Company formation via joint-stock is the core meta-creative process behind industrial society, modernity, the information age, and the intelligence age. A new mechanism can execute the essential aspects of company formation: conditional contracts for employees, investors and customers around a company designer’s plan.
Company formation powering technological growth is the primary mechanism behind GDP growth:
And so innovation in that core process has consequences for the trajectory of technological and scientific growth.
There are three major processes that are required for the founding of a new company:
Hiring people.
Finding and hiring people with the relevant skills for creating a product or service.
Raising money.
Raising the funding required to pay for the talent and raw materials behind the company, until its product or service is functional.
Closing customers.
Customers committed to purchasing the product or service to be created can have already been identified and have signed to that commitment.
Both hiring and raising are typically accomplished by the Founder & CEO of the company. This conditional contract process can replace the most important aspects of that role, as a new & comparatively easeful way to bring successful companies into existence.
Conditional Contracts
Unlike a traditional contract, which has explicit and fully known stipulations all present at time of signing, conditional contracts leave one or more essential terms as the condition and consequences that follow depend on that condition’s fulfillment.
Conditions for company formation:
Conditionally Invested Money
Conditionally Committed Team Members
Conditionally Committed Customers
We propose a platform where the designer of a prospective company can post a company design, detailing the nature of its team members & their required quality, and its products or services. This design can be conditionally committed to by interested investors, team members, and customers.
Because entities are only brought into existence if it already has eager & willing investors, team members, and customers already committed to it, resolving the essential and challenging coordination problem typically resolved by the Founder CEO.
The Company Designers
Who are the designers? This is an incredibly high leveraged role, typically accomplished by people who have very few at-bats. By making this a specialized role, we can leverage knowledge gained across episodes of company formation.
Who are the designers?
Successful serial entrepreneurs and investors who know the ins-and-outs of the details of the industries that they’re designing companies for.
These people presently have no incentive to release all of their potential company ideas, but can be incentivized by a single-digit percentage stake in the companies that they design.
At the 2021 bottlenecks conference, I asked these folk to design companies:
Think tank for scientific funding | Patrick Collison | You should start a science funding think tank. The enormous institutions that make these decisions - downstream are the NIH and the NSF. If you go to amazon, there are zero books about the NIH. Yes on how to obtain a grant, but nothing on the institution itself. There ought to be a community, and entity, a field about science funding thinking. |
Well funded, high quality Cryopreservation company | Laura Deming | Cryopreservation might be solvable in 1-2 decades.. Whole body is done in non-humans. Tissues in humans and non-humans. Embryos in humans and non-humans. Cells in humans and non-humans. In china, they cryopreserved and transplanted an amputated finger. Arctic rotifer lives after 24000 years in a frozen state. Whole organs is hard, but doable. This is the most important thing to work on. |
Institute for Mechanism Design | Jeremy Nixon | Many of the most important problems facing our civilization are social coordination & collective decision making problems. Let's come up with ways to solve our coordination problems using social choice theory, mechanism design, cool voting schemes, political science, blockchains, and your new creative ideas! |
Institute for risk | Blake Scholl | Think tank organized around how to bring capitalist/private models for managing risk versus using regulatory agencies. Eg, how do we replace the three letter agencies with a combination of consumer reports and mandated insurance. |
Ben Reinhardt | Private ARPA to run programs that unlock things that are too researchy for startups too engineering heavy for academia and too irresponsible for government | |
Reliable informal network | Geoff Anders | Maybe: Informal group that people can reliably expect to continue interacting with and being included in related to these issues. |
Nieman-Marcus catalog for billionaires | Tom Kalil | (1) Curation of dozens of high-impact ideas for HNWI (2) Training program designed to teach more people to understand the arts and science of designing market-shaping/demand-pull interventions |
Philanthropic patronage for individual scientists | Martin Borch Jensen | a lot of criticism of current academic funding is focused on good exploratory research being discouraged by typical funders. why aren't science focused philanthropists finding research they're sufficiently interest in to fund directly |
Institute for celebrating disaster avoidance | Ryan Orbuch | I'm worried we don't give "disaster avoidance" style problems (eg climate) the same success narrative or celebrate their big achievements, leading to burnout in the field and fewer people working on them. Eg we fixed the ozone hole, but it's not clear we took the time to culturally metabolize the impressiveness of that global technical achievement. I think with new climate solutions, we're in a similar spot -- we need to represent folks actually solving these problems more heroically, and have media around more positive outcomes instead of just focusing on the disaster component |
The Atlas Institute | Jose Luis Ricon | Roadmaps at scale. a permanent entity to do full time bottleneck finding and roadmapping (without necessarily solving the problems). in a way maintaining dashboards /atlases/tech trees of where a field stands and why it is not moving faster |
ARPA-Lab | Ilan Gur | ARPA-E was created as a high-impact R&D funding agency with the goal of de- risking disruptive energy technologies for urgent and successful transition to the private sector. Ideal characteristics of the projects ARPA-E seeks to fund include: novel, out-of-the-box approaches that address a significant problem; a lean, optimized team that stays focused on the end goal and is able to learn and adapt as their work progresses; and a clear vision of success that, beyond academic curiosity in the research, includes ownership of the project’s real-world outcome. |
