Navigating the Machine
In our other books, my (Malcolm’s) story begins when I meet Simone and our history is told through her eyes. This is because it is hard for me to talk about my “backstory” without sounding like I am telling some sort of contrived rags-to-riches narrative (an inaccurate narrative I loathe). I had every advantage in life and escaped my negative circumstances only because of privilege.
That said, continuing this book without disclosing more about my background would be dishonest, as it heavily affects my perspective on governance. When I was in elementary school I was placed in the private prison system—a series of prison alternatives for minors (think: Holes)[[50]](#_ftn50)—and spent my life from that point onward living largely outside a family home. In fact, now that I think about it, elementary school was the last time I lived with my family full time. Essentially, I spent all my formative years navigating corrupt governance structures as my only source of basic necessities like housing, food, etc.
It is hard for me to know the real reasons why I was sent to these facilities in the first place because I was in elementary school at the time. All I know for certain is that I was sent by court order. Perhaps I was sent away due to some equivalent to Kids for Cash, as the first prison-alternative camp I attended may have been giving kickbacks to judges who referred families to them.[[51]](#_ftn51) Maybe family politics were at play. It could be that my parents thought they could get better terms in a highly contentious and litigious divorce if they could convince a judge that I had behavioral problems caused by the other parent. Perhaps a mix of these factors led my parents to believe it was just easier to have me out of the picture for a while.
Whatever the case, things turned out fine for me, in no small part because of my privilege. I ended up getting my MBA at Stanford and the last company I have run has so far pulled in $70 million a year. Had I grown up around my family, beholden to them, I would never have had the privilege of being uncompromising in my morals without being forced to make enormous sacrifices that, if I am being honest with myself, I probably would not have made. This is not a sob story; it is only relevant to my take on governance structures because I spent my formative years being raised within a variety of bureaucracies. Throughout my childhood, my wellbeing depended on my ability to intuitively understand how they actually functioned—not just how they claimed to function—and this experience yielded many of the insights shared in this book.
One of the most pivotal moments of my life involved one of the staff members at a prison-alternative camp to which I had been sent pulling me aside and explaining how futile it was for me to fight the system. All of the letters I wrote and tried to send to people outside the facility were either not sent out or redacted—after all, he pointed out, did I really think they are so stupid as to allow themselves to be implicated in anything? The letters only served to demonstrate to the camp’s management that I was motivated to try to financially hurt the facility. No one outside was going to help me. In trying to recruit outside help, I was incentivizing the system’s bureaucracy to prevent me from leaving—something that was trivial for them, as they could instantly fabricate new misdeeds given that no one from outside the facility could interact with me without their permission. I was only a child and they were a large, well-funded company.
After that, he pointed out something that genuinely shook me: From their perspective, regardless of the time we actually had on our sentences, every child in the system was an annuity. They could easily fabricate events to keep us in as long as they wanted—though it wasn’t like they needed to. They had created an environment in which, to survive, you had to break so many rules that they always had something on you.
For example, one day another kid said he would try to kill me that night. We slept in plastic sheets we rolled around ourselves, so I stuffed mine and hid somewhere else (we were in the desert, so the plastic would freeze closed at night so there was no chance of him checking inside). He smacked it a few times with a shovel late that night and I thought, “glad that’s out of the way,” until the staff heard the noise and found I was not in my dedicated sleeping spot.
Because each of us was a guaranteed source of perpetual income, we could be sold to other behavioral health facilities for referral fees that were priced similarly to how one would price an annuity. At the time, I had lost over 60% of my body weight. The staff member who had pulled me aside thought I was starving myself (I wasn’t; I was having a reaction to the food and felt so desperate for sustenance, I had learned what local insects and plants I could eat without getting sick). He explained that they didn’t want another kid’s death on their record and if I didn’t find a way to get healthier quickly, they would “sell me” to another, even-more-draconian institution. Given that being transferred between these camps, behavioral correction facilities, and “therapeutic correctional schools” was a common practice, I had heard enough from the other kids to know it could be worse. At least the place I was at didn’t shoot us up with a drug cocktail every morning to keep those under its care in a mentally-addled state.
