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This issue of The Diff is brought to you by our sponsors, Brex. Longreads- There are plenty of second-time founders who learned important lessons from their first failure. Kashmir Hill profiles Blake Benthall, who launched a crypto tracking startup after spending nearly a decade working for the government as restitution for running a crypto-based drug marketplace. (For a brief period, he moonlighted as a drug market operator while working at SpaceX, but he was fired for poor performance.) Youthful hijinks used to be an entry point into the infosec world (I remember reading The Hacker Crackdown in the mid-2000s and recognizing the name of one of the teenage hackers mentioned in the book because he was the CTO of a then-hot startup). Over time, the barrier to entry has shifted from technical skill to willingness to take serious legal risk, so while that experience means something, it doesn't represent the same signal it used to.
- John Psmith reviews Andrei Lankov's The Real North Korea. The Diff reviewed this book briefly last year, mostly focusing on the economic side, but the main argument of the book was that North Korea's policies are surprisingly rational considering their situation. The regime has external and internal threats, and simply doesn't make much sense in the modern world, but there isn't a tenable path to stepping down. And part of the game theory of this is that the more internal collaborators the regime has, the more people there are who see its collapse as an existential risk. So every North Korean who works as a police officer, propagandist, etc. instead of as a farmer or factory worker both makes the country poorer and makes the regime more durable.
- D. A. Wallach on what the healthcare industry can learn from streaming. This is much more sensible than that summary makes it sound like: the common thread is that an industry can switch from viable to non-viable based on the structure it uses for delivering and charging for services, with direct customer relationships tending to lead to good outcomes and opaque intermediaries leading to worse ones. The mechanics of Spotify-for-healthcare are, of course, much harder to work out, but it's a good end point to aim for.
- T. Greer at Scholars Stage on the differing structures of the Republican and Democratic parties. This is a very useful piece. They're both called "parties," and they both try to get people elected, but the way they're structured is completely different. Specifically, Democrats tend to function as a coalition of long-lasting interest groups, whereas Republicans tend to function as as a stable interest group. This helps explain why one party drifts and the other party veers (Trump was obviously a big change, but so was Reagan).
- Conrad Bastable on the perks of tech monopolies. This thesis is half first-principles and half observational. On the first principles side of things, the prospect of monopolistic economics is a very strong incentive to invest in promising companies, so this generation's monopolies are an implicit subsidy to next generation's competitors. But there's also a pattern where the dominant tech companies in one generation create the infrastructure and pure research that propels the next generation, even when those companies wreck the economics of whoever did the research that made them possible. The biggest threat to Google today stems from AI research done on Google's dime; Xerox isn't the business it used to be because the networked computers envisioned by PARC replace copies with email. That pattern won't necessarily persist forever, the current breed of monopolies seems more focused than usual on maintaining that status, but it's a pattern worth keeping in mind.
- In this week's Capital Gains, we look at the complexities in estimating customer lifetime value. Any time a company raises money based on a customer-level economics, and uses that money to acquire new customers, its new cohort will typically have completely different behavior from the previous group.
- And this week in The Riff, we talked about the prediction market election, the cost of outages, and whether companies can just stay private forever. Listen with Twitter/Spotify/Apple/YouTube.
BooksPhilosophy starts with questions about the meaning of life, and never answers those questions to universal satisfaction. Another approach is to aim for a minimum viable solution to the "meaning of life" problem, so you can get on with actually living your life. That's what Tyler Cowen's Stubborn Attachments aims to provide: we can't all agree on specific values, on what forms of happiness are valid and what kinds are fleeting, on where supererogatory acts shade into obligatory, etc. But Cowen makes the case that we can agree that adherence to pretty much any moral code, and the pursuit of most forms of happiness, is easiest when we're all wealthier. There's a surprisingly strong array of arguments for more wealth. Some of the strongest come from addressing the counterarguments. For example, Cowen notes that in the 2000s, a common observation about the link between money and happiness was that the correlation roughly flatlined at around what was then Greece's GDP per capita. But that also meant that when Greece's economy went into a recession, GDP per capita was passing through the "strongly correlates with happiness" region—better to be rich enough that losing a quarter of your country's current economic activity puts you at that happiness breakeven, rather than being right at the breakeven. He also notes that some of the fleeting sources of happiness—finding a little money on the sidewalk, having your favorite sports team win—are also more common in a richer society. One of the important questions in this book is one I've wrestled with: how high a discount rate should we apply to the happiness of people in the distant future. Cowen makes a strong argument that the baseline moral discount rate should be zero, because anything else leads to absurd outcomes (at a 4% discount rate, saving one life in the year 1524 is roughly morally balanced by wiping out every life in the US today). He does note that we should add some kind of discount rate for uncertainty about how our actions affect the future, but shouldn't take it too seriously. (He also makes the amusing point that politically, both sides switch discount rates depending on what policy is being argued for—spending money on education and on research into renewables implies a low discount rate, while any growth-slowing economic redistribution implies a higher discount rate. As is often the case, the morally consistent form a lonely political enclave surrounded by big hypocritical coalitions.) This kind of thinking leads to some interesting conclusions. For example, the book identifies "the highest manifestation of the ethical good in human history to date": as it turns out, it's the policies that led to high growth in East Asian economies from roughly the 50s through the 90s. If wealth is the limiting input into desirable goods ("goods" in the moral sense, not just the economic one), and if it's generally acceptable to trade a lower standard of living now for a higher indefinite growth rate, then it's hard to argue with this. And, importantly, Cowen wants to balance this growth-maximizing directive against human rights and political practicalities. So this book ends up being a surprising combination of a view that sounds extreme in theory, but is mostly a practical compromise between competing visions. A great deal of the human misery inflicted in the twentieth century came from people who had very nice-seeming ideas with dire implications, so if nothing else it's nice to have a moral principal that offers generally good guidance, doesn't have to pick a side, and that avoids that sort of disaster scenario. Open ThreadBanking that takes every dollar further.Runway is life for startups, so why do most banks chip away at it with fees, minimums, and delays? Founders deserve better — that’s why Brex built a banking solution that helps startups take every dollar further. With Brex, you get the best of checking, treasury, and FDIC protection in one account. Send and receive money fast worldwide. Earn industry-leading yield from your first dollar — while being able to access your funds anytime. And protect your cash with up to $6M in FDIC coverage through program banks. Ready to join the 1 in 3 US startups using Brex and take every dollar further? Diff JobsCompanies in the Diff network are actively looking for talent. See a sampling of current open roles below: - Growing pod at a multi-manager firm is looking for new quantitative researchers, 250k+ (NYC)
- A well funded early stage startup founded by two SpaceX engineers is building the software stack for hardware companies. They're looking for an enterprise account executive with 5+ years of quota-carrying experience, especially selling complex solutions to late-stage startups and F500 companies. (LA)
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- A company building high-performance simulation tools for smart contracts and other applications is looking for a DevOps/MLOps engineer with experience in reinforcement learning, and an interest in AI agents. (Remote, European Time)
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Even if you don't see an exact match for your skills and interests right now, we're happy to talk early so we can let you know if a good opportunity comes up. If you’re at a company that's looking for talent, we should talk! Diff Jobs works with companies across fintech, hard tech, consumer software, enterprise software, and other areas—any company where finding unusually effective people is a top priority.
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