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

Singapore has unique advantages that could allow it to push the technological frontier

Skunkworks Podcast on Nuclear Fusion

# Is it possible that there are just different scales that value capture can happen on?
# Is it possible that there are just different scales that value capture can happen on
There’s a prevailing thought that  individuals and orgs can capture value from valuable things. Maybe there are some things that are really valuable but that can only be captured at the scale of a nation or humanity.

This would be supported also if you look within organizations, where some of the value is being captured much more or less. You could save a million dollars a year and it wouldn’t affect the junior.

### Related
- [[You need a certain scale for technology development to be worthwhile]]



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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

Most tech transfer offices are not profitable

List of hard things

Pay-it-forward tithing is underrated

Enabling technologies must be developed while doing serious work

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

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

Research requires intrinsic motivation

Can the ARPA model exist outside of the government?

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

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

There are many important innovations that are just bad investments

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

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

ICT Distillation

An Institute for Creative Technology - Riffing on ARPA

IBM spent years creating copper interconnects

ICT Outline

Omniscience is not enough

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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# Skunkworks Podcast on Nuclear Fusion
- Figure out what changed in failed things 
https://overcast.fm/+L_lrnsLCo/27:10

### Published
## Questions
- [[Is it possible that there are just different scales that value capture can happen on?]]
## Thoughts
- [[Leonardo Ideas can be systematically identified]] by revisiting failed but exciting ideas every few years.
- Example of [[List of Failed Things and Dreams that have not yet come to pass]]
## Related
## Authors
## Link



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Many DARPA Programs are multigenerational

Better value capture mechanisms

Profit is important for both practical and ideological reasons

Value capture is for funders

# 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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Frontier tech has bespoke sales channels

Is it possible that there are just different scales that value capture can happen on?

Podcast List

# You need a certain scale for technology development to be worthwhile
Alternative title:
*You need a certain scale to capture the value created by technology development*

Of course, this scale varies by technology.

At the end of the day technology development is expensive. You either need to be creating it for the sheer joy of it or philanthropic duty/satisfaction (which is absolutely a thing but I will ignore that here) or expect that you you will be able to get some benefit from it that is worth the money (or time equivalent of money) that you spent on it. The benefit could be raw ROI or it could be non-monetary. 

This definitely applies to incremental process improvements - if you make something 1% better you need that 1% to be of a very large number in order for it to be impactful. This is why [[Bell Labs was only profitable in conjunction with AT+T]].  

This is also why technology startups want to grow quickly and get big: they can only really capture the value of their technology at scale. 

Even if a technology makes something 10x or 100x better, or even enables entirely new things, you still need to be at a certain scale eventually for it to be worthwhile. Even if you are the only person in the world with an airplane, the amount you would make running your airline service minus the amount of time and money to invent it probably wouldn’t be much more than a non-inventive job if you only have one airplane. But what about patents? For a patent to recompense the inventor scale needs to happen *somewhere* so eventually there needs to be a large entity that is deploying the technology at scale. The need for eventual scale doesn’t have any baring on the initial funding though, but it does connect the initial funding to a belief that scaled deployment is possible. 

The argument is also a post-hoc reason why countries are incentivized to fund research - if you create a new industry (especially one that has to do with national defense), the only entity that benefits from it is the country that plays host to that industry and can tax it (and use its output for defense.) 

Looking a little deeper at countries, the statement ‘countries can capture the value of research because of their scale’ needs a bit of unpacking. If the value is mostly tax revenue then one would expect cities and states to be sponsoring more research. There doesn’t seem to be a reason why a country would be able to capture the value of a new industry more than a city or a state. So either the main reason that countries fund research is for defense purposes or for reasons other than capturing value. 

There is also something about our notion that discovery and invention is a public good. 

### History
It feels like the historical narrative around this is a little muddled. Nation-states only started directly sponsoring research that was not directly associated with the military (like guns) in the mid-20th century. Of course, there are plenty of technologies that are related to the military with varying degrees of directness from better ship-building technology to (arguably) better food production.[^1] Roughly contemporaneously patents seem to have become less useful ([[Patents held back aviation]], [[In most industries outside of pharma and chemicals, patents are a net drag on innovation]], [[Patents have become more BS over time]]) and governments took on much more research funding. One explanation for the latter is that the returns to research are much larger. Another explanation is that WWII showed that 	science has become tightly coupled to defense in unexpected ways so the state needs to have a massive portfolio. Another (unsatisfying) explanation is that the role of governments in funding research is a molten pile of different contingencies that solidified into current practice: a combination of the government taking on a greater role through necessity and ability (Great Depression, WWII, communication technology, etc.), the increasing importance of research to public good generally and to defense especially, the post-WWII science system, cold-war cultural flexing, rent seeking, etc.

It’s also notable that the majority of development expenses are by private companies and the “basic research” is sponsored by the government. 

### Anecdotes
- [[Synthetic Plastic]] Ballard balls are a fun anecdote because like most of these point proving anecdotes, it has layers. Layer one is that the ambitions for celluloid were much less grand than the plastics industry that it eventually became. However, dig one level deeper and you discover that billiards was a *much* bigger deal than it is today - at least one man built a large business around Billard halls. [[The past is a foreign country]]

### Related
- [[It feels like in the past people had smaller scale ambitions for their inventions]]
- [[aroraChangingStructureAmerican2020]]

[^1]: This is where we really need [[The history of technology without any gaps]] so it’s easier to pick out where the roots of different technologies 

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Is it possible that there are just different scales that value capture can happen on?

Is it possible that there are just different scales that value capture can happen on

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