Being reduced to a line item in a broken bureaucracy and accepting that I was the only one who could get me out of the system helped me better contextualize where I—and really all of us—stand in the world.
Was this camp’s staff member bluffing? How much of what he told me was real? How much am I misremembering due to being in grade school at the time, dehydrated, and starving? It’s hard for me to piece this together as an adult. There was a time in my life when I thought this conversation was a delusion because it sounded too insane to be a real memory—then Kids for Cash became public and I realized It probably really happened. This was further reinforced when the private equity company Simone and I ran looked into buying a company in the troubled teen industry and we got an industry insider’s perspective of some of the facilities where I had been sent (many of which have since been shut down)
I was a product in a larger system. To escape, I needed to understand the rules of the system and—rather than “fight the man”—bend the system itself to my will. Bureaucracies are like a colloid, that weird cornstarch slime you made in grade school: If you hit them, they become solid, but if you work with them, they become putty. First, I engineered a transfer to a correctional school (at least I would be allowed books there) and through a series of similar trades, I gradually improved my living conditions. As it was made clear I was not welcome back home, I had to find a way to house and feed myself once I got out of government subsidized facilities. This was made possible by an educational trust set up by a previous generation of my family, which covered my boarding school expenses.
By halfway through middle school, I had gotten myself transferred to a fairly normal boarding school. I was able to use the same trust to pay for summer camps I could argue were educational, which gave me a place to stay outside of the school year. (Here I need to emphasize how screwed I would be had I not been born privileged—I was incredibly lucky.)
I made money for stuff I couldn’t get from the school by selling restricted supplies, like soda. My rich classmates were highly price insensitive in the face of coveted-but-restricted goods—there was significant profit to be made by setting up an operation to smuggle them on campus at scale. This taught me how governments can affect the value of goods being traded within them. By high school, my life was pretty much that of any other boarding school kid outside of my side hustles and the fact that most of my friends were online.
In a bureaucracy, there are no bad guys: Just hundreds of people acting in a self-interested fashion. Evil is rarely a choice—rather, it’s an emergent property of a set of rules. Bureaucracies and governance structures are not good or evil; they are wind-up AIs often put in place with good intentions that play out mechanistically. I was fortunate to be placed in a position to understand my place in society at a young age: As a line item on someone else’s balance sheet. This knowledge has made my life easier than it has any right to be. Instead of fighting the system, I have been able to improve my lot by increasing my value to that system. Hopefully this book can help you develop your own ways of taming bureaucracy and saddling it to your aims.
Note: One of our test readers commented that the narrative here made him really hate my parents, which I fear means I misarticulated part of the point. I live a great life—a better life than either of them had. How else do you define success as a parent other than giving your kids a better life than you? Honestly, one of my biggest fears is accidentally making my kids’ childhood too easy, leading to them having worse adulthoods as a result.
People are almost never “bad or good” and certainly never worthy of hate. Bad actions are usually the result of complicated people operating within systems set up by other well-meaning individuals. And that is why a book like this is so critically important.
The intentions of a system are almost completely untethered from its outcomes. A government intended to increase economic equality can mass murder more people than any governing entity in history.[[52]](#_ftn52) Policies created to save the environment can be corrupted to undermine sustainability.[[53]](#_ftn53) A family office designed to protect descendants can turn relatives against each other. Tools designed to improve the world can be corrupted into levers for self-aggrandizement. Designing a government is like wishing on a monkey’s paw. Approach it with care and precision because it will do everything in its power to twist your desires into an evil mockery of your intentions.
When you set up a governing system, it’s not just others you put at risk but yourself—the core of who you are. You could start your life as humble librarian Mao Zedong, who was by all reports a pretty nice guy keen to make life better for other people, and in the process of trying to create a better society, you could end up allowing the very government you created—something you risked your life to build—to twist you into one of history’s most monstrous humans (we cover Mao later in the book, but if you only know that “a lot of people died,” then you don’t have a full picture of how irredeemably evil he became). Poorly-thought-through incentives and governing systems have opened this world to more evil than any amount of selfishness, greed, or any other human vice.