Preface：Why We Must, at This Moment, Rewrite Business History

Hello everyone, I am your old friend, the Financial Veteran.

The world at this moment is performing a strange and striking duet. At one end of our lives, there is a carnival of the masses. Countless people are enthusiastically toying with novel tools, using a few simple commands to have artificial intelligence generate a work of art comparable to that of a professional painter, or a video so realistic it blurs the line with reality. This is an unprecedented experience, filled with the joy of creation and the magic of technology, as if everyone can become an artist.

At the other end of the world, however, a deep-seated anxiety permeates the air. In the trading halls of Wall Street, in the code factories of Silicon Valley, in the creative workshops of advertising agencies, the elites who once stood at the pinnacle of the pyramid are feeling a chill as never before. Fields once considered the final bastions of human intellect—such as complex financial modeling, sophisticated programming architecture, and even the flash of artistic inspiration—are now being rapidly learned, imitated, and even surpassed by a “super-brain” known as AGI, or Artificial General Intelligence, in a manner that feels nothing short of crushing.

One half is fire, the other half is a sea of ice. This profound sense of rupture casts a common question into all of our hearts: the world we know, the one we depend on for our survival—are its underlying business logics, its core value systems, truly still intact? The skills we have painstakingly learned, the experience we have diligently accumulated, the career paths we have held as articles of faith—will they all become worthless one morning in the near future?

This is a universal bewilderment, a collective confusion that inevitably arises when we find ourselves at a great turning point in history. However, the experience of history repeatedly tells us: the more we are confused by the “changes” of the future, the more we should seek the “constants” from the past for stability. It is for this very reason that we believe, at this moment, we must rewrite the history of business.

Please note, what we aim to do is not to simply retell those well-worn business stories, like the formula of Coca-Cola or the rise of Apple. Such writing is merely a superficial depiction of business phenomena. Our ambition is to be like a geologist. We will use the drill of our intellect to penetrate the surface soil of today’s dazzling business phenomena, to bore through the thick rock strata composed of capital, technology, brands, and markets, and to go deeper, ever deeper, to seek out the most fundamental, most primal, and inexhaustible energy that drives the tectonic plates of the entire business continent to drift, collide, and uplift—that which is eternal and unchanging: human nature.

This is the core of this book. We will weave for you a magnificent history of business evolution spanning ten thousand years, with “human nature” as the warp and “technology and business models” as the weft. We will see how the desire-codes deeply embedded in our genes—such as greed, laziness, selfishness, and fear—have been utilized, amplified, and satisfied by merchants through different business models under varying technological conditions. We will understand that from an ancient seashell to a string of code today, the underlying business logic has never fundamentally changed.

Our ultimate purpose in all this is to empower you, after reading this book, to draw your own survival guide for the future. For we firmly believe that only by truly understanding the “unchanging” logic of the business world over the past ten thousand years can we, in the next one hundred years, possess the calm and resolve to see through to the essence and navigate the cycles, no matter how the world may change.

Now, let us embark on this journey together, to seek the first principles of the business world.

Part 1: The Thesis: The Unchanging Anchor of the World—The Underlying Code of Humanity and Business

Chapter 1: The Beginning of All Things: The First Principle of Business

In the world of technology, Elon Musk is an unavoidable name. His ability to create disruptive companies like Tesla and SpaceX stems in large part from a way of thinking he fervently champions, known as “First Principles.” Its core requires us to penetrate the surface of things to find their most fundamental, most central “atomic unit,” which cannot be further divided.

Now, let us borrow this powerful intellectual tool to examine the business world we inhabit every day. What, precisely, is the “first principle” of this vast and complex system we call business?

Is it capital? Capital is indeed the lifeblood of business, but capital itself has no direction; it merely follows the scent of profit, needing to attach itself to a vehicle that can generate returns. Therefore, capital is not the source.

Is it technology? Technology is undoubtedly the accelerator of business, capable of dramatically increasing efficiency and even creating entirely new markets. But looking back at history, from the steam engine to the internet, technology is constantly being iterated upon and subverted. It is more like a tool than the eternal driving force.

Is it the market? Brands? Management? These are all critically important, but they are more like the various components and functions that become apparent after the intricate machinery of business is set in motion. They are the “how,” the instruments, but not the “why,” the initial dao that set everything in motion.

We must continue to dig deeper. What is the essence of business activity? It is the transaction. And what is the essence of a transaction? It is the exchange of value. What, then, is the underlying driver of value exchange? Why do humans need to exchange?

The answer ultimately points to a word that is the most ancient, the most familiar, and yet the most easily overlooked: human nature.

More precisely, it is the innate and insatiable desires within human nature. It is these desires that constitute the starting point for all activities in the business world, the initial and ultimate energy that drives the great wheel of commerce forward. Business did not create desire; in essence, it is merely an ingenious mechanism for discovering desire, guiding desire, and ultimately, satisfying desire in a systematic and scalable way.

Next, we will delve into an analysis of the four “fundamental forces” of human nature that constitute this primal driving force, to see how they interact in the real world and give rise to all the complex business phenomena we observe. These four forces are: Greed, Laziness, Selfishness, and Fear. They are like four invisible hands, shaping the face of commercial civilization in every corner of history. As the Book of Rites 【An ancient Chinese collection of texts describing the social forms, administration, and ceremonial rites of the Zhou dynasty】 states: “Food and drink, and the relations between man and woman, therein lie humanity’s greatest desires.” These desires, though common and ordinary, contain the most profound codes of the business world, running through all of history, unchanged.

Section 1: Human Nature: The Invisible “Hand of Desire”

I. Greed and Expansion: From Tribal Conflicts to Market Frontiers

Let us first examine the word “greed.” In everyday language, it almost always carries a negative moral connotation. But within the analytical framework we are building for business, we need to temporarily strip it of its moral coloration and understand it as a neutral, objective biological concept.

From this perspective, so-called “greed” is, in essence, an organism’s instinctual pursuit of “acquiring more resources for survival and reproduction.” This pursuit is deeply embedded in the genes of all living things; it is the underlying code for the continuation and expansion of life. A tree will instinctively extend its roots deeper and wider into the soil to draw more water and nutrients. A lion will instinctively occupy a larger territory to ensure it has enough prey. This craving for “more” is not a choice, but an inevitability branded into the very marrow of life.

In the dawn of human civilization, this primal “greed” manifested in a very direct and crude manner. Imagine a scene tens of thousands of years ago, where two primitive tribes meet in a lush valley. What they fought for were the most basic resources for survival: a river that could provide a stable supply of fish, a patch of forest filled with edible berries, or a warm cave that could offer shelter from the wind, snow, and beasts. This struggle often unfolded in the most primitive form of violence. The victorious tribe would gain more food, a safer habitat, and, most importantly, more opportunities to mate and perpetuate its genes. This was “greed” in its most naked form before the birth of commerce, driving our ancestors to engage in the cruelest competition for survival and expansion.

As productivity slowly developed and human society entered the eras of agricultural civilization and early empires, the manifestation of “greed” became more complex and systematized. It was no longer confined to the immediate struggle for food and water but evolved into the possession of more abstract and long-term resources. Now, people contended for vast expanses of arable land, for labor that could be enslaved and driven, and for glittering gold and silver that could serve as symbols of wealth and mediums of exchange.

When we open a book of world history, whether it is Alexander the Great’s eastern campaign or the Roman legions’ dominion across three continents, one of the most powerful driving forces behind them was the rulers’ endless thirst for more land, more people, and more wealth. This state-level “greed” drove the wheels of empire outward, incorporating different civilizations into a single system of rule, and objectively promoting the circulation of goods and commercial exchange over a larger area. In a sense, the history of an empire’s expansion is the history of the pioneering of “greed’s” geographical boundaries.

And as the wheel of history rolled into modern commercial society, this driving force did not diminish in the slightest; it merely donned a more civilized, more refined, and more complex cloak. A modern entrepreneur no longer seeks to conquer cities and territories but to achieve ever-growing market share. A publicly-traded company no longer promises its shareholders chests of gold, but a continuously rising profit curve and stock price. An ordinary individual no longer craves to hoard grain, but to see the numbers in their personal bank account constantly tick upward.

In essence, when a multinational CEO in a boardroom today stares at the three percent growth target on a financial statement, the desire in his heart is no different from that of a tribal chief tens of thousands of years ago, who yearned to possess one more river. They are both different expressions of the same underlying driving force, manifested in different eras and under different technological conditions.

