In the Peter Thiel CS183 notes by Tribunus Blake Masters, it is written:
How hard it is to obtain the truth is a key factor to consider when thinking about secrets. Easy truths are simply accepted conventions. Pretty much everybody knows them. On the other side of the spectrum are things that are impossible to figure out. These are mysteries, not secrets. Take superstring theory in physics, for instance. You can’t really design experiments to test it. The big criticism is that no one could ever actually figure it out. But is it just really hard? Or is it a fool’s errand? This distinction is important. Intermediate, difficult things are at least possible. Impossible things are not. Knowing the difference is the difference between pursuing lucrative ventures and guaranteed failure.
Discovery is the process of exposing secrets. The secrets are dis- covered; the cover is removed from the secret. Triangle math was hard for Pythagoras to discover. There were various Pythagorean mystery cults where the initiated learned about crazy new things like irrational numbers. But then it all became convention.
It can also work the other way, too. Conventions can get covered up and become secrets again. It’s often the case that people stop believing things that they or previous generations had believed in the past.
Some secrets are small and incremental. Others are very big. Some secrets—gossip, for instance—are just silly. And of course there are esoteric secrets—the stuff of tarot cards and numerology. Silly and esoteric secrets don’t matter much. And small secrets are of small importance. The focus should be on the secrets that matter: the big secrets that are true.
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The concept of secrets goes beyond business and science. A common trivial observation is that “information is power” or that those who control information control (fill in the blank). But what does that mean? Control over information means discovering information that other people do not have and choosing who gets that information and when. It refers to secrets.
Secrets have been essential to power from the first organized societies. In Rome, secrets changed hands in the atrium. In the feudal world, secrets were regulated by personal loyalty. The members of the King’s court had personal relationships with each other. The nobles and gentry had personal relationships with their knights, stewards, sheriffs, clergy, wardens, barristers, and butlers. They had personal relationships with their tenant farmers. From top-to-bottom, a world held together by personal relationships. Control of secrets in a world like this is straightforward. It would seriously jeopardize anyone’s social position to reveal a secret without authorization.
Capitalism began as a parallel society to feudalism. Merchants did not fit into the feudal order. Although the nobility had a strong sense of superiority over the merchants, they often came to a mutually beneficial arrangement. Mercantile outposts like the City of London or the Hanseatic League were respected, in turn, merchants lent money to their sovereigns. The world shifted from a feudal one to a capital one because the capitalists won over the aristocrats. They did this by filling in where the feudal order failed.
Merchants developed their own information advantage. A merchant from London and Paris could meet in Venice or Genoa and exchange gossip. Each of them would then know things in their home city that the nobles did not know. The development of the printing press supercharged this. Wealthy merchants founded newspapers, primarily to get market data faster than the competition. Capitalism is all about getting information before rivals. A secondary and surprising benefit of printing was the spread of technical information. A technician in London and Naples could previously only compare notes by one of them relocating for a long time. With printing, they could share information rapidly. Innovation accelerated, especially in shipbuilding and navigation, of prime importance to the merchants.
At the end of the Middle Ages, Europe faced a polycrisis. Of course, there was the Bubonic Plague. There was the Little Ice Age, constantly ruining European harvests. There was the threat of Ottoman invasion. The POC fantasy of laying waste to the white man and hearing the lamentations of the white woman as they steal her genes, present then as now, was more potent and imminent than ever. One would expect Europe’s forests to be reserved for firewood, or cleared for farmland to cope with the famines, or turned into ships to defend against the Ottomans. Instead, the Europeans invested their wood into making ocean-going vessels. Those ships discovered new fisheries that helped feed Europe through the long winter. They discovered the New World with its vast untapped wealth, including a huge surplus of wood. They discovered how to round the African cape to break the Ottoman economy. And they certainly beat the Ottomans on the sea and on land.
The prestige of these successes led aristocrats to join the capitalists, investing in their enterprises and relying more on this investment income than their traditional landed estates. Merchants moved beyond the sea, applying their financial and scientific methods to war, industry and even farming. This created the modern era of industrial capitalism. Secrets played a role everywhere. A profit is fundamentally what happens when you have information before customers and competitors. These techniques were further applied beyond the economy and into politics. As the new weapons favored mass armies, personal relationships no longer sufficed to govern. The masses were given the right to vote in recognition of what they could do with a rifle. Of course, an elite always rules, so the masses now had to be controlled like never before. The power of the rifle was subsumed into the power of the ballot. The power of the ballot was then broken by dilution. The mass of fighting men, unlike feudal soldiers, couldn’t hold it. It was extended to men who could neither fight nor maintain a household, then to women, breaking the household unit. Baffled commentary at the time wondered if it would be extended to babies and asses.
