There is a significant class of innovations that would create drastically less value for the world if their value had been captured by their creators

It is hard to capture value from research

There are many questions and issues with the idea of pay-it-forward tithing

# Better value capture mechanisms
[[Current value capture mechanisms are crude]] so people have suggested many alternatives. 

People have suggested many ideas:
- Even with current laws, [[Value capture does not always need to happen through IP]] - people could couple non-exclusive licensing with consulting.
-  Better IP mechanisms that don’t depend on monopolies or have shorter monopoly periods or in which the state buys out the IP. [[Radical Markets]] could be seen as an extreme version of this, where every piece of IP has to be “rebought” by its creator at a market-set price.
- Something resembling income-share agreements with promising scientists is a version of this suggested by [[Laura Deming]].
- The crypto people ambiently talk about ‘research on the blockchain’ where you can track every idea that eventually goes into a product back to its originator and reward them.
- Prizes
	- [[Prizes as an alternative to patents - Wikipedia]]
	- [[Prizes, not patents]]

Better value capture mechanisms are the same as better ways to price positive externalities ( [[Heuretic generation has a lot of positive externalities]]!) and the mirror of better ways to price negative externalities. 

### Related
- [[Market failures are coupled to externalities]]
- [[Technology increases the number of externalities in the world]]
- [[A technology company is a package of human capital and IP]]



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Most tech transfer offices are not profitable

Value capture does not always need to happen through IP

Creations whose impact depends on being public generate uncertain value through not-particularly modular combination with many other things and have a large combinatorial surface area

A normal for-profit structure would hamstring an ARPA-riff

Better value capture mechanisms

Profit is important for both practical and ideological reasons

It is nebulous a priori which research should produce public goods vs private goods

PARPAs ideal legal structure comprises both a nonprofit and a for profit

ICT Distillation

ICT  Reviewers

ICT Outline

Omniscience is not enough

# Current value capture mechanisms are crude
The direct ways to capture the value from research are to patent[^1] it or build a product around it (and leverage trade secrets.) Other possibilities are more indirect and ‘credit based’: consulting, speaking fees, or leveraging reputation to get more lucrative positions later.

### Patents
Patents require an expensive application that can take years to process, lawsuits to enforce, and effort to monitor for violation, and lead to an extremely illiquid market. On top of that, there is tons of valuable work that just isn’t patentable.

Capturing value with a patent is often inefficient. In an ideal situation, someone building a product that incorporates the patented process comes to you, the two of you negotiate a licensing deal, and they send you a check every year. The world is not ideal. Often, you need to *find*people who are violating your patent and threaten to sue them if they don’t pay up. Standard lawyer advice when building something is to *not* look for prior art because it decreases your liability in case you happen to reinvent something. Even if someone *does* come to license your patent, the negotiation over licensing terms can be brutal - there are no standard terms and especially for a startup it can create a drag chute on a product’s profitability that makes an already hard job even harder. Once the licensing agreement is signed, you still need to make sure that the company is paying you the royalties you’re due and sue if they’re skimping you. Many inventors have spent a lot of their lives in court over patents and sometimes wind up dying in the gutter in spite of that. 

It’s worth noting two historical facts about patents that shed some light on their limitations.  [[Patents have become more BS over time]]. On top of all of that, patents weren’t even created as a value-capture tool for discovery or invention.  Instead, patents started as a way for monarchs to increase their income without going through Parliament by granting temporary monopolies.[^2] Of course, the modern patent system is explicitly meant to incentivize innovation so this might be nothing more than a cool anecdote. 

Additionally, [[Patents inherently prevent a piece of IP from being combined with other knowledge]].  The combination-preventing nature of patents is particularly problematic if you want to use them to try to fund work to address gaps in work on processes and systems (which naturally require technological combinations). <[[In the past, corporate labs filled a particular niche in the innovation ecosystem]]>

### Products
The first reason products are a crude way to capture value from research is that most modern products are an amalgamation of different technologies and designs. So while a piece of research may have vastly improved a component, that doesn’t necessarily translate to a vastly superior product. 

Second, products are inherently coupled to companies, so the success of a product (from a value capture standpoint) is inherently tied to the success of a company. This coupling means that there are many other factors that affect the product’s success besides the product itself (let alone the research-based piece of it). Markets, sales channels, margins, fundraising, perception, etc. all make or break companies independent of their products.  [[The best technologies don’t always win]] is an adage for a reason.