Therefore, we can draw our first conclusion: “Greed,” this instinctual pursuit of “more,” is the underlying code for the concept of “growth” in the business world. It explains why business activity never ceases, why market competition always exists, and why companies are constantly seeking to expand. It is the most primal and powerful fuel for all commercial pioneering. Understanding this point is the only way to truly comprehend the essence of the relentless expansion and transformation of the business world.

II. Laziness and Efficiency: From Drilling Wood for Fire to Algorithmic Recommendations

If “greed” is the accelerator for the outward expansion of the business world, then “laziness” is the eternal engine that drives the optimization, iteration, and upgrading of all the internal gears of this great commercial wheel.

Like “greed,” the word “laziness” carries too many negative moral judgments in our daily culture. It is often associated with images of lacking ambition, muddling through, and wasting time. However, to truly gain insight into the underlying code of business evolution, we must thoroughly “rehabilitate” the word “laziness.”

Here, the “laziness” we speak of is by no means a sign of a dispirited will, but rather the awakening of intelligence. We must redefine it as: the inherent tendency of an organism, and indeed an entire civilization, to “use less energy to achieve the same or greater returns” when facing a given objective.

This is a law deeply embedded in the fabric of the universe. In physics, there is an ancient principle known as the “Principle of Least Action,” which states that all motion in nature will choose the most “economical,” most “sparing” path. Light refracts when passing through different media precisely because it is “calculating” and choosing the route that takes the least time. A river, as it carves its way through the earth, will instinctively find the path of least resistance, meandering onward to eventually merge with the sea.

Human intelligence, in a sense, is the highest expression of this universal principle. At the core of every technological innovation, every new model we create, lies this advanced form of “laziness” as the driving force. It does not cause us to stop working, but rather compels us to think: How can we work smarter? How can we accomplish with one part of the effort what used to require ten?

Therefore, “laziness” is not the enemy of business; on the contrary, it is the creator and guardian of “efficiency,” the eternal yardstick of the business world. A history of business evolution is, in a sense, a history of the triumphs of human “laziness.” From our ancestors first using tools to free their hands tens of thousands of years ago, to us today lying on the sofa and controlling all the appliances in our home with a single voice command, every step on this long evolutionary path shines with the light of wisdom sparked by “laziness.”

Now, let us follow the timeline to trace how this force, starting from the tiniest spark, eventually grew into a prairie fire, shaping the highly efficient, convenient, yet incredibly busy commercial world we live in today.

Imagine the life of our ancestors in the ancient world, a world without fire. It was a world dominated by long nights and biting cold. When the sun set, darkness descended like a physical entity, bringing with it the fear of unknown beasts. Food was raw and cold, tinged with the taste of blood, not only difficult to stomach but also teeming with parasites and germs that constantly threatened fragile lives. Every night was a grueling test of the limits of survival.

However, our ancestors had chanced upon the power of fire—the light and warmth that burst forth in an instant when lightning struck a dead tree. This power undoubtedly carved a deep yearning into their genes. But how could this accidental, divine force be transformed into something they could control at will, a part of their daily lives? The earliest attempts were likely simple and extremely inefficient: friction. Two primitive humans, or perhaps just one, would hold a piece of dry wood and rub or spin another stick against it, day after day, year after year.

This was a process that consumed immense energy and patience. We can picture the scene: a scantily clad ancestor, huddled in a cold, damp cave, his arms aching from the prolonged mechanical motion, his forehead beaded with sweat, his eyes filled with a longing for warmth and the helplessness of physical exhaustion. He might spend hours, even an entire day, to finally see a faint wisp of smoke rising from the wood dust. Then, with the utmost care, as if nurturing a newborn infant, he would coax that wisp of smoke into a dancing flame.

The process was too arduous, too long, too inefficient. It ran contrary to the human instinct to “obtain greater returns with less energy.” And so, that advanced nature of “laziness” began to quietly work its magic. There must have been a smarter ancestor who, on a night tormented by hunger and cold, began to think: There must be a better way.

We can never know exactly how that “eureka” moment occurred. Perhaps he saw a hunter draw a bow to shoot prey and was inspired by the arrow spinning rapidly on the bowstring. Perhaps he accidentally wrapped a cord around a stick and, upon pulling the cord, felt an unprecedented rotational speed.

Whatever the process, a revolutionary invention was born: the “bow drill” for making fire. 【The bow drill is an ancient tool, appearing in various cultures, that uses a bow to create rapid rotational friction between a spindle and a fireboard, drastically improving the efficiency of fire-starting compared to hand-drilling.】 It was an ingenious system. People no longer needed to use their own hands to directly rotate the “spindle.” Instead, they fashioned a small bow with an animal sinew string, wrapped the string once around the spindle, and then simply by moving the bow back and forth horizontally with ease, they could make the spindle rotate at a speed tens, even hundreds, of times faster than by hand. At the same time, to apply stable downward pressure, they learned to use a stone or piece of wood to hold down the top of the spindle.

This was a creation of genius. It transformed the original process of friction—which was extremely physically demanding, unstable, and had a very low success rate—into a stable and efficient production process assisted by a mechanical system. What once was “hard labor” that took a strong man half a day to complete could now be easily accomplished by an ordinary person in just a few minutes.

The birth of the bow drill was the first great victory for the “Gospel of Laziness.” It perfectly illustrates the true meaning of “laziness”: not abandoning the goal of making fire, but completely revolutionizing the method of achieving it. It liberated humanity from arduous physical labor to ponder more important things, such as how to preserve embers, how to cook food, how to use fire to drive away wild animals, and how to socialize around a fire. This small improvement in efficiency leveraged a massive acceleration of the wheel of human civilization.

This victory was re-enacted repeatedly in early human history. When our ancestors needed to cut a tree branch, they could initially only break it with their hands or gnaw it with their teeth—a highly inefficient process that often left them injured. Then, the “laziest” and smartest among them picked up a sharp-edged stone from the ground. He discovered that striking and chopping with this stone was far more effort-saving than using his own flesh and blood. This was the prototype of the first “stone axe.” Later, people learned to polish the stone to make it sharper and to attach a wooden handle to utilize the principle of leverage, unleashing greater chopping power with less force. Every improvement was a tribute to the instinct of “laziness.”

Among all these early inventions, the most representative is undoubtedly the appearance of the wheel. In a world without wheels, transportation was the most severe test of human physical endurance. Imagine the scene of the ancient Egyptians building the pyramids: tens of thousands of slaves, under the whips of overseers, chanting heavily as they dragged massive stone blocks, each weighing several tons, on rollers, step by agonizing step from the quarry to the construction site. Although rollers reduced friction, they had to be constantly moved from the back of the stone to the front, an extremely cumbersome process that was still highly inefficient.

This enormous expenditure of energy, this pitting of countless human lives against the physical adversary of “friction,” was bound to stimulate humanity’s “lazy” instinct to seek a better solution. Again, we cannot verify how the first wheel was invented. Perhaps it was a craftsman who, while making pottery, was inspired by the spinning potter’s wheel. Perhaps someone discovered that by narrowing the ends of a log and widening the middle, it could roll more stably, eventually evolving into the structure of a wheel and axle.

But regardless, when the first wheelbarrow, laden with a stone that previously required ten men to drag, was easily pushed forward by a single person, a new era began. The wheel, this seemingly simple circular device, was humanity’s most glorious victory in overcoming “spatial resistance.” It reduced the energy consumption of “transportation” by several orders of magnitude. From then on, the radius of human commerce was greatly expanded. Goods that could only be exchanged locally could now be transported tens, even hundreds of miles away. Larger cities could be established because the grain needed to feed their populations could be transported from a wider expanse of countryside. More magnificent buildings could be erected because heavy construction materials were no longer an insurmountable obstacle.

The bow drill, the stone axe, the wheel—these great inventions of the primeval age all point to the same thing: an increase in “efficiency.” They liberated humanity, bit by bit, from the most primitive and clumsy physical confrontation with the natural world. And what drove all of this was that insatiable inner impulse to “prefer ease over toil.” This impulse is not a sin; it is the first mover of civilization. In the dictionary of the business world, it has only one translation: to create greater value at a lower cost. This golden rule, established since the first time humans drilled wood for fire, has been and will continue to be repeatedly verified in all future business activities.

III. Selfishness and Cooperation: From the Prisoner’s Dilemma to the Spirit of Contract

We have discussed how “greed” drives expansion and “laziness” fosters efficiency. Now, we must confront what is perhaps the most central, fundamental, and misunderstood force in the spectrum of human nature: “selfishness.”

