In Zero to One Able investor Peter Thiel has a pretty interesting take on our 21st Century relationship to money. In the chapter entitled You Are Not a Lottery Ticket, Thiel posits that we are living in an age of Indefinite Optimism. Simply put we have a belief that the future will be a better one, but we don’t really know how. We work, but without concrete master-plans of a shared future. As he says:
Instead of working for years to build a new product, indefinite optimists rearrange already-invented ones. Bankers make money by rearranging the capital structures of already existing companies… And private equity investors and management consultants don’t start new businesses; they squeeze extra efficiency from old ones with incessant procedural optimizations. It’s no surprise that these fields all attract disproportionate numbers of high-achieving Ivy League optionality chasers; what could be a more appropriate reward for two decades of resume-building than a seemingly elite, process-oriented career that promises to “keep options open”?
He contrasts this with saying that in the early 20th Century the American people had more of a Definite Optimism that drove our work. The Golden Gate Bridge, the Interstate Highway project, and NASA’s space exploration were all part of this Definite Optimism towards the future. We had a shared—a definite—view of what our society was going to look like, and we worked towards it.
Thiel says that you can see this difference in optimism in how we treat our money. The Indefinite Optimist doesn’t really know what to do with money other than making more money. In an Indefinite Optimist’s world, money is the end. Give a billion dollars to an Indefinite Optimist and he’ll do “practical” things like invest it in the market—trying to squeeze out a few percentage points of growth from the money pile.
The Definite Optimist sees money as a resource to deploy in order to bring about the grand projects in their heads. Money is a means to an end. Give a billion dollars to a Definite Optimist and they’ll deploy it to build Hyperloops in California or giant MegaSolar factories in Nevada or a Martian colony. The benefit to the community is money well spent, as is doing something really cool.
The Definite Optimist’s relationship to money is vastly different than the Indefinite’s relationship to it. The Definite Optimist says that the world would be a better place with the concrete thing they are working on rather than the open-ended potential that a big pile of cash brings. The risk of doing something fantastic and meaningful far outweighs the security of cash earning interest.
Now Definite Optimists are not all just about Hyperloops and solar farms. The small business owners of America are Definite Optimists. They see that a neighborhood would be better off if their cool coffee shop was a destination; they see that life is better when one has better beer to drink. We see this with the push towards companies closely tied to social causes. We see this with a greater push towards designing delightful customer experiences. There are thousands of citizens all across America that want to craft things, make things themselves, provide new options and flavors. In short, there are thousands of people who have a definite vision for the future and a desire to improve their communities through their business.
Most lenders think about money as Indefinite Optimists. They don’t buy in to the definite vision or accept the risk that the Definite Optimist is comfortable with. They just want a predictable return. At Able we’re doing lending differently. We partner with people who have bought in—the Backers—and we give Definite Optimists the opportunity to bring their vision of the future to the present.