Introduction by Infinite Loops host Jim O’Shaughnessy:

Venkatesh Rao is a writer, consultant, and author. He has been writing about indie consulting for years and has recently published The Art of Gig, Volumes 1 & 2, which together take an in-depth look at the gig economy.

Venkatesh joins the show to discuss tragic luck, becoming slightly nonsensical, the advantages of mediocrity, and a whole lot more!

My intro:

Venkat is one of my favorite writers. I pulled a number of ideas out of this interview for posterity. This is not a summary, just things I want to keepsake.

Episode link

[All bold is mine]

• I had an equal number of people calling me a communist and a capitalist. – Venkat

I loved this line for the same reason I love this quote by Niels Bohr:

“How wonderful that we have met with a paradox. Now we have some hope of making progress.”

• On Arthur C. Clarke’s distinction between a failure of imagination vs a failure of nerve: Arthur C. Clark has this wonderful essay called Failures of Prophecy, I believe, and he talks about two kinds of failure in thinking about the future, failure of imagination and failure of nerve, and he makes the very interesting claim that the failure of nerve is, by far, the more important. A lot of
  people are extremely imaginative, they can take in the vast amount of confusing information in the world now and come up with very imaginative sort of interpretations and sense-making constructs. But very few people can look the confusing or mess of reality in the face and say, “This is actually the nervy, courageous thing to do,” And go against their instincts. And it’s easy to, I don’t know, spend as much time as you like on the fun imaginative stuff and never do a courageous thing in your life, whereas the nervy thing is kind of the hard thing to do. So that’s where that particular phrase came from.
• “Paycheck people” The Paycheck People connection is, I guess, the industrial economy over a century, has created this gamified environment relating to work where it is easy to get through life never making a hard decision ever. So long as you’re smart and imaginative, you will always be valued, you’ll have a job, somebody will give you interesting problems to work on. If you have the right kind of imagination, maybe you’ll come up with good answers, but your courage is not routinely tested. And this, I think, was probably the case in most sectors in the, at least, developed industrialized world, and the paycheck economy in particular, until, I would say, the mid to late nineties when things started wobbling and the old certainties were really starting to unravel and it became clear that you could not go through life only being smart and imaginative and playing the game that was laid out in front of you because at some point, you had to make courageous decisions, and the paycheck world is not really set up to allow you to make courageous decisions.In fact, in the paycheck world, I would argue, courageous decisions are, generally, decisions that kind of break the gamification model of the world itself…. In the brief time I was paycheck employed for several years at Xerox, I dropped a few bombs, I made few bold decisions, but what was shocking was not that a few senior executives kind of spotted me and chose to sponsor me and back my decisions and help me take, I don’t know, risky decisions and risky projects, but the complete lack of reaction in the rest of the corporation, and this, I think, is generally true. It’s like it’s outside their frame of reference to understand risk at all. It’s like, all right, you make this narrow band of maybe very intelligent and imaginative decisions, but within an extremely narrow band of acceptable risk. And beyond that, risk-taking is for senior executives, weird people in the investing world, artists and creative types who live hand-to-mouth and are starving. Risk is not within the frame of reference for how to navigate the world. And I think that’s kind of why I relate the paycheck economy to kind of a structural failure of nerve, it sort of trains you to not have nerve, it trains you to survive without it, and I think there’s a cost to that over a long term.
  
• The false sense of security in the paycheck world

  A lot of the sense of security in the paycheck world is a completely false sense of security. That security does not actually exist. It’s as risky as being a gig economy independent, it’s just that they manifest and structure themselves differently. And if you refuse to take risks for year after year, quarter after quarter, for years on end, you’re going to end up with lots of risks. So yeah, it blows up in your face.[Kris: this feels like another one of those failures of mental accounting. We have a “first order effect” myopia where we are sedated by a steady paycheck while the wild world evolves and the sociopathic forces that govern corporate life conspire at least subconsciously against you — unless you are also all-in on the corporate Hunger Games. The person who is not playing the game ruthlessly is the one quietly accumulating all the risk when they thought they were playing it safe] 

• Is there a character type or archetype that tends to be more open to risk?

