Bridgerton Season.3 & solving for truth by mission investing

Put your money where... you see value.

1. The carriage metaphor applied to groups of people.

When applied to groups of people instead of individuals one might wonder what this metaphor would look like. There is 3 imaginable scenarios:

1. Everyone is on their own carriage driving side by side towards a certain destination, braking away from the pack from time to time to free ride a little off road and then coming back or leaving the pack for good. I would look a little like an army of carriages.

2. An intermediate type of thing, where there is a pack of distinct bigger carriages. For instance, some group within the pack is on one carriage while other groups are on other carriages. Their paths can diverge from time to time but they are re-joining quite often to make sure they are still heading towards the same destination.

3. It is one carriage that carries everybody, headed to one destination. The carriage represents what makes the group of people the group of people (what makes you you). Group identity. The driver is a dynamic element which always manages to make the best decisions, sourcing from whoever (individual or group of people) is on the carriage and has the best chance to get it right at a certain moment in time. Same goes for the left and right balance.

In my opinion the most powerful scenario is the 3rd one. One carriage carries everybody, headed to a specific destination. Now, what changes when comparing a group of people headed to a specific destination with an individual headed to a specific destination?

The different elements and dynamics of the journey explained for groups of people:

Left and right:

To self organize/ recentre a group of people there is 2 options:

1. Create rules which if not respected lead to punishment.

2. Design a network with strong incentives and mechanisms that make people act in a certain way and if they don’t they are worse off than if they do.

I guess you could also do a combination of both but I’m still strongly in favour of the second option. You need to put in place mechanisms that allow the group to self adjust in the same way then an individual would do.

You need:

• The permission to enter or exit the network based on certain criteria.

• Voting: preference voting between multiple options and yes or no voting

• Expression: everyone needs to be able to make their opinions and voices heard if they put in the work

• Resilience through delegation of votes

The carriage:

Building the carriage is essentially getting the network design and the incentives ready and make it so that needs of present and future network participants are continuously met. The best case scenario would be that needs are automatically met while being aware that they are crucial (as I mentioned in the last article). The key to that is automization within the network through a decentralization flywheel. This needs to be put in place and corresponds to building the carriage. Once the wheel starts spinning we are good to go.

Maintaining the carriage: over time someone needs to make sure the carriage is safe and is not breaking down. Some group within the network needs to do that.

Note: If you followed this explanation carefully you might have noticed that this is all applicable to democratic nation states and how they function.

The driver:

Reminder: Applied to individuals the driver has to make sure that:

1. the carriage is fine. Meet all needs.

2. he/she balances between left and right.

3. he/she learns for the sake of learning. Learn about everything there is. Multidisciplinary approach.

Applied to a group the driver is a dynamic element, impersonating the best possible judgement for a given situation or time. This judgement is sourced from the group itself. The group is one large brain. The most difficult thing here is, how do I get the driver to have the best possible judgement? For that we have mechanisms that where described above (left and right).

Therefore, applied to a group of people the driver has to make sure that:

1. the carriage is fine. Decentralization flywheel.

2. he/she balances between left and right. Incentives and network design.

3. the group learns for the sake of learning. Investing all kinds of resources (describe in “2. Investing”)

The road for truth:

The group as an ensemble is learning for the sake of learning. How exactly that comes along and what the mechanism is that comes into play here, will be explained in the investing section.

The difference compared to the individual search for truth, is that there is a reason/ purpose the group initially formed and it seems like this preselects to an extent what truth is or where it could lie. Why and how the group was formed is irrelevant, and honestly no one really knows what’s behind it (intuition, reason ?) Therefore, the only thing that matters to us is how once the group has formed or is being formed it manages to stay on the road of truth.

Obstacles: the obstacles are mostly related to social dynamics. How are groups influenced and what type of dynamics could get an entire group people of road? What we can control is dynamics between people, not what an individual does or thinks (obstacles for individuals). Therefore we need to focus on setting the right parameters for obstacles to be avoided that have to do with social dynamics.

The horses are the missions for a group of people or a network. These could potentially become way larger and significant for humanity as a whole than the ones of individuals. In the same way as for individuals the missions only make sense once the driver is ready, left and right can be balanced out thanks to the driving skills and the carriage is robust and ready for the journey.

The same process as to individuals applies to groups here. The group will find its horses once it is on the search for truth.

2. Investing

a. Investing all kinds of resources

How can an investment network lead to truth for a group of people?

There exists proven mechanisms that encourage people to search for the truth under specific conditions. Jonathan Haidt described the following in “The righteous mind”:

“Accountability increases exploratory thought only when three conditions apply (1) decision makers learn before forming any opinion that they will be accountable to an audience (2) the audience views are unknown, and (3) they believe the audience is well informed and interested in accuracy. When all three conditions apply, people do their darnedest to figure out the truth, because that’s what the audience wants to hear.”