“But unique new technology creates a moat that will make the company successful!” Jerry Neuman’s article,[[Productive Uncertainty]] argues convincingly against pure-technology with the idea of “excess value” an invention would produce for a startup. 
`If a moat exists prior to the startup being founded (say, a patent) then, absent uncertainty, this patent could be sold for at least as much as the startup could garner from it.` 

More broadly, value capture through products force innovations to be subject to either [[§Startup Constraints]] or [[§Corporate R&D Constraints]]. None of this is to say that products are a *bad* way to capture value, only that they are subject to many constraints and contingent requirements that mean that the correspondence between valuable technologies and technologies whose value can be captured by a product is weak. 

### Related
- [[Michael nielsen re david d value of creative work twitter]]
- [[Patents held back aviation]]

[^1]: I’m going to just talk about patents but the same arguments apply to both
[^2]:Anton Howes <[[Age of Invention- How to Build a State]] >






Bell Labs was only profitable in conjunction with AT+T

Legal structures are intimately tied to the question of how money works in an organization

It is especially hard to capture value from externalized research

Things that are not paper-worthy enough for academia and not product-focused enough for a startup

Can the ARPA model exist outside of the government?

Research requires massive intrinsic motivation

Pay-it-forward tithing is underrated

The work at Bell Labs that was most valuable to AT+T and the work that was most valuable to the world was fairly disjoint

Profit-maximizing organizational structures can hamstring technologies whose impact depends on them

There are many important innovations that are just bad investments

Enabling technologies must be developed while doing serious work

An Institute for Creative Technology - Riffing on ARPA

Research Blockchain

# It is hard to capture value from research
Abstractly, a lot of research tends to resemble a public good. (See [[Scientific Knowledge as a Global Public Good - Contributions to Innovation and the Economy]].)  Technically, knowledge is a non-rivalrous good. Your knowledge of airplane building does not prevent me from knowing how to build an airplane. Once knowledge is no longer secret, it generally becomes non-excludable as well. These properties make the outputs of research look a lot like public goods by default. 

[[Value capture is important for incentivizing and funding research]]. The primary way to capture the value of a public good is to privatize it. [^1] However, privatizing research is tricky. [[Current value capture mechanisms are crude]] - to capture value from research, you need to either patent it *and get paid* or build a product around it. Researchers and research organizations can also indirectly capture some of the value through credit and status that can convert to consulting gigs and speaking fees. Let’s walk through the challenges with each of these mechanisms.

### Patents
 Patents only apply to research that directly goes into a product - often there is a lot of work (and failures) by *different people* that leads to the patentable research. [[We stand on the shoulders of too many giants to give them all credit]] so it’s hard for people who pave the way for research to get a kickback from patents. Large R&D labs amortize some of this work, but the modern system of startups and academia fractionalizes the work and weights the rewards towards the people at the end of the chain, for better or worse.[^2] Research often needs to be combined with *other* research to create something really valuable. Often patenting terms are so rigid that the cost of licensing multiple patents to develop a new product kills it in the cradle. [[Patents inherently prevent a piece of IP from being combined with other knowledge]]. 

 Finally, capturing value with a patent is often widely inefficient. In an ideal situation, someone building a product that incorporates the patented process comes to you, the two of you negotiate a licensing deal, and they send you a check every year. The world is not ideal. Often, you need to *find*people who are violating your patent and threaten to sue them if they don’t pay up. Standard lawyer advice when building something is to *not* look for prior art because it decreases your liability in case you happen to reinvent something. Even if someone *does* come to license your patent, the negotiation over licensing terms can be brutal - there are no standard terms and especially for a startup it can create a drag chute on a product’s profitability that makes an already hard job even harder. Once the licensing agreement is signed, you still need to make sure that the company is paying you the royalties you’re due and sue if they’re skimping you. Many inventors have spent a lot of their lives in court over patents and sometimes wind up dying in the gutter in spite of that. 

### Products
 In order to capture research value through a product, the research needs to make a single product (significantly?) better than its alternatives. If it’s modular enough that it can easily be sold and incorporated into many other products, that’s still just a product. Products rarely succeed on the quality of their new technology alone. 

Additionally, products are coupled to companies so there are many other factors that affect the value captured by the researchers besides the research itself, or even the product. Markets, sales channels, margins, fundraising, perception, etc. all make or break companies independent of their products.  [[The best technologies don’t always win]].  

