Safi Bahcall, Loonshots

Safi Bahcall, Loonshots [Book Review]

Safi Bahcall’s Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries (St. Martin’s Press, 2019) is a terrific book, one I couldn’t put down. And it’s not just for people making business decisions. It’s for anyone who wants to understand the sociology of science and technology. I found it a compelling—and entertaining—update to Thomas Kuhn’s 1962 classic, The Structure of Scientific Revolutions.

Q4 hedge fund letters, conference, scoops etc

Safi Bahcall, Loonshots

Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries by Safi Bahcall

Bahcall trained as a physicist (Harvard and Stanford), decamped from science for three years to work as a consultant for McKinsey, and then co-founded the biotechnology company Synta Pharmaceuticals, where he served as CEO for 13 years.

Bahcall’s thesis is as simple as it is brilliant. He expresses it as a three-step argument: (1) “The most important breakthroughs come from loonshots, widely dismissed ideas whose champions are often written off as crazy,” (2) “Large groups of people are needed to translate those breakthroughs into technologies that win wars, products that save lives, or strategies that change industries,” (3) “Applying the science of phase transitions to the behavior of teams, companies, or any group with a mission provides practical rules for nurturing loonshots faster and better.”

He illustrates and explicates his thesis with a wide range of examples of both successes and failures. There is Juan Trippe of PanAm, Edwin Land of Polaroid, Vannevar Bush of the OSRD (the wartime loonshots nursery). He explores why the world speaks English instead of Chinese or Arabic. He debunks Newton’s status as the lone genius who discovered universal gravity, explained the motion of the plants, and invented calculus. Newton was instead the great synthesizer of the ideas of others. Bahcall’s hero is Kepler, who “broke far more violently from the past than Newton” and who was closest in spirit to Einstein.

At the heart of Bahcall’s argument is the notion of phase transitions, when “systems snap—liquids suddenly freeze, traffic suddenly jams, forests or terror networks suddenly erupt—when the tide turns in a microscopic battle.” A phase transition is the sudden change between two emergent behaviors.

As applied to the financial markets, Bahcall argues against Alan Greenspan’s view that efficient markets and invisible hands are fundamental laws that are rarely, if ever, violated. “That fallacy is one cause of policy disasters (or investment opportunities, if you are a trader).” Instead, both efficient markets and invisible hands are emergent properties, collective behaviors, “dynamics of the whole that don’t depend on the details of the parts.” And, to repeat, emergent properties can change suddenly.

I have offered here only a glimpse into the richness of Loonshots. Even though it’s early in the year, I can guarantee that it will be on my list of best books of 2019.

Article by Brenda Jubin, Reading The Markets


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