Graduate school for internet generalists | Samo Burja | Accelerated PhD program in economics or some other social science, no admission prerequisite except being handpicked. It would admit talented internet autodidacts ran them throguh an accelerated PhD program, including thesis, which is then used as the draft for a book deal examined by an affiliated academic publisher. Part of the requirement would be to move to a relevant well connected city somewhere in the West for the duration of the studies. |
Differential technology investing | Anastasia Gamick | Funding agency that spends some time researching especially high leverage projects to fund, calls to action, workshops, etc. for scientists who have ways to solve those projects and then provide initial fundings + coaching. |
A city where we control the local government | Max Hodak | See mark Lutter's stuff |
FROYO: focused research org ystablishment org | Adam Marblestone | Self explanatory |
Crypto-econ science & technology funding agency | Juan Benet | A science & technology acceeleration organization that uses a combination of open source, cryptoeconomics, mechanism design, investable science assets to drive progress. |
Cargo airship company | Eli Dourado | A 950-foot airship could move cargo containers around the world 5-10x faster than a container ship and 5-10x more cheaply than an airplane. If airships could capture 5% of the container market that would be 4000 airships and perhaps $200B/year in revenue. The company would expand global trade and prosperity, especially in countries without access to deep water ports. |
Understanding aerosols | Ian McKay | Atmospheric aerosols (tiny solid and liquid particles inthe sky, both natural and manmade) impact climate more than CO2. Unlike CO2, the exact type of aerosols and location in which they're emitted have a huge impact on the sign and magnitude of their climate forcing. Sulfur in ship fuel seems to cool the climate, sulfur in jet fuel seems to warm it, etc. Until we understand the detailed connections between aerosols and climate, we won't really know how much influence we're having and what the last resort options for restoring climate really are. |
A private defense-dominant biodefense ARPA/FRO | Jacob Swett | De-bottlenecking key technologies to radically shift the defense/offense balance |
Cryptoeconomic modeling consultancy | Molly Mackinlay | This group helps model and improve incentive alignment in complex systems by designing and implementing MVP interventions |
Institute for Climate Stabalization | Sarah Sclarsic | Research Institute to conduct R&D to create high-impact technologies that could significantly help stabalize the climate. Core focus on atmospheric carbon removal but could also include solar radiation management, ice sheet stabalazition, permafrost preservation, etc. |
Advanced Climate & Energy Labs | Will Regan | A targeted, finite-life Bell Labs / PARC successor applied R&D lab (or a co-location of 5 large FROs) to develop a few critical high-impact energy and climate technologies (cheap fusion, <$50/t CDR, <$1/kg H2, zero-emissions OPC, LDES, etc). Integrate promising components into systems, do high-risk R&D that doesn't fit well in academia/startups. Turn the wins into spinout companies (perhaps with a new Activate branch). Whitepaper avail for those interested. |
Large amounts of directed academic funding | Anastasia Gamick | Sufficient funding for academic projects that are currently poorly aligned with incentives. Dump enough money into basic research, encourage people to publish null results, work on non-concensus areas, publish in open access ways. These projects have to be successful engouh and high status enough that they make null results and open access cool. Hopefully some of these academics end up with tenure elsewhere. |
Respectability Cascade Firm | Jeremy Nixon | Coordinates between popular twitter / social media accounts to make worthwhile ideas respectable |
Companies That Produce Companies
The big missing structure in our society is the process for improving institution creation. Companies were one big innovation here, with joint stock competing with religion, guilds and other credit sharing processes. What is next, for institution design? And by what process can it be subjected to the same optimization forces that particular companies are subject to? At present, selection pressure on institution formation processes is much weaker than pressure on specific organizations.
Overcoming the Team “Fit” Problem
One classic challenge is that the culture of companies typically follows from a very specific pre-existing and successful culture. Selecting talent purely on the basis of their ability exposes this delicate question of personal choice to mistakes that are obvious but difficult to clearly & abstractly define.
One solution can be for the designer of the company to recommend a ‘culture’, which can be represented by examples of people who fit a mold or by a set of values.
Overcoming the Lemon Problem
One issue that people rightly worry about is that the quality of team members will skew low. The #1 resolution here is that the designer of the company, who is ideally a successful serial entrepreneur, can be the evaluation bar for companies that they design (and take equity in). It also creates the potential to be affiliated with that person, increasing the trust in the design and the resulting company while minimally stressing the designer’s time costs.
Overcoming the Failure to Fulfill Commitment Problem
One can consider a security deposit attached to the platform, which is lost if a contract is fulfilled and people drop out, or a contracting scheme where second and third place commitments for working roles are registered and fallen back upon if one person drops.
Conclusion
This is a first central example of the transformative application of a platform for conditional contracts. Naturally, there are extensions to many other forms of coordination problem: project choice, coordinating living in a similar location with a large group, and even explicit treaties between nations. We look forward to implementations that allow us to test these ideas in impactful contexts of use.
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