Published on: March 27th, 2019 • Duration: 34 minutes
Finite players play to beat the people around them. Infinite players play to be better than themselves.
I could’ve been reading an article analyzing Roger Federer and Rafael Nadal. Except I wasn’t.
ENTER: Simon Sinek
I was listening to Sinek (he was talking at Google) use game theory to describe the kinds of ‘games’ companies engage in: finite games, where the objective is to win (or cause all other participants to stop playing), or infinite games, where the objective is to continue the game as long as possible.
I first came across this line a few months ago. It has stayed with me since then. Suddenly, companies and leaders were falling into either one of these categories for me. If you are an entrepreneur, quite likely Sinek’s line speaks to you too. And you’ll start placing companies into one of these categories. I hope you will, at least.
Take Sinek’s examples as a starting point. Microsoft (under Ballmer’s leadership) executives used to tout how much better their products were compared to Apple. Apple, at the same time, however talked more about end results they were working to achieve. Microsoft, says Sinek, was playing a finite game, whereas Apple was onto an infinite game of self-improvement. Which approach is better did you ask? The business results of both Microsoft and Apple from the time speak volumes about the merits of each approach.
ENTER: Paul Graham
Understanding finite vs infinite games isn’t merely an exercise in the abstract. There is more. Lace it with investor and writer, Paul Graham’s mental model of good vs bad test, and I’d argue that we have a conceptual framework that is critical for business leaders anywhere.
Graham’s recent post about unlearning is a masterclass in understanding the merits of startup life relative to life at institutions like schools or large corporations.
The most damaging thing you learned in school wasn’t something you learned in any specific class. It was learning to get good grades.
Graham’s core idea is that it’s important to know whether you’re spending energy solving a challenge that’s directly connected to reality (studying for a good test), or a challenge that isn’t, usually imposed by an authority (bad test). Recognizing and destroying bad mental models may be even more valuable than adding new ones.
What is the litmus test for a good or bad test? Bad tests are inherently ‘hackable,’ meaning that with clever and directed energy, we can often find a shortcut to ‘scoring well’ on that test and acquiring a label of success without fully solving the underlying challenge. Good tests, on the other hand, are ‘unhackable,’ so we can either succeed at solving the challenge to a varying extent, or fail entirely.
A test in a class is supposed to measure not just how well you did on that particular test, but how much you learned in the class.
Good tests like curing cancer, making education free for anyone, or even winning a tennis match are inherently more engaging because the best scientist, entrepreneur, or player will typically win in each respective scenario.
ENTER: Elon Musk
Sinek and Graham’s models seemed familiar the first time I encountered them, and I wondered why. In filing away these new mental models, I was reminded of their neighbor in the idea world: thinking from first principles, especially as popularized by Elon Musk:
Physics teaches you to reason from first principles rather than by analogy. So I said, okay, let’s look at the first principles. What is a rocket made of? Aerospace-grade aluminum alloys, plus some titanium, copper, and carbon fiber. Then I asked, what is the value of those materials on the commodity market? It turned out that the materials cost of a rocket was around two percent of the typical price.
SpaceX went on to cut the cost of rocket launch by ~90%, while still making a profit.
Why didn’t the giant aerospace incumbents figure this out first?! In my view, the incumbents were busy playing finite games against their competitors, hacking bad tests, and thinking derivatively from their last quarterly results, rather than from first principles. Textbook opportunity for disruption.
Sinek + Graham + Musk For the Win
Good tests map beautifully to infinite games and first principles thinking. All three mental models seem to reinforce a simple message: think like a scientist.
Infinite leaders, says Sinek, filter decisions first through the unchanging values of a company. And only then, factor in the company’s dynamic interests. This may result in sub-optimal single decisions and failures along the way. However, over the years, the long string of decisions strung together will be more cohesive and, therefore, valuable (assuming the company’s values are well set up).
The political environment of a classroom, or large company, is often set up to reward those that hack bad tests and finite games, since the isolated outcome looks favorable. We don’t consider how that outcome will eventually be strung together with other outcomes in order to fully connect with reality.
The book What Have You Changed Your Mind About? chronicles painful realizations by experts playing a finite game in their area of expertise. In it, a successful hedge fund manager, Nassim Taleb (author of the excellent book Antifragile), talks of how he lost faith in probability as a guiding light for making decisions.
Good tests, infinite games and first principles thinking aren’t for everyone. For others, it’s the only way to go.