  This is a very interesting and complex question, and I think there are layers to it that are truly worth unwrapping…

  1. On privilege
     Some of the basic criticisms of risk-taking, especially from the liberal corner, it’s like, yeah, the people who look like they’re bold risk-takers, if you look at their background, you’ll often find that they come from privilege and the risk, subjectively, for them, is not actually that big. The marginal cost of a hundred thousand dollar risk is not the same if you sort of grew up in poverty and made that first hundred thousand dollars with painstaking hustle versus if that hundred thousand is just 1% of a very large trust fund you inherited.

  2. Psychological conditioning that leads you to have different perspectives

     Another interesting layer, and this comes up in the famous two marshmallow test, for example, which has been kind of discredited, but it’s interesting how it’s been discredited, where the original research claims that kids who were willing to wait for the researcher to come back so they could have two marshmallows instead of having just one marshmallow right now, they did better in life and future. And poking at that, some more recent research looked at the backgrounds of children who made the two kinds of different decisions, and it turned out that the kids who picked one marshmallow now, versus two marshmallows later, tended to come from less privileged backgrounds where the short-term environment was relatively stable, but the medium and long-term environments were so unstable that it was actually rational for them to say, the future is so uncertain, I’d rather take the one marshmallow now than risk this.And if you poke deeper, there was this research done, I think by Phil Zimbardo, he’s another person who’s gotten canceled for questionable research. But one of the interesting things he did were these tests to study time perspectives, was asking children to tell autobiographical
     stories, and it’s very telling. People who grew up in deprived environments tend to tell stories that span a day. People who grew up in more privileged environments tend to tell stories that span a lifetime. So a poor kid who grew up in the slum might say something like, I got up in the morning and went to the market and found, I don’t know, a sandwich or something. It’s a day-long story. And a rich kid might tell a story about how I’m going to go to college and study law and become president and everybody will love me and I’ll be famous.

  3. The subjective perception of the quality of the risk

     Let’s say you were bullied as a kid and developed an extremely strong fighting instinct. And in a particular situation where somebody might be very combative and another person might be very conciliatory, you take what looks to other people like a very risky decision to escalate a conflict and blow things up. And maybe that traces back to some, I don’t know, early childhood memories of fighting back against bullies
     or something like that. So to you, in that situation, psychologically, it could be the case that, even though there are lots of explicit risks, like saying something objectionable and potentially losing your job, the sort of utility of that outcome or disutility of that outcome is actually less than the disutility of challenging, say, very deeply repressed traumas and learned behaviors for dealing with those traumas.

     So I think the narrative people tell themselves of what the risk they’re taking actually means to them, is actually very different from what you might assume just watching a drama unfold from out there. So my point here is, the risk looks very different to the person taking it then it might to different spectators, and this is part of the other mind’s problem. Like, I’m in a meeting, somebody else is saying something very risky that might get them fired and I’m like, “I would never say that because if I put myself in their place, I would see the risks and utilities very differently.” But part of that is… There’s the seen part, which is explicit incentives which affect everybody like money, losing positions, jobs, and investments, but there are also internal psychological risks. Maybe I don’t have the traumas that could be badly exposed and brutalized if I did certain things that another person does.

Venkat reveals his system for dealing with the complexity:

I’ve gotten, I think, both more empathetic and more judgmental about this stuff…The way I like to phrase this is, I like to keep my psychology complex, but my moral judgment’s simple. It’s like, I can never quite put myself in your shoes and unpack the complex psychology of why you’re taking the decisions you are, but I am going to draw some hard lines in the sand and say, “All right, murder is wrong.” I don’t care how traumatized and messed up you were in your childhood or how murdering someone seemed to you, the less risky thing, as opposed to facing the consequences of some actions and drawing a line in the sand at murder is wrong, you’re infringing another person’s life. So I think that’s kind of the layers of how I think about this stuff.

So to your original question of how should we think about the distribution of risk and is there a genetic predisposition to risk-taking, I think the answer is probably yes. There are probably people who are fundamentally more, I don’t know, risk-positive, and more likely to just blow things up to see what happens. So there’s probably some genetic predisposition, but there are these layers of trauma management, behavioral conditioning, and circumstantial assets that create so much more context that, I would say, the genetic component, at least in modern conditions, is probably
almost a rounding error.

