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

Sat Nov 7 15:56:58 CET 2009

Hi Ryan,

I did not send to 'win' any argument with the counterfactual statements of
Andrew, that bigger concentrations of wealth are needed for innovation,
however defined. It is not just that a cursory study of history shows that
very unequal and concentrated societies, such a feudalism, where not very
innovative, and that more distributed forms, say free cities in the middle
ages, where much more innovative; it is true even in the domain where Andrew
claims expertise, it is the VC sector, where the study I sent shows how
increased concentration has actually harmed innovation. From where I stand,
increased concentration of wealth does not cause, nor is a guarantee of
innovation. However, they define it, I think that most people in the VC
community would recognize the use of the term as unproblematic. I use
innovation in the way the general public understand it, as inventions that
change processes, if it is defined in a technical way as only those changes
that make money for investors, that's fine for me too, but the argument
against concentration of wealth still stands. The democratic city states you
mention would rather bolster my case, but if you believe giant companies
innovate more than clusters of SME's, that would bolster Andrew's point.
Innovation is a complex process, and I seriously doubt that a simple process
as concentrating wealth would automatically cause innovation to increase.
Strong claims need strong proof. My conviction is that size is not a
sufficient cause of innovation, and that many complex factors play, and that
high concentration can actually hamper innovation.

I must say that I fail to understand your definition as an innovation as an
operator. Most businesses and policy makers would rather talk about it as an
outcome, something that must be fostered, and not as something that falls
out of the blue sky to cause something else. Almost all public literature
about innovation is how to foster it.

As  you intuit, the end point of innovation is indeed not monetary gain, but
social good, so, there it is, stated, I frankly thought that on a p2p
mailing list, that would be rather obvious.

As for the aim of the P2P Foundation, it is to research, document and
promote p2p practices, and that is  what we are doing. I'm not sure how your
insistence on socialism as a topic of discussion is related to it. Most
people on this list would I presume share the general goal of promote p2p
practices, and think through, through dialogue, on how this is emerging and
can be achieved. I have explained my own definition of the political goals
of an emerging p2p movement in several of my writings, which are not
difficult to find: 1) reducing artificial scarcity in culture; 2) achieving
an economy that is sustainable; and 3) achieving both first goals in a
context of social justice.

As a specialized movement though, we focus on achieving peer to peer
dynamics within that general context.

I don't personally think that a neoliberal program, of concentration of
wealth from the bottom to the top, of the careless destruction of the
biosphere, is the answer. I think though that summarizing all that is
different from that as socialist, is a leap that is unwarranted and
unnecessarily polarizes the debate. I can't understand your position, as you
always seem to want to steer the debate in that sense, seeing it as a
negative, but at the same time espouse the radical mutualist views of Kevin
Carson as the ones you find the most in tune.

It's a big contradiction and mystery to me,

I also don't understand why you conflate your own views and feelings, about
the destruction of the p2p movement, with an objective fact. Whatever
indicator I look at, the audience and community around p2p, both narrowly
defined as the people around the p2p-f ecology, and in general and more
broadly, as free culture movement, is growing, consolidating and expanding.
If you know of other indicators that point in the other direction, I would
be curiousl

Michel

On Sat, Nov 7, 2009 at 9:11 PM, Ryan Lanham <rlanham1963 at gmail.com> wrote:

> Hi Michel,
>
> The point I was trying to make (and Stan too) is that innovation is ill
> defined.  Therefore it is impossible to know what you are talking about.
>
> Innovation is an operator...a cause of something.  It isn't an outcome.
> That is, I can't measure innovation separate from its consequences.
>
> As an aside, if big concentrations of wealth slowed growth, then New York,
> San Francisco, Singapore and Tokyo would not function as magnets for
> talent.  They do so function.  Wealth HAS concentrated in the last 50
> years...greatly.  It has urbanized and regionalized.
>
> Indeed poor places fail in large part for lack of talent and useful
> interchange.  That was the basis of Paul Krugman's Nobel Prize winning
> work.  We know pretty definitively that the best way to become poor is to
> isolate yourself socially and economically.
>
> Thus, speaking of innovation without having a theory of desirability (as
> expressed in economic growth or by some other means--e.g. energy efficiency)
> is, at best, heuristic.  At worst, it is nonsensical.   Where J. Andrew wins
> the discussion with you, in my opinion, is that you have not clearly
> stipulated the end measure of innovation in a non-market sense.  He didn't
> state it in any positive sense either, but the tradition of innovation
> thought ties to economic growth.  I suspect you don't see that as the
> positive end-point to be sought.
>
> As usual, my point is that P2P has few if any clear goal sets.
> Consequently it tends to borrow goal sets from communism or
> socialism...which turns off about 97% of the civilized world.  As a
> Norwegian said to me the other day in the Cayman Islands... "You call us
> socialist?"  "We are far more market driven than the Cayman Islands!"  Their
> goal is health, wealth and well-being for Norwegians.  P2P doesn't have a
> political goal set.  Therefore it is difficult to say what it is.  I think
> that lack of definition is now starting to become destructive to the
> movement as it searches for a point.
>
> Ryan
>
>
>
> On Sat, Nov 7, 2009 at 1:06 AM, Michel Bauwens <michelsub2004 at gmail.com>wrote:
>
>> 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
>>>>
>>>> P2P Foundation: http://p2pfoundation.net  -
>>>> http://blog.p2pfoundation.net
>>>>
>>>> Connect: http://p2pfoundation.ning.com; Discuss:
>>>> http://listcultures.org/mailman/listinfo/p2presearch_listcultures.org
>>>>
>>>> Updates: http://del.icio.us/mbauwens; http://friendfeed.com/mbauwens;
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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
>>
>> Updates: http://del.icio.us/mbauwens; http://friendfeed.com/mbauwens;
>> http://twitter.com/mbauwens; http://www.facebook.com/mbauwens
>>
>>
>>
>>
>>
>
>
> --
> 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

Updates: http://del.icio.us/mbauwens; http://friendfeed.com/mbauwens;
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