Cargo Cult Startups
Imitating the Externals—A Conversation with Peter Thiel
In November 2019, I sat down with Peter Thiel to talk about his philosophical mentor, René Girard. We spoke about the consequences of Girard’s mimetic theory across business, investing, culture, education, and many other domains.
At one point, Peter told me a story about his father that took me by surprise.
“My dad worked these large engineering projects,” he said. “One of them was at Lihir Island, off the coast of Papua New Guinea. I remember that on the way to the air strip there was this concession stand with people standing around. They were all “businessmen”—or at least playing the role of businessmen. But they would just stand around and chat. Nobody was buying or selling anything.”
What were they doing, then? The locals were engaged in a ritual. They were imitating the behavior of the wealthy businessmen who had recently come to the island. (Lihir is well-known for its open-pit gold mine, though Thiel didn’t tell me what kind of engineering project his dad had been there for.)
By imitating these external behaviors, there was a sense—at least a hope—that they might come to share in the prosperity of their visitors.
But that hope was a fata morgana. Wealth is, by its very nature, hidden. Morgan Housel explains this in his excellent new book The Psychology of Money. Wealth is income not spent. Being “rich,” on the other hand, can be distinguished as a measure that relates more to one’s current income and how it is spent.
A Lamborghini, for example, is not an ostentatious display of wealth. It’s an ostentatious display of money.
“People are good at learning by imitation,” Housel notes. “But the hidden nature of wealth makes it hard to imitate others and learn from their ways.” [emphasis mine]
We can’t imitate many of the actions that lead to wealth because the most important action that leads to wealth—not spending every dollar we make—is an anti-action. Wealth comes, in part, from the things that we don’t do—the money that we don’t spend. And so it grows in secret.
Yet people try to find all sorts of silly ways to grow wealthy through imitation.
Nowhere is this more apparent than in the world of entrepreneurship.
About Cargo Cults
After Peter shares the story about the aspirational businessmen on Lihir Island (when he tagged along on his dad’s work trips), he adds: “There’s a similar, cargo cult version of a startup.”
We’ll explore that. First, a brief word about Cargo Cults.
“Cargo Cult” is a controversial term that refers to the strange events that occurred in the South Pacific during and after World War II. In the early stages of the war, Allied troops—mostly American—were stationed on islands as part of the Pacific theater of war. These islands were strategic assets in the Allied offensive against Japan.
Some of the most important islands were part of Melanesia, which includes the Solomon Islands and Papua New Guinea. (The island that Thiel visited with his father is just off the coast of New Guinea.)
On some of these islands, the number of American troops was significant—they made up 5% of the population in Fiji and 81% in Guam. In New Caledonia, they made up 187% of the population—in other words, there were almost double the number of troops as locals.
Hundreds of thousands of Americans were spread out across the South Pacific ocean during the war.
Some of the South Pacific islands had already known decades or even centuries of colonialism by European powers. Others were introduced to occupation for the first time. And it was a new form of it involving Allied military action, troop movements, exploitation, and crude forms of racism by some American troops who had previously never even been to another U.S. state—let alone another country, and let alone an island nation on the other side of the world.
The troops stationed on these islands would receive supplies that were often dropped out of cargo planes by parachutes in huge crates filled with cigarettes, beef sticks, tee shirts, whiskey, playing cards, and other sundries. They would share some of their supplies with the locals as a way of building goodwill (and probably for other reasons of varying and mixed motives).
But then the war ended. Many of the troops began to leave. Over the coming years, something strange happened. The people who lived on some of these islands—most famously, the island of Tanna, part of the Republic of Vanuatu—gathered on the runways where the planes had landed. They mimicked air traffic controller motions. They carved wooden headphones out of wood and set up control towers. They lit signal fires and formed parade formations.
They even built mock planes.
“They’re doing everything right,” explained Richard Feynman, a Nobel prize-winning physicist who coined the term ‘cargo cult’ during a commencement speech at Caltech in 1974. “It looks exactly the way it looked before. But it doesn’t work…they follow all the apparent precepts and forms, but they’re missing something essential because the planes don’t land.”
His message to the graduates, most of whom would enter scientific fields, was this: "The first principle is that you must not fool yourself—and you are the easiest person to fool."
The so-called “Cargo Cults” were not really about cargo at all. They were about identity.
Most of us participate in them in some way or another.
I remember when I first started seriously trading stocks. I asked veteran investors which trading platform they used (Scottrade? E*Trade? Ameritrade? I know—this was in 2002). I even did my best to mimic the desk set-ups that I saw on the trading floor of Goldman Sachs. And I read the newspapers that experienced traders told me they read (IBD)—as if the trading platform I used, or the arrangement of the monitors on my desk, or the news I consumed might turn me into Paul Tudor Jones.
I wanted more than the traders’ wealth or prestige—as elusive as both of those things are. (Did you know that the word prestige comes from the Latin praestigia, which means “illusion”? Prestige is literally an illusion.)
I wanted to be them.
I tacitly, or subconsciously, believed that imitating these superficial and exterior things would somewhat affect an inner transformation at the level of my identity.
I thought that I lacked something that they possessed—and not just “knowledge.” Something beyond that.
I believed the best investors, the Market Wizards (this is the mythological name that a very famous book gives them), were literally cut from a different cloth: that they were existentially different, that they possessed something at the level of their being that I simply didn’t have but could acquire if I did the right things.
Of course, I didn’t realize any of this at the time. It wouldn’t be until years later—well over a decade later—when I was introduced to the thought of René Girard that I began to make sense of that experience.
Girard taught that all desire is fundamentally a desire for being. In other words, all desire is metaphysical—it seeks a kind of inner transformation, a transfiguration of identity, which we desperately seek but even more desperately deny.
When Peter Thiel says that he sees a Cargo Cult-like phenomenon play out in startups, he is referring to this kind of metaphysical desire.
“It’s sort of like: ‘What do you want to be in life?’”, Thiel tells me. “And the answer, more often than not, is ‘I want to be an entrepreneur.’”
But what does that mean?
It’s always badly defined. There is a vague desire to be a certain kind of person. Yet entrepreneurship begins when someone attempts to solve a specific problem in the world—and when starting a business just happens to be the best way to do it.
The desire to be an entrepreneur is misguided. But then again, all desire—at least according to Girard—is a desire to be something.
So what do most entrepreneurs do? They imitate the externals. They perpetuate the rituals.
The idea of a “Founder” is closely tied to the idea of “being an entrepreneur”—and it presents an even further trap.
In Girardian terms, there is no such thing as a “Founder.” It is essentially a mythological category.
Founders are the biggest believers in the Romantic Lie—they invent creation myths to convince themselves that their desire is totally unique, that they are specially anointed to turn their company into a “unicorn” (funny: billion-dollar startups are named after a mythological creature…)
Some founders claim they are totally data-driven. They sift through “data” until they think they’ve found an opportunity to exploit. But that form of hyper-rationalism is also a denial of mimetic desire.
My experience starting businesses has shown me the fickleness and complexity of desire—and how easily we gloss over it with over-simplified stories.
You may have heard some. You may have told some.
And that brings us to one concrete, anti-mimetic practice: avoid listicles. Be wary of the Cargo Cult-fueled tactics of Entrepreneur magazine—or any magazine named after an identity, for that matter. The business runs on mimetic desire.
Sometimes, that’s okay.
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In the next edition of this newsletter, we’ll explore Stage 2 of the mimetic process—Obsession—and continue the work of telling the full story, not the Romantic one.