This is all to say that just as it’s a long and windy road *to* a productizable piece of research, it’s also a long, windy, and narrow road to successfully productizing that research. Arguably, the work to productize the research is equally or more valuable than the research itself. 

A side note: Pharmaceuticals are unique in their productizability. It’s easy to trace new molecules back to the scientists in the lab and those molecules are patentable. Drugs demand is relatively little work to go from research to a product. You don’t need to worry about design, usability or specific use cases when taking a drug to market.  Scaling, manufacturing, and tweaking are of course hard and should not be ignored. If the drug does what it says there is close to zero market risk - people don’t like to die. The intertwined standardized FDA approval process combined with the Pharma-insurance complex means that there is almost no channel risk either. This is all to say that pharmaceuticals might not be the best exemplar for capturing value from research. 

### Indirect Value Capture
 Researchers can also capture value from their research by consulting with companies who could benefit from that research, getting speaking fees, selling books, and just generally acquiring social status. While in ways this can be good because it encourages people to spread knowledge as far and wide as possible, those same forces also incentivize exaggeration, sensationalization, and at worst, falsification (see: replication crisis.) It also pushes research to try to grab all the credit for themselves - instead of trying to create a monopoly on the research itself, researchers can capture monopoly rents on research credit. [[Value capture does not always need to happen through IP]].

### Is uncapturable value actually valuable? 

One could make the argument that if a piece of research doesn’t lead to a valuable product or patent then it isn’t valuable itself. While [[Someone needs to buy manufactured technology eventually in a monetized economy]], there are *many* pathways by which research can eventually end up in those products. Some of those pathways might enable researchers to capture value with [[Better value capture mechanisms]](science coin!) I would argue that the value of other pathways are inherently uncapturable.

There are many pieces of research that would make many products a little bit better but not enough to be worth the overhead of a patent and licensing, and they aren’t modular enough to be a product in and of themselves. Imagine a manufacturing tweak that saved thousands of companies $100 over many years. Valuable, but not enough to license on either side. This situation might be remedied by better mechanisms. 

Some impactful research resembles [[Problems where it is easy to know whether an answer is correct but hard to get to that answer]].  This situation applies to a lot of design work and best practices. Arguably you could patent these, but the work to hunt down and sue everybody who used it would require massive resources and perhaps just lead to people taking the hit and not using it in the first place. It’s questionable whether better mechanisms could help here, though you could make an argument that in the same way that the iTunes Store drastically decreased piracy, better mechanisms could make it easier to give kickbacks. 

[[We stand on the shoulders of too many giants to give them all credit]] - research often follows circuitous routes and sometimes it’s not even clear who you’re building on or you are separated though so much time that it’s impossible for them to capture some of the value they create. If you build a product with the help of a fifty year old paper, do you give some royalties to the author’s heirs? 

While it’s not strictly uncapturability, [[There is a significant class of innovations that would create drastically less value for the world if their value had been captured by their creators]]

There’s also just a lot of value that doesn’t turn into money. How would even the most sophisticated IP mechanisms have made [[Norman Borlaug]] a bajillionaire? 

While better value capture mechanisms may help, we also need better social technology ([[Pay-it-forward tithing is underrated]]) to fund and reward research that is truly a public good. 

### Related
- [[Patents have become more BS over time]]
- [[Do patents work better when firms are smaller or more uniform size?]]
- [[Market failures are actually failures of the existing institutions to allow markets to work]]
- [[Market failures are coupled to externalities]]
- [[§PARPA]]
- [[Michael nielsen re david d value of creative work twitter]]
- [[Is it possible that there are just different scales that value capture can happen on?]]
- [[You need a certain scale for technology development to be worthwhile]]

[^1]: [[Value capture is a utilitarian fantasy]], but it does encapsulate a lot of practical concepts around incentivizing and funding things that I (and hopefully many other people) want more of in the world. 
[^2]: [[Research should be treated like infrastructure]]



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Decoupling from market discipline is like cave diving

Technology increases the number of externalities in the world

Heuretic generation has a lot of positive externalities

What is a market failure?

# Market failures are coupled to externalities
Market failures happen when individuals either do not do a beneficial activity because they cannot capture enough value from a positive externality or they do too much of a detrimental activity because they are not responsible for a negative externality. 

