I would like to push back a bit, as I donât think itâs true that scalability per se matters more now than it did in the past.
Instead, I think the availability of more funding has pushed down the cost-effectiveness bar for funding opportunities, thereby âunlockingâ some new worthy funding opportunities, including some very scalable ones.
To see this, consider that the added value of discovering/âcreating any new funding opportunity for the community is roughly given by (not accounting for diminishing returns when spending at bar level):
âvalue created by adding a new funding opportunityâ = (âaverage cost-effectiveness of the opportunityâââcurrent cost-effectiveness barâ) * âroom for funding of the opportunityâ
I.e. what youâre effectively doing by adding a new opportunity is improving the cost-effectiveness of money that would have otherwise been spent at the bar level.
This implies that any opportunity that is above the current bar in terms of its cost-effectiveness can be worth discovering if itâs scalable enough. But that is nothing new: it was true as much in 2010-2014 as it is now. Itâs just that the bar was higher, so some very scalable but below-bar opportunities werenât worth discovering back then but are now.
I also think itâs worth stressing that the best alternative to finding a great (above-bar) option to spend money on now is not to spend on options below the bar, but to wait /â keep looking and spend it at an above-bar opportunity later (and ideally invest to give while youâre at it).
In your example, this cashes out (roughly) in us using Research multiple times to find as many Alpha-like projects as possible and fund those, and to only start looking for and funding Beta-like projects when there are no more Alpha-like projects to find. Even if there is only one extra Alpha and one extra Beta to find, itâs better (with the parameters as provided in your example) to find and fund that Alpha and find and fund Beta, than to find at fund only one of the two.
Cases somewhat akin to âyou can only use Research for either Alpha or Betaâ can occur, but only under very specific conditions, e.g. when opportunities are time-sensitive and/âor when there is a very tight bottleneck on research resources (=strongly increasing marginal costs to doing research), which might in fact be the case currently.
(As a side point: given the option of investing to give, itâs important to âsetâ the bar taking into account our expectations of how cost-effective future opportunities will be, investment benefits one can achieve in the meantime, value drift and expropriation risks etc.)
I would like to push back a bit, as I donât think itâs true that scalability per se matters more now than it did in the past.
Instead, I think the availability of more funding has pushed down the cost-effectiveness bar for funding opportunities, thereby âunlockingâ some new worthy funding opportunities, including some very scalable ones.
To see this, consider that the added value of discovering/âcreating any new funding opportunity for the community is roughly given by (not accounting for diminishing returns when spending at bar level):
âvalue created by adding a new funding opportunityâ = (âaverage cost-effectiveness of the opportunityâââcurrent cost-effectiveness barâ) * âroom for funding of the opportunityâ
I.e. what youâre effectively doing by adding a new opportunity is improving the cost-effectiveness of money that would have otherwise been spent at the bar level.
This implies that any opportunity that is above the current bar in terms of its cost-effectiveness can be worth discovering if itâs scalable enough. But that is nothing new: it was true as much in 2010-2014 as it is now. Itâs just that the bar was higher, so some very scalable but below-bar opportunities werenât worth discovering back then but are now.
I also think itâs worth stressing that the best alternative to finding a great (above-bar) option to spend money on now is not to spend on options below the bar, but to wait /â keep looking and spend it at an above-bar opportunity later (and ideally invest to give while youâre at it).
In your example, this cashes out (roughly) in us using Research multiple times to find as many Alpha-like projects as possible and fund those, and to only start looking for and funding Beta-like projects when there are no more Alpha-like projects to find. Even if there is only one extra Alpha and one extra Beta to find, itâs better (with the parameters as provided in your example) to find and fund that Alpha and find and fund Beta, than to find at fund only one of the two.
Cases somewhat akin to âyou can only use Research for either Alpha or Betaâ can occur, but only under very specific conditions, e.g. when opportunities are time-sensitive and/âor when there is a very tight bottleneck on research resources (=strongly increasing marginal costs to doing research), which might in fact be the case currently.
(As a side point: given the option of investing to give, itâs important to âsetâ the bar taking into account our expectations of how cost-effective future opportunities will be, investment benefits one can achieve in the meantime, value drift and expropriation risks etc.)