Invest in the Fork-Seekers
Imagine that you’re hungry, and there’s a bowl of rice sitting in front of you. Behind a locked glass door, there’s a fork. Otherwise, you’d have to eat each little grain with your hands.
It’d take a little bit of effort on your part to find a way to unlock the door. And there’s risk involved (you may fail and not be able to open the door). But the chances that you succeed are high enough for it to be worth it.
The only problem is that you need to survive. If you spend enough time trying to unlock the door without eating any rice, you’ll die. People who are determined and ambitious will endure some hunger while they attempt to get the fork, but we all need to eat eventually.
I think that this situation is analogous to starting a startup vs. working a normal job. Starting a startup is like looking for the fork, and working a normal job is like eating the rice grain by grain.
The point I’m trying to make is that you only have so much time to look for the fork before you need to start eating the rice with your hands. I think that this is very frustrating. Eating rice with your hands sucks, and is very inefficient. If you’re the kind of person to start a startup, this sort of inefficiency just kills you.
Furthermore, society would be better off if more people looked for the fork (in the sense of higher economic output/rice). Although some people may fail to find it, the average outcome would be orders of magnitude higher than for people who eat with their hands. I find it sad and frustrating that society isn’t structured to achieve this higher outcome.
However, where there’s frustration, there’s usually opportunity, and this situation screams of opportunity to me. It’s pretty simple really; if someone wants to look for the fork, give them the rice they need to live off of while they search in exchange for a portion of the rice they get if they find the fork.
I know what some of you may be thinking: angel investing does this. No it doesn’t. You only get an angel investment if you are showing some good progress towards finding the fork already. And you only get good terms on the investment if your progress is so obvious that all the investors are fighting over you.
A lot of things have to happen before you make the progress you need to get an angel investment. You need to take the time to develop the skills you need (coding, design, marketing etc.). And you probably need some sort of domain/industry knowledge (sports, restaurants, real estate etc.). And then you need to take the time to develop and refine your product enough to get the traction you need for an investment.
What about the people who want to look for the fork, but who aren’t at this point yet? Maybe they are switching majors/careers and need to take the time to develop skills some sort of industry knowledge. Maybe they failed at a startup, but want to reup and give it another go. These people usually end up having to do these things on the side while they eat rice with their hands. This is really tough to do. Eating the rice with your hands takes a lot of time and energy, and it’s tough to find some leftover time and energy to look for the fork. Unfortunately, people usually lose sight of their desire to find the fork, and they just settle for eating with their hands their whole lives.
I think that this is sad and inefficient. And I think that there’s still a huge opportunity for investors to profit off of these people — just make risk and reward proportionate. If someone wants to learn to code so they could start a startup, pay for their living expenses for a year in exchange for say, 25% equity in their first startup. If they know how to code but just have an idea, give ‘em a few months worth of living expenses for say 15-20% equity so they could pursue their idea.
I’m not really sure what the right numbers would be, but I feel pretty confident in the idea that investing in fork seekers would be very profitable, no matter how close or far they are from finding the fork. Like everyone else, fork-seekers have utility functions that level off pretty quickly once they get “rich”. Investors could profit off of this fact. It’s a win-win. Both parties get what they want.
And here’s another thought: there are economies of scale when it comes to paying living expenses for fork-seekers. If you’re funding lots of fork-seekers, instead of giving each of them money to go find an apartment, just buy something like a dorm and give fork-seekers a room. Fork-seekers are ambitious and determined, and I’m sure you could get by with giving them the minimum they need to live off of. And the dorm idea would provide social pressure to work hard (you’re motivated by the other fork-seekers around you, and you don’t want them to see you slacking off), as well as peers to bounce ideas off of, and to keep you level-headed when things go good/bad.
Upstart is already sort of funding fork-seekers, but not on the scale that I envision.