The expansion of the franchise was part of a pincer movement by the elite to break the power of the people. The other side was the expansion of mass media, fueled by further innovations from the telegraph, to radio, to television, and finally the internet. But mass media worked even with just print. It is assumed that our present regime is odious because it uses The Narrative to control thought. On the contrary, The Narrative is odious because the regime is gangrenous. All modern regimes had The Narrative. The Prussian Juncker regime and the Austrian Habsburg regime, for example, had newspapers that were secretly government-controlled, shaping mass opinion. Those regimes projected a show of parliament responding to public opinion. In fact, both sides of that equation were being carefully managed by bureaucrats and intelligence officers.
As with the feudal system, this one contains the seeds of its own destruction. The development of the internet, the ultimate expression of mass media, has made secrets impossible. There is an inability to stop the propagation of secrets, but that is not the central problem. Eventually, all secrets get out, what matters is when they get out and who gets them in what order. The problem with the internet is that elites can no longer maintain coordination discipline with regards to secrets. As Thiel/Masters state:
The basic choice is whether or not to tell other people about your secret. If you don’t tell anyone, you’ll keep the secret safe. But no one will work with you. When you die, your secret will die with you.
Alternatively, you could tell your secret to everybody. You may be able to convince some people that it’s actually true and build a team. But then the secret is out. More people may try to compete with you.
What kind of secret you have may influence your decision to share or hide. If it’s an intellectual secret, there’s probably little downside to just sharing it widely. The same goes for natural secrets, though perhaps to a lesser extent. But secrets about people are entirely different. Sharing them can be quite costly. At one point Faust tells Wagner:
The few who knew what might be learned,
Foolish enough to put their whole heart on show,
And reveal their feelings to the crowd below,
Mankind has always crucified and burned.
Human and political secrets tend to be quite dangerous. Julian Assange would probably agree.
The challenge in the startup context is to figure out exactly who and how many people you should share your secret with. A lot of this is timing. The right time to bring people in is rarely at the very beginning, all at once. But it’s not never, either. The timing question is a complicated one, but some intermediate answer is likely the best. Much depends on what you think the rest of the ecosystem looks like. If you think that you have a big secret but lots of other people are about to discover it, it’s worth being risky. You have to move as fast as possible and tell whomever you need to.
This is what PayPal did in the summer of 1999. After some failed business models involving beaming money via palm pilots, they realized that linking money and e-mail together would be powerful. This seemed like a really big secret. But it also didn’t seem very hard. Surely, other people were going to figure out the same thing in short order. So the PayPal team had scramble and share the secret liberally. This is never without its risks. People you talk to may end up competing with you instead of joining you. In June of ’99, a candidate for a management position shared a secret during his interview with Peter Thiel that he should not have shared: he wanted Peter’s job. It was a dangerous political secret. Peter, it turned out, liked his job and wanted to keep it. The interviewee was not hired. A few weeks later he tried to launch a competitor.
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Say the regime uses a friendly-looking mealy-mouthed everyman to deliver The Narrative to the masses. There have been many such figures in the era of television. The public trusts them. It hacks the part of the mind that makes you think he’s a friend or at least a trustable figure like a priest or town crier. Any random nepobaby can blow this up by revealing that the newsman actually has a remote-controlled rape room. The debasement of currency can’t happen* when its occurrence can be rapidly transmitted and explained to anyone with a financial stake. Speculation and trading are very difficult when inside information is drastically reduced. Epstein-style comprise opps can’t control elites anymore, as they either get out without intention or the marks develop shamelessness. That the Speaker of the House is a child molester and the opposing party never cares to bring it up before, during, or after reveals to anyone who cares the kayfabe of “politics.” The regime is dead, it just doesn’t know it yet.
Regimes, unlike men, do not die without someone to replace them. One of the major things that will determine who can replace them is who can control the discovery and distribution of secrets in a way that survives incentives to defect.
*Obviously, a currency can still be debased. But debasements used to be more of a discrete event to raise funds. By the time anyone found out, it would be a fait accompli. Monarchs that were caught in the act of a debasement suffered ruinous financial consequences. With the internet, a debasement becomes a continuous and permanent event, which is way less beneficial to those who control the currency.