Chinese version on Jan 10 2017
This article is addressed to all the startup companies in the PreAngel (PA) series. I ask the founders of the PA series to share it with all employees as my New Year's message for 2017. Through this article, I want to share five core perspectives with you all. I hope that in 2017, every member of our big family will attain a higher level of understanding, continue to evolve, and win a more wonderful life experience.
1. Cognitive Model:
From the moment of birth, we are sentenced to a "deferred death." As a species "born towards death," our lifespans won't likely exceed 120 years, a point where everyone is equal.
The difference in lifespan between people is not significant, at most 100 times (1 year vs. 100 years), and in most cases, only 20% (60 years vs. 80 years). However, the difference in achievements between people can be tens of thousands to hundreds of thousands of times greater. It's normal for friends or classmates to have achievements that differ by several times or even dozens of times.
What causes such differences in achievements?
In my six years of investing, I have met countless investors and entrepreneurs from various backgrounds, with significant differences in achievements. Although it's hard to summarize a simple formula like E=mC² to calculate (predict) a person's future achievements, I have identified some fundamental differences that determine how much a person can achieve in life.
The biggest difference between people stems from the "cognitive model."
I have already discussed the cognitive model in detail in "Why Don't Capitalists Invest in the Most Diligent Breakfast Vendors?" It is not formed in a day, nor is it unchangeable. I believe that "genes, education, family influence, social environment, and national culture" play a significant role in forming a person's cognitive model, and these influences occur before an individual matures (mainly before 16 years of age). Thus, they are not subject to personal change and are the uncontrollable "luck" factors in one’s life, arranged by fate.
If a person realizes the importance of the "cognitive model" after the age of 16 (by chance), they can consciously guide themselves into a "positive cognitive cycle." Through reading, thinking, practicing, making valuable friends, and worshipping true masters, they can improve by 1% each day, 38 times a year. If a decade is considered an era, then anyone can achieve great things within a decade of entering this positive cycle, creating a significant gap between themselves and their childhood friends, possibly by tenfold, a hundredfold, or even a thousandfold.
If you didn't realize the importance of the cognitive model at 16 and have muddled through to today, then today is your lucky day. From now on, you must face your "cognitive model" and consciously manage and sculpt it towards a positive cycle, progressing a little every day.
Start with reading classic books and engage in deep thinking; start with work, and do everything possible to do it well.
The positive cognitive cycle is a huge upward "vortex." Once you push yourself into this vortex, you will be spiraled to the peak of life. Give yourself a year to upgrade. In this year, don't complain about work or life, don't give up easily, don’t mind gains and losses, and focus all your energy on upgrading your cognition. Put all the unpleasantness and frustrations of the year aside and deal with them at the end of the year. Embrace everything with tolerance and calmness!
The reason for the huge gap in human achievements is not that some individuals are physically stronger than others, but that they have borrowed ten, a hundred, or even a thousand times more potential energy. The achievements of humanity are due to this potential energy, and individuals are just the "tide riders" of their era, the "carriers" of those achievements, just as every human soul needs a physical body as a "carrier." Each era's achievements need several individuals as "carriers" to enjoy this honor. I have also detailed the importance of potential energy in "Without Potential Energy, We Would Achieve Nothing." I suggest everyone re-read it.
Heroes are made by the times, and heroes are good at leveraging opportunities!
Thus, a person's achievements are not their own but belong to the era; those who enjoy these achievements have merely borrowed this honor and benefit. What others can do, you can do too.
The founder of Haier, Zhang Ruimin, often says: "There are no successful enterprises, only enterprises of the era!" This is precisely the point.
I suggest to PA friends:
Use all your wisdom to search for the next "big wave" and prepare for all the surfing ahead.
2. Choice and Courage
If you enter a positive cognitive cycle, I am sure that after a year, your level of cognition will have greatly improved. Then, you should reassess your life based on this new level of cognition and plan your future.
We encounter various choices in life, from trivial ones like what to eat for breakfast or what to wear, to major decisions like university preferences, studying abroad, whom to marry, when to have children, what career to choose, and whether to start a business.
Life is essentially the cumulative effect of numerous choices. If you had chosen to enter the real estate industry in 2000 and persisted till today, I believe you would have amassed a considerable fortune. If you had joined Alibaba, then a little-known company in 1999, and stayed till today, you’d likely be a significant figure in the internet world. If you had started saving aggressively to buy property in 2000, you'd probably be a super landlord by now. If you had bought Tencent shares at their IPO in 2004 and held onto them, you'd be a stock market wizard. And if you had invested heavily in Bitcoin when it was less than a dollar and hadn’t sold yet, you’d be among the Bitcoin billionaires.
