In Convexity Machines - Short Post I set some basic criteria for what I've dubbed "Convexity Machines."
- Convexity Machines are digital environments with user-generated randomness
- Users have potential for large gains (status/$)
- Users’ mishits are small/harmless
- Optionality exists to select gains, forget losses
- The 4 Primary Roles in a Convexity Machine
- Specific Characteristics of Convexity Machines
This will set us up to begin trying to understand specific startups as Convexity Machines 💪
After going deep on those two items, we'll wrap with some attempted simplification.
As you read through this, some products to keep in mind and guide your thinking:
As you read through this, some products to keep in mind and guide your thinking:
- Pioneer - https://pioneer.app
- TikTok - https://www.tiktok.com/en/
- WattPad - https://www.wattpad.com
- SoundCloud - https://soundcloud.com
- Instagram - https://www.instagram.com
- Numerai - https://numer.ai
The 4 Primary Roles in a Convexity Machine
#1) Platform
- This is the digital environment where all the action occurs
- It sets constraints for what is being created and how
#2 Creators
- These are the most important people on the Platform
- They are playing the Platform's game, and optimizing their creations for that same game
- They tacitly compete with each other for resources (attention, status, and reward)
#3 Crowd
- These participants are curators
- They like/heart/view/etc... Creators's output
- They like/heart/view/etc... Creators's output
- Members of the Crowd are often Creators too
#4 Selectors
- They choose which Creators to reward with money, endorsements, or other rewards
- The entity exists off-platform
- They choose which Creators to reward with money, endorsements, or other rewards
- The entity exists off-platform
Moving on to specific characteristics, we are going to use this 👆new vocabulary.
Specific Characteristics of Convexity Machines
- No gatekeeper limits participation
- Creators/Crowd members can join effectively unhindered
- The number of Creators/Crowd members is effectively unlimited
- Uncertainty of what will be created
- Output is Creator-determined and unlimited
- Output is only bound by the format constraints set by the Platform [note: These constraints are crucial. First, they must encourage creativity. Second, these constraints enable Selectors have some idea of what they are going to the Platform to select (buy).]
- Creators have potential for large intermediary and final gains
- Intermediary gain - Status
- The Crowd grants status, and signals the value of the Creator, with likes/views and other legible engagement
- Final gain - Money (and probably more status)
- Selectors are looking for Creators with the most on-platform status to reward
- Selectors exist off-platform to bestow those gains
- Creators are largely unscathed when the Crowd doesn't bestow views/likes/etc...
- Small/harmless losses include: time, energy, small amounts of status
- Optionality exists for both Creators and Selectors
- Creator optionality
- Option, but no obligation, to keep or delete/ignore any creative output
- Option, but no obligation, to accept Selector attention
- Selector optionality
- Option, but no obligation, to select any single Creator and forget the rest
Specific Characteristics - simplified (a little)
As I can't seem to shake this way of looking at some startups, I'll begin analyzing startups using these simplified terms.
Convexity Machines are digital environments with user-generated randomness
- No gatekeeper limiting participation
- Uncertainty of what will be created
- Creators have potential for large intermediary (status) and final ($) gains
- Selectors exist off-platform to bestow those gains
- Creators suffer minimal losses (i.e. time, energy, maybe a little status) from creations that don't generate status
- Optionality exists for both Creators and Selectors
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