From: Robert Hettinga <rah@shipwright.com>
Date: Wed, 3 Sep 1997 23:36:26 +0800
To: Tim May <cypherpunks@Algebra.COM
Subject: Capitalism 102 (was Re: Things we should be working on...)
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At 11:21 pm -0400 on 9/2/97, Tim May wrote:

> Sorry I "donated" my time making up this list,

To the contrary, it's not a donation at all. I see it as a set of
investment criteria, myself. How is the market going to make something for
you if it doesn't know what you want? Keeping in mind what I said about
privacy being economically efficient, I take what is said on this list
about privacy, "gossip" or not, very seriously, especially when it comes
from someone like you, Tim.

> given the messages I'm
> seeing and the private chastisements of me for daring to suggest.

Maybe they're misinterpreting all the stuff you've said over the years
about "something must be done", "cypherpunks is not a group", and "we"
ought to do to things, etc.

Frankly, a discussion of specifications and desired results is worth much
more than the wasted random effort saved when people just write code and
let god sort it out. I mean, Michaelson-Morley may have been a neat
experimental finding, but nothing really happened with gravity until
Einstein figured out space-time, right?

> Apparently some of you think that only full-time C or Java programmers are
> qualified to make suggestions.

Of course not. See above. There are many more people who know how to write
code than there are like you, Tim, who know what to do it *for*.
Unfortunately, people who write code need to eat. Fortunately, people who
know what to do can raise money to hire people who write code if the idea's
good enough to sell twice: once to investors, and again to the market for
which the code's intended. And, rarely, as in your case, Tim, some people
with money already know what to do and can hire people to do it. If they
can "sell" *themselves* on the idea that the market will buy it. The guy
who founded Aldus did it with Pagemaker. Osbourne did it, too, before he
made the mistake of hiring a completely ignorant "professional" managment...


> And spare me the lectures on Capitalism 101.

Well, it was more for the list's benefit than yours, Tim. You're just my
unsuspecting foil, here. :-).

If, say, John Gilmore were here saying the same kinds of stuff you were,
I'd have sprung my little rhetorical trap for him instead, by getting him
to list what we should do next, and then asking him which ones he's going
to invest in. He'd probably be just as pissed off.

You just got lucky, is all...


Actually, if you count the money and time he's thrown at politics and
lawyers, and S/WAN, and cypherpunks, and a few other things, you might say
Gilmore's made an investment or two. Unfortunately, since he's not using
actual investment criteria -- profits, in other words -- you might consider
those investments to have been accidental. On the other hand, investing is
always about personal choices, whatever they are, and so the loop closes on
itself, I suppose.

The point is, all of the stuff you've listed costs money to do, Tim, or it
would have been done already. Which means, unless you're doing this for a
hobby, spending a very small fraction of your total income, (or an
obsession, taking all of your time and income, which can easily be argued
here on my own part :-),) then the money or time you invest in an activity
has to perpetuate itself, or eventually you won't be able to do it anymore.
Simple economics.


So, Tim, why don't you pick your favorite project on that list, hire some
people to write code, and go for it? Most of the stuff on your list can't
cost that much to do, and, if it did, then it's probably the wrong project
for you, personally, financially, to work on. If that project makes money,
you can reinvest it in something bigger anyway. Capitalism 101.

I think that Sameer in particular proves that the barriers to entry for
some financial cryptography markets are still practically nonexistant from
an investment perspective. Not for the stuff Sameer's doing, of course.
He's raised his own barriers to entry behind him by investing in his
markets already. C2NET was completely bootstrapped, though, and hopefully,
Sameer will never need outside investment. As smart as he is about
business, he'd certainly be a fool to ever take VC money. However, like
Bill Gates, the time may eventually come when he's got so many option
holders in C2NET that the SEC will force him to go public, like they did to
Microsoft, another bootstrapped company.

Anyway, especially in anonymous digital bearer settlement, which is the
really important stuff in financial cryptography, there are lots of
opportunities out there, and some of them are bootstrapable. Some of those
which aren't should be funded by single, monomaniacal, investors like the
Aldus guy did with Pagemaker, or you, Tim, should do with your favorite
project on the list. Hopefully, the rest the non-bootstrap stuff can be
done with e$lab or something like it. At least that's what *I'm* hoping...
;-).

You don't even have to be incredibly active as an investor. Armand Hammer
(not a good example as a human being, but certainly a good one here) got
into the oil business practically by accident *after* he retired, and
pretty much kept a retiree's schedule all throughout Occidental's growth
into a major oil company.



Privacy, financial or otherwise, is economic efficiency. Anyone who
consistantly steers by the star of privacy is going to make money and thus
change the world.

And, Tim, there is no better navigator of those waters, anywhere in the
world, than you are. None.

You're the moral compass most of us in the crypto community have
internalized when we think "what would Tim say" about something we're
thinking about doing.

(Well, you don't steer north all the time, sometimes there are rocks in the
way, but you still have to know where north is, certainly, or you don't
*get* anywhere. ;-))


So, Tim, again, which one of those projects do you want to do? Who are you
going to hire to do them? More important, how much money do you think
you'll get back by doing it?



Cheers,
Bob Hettinga


-----------------
Robert Hettinga (rah@shipwright.com), Philodox
e$, 44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
The e$ Home Page: http://www.shipwright.com/