# Does the money factory need to necessarily be one organization?
* [[Conversation with Daniel Windham 31/10/2019]]
* [[Innovation orgs need to be aligned with their money factory]]
* [[Is it essential that a research org is a small fraction of the money factory’s budget?]]
          


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The Idea Factory

How does money work in PARPA?

ARPA became DARPA in 1972 because of the increased scrutiny on military spending both in the government and outside of it

Regulation drove many of Bell Labs’ actions

The incentives inherent to corporate R&D mean that researchers motivated by money leave and those who are motivated by glory are not the best in the world

Bell Labs is one of the few examples of an innovation org that was aligned with its money factory

“The System” of AT&T

There are many tight feedback loops built into the ARPA model

Philanthropies can easily become misaligned with their money factories

Expensive research needs to address an existential threat eventually at an organizational level to maintain support

Healthy corporate R+D requires a trifecta of conditions

Philanthropies are forced to show consistent short term progress

National labs and other government research centers are a research alternative to universities

AI research is an exception to the decline of corporate R+D

Organizations can get incomes via Contracts, budgets, or products

All the work at Bell Labs needed to tie back to the system

Bell Labs and AT&T had timescale alignment

Breakthrough fundamental science

DARPA’s primary purpose is to develop military technology

An Institute for Creative Technology - Riffing on ARPA

Does the money factory need to necessarily be one organization?

The shift of Pioneer to be a remote accelerator is a case study for the incentives around monetization

Who is paying the bills?

# Innovation orgs need to be aligned with their money factory
Aligned incentives are the only thing that will enable the innovation org to not have crushing oversight and be able to work on long-term projects. [[Playing the same game is the only way people can align for extremely long time scales]] so if the innovation org is going to survive long term, it needs to be playing the same game as the money factory. It can get away with diverging for some time, but it’s always finite.  [[Alignment between people playing different games can happen on finite time scales]]. The alignment also needs to be clear to the people who control the money and be on a timescale that’s acceptable to them. So while fundamental research might be in the long-term interest of the United States Government, the timescale that matters to most politicians is their term in office. 

 [[Bell Labs is one of the few examples of an innovation org that was aligned with its money factory]].

The more fund-strapped the money factory is, the tighter the alignment needs to be. When AT&T, Microsoft, or Google are flush with Monopoly money they’re happy to let people dick around on whatever. When stocks dip, the first programs to be cut are the ones that have the least plausible ties to the core product. [[Expensive research needs to address an existential threat eventually at an organizational level to maintain support]]. Similarly [[ARPA became DARPA in 1972 because of the increased scrutiny on military spending both in the government and outside of it]].

### Related
[[Principles for Innovation Orgs]]

## References




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§ARPA model

DARPA is ~0.5% of the Department of Defense Budget and ~12% of that is basic research

# Is it essential that a research org is a small fraction of the money factory’s budget? 
[[DARPA is ~0.5% of the Department of Defense Budget and ~12% of that is basic research]]. Similarly, other storied research organizations tend to be attached to large ‘money factories’ and represent a small fraction of their budget  - at its height, Bell Labs’ budget was 5% of AT&T’s budget. By contrast, my sense is that even well-capitalized independent research-focused organizations feel constant pressure that can impede long-term research efforts.  Now, plenty of corporate labs produce nothing of note, so being attached to a larger money-making organization is certainly not sufficient for producing long term results but it’s important to understand whether it is necessary.  

* [[Conversation with Daniel Windham 31/10/2019]]


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