The nature of secrets

Aren’t secrets interesting?

A re-read of Thiel and Masters (2014) “From One To Zero” prompts this post. It was a dark read my first time through. It was a little brighter on the second. On third reading, I noticed a yellow fibre weaving through the tapestry. Come along as we tug on that single, beautiful thread.

A secret has several quality attributes:

• It can be information or not.

• It can be true or false.

• It can be open or hidden.

• It can valuable or not.

And all the degrees in between.

Let’s have some fun.

Information or Not

Claude Shannon (1948) defined information as a set of possible messages, he wrote: “The word communication will be used in a very broad sense to include all of the procedures by which one mind may affect another.” Let’s overthink that. He was an important contributor to the science, and perhaps the art, of how information can be transformed to appear as though it doesn’t have an order, or, how the way that it is ordered is designed to be concealed. Most courses on encryption start with a kind of assumption about order or disorder, what is interpretable or recognizable as information, and what is not. Secrets are messages intended to be communicated to a specific audience.

Any arbitrary string can be appear to be a message or not, depending on how it can be transformed.

At the risk of getting too McLuhan about it, perhaps, sometimes, there’s an incentive to deliberately encode complete disorder as disordered messages, so as to confound and confuse an adversary? What if you deliberately encrypted nonsense on purpose and mixed it in with a message that’s disguised as nonsense? In other words, sometimes a string has been artistically crafted to conceal order, and sometime you want your adversary to expend energy and resources to decrypt order that simply does not exist. In that way, even random nonsense could be a procedure by which one mind may affect another.

As a result of the ambiguity of the words used in these definitions, I can’t offer a completely resolved, defined, sharp boundary along the dimension of what is information and what is not, consider these three strings and make up your own mind:

• “This string is information.”

• “Tihs stginr si inmationfor.”

• “6560682157”

But, perhaps, the closer you stare into that boundary, between what is information and what is not, the more distinction you can see.

It seems likely, given that the set of all strings is uncountable, that most of the potential arbitrary strings of data that could ever exist do not contain any information. In other words, most of strings that could exist contain no message.

True or False

“What important truth do very few people agree with you on?” (Thiel and Masters, 2014, p. 7)

It’s from the work of Gödel (1931) that we understand the beauty and catastrophe that the Universe will never enable a system that will recognize truth. From Gödel’s rubble I have to establish some kind of basis to grapple with.

I’ll frequently use the sentence “compiles as true” to describe a statement that generally makes accurate predictions about nature – as an expression that a statement has face validity. So, a statement has a degree of truthiness, face validity, if it can be joined with other statements to create a generally accurate, useful, prediction about nature, and it’s generally false if it does not. The nature and incentives of deception has been a theme running through the posts all year.

It follows that, because most arbitrary strings of data do not contain information, most strings do not compile as True.

So, it’s from those roots I generalize:

Almost nothing is True.

(Open and Common Knowledge) or (Closed and Uncommon Knowledge)

“The most contrarian thing of all is not to oppose the crowd but to think for yourself.” (Thiel and Masters, 2014, p. 23).

A lot of people define the boundaries of their community, the decision to include somebody in the set of themselves and exclude others from the set of themselves, by the knowledge they possess and the goodness of fit between the sets of expressed beliefs and demonstrated knowledge. This might mark the difference between what is an open society, with common knowledge, and what is a closed society, with secret knowledge. Perhaps…even defined by the knowledge of its membership. That would mean that the knowledge of a closed society is uncommon.

Uncommon knowledge doesn’t necessarily have to be contrarian. It doesn’t have to be a belief, or a set of beliefs, that, when interwoven into a perspective, renders an argument that is orthogonal to what is common. What Thiel and Masters suggest that is that the mere act of thinking for yourself is sufficiently contrarian.

And there’s a kind of necessity there because, in order to create commercial relevance, in order to create and capture demand, in order to be valuable, it can’t be in opposition to every crowd or with the entirety of society. This idea, in turn, previews whether or not a string of information that is uncommon, and hopefully true is valuable. Or not.

Valuable or Not

“By definition, a secret hasn’t been vetted by the mainstream.” (Thiel and Masters, 2014, p. 96)

“The business version of our contrarian question is: what valuable company is nobody building?” (p. 24)

A valuable secret, in the commercial context, is information that is: true, uncommon and closed.

Roger Martin (2009) gave us a wonderful analogy to describe what we do in design thinking. We walk up to a wall mysteries, and we use tools to pick out some of the chaos, understand it, and, in general, managers try to put just enough order around those mysteries to render them into useful heuristics: decision-lever tuples that render value a majority of the time, and little loss the minority of the time. And then later the quants come along and convert those heuristics into natural laws that can be optimized, and ultimately arbitraged away by management consultants into commoditized common knowledge — the <<<best practices>>> of such and such vertical. There’s something deeply comedic about managers diluting the competitive advantage of their firm by teaching agents to teach their competitors their secrets. It’s absurd.

That surface, that wall of mystery, is the barrier that holds us all back.

And it’s been there forever.

We just pick away at it. Our biology, as species, likely really didn’t massively differentiate until we started using our minds to pick away at that wall. I wonder if it started by accident. Somehow, we figured out how to control fire just enough to outsource a large part of our digestion system to it. Digesting roots and raw meat takes a lot energy, so why can’t something else do it? So we hired fire and biomass to take care of that: dried wood, shrubs, poop and such. It opened up a lot more energy for our bodies to think of other mysteries. It helped our inner monkey to pick away at that wall of mystery and get better.