For thousands of years of civilized history, “selfishness” has been the common target of condemnation by almost all moral systems. It is seen as the root of all evil, a stumbling block on the path to nobility and greatness. However, if we wish to build a truly solid intellectual edifice for business, we must have the courage to face the truth of human nature head-on. We must admit that “selfishness”—the tendency to “prioritize and maximize one’s own interests”—is not a moral defect, but a fundamental command written into the genes of every living organism for self-preservation and continuation. Like gravity in the physical world, it is an objective reality; we cannot eliminate it, we can only understand it, guide it, and utilize its laws.

And here lies the most profound and fascinating paradox of commercial civilization: how can a world composed of countless “selfish” individuals transcend mutual suspicion and betrayal to eventually evolve such a precise, complex, and large-scale system of cooperation? The magnificent trade networks, the stable financial markets, the cross-border supply chains—from where does the trust they rely on truly originate?

The answer does not come from ethereal moral sermons, but from a series of cold, rational calculations of interest. To fully understand this process, we need to employ a powerful thought experiment tool, the most classic model in game theory: the “Prisoner’s Dilemma.” 【The Prisoner’s Dilemma is a canonical example in game theory, first framed by Merrill Flood and Melvin Dresher in 1950, which shows why two completely rational individuals might not cooperate, even if it appears that it is in their best interests to do so.】

Let us construct a scenario together. Imagine on the Mesopotamian plain thousands of years ago, there are two pottery merchants who do not know each other, let’s call them A and B. During a long-distance trade journey, they are arrested simultaneously by the local city-state guards on some vague charges and are held in separate cells, unable to communicate.

The captain of the guard, a manager well-versed in human nature, presents each of them with the exact same deal. This deal constitutes a subtle trap:

First, if both of you remain silent and steadfastly deny any charges, due to our lack of evidence, we can at most sentence each of you to one year in prison.

Second, if you, A, choose to confess and testify against your partner B, while B remains silent, then you, A, will be released immediately for your cooperation, while B, due to your testimony, will be sentenced to a heavy ten years. The reverse is also true.

Third, if you both choose to betray each other and confess, then you will both be sentenced to five years in prison.

Now, let us put ourselves in Merchant A’s cell and conduct a purely “selfish” and rational deliberation. He does not know what B will choose, but he can deduce all the possibilities.

A would think:

Scenario 1: Suppose that fellow B chooses to remain silent. What should I do? If I also remain silent, we both go to prison for a year. But if I choose to confess, I get to walk free immediately! “Freedom” versus “one year in prison”—clearly, confessing is my best option.

Scenario 2: Suppose that fellow B chooses to confess and sell me out. What should I do? If I remain silent, I will face ten years in prison because of his betrayal—the worst possible outcome. But if I also choose to confess, although we both go to prison, the sentence is five years, which is much better than ten. So, on the premise that B betrays me, my best option is still to confess.

Having reached this point in his deduction, a chilling conclusion emerges: regardless of what choice his partner B makes, for A personally, the most advantageous choice is always to “confess,” to “betray.”

And since B is in a perfectly symmetrical situation, after conducting the same rational, selfish deduction in his own cell, he will inevitably arrive at the exact same conclusion. The final result is that both “smart” merchants unhesitatingly choose to betray each other. Consequently, they both end up spending five years in prison.

This is the cruelty of the Prisoner’s Dilemma. It reveals a profound truth: in a one-shot, information-isolated game, two purely rational and selfish individuals, in pursuit of maximizing their own interests, will ultimately choose a collective outcome that is worse for both of them. They had the opportunity to achieve the collective optimum of “only one year in prison each” through “cooperation” (both remaining silent). But in the end, the fear of betrayal and the temptation of taking advantage pushed them both into the abyss of “five years in prison each.”

This model perfectly explains why, in the early stages of commerce where trust is lacking, fraud, breach of contract, and shoddy goods were so rampant. Because in a “one-off deal,” the temptation to “betray” is simply too great.

However, human commercial civilization did not remain forever in this dark forest of “mutual harm.” What changed everything?

The answer is: the introduction of time.

When a one-shot game becomes a “repeated game” that can be played over and over, the very nature of the game changes fundamentally. Let’s return to the story of the two merchants. Suppose that after their release from prison, they meet again in the same market, and it is likely they will continue to do business for the next ten or twenty years.

This time, when they face another opportunity to cooperate, a whole new layer of calculation will emerge in A’s mind. He will think: This time, if I cheat B again for a small immediate gain, I might get away with it once. But after that, B will never trust me again. Not only will he refuse to cooperate with me, but he might also spread the word throughout the merchant community that I am an untrustworthy person. For this one-time short-term gain, I will lose all future opportunities to cooperate with B, and possibly with others. This ‘future loss’ seems to far outweigh the ‘present gain.’

This consideration for the future is known in game theory as the “shadow of the future.” It is precisely this “shadow” that causes a rational egoist to begin to voluntarily restrain their immediate impulse to betray. Cooperation is no longer just a moral virtue; it becomes a higher, more long-term form of selfishness. To protect their reputation as “trustworthy” and thus be able to continuously profit from countless future cooperations, people begin to proactively choose “honesty” and “faithfulness.”

In the environment of a repeated game, a simple yet extremely effective strategy will eventually come to the fore: “tit-for-tat.” Its principles are very clear: First move, I choose to cooperate. From the second move onward, I will simply copy your previous move. If you chose to cooperate in the last round, I will continue to cooperate with you in this round. If you chose to betray me in the last round, I will unhesitatingly betray you in this one.

The power of this strategy lies in its being simultaneously kind (it never initiates betrayal), deterrent (if you betray me, I will retaliate), and forgiving (once you repent and choose to cooperate again, I will immediately resume cooperation). In a community of selfish individuals, this strategy, based on “reciprocity,” has been proven to be the optimal path to long-term, stable cooperation.

Thus, in the early days of human commercial civilization, the rudiments of trust were spontaneously established in small, close-knit “acquaintance societies” through repeated games. A village blacksmith would not easily use inferior iron to forge farm tools, because he had to face the same villagers tomorrow, the day after, and for every year to come. His reputation was a part of his livelihood.

However, this trust mechanism, which relies on “reputation” and “repeated games,” has a major limitation: its effective radius is very small. When the scale of commerce begins to exceed a single village or town, when the parties to a transaction are two strangers who may only meet once in their lifetime, the “shadow of the future” disappears, and the curse of the “Prisoner’s Dilemma” descends once more.

To break this limitation and achieve larger-scale, long-distance commercial cooperation, humanity had to invent a brand new “technology of trust.” This technology needed to upgrade the fragile, subjective trust between individuals into something more stable, more objective, and more enforceable.

This great invention was the “contract.”

The earliest contracts were likely just oral promises. Under the watchful eyes of the gods, members of a tribe would swear an oath, agreeing on how to distribute goods or the rules for a communal hunt. This trust was maintained by a shared fear of “divine punishment.”

But as commercial activities became more frequent and complex, the ambiguity of oral promises became apparent. And so, the first great revolution of trust in human history occurred: “carving” the agreement down. In the ancient Near East, archaeologists have unearthed a large number of Sumerian cuneiform tablets, a considerable portion of which are commercial contracts. A tablet from over two thousand years BCE might clearly record: a certain merchant lent another merchant a certain number of bags of grain, to be repaid at a certain time and at a certain interest rate. 【Sumerian clay tablets, dating back to the 3rd millennium BCE, are some of the earliest written records of legal and commercial contracts, detailing loans, sales, and agreements, forming a foundation for codified law.】

The transition of contracts from “oral” to “written” was revolutionary. It allowed commercial agreements, for the first time, to escape the vagaries of human memory and become “objectified” and “evidentiary.” When a dispute arose, the argument was no longer about “what I remember you said,” but “let’s see what is carved on the tablet.”

However, merely carving the contract on a clay tablet was still not enough. If one party blatantly breached the contract, the other party had little recourse beyond moral condemnation while holding the tablet. The final, and most important, piece of the trust puzzle had to be put in place.

This piece was the intervention of a “third-party enforcer.”

Only when a sufficiently powerful organization, such as a city-state or a kingdom, declared that it would use its machinery of violence (armies, courts, guards) to ensure that all contracts signed under its jurisdiction were executed to the letter, was the ultimate form of commercial civilization truly founded. The greatness of the Code of Hammurabi 【c. 1754 BCE】 lies not in the fairness of its articles, but in the fact that, for the first time, it declared in the name of the state to all Babylonian merchants: your commercial activities are no longer reliant solely on your mutual reputation and morality; they are now guaranteed by me, King Hammurabi, and the entire state apparatus behind me. Any violator will face the severe sanctions of state law.