So what he’s saying is that there is confirmatory thought which is a “one sided attempt to rationalize a particular point of view.” In order to find the truth what we need is exploratory thought while making sure we are not drifting back to (or at least try not to) confirmatory thought. To achieve that we need to insert accountability into the equation under specific conditions.

To create these specific conditions think about networks investing all kinds of resources. In every type of network, whether its friends, family, professional or whatever else there is an investment of something with an expectation of a return. Therefore we can generalise that. Within all networks the following applies:

Participants are expecting returns. Investments, whatever the form, monetary or not are asking for returns.

In fact, no one gives money away for no reason, even if it’s out of pity for a homeless person or taxes because you are forced and would go to jail if you didn’t pay. No one gives their time away for no reason, no one gives presents for no reason even if it is just to feel appreciated. The point is there is something. Consider this: What do you have to give? Money, time, knowledge, or other. What do you want in return? Money, improvement of some cause you care about, recognition?

So why does this matter? It matters because within every network participants want to get a return, they are searching for the best way to satisfy some desired return which corresponds to the search for truth within the network. Note that I’m not talking about selfishness, utility maximization or rational decision making. I’m just saying that returns drive the learning within a network which corresponds to the search for truth within every kind of network. What the actual drivers are behind these dynamics is something I don’t know.

b. investing money

Now lets apply this to money. Money is the most impactful social technology there is, without a doubt. It’s not the phone, it’s not the computer, it’s money. It is also the single most demanded thing that individuals or groups of individuals (depending on where you live on this planet) need to survive and strive in this world. It’s power is massive because it is the thing used by people to run the co-living and getting along of all people on this planet. It is the most important behavioural incentive there is. The more we are becoming connected, the more power full it becomes.

So now there’s also a big fat problem that appeared from this money lead world over time.

The old system:

In the current (slowly become old) system what we need to understand is the “machine”. Originally the machine emerged with the goal of connecting households and companies. Households need/want products and companies want money to make their products. Overtime the machine has lost its way, it has become the focus of activity and innovation instead of better fulfilling the job it was intended to do.

The machine is a mix of people and incentive designs. The person who understands and/or can influence the machine the best is winning. It’s as simple as that.

full representation of the machine

The newer system is based on distributed consensus and decentralized networks. This network based approach offers the possibility to slowly over time create a new version of the machine that ultimately changes the game that is being played. This also means that some players will be replaced while other simply disappear and completely new ones emerge. It’s a different game where different skills and different characteristics than previously will make you succeed.

For instance, one change is the possibility of people being able to allocate money to things that actually creates value for what they perceive to be valuable and make the same returns as people focusing primarily on the machine. Value first, machine second instead of machine first (guaranteeing returns), value second (side effect). Both scenarios creating the meaningful returns.

In the current system the mechanism coming the closest to that (value first, machine second) corresponds to people paying taxes and the government subsidizing companies or projects expecting a return on investment through increased productivity, gdp growth, strategic geopolitical advantages, job creations, etc. In fact you see that in the US this worked for the internet and Elon Musk and his companies for example. The problem is that people don’t choose where the money is allocated, it is the government. And how can one government really satisfy the desired value creation and expected returns of all its inhabitants accurately and proportionately to their desires?

Decentralized networks/ the newer machine have the potential to take the best of governments and the old machine: connecting peoples money and companies while giving people the choice to allocate their money based on what their individual believes are about how and where value can be created.

Dynamics within the newer system:

How do people find direction within the newer system?

Currently, they simply don’t. Currently people are running free getting pulled and pushed in every direction. People who want to can influence other people’s opinions, believes and therefore actions and investments. It’s a mess.

The way it should be is what I call mission driven investing because it gives people the freedom to allocate money based on their own believes but at the same time gives directionality and is a vehicle getting you, your values and your money to an actual destination.

Mission driven investing, a brief intro:

How we should find direction within the newer system?

The network starts with a vision of where it aims to go or more accurately, where it wants humanity to go, in other words, where it sees value. This vision is the most crucial aspect from the beginning on. Over time this vision will change based on decisions taken by network participants and changes outside of the network. This changing vision is crucial and will be the north star of the entire network. Within this vision, the network and outside participants will be able to propose missions which can be adopted by the network or not. These missions don’t have a clearly defined path, in fact they must have obstacles in the way of achieving them otherwise they are not worth pursuing. Overcoming these obstacles represent specific goals that parts of the network will be pursuing. These obstacles can be of different nature and require different kind of solutions such as technological, social, organizational and/or political innovation. The more expertise the network gets overtime the more ambitious the missions it will be pursuing become.

Finally, investment networks need to focus on other things now, not the machine of the current system but people dynamics and group dynamics and how people would decide to allocate their money. Using that approach we are able to create investment vehicles fitting the newer system’s characteristics and new approaches towards value creation and returns.

3. Building a new investment vehicle

Next post.