>I think of this as unearned money and want to give some of it back to the community, hence this grants program..... When it runs out, I‘ll just be a normal person with normal amounts of money
Assuming you started as a normal person with normal amounts of money, this means that you aren't giving back "some", you're giving back all.
And I'm not convinced that this money is "unearned". It's the same anti-capitalist fallacy I see people use to claim that all investment gains by companies or millionaires are unearned. Investing has risk, and if the company lost money from the investment, they wouldn't say "well, the company's loss is unearned, so we should donate some money to the company to make up for it". If the loss isn't unearned, it would be absurd to claim the gain is unearned--the gain only exists because of the possibility of a loss, and vice versa.
At most the crypto that people directly donated to you is unearned. And even then, it was your decision to *keep* it as crypto instead of cashing out immediately, and that decision had risks as well as possible benefits, so the profit from that crypto isn't unearned. It's equivalent to being given $X in cash and using it to immediately buy crypto. It just feels different because you put the crypto in a separate mental bucket, that's all.
I think it shows a lot of integrity on Scott's behalf.
Ideally earnings would correlate with the benefit to society so the economy as a whole is positive sum. Sometimes assuming risk has social benefits but it's also totally compatible with zero sum games, like ordinary gambling. "Earned" usually also has the connotation that it took substantial effort.
The benefit to society of speculating on crypto and stocks is dubious and the ratio of effort to earnings is definitely much lower than his normal work as a writer or psychiatrist.
My point is that if you wouldn't claim that a loss is unearned, you shouldn't be claiming that the win is unearned. Claiming that the win is unearned but not the loss is inconsistent whether there are any social benefits involved or not.
> the ratio of effort to earnings is definitely much lower than his normal work as a writer or psychiatrist.
Similar problem. The ratio of effort to earnings is low, but that's only one of a whole range of scenarios, some of which are losses and have low effort to loss ratios. This cancels out the scenarios where he has low effort to earnings ratios, even though only scenario at a time can actually happen.
(Actually it's more complicated than this. You'd need to figure the *average* effort to earnings ratio. So increased *frequency* of loss (or increased frequency of small wins) can make up for increased *size* of win and vice versa.)
>whether there are any social benefits involved or not.
If we accept that there aren't any social benefits it's a form of enriching yourself at the expense of society the same way robing a bank is.
No one would say "The robbers have a legitimate right to the stolen money because if the heist had failed we wouldn't have compensated them for the cost of the getaway car." It's a situation where it' wrong to make gains but but you can't complain if you make a loss.
>This cancels out the scenarios where he has low effort to earnings ratios.
I guess it's right not to only count the actual outcome. But crypto and stock quite obviously had positive EV at the time. Even the ratio of expected value to effort was very high.
>If we accept that there aren't any social benefits it's a form of enriching yourself at the expense of society the same way robing a bank is.
Robbing a bank is on the average negative. It isn't neutral. "No social benefits" just means that it's neutral.
>But crypto and stock quite obviously had positive EV at the time.
Your reasoning implies that *any profit* is unearned: I paid for a loaf of bread that cost the store $X to make, but I paid the store $Y. We don't say that the store's profit of $Y - $X is unearned because "selling bread has positive EV". Just because crypto isn't a concrete object like a loaf of bread doesn't change this.
(Also, your reasoning leads to the conclusion that the more efficient you are, the worse the transaction is. If I am good at my job and can do it with less effort than someone who is mediocre at the same job, have I done something wrong because my effort to earnings ratio is too high compared to the other person?)
The reason that we don't say that the store's profit on the bread is "unearned" is because it's supporting a process that results in members of our society having bread, instead of being hungry. This is an important social benefit.
More generally, I think most profit is generated through activities that increase, on net, human utility. That's great and I hope those profit-making activities continue. But some profit isn't; profit from bank robbing and profit from crypto, for example, aren't in this category.
I agree with you. Accurate prediction is a valuable and difficult commodity.
I read the statement as being focused more on the fact that Scott got free investment advice from those who are doing the work to make accurate predictions. Sure Scott did the work of curating and vetting those advisors, but it was still free advice from the community, and so giving back to the community (or those individuals who freely gave advice) feels nice somehow.
> Assuming you started as a normal person with normal amounts of money, this means that you aren't giving back "some", you're giving back all.
Maybe he isn't giving back every penny, so it would be disingenuous to say he was giving it all back.
Maybe he would have considered a loss of the crypto as unearned too.
I think what's happening here is that your worldview is crashing against Scott's worldview. You are arguing as if Scott is wrong to believe what he does, but maybe he just has a different worldview to you.
Any money you get without creating value is unearned. Holding crypto obviously creates no value, and unless he bought that AI stock during an actual stock offering (I don't know if he did) the link between his buying stock and value being created by those companies is dubious at best.
And, of course, it requires that you believe AI companies have created or will create value, rather than just being black holes of energy that only produce enshittification.
Holding any investment that goes up creates (on the average) value. You don't have the use of the money, and the other party does, until you sell back the investment. The other party uses the money to create value--that's why he sold the investment in the first place. If you buy the stock from someone else instead of buying it during an original offering, you are still creating value because you could sell the stock back to the AI company and have chosen not to, so your money is still being used to create value by the AI company.