From that moment on, trust was successfully “depersonalized.” A merchant from Egypt could confidently extend credit for goods to a Babylonian merchant he had never met. What he trusted was not the face of that merchant, but the cold and efficient legal enforcement system behind him. It was this “institutional trust,” which transcended individual morality, that finally broke the barriers of the “acquaintance society,” making large-scale, long-distance commerce between strangers possible.

Therefore, let us return to our original question. What drives cooperation? It is the most profound “selfishness” in our human nature. Because we are selfish, we desire to profit from exchanges with others. And it is also because we are selfish that, through countless games, we rationally calculate that long-term, stable cooperation is far more aligned with our own long-term interests than a one-time betrayal. Ultimately, to minimize the risks of this cooperation, we collectively created the magnificent “tools of trust”: contracts, laws, and states.

Thus, we must arrive at this profound conclusion: “Selfishness,” within the framework of repeated games, in a way we had not imagined, ultimately gave birth to the cornerstone of commercial civilization—trust. This is not a victory of human sentiment, but a victory of reason.

IV. Fear and Security: From Hoarding Grain to Financial Insurance

We have traversed the wilderness of greed, climbed the ladder of laziness, and witnessed how selfishness constructs the bridge of trust through game theory. Now, we must confront the deepest, darkest undertone in the source code of human nature: fear.

Fear is the anxiety about the uncertainty of the future. It is the imagination of a potential storm on a sunny day; the worry about an unforeseen illness in a healthy body; the concern over a possible poor harvest next season when the granaries are full. It is a survival mechanism embedded in all living organisms that keeps us alert, helps us avoid risks, and prepares us for the future. In the dawn of human civilization, during the long ages when all our ancestors struggled on the edge of survival, fear was the nightmare that accompanied them every night and the clarion call that roused them every morning.

It is precisely this seemingly negative force that gave birth to humanity’s earliest and greatest series of commercial ideas and practices: risk management. If greed, laziness, and selfishness collectively define “what” business is and “how” it is done, then fear fundamentally answers the ultimate question of “why” business must be conducted in such a way. Because the essence of business is not just to create value, but to protect it, allowing that value to traverse the uncertainties of time, to travel safely from today to tomorrow.

The entire magnificent edifice of the financial industry, from the most ancient lending relationships to the dazzling derivatives on Wall Street, has its foundational bricks and mortar laid by humanity’s most basic efforts to combat fear. And the starting point of it all begins with an incredibly simple, yet profoundly wise action: hoarding grain.

Let us cast our gaze to the banks of the Nile or the Yellow River thousands of years ago. There, our earliest agricultural ancestors had just completed a great technological revolution: they learned to sow and to reap, “binding” their fate to the land, a departure from chasing unpredictable prey. They gained an unprecedented stability in their food supply, enabling them to settle in one place, to thrive and multiply, to build villages and cities.

However, this binding was a double-edged sword. While it brought stability, it also brought a new, far greater fear. Hunter-gatherers could migrate to another place if the fruits in one area were depleted. But for farmers, their entire lives and fortunes were staked on the piece of land beneath their feet. Their lives were henceforth governed by an invisible, cyclical “law of periods.”

They feared drought. The scorching sun in the sky was no longer just a symbol of warmth; it could also become a cruel demon, refusing to grant rain for months, even years, causing the earth to crack and the seedlings to wither. They feared floods. The very river that nourished all life could, overnight, turn into a roaring beast, swallowing their homes and fields, washing away a year’s hard labor. They also feared locust plagues, pestilence, and all other unpredictable natural calamities.

This systemic fear of the future hung like a giant dark cloud over every agricultural civilization. A year of good harvest might mean a year of sustenance and joy. But a subsequent year of disaster could bring widespread famine, displacement, and even the collapse of the entire civilization. The dust of history conceals countless ancient peoples who perished because they could not withstand a single natural disaster.

In the midst of this profound collective fear, a great business model that transcended the individual family was bound to be born. The most intelligent people, usually the tribal leaders or priests, realized that relying on each family to store its own surplus grain was insufficient to combat large-scale, long-cycle disasters. This was because an individual family’s reserves were limited and susceptible to loss from various accidents.

Thus, a socialized “risk-hedging” mechanism came into being: the establishment of public granaries. In every bountiful season, when there was more grain than could be consumed, the ruler, through taxes or tributes, would collect the surplus grain from each family and store it in more robust and dry public granaries managed by designated officials.

On the surface, this act was a concentration of wealth, a manifestation of power. But from the underlying logic of business, it was the first time in history that humanity, as a “society,” made a “temporal” investment. They systematically “invested” the surplus value of the “present” (grain) into the uncertain “future” using the most ancient financial tool: “storage.”

When disaster struck, be it a great drought or a flood, when the cellars of individual families were long empty and despair began to spread, the tall, solid public granary became the “last reserve” of the entire civilization. The ruler would open the granary and distribute the previously stored value back to every starving person.

This simple cycle of “collection” and “distribution” is, in essence, a form of “famine insurance” with the entire society as the policyholder. Every farmer who handed over grain in a good year was buying a “policy” against the uncertainties of the future for himself and his descendants. And the ruler responsible for managing and operating this “policy” gained supreme power and prestige. The reason the pharaohs of ancient Egypt could mobilize hundreds of thousands of laborers to build the pyramids was that their power was rooted not just in mythology and violence, but more so in their mastery of the patterns of the Nile’s flooding and their absolute control over the state granaries. Whoever could provide the most basic “sense of security” for the people could command the most stable rule.

From the starting point of hoarding grain, humanity’s methods of confronting fear became increasingly systematic. As settled wealth expanded beyond just grain to include houses, tools, and livestock, a new fear was born: the fear of external invaders. Thus, humanity transposed the logic of combating natural disasters to combating man-made risks. They began to pool funds and labor to dig moats, build high walls around their settlements, and organize a dedicated armed force for defense.

A magnificent city wall was, in essence, a form of “collective property insurance.” Its “premium” was the labor and taxes paid by every resident. Its “payout” was the provision of a safe haven for the lives and property of everyone within its walls when an enemy attacked. This, too, was a business model that consolidated the scattered and vulnerable defensive capabilities of individuals into a powerful, shared “security system.”

However, both granaries and city walls were still merely “defensive” risk management tools. They could only passively await the occurrence of risk. As the radius of commercial activity expanded, especially when human greed cast its eyes upon the vast blue ocean—a realm filled with opportunity but also with more unknown fears—a more proactive and sophisticated risk management tool began to appear on the horizon of history.

Imagine the maritime trade of ancient Greece or Phoenicia. A merchant converts his entire fortune into a shipload of olive oil and pottery, preparing to transport it to distant Egypt in exchange for spices and luxuries. This was a colossal gamble. He feared the unpredictable storms that could easily tear apart his ship and fortune. He feared the elusive pirates who could leave him with nothing, or worse, a slave. He also feared the fraud and extortion he might encounter in a foreign land.

This single voyage could make him fabulously wealthy overnight, or it could lead to his utter ruin. This extreme risk severely inhibited commercial vitality. There must have been countless potential merchants who abandoned the idea of going to sea because they could not bear the fear of “total loss.”

How to solve this pain point? How to effectively “slice” and “transfer” this “catastrophic” risk? The wisdom of commerce was once again ignited. An ancient financial contract known as “bottomry” or “maritime adventure loans” quietly emerged along the Mediterranean coast. 【Bottomry was an early form of insurance contract where a lender financed a voyage. If the ship returned safely, the loan was repaid with high interest (the premium). If the ship was lost, the debt was cancelled.】

Its model was as follows: a wealthy lender would loan a sum of money to the seafaring merchant for him to procure goods and a ship. They would sign a special contract, the core clause of which was: if the merchant’s ship returned safely with a full cargo, the merchant had to repay the principal plus an extremely high interest, which could be as much as twenty or even fifty percent of the principal. However, if the ship failed to return due to a shipwreck or pirates, the loan was completely forgiven, and the merchant owed nothing.

This was a design of genius. It clearly sliced the risk of a single sea voyage into two parts. The merchant bore the business risk—he needed to ensure he could buy good merchandise and sell it at a good price. The lender, by charging the high interest, bore the physical risk of the “voyage itself.” That exorbitant interest, far exceeding normal rates, was in essence the “insurance premium” the merchant paid to the lender to transfer the “risk of shipwreck.”

This ancient form of “adventure lending” is the common ancestor of modern financial insurance and venture capital. For the first time, it turned “risk” itself into a “commodity” that could be priced and traded. A merchant with business acumen but no capital, and a wealthy individual with capital but an aversion to risk, could achieve a perfect union through such a contract. The boundaries of commerce were thus once again greatly expanded.

