Incentives

When examining human behavior, you can usually answer the “why?” behind most phenomena by analyzing incentives. This principle applies universally—from economics to politics, where elected officials often prioritize certain interests over broader constituent needs. There’s a reason the phrase “follow the money” has become ubiquitous. Many people skip the step of examining incentive structures, then express confusion when others act in ways that seem counterintuitive. Yet once you look at the underlying incentives, motivations typically become clear. Most of the dysfunction we see in modern capitalism can be traced to poorly designed incentive systems.

There are 2 ways to go through life: you can either play the game, or you can play the metagame. The game is 1-dimensional chess, and the metagame is N-dimensional chess. You can apply this idea to just about everything in life. The easiest way to move from playing the game to the metagame is to think about every interaction in terms of incentives. Examining incentives is the easiest way to figure out what people want and how to turn win/lose or lose/lose transactions into win/win.

I was recently trolling someone on Reddit, and in a brief (and regrettable) fit of passion I made a remark only I could love about “transcending the bullshit”. I have often repeated that I intend to one day publish a book titled “Everything is Bullshit”, in honour of the late David Graeber’s Bullshit Jobs, but extending to pretty much all facets of society.

One of the hard truths in startups, especially VC funded startups, is that perception matters more than reality. Many people are able to raise vast amounts of money at high valuations on little more than excitement about the prospect of a viable business some time in the future.