[p2p-research] big does not necessarily innovate: the current VC model is broken

[Michel Bauwens]

Hi Ryan,

the key background to this whole debate is the key hypothesis of J. Andrew,
that 'big concentrations of wealth are needed for innovation' to occur. To
counter this, I simply stress that innovation is a pluralistic mechanism,
that big concentrations of wealth have big downsides and anti-innovation
effects, and that a pluralist approach to innovation which would include
distributed funding mechanisms, would be better, rather than simply
accepting the above anti-P2P premise,

that's all, there is no more to it than that. I would react the same if
someone would say, 'males are inherently superior innovators than females'.
I don't think elitist and purely scarcity based opinions should go
unchallenged in a p2p forum, it's an important boundary issue,

Michel

On Sat, Nov 7, 2009 at 6:31 AM, Ryan Lanham <rlanham1963 at gmail.com> wrote:

> Michel,
>
> What is the desired end for this VC argument?  I simply don't see the point
> being made on either side.  Is it me being thick?  What do we want the
> answer to be?
>
> What measure is there of innovation that doesn't tie to some economic score
> or social value?  Whatever it might be, we must be moving faster than ever
> before.  I know of no business persons, economists, scientists or even
> artists who do not believe we are in an Age of incredible change.  Most want
> to slow it down.  I personally have had several discussions with
> scientists--easily had on the web--who say it is moving so fast no one can
> be certain of the current.  Whole sets of institutions including academia
> seem plausibly in doubt by smart people--Stephen Downes, for example, who we
> both respect.  There is obviously a crisis in government...in the arts, in
> political and economic philosophy.  Heck, economics is completely in
> disarray from the perspective of its own deans.
>
> If innovation is productivity, the economy is again growing in GDP terms.
> If it is employment, we would agree there is a great crisis...but employment
> has never been much of a measure of innovation, change or transformation.
>
> What outcome do you or J. Andrew want?  Most argue against research
> investment by government because it is not economic...which I take to me a
> driver of GDP growth.  At some point, there must be a point.  What is it?
>
> I have become confused by what you hope for from VCs.  At some level there
> must be a point...get more X or less Y.   The measures and goals tie to
> those values.  Without some value parameter at bottom, what is the point?
>
> Ryan
>
>
>  On Fri, Nov 6, 2009 at 4:00 PM, Michel Bauwens <michelsub2004 at gmail.com>wrote:
>
>>
>> This goes against the argument that 'big concentrations of capital' are
>> necessarily more innovative
>>
>> research points to the absolute opposite: the growth of vc sizes has been
>> detrimental to innovation:
>>
>> see http://redeye.firstround.com/2009/10/company-math-vs-vc-math.html
>>
>> note that this research and debates come from within the vc community
>> itself, not from some wild-eyed social-democratic economist:
>>
>> in fact, research shows the exact opposite of what was argued here
>> recently:
>>
>>
>> These "requirements" are a direct result of the mathematical model that
>> venture funds are optimized for.  And as fund's have gotten larger, their
>> math has gotten more difficult.  We're now witnessing the conclusion of a
>> "10 year experiment" where money invested in venture funds has exploded and
>> fund sizes have more than tripled in size.  A decade ago, 75% of all venture
>> funds raised were under $100 million.  In 2007, fewer than 25% of all
>> venture funds raised were under $100M.  And I don't think it's a
>> co-incidence that *VC performance has fallen off a cliff during this time
>> period*.  Indeed, we're approaching a point where *the 10-year return in
>> venture capital is negative*.  Paul Kedrosky recently authored a paper<http://www.pehub.com/wordpress/wp-content/uploads//usventcap061009202.pdf>for the Kauffman Foundation which discusses this in great detail and
>> proposes that the venture industry needs to be "rightsized" -- and suggests
>> a 50% reduction<http://paul.kedrosky.com/archives/2009/06/right-sizing_ve.html>.
>>
>>
>> --
>> Work: http://en.wikipedia.org/wiki/Dhurakij_Pundit_University - Research:
>> http://www.dpu.ac.th/dpuic/info/Research.html - Think thank:
>> http://www.asianforesightinstitute.org/index.php/eng/The-AFI
>>
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>>
>>
>>
>>
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>
>
> --
> Ryan Lanham
> rlanham1963 at gmail.com
> Facebook: Ryan_Lanham
> P.O. Box 633
> Grand Cayman, KY1-1303
> Cayman Islands
> (345) 916-1712
>
>
>
>


-- 
Work: http://en.wikipedia.org/wiki/Dhurakij_Pundit_University - Research:
http://www.dpu.ac.th/dpuic/info/Research.html - Think thank:
http://www.asianforesightinstitute.org/index.php/eng/The-AFI

P2P Foundation: http://p2pfoundation.net  - http://blog.p2pfoundation.net

Connect: http://p2pfoundation.ning.com; Discuss:
http://listcultures.org/mailman/listinfo/p2presearch_listcultures.org

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