From medieval Venice to the coffee houses of modern London, this model was continuously optimized and iterated. Merchants no longer relied on a single lender; they learned to spread the risk of one ship among dozens, even hundreds of investors, with each subscribing to only a small share. This way, even if the ship did sink, the loss for each individual was within an acceptable range. The famous Lloyd’s of London, a giant in the global insurance industry, originated in a London coffee house where merchants, while waiting for news from the sea, would underwrite shares of risk for departing cargo ships on slips of paper.

To this day, the modern business world we inhabit is enveloped in an invisible safety net woven from the efforts to combat fear. Every one of us, from the moment we are born, is constantly buying and using various forms of “insurance.” We buy health insurance to hedge against the risk of future illness. We buy pension plans to hedge against the risk of losing our source of income in old age. We buy car insurance and property insurance to hedge against losses from accidents.

And when we broaden our perspective to the entire macroeconomy, we find that the entire financial system is, in essence, a much larger and more complex risk management system. A farmer planting in the spring can lock in a selling price for the autumn harvest by buying an agricultural “futures” contract, thereby no longer fearing price fluctuations. A multinational corporation can hedge against the erosion of profits from exchange rate movements by trading “forward currency contracts.” Even a nation can transfer its risks of earthquakes, typhoons, and other natural disasters to the global capital markets by issuing “catastrophe bonds.”

From tens of thousands of years ago, when our ancestors, out of fear of cold and darkness, first lit a bonfire to grasp warmth and security in their own hands; to thousands of years ago, when a tribe, out of fear of famine, built the first public granary to confront nature’s uncertainty with collective strength; to today, when an ordinary office worker, with a simple tap on their phone, purchases a policy that provides security for their family’s future.

The core driving force behind this long evolutionary path has remained unchanged. It is the eternal, irrepressible pursuit of “security” deep within our human nature. It is this fear of uncertainty that has compelled us to constantly think, to calculate, to innovate. It ultimately gave birth to a series of great financial tools: savings, credit, insurance, futures, options, and more.

Therefore, we must profoundly recognize that “fear” is not an obstacle to business. On the contrary, it, and the desire for “security” derived from it, is the “mother of demand” for the entire risk management and financial services industry. Wherever there is unmanaged fear, there lies a tremendous business opportunity. Understanding this is the only way to truly comprehend why finance has become the absolute core of the modern business world.

Section 2: The Essence of Business: The Monetization of Human Nature

I. The Birth of the Transaction: The Matching and Exchange of Desires

We have delved deep into the four underlying forces that drive human commercial behavior: the desire for more, which is “greed”; the pursuit of less effort, which is “laziness”; the defense of one’s own interests, which is “selfishness”; and the aversion to future uncertainty, which is “fear.”

However, in the long dawn of human civilization, these four forces were more like independent undercurrents churning within each individual’s heart. They drove every primitive being to engage in a lonely and repetitive struggle for survival and reproduction. A hunter, driven by greed, yearned to catch larger prey; driven by laziness, wished for a sharper spear; driven by selfishness, kept the best meat for himself; and driven by fear, lit a bonfire at the mouth of his cave. All of this was still a direct dialogue between “human nature” and “nature.” It was about survival, but it had not yet crossed the threshold of “business.”

The birth of business required a crucial catalyst. It needed an opportune moment for these parallel currents of desire, buried deep within different individuals, to converge, collide, and undergo a wondrous chemical reaction. This moment was the greatest and yet most simple scene in human history: the first transaction.

To truly understand the earth-shattering significance of this moment, we must use the telescope of our minds to pierce through the mists of tens of thousands of years and travel to an imagined, yet realistic scene from a pre-commercial era.

It was a world without markets, without currency, without even language. In a small, scattered tribe of primitive humans, lived two fictional members. Let’s call one of them “Guo” (Fruit) and the other “Shi” (Stone).

Guo was a natural-born gatherer. He possessed keen vision, able to easily distinguish which berries were edible and which were poisonous. He was familiar with every fruit tree in the forest, knowing when they would blossom and when they would bear fruit. Thanks to his excellent gathering skills, he could always obtain more food than he needed for the day. A corner of his cave was always piled with red berries he couldn’t finish. These berries met his most basic survival needs and temporarily quelled his fear of hunger. However, a new trouble was quietly brewing in his mind.

The bonfire in his cave was growing dimmer. The dead branches nearby had long been collected. To find more firewood, he had to venture further, which meant felling sturdier trees. But in his hands, he had only a crude wooden stick used for digging up plant roots. Whenever he used this stick to strike a large tree with all his might, the hard trunk would only be left with a shallow white mark, while the impact would send a numbing shock through his hand. The process was not only extremely arduous but also incredibly inefficient; he would often spend the better part of a day to bring back a small bundle of wood, not even enough to burn for a single night.

Here, we see the force of “laziness” accumulating within Guo. He yearned for a more labor-saving, more efficient way to accomplish the task of “gathering firewood.” This yearning, whenever he looked at those tough tree trunks, grew stronger and stronger, forming a clear, unmet “desire.”

At the other end of the tribe lived Shi. Shi was a taciturn craftsman. He wasn’t as skilled as Guo at running and finding things, but he had a pair of strong and nimble hands. His greatest pleasure was sitting at the entrance of his cave, using one hard stone to strike another piece of flint. Through day after day of tedious striking, he mastered an exquisite skill. He could precisely control his strength and angle to flake off sharp-edged pieces from the flint. Then, using an antler or a piece of wood, he would further process these flakes, polishing them into sharp stone axes and knives.

Shi’s cave was filled with his creations. These stone tools, gleaming with a cold light, were his source of security and a testament to his value. But like Guo, he faced his own dilemma. He was so engrossed in his craft that he often lost track of time. When he looked up from his long period of concentration, he would often find the sun already setting in the west, and his stomach completely empty. He would have to drag his weary body into the forest to try his luck, but lacking Guo’s talent, he often only managed to find some bitter-tasting plant roots to appease his hunger.

In Shi, we see the force of “fear” issuing its sternest warning in the form of “hunger.” He craved food, especially those sweet fruits that could quickly replenish his energy. This craving, every evening when his stomach rumbled, became incredibly real, forming the most urgent “desire” deep within his heart.

Now, our stage is set, and our two protagonists are in place. Each possesses their own “endowment” and “surplus,” and each harbors an unmet “desire.” Guo has surplus food but desires an efficient tool. Shi has surplus tools but desires life-sustaining food. In their respective worlds, they have both reached a “dead end” that they cannot overcome on their own.

Finally, on an ordinary afternoon, the intersection of fates occurred.

A hungry Shi once again walked into the forest. He smelled the sweet scent of fruit and followed it to its source, where he saw Guo under a tree, enjoying red berries. At Guo’s feet lay a small pile of his “surplus” from the day’s gathering.

Shi’s throat moved involuntarily. What his eyes betrayed was a pure, physiological craving for food. Out of primal instinct, he tightened his grip on a brand-new stone axe tucked at his waist—his proudest work of the day. A fleeting thought, born of the “selfish” instinct, might have crossed his mind: perhaps he could just take the food by force.

And Guo, almost at the same moment, noticed Shi’s arrival. He immediately stood up warily, shielding the pile of berries behind him. He also saw the gleaming stone axe at Shi’s waist. Its perfect edge, its smooth polish, made him realize instantly that this was the “divine tool” he had been dreaming of, one that could easily fell trees.

In that instant, the air seemed to freeze. Fear and greed waged a silent battle in the meeting of the two primitive men’s eyes. If history had followed the pure “dark forest” law, what would have followed might have been a bloody fight.

But a higher-level calculation, one belonging to intelligent beings, was quietly taking place in their brains at a speed we can hardly imagine.

Shi was thinking: If I choose to rob him, I might get food for today. But Guo is stronger than me; I could get hurt. And what about tomorrow? And the day after? I would forever lose a stable source of food and make a permanent enemy.

Guo was also thinking: This stone axe, to me, means a warm bonfire, a safe night, and it means I can save a lot of time to gather even more fruit. And this pile of berries at my feet, to me, is just ‘surplus.’ They will soon rot, and I can’t eat them all today anyway. To trade something I am about to lose for something I desperately want and can use for a long time… this seems… feasible?

We don’t know who took the first step. Perhaps it was the famished Shi, who first pointed at the berries at Guo’s feet, then at his own mouth, letting out a whimper of longing.

And then, the true “moment of creation” for commercial civilization arrived.

Guo, having understood Shi’s intention, did not immediately satisfy him. Instead, he reached out and, with an equally primitive body language that transcended words, pointed to the stone axe at Shi’s waist.

This was an earth-shattering “offer.” Its subtext was: I understand your desire, but I have my own. What can happen between us is not a one-way taking, but an equal “exchange.”

