With the recent talk of reddit being cannibalized by bitcoin technology, I thought it a good time to post something I’ve been thinking about for a while. Could a completely decentralized startup one day rival the likes of Google, Facebook and Amazon?
Within the bitcoin world there’s a common understanding that the most valuable thing about bitcoin is not the monetary currency but the underlying “blockchain” technology that the bitcoin currency runs on. For those unfamiliar, you can check out three heavily-funded ventures creating infrastructure that would enable anyone to program applications on the blockchain that go way beyond monetary currencies: Ethereum,Swarm and Blockstream.
One such application is what’s known as a “Distributed Autonomous Organization,” which is an organization like a corporation, government or NGO, but which has no central leadership and uses internet technologies to organize and function. Examples of DAOs that you are familiar with include open-source software systems like Linux; terrorist organizations like Al Qaeda; communities like Anonymous; and …
- Startups add an average of 3 million jobs in their first year, while older companies lose 1 million jobs annually. (ref)
- Without startups, job growth in the US would be negative 1.2 percent. (ref)
- Angel investments created 370,000 U.S. jobs in 2010, nearly half of the private sector jobs created that year. (ref)
- 265,400 individuals provided $20.1B in angel investment capital to a total of 61,900 entrepreneurial ventures in 2010. (ref)
- In contrast, the private equity industry invested $180B in 2010. (ref)
- Historically, angels invest $50B per year into 50,000 companies, representing 70% of capital for new ventures; 11 times more than the amount provided by Venture Capitalists. (ref)
- The long-term historical return of the U.S. Angel market is 27% annually, three times higher than the public stock market. (ref)
- Warren Buffett’s historical return is 24% annually. (ref)
- Venture Capital historical returns are around 20%, but over the
Remember Jamie Oliver’s TED Prize Wish? Well tonight is the prime time season premiere of his Food Revolution show on ABC. The Huffington Post called Undercover Boss the most subversive show in America, and I can’t disagree. But in terms of importance to the future of America (and by extension every country which imports American TV and culture), Food Revolution I can’t imagine a more important show.
It’s not just the lives of individuals who eat crap (which is most of the country, frankly, even though they have no idea how toxic what they are eating is). It’s the happiness and achievement potential of today’s youth. It’s the emperor with no clothes at the center of the healthcare debate. And it’s a lynchpin for economic recovery and sustainability.
Watch the premiere, and spread the word……
Michael Pollan, as always, making perfect sense:
If you had a billion dollars to make the world a better place, how would you spend it?…
I was listening today to a Fresh Air interview from a couple of weeks ago on the reasons for the high cost of health care:
Highly informative and thought provoking. One thing that struck me was the discussion about how we don’t pay primary care physicians enough and that specialists make a majority of the dollars. This is not earth shattering news, but it I was reminded of a similar problem in higher education. Specialization is highly valued where as general studies and thinking/life skills are not, despite the fact that it’s these more general abilities and knowledge that determine how successful you are in your chosen trade (specialized or not). Same thing in medical care: it’s not the specialists who have the most impact on your health and mortality, it’s …
The following quotes are from a book describing a real set of events:
[The incident] is an extraordinary example of what happens when you get… a dozen people with an average IQ of 160… working in a field in which they collectively have 250 years of experience… employing a ton of leverage.
It’s hard to overstate the significance of a [government-led] rescues of a private [corporation]. If a [company], however large was too big to fail, then what large [company] would ever be allowed to collapse? The government risked becoming the margin of safety. No serious consequences had come about in the end from the… near-meltdown.
