This isn’t a “book review” of Nate Silver’s On The Edge, but I read the book and thought its main point got some important things wrong. In my words that thesis would be that a new class of elites is gaining economic and cultural power in the United States through avenues such as tech companies and the cryptocurrency industry, and they are so psychologically similar to poker players and other gamblers that it’s useful to think of all these domains as neighborhoods in an overlapping community of “the River.”
As Silver defined the River on a podcast:
“It’s a sprawling ecosystem with people in different parts of the world. Silicon Valley is a big part of it, or Las Vegas. Miami in the crypto boom days, especially. But it’s people who are quantitative risk-takers, and they have things in common, too…The big five characters are, in a sense, Elon Musk, Peter Thiel, Sam Bankman-Fried, Sam Altman, and probably Marc Andreessen.” [1]
As I said, I initially saw much less kinship between these groups than the book presents. Going through the chapters on venture capital/technology and on cryptocurrency, I was met with case after case that doesn’t look like sharp gambling behavior at all. But, as I thought about it more, I decided that these communities do have something in common- just not quite what the book says they do. And I think the real underlying link does a better job at understanding both “the River” itself, and why “the Village” [2] finds it objectionable.
Less Than Expected
The first segment of On the Edge pulses with poker players making high-pressure calculations of the odds and judgments of their opponents’ behavior, professional gamblers hunting for mispricings across different sportsbooks, and so on. The dominant motif here is expected value: see an uncertain outcome, estimate the chance of winning and the payoff if one wins, and make the “bet” if and only if p(win) times the winnings exceeds the cost of betting. In fact, you can bet on something happening even if you think it probably won’t happen– a 20% chance of 10xing your money is very positive EV, if you’ve made the respective estimates correctly [3].
Then we move to where Silver tries to link the types of people we think of as gamblers, to the titans of technology and cryptocurrency, and we get some shockingly unsupportive content.
Peter Thiel: venture capitalist Michael Mortiz describes him as “Not a risk-taker…a guy wired to protect his downside.” (page 248- all page numbers from the hardcover). Thiel himself casts doubt on a quantitative-minded approach to the world (255-256).
Mortiz: “[Venture capital is] about eliminating risks. And taking as few risks as possible.” (251)
Marc Andreesen: “Basically ninety percent of the fight is over before it begins in venture…it has to do with the reputation that we’ve established, the track record- you know, the brand…It’s sort of a self-fulfilling prophecy, the whole thing.” (291) His Techno-Optimist Manifesto lists “risk management” as an enemy. [4]
Keith Rabois: “Most of the people I compete with…part of what I’m doing is mapping their brain. Like, will they or their fund appreciate this?” (286)
Silver also describes playing poker in a Silicon Valley environment, where he “won enough money to buy a Tesla” and notes that “the biggest poker games select for the players who want to take crazy, irrational, -EV risks.” (252)
In the cryptocurrency chapter, Silver recounts a Miami-based cryptocurrency party where Alex Mashinsky, the CEO of Celsius, says “Poker is about skill. [Cryptocurrency investing] is not about skill. This is just about getting on the bus…You don’t have to drive the bus. You don’t have to know where it’s going. You can sleep on the bus. Look at my shirt: HODL!” (308)
Then there is Sam Bankman-Fried. “I’ve never done standard gambling, really,” he tells Silver (382). Silver portrays him as not understanding the underlying theory behind the Kelly criterion, a risk management concept (397-398) or even the implications of making a coin-flip, double-or-extinction bet on humanity (401). On page 389, Silver presents four theories of Bankman-Fried; the one he will eventually settle on in the chapter calls him “a poor trader and incompetent manager of risk.”
And finally there is Elon Musk. Silver apparently doesn’t meet Musk, but Thiel recalls thinking of the Tesla CEO, SpaceX founder, and Twitter god-king as “the man who knew nothing about risk” (248) and praises the psychological traits that led him to create SpaceX- “no one [else] does it because they all think probabilistically” (255). Silver describes Musk as “irrationally risk-loving.” (278)
That is the majority of the “big five characters” of the book, and a few other individuals, not thinking in the manner the book’s thesis leads a reader to expect. In fact, at the risk of being too cute, the book’s index refers to “expected value” or “EV maximization” on pages 14, 15, 20-21, 22, 51, 54, 76, 82, 114, 116, 122, 126, 129, 130, 132, 133, 158-160, 208, 366, 421, 425, 426, 427, 457, 481, 482, and 484; the tech and crypto chapters run from page 247 to 339.
So the central thesis of the book is in tatters. Or…is it?
The Object of the Game: To Win
If you look back at how the venture capitalists describe their process, they are finding ways to win that don’t depend on excelling at the ostensible venture capital playbook of evaluating how much a company might be worth and what its chances are of reaching that valuation at its IPO. I’d suggest a different framing: the River, in each subcommunity Silver identifies, considers metagaming a legitimate form of competition and devotes large amounts of time and effort to it.