At this moment, Shi’s eyes must have also flickered with a mixture of surprise, hesitation, and ecstasy. He looked down at his stone axe, a work that had taken him a whole day’s effort, a symbol of his pride. But in the face of “hunger,” that most primitive fear, this pride didn’t seem so important. More critically, he had several more axes like this back in his cave. The calculation was crystal clear: to trade an item that was “surplus” to him for something that would save his life.

So, he untied the stone axe from his waist and slowly placed it on the ground. Then, he took a few steps back to show he had no hostile intentions.

Guo walked forward and picked up the axe. He felt its cool, solid weight, ran his finger gently over the sharp edge, his eyes filled with satisfaction and joy. Then, he pushed the entire small pile of berries at his feet towards Shi.

Shi rushed forward, grabbed a handful of berries, and wolfed them down. The long-awaited sweet juice instantly dispelled his hunger and weakness.

When Shi was contentedly eating the berries and Guo was effortlessly chopping down a thick branch with his new stone axe, the greatest act of value creation in human history was complete.

Let’s review this magical moment. Note that in this process of exchange, nothing “new” was physically created. The berries were still the same berries. The axe was still the same axe. The total amount of matter in the world did not change at all.

However, the total amount of “value” in the world had, in a very real sense, grown explosively.

Before the trade, that pile of surplus berries had a “marginal utility” of almost zero for Guo. Their only fate was to rot. And that surplus stone axe, for Shi, was just a heavy stone that couldn’t fill his stomach. They were both “mismatched” resources.

After the trade, the berries entered the stomach of the person who needed them most, transforming into the energy for survival. The stone axe entered the hands of the person who needed it most, transforming into the productivity for acquiring warmth and security. Two “nearly useless” items, in the instant of exchange, both became “priceless” treasures.

This is the essence of a transaction: it does not create matter, but “optimizes” its allocation. Through a precise “matching of desires,” it allows a resource to flow from the hands of someone who “needs it less” to the hands of someone who “needs it more.” In this process of flow, “value,” like an electric current, is miraculously created.

This seemingly simple scene contains the entire genetic code for all the complex models of the future business world.

First, it defines the subjectivity of “value.” The value of the stone axe was not determined by how much labor Shi put into it, but by how much Guo needed it. Value resides not in the object itself, but in the relationship between the person and the object.

Second, it reveals the possibility of a “win-win” outcome. This transaction was not a zero-sum game where one party gains and the other loses. Both Guo and Shi traded something they had in “surplus” for something they “desperately needed.” They both became winners.

Finally, and most importantly, it laid the first cornerstone for the path of “specialization of labor.” Both Guo and Shi would have derived a crucial insight from this successful transaction: It seems I don’t need to be good at everything. I just need to perfect what I do best. I, Guo, only need to focus on gathering, gathering more fruit than I can eat. I, Shi, only need to focus on making tools, making more tools than I can use. Then, we can obtain everything else we need through “exchange.”

When this revelation, like a seed, took root and sprouted in the tribe, a new era began. The “invisible hand” of commerce, though still so young and clumsy, had begun to wave, ready to reshape the entire world.

II. The Evolution of the Model: The Systematized Solution for Satisfying Desire

In the previous section, we witnessed the great exchange between Guo and Shi. It was a pure, perfect moment, almost like a divine revelation. In that instant, two mismatched resources found their most needy owners, immense value was created out of thin air, and two separate individuals both emerged as winners.

This transaction, like the singularity of the Big Bang, contained all the possibilities for the future evolution of the business world. However, the singularity itself is just the beginning. An accidental, isolated success, no matter how wonderful, is not yet enough to be called “business.” It is more like a pastoral poem, a mural painted in the dawn of civilization, full of poetic charm but also fraught with fragility.

Guo and Shi were fortunate because they happened to meet the right person at the right time in the right place. Their desires formed a perfect complementary match. But what if, on the next day, Shi no longer needed berries, but a piece of animal hide? What if the place where Guo gathered berries was a three-day journey from Shi’s cave? What if a third and fourth stonemason appeared in the tribe, all capable of making stone axes, but of varying quality?

Countless variables could have caused this fragile, peer-to-peer transaction model to fail in an instant. Human intelligence soon realized that to transform “value creation” from an “accidental encounter” into an “inevitable occurrence,” one must go beyond the “transaction” itself. We had to invent something more advanced, more stable.

This something is the “business model.”

If a “transaction” is a “single-point solution” for matching a specific desire, then a “business model” is a “systematized solution” designed for the continuous and scalable satisfaction of a general class of desires. A transaction is a flash of lightning, whereas a business model is the entire power plant built to continuously and controllably release that energy.

To more clearly understand the immense leap involved, we must temporarily set aside the myth of Guo and Shi and enter a scene with more worldly flavor, one that is closer to the essence of business: the birth of a “restaurant.”

Let us once again activate our mind’s telescope. This time, we travel to an ancient town of a certain scale, thousands of years ago. In the center of the town, there is a bustling marketplace. On the edge of this market lives a fictional hostess, whom we shall call “Kui.”

Kui was a capable housewife, and her greatest skill was simmering a delicious pot of meat stew. Every day at noon, she would prepare such a steaming pot of food for her husband and children who were out working. This was her family life, having nothing to do with business.

One day, a dust-covered merchant caravan from afar happened to pass by Kui’s door. The lead merchant, drawn by the enticing aroma, was so overcome by fatigue and hunger that he threw etiquette to the wind. He knocked on Kui’s door, took out a few cowrie shells (a common medium of exchange at the time), and hoped to trade them for a bowl of stew to appease his hunger.

The kind-hearted Kui, looking at the weary traveler, agreed. The merchant drank the hot stew and felt the fatigue drain from his body. Satisfied, he left the shells and continued on his journey.

Please note, this was a “transaction.” In essence, it was exactly the same as the exchange between Guo and Shi. It was a one-time, accidental event that satisfied a specific desire in a specific context.

If the story had ended there, Kui would have forever remained just a capable housewife. But the seed of business had been quietly planted in her mind.

The next day, as Kui was preparing the stew for her family, a thought irrepressibly surfaced: Was that merchant yesterday just passing by chance? In this market every day, there are so many travelers from all directions, craftsmen who have toiled all morning, and farmers busy haggling. When noon arrives, are they just like the man I met yesterday, tired and hungry, craving a bowl of hot food?

The moment she began to think this way, she started to transform from a “housewife” into a “merchant.” Because she was no longer just focused on the needs of her own family; she had begun to “identify” and “generalize” the “common needs” of a group of people.

So, she made a decision. While simmering her family’s stew, she deliberately added double the amount of meat and water. Then, she took the extra half, put it in a pottery pot, and carefully carried it to a large tree outside her house. She found a few stones to serve as stools and placed some crude earthenware bowls beside them.

This was the first great attempt to move from a “transaction” to a “business model.” Though it looked incredibly simple, it already possessed the embryonic form of a “system.”

Let’s analyze the profound changes embodied in this “stew stall”:

First, it achieved “proactivity” and “predictability” in “supply.” Kui was no longer passively waiting for a hungry merchant to knock on her door, but was proactively preparing a solution in advance for all potential hungry customers. For those potential customers, they now knew there was a “definite” place under the big tree where they could get food. This “certainty” is the first cornerstone of commercial civilization.

Second, it began the exploration of “process standardization.” To consistently provide the stew, Kui had to think about a series of questions. Should I buy my meat from the butcher every morning, or arrange for him to deliver it regularly? Do I have enough firewood? How many bowls do I need to prepare for the potential number of customers? These questions would compel her to establish a rudimentary “procurement => production => service” process. This process is the skeleton of a business model.

Finally, and most importantly, it introduced the core concept of “profit.” Kui’s price for a bowl of stew would certainly not be just the cost of the meat and water. She had to factor in the consumption of firewood, the wear and tear of the bowls, and her own time and labor, and on top of all that, add a reasonable “profit margin.” This “profit” was the reward for the risks she took (e.g., not selling a single bowl that day) and the labor she invested. It was also the sole engine that could keep the “stew stall” running and potentially expand in the future.

Now, let us clearly compare the fundamental difference between a “single transaction” and a “business model.”

A transaction deals with a “present,” “individual” desire. Its core is “matching.”

A business model, on the other hand, deals with “future,” “common” desires. Its core is the “system.” A complete business model includes at least a set of interlinked value creation systems:

First, the “Value Proposition” system: For whom are you solving what problem? Kui’s value proposition was “to provide fast, convenient, and delicious hot food for the hungry and tired people in the marketplace.” She accurately captured the two common human needs of being “too lazy to go home and cook” and “craving something good to eat.”