It just doesn't feel like creating value because there's no object or line item which says "this value created by Scott's investment".
Technically the answer is submit multiple applications, but for some reason I don't think we've approved anything like that in the past, maybe because we tend to be looking for projects that people have thought about pretty hard and are pretty attached to. Still, you can try.
If I understand Paul Graham and YC's perspective on this correctly, they would say that the person/founder is the most important piece they're looking for, and the specific project the founder chooses is secondary - but of course YC's goals and process are different than ACX Grants's. Still, if ACX Grants has sufficient assessment bandwidth & expertise, maybe the best approach here would be for someone with multiple ideas they care about & think could be important/valuable for the world to submit one application briefly detailing all ("all" = a manageable small number) their ideas, and ACX Grants could choose one of those to fund (assuming the applicant and at least one of their ideas was compelling enough, etc). At an early enough stage, there are many things someone could potentially be passionate about and fully invested in, and would absolutely be if they were given the right nudge & the resources to get started.
There is a downside that a grant becomes a SAFE, and that is the downside for past or future grantors don’t like that some other grantor got better terms than they did. It also at least slightly signals the project will become a startup relative to other grants, which not all projects may want.
In practice a “grant that turns into a SAFE” and an actual SAFE are the same thing, as most startups at this stage are indeed non-profits in the sense that they don’t make a profit. Either way it’s “hey, spend this money but if you make a profit I get equity”.
Perhaps this isn’t actually a downside and I’m modelling grantors incorrectly. That said, there are other funds (like 1517) that structures grants as equity-free, but includes an option to invest in future rounds. It may be worthwhile considering why professional investors landed on this model.
Excited to see this happening again. It seems a lot of the ideas that have recieved funding in the past are seed or even pre-seed stage ventures. Is there a maximum level of maturity that you'd be willing to consider (beyond considerations of counterfactual funding opportunities)?
Re "A group of lawyers who sue factory farms under animal cruelty laws:" Woot woot woot!!! Thank you for the gift and we are so honored to be included as an example!!!!! - Alene & Legal Impact for Chickens
Yikes, thank you, fixed!
>I think of this as unearned money and want to give some of it back to the community, hence this grants program..... When it runs out, I‘ll just be a normal person with normal amounts of money
Assuming you started as a normal person with normal amounts of money, this means that you aren't giving back "some", you're giving back all.
And I'm not convinced that this money is "unearned". It's the same anti-capitalist fallacy I see people use to claim that all investment gains by companies or millionaires are unearned. Investing has risk, and if the company lost money from the investment, they wouldn't say "well, the company's loss is unearned, so we should donate some money to the company to make up for it". If the loss isn't unearned, it would be absurd to claim the gain is unearned--the gain only exists because of the possibility of a loss, and vice versa.
At most the crypto that people directly donated to you is unearned. And even then, it was your decision to *keep* it as crypto instead of cashing out immediately, and that decision had risks as well as possible benefits, so the profit from that crypto isn't unearned. It's equivalent to being given $X in cash and using it to immediately buy crypto. It just feels different because you put the crypto in a separate mental bucket, that's all.
I think it shows a lot of integrity on Scott's behalf.
Ideally earnings would correlate with the benefit to society so the economy as a whole is positive sum. Sometimes assuming risk has social benefits but it's also totally compatible with zero sum games, like ordinary gambling. "Earned" usually also has the connotation that it took substantial effort.
The benefit to society of speculating on crypto and stocks is dubious and the ratio of effort to earnings is definitely much lower than his normal work as a writer or psychiatrist.
My point is that if you wouldn't claim that a loss is unearned, you shouldn't be claiming that the win is unearned. Claiming that the win is unearned but not the loss is inconsistent whether there are any social benefits involved or not.
> the ratio of effort to earnings is definitely much lower than his normal work as a writer or psychiatrist.
Similar problem. The ratio of effort to earnings is low, but that's only one of a whole range of scenarios, some of which are losses and have low effort to loss ratios. This cancels out the scenarios where he has low effort to earnings ratios, even though only scenario at a time can actually happen.
(Actually it's more complicated than this. You'd need to figure the *average* effort to earnings ratio. So increased *frequency* of loss (or increased frequency of small wins) can make up for increased *size* of win and vice versa.)
>whether there are any social benefits involved or not.
If we accept that there aren't any social benefits it's a form of enriching yourself at the expense of society the same way robing a bank is.
No one would say "The robbers have a legitimate right to the stolen money because if the heist had failed we wouldn't have compensated them for the cost of the getaway car." It's a situation where it' wrong to make gains but but you can't complain if you make a loss.
>This cancels out the scenarios where he has low effort to earnings ratios.
I guess it's right not to only count the actual outcome. But crypto and stock quite obviously had positive EV at the time. Even the ratio of expected value to effort was very high.
>If we accept that there aren't any social benefits it's a form of enriching yourself at the expense of society the same way robing a bank is.
Robbing a bank is on the average negative. It isn't neutral. "No social benefits" just means that it's neutral.