Choosing the right direction is more critical than effort.
Looking back, everyone is a strategist; looking forward, most people see fear, not opportunity. Our risk-averse nature, honed over thousands of years of evolution, prevents many from acting on trends they perceive. It's not just about seeing the trends but also about the courage to act on them. Every choice involves risk and opportunity costs.
Even the seemingly safest investment of the past fifteen years—real estate—required guts to pursue. Most of us bought homes out of necessity rather than as an investment, accidentally benefiting from the property value appreciation, which often exceeded our lifetime earnings. This missed opportunity is ultimately a matter of cognitive model—we were not raised with a proper “financial mindset” and didn't pay enough attention to macroeconomic trends and national affairs, focusing instead on immediate needs. Thus, we missed perhaps the only chance in history to increase our wealth tenfold without much effort.
What choices do we have if we missed the real estate boom?
Today's most significant opportunity for the youth isn’t a “secure job,” as history has proven there’s no such thing. It's about “joining the startup wave.” Choose the right direction and the right leader (or be the leader yourself).
What does entrepreneurship mean? Broadly speaking, it’s when your future earnings aren't determined by a predictable and capped salary and bonus, but by unpredictable and limitless equity or options. That’s entrepreneurship.
Regardless of the region—be it the US, China, Southeast Asia, or Africa—new wealth leaders will continue to emerge, but the era of 'working your way to wealth' is over. The new wealth leaders will be those who chose the right direction or followed the right leader.
Good choices require two key elements: high-level cognition and courage.
A lack of courage is why many highly educated individuals work for those with lower education. Beyond a certain level of cognition, most can see the same potential. But why is there still such a vast difference in achievements? Because we not only see the trends but also the risks. What if we fail?
Fear and aversion to this “what if” make 99% of people settle for less.
Essentially, there are two kinds of bravery: blind courage and “informed boldness.” So, I’m not advocating reckless gambling. Rather, through deliberate practice, improve your cognition and professional skills, make accurate judgments about the future, and then invest your money or time (life). This is the philosophy of “Others laugh at my craziness; I laugh at their inability to see through.”
If you follow a leader whose cognition far surpasses most in the era, you can bravely and blindly follow them. This choice is often better than relying on your mediocre judgment and is more suitable for most people. After all, true visionaries are rare in any era. Those who firmly followed Ren Zhengfei or Pony Ma from the start have achieved financial freedom.
For PA friends:
Good choices require high-level cognition and brave actions!
3. Patience and Perseverance
Once you've raised your cognition and bravely made your choice, prepare to be “time's friend” and enjoy the rewards of compounding. Einstein said: “Compound interest is the eighth wonder of the world!”
Tencent, now China's highest-valued company, was insignificant at its inception and overlooked by many. Even in its tenth year, it was just an average internet company. Its real rise probably started around 2011 with two events:
- The 3Q battle with Qihoo 360, which forced Tencent from a closed platform to an open ecosystem, unleashing tenfold potential. This is thanks to 360, but more importantly, due to Pony Ma's self-cognition and ability to reflect and draw nourishing energy from the environment.
- The launch of WeChat, which elevated Tencent's user base to higher-income, high-end demographics, thereby increasing the company's value. WeChat's success within Tencent is also attributed to Pony Ma's appreciation for talent (acquiring Foxmail in 2005 for Zhang Xiaolong and establishing Tencent Guang Research Institute) and the internal competitive mechanism that allowed different teams to work on the same direction simultaneously.
I doubt anyone in 1998 could have predicted Tencent’s success today. Even South Africa's MIH, which made 700 billion HKD on Tencent stock, didn't invest based on precise prediction. Tencent's present is the result of step-by-step iteration and evolution. Throughout this period, many executives joined and left the company. Those who left Tencent before 2011 probably didn’t anticipate its rapid growth later, a stock performance that is every investor’s dream. Since its IPO in 2004, Tencent has provided a 250-fold return to the secondary market investors in 12 years. How many have held the stock from start to finish? While Tencent is thriving today, I can’t predict its future.
This tests not only your courage but also your patience and perseverance!
If joining a startup is the only way to achieve great success (including wealth accumulation) in fifteen years, be prepared for the long haul. The greater the endeavor, the longer the preparation required.