Second, the “Production and Operations” system: How do you consistently create the value you promise? This included how Kui procured meat of stable quality, how she simmered the stew with a standardized process to ensure consistent taste, how she ensured the cleanliness of the bowls, and so on. This is the “backend” of the business model.

Third, the “Delivery and Marketing” system: How do you let your target customers know about you, find you, and conveniently obtain your product or service? Kui’s choice of the conspicuous location under the big tree was the most primitive form of “channel” selection. The aroma wafting from the pot of stew was the most effective “marketing advertisement.”

Fourth, the “Cost and Profitability” system: How do you ensure that your revenue consistently exceeds your expenses? This is about Kui’s pricing of the stew and her accounting for all costs. This is the “lifeline” that determines whether a business model can survive.

When Kui, or rather, the first generation of merchants in human history, began to consciously and systematically think about and build these four systems, business truly shed its “accidental” nature and moved towards “inevitability.”

Once this “stew stall” model was proven successful, it possessed a powerful “replicability.” Kui could open a second stall in another market on the east side of town. She could pass down the secret recipe for the stew to her children or apprentices to run. She could even write a “Stew Stall Operations Manual,” turning the model into “knowledge” that could be replicated on a large scale.

This is the power of a “model.” It transforms a founder’s individual talent and accidental success into an objective “system” that can be learned and transplanted. It is this power that allows a Roman soldier to eat a standard portion of bread at any garrison within the empire; it is what allows a modern traveler to eat a hamburger of almost identical taste at any McDonald’s in the world.

Therefore, let us re-examine the essence of business. It is far more than just “exchange.” The essence of business is the “design” and “operation” of a sustainable system whose sole purpose is to satisfy human desires. The quality of this system’s design and the efficiency of its operation directly determine the success or failure of the business model.

From the inspired desire-matching of Guo and Shi to Kui’s conscious and systematic preparation of food for a group of people by the marketplace—what lies between them is a great leap in the human intellect. We learned to observe, to generalize, to predict, to plan. We learned to distill a one-time success into a repeatable process.

We began to evolve from passive “desire satisfiers” into active “designers of value creation systems.” And the entire history of business evolution, spanning tens of thousands of years, is ultimately a magnificent epic of the continuous iteration and upgrading of “system design.”

III. The Role of Technology: The “Catalyst” for Amplifying Desires and Reducing Costs

In our narrative thus far, Kui’s stew stall represents a great leap in the human business intellect. She no longer passively waits for desire to knock on her door, but proactively and systematically designs and operates a value creation system to satisfy a common desire. This system, we call a “business model.”

However, when we closely examine Kui’s prototype business model, we find that although it is ingenious, its boundaries are firmly constrained by an invisible force. The number of customers she can serve is limited by the size of her pottery pot and the area she can personally manage. The quality of the stew she can provide depends on her personal experience with controlling the fire. The growth potential of this model is entirely bound by her personal physical strength, time, and skills.

To break through this ceiling, to enable this model to serve ten, a hundred, or even thousands of times more customers, to achieve an exponential increase in the efficiency of value creation, Kui or her successors must resort to an external force capable of enhancing human abilities.

This force is “technology.”

If the four desires of human nature are the internal driving force of the business chariot, and the business model is the sophisticated structure and route map designed for this chariot, then technology is the decisive variable that continuously equips this chariot with more powerful “wheels” and “engines.” It may not have a direction of its own, but it endows business activities with entirely new “speed” and “scale.”

Throughout the history of business evolution, the role of technology is like that of a mysterious and powerful “catalyst.” It does not directly participate in the chemical reaction of human nature, but its every appearance greatly accelerates the reaction rate between “desire” and “business model,” and gives rise to unprecedented, new reaction products. Specifically, technology profoundly changes the form of business in two main ways:

First, as a “Desire Amplifier,” it can create entirely new ways to satisfy desires, and even stimulate and define new desires that humans themselves were not aware of.

Second, as a “Cost Compressor,” it can, through revolutionary improvements in efficiency, dramatically lower the threshold for satisfying desires, thereby transforming what was once a privilege for the few into an everyday reality for the masses.

Let us first examine technology’s primary identity: the desire amplifier.

A common misconception is that technology merely serves, in a passive and instrumental way, to “satisfy” pre-existing needs. For example, because people have a need to communicate, we invented the telephone. While not entirely wrong, this understanding vastly underestimates technology’s ability to reshape human nature in reverse. The deeper truth is that a breakthrough technology often acts like a bolt of lightning streaking across the night sky; it not only illuminates the path ahead but also reveals landscapes we had never imagined in the distance, thereby igniting within us a yearning for those landscapes.

Let’s return to a very distant, pre-literate era. At that time, human “memory” relied entirely on the biological storage of the brain and on oral traditions passed down through generations. The limitations of this model were fatal. A person’s knowledge would vanish with their passing. A tribe’s history would become unrecognizable after being passed down orally for several generations. Under these circumstances, humanity’s greed for “knowledge” and desire for “immortality” were severely suppressed, or perhaps non-existent. The limit of what people could imagine was perhaps having their stories remembered by their grandchildren.

However, when a Sumerian first used a reed stylus to inscribe a few cuneiform symbols on a moist clay tablet, the great technology of “writing” was born. Initially, it may have only been used to record how many bags of grain were in a warehouse—a tool to satisfy “laziness” (not wanting to remember) and “selfishness” (clearly defining property rights).

But what it unlocked was an entirely new dimension of desire. When people discovered that thoughts could be solidified, could travel through time and space to be “read” by another person a hundred years later and a thousand miles away, an unprecedented, immense desire for “expression” and “legacy” was instantly ignited.

Philosophers yearned to carve their speculations onto bamboo slips, hoping to achieve intellectual immortality. Monarchs longed to cast their achievements onto bronze vessels, seeking to attain political immortality. Merchants were delighted to find that they could establish credible business relationships with distant strangers they had never met, all through a written contract.

The technology of writing did not “satisfy” a pre-existing “desire to write.” On the contrary, it “created” the desires to write, to read, to record history, and to philosophize. It amplified humanity’s greed for knowledge from the scale of individual, biological memory to a new scale of civilization that transcends life and death. Based on this technology, humanity was able to develop a whole new set of “business models” like education, law, history, and literature.

The same logic runs through every great technological revolution that followed.

When Gutenberg’s printing press first pressed movable type and ink onto paper, it didn’t just usher in an increase in the efficiency of book copying. 【Johannes Gutenberg’s invention of the printing press with movable type around 1440 revolutionized communication in Europe, leading to the mass production of books and the rapid dissemination of ideas.】 It transformed the “possession of knowledge,” once a privilege of the clergy and nobility, into a “desire” that the general public could aspire to. When an ordinary citizen could buy their own copy of the Bible for very little money, their greed for ideas, for knowledge, and for interpreting the world for themselves was stimulated as never before. This “democratization of knowledge,” detonated by technology, ultimately fueled the prosperity of the Renaissance and the tidal wave of the Protestant Reformation.

When Daguerre’s camera first fixed an image of a Paris street onto a silver-plated copper sheet coated with chemicals, it did more than just introduce a new way of painting. 【The Daguerreotype, the first commercially successful photographic process, was introduced by Louis Daguerre in 1839, marking a pivotal moment in the history of visual representation.】 It implanted a new desire in the human heart: the desire to turn the “momentary” into the “eternal.” People suddenly realized that a child’s smile, a lover’s face, a grand ceremony—these fleeting slices of time—could be “captured” and “cherished.” This greed for “memory” gave birth to the vast photography industry, from film and cameras to today’s digital imaging and social media sharing. The initial spark of desire for all this came from that magical “Daguerreotype.”

In our own era, the most classic examples are the combination of the smartphone and the mobile internet. Before they appeared, we certainly had needs for communication and information. But did we have the desire to be “connected to everyone, anywhere, at any time”? Did we have the desire to “fill the boredom of a five-minute wait for the bus by watching a short video”? Did we have the desire to “photograph every meal we eat and share it with friends”?

These desires, which today seem so natural and have become almost physiological instincts, were non-existent fifteen years ago. It was technology, that small glass screen capable of connecting to the entire world, that acted like a master hypnotist, implanting these new commands of desire deep within us. It greatly amplified our craving for “instant gratification,” our greed for the “attention of others,” and our fear of an “information vacuum.” And the entire commercial empire of the mobile internet, from social networks and short video platforms to instant messaging and mobile games, is built almost entirely on the foundation of these new desires “created” and “amplified” by technology.

