This is true, but the reason success rate falls as more people found companies is that you’re drawing in founders creating marginally-less-good companies, who fail in part because creating successful high value companies is hard.
You can make it easier or harder by varying a lot of factors, which is why different cities and countries vary so widely in startup-companies-per-capita and unicorns-per-capita. Once you set those parameters, yes, I’d expect failure rates to fall into a stable equilibrium.
Also: some companies that are failures from the POV of startup investor needs and goals end up being perfectly fine small and medium size companies that can generate stable revenue but will never become unicorns.
I do agree that equilibrium dynamics mean that the failure rate is not fixed, and that this is underappreciated.
But, if the investors judge that the payoff of AI safety lab success would be above average, they should be willing to invest more and accept above average failures rates too. Failure rate increases with additional investment, and investment should increase until expected returns even out across options for further investment.
The harder a problem is, the higher the expected failure rate at any given rate of investment at any given point in time, and the investment won’t happen until and unless the expected return makes it pencil out.
Side note: As I understand it, the real equilibrium ROI for capital in general has been 4-5% on average for as far back as we have records. I find this suspicious, as I have seen no good studies on why. But my headcanon has been that this gives a doubling time about equal to the human generation time. AKA parents and societies save until they’ve saved enough to hand their wealth, undiluted, down to their children, on average.
This is true, but the reason success rate falls as more people found companies is that you’re drawing in founders creating marginally-less-good companies, who fail in part because creating successful high value companies is hard.
You can make it easier or harder by varying a lot of factors, which is why different cities and countries vary so widely in startup-companies-per-capita and unicorns-per-capita. Once you set those parameters, yes, I’d expect failure rates to fall into a stable equilibrium.
Also: some companies that are failures from the POV of startup investor needs and goals end up being perfectly fine small and medium size companies that can generate stable revenue but will never become unicorns.
Right yeah, that’s exactly it.
And we agree on that, yes.
I do agree that equilibrium dynamics mean that the failure rate is not fixed, and that this is underappreciated.
But, if the investors judge that the payoff of AI safety lab success would be above average, they should be willing to invest more and accept above average failures rates too. Failure rate increases with additional investment, and investment should increase until expected returns even out across options for further investment.
The harder a problem is, the higher the expected failure rate at any given rate of investment at any given point in time, and the investment won’t happen until and unless the expected return makes it pencil out.
Side note: As I understand it, the real equilibrium ROI for capital in general has been 4-5% on average for as far back as we have records. I find this suspicious, as I have seen no good studies on why. But my headcanon has been that this gives a doubling time about equal to the human generation time. AKA parents and societies save until they’ve saved enough to hand their wealth, undiluted, down to their children, on average.