Thanks. I think my writing here is intended to reflect both a felt pessimism (or lack of excitement, anyways) among people I know; and also our own optimism despite that; but also our current (eg 1mo roadmap) is not "full steam ahead on impact markets".
The hope of impact markets is that we can come up with a clever accounting system for 501c3 nonprofits, which allows them to fundraise for equity (like a standard C-Corp), and then later distribute its prizes/retro funding among its early funders (like a dividend).
What if, instead of coming up with a clever accounting system, we just asked impactful orgs to incorporate as a C-Corp in the first place? And then, the impact market's prospective funders (usually small funders, like AI Safety Tactical Opportunities Fund) just literally bought equity in the C-Corp. And then, the impact market's retro funders (large funders like cG) just paid out for good work as a prize to the C-Corp. (Or, invest at a higher valuation for a "Series B" with a tender offer, for earlier investors to cash out.)
Then we would get all the benefits of an impact market, but not need exotic new instruments to implement them.
Sure! Like to be clear, there's a very interesting meta, strategic question of "how should we conceive of the EA ecosystem? Are we all just on the same team? Should we act like we're all colleagues of a large for profit org?"
And, it wouldn't be crazy. I think to date, aspects of EA and AI safety act like this. And there's something beautiful, admirable about the attitude of the "don't worry about whose name is first on the paper, or whose getting paid the most, so long as the job gets done".
But otoh, consider the Coasean question, why do firms exist? Specifically, why are there multiple different firms? The market is efficient because the firms are competing for dollars; in our economy/society, dollars are how we divide up "credit", how we represent a claim on current or future work by others.
My general thesis is: EA has been historically small and collaborative, almost Dunbar sized. But AI is scaling up fast, and so AI safety needs to scale up; and also, AI money means that the rest of EA can also scale up. And we've seen repeatedly that markets are the best way to scale complex collaboration, compared to eg top down central planning. (Thus, we should implement impact markets.)
For more on this thesis, see the rest of our newsletter! https://manifund.substack.com/
Sorry, yeah, mostly I was using fancy language to describe ROI; or, how a vc might try to improve/optimize their ROI: work hard to get access to good opportunities at an earlier stage.
(which is exactly what I'd like to see grantmakers doing more of)
Thanks for the thoughts! I think we might disagree somewhat strongly - I actually think that nonprofit grantmakers should approximate their own assessment of impact as a function of "what fraction of the best nonprofits did I fund? For what size? How early?" - aka the same considerations that a for-profit vc considers for return on investment.
I agree that, at the end of the day, we all care about total impact in the world, but I claim that "whose money funded the thing" is basically the most important thing for us to consider when we're trying to decide which grantmakers are good. (obviously other kinds of support can matter too, such as advice and connections, but those are not as central)
As an analogy, if we're allocating impact credit for a project between humans, "whose time was spent on the thing", "whose expertise was most needed for the thing" are natural and good examples of considerations we'd use to decide who was having the impact.
Why does it matter "who was having the impact"? Because without working through such problems, it's really easy to get into double or triple counting problems, where both grantee and grantmaker (and eg grantmaker's funders like Good Ventures for CG) are all implicitly taking credit for the impact. This leads to misallocation of our scarce talent and money.
It's a bit confusing and not the main emphasis of Lightcone Commons, but I believe that they intend to also incorporate speculation budgets like SFF does. The proportional distribution is the main mechanism, which is what informs how the speculators get repaid.
See the section "What if a project needs funding sooner than 3 months from now"
It seems they're less prescriptive than SFF - the default is to repay but not grow the speculator ("direct grantor") budget?
Thanks for the writeup Oscar - I'm generally excited for more exploration around prizes in AI safety too. Will try to get more notes published, but briefly:
I think I'm a bit more bearish on things like "essay prizes" since the future fund era, but prizes overall still worth experimenting with, and ambitious versions could be good - AMCs especially
I think people who like prizes generally underestimate how important deal flow is - you talk about getting publicity which is definitely part of it, then there's actively chasing potential prize submitters, lowering opportunity cost of participation, fast feedback, eois, etc
also how non important a big pot of money is - eg ACX book reviews are really good at surfacing good writing and talent, while the very high paid OpenPhil cause exploration/criticism prizes weren't that good imo
Prizes are also great at surfacing talent. Manifold partnered with ChinaTalk for an essay competition, and they ended up hiring the winning writer as an editor I think. Dwarkesh also had this goal with his recent essay prize.
I also like "Nobel prize for ai safety", like we get a panel of trusted folks to pick out who did the best tais, policy, fieldbuilding etc work on any given year. Could staple some money to it but prestige is probably the main prize - also such a thing could make safety more legible to outsiders.
Kind of weird, but prizes and prize judging are helpful for visas
Yes, this is similar to the design of speculator grantors in SFF (and likely the new Lightcone Commons, too)
I think my ideal design wouldn't even require participation in a specific round or program or system - rather, just retro payback to any particular donor/funder who backed an excellent project.
cG has a lot more money to give away than this, due to growth in Dustin's portfolio + pending Anthropic etc money, so it's not clear that the 1B commitment trades off much against all those other causes you listed.
