One final thought: If you rank EA ideas on a continuum from “produces no value” to “produces a ton of value,” it seems like the section of the continuum where nonprofit ideas are viable is quite small. Too low and your idea isn’t worth working on. But once you start producing lots of value for the world, stakeholders start to be willing to pay for the solution, and then you can start a for-profit company to do it. So from this perspective, the best EA nonprofit ideas are weird and non-central examples of value-producing ideas—they’re ideas that produce a lot of value but you can’t get anyone to pay for.
stakeholders start to be willing to pay for the solution
Under some ethical theories, the vast majority of stakeholders (nonhuman animals, future persons) are unable to pay in any meaningful sense. Are you more positive about nonprofit entrepreneurship for organizations that serve these stakeholders?
Fair question, and your comment elsewhere (about the narrow slice being the only slice that exists if the market is efficient) was enlightening.
However: my philosophy for startups is that I would nearly always take a different approach to solving these sorts of problems in the world. I would prefer to start Beyond Meat, and try to solve the nonhuman animals problem in an oblique way, instead of attacking it directly by starting a nonprofit. And I think a lot of entrepreneurs think like this as well: look at Elon Musk’s startup strategy—he tends to go for something which has a business/profitability angle from the first version, but with a big long-term mission (Tesla Roadster, early non-reusable SpaceX rockets). And as Ben writes elsewhere, I think the startup market is highly and obviously inefficient, so efficient market considerations are not very relevant.
Hmm. This argument seems like it only works if there are no market failures (i.e. ideas where it’s possible to capture a decent fraction of the value created), and it seems like most nonprofits address some sort of market failure? (e.g. “people do not understand the benefits of vitamin-fortified food,” “vaccination has strong positive externalities”...)
Yeah, that seems right to me, and is a good model that predicts the existing nonprofit startup ideas! My point is that it seems like a very narrow slice of all value-producing ideas.
To the extent that markets are efficient, that narrow slice is the only slice available (since the ways of creating value for which you can easily be paid have already been exploited).
(This is one reason why I personally am usually more excited about nonprofit startups: the low hanging fruit is usually picked in the for-profit world, but there’s a lot more remaining in the nonprofit space.)
Agree that if you put a lot of weight on the efficient market hypothesis, then starting a company looks bad and probably isn’t worth it. Personally, I don’t think markets are efficient enough for this to be a dominant consideration (see e.g. my response here for partial justification; not sure it’s possible to give a convincing full justification since it seems like a pretty deep worldview divergence between us and the more modest-epistemology-focused wing of the EA movement).
One final thought: If you rank EA ideas on a continuum from “produces no value” to “produces a ton of value,” it seems like the section of the continuum where nonprofit ideas are viable is quite small. Too low and your idea isn’t worth working on. But once you start producing lots of value for the world, stakeholders start to be willing to pay for the solution, and then you can start a for-profit company to do it. So from this perspective, the best EA nonprofit ideas are weird and non-central examples of value-producing ideas—they’re ideas that produce a lot of value but you can’t get anyone to pay for.
Under some ethical theories, the vast majority of stakeholders (nonhuman animals, future persons) are unable to pay in any meaningful sense. Are you more positive about nonprofit entrepreneurship for organizations that serve these stakeholders?
Fair question, and your comment elsewhere (about the narrow slice being the only slice that exists if the market is efficient) was enlightening.
However: my philosophy for startups is that I would nearly always take a different approach to solving these sorts of problems in the world. I would prefer to start Beyond Meat, and try to solve the nonhuman animals problem in an oblique way, instead of attacking it directly by starting a nonprofit. And I think a lot of entrepreneurs think like this as well: look at Elon Musk’s startup strategy—he tends to go for something which has a business/profitability angle from the first version, but with a big long-term mission (Tesla Roadster, early non-reusable SpaceX rockets). And as Ben writes elsewhere, I think the startup market is highly and obviously inefficient, so efficient market considerations are not very relevant.
Thanks! Beyond Meat and SpaceX are great examples.
Hmm. This argument seems like it only works if there are no market failures (i.e. ideas where it’s possible to capture a decent fraction of the value created), and it seems like most nonprofits address some sort of market failure? (e.g. “people do not understand the benefits of vitamin-fortified food,” “vaccination has strong positive externalities”...)
Yeah, that seems right to me, and is a good model that predicts the existing nonprofit startup ideas! My point is that it seems like a very narrow slice of all value-producing ideas.
To the extent that markets are efficient, that narrow slice is the only slice available (since the ways of creating value for which you can easily be paid have already been exploited).
(This is one reason why I personally am usually more excited about nonprofit startups: the low hanging fruit is usually picked in the for-profit world, but there’s a lot more remaining in the nonprofit space.)
Agree that if you put a lot of weight on the efficient market hypothesis, then starting a company looks bad and probably isn’t worth it. Personally, I don’t think markets are efficient enough for this to be a dominant consideration (see e.g. my response here for partial justification; not sure it’s possible to give a convincing full justification since it seems like a pretty deep worldview divergence between us and the more modest-epistemology-focused wing of the EA movement).
That makes sense, thanks!