>But crypto and stock quite obviously had positive EV at the time.
Your reasoning implies that *any profit* is unearned: I paid for a loaf of bread that cost the store $X to make, but I paid the store $Y. We don't say that the store's profit of $Y - $X is unearned because "selling bread has positive EV". Just because crypto isn't a concrete object like a loaf of bread doesn't change this.
(Also, your reasoning leads to the conclusion that the more efficient you are, the worse the transaction is. If I am good at my job and can do it with less effort than someone who is mediocre at the same job, have I done something wrong because my effort to earnings ratio is too high compared to the other person?)
The reason that we don't say that the store's profit on the bread is "unearned" is because it's supporting a process that results in members of our society having bread, instead of being hungry. This is an important social benefit.
More generally, I think most profit is generated through activities that increase, on net, human utility. That's great and I hope those profit-making activities continue. But some profit isn't; profit from bank robbing and profit from crypto, for example, aren't in this category.
I agree with you. Accurate prediction is a valuable and difficult commodity.
I read the statement as being focused more on the fact that Scott got free investment advice from those who are doing the work to make accurate predictions. Sure Scott did the work of curating and vetting those advisors, but it was still free advice from the community, and so giving back to the community (or those individuals who freely gave advice) feels nice somehow.
> Assuming you started as a normal person with normal amounts of money, this means that you aren't giving back "some", you're giving back all.
Maybe he isn't giving back every penny, so it would be disingenuous to say he was giving it all back.
Maybe he would have considered a loss of the crypto as unearned too.
I think what's happening here is that your worldview is crashing against Scott's worldview. You are arguing as if Scott is wrong to believe what he does, but maybe he just has a different worldview to you.
Any money you get without creating value is unearned. Holding crypto obviously creates no value, and unless he bought that AI stock during an actual stock offering (I don't know if he did) the link between his buying stock and value being created by those companies is dubious at best.
And, of course, it requires that you believe AI companies have created or will create value, rather than just being black holes of energy that only produce enshittification.
Holding any investment that goes up creates (on the average) value. You don't have the use of the money, and the other party does, until you sell back the investment. The other party uses the money to create value--that's why he sold the investment in the first place. If you buy the stock from someone else instead of buying it during an original offering, you are still creating value because you could sell the stock back to the AI company and have chosen not to, so your money is still being used to create value by the AI company.
It just doesn't feel like creating value because there's no object or line item which says "this value created by Scott's investment".
If I have multiple ideas for projects, should I:
- Choose the one I think is best?
- Submit multiple applications? (Bounded. Definitely <10, probably exactly 3.)
- Submit one application describing multiple projects?
Technically the answer is submit multiple applications, but for some reason I don't think we've approved anything like that in the past, maybe because we tend to be looking for projects that people have thought about pretty hard and are pretty attached to. Still, you can try.
If I understand Paul Graham and YC's perspective on this correctly, they would say that the person/founder is the most important piece they're looking for, and the specific project the founder chooses is secondary - but of course YC's goals and process are different than ACX Grants's. Still, if ACX Grants has sufficient assessment bandwidth & expertise, maybe the best approach here would be for someone with multiple ideas they care about & think could be important/valuable for the world to submit one application briefly detailing all ("all" = a manageable small number) their ideas, and ACX Grants could choose one of those to fund (assuming the applicant and at least one of their ideas was compelling enough, etc). At an early enough stage, there are many things someone could potentially be passionate about and fully invested in, and would absolutely be if they were given the right nudge & the resources to get started.
There is a downside that a grant becomes a SAFE, and that is the downside for past or future grantors don’t like that some other grantor got better terms than they did. It also at least slightly signals the project will become a startup relative to other grants, which not all projects may want.
In practice a “grant that turns into a SAFE” and an actual SAFE are the same thing, as most startups at this stage are indeed non-profits in the sense that they don’t make a profit. Either way it’s “hey, spend this money but if you make a profit I get equity”.
Perhaps this isn’t actually a downside and I’m modelling grantors incorrectly. That said, there are other funds (like 1517) that structures grants as equity-free, but includes an option to invest in future rounds. It may be worthwhile considering why professional investors landed on this model.
Why do you think grants to individuals are taxable income? Wouldn't they be gifts, which are not considered income to the recipient?
If you structure them as gifts, then you have to pay gift tax which is typically higher than income tax.
For small gifts under the exclusion (currently $19k) then it could make sense. IANAA, US only, etc
Thx, I’m on it!
Out of curiosity, which previous grantees became valuable companies?
I think I remember from somewhere that previous grantees are discouraged from applying. Is the case?
Thank you Scott for all you do to make the world a better place
What about retroactive funding? Are you up for that
Thank you for doing stuff like this.
Excited to see this happening again. It seems a lot of the ideas that have recieved funding in the past are seed or even pre-seed stage ventures. Is there a maximum level of maturity that you'd be willing to consider (beyond considerations of counterfactual funding opportunities)?
Re "A group of lawyers who sue factory farms under animal cruelty laws:" Woot woot woot!!! Thank you for the gift and we are so honored to be included as an example!!!!! - Alene & Legal Impact for Chickens