We’re obsessed with fire. We burn everything: water, hydrocarbons, rock. Groups of humans that were better at burning other humans got to decide who got to eat and who got eaten. We cooked just about every rock and animal we could find. And the tradition continues to this day at the LHC where we burn bits of bits of atoms. We fry’em so hard that even time slows down for them — relatively speaking. We’re that obsessed because burning has been valuable. Heat is transformative because it releases secrets. Those secrets are so valuable that they don’t remain secret for long.

Thiel and Masters got that. The title of their book, Zero to One, is about technology.

“The single word for vertical, 0 to 1 progress is technology.” (Thiel and Masters, 2014, p. 8)

(Their concept for horizontal, 0 to n progress is adoption, the number of humans of that are using that technology.)

Some secrets more valuable than others. They start out as secrets in an uncountably infinite wall of information that are … ripe for the picking and often motivated by greed or existential risk.

Sometimes it’s as though nature is actively aware that we’re watching it, and that it actively tries to confound us. And sometimes, it seems as though nature has embedded fantastic features, bread crumbs, into the structure of reality for us to follow. It’s pretty awesome that, given just how scrambled all information appears to be, that we’re able to make discover any secrets that are just True enough to be valuable.

Incentives

The deal made in the 1700’s was with an incentive structure. We struggled with other incentive structures. We tried shaming people into compliance. We tried threatening them in the current world. Then we made up stories about eternal suffering. It didn’t work though. So we tried something different. It took quite a few generations for the experiment to get going. It goes like this:

If you’re a clever monkey, then you get to wander up to the wall, and you pick away at the secrets. If you succeed in flaking a tiny fragment away and bring it back to the other monkeys, you’ll get a reward. In exchange for publishing your secret, you get a patent, a temporary monopoly to earn more bananas than you could ever eat. And, while this system just creates a bunch of new problems, I wouldn’t trade the ones I face today for the ones I would have faced in the 1600’s. In this way, there’s a whole motivated system for making sense of the mysteries, for exploring the secrets in the wall. We’ve created a system to reward curious monkeys. Instead of crushing their motivation to discover new mysteries, we recognize their efforts. And collectively, gradually, at the rate that interest compounds, our lives become a bit less terrible, and a bit more interesting.

I don’t think it’s any secret: the system of risk of reward creates compounding progress in ameliorating our living conditions and creates a never ending steam of new problems and catastrophes to solve.

So, in our pocket of the world, we’re rewarded to look for secrets: to go from 0 to 1, and from 0 to n.

“Positively defined, a startup is the largest group of people you can convince of a plan to build a different future.” (p. 12).

We’re to form a knowledge community, a conspiracy against the status quo, to go for those rewards. A company is the company you keep, those who work assessing a secret for its truthiness, to get from 0 to 1, and 0 to n.

The beautiful yellow thread continues:

“Contrarian thinking doesn’t make any sense unless the world still has secrets left to give up.” (p. 92)

“If there are many secrets left in the world, there are probably many world-changing companies yet to be started.” (p. 93)

Based on the reasoning that the number of True secrets is some number between 0 and likely countably infinite, and it’s conceivable that it could be uncountably infinite, then it seems more likely than not that there still a very large number of secrets left in the wall.

Imitation and Innovation

If there is so much left to discover, then why is the rate of startup failure so high? What’s the secret of secret propagation?

“All failed companies are the same: they failed to escape competition.” (p. 35)

Escape can only be achieved differentiation. It implies doing it in ways that, in the Porter (2008) sense of the term, an un-replicable system of deliberate choices that are impossible for competitors to imitate. In the Gregory Dawson sense of the term: schismogenesis. Everything else is regression to the mean and a date with the red queen. It offers a satisfying conclusion to the explanation of the Silicon Valley founder fanfic that passes as non-fiction: some of it is deliberate adversarial encryption, and some of it is likely accidental ego exhaust.

It seems far more likely than not that differentiation is the best path to escape from failure.

Conclusion

A valuable secret has a number of quality attributes: it has to be information, uncommon, hidden, and true. I’m over in the camp that there are plenty of valuable secrets left to be discovered. I reckon that the barrier to their discovery has a lot do with the incentives around courage. There’s a lot of risk around the truthiness of a secret. There’s an entire alchemy around the 0 to 1 portion of the work, just as there is around the 0 to n.

It isn’t perfect. It might not even be the best that we could possibly do. Yet, it’s fantastic that so many get to try to discover better ways through. And, until somebody chips off a better way, a new secret, from that wall of nature’s mysteries – the superstructure of incentives in the WEIRD countries remains in place. For mostly better, and a little bit of worse.

It’s such a lovely, wonderful, yellow thread, isn’t it?

Sources

Kurt Gödel (1931) “Über formal unentscheidbare Sätze der Principia Mathematica und verwandter Systeme, I”, Monatshefte für Mathematik und Physik, v. 38 n. 1, pp. 173–198.

Martin, R. L. (2009). The design of business: Why design thinking is the next competitive advantage. Harvard Business Press.

Porter, M. E. (2008). On competition. Harvard Business Press.

Shannon, C. E. (1948). A mathematical theory of communication. The Bell system technical journal, 27(3), 379-423.

Thiel, P., & Masters, B. (2014). Zero to one: Notes on startups, or how to build the future. Crown Currency.