Was the incident:
a) The savings and loan scandal
b) The collapse of Enron
c) The sub-prime mortgage meltdown
d) none of the above
First correct answer gets to invest in an exciting new bridge project I’m involved with in New York!…
Pursuant to my earlier post, it turns out there already is such a group:
Thanks to Marissa Chien who found it and pointed me to it. She also suggests that people who are having trouble with their mortgage should seek advise from HUD. Information is power and many people (I’ve learned) are irrationally scared of approaching their lender and negotiating. More and more lenders are willing to cut deals to avoid foreclosures.…
The Freakonomics guys have been on this rant for years, and until recently, I agreed with their logic. But the mounting evidence (in my mind) is starting to swing the other way.…
A friend pointed me to a doubly prescient talk given by George Soros in 1994 about his theory of reflexivity in the markets. Essentially Soros notes that there’s feedback in terms of what agents believe about the market and how the market behaves. Not groundbreaking, but he takes this thinking to some logical conclusions which are in contrast to standard economic theory:…
I’m giving my “2009 Q1 award for most concise, lucid comment” to Paul Phillips for this gem:
Viewed from a thousand miles, the financial system has a incalculably large incentive to fail catastrophically as frequently as it can do so without killing the goose that lays the golden eggs.
As long as there is such a thing as “too big to fail” and trillions of dollars are available for siphoning, according to what logic can this cycle be dampened? Nobody has to explicitly pursue this outcome (although there are many who will) for it to be inevitable; the system obeys its own logic above all else.
[ commenting on Alfred Hubler on Stabilizing CAS ]
With his permission, I am posting an email thread between myself and Alfred Hubler. I had contacted him on the recommendation of John Miller when Kevin and I were posting on the possibility of dampening boom-bust cycles in the financial markets through policy or other mechanisms. Here’s what Hubler had to say:…
Kevin started an interesting discussion that included a thoughtful proposal for the problem of major medical care costs risk mitigation. You should read that here before reading my proposal below.
Part 1: Major Medical Annuities. Federally mandated/funded (similar to SSI/Medicare), with a specific initial lifetime value that is the same for everyone. The concept is that you pick a number slightly bigger than the average expected lifetime major medical bill and set aside that pot of money for everyone individually. At some point (e.g. 65) you can choose to start drawing down from your pot as taxable income. Prior to then, the only way the fund can be used is for major medical expenses not covered by other insurance you may have. Such payments go directly to providers and are tax-exempt. When you die, any leftover amount gets transferred to the MMA accounts of your heirs (per your desired breakdown, or according to probate law in the absence of a will).…
Dan Ariely had an interesting idea on NPR’s Marketplace today. Here’s the audio of the segment. The idea is to get tax payers thinking about how their tax dollars should be spent, thus getting them more civilly engaged. His research and that of others suggests that such activity would reduce the propensity to cheat on one’s taxes, and may even get people to pay more than they would otherwise.…
It’s not hard these days to find vignettes like this one (starting at minute 1:45) that describe a microeconomic chain of events that give you a glimpse into the recessionary dynamic. I think it’s a good starting point to explain my personal theory of why asymmetry is the root of all value (economic and otherwise).…
Steven Gjerstad and Vernon Smith have published a really nice article that starts out with bubbles in general and goes on to explain why the bursting of this particular bubble hurt the economy so much. It echoes a lot of themes that I’ve covered before, but is obviously much more soundly though out.
The short version is that the effect of a bubble on the economy is determined by its effect on consumer spending. The Dot Com Bubble didn’t have much of an effect because it primarily affected institutions and already relatively wealthy consumers. However, the Fed’s attempt to shorten the resulting recession created a loose monetary policy which forced dollars into the most attractive asset class: homes. This attractiveness stemmed from relaxed lending standards and tax-free capital gains on homes, which created more buyers. But asset appreciation in this class is fundamentally limited by the ability of consumers to repay loans from income, which was not growing fast enough. As the institutions insuring mortgages …
I asked this question on twitter/facebook and got a lot of variants of “I agree” and only one person who stated disagreement (but provided inadequate reason, IMO). Jay Greenspan put it this way:
Interesting question this morning, and something I’ve been wondering about. I’ve yet to see anyone really argue that state of non-regulation we’ve been in for the last years has been a good idea. I’ve heard some thoughtful conservatives talk about how their views have changed radically — coming to understand that forceful regulation is absolutely necessary.
The super-conservatives I’ve seen are talking more about taxes, avoiding the subject. I’d be very interested to see a credible argument for a hands-off approach.
So how about it, anyone game to take up a considered argument for not mandating that companies who get big enough to affect the global economy should be broken up or otherwise handicapped?…