I don’t take extreme risks and I’m like somewhere in the middle. But I probably present as somebody who takes a lot more risks than I actually do, because, from my subjective perspective, the actions I take are not actually as risky as they appear. So I think that’s a big theme in a lot of my writing. I’ve written about it in a few places, but the risk that I think I’m taking is not the risk you think I’m taking.

• Rationality as nihilism

  There’s a philosophical notion that rationality is actually an extremely nihilistic mode of cognition. An extremely rational approach to say scientific discovery and experimentation, science is a fundamentally nihilistic process. If you let it, it’ll tear apart any sense of meaning you have in the world from any source whatsoever. And this is true of any approach to thinking and decision-making that sort of draws inspiration from more scientific and rational approaches to decision-making. Which is, you define your terms of reference, you define the variables in play, you sort of make up mental models of how those things relate to each other, hopefully in a scientific spirit. So you kind of make sense of the world and understand how the world works. Then you kind of decide what you value and say, “I value this much, I value that that much.” There are constraints. And so you end up solving an optimization problem that there’s a natural progression from thinking of the world in rationalistic modes and being sort of rational and building your models of reality, to moving to synthesis and normative considerations through optimization problems. And what that leads to is seeing sort of life itself as an optimization problem where you are like, “All right, what’s my utility function? What are the weights on the different factors? How am I going to solve this cost function? If I have constraints in the picture, are they hard or soft constraints?So you kind of almost turn yourself into an automaton that’s trying to solve an optimization problem. And there’s a long story about why this happens, but this is basically a doomed process. It will lead nihilism. By the time you’re done solving your perfectly rationally formulated and pose the problem, and you maximize your utility function and say, “Hey, this is the most utility maximizing outcome and decision I could hope for, and I’m going to do X, Y, and Z, and I’ll live the optimal life,” you will find that what you’ve solved for is a completely meaningless life.

  It’s sort of this conundrum of complete rationality and optimization as an approach to decision making leads to completely valueless, but technically correct, utility maximizing outcomes. So it’s the whole economics idea of knowing the price of everything and the value of nothing. This is the manifestation of that.
  

• How fixed point futurism allows you to break out of this nihilistic process of optimization

  The answer is, you actually have to start not from rationality, but from complete arbitrariness. It’s like, “I’m going to pick something utterly arbitrary. I’m not going to attempt to justify it.” You want arbitrariness in a completely… How do I put it? Artistic sense. It’s like, “I’m just going to declare that blue is my favorite color.” So that’s the kind of thing I mean by arbitrariness. And it’s amazing how often committing to this kind of arbitrariness actually kills nihilism inherent in otherwise rational postulates. And then you can be as rational as you want about everything else so long as you hold faster that one arbitrary commitment you’ve made, which is what I mean by fixed point futurism. And an example that’s on my mind right now, my wife and I, we are shopping around to buy a house for the first time. And it’s like that’s a classic rational optimization decision-making problem. You can make up a spreadsheet about buying houses with all sorts of attributes about property values, income taxes, property taxes, blah blah, blah. And you can lose yourself in this optimization problem of a million variables, and sort of get everlastingly trapped in this hell of trying to decide what your utility function is.But on the other hand, you can pick something arbitrary that is going to break you out of that. So for example, my wife is arbitrarily attached to the idea that she must have beautiful view, where either of the ocean or mountains or something like that. And that can be an optimization variable where you can talk about, “All right, how much view am I willing to give up for lower taxes or whatever.” But it can also be arbitrary. You can say, “I want a view of Mount Rainier,” and that’s an extremely arbitrary thing that can lock you in.

  It’s a little philosophical sleight-of-hand trick of turning a nihilistic process into a meaning-making process. It’s like now you’ve decided no matter what happens to the rest of the world and whether we are all doomed to die in a zombie apocalypse, you are going to make one thing true about the future.

  You’re going to be wearing blue shirts, you’re going to be staring up at the sky with a telescope, even if it means zombies are coming at you and you’re like killing them with the machete, right? That’s what I mean by fixed-point futurism.
  