Helpfully, and devastatingly, startups afford little-to-no buffer from the real world. The company either solves the challenge, or dies. This kind of instant feedback and intolerance for ‘hacks’ forces infinite game leadership at startups – painful in the short term, but ultimately more rewarding for everyone involved. And the true test of an entrepreneurial leader? As Satya Nadella said, while transitioning Microsoft from a finite game to an infinite game, leaders must find the rose petals in a field of S#$@.
What bad tests or finite games are you putting energy into? Where have you applied first principles thinking?
A strange thing happened when Jeffrey Epstein came back to New York City after being branded a sex offender: His reputation appeared to rise.
In 2010, the year after he got out of a Florida prison, Katie Couric and George Stephanopoulos dined at his Manhattan mansion with a British royal. The next year, Mr. Epstein was photographed at a “billionaire’s dinner” attended by tech titans like Jeff Bezos and Elon Musk. A page popped up on Harvard University’s website lauding his accomplishments, and superlative-filled news releases described his lofty ambitions as he dedicated $10 million to charitable causes.
Powerful female friends served as social guarantors: Peggy Siegal, a gatekeeper for A-list events, included him in movie screenings, and Dr. Eva Andersson-Dubin, a champion of women’s health, maintained a friendship that some felt gave him credibility. Mr. Epstein put up a website showing Stephen Hawking and other luminaries at a science gathering he had organized.
“If you looked up Jeffrey Epstein online in 2012, you would see what we all saw,” Leon Botstein, the president of Bard College, said in an interview. He seemed “like an ex-con who had done well on Wall Street,” who was close to the Clintons and gave money to academic pursuits, Dr. Botstein said. That was why, he noted, Bard accepted an unsolicited $50,000 in 2011 for its high schools, followed later that year and in 2012 by another $75,000 in donations.
Over a decade ago, when Mr. Epstein was very publicly accused of sexually abusing girls as young as 14, he minimized the legal consequences with high-powered lawyers, monetary settlements that silenced complaints, and a plea deal that short-circuited an F.B.I. investigation and led to the resignation announcement on Friday of a Trump cabinet official who had overseen the case as a prosecutor. Socially, Mr. Epstein carried out a parallel effort, trying to preserve his reputation as a financier, philanthropist and thinker.
Some of the respect Mr. Epstein, 66, drew on was manufactured, the accomplishments recycled. The gathering with Dr. Hawking had taken place back in 2006. The positive online notices appeared to have been paid for by Mr. Epstein: A writer employed by his foundation churned out the news releases, and Drew Hendricks, the supposed author of a Forbes story calling Mr. Epstein “one of the largest backers of cutting edge science,” conceded in an interview that he was given $600 to post the pre-written article under his own name. (Forbes removed the piece after The New York Times published its article.)
Though some institutions and prominent people, including Donald J. Trump, said they shunned him, Mr. Epstein’s tactics largely worked. Over the past week, as the scope of his alleged offenses, involving dozens of victims in the early 2000s, became clearer after a new indictment in New York, the story of Mr. Epstein and his social circles shows how some people were willing to welcome back — or at least give a pass to — a handsome rich man who had been convicted of a crime involving a minor.
Mr. Epstein’s social strategy proceeded from his legal one. The lenient agreement he reached with prosecutors — his plea involved one girl, a 17-year-old, and the crime was prostitution, which made it look like the teenager was in part to blame — gave others a reason to dismiss his wrongdoing, decide he had already paid his penalty or not question what had happened.
At the top of New York society, plenty of people have “weird chitchat attached to their name,” said Candace Bushnell, the “Sex and the City” writer. She said in an interview that she looked into rumors about Mr. Epstein for The New York Observer in 1994 but stopped reporting after she was thrown out of his townhouse and threatened.
For years to come, people brushed such stories aside. “You’d think, ‘It couldn’t possibly be true,’” she said.
A Renaissance Man
In March 2006, a year after allegations of sexual misconduct were first reported to the police in Palm Beach, Fla., Mr. Epstein underwrote the kind of elite event he prized.Though Mr. Epstein never attended Harvard, it became a recurring theme in his self-styled image. He made donations and mingled with its faculty, including the law professor Alan Dershowitz, right.CreditRick Friedman/Corbis, via Getty Images
It was a five-day gathering in the Caribbean of some of the world’s top scientists, including Dr. Hawking, to share ideas about gravity and cosmology, with scuba and catamaran excursions on the side. One evening, the participants had dinner on the beach at Mr. Epstein’s private island.
Some of the scientists noticed that Mr. Epstein “was always followed by a group of something like three or four young women,” as Alan Guth, a physicist at the Massachusetts Institute of Technology, put it in an email to The Times, but they did not probe further.
Over a decade later, after Mr. Epstein was released from the Palm Beach County jail, he employed a similar strategy. He surrounded himself with prestige and counted on others to look past what he had done.