Thanks. I think my writing here is intended to reflect both a felt pessimism (or lack of excitement, anyways) among people I know; and also our own optimism despite that; but also our current (eg 1mo roadmap) is not "full steam ahead on impact markets".
Thanks for flagging. Let me try again:
The hope of impact markets is that we can come up with a clever accounting system for 501c3 nonprofits, which allows them to fundraise for equity (like a standard C-Corp), and then later distribute its prizes/retro funding among its early funders (like a dividend).
What if, instead of coming up with a clever accounting system, we just asked impactful orgs to incorporate as a C-Corp in the first place? And then, the impact market's prospective funders (usually small funders, like AI Safety Tactical Opportunities Fund) just literally bought equity in the C-Corp. And then, the impact market's retro funders (large funders like cG) just paid out for good work as a prize to the C-Corp. (Or, invest at a higher valuation for a "Series B" with a tender offer, for earlier investors to cash out.)
Then we would get all the benefits of an impact market, but not need exotic new instruments to implement them.
Sure! Like to be clear, there's a very interesting meta, strategic question of "how should we conceive of the EA ecosystem? Are we all just on the same team? Should we act like we're all colleagues of a large for profit org?"
And, it wouldn't be crazy. I think to date, aspects of EA and AI safety act like this. And there's something beautiful, admirable about the attitude of the "don't worry about whose name is first on the paper, or whose getting paid the most, so long as the job gets done".
But otoh, consider the Coasean question, why do firms exist? Specifically, why are there multiple different firms? The market is efficient because the firms are competing for dollars; in our economy/society, dollars are how we divide up "credit", how we represent a claim on current or future work by others.
My general thesis is: EA has been historically small and collaborative, almost Dunbar sized. But AI is scaling up fast, and so AI safety needs to scale up; and also, AI money means that the rest of EA can also scale up. And we've seen repeatedly that markets are the best way to scale complex collaboration, compared to eg top down central planning. (Thus, we should implement impact markets.)
For more on this thesis, see the rest of our newsletter! https://manifund.substack.com/
Sorry, yeah, mostly I was using fancy language to describe ROI; or, how a vc might try to improve/optimize their ROI: work hard to get access to good opportunities at an earlier stage.
(which is exactly what I'd like to see grantmakers doing more of)
Thanks for the thoughts! I think we might disagree somewhat strongly - I actually think that nonprofit grantmakers should approximate their own assessment of impact as a function of "what fraction of the best nonprofits did I fund? For what size? How early?" - aka the same considerations that a for-profit vc considers for return on investment.
I agree that, at the end of the day, we all care about total impact in the world, but I claim that "whose money funded the thing" is basically the most important thing for us to consider when we're trying to decide which grantmakers are good. (obviously other kinds of support can matter too, such as advice and connections, but those are not as central)
As an analogy, if we're allocating impact credit for a project between humans, "whose time was spent on the thing", "whose expertise was most needed for the thing" are natural and good examples of considerations we'd use to decide who was having the impact.
Why does it matter "who was having the impact"? Because without working through such problems, it's really easy to get into double or triple counting problems, where both grantee and grantmaker (and eg grantmaker's funders like Good Ventures for CG) are all implicitly taking credit for the impact. This leads to misallocation of our scarce talent and money.
I, for one, am excited to see the show when it comes out!
It's a bit confusing and not the main emphasis of Lightcone Commons, but I believe that they intend to also incorporate speculation budgets like SFF does. The proportional distribution is the main mechanism, which is what informs how the speculators get repaid.
See the section "What if a project needs funding sooner than 3 months from now"
It seems they're less prescriptive than SFF - the default is to repay but not grow the speculator ("direct grantor") budget?
Thanks for the writeup Oscar - I'm generally excited for more exploration around prizes in AI safety too. Will try to get more notes published, but briefly:
I think I'm a bit more bearish on things like "essay prizes" since the future fund era, but prizes overall still worth experimenting with, and ambitious versions could be good - AMCs especially
I think people who like prizes generally underestimate how important deal flow is - you talk about getting publicity which is definitely part of it, then there's actively chasing potential prize submitters, lowering opportunity cost of participation, fast feedback, eois, etc
also how non important a big pot of money is - eg ACX book reviews are really good at surfacing good writing and talent, while the very high paid OpenPhil cause exploration/criticism prizes weren't that good imo
Prizes are also great at surfacing talent. Manifold partnered with ChinaTalk for an essay competition, and they ended up hiring the winning writer as an editor I think. Dwarkesh also had this goal with his recent essay prize.
I also like "Nobel prize for ai safety", like we get a panel of trusted folks to pick out who did the best tais, policy, fieldbuilding etc work on any given year. Could staple some money to it but prestige is probably the main prize - also such a thing could make safety more legible to outsiders.
Kind of weird, but prizes and prize judging are helpful for visas
Yes, this is similar to the design of speculator grantors in SFF (and likely the new Lightcone Commons, too)
I think my ideal design wouldn't even require participation in a specific round or program or system - rather, just retro payback to any particular donor/funder who backed an excellent project.
cG has a lot more money to give away than this, due to growth in Dustin's portfolio + pending Anthropic etc money, so it's not clear that the 1B commitment trades off much against all those other causes you listed.