Latent Value

Nov, 08 2020
3 Minutes

You're probably familiar with the marshmallow test.

As a quick reminder, it was a study done on young children, who all presumably liked marshmallows. One by one, researchers led kids to a room with a single marshmallow on a table. The researchers mentioned that they had to go, but that if the marshmallow was still on the table when they returned, they would give the kid two marshmallows.

After 15 to 20 minutes of locking the child with temptation, the researcher would return and fulfill their promise.

In follow up studies many years later, they found that children who "delayed gratification" had better test scores as young adults, among other measurements of "competence".

The message from this study was clear - delay gratification and you'll be more successful.

Now, this is a nice little story, but life isn't so neat. Optimizing for the long term isn't as simple as doing things that are slightly difficult now, in order to reap compound rewards in the future.

I believe that optimizing for the future requires leading a life that generates a lot of "latent value". Let me show you a few examples of what I'm talking about.

Code Names

In the party game Code Names, 25 cards are laid out on a table, each containing a single word. There are two teams, each who has a spymaster and a group of guessers. The spymasters have access to a "map" that informs them which cards are theirs and which ones are their opponents. In alternating fashion, the opposing spymasters give their team a clue - a word and a number. The word is a hint, and the number conveys how many cards the hint applies to.

The goal, of course, is to get your team to guess all of the words before the other team guesses theirs.

There is an interesting strategy where an ambitious spymaster will provide a clue that that applies to a large number of words. Quite often, this gamble doesn’t pan out. Despite the lack of success, it was not for nought. In later rounds, this failed clue provides the backdrop for future clues. With this additional context, future guesses become slightly easier.

Teams can reap the rewards of their previously failed ambition.

Cups of Water

Before he fell off the proverbial cliff, M. Night Shyamalan was creating movies with mind bending plot twists.

One of his better films is the movie "Signs", in which aliens invade some generic farm in the American midwest.

I don't remember much from the film, except for the fact that there's a little girl and throughout the movie she's grabbing cups for water, and leaving them around the house unfinished.

The cups end up everywhere and it's a huge nuisance to the rest of the family.

But - plot development! - it turns out that water burns alien flesh as if it's acid. Towards the end of the movie, all these cups of water become useful weapons as the family fends off the alien invasion.

The family was saved by their little girl's previously annoying habit of leaving cups of water all over the house. What seemed useless and possibly annoying, became useful much later.

Latent Value

My mom likes to counsel me “不走弯路”/”bù zǒu wānlù”. It translates to “don’t take the winding path” - the implication being that if you’re trying to get from point A to point B, the best route is the straight line.

Yes, it's a bit annoying to hear this, but I know what my mom is trying to say. She's conveying cautionary tales with those four words - of people that she's seen, and of paths she's taken herself.

But it's also true that life doesn't always work out the way you draw it up. You might beeline for a path of success, only to realize that you've changed and you hate the thing you've been chasing.

I don't have great advice here, but I do think there's an alternative to optimizing for guaranteed success. Rather, try to live a life that generates latent value. Trying hard things and failing. Doing things that feel nautral and energize you. These are the seeds of latent value.

Who knows, your YouTube creator failed ambitions might just open up a path to becoming the defender of our planet from aliens.