• If you’re mired in the “paycheck economy”, you may be in such a routine that more existential questions about meaning are ignored or not given space. How does Venkat think about this?

  Meaning I think is extremely strongly related to the first topic we were talking about, nerve versus imagination. I think meaning-making begins when you first take your first courageous decision in your life and then realize just how much agency you have. To what extent you are operating in a condition of learned helplessness in institutionalized environments. And the first time you sort of make a reach for a truly autonomous decision, despite the risks, you realize how much more opportunity there is to do so. And for me, the first time that happened was actually long before my leap into the gig economy, when I was unhappy with my first PhD advisor. And I made the decision that even if it’ll costs me my financial aid and I’m sort of adrift for a while, I’m going to break up with my PhD advisor and sort of go off in the wild for a while and find another advisor and new funding.And that is what I did. It was very sort of a tough decision. I quit that advisor, I lost my funding, I had to go off and work at a startup for a year. Then I came back, worked with another advisor I got along with better. But I think that flipped a switch in me where after that, solving for meaning became so easy and so much second nature because it’s not an intellectual problem. You don’t have to be smart to solve for meaning-making, you just have to be courageous. You have to do the tough and hard thing as opposed to the maybe intellectually complex but easy thing. So I think I’m a reasonably smart guy, but I think what unlocked meaning-making for me was that first choice to make a tough decision. And after that, it was brain-dead obvious to me. Anytime I came to a fork in the road, it’s like, “Yeah, this is obviously the more meaningful thing to do, so I’m going to do it.”

• How the world obscures this

  I would say that today the world is set up in a way where it’s actually hard to learn this meaning-making trick except by accident. And one of the things that I think this growing conversation around the gig economy is doing, is sort of reinforcing the intense practicality of looking for meaning. A lot of people don’t get this.If you look at conversations about meaning-making in the abstract, the way talking heads talk about them and talking about lost voice, listening to podcasters and getting radicalized, that level of conversation about the meaning crisis, it seems like a philosophical spiritual problem that should be addressed with religion and philosophy, ideas and so forth. It’s not. It’s really as simple as meaning-making is unlocked when you first learn to take courageous decisions and keep doing that, so it becomes a habit. And after that, you kind of unlock this idea of fixed point futures and all these other little tricks become sort of self-evident. 

  Learning to make meaning is the most intensely practical thing you can do. It’s not a matter of spiritual retreats and going on soul-searching journeys and having shamans take you on Ayahuasca retreats and things like that. It’s not about that at all. It’s the first time you come to a hard decision in your career or life, make the hard decision, see how good you are at making tough calls, and then keep doing that and meaning-making will take care of itself.

  And I think that’s a lesson that the emerging conversation in the gig economy is driving home for a lot of people. And a lot of people who stay in the paycheck economy, stay in an environment that makes this way too hard, that tells them, “You have to go on spiritual retreats and read Zen philosophy and take drugs to learn meaning-making.” And it’s not that hard.

• The “tragically lucky”

  At age 23, it’s very tempting to conflate agency and determinism in scripts. You think you control your future, you think you can make a very specific future happen. You think “I’m a smart guy, I have these resources at hand and I can solve the problem and solve the equation of how to turn my talents and resources into the outcomes I want.” And then of course, life hits you in the face. You realize it’s much more complex.Then you ask, “What happens next?” Do you then refactor your sense of agency as in “I still have agency, it just doesn’t work the way I thought it did, so I’d better get about understanding how the world actually works and understanding how agency actually operates.” That’s one path.

  The other path is of course the world sort of mashed my plans to bits and pieces and I’m going to be helpless from here on out, and that happens to people too.

  So I think a naive sense of youthful agency does not survive first contact with the enemy…but for some people it does. And of course, there are also people who just get lucky in a very naive sense in the sense that they plan a particular future and actually it unfolds because they never get hit in the face with conflicting reality. So there are people I know who are these spirits who go through life everything having gone exactly as they planned.
  