“I’m not a sexual predator, I’m an ‘offender,’ Mr. Epstein told The New York Post in 2011. “It’s the difference between a murderer and a person who steals a bagel.”
Ms. Siegal recalled, “He said he’d served his time and assured me that he changed his ways.”
For someone purported to have vast resources at his disposal, Mr. Epstein’s early endeavors to improve his image were oddly unpolished. In 2010 he created the first of at least a half-dozen websites, with names like JeffreyEpsteinScience.com and JeffreyEpsteinEducation.com, dedicated to extolling his philanthropy and fashioning himself a patron of technology and medicine.
The websites looked amateurish, the photos of him meeting with top scientists dated to years before his time in prison, and the name of the Harvard professor who led a research center Mr. Epstein had funded, Martin A. Nowak, was often misspelled.
At the same time, Mr. Epstein launched a public-relations campaign composed of a blizzard of news releases, along with canned write-ups designed to resemble news stories. For the most part, the announcements, which circulated from 2012 to 2014, were recycled accounts of donations he had made in the early 2000s and did not reflect new charitable giving. The earliest releases listed Mr. Epstein’s personal contact information, though later ones had the name of a media consultant. Some of the ersatz news stories found their way onto sites like Forbes and The Huffington Post.
Of all the names Mr. Epstein dropped, perhaps the most frequent was Harvard’s.
Though Mr. Epstein never attended Harvard or even got a college degree, the university has been a recurring theme in his self-styled image as a Renaissance man of finance and science. He found Harvard’s doors open to him once he opened his wallet, with donations starting in the early 1990s that eventually totaled at least $7.5 million.
He took to wearing Harvard sweatshirts, gravitated to mingling with celebrity scientists like Stephen Jay Gould and Steven Pinker, and developed friendships with the former Harvard president Lawrence H. Summers and the law professor Alan Dershowitz, who later helped defend him. (In civil suits, Mr. Dershowitz has been accused of having sex with two of Mr. Epstein’s accusers; he has denied the allegations and accused their lawyers of malfeasance.) Mr. Epstein, a former math teacher, even popped up for lunchtime discussions among scientists at a Harvard cafeteria, Dr. Pinker said in an interview, adding, “He weighted his own opinions as much as scholarly literature.”
By 2014, a page appeared on the website for Harvard’s Program for Evolutionary Dynamics, the initiative Mr. Epstein had financed 11 years earlier with a $6.5 million donation (and a pledge of $23.5 million more that never came), featuring a studio portrait, his résumé and links to his websites. “He is one of the largest supporters of individual scientists, including theoretical physicist Stephen Hawking, Marvin Minsky, Seth Lloyd and Nobel Laureates Gerard ’t Hooft, David Gross and Frank Wilczek,” the Harvard bio said, in what appears to be an exaggerated claim.
A Harvard spokesman said he did not know who was responsible for the page, which has since been removed
That same year, Mr. Epstein resurfaced at a prestigious science conference. Dr. Pinker, who sat at the same table as Mr. Epstein, said he was treated as an important donor to be wooed.
A Brand-New Start of It
Although he was often described as a billionaire, Mr. Epstein did not come close in his philanthropy to other superrich people. His charitable foundations rarely gave away more than $1 million a year during the 2000s, according to tax records, and much of it was money others had given him.
In 2015, a new foundation Mr. Epstein created, Gratitude America, received a $10 million infusion and started making donations. The source of the money is something of a mystery. Like his earlier giving, which was financed largely by $21 million in donations to his foundation from a close friend and business associate, the retail magnate Leslie H. Wexner, the 2015 money did not appear to have come from Mr. Epstein.
Tax records show the $10 million donation came from a limited liability company located at a 22-story building on Park Avenue in Manhattan that also houses the family foundation of Leon Black, a billionaire investor and chairman of the Museum of Modern Art. He has known Mr. Epstein for years. In 1999, Mr. Black gave $166,000 to another of Mr. Epstein’s charities, and Mr. Epstein once served on the board of Mr. Black’s own foundation. The two men also appear in photos at a 2007 meeting with scientists at Harvard.
It could not be determined whether Mr. Black was responsible for the $10 million donation. His representatives did not respond to requests for comment.
Dr. Eva Andersson-Dubin, founder of the Dubin Breast Center at Mount Sinai, gave Mr. Epstein another form of currency.