Metagaming is defined as “strategies that transcend the rules and systems of a game, by…emerging from them via player interaction.” [5]
The term, maybe obviously, comes from “games” as entertainment. Many competitive games such as Magic: The Gathering have players heavily tracking “the meta” of which combinations of cards are commonly being played, so that the player can design counters to those particular strategies and attend a tournament prepared to deploy them [6]. One can also watch the Youtuber Spiffing Brit’s videos to see how the mechanics of computer games can be exploited to generate wins from absurd and seemingly impossible premises, like winning a game of Civilization VI without founding a city.
And “strategies that transcend the rules and systems of a game” are quite common in poker: in fact, there’s an intriguing sidebar in the book where Silver encourages female and ethnic-minority poker players to exploit metagamers working off of the reputation of how those demographics are likely to play poker. This is, to say the least, a very Riverian response to what some would call offensive demographic profiling.
This is the worldview that many venture capitalists, tech founders, and cryptocurrency players are using to win. And I think this is very helpful in understanding the Village. Many, many people, not just Silver’s frequent targets in mainstream media, don’t like when metagaming finds its way into real-world institutions.
For example, on Twitter, Silver had this response to a commenter upset by him describing politics as a “game”:
Nakedly strategic! This comes months after the Biden and Trump presidential campaigns’ agreement to work directly with media organizations to set a schedule and terms for presidential debates, rather than adhere to the norm of allowing these debates to be coordinated by the League of Woman Voters, was treated by Silver as a smart play for the Democrats because an earlier presidential debate could enable them to replace Biden on the ticket with a different candidate (as occurred). Treating politics as a game might end up producing a completely different presidential administration than in the counterfactual case.
Or consider “regulatory arbitrage”, the secret sauce of Uber and AirBnB. By getting to market a product competing with taxis or hotels while evading the costly regulations that would make competition impossible, these startup companies have built billions in value, but also angered anti-capitalism activists (and, I would assume, many people who paid dearly for taxi medallions).
Or consider travel hackers. A Rolling Stone article from 2015 captures travel hacker Ben Schlappig jetting around the world, squeezing oversold flights, credit card rewards offers, low-demand high-mileage routes, and other opportunistic moves into currency to support what is called a “nonstop-luxury life” in the skies. A telling quote in this article emphasizes: “ “This is their Game Boy…They don’t play World of Warcraft — they figure out how to do mileage runs.” ” [7]
Or consider the “Forrest Bounce”. This is a rarely employed strategy on the quiz show Jeopardy! in which, rather than progressing in an orderly fashion from the lowest-money-value (and often easiest) question in a category to the highest-money-value one, a player will instead exploit historical tendencies for which question will turn out to be a “Daily Double”, an opportunity to wager as much of their score as they want on their ability to correctly answer one question without any competitive pressure. James Holzhauer- who combined a career as a professional gambler with a history as a trivia champion- used this sort of metagaming to become one of the top Jeopardy! winners of all time, and something of a heel to audiences (and, perhaps, the late host Alex Trebek) who find the Forrest Bounce irritating as a matter of television presentation.
So we can use this to understand the Village. Silver has longstanding tensions with the New York Times, and so projects that the mainstream media’s dislike of the River is some inherently left-coded thing. But it’s broader than that- a very ideologically and sociologically broad insistence that people should only try to win in some ways and not in others. [8]
This is different from hating winning itself; Warren Buffett is pretty popular, and one of the highest grossing romantic comedies of all time, Pretty Woman, features a greedy-but-redeemable Wall Street executive as its lead male character. No, the Village is comfortable with winners, but they don’t want them to acknowledge that they are playing a game and achieve a win by finding loopholes in the rules.
And there’s one particular form of metagaming which is the whole raison d’etre of modern poker, and which particularly rankles the Village.
Sing, O Muse, Of A Shapeshifting Man
What would poker be like if there wasn’t any bluffing?
One can imagine it then becomes a game of estimating your chances of having the best hand under incomplete information (the cards that your opponents have), uncertainty (the cards that are yet to be drawn), and position sizing.
This would still be a quite quantitative game but, I think, a much less fascinating game for the River. It would be behaviorally sterile, much like blackjack with a few extra wrinkles. Blackjack is a popular casino game, but On The Edge spends more time discussing the mechanics of counting cards and especially discussing how to avoid the casino noticing that you are counting cards.
Poker is instead a game where deception might as well be in the official rules. When you sit down to play poker, you are implicitly promising to lie, and agreeing to be lied to.
And deception has a complicated reputation in Western culture.