Therefore, we must see that top-tier business people are never passive demand-seekers. They are often “desire creators” who dance with technology. They can keenly perceive the immense power latent within a new technology to reshape human nature, and design a whole new business model around it, guiding and educating users to embrace a new lifestyle, and with it, a new set of desires.

Now, let us turn to technology’s second identity, its more familiar face: the cost compressor.

If “amplifying desire” is technology’s revolution on the spiritual level, then “compressing cost” is its revolution on the physical level. Its core directly targets the “laziness” in human nature—to obtain equal or greater returns with less energy consumption. Every great leap in production efficiency is, in essence, a “violent” compression of cost. This compression leads directly to the most exciting change in the business world: democratization.

Before the Industrial Revolution, owning a piece of brightly colored cotton cloth was a luxury for an ordinary European commoner. Cotton had to be imported from distant India, and spinning and weaving depended entirely on the slow and expensive manual labor of workshops. The price of a piece of clothing could be equivalent to several months’ wages for an ordinary worker.

However, when great technological inventions like the Spinning Jenny, the water frame, and ultimately the steam engine were applied to the textile industry, an avalanche of cost reduction occurred. A machine tended by one person could produce in a single day the amount of yarn that a skilled spinner used to produce in a year. Production efficiency increased by hundreds, even thousands of times.

This meant that the labor cost and time cost required to produce each meter of cotton cloth were compressed to a negligible degree. The result was a cliff-like drop in the price of cotton cloth. What was once a luxury for the nobility suddenly flew into the homes of ordinary people. Everyone could own comfortable, clean, and beautiful clothing at an extremely low price.

The role of technology is that of a “cost butcher.” It takes goods or services that were once expensive due to “scarcity” and makes them “abundant” and “cheap” through “mass production” and “high efficiency,” thereby awakening and satisfying the latent desires of the masses.

This story has been re-enacted time and again in business history.

Henry Ford’s assembly line was a great innovation in management technology. By breaking down the complex process of assembling a car into countless simple, standardized actions, it drastically compressed the time and labor costs required to produce one vehicle. The price of the Ford Model T thus dropped from an initial $850 all the way down to under $300. This brought the dream of “owning a car,” which seemed unattainable at the time, into the family budget of the American middle class for the first time. Ford, with technology, single-handedly initiated the “Automobile Age,” expanding the radius of human activity from the “community” to the “continent.”

And in our era, the most thorough cost compression has undoubtedly come from digital technology. In the digital world, the marginal cost of replicating a piece of information is virtually zero. The additional cost for a song to be heard by one person versus one hundred million people is almost negligible. The same is true for an article, a piece of software, or a movie.

This characteristic of “zero marginal cost” is the cornerstone of the entire internet business model. Google can index and present the world’s information to you at almost no cost. Facebook can connect you with two billion people globally at almost no cost. The reason they can offer “free” services is precisely because technology has compressed the cost of serving each new user to the extreme. They then monetize the immense “attention” they have gathered through the “advertising” business model.

Therefore, we can draw a clear conclusion: technology is the “accelerator” of business evolution. It has a symbiotic relationship with business models, one of mutual definition and mutual fulfillment.

An innovative business model will point the way for technological development. It was the immense demand from the “global trade” business model that stimulated the continuous iteration of navigation and shipbuilding technologies.

And a breakthrough technology will provide the underlying possibility for a “paradigm shift” in business models. Without internet technology, there would be no Google or Amazon; without artificial intelligence technology, the future of business we are discussing today would be nothing but a castle in the air.

The desires of human nature are the eternal, unchanging magma that drives the movement of tectonic plates. Technology is the series of volcanic eruptions, sometimes gentle, sometimes violent. Each eruption changes the landscape of the earth’s surface, shaping new commercial continents and oceans. As witnesses of this era, our task is to listen for the rumbling from deep within the earth’s crust, to see the glow of the next technological eruption, and to think ahead about where we should stand in the next earth-shattering tectonic shift.

With this, we have completed our intellectual “geological survey.” We have employed the “First Principles” thinking championed by Elon Musk, and like peeling an onion, we have relentlessly stripped away the superficial layers covering business—capital, technology, markets, brands—until we touched the very core, the diamond-hard “atomic unit” that drives it all: eternal, unchanging human nature.

We have meticulously dissected the four fundamental forces that constitute this “human atom”: the desire for more, which is “Greed”; the pursuit of less consumption, which is “Laziness”; the affirmation of the self, which is “Selfishness”; and the anxiety about the future, which is “Fear.”

Now, let us stand at this endpoint of the first chapter, which is also the summit at the beginning of our entire historical narrative, and systematically review how these four seemingly independent forces collide and catalyze each other within the great vessel of “society,” ultimately triggering the magnificent “chemical reaction” that created the entire business world.

The starting point of this reaction was the first great confluence of “Greed” and “Laziness.” Greed, like an “oxidizing agent” in a chemical reaction, provided the most primal, explosive energy, driving living organisms to ceaselessly expand and possess. Laziness, meanwhile, acted as the most efficient “catalyst.” Using “efficiency” as its sole metric, it constantly sought the “reaction pathway” with the lowest consumption and highest output for this wild energy. From the first sharpened stone axe to the steam engine that powered the entire industrial age, to the algorithms today that can anticipate our thoughts—all these technological leaps are, in essence, the “highways” that “Laziness” has paved for “Greed” on its path to satisfying desire.

However, energy and efficiency alone are not enough to build a stable commercial civilization. When every “selfish” individual, like a high-speed atom, races down this highway, destructive collisions between them seem inevitable. And it is precisely in this chaotic collision that another, more profound chemical reaction takes place.

“Selfishness,” the force with the strongest centrifugal tendency, begins to undergo a miraculous “polymerization reaction” under the powerful constraint of “Fear”—that is, the great fear of “cooperation breakdown and mutual destruction.” Through countless painful “Prisoner’s Dilemma” games, the most rational “egoists” eventually reached a common conclusion: establishing a set of mutually trusted contracts is far more beneficial to everyone’s long-term interests than endless betrayal and suspicion. And so, “trust,” the most precious “product” of commercial civilization, was miraculously precipitated through the repeated tempering of “Selfishness” and “Fear.”

At this point, the underlying chemical equation of the business world is presented before us in its entirety:

(Greed + Laziness) provides the grand narrative of “Growth”; (Selfishness + Fear) builds the microscopic foundation of “Order.” The former defines how far the boundaries of business can reach; the latter determines how high the edifice of business can be built.

The great forefather of economics, Adam Smith, with his genius insight, gave this great chemical reaction a term that has been passed down through the ages—the “invisible hand.” He told us that in a market economy, every individual, in pursuing their own interest—that is, their human instinct—is led by an invisible hand to promote an end which was no part of their intention, namely, the welfare of society as a whole.

This “invisible hand” is not some mysterious supernatural force. It is the grand, orderly law of business that emerges from the interaction and balancing of the four fundamental forces of human nature that we have deconstructed in this entire chapter. The essence of business is thus clearly revealed: it does not “create” desire; no business model can conjure up greed or fear that does not already exist in human nature. Its true mission is to “discover” the desires that already exist, latent deep within human nature, and then to design a replicable, scalable, and sustainable systematized solution to “satisfy” it in a way that is more efficient and more trustworthy than anyone else’s.

From ancient times to the present, from East to West, regardless of skin color or belief, the underlying operating system that drives every one of us has never fundamentally changed. As the Book of Rites states, “Food and drink, and the relations between man and woman, therein lie humanity’s greatest desires.” “Food and drink” point to all of humanity’s material desires for “survival,” the most direct manifestations of “Greed” and “Fear.” “The relations between man and woman” point to the sum of all social relationships for “reproduction,” the deepest roots of “Selfishness” and “Love.”

These two seemingly most ordinary and simple matters contain the “greatest common divisor” of all human desires. Confucius called them the “great desires,” indicating that our ancestors had long understood that these desires were not weaknesses to be despised. On the contrary, they are the most powerful and legitimate “internal drivers” for the very continuation and development of life itself.

They are universal; they are eternal. Like the force of gravity, just as they shaped the dreams of the first cave dweller ten thousand years ago, they are, in a more complex and subtle way, shaping our every click and browse in cyberspace today.

My friends, by understanding this, we have forged for ourselves the most powerful “cognitive filter.” When we look again at the magnificent history of business, we will no longer be lost in the dazzling changes of technology and models.

What we will see is a crystal-clear evolutionary history of “human nature” and the “solutions to satisfy it.”

Now, the thesis is established. Let us take this newly forged intellectual map and officially begin our journey through time. We will start from the distant primeval era to see how this eternal “great desire” has, step by step, shaped the world into the one we see today.