There is a lot of focus on the negative externality piece of market failure:
- Tragedy of the commons
- Pigouvian tax



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Prizes as an alternative to patents - Wikipedia

Why doesn’t ARPA use prizes instead of grants?

Tyler Cowen | Talks at Google | Prizes

# Prizes, not patents
- Patents are based on restricting use of knowledge
- Patents grant temporary monopoly power
- Patents make new medications more expensive because the drug makers need to recoup their costs
	- ::Do patents make other new things more expensive?::
- Governments already pay cost of developing drug indirectly through prescriptions
- Prize fund wouldn’t replan patents, just In areas where what’s needed is well known
### Published
2007
## Questions
## Thoughts
## Related
## Authors
- [[Joseph Stiglitz]]
## Link

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A system that replaces grants with prizes and and loans with prize winnings as collateral

# Prizes as an alternative to patents - Wikipedia
Pushed by [[Joseph Stiglitz]] 
Supported by Bernie Sanders - two bills to have prize funds for drug manufacture
[[Gates Foundation]] enforces that anybody getting a grant from them needs to waive all claims on patents

### Criticisms
Prizes 

### Published
## Questions
- Who pays for the prizes?
- How much money are patents worth?
## Thoughts
## Related
This is an implementation of [[Top down problems and bottom up solutions]]
Cites: [[Prizes, not patents]]
## Authors
## Link
[Prizes as an alternative to patents - Wikipedia](https://en.wikipedia.org/wiki/Prizes_as_an_alternative_to_patents)

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Individual rights conflict with societal progress

Hayek Suggested that the ideal government would minimize coercion

# Technology increases the number of externalities in the world 
If you think of liberalism as endorsing the idea that you can swing your fist wherever you want as long as it doesn’t hit anybody’s nose, increasing human agency is effectively increasing the length of people’s reach. Technology enables people to do more things that step on other people’s toes but at the same time it also enable to do things that other people can ride off. Technology increases the number of externalities in the world, both positive and negative. 

- Trains allow people to move faster, but create noise and require contiguous amounts of land. 
- Lots of technological infrastructure requires a critical number of people using it to make it worthwhile
- Internet satellites allow people connectivity everywhere but brighten the sky
- Coal power plants produce cheap electricity but create air pollution
- People doing scientific research can’t capture all the value that it creates
- The internet enabled open source, which has massive positive externalities
- Introducing new technology creates benefits and destroys jobs 
- CO2 

The issue with technological externalities is that their value or cost is [[Nebulous]] and hard to measure. [[Many things cannot be measured well]]. This attribute makes it extremely hard to have a consistent way to deal with them. 

None of these technologies existed when classical liberalism was created.  [[Classical liberalism arose in an environment that no longer exists]]. The extreme version of liberalism isn’t viable in a world where new externalities are constantly changing, increasing, and subject to interpretation. 

There aren’t many mechanisms to address externalities (reduce or force payment for negative externalities while encouraging positive externalities) except through governments. So pure technological growth may account for some of the fact that [[Regulations have increased by an order of magnitude]]. 

### Related
- [[Tradeoffs]]
- [[Robert Coase]] 
- [[Market failures are actually failures of the existing institutions to allow markets to work]]
- [[Market failures are coupled to externalities]]
- [[Regulations slow down technological advancement]]
 
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Pay-it-forward tithing could resolve the tension between the potential public-good and potential profit in research.

# There are many questions and issues with the idea of pay-it-forward tithing
### The State is a looming question around tithing
In many people’s minds, our taxes (which are much more than 10%) have taken the the place of the tithe. Indeed, historically states were often the collector and distributor of tithes. Ideally, taxes would serve the purpose of a tithe administered by the state, going to the things that people would want their tithes to go towards. However, pragmatically this is not the case. 

I don’t have a good answer to the government question, but I don’t think that the current situation, where everybody is basically fighting to control where everybody else’s money goes is going to change any time soon. I’m going to avoid a huge, tangled, and centuries old question about the role and spending priorities of the state and treat it as a fixed sunk cost. Instead, pay-it-forward tithing could extend the fairly uncontroversial[^1]  line of thinking that asserts that it’s good that extra-governmental nonprofits and charity exist. If research inevitably leads to public goods and there are flavors of it that the government isn’t supporting it should fall into that same line of thinking. 

