The Death Zone and the Will to Win: Why Big Companies and Old Powers Lose
I’ve long been a follower and fan of Balaji S. Srinavasan. He is one of the most thoughtful and forward thinking people from Silicon Valley. What is also interesting is that he’s moved away from the USA to Singapore and India. As the ultimate sovereign Individual, you vote with your feet and your money.
I listen to all his interviews and writings and he is very negative on the United States and much more optimistic about China & India. This is in comparison to my other favorite geopolitical thinker Peter Zeihan who is bullish on the USA & India but negative on China. The lens that both of them look through definitely affects this: Zeihan looks at things through hard power, demographics and geography. Balaji looks at things through everything with a media and technology lens. I think they are both correct.
So where am I going with this? As much as I hate to hear, and it really pains me but Balaji will ultimately be right. Yes, the United States has a huge advantage when it comes to people, military spending, natural resources, energy and food. Additionally the USA has a geography far away from enemies & separated by 2 oceans and bordered by two massive, dependent, friendly and demographically complementary countries (Mexico and Canada for the geographically challenged).
The United States should be they hyperpower on paper but due to gross incompetence, military overreach in being bogged down in Iraq and Afghanistan. Not having faced any major threats since 1989, we as a country have become arrogant and complacent (and allowed our peer competitors like Russia & China to come to the fore). That is why internally we see the rise of “woke” culture, millennials whining about “safe spaces” & security. We’ve turned against ourselves. Basically, because we have not had any major hardships for the last 20–30 years in America, it has turned us soft.
And if you think I have issues with this upcoming generation in America, don’t ask me what I think of the same generation in Western Europe (outside of the immigrant kids of course). This is also why I spend so much more time investing and working in Eastern Europe, these kids know hardship. Remember the Soviet Union only 32 years ago and that was a VERY tough decade or two after. Consequently the work ethic is strong and complacency low.
But unlike China or Russia, who face tremendous issues in demographics, food, energy, and tough geography being surrounded in their view by perceived enemies; it puts them into a death zone. It’s like that old saying, “Nothing concentrates the mind, like your execution in the morning.”
The major constraints have forced them to husband and manage their meager hard resources better. Using a poker analogy, China and Russia are playing weak hands really well, while the USA is playing their strong hands badly. And what we will learn is that resources are not the most critical factor in winning. Its morale, unity, focus, competence and culture. Whatever you think of the Chinese Communist Party or Russian Siloviki (Men of Iron, technocrats and ex-KGB officers) leadership, these are for the most part highly competent & ruthlessly effective people. (I should note here: I viscerally hate these people personally. Whatever issues I have with the United States, which are plenty, I much prefer a world order led by the USA than by China. A CCP China exemplifies anti-privacy, anti-democratic & anti-freedom values that go against almost everything we believe and live). In their minds, they are on the death ground and believe failure literally will lead to their deaths or imprisonment.
You cannot compare them to the grossly incompetent people we have running the United States or in Western Europe right now in all sectors of the government, who have little to fear from failure or seem to fail up. We can’t build anything anywhere, our infrastructure is creaking, we can’t win wars despite all the money and lives we’ve spent. We can’t get unified or behind anything. These are not good signals for our future. We are living the G. Michael Hopf’s famous quote: “Hard times create strong men. Strong men create good times. Good times create weak men. And, weak men create hard times.”
Using this analogy to startups and big companies, this is why I never worry about the big incumbents like the FAANGs (Facebook, Amazon, Apple, Netflix, Google + Amazon) coming in to compete in any of my Startups spaces or sectors. There is a massive level of risk and reward that a startup team has over the big company. There is also a sense of urgency when you know every hour, every day and every dollar counts. You live in a world of “Extremistan”: massive downside which focuses the mind, but also massive upside if you execute in the right direction. It’s literally “No Pain, No Gain.”
This is in contrast with those working at big companies that have massive cash cow business and a lot of processes and multiple departments/committees to make decisions. They have it pretty easy. No one is going to push too hard or stick their neck out. There is no death zone and there is no upside for them. And this is why they just can’t compete. It’s not even a fair comparison, it’s like comparing US Navy SEALS against the US Coast Guard.
I’d pick a smaller, focused, motivated, properly incentivized team over a big company any day of the week. The will to fight really matters. Just take a look at our outnumbered & outgunned Ukrainian friends kicking Russian army ass. As they say, “it’s not the size of the dog in the fight, it’s the size of the fight in the dog.”