Sapiens: Venture perspective (Spoiler Alert!)

25 things I learnt about the venture ecosystem after reading the most exciting bestseller of recent times

I have been spending a lot of time reading lately. A friend recently asked me how I manage to find time to finish all my work, be social, manage a blog, and read. My answer was simple: I never got a Netflix account.

Hence when I finished reading one of the most impactful books I have read for long (Sapiens), I decided to go away from the usual VC blog and write a bit about the book. The last I felt the same way after reading the last line and pushing a book away was with Richard Dawkins’ The Selfish Gene. It’s quite clear even after the first page of Sapiens that Yuval Noah Harari is a master storyteller. I can only wish that my history teacher from school had been even a fraction as good and captivating as this guy is. The only thing captivating in my history class was the rustling of the tree leaves outside the window. But what really astounds me in the book is the amount of research that the author would have done to be able to support all his beliefs with stark facts presented in a causal, almost off-handish, manner.

The book is making waves in startup land and in the normal world as well. If you haven’t yet managed to lay your hands on it, I suggest you do it as soon as possible, you won’t regret it.

What makes this book special? For starters it’s the contention that Homo Sapiens evolved into being the dominant species on planet Earth thanks to our belief in shared fictions of religion, nation, and money. Homo Sapiens came into being only around 70000 years ago (“only” when you compare this with the 3.8 billion years of life as we know it) but their (our) evolution has been running on an accelerated treadmill due to three major revolutions: Cognitive, Agricultural, and Scientific.

But behind all the history and evolution of Homo Sapiens, Harari also paints a much deeper, darker, and satirical picture of the havoc that we wreaked on the planet’s natural habitat as well as fellow species. While the first page is a piece of art, the book ends with an intimidating statement:

Is there anything more dangerous than dissatisfied and irresponsible gods who don’t know what they want?

I don’t want to ruin the book for you, or delve too much into philosophy but I do want to share some interesting excerpts from the book so it gives a sneak peek of what the book is about. In the next few parts I’ll write about the more interesting/cool/surprising/horrifying parts of the book, so if you don’t like spoilers, feel free to stop reading this now.

