Max Hodak Writings

The signaling of secrecy

May 2016

One observation I’ve had is that great value is rarely created through secrecy. On the contrary, most of the biggest successes at hard problems have no problem talking about what they’re doing even years ahead of time. They may not do much PR or marketing, because that’s a distraction and not related to their current white-hot risk, but they’re happy to share the results and basic math that says that what they’re doing can succeed. This has been such a strong effect in situations I’ve seen over my eight years in Silicon Valley that I now heavily discount teams working on hard problems that seem overly obsessed with secrecy unless there’s a specific and clear reason for it.

I’m not really sure of what the mechanism behind this might be. One particularly surprisingly thing to me is that most of the best people in deep learning are publishing what I would have expected them to keep extremely quiet and proprietary. Even Google, before it was Google, was a paper that laid out PageRank and their architecture quite clearly.

I’m not saying that companies should open source all their code or give away the critical secrets that make things work. This is just an empirical observation that companies who spend extended periods of time in stealth mode or have a severe preoccupation with confidentiality never seem to work out. Apple obviously succeeds with extreme internal compartmentalization, but I’ve never seen anyone else pull it off. And, of course, in the beginning, Apple was bringing bare circuit boards to meetups for feedback.

Bill Joy of Sun Microsystems always liked to say that “there are always more smart people outside your company than within it.” Typically when something really works it creates lots of new space. VR isn’t just Oculus, it’s a whole industry now. Recombinant DNA isn’t just Genentech. Social media isn’t just MySpace. I expect part of the mechanism here is that extreme secrecy implies arrogance — that the company can do it all themselves, and expect to own the entire resulting value, which is probably an underestimation of what they’re trying to do and a misunderstanding of how markets grow.