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
“Never doubt that a small group of thoughtful, committed, citizens can change the world. Indeed, it is the only thing that ever has.” (Margaret Mead)
“Be the change you want to see in this world” (Gandhi)
There is an idea virus within American culture that has the power to destroy. The idea is that technology and innovation are fundamentally good. Whether you consider yourself a technologist, an entrepreneur or a scientist (all labels I use to identify myself at times) I’d like to propose an alternative to to this idea and an inoculation against the virus.
Observation #1: Innovation amplifies whatever values and beliefs are held by the innovator.
For instance, if I value my time, I might invent the first clock, or start a business to create time-management products, or devote my life to unlocking deep mysteries of the physics of time. And if I believe clean drinking water is a fundamental human right, I might invent a new method of water purification, or …