1. “Seventy thousand years ago, Homo sapiens was still an insignificant animal minding its own business in a corner of Africa. In the following millenia it transformed itself into the master of the entire planet and the terror of the ecosystem. Today it stands on the verge of becoming a god, poised to acquire not only eternal youth, but also the divine abilities of creation and destruction.”
   Where do we go from here? Will people such as Elon Musk take us to the fictional world of spaceships and inter-planetary civilizations. Or will powers such as Trump completely ignore our impact on the surroundings while we chase mindless growth?
2. “There is some evidence that the size of the average Sapiens brain has actually decreased since the age of foraging. Survival in that era required super mental abilities from everyone. When agriculture and industry came along people could increasingly rely on the skills of others for survival, and new ‘niches for imbeciles’ were opened up.”
   There is a clear reason why startups are better at innovation and execution than incumbents. It’s because they are used to managing with less resources and end up being much more efficient as a result. It’s a key thing to be kept in mind by startups as they scale.
3. “Don’t believe tree-huggers who claim that our ancestors lived in harmony with nature. Long before the Industrial Revolution, Homo Sapiens held the record among all organisms for driving the most plan and animal species to their extinctions. We have the dubious distinction of being the deadliest species in the annals of biology.”
   Growth for the sake of growth and with complete disregard of others is not good for the ecosystem. Just like Homo sapiens have been driven selfishly towards self population, so are startups driven towards extracting maximum value out of the value chain. Facebook and Google are an example of companies that have supreme monopoly (duopoly) in their industries, leading to thousands of companies being affected and eventually shutting down their business.
4. “If we knew how many species we’ve already eradicated, we might be more motivated to protect those that still survive. This is especially relevant to the large animals of the oceans. Unlike their terrestrial counterparts, the large sea animals suffered relatively little from the Cognitive and Agricultural Revolutions. But many of them are on the brink of extinction now as a result of industrial exploitation.”
   As we build our companies in the venture ecosystem, I feel we are disregarding our society and ecosystem more and more. As an example, a Bitcoin transaction takes 1000 times more energy than a simple credit card swipe. It’s time that we started being mindful of our planet’s resources as we innovate.
5. “Agricultural Revolution left farmers with lives generally more difficult and less satisfying than those of foragers. Hunter-gatherers spent their time in more stimulating and varied ways, and were less in danger of starvation and disease. The Agricultural Revolution certainly enlarged the sum total of food at the disposal of humankind, but the extra food did not translate into a better diet or more leisure. Rather, it translated into population explosions and pampered elites. The average farmer worked harder than the average forager, and got a worse diet in return. The Agricultural Revolution was history’s biggest fraud.”
   As markets become more mature and open, the Gini coefficient tends to increase drastically. The reason why China’s internet economy is so well established is because the country gave the ecosystem enough time to build its internal systems to a state where the companies can fight international competition. It’s important to time the evolution 0f the market and also understand that systematic and open markets might not always lead to more equality.
6. “Who was responsible (for farmers’ condition)? Neither kings, nor priests, nor merchants. The culprits were a handful of plant species, including wheat, rice, and potatoes. These plants domesticated Homo sapiens, rather than vice versa.” Next time you are in the subway, or on a street, look up and around you, and you’ll see a mobile screen commanding the attention of almost every passerby. Moderation in usage of devices and internet systems is something we are yet to learn just like we did for TV.
7. “Myths, it transpired, are stronger than anyone could have imagined. When the Agricultural Revolution opened opportunities for the creation of crowded cities and might empires, people invested stories about great gods, motherlands, and joint stock companies to provide the needed social links. While human evolution was crawling at its usual snail’s pace, the human imagination was building astounding networks of mass cooperation, unlike and other ever seen on earth.”
   Stories work. Period. Snapchat. Instagram. Messenger.
8. “Contrary to Aristotle, there is no known biological difference between slaves and free people. Human laws and norms have turned some people into slaves and others into masters.”
   Let’s learn from our history when it comes to gender and racial equality in the startup ecosystem. Otherwise we might end up wasting a lot of time in long revolutions that are counterproductive for everyone involved.
9. “In many societies women were simply the property of men, more often their fathers, husbands, or brothers. Rape, in many legal systems, falls under property violation — in other words, the victim is not the woman who was raped but the male who owns her. This being the case, the legal remedy was the transfer of ownership — the rapist was required to pay a bride price to the woman’s father or brother, upon which she became the rapist’s property. The Bible decrees that ‘If a man meets a virgin who is not betrothed, and siezes her and lies with her, and they are found, then the man who lay with her shall give to the father of the young woman fifty shekels of silver, and she shall be his wife’ (Deuteronomy 22:28–9).” Bias against women has always existed in human society, this is not something new. The startup ecosystem has the courage to stand up against it. Let’s do that.
10. “How can we distinguish what is biologically determined from what people merely try to justify through biological myths? A good rule of thumb is ‘Biology enables, culture forbids’. Biology is willing to tolerate a very wide spectrum of possibilities. It’s culture that obliges people to realise some possibilities while forbidding others.”
    Evolution and Innovation will always go one step ahead of Regulations. Be willing to work with regulators, but it’s better to wait for them to forbid rather than to enable.
11. “Today religion is often considered a source of discrimination, disagreement, and disunion. Yet, in fact, religion has been the third great unifier of humankind, alongside money and empires. The crucial historical role of religion has been to give superhuman legitimacy to these fragile structures.”
    Social contexts are important, and religion is one of them most important. You might not be religious (just like I am not), but accepting and respecting some one who is religious is very important when navigating multicultural environments.
12. “A leading theory about the origin of the gods argues that gods gained importance bcause they offered a solution to this problem. Gods such as the fertility goddess, the sky god, and the god of medicine took centre stage when plants and animals lost their ability to speak, and the gods’ main role was to mediate between humans and the mute plants and animals.”
    People believe whatever you want them to believe in as long as you can solve a real problem for them. And new realities can be invented as long as you have a value proposition strong enough.
