• This book is our story, how two outsiders—a charter school principal and a defrocked philosopher…now have the privilege of chairing one of the most successful early-stage funds in business…funding the top one or two percent in the class of all…I as a disinterested outsider. Not written but muted as a crazy participant.
  • If the Rust Belt came to define the hollow industries of the Midwest, over the next ten years the Paper Belt would come to define the paper-based industries from Washington, DC to Boston. In DC, they print money, visas and laws on paper. In Delaware, companies incorporate on paper. And Boston, Harvard, and MIT print diplomas on paper. I am dedicated to lighting the paper belt on fire.
  • -Michael Gibson, Paper belt on fire. The first quote is from the introduction, and the second quote is from Chapter 8, “The Nakamoto Consensus.”

Mby Eichel Gibson Paper belt on fire A memoir and a manifesto weave together. Without describing his accomplishments and how he achieved them, the manifesto may seem confusing and grandiose. Without the manifesto, the memoir would have lacked emotion. Together, they make for a compelling read.

Lessons from memoirs

Gibson was hired by Thiel Capital in 2010, initially to help Peter Thiel teach a course. But immediately Gibson became involved with the Thiel Fellowship, an initiative to award $100,000 a year to selected young people for two years to do something other than attend college. A few years later, Gibson and his colleague, Daniel Strachman, parted ways to start a venture capital fund called 1517, which would support very young entrepreneurs, including teenagers.

Screening candidates for Thiel Fellowships and then searching for young entrepreneurs gave Gibson and Strachman a unique experience in finding unusually gifted individuals. Like Tyler Cowen and Daniel Gross in their book genius, Gibson and Strachman looked for intangible qualities beyond standard indicators of intelligence. Gibson’s chapter on “Intelligence Redefined,” is at least as good as the Cowen-Grossman book.

For Gibson, core virtue is a kind of strategic resource.

Great founders are those who always find a way. It is their highest virtue.

What does it take to “find a way” in the world of tech start-ups? Gibson lists five abilities founders need:

  • First, the ability to deal with unknowns and uncertainties without being too tentative or too confident. Gibson calls it “edge control.”

Second, the ability to adapt as a company grows from a handful of people in a room to a huge corporation. I’ve noticed firsthand that small companies can and should be run informally, but when you get past the right-of-way number of about 150 employees, you start to need formal processes—organization charts, company manuals, internal training programs, and the like.

Third, what Gibson calls “overflow.” The founder must have superior knowledge of a technology/market niche but be able to communicate that knowledge to lay people unfamiliar with the niche.


  • … A company must have the social and emotional intelligence to recruit founders, work with customers, raise money from investors, and gel with co-founders. The complexity of this total effort is incredibly demanding and mentally exhausting.


  • The initial motivation to start a company is often the excitement of doing something new and risky… but the sustained motivation to keep going year after year, through all the twists and turns, must be tied to something deeper, richer in meaning.

“Previously, while working in a large company, I had the experience that when one of my ideas became a corporate project, someone else was given the responsibility.”

When I started one of the first commercial sites on the web, I had something to prove. Previously, while working in a large organization, my experience was that when one of my ideas turned into a corporate project, someone else was given responsibility. That was deeply disappointing. Getting out on my own allowed me to try to implement an idea. But once the web-based business became successful enough to give me enough legitimacy, there was no sustainable motivation for me to stick with it.

I also appreciated another chapter in the memoir called “The Cram-Down,” which describes how the 1517 Fund as an early-stage fund could be mistreated by later investors. I had a similar bittersweet experience when I tried an angel investment, and until I read this chapter, I thought I was being unreasonable.


I wonder if writing this book means Gibson has lost his sustained motivation to run venture funds. Perhaps its heart lies in what I call the Manifesto. Finding scores of talent to become Thiel Fellows and then establishing an investment fund for smart, resourceful young entrepreneurs is just the start.

The beginning of the manifesto can be found in the preamble. It makes four claims:

  • The first is that science, knowledge, and wisdom are the source of almost all good things: a higher standard of living; long, healthy lives; Thriving communities… the second is that the rate of progress in science, knowledge and wisdom has leveled off… since about 1971… the third claim is the complete and utter failure of our education system, from K-12 to Harvard, is a phenomenon… Finally, the bottom line is that the fate of our civilization depends on replacing or reforming our untrustworthy and corrupt institutions, including both local public schools and the entire Ivy League.

Gibson’s final chapter, “Coda: The Invisible College,” is more elaborate.

  • It is imperative that we find solutions to the top unsolved problems in the following areas: Energy generation, transportation, health, education, abundance of fresh water, increasing crop yields at low cost, cleaning the air and ultimately, human development.

He goes on to enumerate the various teams that are working on these problems, from obscure start-ups to project groups at leading corporations.

Most people are in favor of scientific progress. But the mainstream approach is to give more money to universities and government funding programs. In the chapter “Redefining Intelligence” Gibson writes:

  • Grant-making agencies cover their asses by funding research only on established, prestigious rather than experimental ones. The National Institutes for Health, for example, allocates only two percent of its funding to scientists under the age of thirty-five, while 98 percent of its funding goes to scientists over the age of thirty-six. If scientists and inventors are more creative in their twenties and thirties, things are completely backwards in this funding policy.

In his “Coda” chapter, Gibson writes:

  • To accelerate progress, we need young people to work on the frontiers of knowledge sooner than in the past. They need more freedom. This means institutions that trust them to take risks and demonstrate some edge control with their research.

For more on this, see

A mixture of memoir and manifesto Paper belt on fire applied to me. The memoir is well-paced and tells the colorful stories of famous figures like Peter Thiel and Vitalik Buterin, along with colorful but lesser-known characters. The manifesto is not merely a complaint about the sorry state of institutions. It is a bracing attempt to chart a new course.

*Arnold Kling has a Ph.D. in Economics from the Massachusetts Institute of Technology. He is the author of several books including Crisis of Abundance: Rethinking How We Pay for Health Care; Invisible Wealth: The Hidden Story of How Markets Work; Unchecked and Unbalanced: How Differences Between Knowledge and Power Caused the Financial Crisis and Threatened Democracy; And Specialization and Trade: A Reintroduction to Economics. He contributed to EconLog from January 2003 to August 2012.

Read more of what Arnold Kling is reading. For more book reviews and articles by Arnold Kling, see the archives.

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