E17. True Enough LLC

“We are currently experiencing a market glut of facts unlike anything we’ve ever seen.”

The first Tuesday of the month arrived, so I helped Lou Reed’s Nephew set up his sign outside the small conference room. No sooner had we sat down and opened our laptops than someone arrived.

He was overdressed and overprepared. He wore a blue check suit and a spread collared shirt in which was nestled a Windsor knot the size of a cat’s head. He had the haircut typical of cinematic depictions of British soldiers in the first World War and German ones in the second: razor short on the sides, vainly long, smooth, and damp on top. He entered the room intent on taking up all available space, of which there was less than he expected. He didn’t let this stop him. He set up his own easel and foam core charts and squinted around to see if there was any A/V.

“Is there any A/V?” he asked, though there obviously wasn’t.

“What’s your pitch?” Lou Reed’s Nephew asked.

“I’m here to talk about facts,” the man said. He handed us two cards that identified him as founder and CEO of a company called True Enough LLC and told us his name was Hackett.

“What about them?”

“We are currently experiencing a market glut of facts unlike anything we’ve ever seen.”

His delivery was as firm as his handshake.

“And why is that?” Lou Reed’s Nephew seemed to understand what Hackett was getting at.

“Three reasons,” Hackett said. We had been led where he wanted us to go. He removed a card from the easel to reveal the card behind it, which contained three bullet points.

·        Lowered barriers to entry

·        Negative marginal cost of getting it wrong

·        Increased demand

He spoke about each in turn.

“Barriers to publication have been lowered by digital media, which is a good thing—democratically speaking—but, as with permissive monetary policy, it leads to a devaluation of facts already in the marketplace.” 

While he spoke with conviction about monetary policy, his praise for democracy sounded merely polite.

“They become cheap, relatively speaking, like dollars in an inflationary economy. A lot of ‘alternative facts’ and half-truths become good enough substitutes as the threshold required to count as ‘true’ is lowered. This is a natural function of oversupply. Like flooding a market with counterfeit goods, this damages the value of the genuine articles and causes consumer confusion as some decide the impostors are ‘good enough.’

“Meanwhile, in a mildly competitive information marketplace—kept mildly competitive by high barriers to entry— ‘getting it wrong’ has a cost. Competitors use errors against one another to steal audience and revenue, which provides a market check that enforces quality—in this case truth. But in today’s hyper-competitive information marketplace—with low costs to entry and a vanishing likelihood that the same reader will read a claim, the counterclaim, and the correction—the marginal cost of getting it wrong approaches zero. When it goes negative, like Eurozone interest rates, everything changes. Truth telling will become less profitable than its opposite for the first time since the Spanish-American War, creating a misinformation flywheel that accelerates with every turn.

“We’ve assumed for a century that truth has intrinsic value, but we’ve mistaken grace for virtue. We are about to see that truth’s value was held in place by contingent market factors that will soon no longer be the case.”

I’d never liked this idea of mistaking grace for virtue—with its promotion of constant self-searching and obsessive doubt—and found it no more comforting in this context.

“Finally, the removal of truth constraints will create tremendous demand for ‘facts,’ or fact-like statements to be precise (since the word ‘fact’ will have lost some of its meaning in this deflationary event). New information outlets, which will be launching every day after the truth rate goes negative, will need an escalating supply of these statements, and those with a slightly better pedigree—by virtue of having already been out there, with a history, no matter how sordid—will be marginally more valuable.”

With this he removed the card with the bulleted list to reveal a card with a series of pie charts.

“Today, 10% of online statements count as true, but as the truth rate approaches zero, this proportion will rise. Three months from now it will be 15%. In six months, 20%. In five years, 50% of online content will be good enough to meet new, rapidly falling standards of truth.

“At True Enough we have identified transactions that will allow us to gain control of half of those statements now, while they are still just speculation, rumor, and nonsense. 

“Would you like to join us?”

I was speechless, uncertain what Hackett was getting at, though duly awed by his confidence.

I waited for Lou Reed’s Nephew to speak.

“What, exactly, are you buying?” he asked finally.

“It’s a mix,” Hackett said. Done with his pitch, his body relaxed. He seemed relieved to talk details. “Abandoned blogs. URLs with search authority. Forgotten content farms that rank. All of these seem worthless today, but time will change that. We plan to acquire, hold, and wait.”

“So, your plan is to corner the market on untrue vehicles, which are now considered laughably unreliable and outré, but whose value will skyrocket once the value of truth itself goes through the floor, and all these sites begin pumping out misinformation and rumor that will suddenly pass as true?”

“Yes.”

“You’re talking about shorting the truth.”

“True,” Hackett said.

“Interesting,” Lou Reed’s Nephew said. “It will be like all the gold bars in Fort Knox were replaced with painted logs without triggering a single alarm.”

“That’s a great line,” Hackett said. “Can I steal that?”