Sustain Fund is contemplating a major new project that aims to encourage more startup thinking. The working title for for this project is Sustain Fund Fellows Project. We do NOT need people to encourage us with platitudes like “… really like your project, expecting great things, best of luck!” We are also NOT looking for money or any offers for any kind of material support – even if we ultimately seek partners and collaborators, it is way too early for that! At this point, what we NEED are questions and criticisms … especially criticisms, but we also welcome questions that provide feedback and indicate need for greater clarity and focus.
Encourage Shrewd, Hard-Nosed Startup Thinking
We would like to see a healthier, more vibrant startup ecosystem all over the globe.
The data on startup activity could not be more clear – startups provide ALL new jobs and ALL new wealth creation. Startups are disruptive and constantly threaten the position of established companies; the tendency of established companies in all industries to move in the direction of consolidation, risk avoidance and monopolistic stifling of new technologies, means that means that startups either are, directly or indirectly, responsible for ALL new innovations.
Good intentions don’t matter. Specifically, incubators and accelerators generally FAIL to really encourage more meaningful startup activity … they may result in too many resources being devoted to weak startups doomed to failure. Accelerators and incubators may facilitate and enable people to consider starting a new business who shouldn’t do so. Entrepreneurial experience tells us startups never be successful, unless when they are started by people who will not quit, will overcome all kinds of obstacles and simply will not take “No!” for an answer.
Paradoxically [or maybe it’s not that much of a paradox], making startup formation easier actually is contrary to encouraging startup thinking.
We believe we are called to genuine kindness, empathy and serving others. Sustain Fund believes that checkbook charity is idiot compassion or conscience laundering or just PR. We experiment with different things; we fail wisely, most things don’t work, we keep trying, we attempt to design smarter experiments so that we can put more effort, resources and capital into what works.
Practically, this means that we aggressively make loans and back different entrepreneurial projects around the world. It is mostly a matter of trying pour gas on fires that have been kindled. It is not just about financial capital – increasingly, it is about community and mindshare. We try to add value to development communities by evaluating applications, writing and debugging code, forking repos and attempt to understand the application realms to better make improvements, better contribute to discussions on issues, evangelize socially valuable projects that deserve more attention.
- Microfinance - Kiva, Grameen, Acumen Fund, Mifos
- Crowdfunding - Kickstarter, IndieGoGo, OurCrowd
- Self-directed IRA/401(k) programs - Entrust, SOCAP
- Shared resources – AirBNB, Uber, Lyft, Turo
- Open source technologies - Git distributed revision control, Applications, Civilization, Germplasm, [machine learning]
Humans are doubling the amount of data that has been accumulated each year – the REAL challenge is to provide order and coherent structure to that in order to exploit the value in that data. There is still a very large role for better search technologies, scalable machine learning and deep intelligence. An expanded opportunity set coupled with search and recommendation technologies allows for exercising of greater choice, more intense optimization and better allocation of resources for more valuable exploration and useful data acquisition.
We are particularly interested in open source fintech technologies because fintech is fundamentally about providing the infrastructure for the optimal allocation of resources. Can we improve the infrastructure and mechanisms of deal flow for entrepreneurs and investors? Can we better harness the competitive efforts of many contenders to winnow out the largest winners and most worthy of resources in the idea space. If we believe that resources should flow to those who generate value, can we use smart contracts in order to better reward effort of people working on different nanoenterprises?
Underemployment of bright people is a real problem. There are a lot of people who desperately want to work at something more meaningful while they build or retool their careers. Those people basically understand that working on HARD things not only allows them to do two things simultaneously. First of all, they produce something, but secondly the experience they gain also develops their long term productivity.
We see a lot of success stories worthy of consideration in the startup realm … not all of these are worthy of emulation, but they might be important to think about.
- Thiel Fellowship – could the projects conducted under these fellowships be more ~crowdly~ in nature? Is there anything magic about this particular age, ie what about people re-inventing themselves?
- yCombinator – what would be necessary to pour gas this notion? Could we broaden yCombinator to an ENERGY focus?
- Nedspace – could this model be extended to other cities – to make it YMCA-like?