  But there’s a certain tragedy there, which is, they think they’re super agenty then things go out exactly as planned and they become president or whatever, and then they’re like 60, 70 or these old people and they come across as children. I talk to them and they’re like, there’s a sense of a lost child about them. It’s like they were never really tested by life, so they’d never really actually learned what was going on. It’s like they’re 60 or 70 and they act like children or 23-year olds maybe. And part of the reason is they were on the surface, they were super lucky that things bent as they planned, but at the deeper sort of philosophical level, they’re the most intensely tragic figures in the world because things went exactly as they planned. The most interesting thing that can happen to you in your life is things don’t go as you plan. And because that forces you to come to terms with what’s the actual nature of the world, what’s the actual nature of agency.

  [Kris: I think most people’s desire or goal in life is to become tragically lucky. Ignorance is bliss and all that. Hard to think of anything more boring.]
  

• Finding a healthy sense of agency

  2 versions of the problem

  a) There are people who were so battered down by early life traumas that they never make those naively optimistic 23-year old statements at all.

The first challenge is to get them to that place of naive optimism in the first place. So I think of that as a much more basic challenge of humane treatment of young people, which is if they’ve been battered, just create kind environments for them where they can develop some confidence and say, “Hey agencies, actually I think that exists”, even if it’s at a very toy level. So often when I’m thrown into position of trying to mentor younger people, which I try to avoid, I’m not a mentor type person, but when I am thrown in the situation, my tendency is to ask “how burned are you? How much are you a devastated landscape of bad parenting and bad childhood conditioning that we have to get you to the starting line of being a naive optimistic age 20?” And this requires kindness and nurturing, and I’m not very good at that, other people are better.

b) But let’s assume some people are already at that starting line of naive optimism

How do you ensure that you when throw them into reality a) they don’t get tragically lucky. Let’s hope they don’t get tragically lucky. Throw them in something that actually challenges their assumptions about the world and breaks them in some way. But then how do you ensure that if they’re broken, they’re actually not going to react with complete helplessness, but then sort of pick themselves up and say, “No, the world works differently and I’m going to rethink what agency means.”

And I think yes, that is a learnable, teachable skill, but it’s one that the industrial environment with schooling and the paycheck world is actually anti-optimized for. It’s designed to teach you exactly the opposite of that. It’s designed to take you from an naive starting point and keep you tragically lucky for the rest of your life. And if they fail at it, you’re tossed by the wayside. That’s what the industrial world is set up to do, make you tragically lucky or throw you into the garbage heap.

In the developing world, more people are thrown by the wayside, and in places the US more people enjoy the tragically, enjoy is the wrong word, but suffer the tragically lucky outcome.

We don’t want either of those outcomes. We want you to be thrown into the world, into a test environment where you’re
actually tested and then you kind of learn the skills through trial and error of acquired realistic agency

• The self-defeating fear of technology

  Go back as far back as you like in tech history. And you will always find that it’s the case that whenever tech sort of automates or disrupts a category of labor, it creates 10 times more new kinds of labor, right? So we feed the entire planet with maybe 4% of modern populations in agriculture. It used to be 80 plus percent a couple of centuries back, but we produced more food and feed everybody. And it’s not that all those farmers banished. Future generations just weren’t farmers anymore. There was no need for them to be farmers. So in one sense, it’s true. If you’re attached to your idea of yourself being a farmer or a creative writer who’s going to get disrupted by LLMs and you’re attached to that idea, you are going to go obsolete. So your expectation is, in fact, tragically correct. You are going to be extinct. But the question is, “Why are you choosing that path of extinction?” I think the reason is that these people like the character in Office Space who says, “I’m a people person,” they’re actually the most degenerate sort of lesser subhumans in our world, because it’s kind of weirdly dumb to live as part of a species that’s been a technological species for 6,000 years and reject this hugely important aspect of our environment that’s been growing for 6,000 years, right? Saying, “I’m a people person,” and sort of distancing yourself from the world of technology that you’re completely entangled with is like I translate it as saying, “I choose to be a 10th of what a human being actually is.” So yes, the thing is it’s not the technologies or tools or that we are sort of masters of our technology, that we use technology as tools, but that we co-evolve with them. The medium is the message, and we are inextricably entangled with our tools… what tools you sort of came of age with… I’m as much a product of my human conditioning environment, my parents and my friends and so forth, as I am a product of computers and various other technological artifacts through which my brain became what it is today, and that process kind of continues.
  

