Note that the billionaires disagree on this. Thiel says that people should think more like calculus and less like probability, while Musk(the inspiration for the cook and the chef) says that people think in certainties while they should think in probabilities.
Not my reading. My reading is that Musk thinks people should not consider the probability of succeding as a spacecraft startup (0% historically) but instead should reason from first principles, such as thinking what are the materials from which a rocket is made, then building the costs from the ground up.
“Thinking in probabilities” is a consistent talking point for Musk—every interview where’s he asked how he’s able to do what he does, he mentions this.
Yeah, I think in general you always want to try to think about the future, try to predict the future. You’re going to generate some error between the series of steps you think will occur versus what actually does occur and you want to try to minimize the error. That’s a way that I think about it. And I also think about it in terms of probability streams. There’s a certain set of probabilities associated with certain outcomes and you want to make sure that you’re always the house. So things won’t always occur the way you think they’ll occur, but if you calculate it out correctly over a series of decisions you will come out significantly ahead…”
So that covers probability.
In terms of reference class, I think what Thiel and Musk are both saying is that previous startups are really bad to use as a reference class for new startups. I don’t know if that means they generally reject the idea of reference classes, but it does give me pause in using them to figure out the chances of my company succeeding based on other similar companies.
Note that the billionaires disagree on this. Thiel says that people should think more like calculus and less like probability, while Musk(the inspiration for the cook and the chef) says that people think in certainties while they should think in probabilities.
Not my reading. My reading is that Musk thinks people should not consider the probability of succeding as a spacecraft startup (0% historically) but instead should reason from first principles, such as thinking what are the materials from which a rocket is made, then building the costs from the ground up.
First, I think we should seperate two ideas.
Creating a reference class.
Thinking in probabilities.
“Thinking in probabilities” is a consistent talking point for Musk—every interview where’s he asked how he’s able to do what he does, he mentions this.
Here’s an example I found with a quick Google search:
So that covers probability.
In terms of reference class, I think what Thiel and Musk are both saying is that previous startups are really bad to use as a reference class for new startups. I don’t know if that means they generally reject the idea of reference classes, but it does give me pause in using them to figure out the chances of my company succeeding based on other similar companies.