- YearOfTheStartUp (YOTSU) – could we include more people in this program by keeping the tenure of participation in the program the same, but making the tenure of residency shorter? What about weekend programs for entrepreneurs with jobs?
- MakerFaire – can MakerFaires be mobilized or replicated to reach more people?
- Hackathon – how do we conserve momentum? What can we do to better “deal flow” the winners of these events into collaborative workspaces, accelerators, angel funds.
Amongst the success stories, there are still plenty of failures and huge opportunities to study and mitigate risk for more aggressive improvement. For example, in spite of issues with longitudinal or panel data on startups [because not all startup activity is reported and startup failures are quietly censored], we know that most startup incubators and accelerators do not particularly work all that well – accelerators and incubators may facilitate and enable people to consider starting a new business who really should not jump in [yet] with their ideas. Also, capital and resources will always tend to coalesce around a very few ideas. Organic acceleration or designing proximity and serendipity through real estate may still matter … but quality will still matter. Simply increasing population density is not going guarantee significant network affects … you cannot fix stupidity and lack of initiative by just dumping stupid, lazy people into a bigger pile and enabling them with phony startup ideas. Solid ideas that will not die do not pay attention to boundaries and capital is pretty good at avoiding geographic constraints, too.
Opportunities as ideas rain down upon us as we think – the average human “experiencing self” has a cognitive sense of the present moment or what is going through one’s mind on average of about every three seconds … the average human is accorded 600K moments of experience in life. Most humans squander most of their moments, but we can learn to do better. And yet, even at our best, we have far more ideas than we can ever hope to record or adequately describe … we can hope to get the good ones down, but even censoring the data to what we can record, yields an overwhelming reservoir of ideas to pursue. That raises a very real question of whether we really know our preferences and cognitive limitations of decision making – there are real barriers to finding the highest and best opportunities even if we described the full opportunity set and have done the full due diligence on all key candidates.
Human judgement is a particularly tricky thing because it is entirely trapped in a realm governed by assertions, whims and unfounded belief. Of course, we second-guess other people’s beliefs because we know that all beliefs are driven by our irrational hopes and fears. Except that what we forget is that believing one’s beliefs are not tainted by belief is itself a religion founded upon the the irrational hope for human reason and the fear of the other side’s beliefs. If we consider the world of startups, we see that potential outcomes of disruptive startups that scale are asymmetrically significantly greater the outcome of steadily working on continuously improving the same thing … but the probability of finding the unique disruptive startup idea is small enough that there is an asymmetrically teensy likelihood of success … AND if that were not bad enough, there is also an asymmetrically small chance of detection or find the “perfect storm” of colleagues or assembling the “winning team” [including the investors with the right stuff and connections to other resources] that can result in successfully developing the unique disruptive startup idea.
Sustain Fund Fellows Project aims to invert and disrupt the traditional accelerator or incubator model – it seeks serial entrepreneurs who wish to engage in the Sustain Fund objective of active entrepreneurial activity in order to sharpen our understanding of risk prioritization, machine learning, deep intelligence and data mining necessary to crowdsource a better market or fintech filter. This filter or marketplace will increase likelihoods of finding the outsized successes and putting together winning teams to work on the best ideas. The aim is not to do this for others as a service, but to develop and provide tools to those in the market, in the gold rush. It’s all about accelerating the process of entrepreneurs and investors optimally selecting and focusing upon their very best opportunity. We modestly aim to help set the stage for entrepreneurs and investors with vision being equipped to identify those unique opportunities that others do not see.
Technologies change over time, but we can be confident that the basic goal of Sustain Fund fintech will remain the same – it will always be true that every meaningful new startup business must answer ALL of Thiel’s seven questions:
Is your business idea about creating breakthrough technology instead of incremental improvements?
Is now the right time to start this particular business … or should the idea be held in reserve, in some sort of “parking lot?”
Does this business start with a big share of a small market that it can thoroughly dominate?
Is the right team of founders, investors, partners and employees involved? Are they in the right positions?
Do the business control its own destiny? Does it have a way to not just create but deliver the product?
Will the business’s market position be defensible as far as we can see, ie 10 and 20 years, into the future?
Has this business identified a vein of unique opportunities to mine that others are not currently mining successfully?