This is the first part of a ongoing series where I will critique and attempt to falsify my Outcomes Thesis.
My Outcomes Thesis suggests that in the next evolution of information technology the resource which is monopolised will be complex outcomes and solutions services.
Outcomes and solutions services in today's world typically have a very heavy human component and are a composite of sales, business development and customer success. My thesis suggests that technology will eat this layer of the stack in the next era of IT and that production of this technology will be the next monopolised resource.
An IT era dominated by outcomes and solutions will contrast directly with the most recent era which we are moving out of. One that has seen the dominance of network-derived self-serve software platforms monopolised by data and associated services. Here's a post I wrote as an introduction to the ideas.
There are several main vectors by which I believe this thesis could be falsified—
Today I'll start with the first of these arguments.
Note: if you're not familiar with the idea of IT monopoly cycles a good place to read about them is Tim Wu's The Master Switch. I haven't watched it but this video could be a good summary if you don't want to read the book.
I first saw the argument suggesting this idea articulated by Chris Burniske—
A notable deviation from the past:— Chris Burniske (@cburniske) April 6, 2019
Since a #cryptoasset’s value accrual will not be strictly profit driven like equity, if information networks are capitalized using cryptoassets as opposed to equities there’s less of an extractive incentive (& thereby less drive to consolidate)
Chris is saying, as established in the Placeholder investment thesis, that he believes the next era of information technology will be capitalised through cryptoassets. That is in contrast to the current era, as well as the past ~400 years of business-building, which has been capitalised by equity.
The most interesting piece in the tweet and what's most difficult to tease apart is the idea that cryptoasset value accrual won't be entirely profit-driven.
My sense of what this means is that cryptonetworks will not all be fundamentally optimised for profit generation in the same way that equity-backed corporations are.
Some will – a hypothetical investment DAO, for example. Such a cryptonetwork will hold profit-maximisation as its objective function and everything will be optimised in that pursuit.
Most, however, will optimise for other metrics. Ocean Protocol, for example, optimises for the availability of high-quality datasets and data services. Fetch.AI, if I've understood the project correctly, will optimise for the production of efficient machine-to-machine collaboration. FOAM optimises for availability of high-accuracy location services. And the list goes on.
To me, this is actually one of the most interesting aspects of cryptonetworks – they're global-scale optimisation machines. I personally find this extremely exciting because it's an antidote to the very, very crude set of existing primary organisational incentives – profit, non-profit, not-for-profit, charity. And I think that's important because the limitation of our organisations is probably at the heart of many of the world's ills – it's profit-first and fuck everything else.
What does all this about a multiplicity of network objectives and optimisation mean for the question of capital consolidation though?
Well, as Chris says, maybe it does indeed lead to a reduced incentive to build walls around cryptoassets. I must admit, I'm so entrained in the idea of organisations maximising profit that my mind begins to boggle a bit when I imagine a world which doesn't solve for profit.
It's such a perplexing idea because it really places the network's objective function above profit. In this paradigm, profit through growth is not necessarily what a network optimises itself for.
These are interesting ideas, and my feeling is that they're very relevant for cryptonetworks which create open services – the Makers, Oceans, FOAMs of the world.
But will organisations which deliver outcome services be profit-first? Maybe, maybe not.
In answering that question, it feels critical to first understand how likely it is that organisations which offer outcome services will be cryptonetworks. That is, capable of setting and maintaining their own objectives whilst delivering complex outcome-focused services at global scale.
How can we assess that? As far as I'm aware, and am very happy to be informed otherwise, nothing capable of delivering such comples services at such huge scale has ever existed before. So that immediately marks the likelihood down at the base rate level.
Technology does appear to be coming online to enable networks to operate at global scale whilst setting their own objectives, though. See my earlier examples of Maker, FOAM, Ocean etc.
What we have not seen is the possibility of such networks combining multiple open services, utilising some form of decentralised orchestration, to provide a step-change in service quality and sophistication.
We haven't seen signs of this yet but in a time of radical upheaval, anything is possible, and I'll be looking out for these signs.
Personally, I hope the rise of cryptonetworks does indeed mean the end of IT monopoly cycles if we can replace them with something more efficient. The realist and pragmatist in me will continue to assume otherwise, though.