According to Greek myth, the god Dionysus gave Midas, a king of ancient Phrygia in the 8th century, the power of turning everything he touched into gold.
Every year, Forbes publishes a list of top technology investors called the Midas list.
I also would like to borrow the metaphor by calling the superhuman we imagined in the last post, “Who, then, can see the future?”, Midas. If an investor had the ability to see the future, he would indeed be like Midas, every bet he would make would turn into gold. Within just the first year of business, he would have established a reputation so formidable that if he opened a fund, almost regardless of the terms, he would have a line of LPs wrapped around the building with checks in hand.
Where am I going with this? Why do I entertain these fantasies?
Fiction’s not for babies, y’all. There’s just something in a myth…
To return to the thread of my argument, I’m interested in learning how to think intelligently about the future. In other words, I would like to think like Midas. Great entrepreneurs think like investors, after all.
Who, then, can glimpse the future, if not Midas?
A mind trained to study the past. The past is full of clues.
For it was once the future.
Of Great Men & Marxists
The disciplines of philosophy and history have an intimate relationship. If, in the market to come, philosophers are to be kings, then historians are to be queens. When it comes to the philosophy of history, there are two schools of thought: the “marxist” school and the “Great Man” school.
“Marxist” historians, it’s worth noting, aren’t necessarily marxists, but they share with them a historical point of view: the vast majority of things that happen in society (and indeed, in the universe) are beyond the control of any one individual. Individuals are rounding errors in the grand scheme of things. What truly matters are large impersonal forces like capital structures, class movements, information flows, technological progress and the cultural evolution of ideas (Hegel’s zeitgeists). As a result, they tend to think of long-run outcomes as fairly determinist. There is a certain inevitability to the waves that crash with the tides of time.
In contrast, the “Great Man” school fills its pages with the stories of the likes of Julius Caesar, Napoleon Bonaparte, George Washington or Steve Jobs. Remarkable individuals do not resign to fate, they hammer their destiny into stone through brute force of will. Like Achilles, they seek immortality through their deeds, or like Martin Luther King, they rally their fellow men behind a beatific vision. To understand history, you must understand the characters in the story, and these are heroes and villains of ambition, cunning and genius. History does not happen to them, they happen to history.
Let’s imagine these two schools of thought expressed as investment strategies. The marxists, with a little irony, would invest in trends. The “great man” historians, would invest, (wait for it), in great men - in promising individuals. They would pride themselves as great judges of character and talent.
Which strategy would perform better against the Midas index?
Trends and Megatrends
There are trends, and then there are megatrends. At any given point in time, there are many, many trends in the world. Usually, though, there are just a few megatrends. The difference is temporal and structural. What I mean by that is: a trend may come and go, and if it has a lasting effect, it is residual or gradual or incremental to what was already there before, but a megatrend, on the other hand, comes and completely alters the landscape, things change and don’t go back to normal, and the new normal is structurally different. Think of them like waves and tsunamis. Waves can crash on a beach for millennia. While the coastline will change, it will change slowly. If a tsunami comes, it alters all in its path.
Right now, there are megatrends reshaping our world. The problem is we don’t have the historical perspective to see them. To use another metaphor: we can’t see the forest through the trees. Take, for example, the last ten years. There has been revolution after revolution in hardware and software, yet, “what’s next?” is the ever elusive question. That’s what Midas could see, but we can’t. Midas only bets on megatrends, while we run around chasing trends.
Resolving the Paradox
There’s truth in the paradox, as Kierkegaard might say, between the Marxists and the Great Men. The Marxists have a point. There are trends and megatrends shaping our world, and compared to them, individuals have very little agency. We are just a part of these broader movements, which loom powerful, impersonal, and beyond our control. Yet, despite that, time and again, it seems that certain individuals have a disproportionate impact on events. How do they do it? To resolve the paradox, let’s study the interplay between some great men and the trends of their day.
Would the Republic have fallen without Caesar? There’s reasons suggesting that it would. Through the class struggles between patricians and plebeians, so many checks and balances had emerged that the political system had become dysfunctional, and nobody could get anything done except in a crisis. Already the thread of culture had began, in the amphitheaters that were the precursors to the Colosseum, that taught Rome to celebrate the values of the victor in war. If might makes right, then the successful generals, who had in so short a time amassed an empire sprawling in every direction, had a sympathetic audience in the capitol - and none had been more successful than the champion of the Gallic campaigns, Julius Caesar. If to the victor go the spoils, then Caesar had spoils in plenty: autonomy and sovereignty as the governor of the newly conquered Gallic provinces, he was entitled to a large income. Finding himself with legions, wealth and popularity, he looked to Rome. Perhaps before he looked to Rome, Pompey and the Senate looked to him, and trembled. His power had made him a threat to their power, and they ordered him to lay down his military command. Which he disobeyed by crossing the Rubicon and taking control of the city and its politics, becoming de-facto dictator, and ending, except in name, the Republic. While his remaining days were short, they were long enough to sketch the blueprint for a new order, which would survive even his assassination.
