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Incompleteness
  for Startups
  By Max Skibinsky
Few Essay's




 Startup-
Russia.com
1. The Ultimate
    Theorem
Gödel   1 st   Incompleteness Theorem
                       •  Ultimate Theorem
                       •  Why everything evolves
                       •  Why Everything is
                          subject to change
                       •  Why things gets more
                          complex over time
Gödel   1 st   Incompleteness Theorem
                        Any … theory (*) cannot
                        be both consistent
                        and!complete. For
                        any!consistent… formal
                        theory (*), there is an …
                        statement that is true,!but
                        not provable in the theory
Gödel Statement



   G: True yet Un-
Provable in SYSTEM H
Gödel   1 st   Incompleteness Theorem




Nobody CAN BE TOLD WHAT THE MATRIX IS…
SMALL BROTHER: Turing Halting Problem
                   Given a description of a
                   computer program, its
                   impossible to write a
                   program to decide whether
                   the program finishes
                   running or continues to run
                   forever
Sketch Proof
Let say Halt(software,data) exits. Returns True or
False

What about G(s) = If Halt(s, s) then LoopForever
else Stop

Think what happens if you try to compute
G(G).
•  If Halt(G,G) halts then it loops.
•  If Halt(G,G) say it loops it will halt.
Cantor
                                                  Diagonal Proof




                                          Related


    Proof related to                    Subcase




Recursion
                       Proof based on
You Can Not Formalize The
You Can Not Formalize The




•  Anything known K: always can build recursion G(K)
   that is “bigger”
•  A^n + b^n != c^n : halt or not?
•  You never know enough (bad)
•  There is always room to know/invent more (good)
2. Marketplaces
Marketplace: Set of Formal Rules

• Collect Underpants
• ? [data]
• Profits!
Marketplace:
          Sets of Formal Rules
1.  Put software in the cardboard box
2.  Bundle browser with OS
3.  Cut oxygen supply to competitors
4.  …
1923.  Profits!
Gödel Statement



G: True yet Un-
   Provable
New G

•  Put software in the box   •  Create search engine
•  …                         •  Sell all words for bids
•  Profits!                  •  Profits!
There is always another G
•  Put software in the box   •  Create friends graph
•  Sell words for bids       •  …
•  Profits!                  •  Profits!

•  Put game in the box       •  Give away free game
•  …                         •  Ask for money
•  Profits!                  •  Profits!
Gödel Statements

•  Profitable yet un-provable by old rules
•  Include G New Theory New G’s
•  Infinite number of G’s
•  No formal discovery system
Startups

•  Success: find at least one G
•  Compete in old system: #epicFail
•  Many fails: no sure way to a new G
•  Quick experiments, fast pivots
The First Cycle

                   New G



Attempts at G
3. Scale Free
     Laws
Scale Free Laws

You can NOT understand the scale by
      looking at surroundings
        •  Also known as Power Laws
        •  Generate long tails
Scale Free: Terrain
Scale Free: Terrain
Scale Free: Terrain
Scale Free: Terrain




 ground near NASA's
Phoenix Mars Lander
Startup Scale Free Variables

      •  Traffic
      •  Users
      •  Revenues
Scale Free Example


50 Users




5 Users
Scale Free Example

$1,000,000,000 revenue




 $100,000,000
Startup Life Cycle
CASE STUDY




•  Founded: ’07. Valuation ’11: $10,000,000,000
•  2009 revenue: $270,000,000
•  2010 revenue: $700,000,000+
Startup: first G
                      Dec ‘07




May ‘07
Life Cycle: Multiple Gs



                ‘09


       ‘08
07
Scale Free: Time
Scale Free: Time
      New hit (G): growth in 3 months
• 3 months: +1 month
• 4 month: +2 months
• 5 month: +5 months
• 18 month: +4.3 years
Scale Free: Time

You are…
       `
where?
              ?

?      ?
M&A Aspects
•  x100 vs x4
•  Mature: teams (cheap) or rev stream
•  Startups: G search
•  Big: profitable ops
Summary
• Startup jumps on G-events
• Big wins: sequential G.
• Can’t discover by method
• Impact & time : scale free graph
• M&A: Decide between G and g+1
max@skibinksy.com
facebook.com/lordmax
Must Read



•    Fooled by Randomness, Black Swan,   •    Tipping Point
•    On Intelligence, Incompletness      •    The Blind Watchmaker
•    Guns, Germs & Steel, Collapse       •    The God Dellusion
•    The Red Queen                       •    Genome
•    Poor Charlie Almanac Ubiquity       •    Elegant Universe
•    Evolution of Cooperation            •    The Trouble with Physics
•    Nexus                               •    The Road to Reality
•    Social Atom                         •    Freakonomics
•    The Wisdom of the Crowds
Russian
Specifics
Myths
•  Russian Engineers are best in the world?
   –  Not anymore
•  Russian entrepreneurs are most tenacious?
   –  Good luck flogging dead horses for years
•  Russian entrepreneurs are most scrappy?
   –  If scrappy long enough to notice its not working
   –  If G exploding and you are scrappy you are an idiot
Default Rule

   When in doubt, use rule #1:
If its feels natural its probably
              wrong
Russian “System”

• Penalize failure == 0 discovery
• Hierarchical: formalized!
• Process dominated: formalized!
• Don’t fence inherited problems:
  SOLVE THEM
Russian “System”

• Soldier vs creativity
• Status vs meritocracy
• Masculine vs balanced
• Micromanaged vs free form
• Endless list
Job #1 : G Discovery