If the Riverians were going to pick a patron saint, I would nominate Odysseus. It’s most infamously his suggestion to hide Greek soldiers in a wooden horse and declare the horse a gift for the city of Troy, to deceive the defenders into bringing these invaders within the city walls. He metagames by having his crew, their own ears deafened by wax, tie him to the mast of his ship so he can safely indulge in the Sirens’ song. More particularly, over the course of the Odyssey there are numerous instances where he lies about his identity or disguises himself with an intent to manipulate or gain an informational advantage. Lawrence Freedman’s Strategy frames Achilles and Odysseus as the avatars of two contesting traits, strength and cunning (and notes that Machiavelli will later draw a similar dichotomy between “force” and “guile”)- there are factions who are quantitatively superior, and there are factions who are efficient in using limited resources to come out ahead, with deception as a potent weapon in their arsenal. The River gravitates to the latter.
But Odysseus is not thought of well by millennia of Villagers. Achilles, in the Iliad, disparages Odysseus for being deceptive; Dante, in the Divine Comedy, places him in the eighth circle of Hell. In Sophocles’s Philoctetes, the character of Odysseus delivers a line to a younger Greek that Silver might translate as:
“Listen up, rookie: I know that you’ve been raised to play fair. But we’re so close to winning! Do what it takes to get the trophy today, and in another situation honesty will be the right call.”
It is easy to see how to one type of person the above approach is savvy, and to another type it is unsportsmanlike. Instead the Village prefers for people to have consistent identities with legible reputations that they reinforce over time, and get dealt with partly on the basis of those reputations [9].
And this brings us back to Sam Bankman-Fried (“SBF”), who Silver interviewed several times including after the collapse of FTX and even when he was confined to his parents’ house in Berkeley. For a time, SBF was a celebrity: a god in the new crypto economy, and a fountain of political and philanthropic donations. Sequoia Capital’s own website proudly recounted SBF’s successful pitch to their fund [10]:
But your ideal founder is also unsophisticated. And Bankman-Fried also pulled off the greatest trick a sociopath can; the appearance of being socially inept, the illusion of being connable. In addition to him infamously playing League of Legends during the above exchange, he wore a costume even sloppier than the Steve Jobs turtleneck or the Mark Zuckerburg hoodie: “not just any T-shirt and cargo shorts, but what could seem like the baggiest, most stretched out, most slept in, most consciously unflattering T-shirts and shorts; the most unkempt bed-head.” [11]
And I suspect SBF even pulled a trick on Silver (italics here from the original, my emphasis in bold):
“[SBF] had taken on what I’d come to think of as different personas. There was what I call “Talking-Shop Sam.” This was the default mode that I’d grown accustomed to in the pre-bankruptcy days. Talking-Shop Sam spoke rapidly in run-on sentences, full of jargon about arbitrage and expected value. I liked Talking-Shop Sam. We spoke the same language and had good camaraderie; I could imagine us being friends.” (302)
Conclusion
So there we have how the figures in these two chapters of the book (Altman won’t really be explored until the content about AI) are really linked to gamblers- they have a metagame-heavy approach to competitive behavior, and want to challenge social norms that restrict or devalue these strategies [12]. And we can better see that this group generates tensions with broader society, not just innumerate risk-averse elites.
[1] https://www.numlock.com/p/numlock-sunday-nate-silver-on-the
[2] Silver describes incumbent elites as “the Village.” He tries to emphasize the politically left establishment in media and academia as the particular polar opposite of his River. More on this later.
[3] It’s for this reason that Silver’s 2016 election model, which gave Trump “only” a 29% chance of winning the Presidency- much higher than most competing forecasts, including betting odds- is considered by many Riverians to be a good call.
[4] https://a16z.com/the-techno-optimist-manifesto/
[5] https://www.gamedeveloper.com/design/what-is-a-meta-game-
[6] Games themselves play a meta-metagame; the most long-tenured games in the market for entertainment are those, like M:TG, with constantly evolving metagames.
[8] Another problem I have with the anti-progressive angle: what’s more psychologically distinct from a probabilistic approach to life than believing everything is set to unfold according to God’s plan?
[9] Freedman flags that the cunning often get stamped with a reputation for deceit, which is part of the reason Odysseus has to so frequently disguise himself, and why in Philoctetes he needs to send another Greek to do the deception in his place. But poker, as mentioned above, is a sanctuary for the cunning; Silver opens On the Edge with an anecdote about his first gambling trip post-pandemic which includes an observation that “this world of poker players…was the world where I fit in.”
[11] https://www.nytimes.com/2022/12/13/style/sam-bankman-fried-style.html
[12] As discussed, Silver talks much less about “pure” blackjack than he does about ways to metagame; something similar is true when he profiles an individual who finds ways to advantage-play slot machines.
Versus Mist 