Compounding Optimism

Let me share a little theory I have about optimism, and why progress is so easy to underestimate.

I’ll explain it in four parts.

A crocodile in Costa Rica was found pregnant recently – and she did it all herself, with no help from a male. Her fetus is 99.99% genetically identical to her.

It’s the first documented case of a crocodile reproducing asexually. A few other animals – some birds and snakes – can do it as well, but it’s extremely rare.

There’s a good reason why.

Almost 100 years ago, an evolutionary biologist named Herman Muller came up with a theory that eventually became known as Muller’s Ratchet. It says dangerous mutations tend to pile up when there’s no genetic recombination, which can ultimately lead a species to extinction. In the absence of variety – a male and female mixing genes – dangerous mutations tend to stick around, because there are no new, better, variations to compete the bad stuff out of the gene pool.

It’s why so few species reproduce asexually.

David Senra of the wonderful Founders podcast recently told a story about Steve Jobs:

Steve was in his 20s and he goes and meets [Polaroid founder] Edwin Land. And Steve says, “Visiting Edwin Land was like visiting a shrine … he is my hero.”

And Jeff Bezos took a lot of ideas from Sam Walton. Both Steve and Jeff took a lot of ideas from Sony.

You always find these people where you’re like, “Oh, I thought this was a Steve Jobs idea.” No, no. It’s an [Sony founder] Akio Morita idea, or an Edwin Land idea.

Watch the presentations that Steve Jobs gives where he says, “We’re building at the intersection of technology and liberal arts.” Edwin Land said those exact words!

You’re never going to find anybody who gets to the top of the profession without studying the people that came before them and learning from them and admiring them.

This is so true.

Thomas Edison took a lot of ideas from Michael Faraday.

Bill Gates took ideas from a computer inventor named Henry Edwards Roberts.

Warren Buffett learned from Ben Graham and Phil Fisher.

Edwin Land himself was massively influenced by a Harvard physics professor named George Wheelwright, who became a Polaroid co-founder.

The question is: Did George Wheelwright know that he would influence Edwin Land, who would then influence Steve Jobs, who would then design a phone that 2.5 billion people would use?

Did Michael Faraday, who died in 1867, know that his ideas would directly influence the light bulb, which effectively led to the creation of everything from the modern power grid to nightlife?

Did Ben Graham know that his 1950s finance class would lead to 45,000 trekking to Omaha every year to hear his student speak?

Of course not. It’s so hard to know what an idea, or an invention, or a philosophy, will influence, and what a person who’s influenced by it will go on to create.

Visa Founder Dee Hock says, “A book is far more than what the author wrote; it is everything you can imagine and read into it as well.” An author might write something that’s dull or obvious, but it could inspire a reader to go do something incredible.

Ideas compound.

Inventions compound.

Education compounds.

A trivial thing can grow into a massive thing, and faster than most people realize.

Science writer Matt Ridley says most innovation happens when several different ideas “have sex.”

Most new ideas and inventions are pretty bland on their own. But when you mix several of them together, you can get magic. Plastic is great. Electronics are neat. Metal is special. But mix them together in the right way and you get an iPhone, which is pure magic.

It’s ideas combining, joining, and merging, that create the modern world.

And it’s the opposite process of what our crocodile friend recently pulled off.

Ridley explains in his book The Rational Optimist about the benefits of recombination:

A mutation that occurs in one creature can join forces with a mutation that occurs in another. If microbes had not begun swapping genes a few billion years ago, and animals had not continued doing so through sex, all the genes that make eyes could never have got together in one animal; nor the genes to make legs or nerves or brains. Each mutation would have remained isolated in its own lineage, unable to discover the joys of synergy.

Ridley once explained this further:

I’m not interested in the debate about whether some groups have higher I.Q.s than other groups. It’s completely irrelevant. What’s relevant to a society is how well people are communicating their ideas, and how well they’re cooperating, not how clever the individuals are.

Small ideas mixing and compounding into big ones – that’s what really drives the world.

I think part of the reason pessimism is so much easier and more common than optimism is that compound growth is not intuitive.

It’s hard to imagine, say, our incomes doubling over the next few generations. That seems like such a massive leap, like we’d have to boil the ocean to get it done. But doubling the average income over 30 years works out to about 2.3% growth per year. It’s not crazy at all. It’s actually quite achievable. What made it seem so ambitious to begin with is that compound growth is easy to underestimate.

If you look at the end result of a long period of compounding, it’s astounding. But all it took to get it done was little bits of incremental growth strung together for a long time.

All progress is like that.

Technological progress is easy to underestimate because it’s so counterintuitive to see how, for example, the philosophies of a guy who invented Polaroid film would go on to inspire the iPhone. Or how an 18th-century physicist would write a notebook that would set the foundations for a modern electrical system.

If you view progress as being driven by the genius of individuals, of course it’s hard to imagine a future where things are dramatically better, because no individual is orders of magnitudes smarter than average.

But when you view it as one person coming up with a small idea, another person copying that idea and tweaking it a little, another taking that insight and manipulating it a bit, another yet taking that product and combining it with something else – incremental, tiny bits, little ideas mixing, joining, blending, mutating, and compounding together – it’s suddenly much more conceivable.