[p2p-research] big does not necessarily innovate: the current VC model is broken
rlanham1963 at gmail.com
Sat Nov 7 04:27:31 CET 2009
I suppose I am totally confused. Innovation is a means...not an end.
You've got to want innovation to lead to something.
Investment...that's an economic number we can discuss. Innovation? It's
an operator...not an outcome. It so far has no economic standing except as
a possible driver for productivity.
In fact, productivity is climbing extremely rapidly across the globe...as
measured in GDP per work unit. R&D capital really has had very little to do
with it. Most of the growth comes from IT, low labor cost units being
rapidly trained (e.g. in China and India), economies of scale and improved
systems. Is it "innovation" if a guy in Africa gets a cash register in his
store and a cell phone on which he can make supply orders? It greatly
enhances his productivity. To me it is just applied
Even still, the simple truth is that the world is not capital constrained
and hasn't been for a long time. Stimulus efforts are pushing a rope. The
hope is that by injecting capital into economies that they will be primed
like a pump. It's not likely. Demand is not stimulated without
improvements of some sort. Better armies, better banks, better cell phones
only help if they lead to some desired productivity gain or some life
improvement that people will sacrifice for. Trouble is, most people have
entered into debt to consume other desires (like houses). There is little
consumer capacity to sacrifice for non-productive gains. Banks, in short,
don't have economic loans to make.
Having an incrementally better cell phone isn't that great...it's just a
cell phone. The message of technology has been that marginal utility of
invention is falling...rather fast. That's the interesting crisis of
economics now. Intellectual property value is falling...Corry Doctorow and
others have been discussing this for some time...as has Michel. On the
other hand, productivity is rapidly increasing because basic systems (e.g.
cell phones in Africa) are applied at whole new scales. It isn't
"innovation" in the sense of a new idea, it is the simple application of
capital. Soon that will run its course as it has in the developed world.
At that point, the question is...what do people want? Leisure? Security?
Most wealth creation in the developed world is on paper...real stuff isn't
made. Debts expand, others obtain cash...etc. It isn't like a new factory
has come on line or a new widget is now producing a wudget.
Banks have more cash than ever...their issue is that there are not
investments that can be made that realize economic gains. Marginal utility
of capital is down because most production is no longer stuff. It is
services...ideas and the manipulation of ideas to create money. Wealth now
is not tangible. Hence the whole post-scarcity discourse on this list.
Somewhere, somehow, someone needs to do something that generates wealth if
capitalism is to work. Right now, that isn't happening very well. The
measure of it happening is GDP. But that's a crude measure.
On Fri, Nov 6, 2009 at 7:24 PM, J. Andrew Rogers <reality.miner at gmail.com>wrote:
> On Fri, Nov 6, 2009 at 3:31 PM, Ryan Lanham <rlanham1963 at gmail.com> wrote:
> > What outcome do you or J. Andrew want?
> Speaking for myself, the outcome I want is a maximized rate of
> innovation, with an eye toward capital efficiency since that is a
> finite resource. Beyond that, I am pretty agnostic about how that
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