### It would be easy for bad actors to exploit the system
People could use tithe money to do work that impedes progress through excessive efforts to capture value (like patents and lawsuits) and then don’t tithe any of their own profits. 

However, the ‘bad actors can take advantage of it’ argument is true for almost any cultural movement. Additionally, by default, research-generated knowledge tends to diffuse through people inevitably sharing or starting their own organizations unless it’s stopped by legal structures like patents or regulations. 

### People are terrible at evaluating the quality of research
Tithing is absolutely not a way to “optimally” fund research. There will be potentially wonderful projects that wither on the vine and steaming piles of shiny nothingness that get funded. 

However, it’s not clear that current funding methods are much better than track-record and hype-biased randomness. At the very worst, pay-it-forward tithing would make that randomness less correlated. In a more likely scenario people would defer to well-informed friends or organizations like GiveWell would emerge. Of course, it is possible that we would end up in a situation where money just went to the new hotness like resonating water in a bathtub. 

### We should change institutions to allow markets to work instead of depending on charity
The idea that what we should be doing is building ‘markets for everything’ takes the assertion that [[tensions]] to the extreme. [[Current value capture mechanisms are crude]]. There is definitely some ideological appeal to this way of thinking: it feels fair that everybody who creates value should be rewarded for it. On the practical front, the possibility of profit can rally many more resources than the goodness of hearts and markets are the most efficient way we know of to coordinate large numbers of people who don’t know each other. Versions of this line of thinking suggest different [[Better value capture mechanisms]]

I find all of these ideas appealing, but I do not think that they can be the only solution because of the sheer illegibility and [[Nebulous]] ity inherent in research. Dig into the history of any innovation - even one that’s been cleanly attributed to one person - and you will see that there were other people involved, prior ideas they built off of, infrastructure and resources they utilized. It’s a fractal mess. Where do you draw the line? Should the neighbor who had a cross-fence conversation about a process she uses at work that sparked the realization that led to the invention capture some value? She was certainly instrumental to its success. What about the technician who knew how to twist the wire in just the right way to get the first proof-of-concept to work?  [[We stand on the shoulders of too many giants to give them all credit]]. And what about all the failed projects that left a pile of skeletons indicating where the traps were? [[Many things cannot be measured well]]. Maybe there is a way for a market to account for all of this, but I cannot conceive of how. 

### Related
- [[Could DARPA have a positive return?]]
- [[Market failures are coupled to externalities]] 
- [[Technology increases the number of externalities in the world]]
- [[There is a significant class of innovations that would create drastically less value for the world if their value had been captured by their creators]]

[^1]:Even, I believe, in most authoritarian and socialist regimes.



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A new structure for scalable research

How does money work in PARPA?

Venture capital doesn’t work for things that only realize their value on long timescales

Regulation drove many of Bell Labs’ actions

Innovation orgs need a money factory

Productive Uncertainty

Could DARPA have a positive return?

PARPA could walk the line between profit and non profit

Value capture is a utilitarian fantasy

People don’t invest in technology, they invest in businesses

Inverting the normal relationship between an R+D organization and is money factory may enable new classes of activities

Key differences between FROs and different research axes

The Thiel Fellowship is a good case study of creating value by not trying to capture it

There’s lots of money out there … for good investments

# There is a significant class of innovations that would create drastically less value for the world if their value had been captured by their creators
Even if [[Creations whose impact depends on being public generate uncertain value through not-particularly modular combination with many other things and have a large combinatorial surface area]] we are still left wondering “how common are these creations, actually?” People trying to capture the value from their creations have generated *massive* value in the world, so maybe anything else is a corner case.  

This argument is focused on work that you could *conceivably* privatize and use to drive a for-profit organization. There is also a whole separate class of work whose value is just hard to capture. [[It is hard to capture value from research]].

### Empirical Approach 
*Note*: There are two glaring problems with the empirical approach. First, we cannot go through *every* technology so there will be inevitable cherry-picking. Second, [[Counterfactuals]] are hard. There is no way to ‘prove’ that a technology would have had more or less impact if it were public or private. With these problems in mind, the empirical approach is probably most useful to try to *disprove* the assertion that there is a non-trivial set of heuretics whose impact depends on being public. If the disproof feels weak, that is perhaps the best empirical evidence for the claim. 