Without sufficient patience and perseverance, high-level cognition and courage will only bring endless pain and regret. Consider the case of Ron Wayne, Apple's original co-founder, who sold his 10% stake for $800 to Steve Jobs. Today, he relies on social security, while that stake is now worth over $50 billion. We admire Apple and envy its success, but we can't feel the regret in Wayne's heart, the pain of "once having a true love in front of me, but I didn’t cherish it..."
If you don't realize the critical importance of patience and perseverance in achieving great things, then your cognitive model has not yet entered a positive cycle. The cognitive model is the algorithm for decision-making, guiding actions that require courage to initiate and patience and perseverance to maintain.
Otherwise, you won’t see tomorrow’s sun.
I hope PA friends will:
Remember why you started and see it through to the end.
4.Negative Entropy and Vitality
Thermodynamics’ First Law talks about the conservation of energy, which is well-known. The Second Law, the Law of Increasing Entropy, is less understood.The term "entropy" here represents "degree of disorder." The Second Law, proposed by Rudolph Clausius, states that in a closed system without external energy input, entropy (disorder) only increases, not decreases. In essence, this means that temperature naturally flows from hot to cold, not the reverse, indicating that the total disorder (entropy) of an isolated system does not decrease.A simple example: when a drop of ink is introduced into a glass of clear water, the ink will quickly disperse evenly throughout the water, reaching a state of equilibrium (entropy death). This process is an increase in entropy; without external interference, the dispersed ink won't spontaneously gather in one place again.An article titled "How Huawei Uses Money to Transform Greed into Motivation" discusses Huawei's management in the context of the Law of Increasing Entropy. It's worth a search and read.Humans are biological organisms in the universe. Without breathing, eating, or drinking, humans can't maintain life (order) and will descend into disorder (increase in entropy), leading to death. If you don't fuel your brain with energy (nutrition), you'll become increasingly dull and foolish – another manifestation of increasing entropy. This energy includes physical nourishment (meals) and mental nutrition (information from reading or socializing). These energies continuously shape our brain, making our 100 billion neurons more orderly (entropy reduction), signifying a continuous rise in cognitive levels. We should all seek growth in negative entropy.Negative entropy means vitality!
The speed of negative entropy increase also signifies the intensity of vitality.A company is an organization, a system that follows the rule of increasing entropy. Without external forces (energy, information, funding), a company will become increasingly disordered (entropy increase). Only by introducing external forces can a company maintain a certain order and develop towards negative entropy. Such companies possess vitality, forming a "dissipative structure."A dissipative structure is an open system far from equilibrium, maintaining order through constant exchanges of matter and energy with its surroundings. In the process of dissipation, it generates a flow of negative entropy, transitioning from a state of disorder to order.Conversely, a company or country that isolates itself will become increasingly disordered. To develop, one must be open to cooperation and exchange energy with the outside world. Energy and matter flowing in and out form a dissipative system, becoming an open organization within a larger ecosystem. The value of this organization is directly related to the total amount and frequency of energy and matter exchanged with other organizations in the ecosystem.An organ in the human body, if constantly exchanging energy with other organs, is vital and useful. If an organ has no energy exchange with the rest of the body, it becomes useless and is evolutionarily discarded.A closed company will be ignored or eliminated by the ecosystem.
A closed individual will also be ignored or eliminated by humanity.Whether as individuals or organizations, we must engage in positive “energy” exchanges with the world. Absorbing energy from the outside makes us “more orderly, smarter, and more vibrant,” and helps us find our value in the ecosystem, ensuring we are not eliminated or ignored.
5. Pain and Evolution
In a recent article, "Is Pleasure the Only Meaning of Life? Is This the Goal of AI?", I discussed whether robots (artificial intelligence) need emotions like pain and fear:"...Seeing a wild beast, you tremble and want to run, your brain flooded with fear, losing rational thought, overtaken by the amygdala, all for survival. But is this fear really necessary? For a highly advanced AI robot, does it need to feel fear when facing an enemy? We make the robot intelligent enough to handle any crisis, foreseeing various crisis management algorithms. But these algorithms don't need to include 'fear' – just objective, calm program execution based on environmental parameters, deciding whether to run or fight, would suffice."A vacuum cleaner robot can return to its dock to recharge without feeling "hunger." Attacked, it will avoid harm, but it doesn't feel "fear."Many scientists believe emotions like "fear" are byproducts of consciousness, and intelligent life does not necessarily require "emotions." The AI we're developing might eventually possess a self-awareness different from humans – one without "emotions."Most robots in sci-fi films are emotionless, extremely rational, even coldly intelligent beings. But emotionless "machines" don't feel like "life," yet you can't deny their intelligence surpasses humans in some aspects.For instance, today's AlphaGo has surpassed humans in the realm of Go.If intelligent life doesn’t need "emotions" to survive, why then have humans, throughout evolution, retained a wide range of emotions like joy, sorrow, bitterness, pain? Are these emotions really unnecessary?