13. “In the 300 years from the crucifixion of Christ to the conversion of Emperor Constantine, polytheistic Roman emperors initiated no more than four general persecutions of Christians. Local administrators and governors incited some anti-Christian violence of their own. Still, if we combine all the victims of these persecutions, it turns out that in these three centuries, the polytheistic Romans killed no more than a few thousand Christians. In contrast, over the course of the next 1,500 years, Christians slaughtered Christians by the millions to defend slightly different interpretations of the religion of love and compassion.”
    Humans are irrational and can be fooled (morphed) into behaving one way or the other based on utility curves and internal biases. If you want to learn how to tune these biases into your own favor, read Predictably Irrational by Dan Ariely.
14. “The Chinese and Persians did not lack technological inventions such as steam engines (which could be freely copied or bought). They lacked the values, myths, judicial apparatus and sociopolitical structures that took centuries to form and mature in the West and which could not be copied and internalised rapidly.”
    And the same exists for incumbents. They have/can buy all the technology they need in the world. But they are just not structured in a way that can enable innovation. And this is why I put my money on the venture side.
15. “The native Aztec hygiene was far better than Spanish hygiene. When the Spaniards first arrived in Mexico, natives bearing incense burners were assigned to accompany them wherever they went. The Spaniards thought it was a mark of divine honour. We know from native sources that they found the newcomers’ smell unbearable.”
    Cultural context is everything. Learn from Airbnb’s massive name-change failure in China where they rebranded themselves into a love-hotel brand. And especially learn it when moving into a new market with a different culture.
16. “Furthermore, the new knowledge accumulated by the empires made it possible, at least in theory, to benefit the conquered populations and bring them the benefits of ‘progress’ — to provide them with medicine and education, to build railroads and canals, to ensure justice and prosperity. Imperialists claimed that their empires were not vast enterprises of exploitation but rather altruistic projects conducted for the sake of the non-European races.”
    “Do No Evil”. Seems familiar? Should not anymore, because Google correctly rebranded its motto when it rolled up into Alphabet. With great power comes great responsibility. And in a company’s case, the responsibility is towards the shareholder, not towards society.
17. “The fact is, money is not a deception, but rather a tribute to the amazing abilities of the human imagination. What enables banks — and the entire economy-to survive and flourish is our trust in the future. This trust is the sole backing for most of the money in the world.”
    Valuations and Price are determined not just by your current state of your product and company, but also by the future that investors see in your company. Paint a bright future and make it believable, and you shall survive if not succeed.
18. “Credit enables us to build the present at the expense of the future. It is founded on the assumption that our future resources are sure to be far more abundant than our present resources, A host of new and wonderful opportunities open up if we can build things in the present using future income.”
    Capital markets use this as the fundamental thesis. And credit for future income can be both in form of debt or equity. This is why if your company can use some future resources in the present, it makes sense to leverage credit.
19. “Traditional agricultural societies lived in the awful shade of starvation. In the affluent world of today one of the leading health problems is obesity, which strikes the poor even more severely than the rich. Each year the US population spends more money on diets than the amount needed to feed all the hungry people in the rest of the world. Obesity is a double victory for consumerism. Instead of eating little, which will lead to economic contraction, people eat too much and then buy diet products — contributing to economic growth twice over.”
    It’s a strategy employed by many companies to drive extreme profits in. Look at Apple. First they made me buy a Macbook (consumerism #1). Then they made me buy a bunch of adapters and connectors to make it work with another ecosystem (consumerism #2). Retention of customers is key to profitability, even though you might just be undoing what you did for the customer in the first place.
20. “Humans cut down forests, drained swamps, dammed rivers, flooded plains, laid down tens of thousands of kilometers of railroad tracks and built skyscraping metropolises. As the world was moulded to fit the needs of Homo sapiens, habitats were destroyed and species went extinct. Our once green and blue planet is becoming a concrete and plastic shopping centre.”
    Time to spare a thought for your environment during those annual discussions. A tiny step will help in shaping a better tomorrow for our planet.
21. “Today, the earth’s continents are home to almost 7 billion Sapiens. If you took all these people and put them on a large set of scale, their combined mass would be about 300 million tons. If you then took all our domesticated farmyard animals — cows, pigs, sheep, and chickens — and placed them on an even larger set of scales, their mass would amount to about 700 million tons. In contrast the combined mass of all surviving large wild animals — from porcupines and penguins to elephants and whales-is less than 100 million tons.”
    Enabler companies can be as big and even bigger at times that the main markets. Competition can be morphed into partnerships and the other way around.
22. “Romantic literature often presents the individual as somebody caught in a struggle against the state and the market. Nothing could be further from the truth. The state and the market are the mother and father of the individual, and the individual can survive only thanks to them.”
    Trust in the free market. And let regulations kick in as they do. The responsibility of the regulator is to protect you and your customers, not to discourage/dissuade.
23. “Consumerism and nationalism work extra hours to make us imagine that millions of strangers belong to the same community as ourselves, that we all have a common past, common interests, and a common future. This isn’t a lie. It’s imagination.”
    Creating a vision and making people believe in it is everything, almost like a self fulfilling prophecy. Also, not all consumers are equal, learn how to segment them and solve their individualistic needs efficiently.
24. “The dynamics of history are not directed towards enhancing human well-being. There is no basis for thinking that the most successful cultures in history are necessarily the best ones for Homo sapiens. Like evolution, history disregards the happiness of individual organisms.”
    This is the reason why most venture sectors end up being winner-takes-all. Remember that what might be good for the ecosystem might not be good for an individual company and vice-a-versa.
25. “Findings demonstrate that happiness is not the suplus of pleasant over unpleasant moments. Rather, happiness consists in seeing one’s life in its entirety as meaningful and worthwhile. As Nietzsche put it, if you have a why to live, you can bear almost any how.”
    The sense of purpose in a company is everything. Make sure your team understands the vision and the purpose, and finds meaning in it. You’ll be surprised at how low the attrition can be if you do this the right way.

Hope this excites you enough to order the book and read it over the weekend! Also do mention in the comments below what you feel were the most important parts of the book for you.