In this Episode of Distrupters by Delphi Media, host Brain McRae, research editor for Delphi interviews Ben Hunt as he gives a presentation on what he calls “The narrative machine”. Ben is the creator of Epsilon Theory, where he writes interesting takes about markets using game theory and history. He's also the Chief Investment Officer at Second Foundation Partners.
Read out our notes below to learn more
Ben’s Background
Professor & Academic for 10 years in Political Science.
Started a software company at the end of the dotcom crash.
VC & private backing around technology/software.
Started a successful hedge fund.
Started a blog about markets and game theory.
The Writing process
The notes I end up with are never the notes I started with.
This works the same for companies and investments.
Voice, views and actions are evolved from the doing process.
There is no substitute for “the doing”.
The Narrative Machine
Is a take on Ray Dalio’s “Economic Machine”
Ray’s Theory is that the economic machine governs everything.
Ben’s view is that “The Narrative machine” incorporates “The Economic Machine”.
Narrative is the water in which humans, as a social animal, swim.
Humans can often not see the stories that are pushed onto them by media or themselves.
Gell-Mann’s Amnesia
When reading a newspaper story that the reader knows alot about, they can often pick up misrepresentation of the premise or the facts in the article.
Then turn the page, read something they know nothing about and go “hmm, that's interesting”
Humans are biologically programmed to believe the stories told to them, especially when told to them in a certain way.
Epsilon Theory
In the absence of immersive personal experience, we are nuerolly evolved to make sense of the world through a small set of scripts and story arcs that use consistent grammatical and visual cues.
Hollywood knows this, every single movie ever made follows the “3 act script”. This is the script we are biologically programmed to respond to.
Politicians know this, google “*insert any politician here* finger pointing”. Finger pointing is a powerful visual cue.
CEO’s know this, take Marc Benioff, CEO of Salesforce, a mega cap stock despite never making a profit. Marc uses narrative to redefine how to value the company using pro forma metrics.
Big Media knows this, media knows how to create a narrative arc that can cause a response even when our own eyes can see it's not true.
Big Tech knows this, YouTube for example gets 70% of content consumed is recommended by the algotherm.
“Senator, We run adds” - Mark Zuckerburg
Narratives can be weaponized by the insertion of grammatical and visual cues.
All in the name of engagement.
Why can we see the water (narrative) in which we swim?
Humans have 100 billion Neurons in the brain, these neurons detect patterns and form new clusters based on stimulus.
Clusters that have evolved to appreciate grammatical structures.
Language came to human brains some millions of years ago, then gradually took over large portions of the brain.
Language is a symbiote to the species
Humans are the only mammals that can swallow and vocalize at the same time, language is very important to us.
Seeing the water
There must be a conscious effort to recognise people in positions of power attempting to shape human behavior through the use of words and narratives.
In an attempt to avoid being “taken over” by a story arc that we are hard wired to respond too.
One must ask themselves “Do I carry around thoughts in my head that are not my own? Thoughts that have been implanted in me by others, so that I will engage with them.
Narratives
Narratives and words can be thought of as alive.
Institutions have learned to weaponize narratives, through the insertion of specific grammatical structures.
Narratives are much more powerful today because most people can be accessed 24/7 through dopamine machines (Mobile Phones).