This is Peter Thiel’s matrix:

In his book, Zero To One, and in this talk at SXSW, Thiel essentially explains that where we are as a society on this matrix defines how we act and what we do. Every quadrant is a religion, and each religion has a doctrine:

Indefinite pessimism: Things will get worse, but we don’t know how exactly. Best to eat, drink, and be merry.
Definite pessimism: Things will get worse, and we know how. Best to save money and prepare for the worst. Winter is coming.
Indefinite optimism: Things will get better, but we don’t know how exactly. Best to do what works now and keep options open.
Definite optimism: Things will get better, and we know how. Best to plan big projects and work on making them a reality.

The crux of the matter is the role of luck. Imagine an axis: on one end, you have someone believing that luck played no part in their success – regardless of the circumstances, they believe that they would have arrived at the same outcome. And on the other end, you have someone who believes that luck was all it was: if any of the million small variables changed, the outcome would have been drastically different.

What is luck? Baby don’t hurt me…

There’s a useful classification system for types of luck that I found in the James Austin > Marc Andreessen > Naval Ravikant pipeline, and it goes something like this:

Blind luck
Luck from hustling
Luck from preparation
Luck from your unique character

I got my current job because the company contacted me, so that was luck. But they contacted me because I had contacted them 2 years ago, and I had sent over 100 job applications at that point, refining my resume and interviewing skills. It was still luck – it’s not like I just decided I’d get that job and then it happened – but it was a different kind of luck than just being contacted by the company without any effort at all.

But you were born in the right country, in the right time, in the right family, went to the right school, and so on! Are you not forgetting about all these other types of luck?

If you take a very long step backwards and look at the universe, all that you get is a bunch of atoms that move according to the laws of physics. Whatever happens had to have happened. This is true, but is also completely useless, because luck starts having meaning only when you go many levels above the level of atoms.

People who attribute success to luck or ability are speaking about fundamentally different things. That is why the question of "what’s more important" makes no sense. You make a conscious decision to learn to play guitar, dedicate yourself to the craft and become a great guitarist. What’s more important, the fact that you spent years playing or the fact that you happened to be born on Earth? Luck-people emphasize that without a specific set of circumstances (taken for granted), there’s no success. Ability-people emphasize that without hard work and dedication, there’s no success (at least not reliably). It’s true that nobody becomes a good guitarist without being born in a world where there are such things as guitars, but it’s also true that nobody becomes a good guitarist if they don’t work hard on their craft. Both camps are correct, they are simply talking past each other.

The coin toss society

Imagine that to achieve a Big Win, members of a hypothetical coin toss society have to toss a coin. Big Win means that you got all heads. If you have a mixed result, it’s not a big win. Not everyone starts out equal: some people only have to toss 10 times, others around 15, and some people have to toss up to 20 times.

Some obvious realizations:

Your chances are not guaranteed. It’s more likely that you will get a mixed result, and not all heads.
If you don’t throw the coin, the chances of a Big Win are 0.

What beliefs incentivize what types of actions in this society? If the predominant belief is that you should toss the coin because You Can Do It And It’s Worth It, more people throw the coin, and more people get all heads. If the predominant belief is the epistemically correct one (a probabilistic calculation), fewer people decide to toss the coin, especially if the action of tossing is socially (or otherwise) costly. This society will have an overall smaller number of big wins, but will be technically correct. And if there is some mechanism to influence the coin toss, the number of people who discover it will also be smaller.

What is Thiel saying?

In indefinite worldviews, the focus is on the unknowns and the uncontrollable. If you have a society that is definite-optimistic, this society conducts big projects and has great plans of improving the human condition. But then something happens – an unforeseeable incident, an unplanned problem, an implementation gone wrong. It is precisely the unknowns and the uncontrollables that pile up and challenge the definite-optimistic vision. With enough of these, the society starts changing its opinion little by little: "Huh, I guess we didn’t think about that", "Hm, we didn’t foresee this problem", "Oof, we didn’t know that this would happen". Society becomes more "mature" – it stops believing that it can do anything and everything, and it starts saving, insuring and doing probability.

You only need to take a look at the long list of failed megaprojects stemming from definite optimistic views, and see that, while that worldview might be useful, it is far from accurate. If it were accurate, planning would not fail, and random circumstances would not foil planning. The test of epistemic accuracy of definite optimism is its existence: there’s no reason to move to any other religion if definite optimism is working. And if it is not working, that’s proof that there’s something more than just planning and hard work.

Correcting too much

This more "mature" view takes a life of its own and society corrects in the direction of being more indefinite: paying more attention to probability, statistics, and preparation. But society maybe corrects so much that it stifles innovation and grand projects that actually would succeed. Like a too strong immune response, or a guy who had a couple of bad encounters with women so he concludes that all women are evil.

Useful and true beliefs

There are beliefs that are epistemically irrational (not true) but instrumentally rational (you’ll succeed if you hold them).

Scott Alexander in Meditations on Moloch:

Bostrom makes an offhanded reference of the possibility of a dictatorless dystopia, one that every single citizen including the leadership hates but which nevertheless endures unconquered. It’s easy enough to imagine such a state. Imagine a country with two rules: first, every person must spend eight hours a day giving themselves strong electric shocks. Second, if anyone fails to follow a rule (including this one), or speaks out against it, or fails to enforce it, all citizens must unite to kill that person. Suppose these rules were well-enough established by tradition that everyone expected them to be enforced.

How do you break out of such an equilibrium?

Useful beliefs to the rescue! (link)

The deal with Thiel is that he paints his picture with a broad brush. It’s pretty hard to say: "hey, but absolute definite optimism isn’t actually accurate; there are things outside of your control" because the response would probably be "obviously I’m not saying that luck plays no part in success; it’s just the focus on luck that screws up our societies, as nobody is prepared to go for big, ambitious, and important projects."

Thiel isn’t speaking in strict definitions: he’s talking more about the "vibe", the focus. Do his ideas hold up on instrumental, if not epistemic grounds? When you focus on your vision, on what’s worth doing, on what’s important, and dismiss thinking about your odds, situation, where you were born and what systemic pressures you’re enduring, are you more likely to succeed? Yes.

The most simplified version of Thiel’s definite vs. indefinite philosophy is the idea of self-fulfilling prophecies. If you believe in something and execute relentlessly toward your vision, "the future takes care of itself". Note that my conclusion is not "Thiel is giving us a useful lie". It’s more something like: "Thiel is improving our odds of success by making us focus on the factors we can control, instead of self-sabotage due to focusing on factors completely outside of our control".

With that said, since I’m a sucker for motivational phrases, I’ll finish by quoting the end of that chapter:

We have to find our way back to a definite future, and the Western world needs nothing short of a cultural revolution to do it. […] A startup is the largest endeavor over which you can have definite mastery. You can have agency not just over your own life, but over a small and important part of the world. It begins by rejecting the unjust tyranny of Chance. You are not a lottery ticket.