This question remains unresolved, as scientists have yet to fully understand the essence of human consciousness. Thus, the relationship between "emotions" and intelligent life is more of a philosophical discussion.
Since it's a philosophical topic, let me share my perspective:
Humans and animals differ significantly in language, imagination, self-awareness, learning ability, and more, surpassing other species. Among these, a strong learning ability is considered a common trait of intelligent life. For example, the AI we talk about today relies on capabilities like "machine learning, deep learning." Intelligent life starts as a blank slate but can learn language and cognition, leading to deeper self-awareness. Imagination also grows and improves through continuous learning.
Learning ability is the foundation of other human capabilities. A newborn baby, without any subsequent learning, cannot master language, improve cognition, enrich imagination, let alone engage in self-aware thought and expression.
Human progress is due to learning, which in turn benefits from memory. Without memory, how can learning occur? And "pain" is an evolutionary trait developed by animals to "deepen memory." The more painful, the deeper the memory. Deep memories prevent us from repeating the same mistakes, avoiding foolish errors that could lead to species extinction!
The saying "Once bitten, twice shy" accurately expresses how, through evolution, humans have learned to remember the danger of snakes, prompting immediate survival actions upon encountering them again.
Many animals, like humans, have emotions and a certain level of learning ability and imagination, even simple language systems and rudimentary self-awareness. Hence, the emotional connection between animals and humans surpasses that between humans and machines. Animals also learn from painful experiences to recognize enemies, enabling them to escape or take emergency measures in similar future scenarios.
So, I personally believe that emotions like pain are meaningful for the evolution of humans and animals. They serve to "deepen situational memory," facilitating future recall of these memories along with associated emotions. This aids in our progress and the evolution of our species.
"No pain, no gain!" – This familiar saying reexamines the philosophical meaning behind the English proverb: Pain deepens memory instinctively. Each painful experience is a cognitive iteration (upgrade), leaving deep imprints on our neurons and cells, preventing future repetitions of the same mistakes, and facilitating progress.
Mencius once said: "When Heaven is about to confer a great responsibility on a man, it always first frustrates his spirit and will, exhausts his muscles and bones, exposes him to starvation and poverty, harasses him by troubles and setbacks, so as to stimulate his mind, harden his nature, and enhance his incompetence." This reflects the profound philosophical truth of how human emotions play a realistic role in accomplishing great tasks. If you don't want to waste your life, if you wish to constantly improve cognition, make progress, and eventually achieve something in this one and only life journey, then you must accept the severe trials that come with it. Riding the waves is not easy; it involves numerous falls into the sea and possibly getting crushed in the vortex.
The greater the wave, the more dangerous it is.
Great achievements and leaders endure immense trials and torments. All achievements come at a price; we can't expect to enjoy success without any form of pain (including being ignored, attacked, suppressed, ostracized...). Achievement and pain are almost twin brothers, always appearing together.
I recommend everyone read "The Story of Tencent" by Wu Xiaobo. Combined with the aforementioned Tencent stock price trend chart, we can see that Tencent's rise to become China's most valuable company (second being ICBC) was not a result of Pony Ma's planning but an evolution in adversity.
From a monopoly to an open ecological dissipative structure,
Only then can a great and evergreen enterprise be achieved!
Everything that seems destined is coincidental;
Everything that seems coincidental is perhaps destined.
Starting from 2017, I will practice my new cognition, which is "to heavily invest in businesses and teams I believe are reliable." I also advise PA friends to "dedicate your entire life to your dream."
Here, "dream" refers to your most crucial choice (direction or leader). If you haven't decided yet, please continue iterating your cognition, continue exchanging energy with the environment to grow in negative entropy, bravely experiment, persist appropriately, until you find that dream you're willing to dedicate your entire life to. Then go all in and be prepared to face all the tests (pains) that the era will throw at you in the future.
What doesn't kill you makes you stronger. The best proof of this is the Jewish people and the state of Israel. Without centuries of torment, there wouldn't be the global spread of Jewish elites today. The rise of this nation is something all entrepreneurs should