Why Progress on Demand doesn’t work (yet).

How small technology startups out-innovate governments and corporations by magnitudes, why Silicon Valley still falls short of its potential and how this could all change

Previously, we got a birds-eye view perspective on the future:

A world in that a much larger share of people become pioneers, and start solving humanity’s greatest challenges.

A world in that everyone understands the principles of progress and in that the ‘engineering cycle’ is universally applied to all challenges.

Based on the basic principles that inform the choices humans make, this future is inevitable. It is the best available option.

At the heart of this pioneer civilization stands a new type of institution that re-organizes the workplace around the need of the pioneers.

This institution makes it possible to engineer solutions to any problem humanity faces.

I call this new type of institution the Supercore. It represents the core of our future society’s economy, culture and ability to create limitless progress for all.

To understand how a Supercore works, we first have to take a look into humanity’s current attempts to generate progress — and why they still lag in what is humanly possible.

How Silicon Valley startups beat big government and corporations

The first observation we can make is that small, agile technology startups tend to significantly out-innovate large government and corporate institutions.

Our recent history offers many examples: SpaceX, a rocket startup, defeats the 5 largest governments in the world in the space race. Tesla, an equally tiny electric car startup, beats the world’s largest automakers to the next generation of cars. Netflix, a streaming content startup, beats the giant cable companies and Hollywood studios on their turf. Microsoft — two college dropouts — defeat the world’s largest computer companies. Google — two students still in college — take over multiple economic verticals, from media to advertising to internet infrastructure. The list goes on and on.

We are all familiar with these stories. We all understand that the US government and Fortune 500 companies don’t stand a chance against a handful of founders with purpose, dedication and some reality-hacking skills. We understand that massive institutions can be brought to their knees by a few guys in a garage.

The reason why institutions thousands of times larger than startups lose the innovation battle is simple: they use the wrong method.

They believe that creating progress is like building a house: a linear process that can be accelerated by more money, more experts and more bricks. They don’t understand that creating progress cannot be linearly planned. It can only be created through a continuous process of learning, imagination and engineering.

The result of this misunderstanding is a dramatic loss of efficiency in these large entities.

Without an understanding of the engineering cycle (imagine — build — learn — repeat), the marginal rate of true progress approaches zero.

That is why large institutions tend to stand no chance against startups. With near-zero progress per dollar, spending a thousand or a million times more money than the startup you compete with still makes you a loser.

Startups beat large institutions by THOUSANDS OF TIMES in innovation effectiveness. They build rockets in 10 years with $100m that governments failed to build in 50 years with $50 billion.

That’s why ITER, the $20b nuclear fusion government project, is likely to (soon) be beaten by a random small startup with $100m or so in funding. That’s why the $1 trillion dollar F35 strike fighter fleet can be defeated by a swarm of drones and hackers at a marginal fraction of that cost. That’s why the billion-dollar cancer moonshot program will generate much less progress in defeating cancer than a handful of small biotech startups will.

If we add the fact that the vast majority of innovation budgets are being controlled by corporations and governments and deployed through an outdated, highly ineffective process, it’s easy to get depressed about the standstill these spending’s generate.

But within this giant failure lies one great opportunity: humanity could accelerate its progress by thousands of times without spending a dime more.

All we have to do is change the process.

Why Silicon Valley cannot solve problems on demand

Silicon-Valley-style technology startups offer a vastly more effective way of creating progress than innovation divisions at large institutions.

This is great. But if that’s the case, why don’t technology startups simply solve all of humanity’s problems?

The reason lies in a flaw in the way startups and VC’s currently operate. If a government or large corporation has a big problem they want to see solved, they don’t have a viable path to translate this desire into an on-demand innovation request for the startup ecosystem.

You can’t walk up to a VC or accelerator and say “here is a billion dollars, build me a fusion reactor”. Or “Here is a billion dollars, find a cure for cancer”. There is simply no structure in place to translate between demand for big solutions and the reality engineering ecosystem of today.

The current startup ecosystem is designed to generate progress in an unplanned manner: it has to wait for entrepreneurs to show up and then go with what they want to do. Investors cannot define a future target and tell their startups to create that reality.

This reactive approach to VC pushes investors and startups to focus on low-ambition opportunities. Creating the next photo-sharing app is great. Curing cancer — not so great. Bigger goals are perceived as being too risky, whereas small goals are considered safer. Who wants to aim at a trillion-dollar opportunity if the billion-dollar opportunity is so much easier, safer and faster to reach?

The current startup ecosystem is incapable of creating progress on demand. It cannot systematically solve big problems.

This is the big inconsistency in humanity’s current innovation infrastructure:

Startup ecosystems embrace the engineering cycle but don’t have the budgets and will to approach the big challenges of humanity. Governments and corporations have the budget and will to approach the big challenges but don’t understand (how to apply) the engineering cycle.

If the first group would implement a progress-on-demand logic, or the second group would implement the engineering cycle, we could increase humanity’s rate of progress by magnitudes.

Within a few years, we could cure cancer, solve all energy problems, become multi-planetary, solve world hunger and -peace, boost economic growth across all countries to its maximum stable state, and explore new dimensions of reality at a rapid pace.

That is a pretty big reward for a simple organizational improvement.

So why does no one do it?

I believe that the only reason humans don’t do it is inertia. Inertia eventually gives way to the best available option. Humans will do it, and they will do it soon. Once the inertia is overcome, a new type of institution will emerge: an institution that combines large capital access with agile reality engineering and the professional application of the engineering cycle. This institution will be capable of solving any challenge humanity faces in a short period of time.