The physician, who served for many years as an in-house doctor of NBC, is a breast cancer survivor who used her experience as inspiration for a holistic treatment approach. A former model and Miss Sweden, she is the wife of Glenn Dubin, a founder of Highbridge Capital Management who is No. 1168 on the Forbes billionaires list. The two are known for their philanthropy, and in 2006 they bought Jacqueline Kennedy Onassis’s former apartment at 1040 Fifth Avenue, a symbol of their standing in the city.
Dr. Andersson-Dubin also has a long history with Mr. Epstein, and has remained loyal to him since the 1980s.
At that time, she was putting herself through medical school. She became his girlfriend and, with his encouragement, put modeling aside to focus on her studies. They remained close after she married in 1994. After Mr. Epstein’s release from jail, she continued to socialize with him; those in her circle were aware of their continued friendship.
Despite longstanding news reports about Mr. Epstein’s behavior, Dr. Andersson-Dubin said through a spokeswoman that she was shocked by the recent news. “She’s a very loyal friend and didn’t abandon him after 2008, but the frequency of their contact was less,” the spokeswoman said. The new allegations “are completely counter to the person she is familiar with.”
Their relationship went a long way toward dispersing the cloud around him, according to some observers. If Mr. Epstein had Dr. Andersson-Dubin’s friendship, it suggested to others that perhaps he should be given the benefit of the doubt.The publicist Peggy Siegal, left, and Dr. Eva Andersson-Dubin supported Mr. Epstein after his release from prison. Leon Black, the chairman of MoMA, donated to his foundation in 1999.CreditPresley Ann Slack/Patrick McMullan; Rob Kim/FilmMagic; Dimitrios Kambouris/Museum of Modern Art via Getty Images
Ms. Siegal, perhaps the city’s most prominent professional hostess, took a more active role, using her gate-keeping powers to usher Mr. Epstein, a friend, into screenings and events.
In an interview, she said that her relationship with Mr. Epstein was not a paid one: They had developed a rapport over the years, with him often quizzing her about films and other topics. “I was a kind of plugged-in girl around town who knew a lot of people,” she said. “And I think that’s what he wanted from me, a kind of social goings-on about New York.”
After he left prison, she had no trouble continuing the friendship. She knew other people who had served time and then resurrected their lives, she said. “The culture before #MeToo was — ‘You’ve done your time, now you’re forgiven.’”
At screenings, Mr. Epstein would shuffle in at the last minute, sit in the back, speak to no one and leave before the party, Ms. Siegal said. He had no ambitions for New York’s party circuit, she and others said, and preferred to entertain people in his own space.
But her invitations helped. In 2010, just after Mr. Epstein left prison, he attended a screening of “Wall Street: Money Never Sleeps.” Soon a flattering blind item appeared in The New York Post about how he was “greeted warmly by guests.”
“It was the first time he has been out in two years, but nobody blinked he was there,” an anonymous source told the newspaper.
A few months later, Ms. Siegal threw the dinner party at Mr. Epstein’s Upper East Side mansion for Prince Andrew, giving Ms. Couric, Mr. Stephanopoulos, Chelsea Handler and others a chance to speak to a member of the royal family a few months before the much-anticipated wedding of Prince William and Kate Middleton.
“It was just one of those strange nights,” Ms. Handler said in an interview. Ms. Siegal had not emphasized who was hosting, several guests recalled. “The invitation was positioned as, ‘Do you want to have dinner with Prince Andrew?’” Ms. Siegal said. Mr. Epstein did not speak much. Dr. Andersson-Dubin was there, but others said they barely knew who Mr. Epstein was or what he had been convicted of.
Two of the other guests have also been accused of sexual misconduct, then or since: the television host Charlie Rose and Woody Allen, who attended along with his wife, Soon-Yi Previn. (“So how did the two of you meet?” Ms. Handler recalled asking the couple.) Soon after, outraged headlines appeared about Prince Andrew’s associating with Mr. Epstein, a sex offender.
In a recent email, Mr. Stephanopoulos said he regretted attending. “That dinner was the first and last time I’ve seen him,” he said, referring to Mr. Epstein. “I should have done more due diligence. It was a mistake to go.”
After the #MeToo era dawned in 2017, others were starting to feel less comfortable with Mr. Epstein. The Miami Herald published an investigation that spurred new interest in the case. Ms. Siegal began to distance herself. It was obvious that he was going to face renewed scrutiny, she said, but “he was in complete denial.”
Others echoed that description. Just three months ago, as federal prosecutors were closing in with new charges, Mr. Epstein had a conversation with R. Couri Hay, a publicist, about continuing to improve his reputation. Mr. Epstein asserted that what he was convicted of did not constitute pedophilia, said Mr. Hay, who declined to represent him.
The girls he had sex with were “tweens and teens,” Mr. Epstein told him.