• Everything else is secondary
• First G: Life
• Sequential Gs: Future
• Free form, uncertain, non-process,
  creative, meritocratic, human driven

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Incompleteness for Startups

  • 1. Incompleteness for Startups By Max Skibinsky
  • 3. 1. The Ultimate Theorem
  • 4. Gödel 1 st Incompleteness Theorem •  Ultimate Theorem •  Why everything evolves •  Why Everything is subject to change •  Why things gets more complex over time
  • 5. Gödel 1 st Incompleteness Theorem Any … theory (*) cannot be both consistent and!complete. For any!consistent… formal theory (*), there is an … statement that is true,!but not provable in the theory
  • 6. Gödel Statement G: True yet Un- Provable in SYSTEM H
  • 7. Gödel 1 st Incompleteness Theorem Nobody CAN BE TOLD WHAT THE MATRIX IS…
  • 8. SMALL BROTHER: Turing Halting Problem Given a description of a computer program, its impossible to write a program to decide whether the program finishes running or continues to run forever
  • 9. Sketch Proof Let say Halt(software,data) exits. Returns True or False What about G(s) = If Halt(s, s) then LoopForever else Stop Think what happens if you try to compute G(G). •  If Halt(G,G) halts then it loops. •  If Halt(G,G) say it loops it will halt.
  • 10. Cantor Diagonal Proof Related Proof related to Subcase Recursion Proof based on
  • 11. You Can Not Formalize The
  • 12. You Can Not Formalize The •  Anything known K: always can build recursion G(K) that is “bigger” •  A^n + b^n != c^n : halt or not? •  You never know enough (bad) •  There is always room to know/invent more (good)
  • 14. Marketplace: Set of Formal Rules • Collect Underpants • ? [data] • Profits!
  • 15. Marketplace: Sets of Formal Rules 1.  Put software in the cardboard box 2.  Bundle browser with OS 3.  Cut oxygen supply to competitors 4.  … 1923.  Profits!
  • 16. Gödel Statement G: True yet Un- Provable
  • 17. New G •  Put software in the box •  Create search engine •  … •  Sell all words for bids •  Profits! •  Profits!
  • 18. There is always another G •  Put software in the box •  Create friends graph •  Sell words for bids •  … •  Profits! •  Profits! •  Put game in the box •  Give away free game •  … •  Ask for money •  Profits! •  Profits!
  • 19. Gödel Statements •  Profitable yet un-provable by old rules •  Include G New Theory New G’s •  Infinite number of G’s •  No formal discovery system
  • 20. Startups •  Success: find at least one G •  Compete in old system: #epicFail •  Many fails: no sure way to a new G •  Quick experiments, fast pivots
  • 21. The First Cycle New G Attempts at G
  • 23. Scale Free Laws You can NOT understand the scale by looking at surroundings •  Also known as Power Laws •  Generate long tails
  • 27. Scale Free: Terrain ground near NASA's Phoenix Mars Lander
  • 28. Startup Scale Free Variables •  Traffic •  Users •  Revenues
  • 29. Scale Free Example 50 Users 5 Users
  • 30. Scale Free Example $1,000,000,000 revenue $100,000,000
  • 32. CASE STUDY •  Founded: ’07. Valuation ’11: $10,000,000,000 •  2009 revenue: $270,000,000 •  2010 revenue: $700,000,000+
  • 33. Startup: first G Dec ‘07 May ‘07
  • 34. Life Cycle: Multiple Gs ‘09 ‘08 07
  • 36. Scale Free: Time New hit (G): growth in 3 months • 3 months: +1 month • 4 month: +2 months • 5 month: +5 months • 18 month: +4.3 years
  • 37. Scale Free: Time You are… ` where? ? ? ?
  • 38. M&A Aspects •  x100 vs x4 •  Mature: teams (cheap) or rev stream •  Startups: G search •  Big: profitable ops
  • 39. Summary • Startup jumps on G-events • Big wins: sequential G. • Can’t discover by method • Impact & time : scale free graph • M&A: Decide between G and g+1
  • 41. Must Read •  Fooled by Randomness, Black Swan, •  Tipping Point •  On Intelligence, Incompletness •  The Blind Watchmaker •  Guns, Germs & Steel, Collapse •  The God Dellusion •  The Red Queen •  Genome •  Poor Charlie Almanac Ubiquity •  Elegant Universe •  Evolution of Cooperation •  The Trouble with Physics •  Nexus •  The Road to Reality •  Social Atom •  Freakonomics •  The Wisdom of the Crowds
  • 43. Myths •  Russian Engineers are best in the world? –  Not anymore •  Russian entrepreneurs are most tenacious? –  Good luck flogging dead horses for years •  Russian entrepreneurs are most scrappy? –  If scrappy long enough to notice its not working –  If G exploding and you are scrappy you are an idiot
  • 44. Default Rule When in doubt, use rule #1: If its feels natural its probably wrong
  • 45. Russian “System” • Penalize failure == 0 discovery • Hierarchical: formalized! • Process dominated: formalized! • Don’t fence inherited problems: SOLVE THEM
  • 46. Russian “System” • Soldier vs creativity • Status vs meritocracy • Masculine vs balanced • Micromanaged vs free form • Endless list
  • 47. Job #1 : G Discovery • Everything else is secondary • First G: Life • Sequential Gs: Future • Free form, uncertain, non-process, creative, meritocratic, human driven