Secrets: Their Nature, Value, and Discovery

Key Insight

Secrets are vital, unknown truths, distinct from conventional knowledge or impossible mysteries. While elementary mathematics, once a secret (like Pythagoras's theorem), is now a conventional truth essential for learning, it offers no competitive advantage. Secrets, however, are difficult yet discoverable; they are not inherently impossible tasks. These hidden truths are the foundation of value, driving world-changing companies and significant progress across science, medicine, and engineering. The contrarian question, 'what valuable company is nobody building?', inherently points to such undiscovered opportunities, suggesting that many world-changing ventures await their inception.

Finding secrets demands relentless inquiry and a belief in their existence, as exemplified by Andrew Wiles who, after nine years of dedicated work, proved Fermat's Last Theorem in 1995, a problem that had remained unsolved for 358 years. This success required both brilliance and faith in the possibility of discovery. Secrets are broadly categorized into two types: natural secrets, which pertain to undiscovered aspects of the physical world, and secrets about people, concerning what individuals don't know about themselves or choose to conceal. An example of a natural secret could be breakthroughs in human nutrition, a field that is universally important but surprisingly under-researched, with most big studies conducted 30 or 40 years ago and seriously flawed.

To uncover secrets, one must look where others are not, particularly in fields that are significant but lack standardization or institutionalization. For example, the monopoly secret, 'competition and capitalism are opposites', can be revealed empirically through profit analysis or by observing what company leaders strategically hide or exaggerate. Once a secret is found, the decision of whether and whom to tell is crucial. Sharing a secret too broadly can be dangerous, as history shows those 'foolish enough to put their whole heart on show' have faced dire consequences. The ideal approach is to share the secret with only those necessary, typically within the structure of a company, which serves as a 'conspiracy to change the world' where recipients become fellow conspirators. This approach allows great businesses, like Airbnb, Lyft, Uber, and Facebook, to be built on fundamental insights that were hidden in plain sight, leveraging untapped capacity or unrecognized simplicity to create immense value.