One of the strongest pieces of evidence that private innovations alone can carry the torch of progress forward is the innovation ecosystem of the late 19th and early 20th century. It was an age of massive technological change ([[Vulcanized rubber]]! [[Automobiles]]! [[Airplanes]]! [[Electricity]]! [[Telephones]]!) - almost all created by private for-profit companies. 

Arguably, many of these innovations only hit the mainstream when the component technologies became public knowledge. There was an explosion of car patents in the 1880’s and 1890’s and an explosion of car *production* in the 1900’s and 1910’s, roughly tracking a patent’s 20 year lifespan. Of course, this could be completely correlational and the time gap between invention and diffusion is just how much time was needed for learning-by-doing to happen.  Anecdotally, it’s telling that safety glass was patented in 1905 and became standard equipment in 1926.  

None of these technologies were complex enough that you couldn’t basically figure out how it works by taking it apart nor did they require up-front capital costs inaccessible to individuals without institutional backing. That means that almost by default the technologies became public knowledge as soon as it was sold. The sufficiently low cost and complexity combined with the cost of acquiring and enforcing patents in multiple countries at once meant that while private, for-profit organizations were creating the technology, it was virtually impossible for a single organization to blunt its impact across the whole world. 

Each of the ‘charismatic’ technologies we think about from the late 20th century were “final goods” with relatively small functional surface area. Additionally, these technologies could become good enough to have *some* market with relatively low-complexity component parts that could be created in-house. In situations where those component parts were artificially private thanks to patents (like the Wright brothers’ patent on coupled wing-warping/rudder control for airplanes) the invention’s impact was (arguably) heavily suppressed until it was made public. [[Arguably patents held back the airplane industry]]. 

The upshot is that almost no Industrial Age technologies meet the criteria that we would predict should lead to being hamstrung by being private.  Strictly enforced patents on the technologies that approach the criteria (like airplane control) did hamstring impact in the US where the patent was in effect. 

So which technologies would meet our criteria and were they public or private? The age of chemical engineering, especially process innovations, that began in the early 20th century seems like good hunting ground. Chemicals and the scalable processes to make them are rarely a final product and can be tuned for many different purposes. 

The [[Haber—Bosch Process]] is one of the most charismatic chemical processes. It also turns out to have been made public through a non-exclusive license at gunpoint. From [[Enriching the Earth]]:
`The first transfer of the Haber–Bosch process abroad was a result of the Versailles Treaty, which the defeated Germany had to sign in 1919. By its terms, BASF was obliged to license construction of an ammonia plant with an annual capacity of 100,000 t in France. `

It would be an entire (worthy!) research project to discern the licensing practices around other chemical processes. However, skimming through the history of the heavy hitters, there seem to be repeated references to multiple companies bringing them to market. ([[Not Counting Chemistry: How We Misread the History of 20th-Century Science and Technology]].) Additionally, a significant chunk of the work still ended up in academic papers instead of patents, whether it was being done in universities or industrial labs. (See [[The decline of science in corporate R&D]]) The number of corporate-lab published papers suggests that at least more of the steps leading up to an innovation were public than today.

Another piece of anecdotal evidence is that before  [[The relationship of government, academia, and technology fundamentally changed in 1980 with the Bayh-Dole act]], it was hard to have exclusive license rights on federally funded research. The default flipped after 1980 to a default state where research institutions by default had exclusive rights to the output of federally funded research. 

The computer age is littered with confirmational anecdotes. [[Alan Kay]] argues that the technologies created in [[Xerox PARC]] have created trillions of dollars in value. Imagine a world where Xerox sued the living daylights out of any product that used a mouse or a GUI. I suspect the mouse and GUI would have created much less value in that world. 

Counterfactually, what would have happened if AT&T were not required to license for free all of the non-telephone patents at Bell Labs? Two plausible scenarios could have happened: Either AT&T would have had a monopoly on the semiconductor market or  [[William Shockley]] would have had an exclusive license to the technology. In the former situation, it’s likely that semiconductors would have been treated the same way as most technologies tangential to a core line of business historically have been: marginalized and deprived of the chance to live up to  its promise. An eternally expensive piece of military equipment. Considering the latter scenario, consider that Shockley was a notoriously terrible manager and Shockley Semiconductor went out of business in 1968. The traitorous eight would never have left, so Shockley Semiconductor might have persisted, but would the innovations that came out of Fairchild have happened? Would [[￼Hoerni’s Planar Process]] have been created and adopted in either situation? Poor management is great at killing weird paradigm-shifting ideas. 

