I had been in an interesting discussion with someone around building institutions. The research and development happens in a pre-determined template designed to have a “controlled chaos”. This helps scale ideas and applications. In specific geographies, where state and institutional capacity is limited, the idea flow stunts. By any stretch of imagination, start-ups are NOT the bellwether of any institutional capacity, but only a symptom of policy management. It is a temporary solution to address long term issues of employment. Financial capital is cheap, but if you throw peanuts, you’d attract monkeys. The linked write-up has raised substantial issues. I only agree with the general tone mentioned, but not the specific contexts (crypto).
Startups and companies are designed to grow fast, institutions are designed to persist. Startups shape the next decades, institutions shape the next centuries. Startups finish the trajectory technology will take to reach society, institutions create and define what that trajectory initially looks like. Startups focus on surviving the next year, institutions focus on surviving the next decade. Startups focus on users, revenue, funding, institutions focus on systems, second-order effects, and externalities. Startups shape the way we act day-to-day but institutions shape our values, belief systems, and the way we think.
There is no point in raising a healthcare start up if you don’t have a hospital (or understand how healthcare systems work). Insurance, for example, is not a fintech product, but you need to induce users (and possibly lobby) for a long-term directed policy and define end-points for behavioural mapping. I read a lot about the “start-up stories” by new-age journalists, and it is apparent they only churn the press releases as stories contributing to the echo chambers of deck presentations by drawing a narrative.
Time and time again, we see that the largest pivot points of technologies in society were in fact created and explored out of someone’s (or a group’s) desire to push a certain view into reality and invent on principle. Long before it was commercially viable, before the technology was mature, and definitely before a market existed for related problems. Look to Licklider who continued to push his world view of the personal computer before there was any notion of a symbiotic relationship between human and computer, let alone a market for it. Or Yann LeCun and Geoffrey Hinton working on research in neural networks in the 90s when everyone thought the work was a dead end. Or early crypto infrastrcutrue work that setup the base layers of the system before billions of dollars of capital flew into DeFi.
That’s why I remain enthused about learning the World War II and the Marshall-Plan. It was those years which laid the strong bulwark of the university academia and industry linkage, culminating in the atomic energy and indirectly using it for therapeutic interventions for cancer (radiation oncology), to which I owe my bread (and a little butter on the side). Institutional capacity can manifest itself via “think-tanks”, policy wonks, or internalization of ideas with external application with clear outlines and goals. Ditto for scientific research and clear directions of budgetary support.