy (broadly construed) accomplishes might in some cases be about organizational incentives, but these translate into individual incentives, namely, not getting fired for doing the “wrong” thing. And socially, the excuse that we will ordinarily accept for anything is “I was following procedure.”

And then, when the procedure generates a bad result, we don’t call for less procedure. We say, “what can we do to absolutely prevent such failures in the future,” even though often the real answer is, “nothing, actually, because no procedure is perfect, and neither is any human.”

But the moment a person says “I made a judgment call and it didn’t work out,” suddenly their livelihood is at stake. Which is not the same thing as, say, putting them to death, but the real-if-small-in-first-world-nations possibility of hunger and homelessness is a fairly serious threat. People have strong incentives to never be responsible for anything, and we’ve told them exactly how they can do that: by never, ever making judgment calls or otherwise acting on their own initiative.

Of course we do ask them to exercise good judgment and act on their own initiative all the time. But the incentives for that are largely imaginary unless you’re self-employed.

William Shockley on what makes a person who publishes a lot of papers (and the superstar researcher system) (a):

Another conclusion is that if you are really bad at just one factor (pi close to zero for just one i), it sinks your overall productivity. This is innate in the multiplicative model (it is analogous to the ecological concept of bet hedging*). Being moderately good at everything is better than great at some and terrible at others (the oft heard “I’m terrible at writing but really good at coming up with ideas” doesn’t cut it but nor does the opposite).

Elon Musk’s former Chief of Staff on Elon’s pain tolerance.

Hard is Not Defensible (a):

Working new things out is hard, but that doesn’t mean once something has been worked out it’s hard to do. Things that are hard to come up with but easy to copy are ‘Math hard’.

Many mathematics problems take a long time to figure out how to solve. But, once you have a method, often the answer can be verified quickly and the method can be learned easily. Pythagoras needed to be smart to invent his theorem, but now children learn it in school. Other Math Hard things include recipes, designs, and new ideas. …

The other kind of hardness is the intrinsic hardness of doing certain things. Some things are difficult to do, even if everyone knows how to do them. This is Bodybuilding Hard.

Achieving a bodybuilder’s physique isn’t complicated, no matter what the endless range of supplements suggests. You need to: exercise frequently with heavy weights; and consistently eat a protein rich diet. Neither is a secret or complicated to understand. Most people, in shape or not, know this stuff. The problem is that doing these things is intrinsically hard. It requires strenuous activity that’s much less fun than seeing friends over beers and burgers.

Most valuable achievements are Bodybuilding Hard. Learning a new skill, becoming wealthy, being a good partner – all require effort. Practically everyone knows more or less how to achieve these things, but few actually do. That’s why there is a supplement shortcut for every industry: pointy guitars; self help books; and magazines with fancy bedroom techniques.

“the older I get the more obvious it becomes that you can win at lots of things just by deciding that you’re going to stick with it longer than everybody else” (a)

“I’m beginning to be of the opinion that most of what you have to do to win is the stuff that everybody admits you probably could/should do but sure seems like a pain in the ass” (a)

Lessons from “The Profit” (a):

A typical firm on The Profit, for example, has decent revenues, sometimes millions of dollars of revenues, but it has costs that are as high or higher. What happened? Often the firm began with a competitive advantage–a product that took off unexpectedly and so for a time the firm was rolling in profits without having to pay much attention to costs. As competition slowly took hold, however, margins started to decline and the firm found itself bailing. But instead, of going out of business, the firm covers its losses with entrepreneurs and family members who work without pay, with loans which grow ever larger, and by an occasional demand shock which generates enough surplus revenue to just keep going.

The correct metaphor for competition isn’t a boxing match that knocks out the inefficient firm. The correct metaphor is a slow tide. Inefficient firms must scramble for a bit of high ground but as the tide ebbs and flows they can occasionally catch a breath when their head bobs above the profit line. An inefficient firm can survive for years before it inevitably sinks. …

Another lesson from The Profit is that firm problems are personal problems. The son who can’t step out from the shadow of the father and the father who can’t let go. The two brothers who haven’t gotten over the death of their father and the problems this creates in the firm they have inherited. The siblings who are still fighting to get their parent’s attention. If Lemonis has a genius skill it’s in keeping his temper and working through bullshit problems to get to the real festering issues that are at the root of inefficiencies.

Now, in this case, there is surely some selection going on. Personal drama makes for good television but the general point strikes me as true and correct and important. It’s difficult to run a business like a business. The analytical mindset that can separate business problems from personal problems isn’t natural. Many people cannot separate business decisions from their own preferences and emotional biases, which is one reason why great business leaders are rare.


You can send your comments to me via

If you enjoy reading my site, you can subscribe by email: