Lessons from Byrne Hobart

On Bubbles, Stagnation, and Progress

Hobart's work frequently returns to the theme of technological stagnation and the surprising role that financial bubbles can play in breaking out of it. He argues that our aversion to the chaos of bubbles may be stifling the very risk-taking necessary for transformative progress.

On the utility of bubbles: Financial bubbles, while often seen as destructive, can be powerful coordination mechanisms that pull the future forward. They signal a specific, definite future, encouraging investment and activity that wouldn't otherwise happen. [1]
Bubbles as engines of innovation: In his book, Boom: Bubbles and the End of Stagnation, Hobart and his co-author argue that financial bubbles have historically been the engine of major breakthroughs, from the Manhattan Project to the internet. [2][3]
The problem of stagnation: Our society is in an age of relative stagnation, characterized by slowing wage growth and incremental scientific discovery, a stark contrast to the transformative progress of the mid-20th century. [3][4]
The nature of transformative progress: Groundbreaking innovation often arises from small, focused groups with a unified vision, significant funding, and, counter-intuitively, a lack of strict accountability. [2][3]
FOMO as a rational response: "This means that FOMO is actually a perfectly good action-guiding thing to feel: in the rare circumstances where feedback loops will accelerate progress, you really should fear that you're missing out on a once-in-a-lifetime opportunity, because it could be true!" [1]
Productive vs. unproductive bubbles: Hobart distinguishes between bubbles that leave behind valuable infrastructure and knowledge (like the dot-com bubble) and those that are purely financial speculation. [5]
The cultural component of stagnation: A cultural and spiritual malaise, marked by pessimism about the future, contributes to our current state of stagnation. [5]
The role of risk aversion: A key driver of stagnation is an increase in collective risk aversion and a demand for certainty that stifles experimentation. [2]
Overcoming stagnation: To escape stagnation, Hobart suggests we need to embrace the chaotic and dynamic power of bubbles and be more willing to fund experimental and ambitious projects. [2][5]
The delusion of deferring the future: "The dot-com bubble looked like the peak of delusion, but the truly deluded were those who wanted to indefinitely defer the future." (Endorsement of Hobart's book Boom) [6]

On Finance and Investing

Finance as a meta-industry: "First, they're very meta industries, like layers over the rest of the economy. They're rich with insights into how a lot of the world and economy works. And they also influence a lot of things about your life.” [7]
The speed of financial markets: Financial markets are designed to react instantaneously to news, making them a useful, though imperfect, gauge of what the world deems important. [8]
The truth-seeking nature of hedge funds: "What's great about working at a hedge fund is that I had to do the research to validate my trade ideas. And the people who are the recipient of the pitch have a very strong interest in the truth. They don't want to win an argument for the sake of winning an argument. They want to make money, so hopefully they're right." [7]
On financial modeling: "I built this little financial model. And the nice thing about financial models is they're just a way to check your assumptions." [2]
The visibility of finance: "Living in a complicated economy often puts you in a position where you're participating in something you'd rather not participate in, but it's very hard to extricate yourself and finance makes it more visible." [9]
On the inefficiency of markets: When discussing John Maynard Keynes's success as an investor, Hobart noted, "the market was more inefficient. I think the story is that every morning he would spend an hour in bed reading the Financial Times and looking at the stock quotes... and making his investment decisions... It's harder to do that now." [9]
On the nature of Old Money: "What sets Old Money and New Money apart is not really those external quirks, but something deeper: New Money has something to prove, and Old Money has nothing to prove." [10]
The legacy of Old Money: "‘Old Money’ doesn't really mean rich, although that helps; what it really means is spending money and building a legacy as if both have to last forever." [10]
The difficulty of great financial literature: Hobart speculates that the complexity and data-driven nature of modern finance make it a difficult subject for great literary works. [9]

On Technology and the Future

Tech as a fast-moving industry: "Product cycles happen faster in tech than in other sectors, and strategies go from being effective to obsolete in a startlingly short period." [8]
The meta-nature of tech: Similar to finance, tech acts as a layer over the rest of the economy, offering insights into broader economic and societal trends. [7]
The Amazonian mindset: "Amazon is a unique company, because every other company in the world thinks of problems in terms of build-vs-buy... Whereas Amazon thinks of build-a-new-business-versus-buy." [11]
On the future of AI and labor: As early as 2020, Hobart anticipated that AI could actually increase the demand for labor, a counter-intuitive take at the time. [7]
The importance of non-obvious ideas in tech: "The space of potential megacompanies is the space of big ideas with high execution risk. And the signature for high execution risk is that the company doing the execution has to make at least a few counterintuitive decisions." [12]
On the value of side projects: "Publishing books—books that their target employees read... should be evaluated as a substitute for paying recruiters. This also explains why companies put so much effort into things that look like incidental side projects." [12]
The power of a single focus: "In The Startup of You, Reid Hoffman talks about his rule for business trips: make the trip if it would be worth doing for one meeting alone, and then backfill everything else." [12]
On the politicization of tech: "As competition between the US and China gets sharper, tech companies will get more politicized." [10]
The future of social automation: A recurring theme in his recent writing is questioning "How Much Socializing Gets Automated Away?" through technology. [13][14]
Compensation as game design: Hobart draws a parallel between designing employee compensation structures and game design, both aiming to create motivating progressions of outcomes. [13][14]

On Writing, Thinking, and Learning

On the purpose of The Diff: "I aim to answer a simple question: in a few centuries, when historians reach a consensus on what was happening today, what will they believe?" [10]
Writing as networking for introverts: This is one of his most well-known ideas, suggesting that writing can be a powerful way to connect with like-minded individuals.
The importance of a variant perception: To succeed in investing and analysis, one needs to develop a "variant view" that differs from the market consensus, which requires extensive reading and research. [7]
On productivity: "If there is a Secret To Productivity, that's probably it: cultivate an antsiness for progress." [1]
The value of working on interesting problems: "There are three tricks, which compound: Work on interesting problems. Find friends who are working on parallel problems and will challenge you. Use the Convexity of Expertise to stay engaged and make faster progress." [1]
On the 40-hour work week myth: "There's this meme that you shouldn't work more than forty hours per week. Don't believe it. It's just laziness apologetics... these are studies of dangerous factory jobs, or monotonous call-center work." [1]
The power of non-mean-reverting phenomena: "I write about things that don't mean-revert... there are times that the world changes, and it's never the same again." [6]
The value of suffering: "Some amount of suffering is good for moral development and gives you better stories to tell, but it's hard to recommend it." [1][15]
On finding opportunities: "It might be a good filter to apply to opportunities: was this crazy five years ago, will be be crazy five years from now, and are you part of the tiny minority of people who think it's right on the cusp of sanity right this minute? If so, jump in." [1]
On reading: Hobart emphasizes the importance of reading widely and deeply, not just within one's own field, to build a rich base of analogies and mental models. [7]

On Culture and Society

On the decline of institutions: "Our institutions are designed for a much simpler world with faster productivity growth." [10]
The shift in ambition: "There's been a lot more selection for ambition in the private sector... that's where the really competent people end up going." [16]
On the nature of truth and storytelling: When discussing the FTX saga, he noted, "there are multiple stories that fit the facts. We have lots of different weird things to explain and therefore many different weird explanations that fit them." [17]
The importance of a transcendent mission: To achieve great things, it's necessary to organize "high-agency individuals around a transcendent mission." [2]
On the power of narratives: The movie The Social Network likely influenced a generation of ambitious people to pursue careers in tech. [16]
The increasing introversion of the world: "The world is increasingly run by, and for, people who like to spend time typing quietly." [6]
On the economics of the Baby Boomers: As a large and influential demographic, their aging will have significant and potentially destabilizing effects on the economy and financial markets. [6]
The limitations of business books: "A business book only gets written when there's a good story and somebody willing to tell it. This means failures are far better-documented than successes." [6]
On the subjective nature of experience: When asked about his early struggles, he reflected, "maybe that experience is entirely subjective to me, or I've been successfully memed into thinking that it Builds Character when it really doesn't." [15]
On making progress cool again: A key challenge for our time is to find ways to make scientific and technological progress exciting and culturally relevant once more. [5]

Learn more:

Lessons from Byrne Hobart

On Bubbles, Stagnation, and Progress

On Finance and Investing

On Technology and the Future

On Writing, Thinking, and Learning

On Culture and Society

Written by Antoine Buteau

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