In this story you have all the elements of a classic Marxist explanation: class struggles, cultural evolution, a structural imbalance of power. It’s not hard to weave a narrative that explains the fall of the Republic in such a way that Caesar is just an incidental detail, and that a similar figure would have emerged sooner or later, precipitating a similar chain of events. Perhaps that’s right. But, what was not inevitable, what was unexpected, if you will, is not that the Republic fell, but that the Empire emerged, and emerged the way it did, bearing Caesar’s image, with his idiosyncratic respect for the formalities of the Republic, with his populist flair. His way of doing business set broad parameters for the emperors to come. When they strayed too far from it, when they asserted their power too nakedly or circumvented process too blatantly, they upset a delicate precedent set by their namesake and found themselves tripping over the lingering remnants of old checks and balances. Here, the legacy of the Great Man.
The Republic was going to fall. That was the megatrend. But the way it fell, and the nature of what emerged - that was the great man.
This is how the paradox is resolved: there are megatrends and there are great men who see them coming, make them happen and shape them in the process.
The Stamp on Events
Let’s briefly run through a few more examples.
Would the 13 American colonies have split from Great Britain without one or more of the Founding Fathers? Perhaps - it was a megatrend. There were lots of deep structural reasons why that geopolitical relationship was strained, and so maybe it was inevitable that something would have happened, but what was not inevitable was the unique nature of the Revolution and the character and Constitution of the nation that it birthed. These the Great Men shaped.
Would we still have laptops and tablets and smartphones today without Steve Jobs? Almost certainly. But in the late 70s, when the megatrend was little more than the rickety Homebrew Computer Club, he saw that these devices called computers, which filled huge rooms and could barely do basic math operations, would soon become very powerful and very small and take on a variety of form factors and would gobble up a myriad of functions currently occupied by analog devices, from clocks to scales to calendars to notepads and more, and that this would change everything. In his mind, it was inevitable - far before most people, even most people in the technology industry, caught on. Three, nearly four, decades later he was still riding the megatrend. Would we have had these devices? Yes. But we wouldn’t have had Apple, with its humanist values and care for design and craft and user experience. Steve was one of the Great Men of his generation who made the megatrend happen, and the unique expressions Apple gave to it were, and are, beautiful - and clearly, they have put their stamp on the future of technology, and shown us what is possible.
How do we have agency in a world where the vast majority of things are beyond our control? It’s an art, and it’s a little bit like surfing. The wave comes, the surfer sees it coming, paddles in its direction, and catches it in time for the energy of the wave to carry him along with it.
What’s different about this, though, is that the great man can, at least to some extent, shape the megatrend, whereas the surfer cannot shape the wave. By making it happen, being its agent, if you will, he also gives it its unique expression - its name, it’s flavor, its voice. He fills in the details, and the details are important. They are the difference between the shape of a body and the statue of David.
The wave, like the megatrend, is just a form of energy. Energy can be redirected: targeted, channeled, focused. There’s a physics to it. A wave is not a very malleable form of energy, and if you try moving it, it will probably move you. But there are ways of capturing tidal energy to create electricity, and with electricity, you can do lots of interesting things. It’s like Tai Chi, a form of martial arts which doesn’t focus on strikes, but on redirecting the energy of your opponent. Don’t resist, give away - like water. Very taoist.
Events may come and go, but individuals put their stamp on them.
Touch to Gold
In the myth, to turn things into gold, Midas had to touch them; seeing them wasn’t enough. There’s a lesson there. Even an investor who can see the megatrend coming - who can, in a sense, glimpse the future - does not know exactly how it will manifest, and who will emerge to shape it, and what legacy it will leave in its wake. This is not the role of the investor, this is the role of the entrepreneur - the Great Man (or Woman) in the story - who not only sees the megatrend, but will actually touch it, every day, by building a company that will be its final expression. Yes, and thereafter, the company becomes the megatrend incarnate. It’s birth foretold, it’s destiny still unfolding
Predicting the future is as hard as it is valuable: extremely. In Greek mythology, even the Fates could only glimpse the future as through a fog. Sometimes, a few of the other gods, chiefly Apollo - or even, on rare occasion, a mortal - would receive a vision or a prophecy, which only the very gifted could interpret. Maybe even our imaginary “Midas” investor was a contradiction in terms - as the future cannot always be seen, even by the gods. And when it can, it is only the megatrends which rise above the fog. Only the outline and not the story. Only the block of stone and not the statue. Only the industry and not the company. The future cannot be seen, only glimpsed. Such that, even in the land of myth, if an investor could glimpse the future, he could not make money so easily, for glimpsing megatrends is not enough. You have to touch things to turn them into gold.
To be continued…
P.s. Apologies in advance to women. You can be Great too.