How much value has Linux created? If Linus Torvald were trying to capture the value it created, how would Linux have been anything other than a shitty version of windows?

### Conclusion
Many ideas have massive impact *because* people can copy them without paying their creator.  Any mechanism for capturing value has more or less built-in friction. This friction can limit the diffusion of innovations. 

The strong argument in favor of trying to capture value is that value capture is what incentivizes and funds innovations in the first place.  Value capture is not a binary “either you capture all of the value or none of it” but a question of how much of it you capture and how you capture it. Arguably Google (and many other companies) have created much more value than they have captured and may have created *less* value if its creators hadn’t tried to capture that value. [[tensions]]. However, these companies generally are not making their money off of innovations with large surface area that generate uncertain a priori value through not-particularly modular mechanisms. [^1][[Creations whose impact depends on being public generate uncertain value through not-particularly modular combination with many other things and have a large combinatorial surface area]].

 [[Current value capture mechanisms are crude]] - patents are legal monopolies and create limits by definition. [[Better value capture mechanisms]] could create a world where any innovation could create as much value as possible *and* its creators could be rewarded. 

I don’t disagree that we need better value capture mechanisms, and perhaps its a failure of imagination but I don’t know how you can’t have value capture without introducing *some* friction into the system in order to track contributions and forcibly extract money from people who are keeping more than fair share (the equivalent of suing someone who isn’t paying the licensing fees on a patent.) 

Given these considerations and the fact that this class of innovations seems to become more prevalent as the complexity of technology and its dependence on research pipelines increases, it seems clear that there is an unfortunate tradeoff between impact/value created for the world and value capture at the technological frontier. 

## Big List O’ Case Studies
### Public things where the counterfactual is probably less impact
- The semiconductor
- ARPA net
- GUI
- GPS

### Private things where the counterfactual is probably more impact
- CRISPR
- SABER engine
- APM
- GPT3

### Public things where the counterfactual is probably more impact
- Rockets (?) 
- OpenBCI

### Private things where the counterfactual is probably less impact
- Li-Ion batteries
- Google Algorithm
- Xerox copier

### Related
- [[It is especially hard to capture value from externalized research]]
- [[It is hard to capture value from research]]
- [[It is hard for a private ARPA to capture value without hamstringing impact]]
- [[Value capture does not always need to happen through IP]]
- [[We stand on the shoulders of too many giants to give them all credit]]
- - [[Venture capital doesn’t work for things that only realize their value on long timescales]]
- [[Technology increases the number of externalities in the world]]
- [[Profit-maximizing organizational structures can hamstring technologies whose impact depends on them]]
- I bet [[Anton Howes]] has opinions about this 

[^1]: Ironically, Google may be an outlier here because of billions of eyeballs + ads.



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Many DARPA Programs are multigenerational

# Value capture does not always need to happen through IP
The classic non-IP way to capture value is a trade secret. Trade secrets only work if you can ensure that the idea remains secret. So trade secrets aren’t an option for research coming out of labs where people are incentivized to publish. It’s also an unstable equilibrium because someone else can patent it and then stop you from using your own thing.  Trade secrets at the end of the day are another way to create a monopoly. 

[[Mick Stadler writes a letter in 1976 on effective transfer mechanisms]] brings up another possibility that actually depends on as many as possible using a piece of research. If you issue a non-exclusive license or no license at all, the inventors can capture a lot of value by consulting with companies who are using the thing. 

Why don’t people do more non-exclusive licensing? I could make up some reasons: the value from an exclusive license can be exponentially larger than a non-exclusive license with several licensees. It’s more work to create many deals around a non exclusive license than a single deal around an exclusive license. Companies want new technology to give themselves an edge over competition and a non-exclusive license doesn’t do that. 

What other options are there?

### Related
- [[It is hard to capture value from research]]
- [[It is hard for a private ARPA to capture value without hamstringing impact]]
- [[A technology’s value is relative to the amount of value it unlocks]]
- [[Is it possible that there are just different scales that value capture can happen on?]]
- [[Manage the Transfer not the Technology]]
- [[Context is important and underrated for knowledge transfer]]
- [[Current value capture mechanisms are crude]]



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Ben's working notes

Better value capture mechanisms

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