An experiment with innovation on the blockchain.

I should write this essay as an inspiring speech. I should confidently tell you about the new world I’m building with my company, Planck, and how it will change everything. I should show charts, letting you behold the enormous addressable markets that we will conquer.

Unfortunately, I can’t do that here. I’d be standing next to a chart, something like:

From economic historian Gregory Clark’s ‘A Farewell to Alms’.)

“This is a picture of the last time humanity solved a core innovation problem” I’d say (truthfully.)

But as you can see, that’s an addressable market so big that even the most exuberant, skyward-gazing pitch couldn’t discuss it with a straight face. And to make matters worse, I’m trained as an academic. (I must ask, then, that you mentally append some awful clause — let’s go with “according to some, it might be possible that” — to every sentence in the whole article. Thanks in advance.)

But it’s true: as far as economists can tell, the addressable market for innovation itself is perfectly equal to economic growth (per person). This is all the wealth that gets created in the world and it’s somewhere around 5 trillion dollars a year, all due to innovation. New ideas, new knowledge, and new ways of doing things — what economist Paul Romer calls “new recipes”.

Innovation is new wealth. As a result, any project working on incentives for innovation itself has this trillion dollar monstrosity as its market. And yet when I say that Planck is trying to help scale scientific innovation, you probably don’t think about a trillion dollar market.

But science is just a decentralized protocol for innovation — it structures and rewards shared knowledge. And so if blockchain is going to transform innovation, massively scaled open science is probably what it will look like. This has already been unbelievably valuable — imagine if you had to pay a physics tax, or if you had to sum up the wealth that Alan Turing created in the world.

The Industrial Revolution, that historical explosion of wealth we saw in the graph earlier, was a radical shift to open innovation. As economic historian Deirdre McCloskey puts is, “what made our world astonishingly rich” in this period is that:

Poor people such as the blacksmith John Harrison (marine chronometer) or the son of a weaver John Dalton (atomic theory, among other ideas) or the seamstress Coco Chanel (business attire for women) were permitted for the first time in history to innovate.”

But today, growth is slowing among countries at the “technological frontier.” And developing countries are slowing as they catch up. Have we really maxed out innovation, as some economists think? Are there great ideas left to find?

How do we reward innovation today?

Or: the problem with “planting crops is worth nothing; only harvesting matters”

There is a reason why venture capitalists say “Ideas are Worth Nothing; Only Execution Matters.” It’s, first and foremost, a solid joke.¹ But it’s also true in a very deep sense: a shared idea can’t be protected. In Elinor Ostrom’s terms, a shared resource that you can’t protect is a “non-excludable public good”. And this inability to protect valuable, scarce resources produces the infamous tragedy of the commons.

It’s absolutely true then that, conditional on telling the world your ideas, ideas are usually worth nothing. And this is nobody’s fault. The fact is, VCs and Angel Investors focus on execution because the marketplace for ideas has very, very poor economics.