• The key to playing infinite games: mediocrity

  I would say, my least popular idea ever, and therefore, my absolute favorite idea ever, which is this call for mediocrity. I have a whole series on my blog about mediocrity and how I love mediocrity and how I solve for mediocrity and I hate excellence. And finally, it’s just me being a troll and a contrarian in this culture of excellence and trying to win and 4.0s and being excellent and Six Sigma and optimizing and all that whole world of being Paycheck People. This is why the term Paycheck People evokes a whole world of stuff. They are people who play finite games. They do all these things. But yeah, how do you get away from that? Be mediocre. I think I got onto this line of thinking starting with David Allen, the author of Getting Things Done. I got friendly with him in 2005 or 2006. I met him a couple of times. Lovely guy. In his workshops on Getting Things Done, he starts off with a very good joke, which is, “How do you get things done? I’m going to give you an absolutely perfect hack. Lower your standards.” I love that. And he doesn’t mean it flippantly. A lot of people assume he’s just making a joke, and the rest of the workshop is about, “All right, how not to lower your standards and how to actually maintain high standards and do it.” No, David means it. He means fricking lower your standards.This, I think, is an unbelievably important key to unlocking infinite game attitudes, because the conceptual connection is optimizing in a finite game and trying to win by particular standards and maximizing according to those standards means you’re operating in a closed universe of sort of contextual information and you’re ignoring everything outside of that. And the infinite game is fundamentally about recognizing the fact that there is an infinite universe out there beyond the little scope of a little game you’ve set yourself to play, and there is no such thing as ultimately winning or losing in that little fake game you’ve made up. All that happens is that you either win or you don’t. And then you sit back and say, “All right, life hit me in the face or made me tragically lucky.” So I think winning in a finite game is tragic luck, losing in a finite game is life hitting you in the face.

  But then what happens next? You’ll sit back, let that boundary dissolve, expand your horizons and say, “All right, what else is out there in the universe? What else is out there beyond the scope of this game that I was just in, that I can pay attention to a,” I don’t know, “new fixed point that I can sort of latch onto and create a whole new game around?” That’s how you continue the game, right?The way to do this is to let go standards. The way to do this is to appreciate that mediocrity is the key, which is when you’re in any given finite game, you don’t go all out. You reserve a part of sort of your human potential for just paying attention to peripheral vision, the world outside the little particular game you happen to be playing. Of course you play it sincerely. And ironically, you do right by commitments you’ve made to other people. If you say you’re going to do a job and other people are depending on you to do that, you do that. So I’m not saying cut your standards in the sense of being unethical or unreliable or anything like that. I’m saying maintain a reserve of who you are, your thinking, and devote it to the infinite universe beyond the particular game you happen to be playing. That looks, from the context of the game, kind of like mediocrity. It kind of looks like you’re not willing to go 110% and hustle and go all out and stuff like that. It looks like, at some level, a part of you is philosophically checked out because it’s curious about the rest of the universe. It’s not checked out because you’re lazy or lack courage or insufficiently committed. You’re checked out because you’re bigger than the particular thing you happen to be doing right now. You’re a larger being that has a bigger faith in your life, and you want to reserve a part of your attention to that. And there’s a strong evolutionary logic to that.[Kris: the logic is basically how slack or redundancy in nature gives the randomness embedded in evolution to be expressed.]

  This is why success can be so tragic for people who’ve been overcommitted to it. It’s like you’ve actually won and you’re acting devastated and destroyed, like the meaning of your life has been rugged from you. The rug has been pulled out from under your feet. That’s because you overcommitted. You had too high of a standard.
  

• Divergentism

  As people grow and age, they fundamentally diverge from each other in thought space, and that’s okay. It’s okay to not be understood, because that’s what happens when you diverge from other people. It’s like people don’t understand you as well, and you don’t understand them as well. So I would say the compact form of the thought is it’s okay to not be understood and to not understand other people.

  [Kris: I’ve had a similar thought. When people are surprised by others my response is always…”there are 8b people in the world”]