If we were to categorize businesses by their literary genre historically nonfiction has dominated: facts pay. In the future, particularly science fiction opportunities become realistic.
As a followup to Doug Loss’ recent “Paying for the Stars” post I would like to introduce my organization as the first of its kind to achieve purchasing power parity thru a philanthropic brokerage and nonprofit bank. I will explain 1. what purchasing power parity is and 2. how it can efficiently “pay for the stars.”
But first let’s back up to how we got here. In 2013 with the support of a professor I started a social academic publishing platform called Papermache (now located at www.papermache.fyi) with the sole purpose of allowing undergraduates to legitimately share their graded research papers without jeopardizing their academic reputation. Much to our surprise administrators and students liked it and at one point we had over 100 papers from 150 registered users. Without a way to make money, however, we shut it down but without learning first that to solve online academic publishing you had to solve online academic finance.
Flash forward a couple of years and I met a colleague at a Best Buy who worked for Google and we started talking about X-Labs, Google’s top secret moon-shot projects department. He wanted to get me in so I started thinking of the most ambitious project I could and it slowly came to me that a philanthropic brokerage was something that could literally get us to the moon. At the time there was a lot of talk about these new cryptocurrencies and my financial experience was limited to recession-era Forex trading and some entrepreneurship classes while building Papermache so I knew enough that all markets were online and not just encrypted currencies therefore it was possible to approach it from a networking perspective – build a risk model infrastructure for an entirely online financial organization. Little by little – over a few years – I laid out the plans for what is now Elmhurst Nonprofit Bank, the first of its kind to specialize in serving nonprofit clients exclusively. The point was to make a market for goods and services by economically incentivizing philanthropic giving thru an actively traded index and request-fulfillment instrument we now call purchasing power.
I hadn’t considered going back to school to study economics and get a PhD as in my mind there were two outstanding dependencies: build it and a team. And so after many months of self-directed study and working with freelancers I am happy to announce we have an opportunity to receive a bank charter from TIAA Credit Union and a fully functioning simulation of our market mechanics and principles complete with purchasing power, profit formula, and chart activity.
There are many advantages to this, namely that it could keep a website like Papermache online by invoicing all of its liabilities to Elmhurst Nonprofit Bank. And of course if it could keep Papermache online then it could keep a whole new breed of websites online forever at any scale without needing to sell ads or charge its users and sell their data. Generally, however, the case for earning financial returns on top of philanthropic gifts by making share value out of nonprofit liabilities was compelling for a number of reasons: 1. the recession delayed giving power for its duration therefore pensioners have little discretionary spending after healthcare expenses so it makes sense that a donation works for them as hard as they work for it; 2. despite the fact their needs are different nonprofits are treated the same by traditional financial institutions so specializing differentiates them from for-profit or retail clients to greater impact.
How then to clarify a blurred line between fiction and nonfiction money? Sticking to the facts and making a grant market both double-blind and post-transactionally transparent. It’s best to think of it from an intellectual property and tech transfer perspective. Currently early-stage startups face the highest failure rates due to prerequisite operating revenue ahead of things like regulatory approval, testing, and business development. If nonprofits can be utilized to overcome that block they would have some of the lowest failure rates of any business. Coupled with the fact that nonprofit demands are limitless and endless – as, say, the field of math or any other science-based discovery – accounting for them conveniently makes a pretty lucrative market. More importantly is you end up having a safer and more true-to-intention business without catastrophes that are products of investment culture like Theranos, for example. At best things like blood tests, new medicines, or other lab-level promises that never really make it to market actually happen and at worst you avoid nonexistent or fraudulent products that do: the nonprofit approach can create a time bubble for these companies to adequately prepare themselves for longitudinal profitability. In the short run this means vaccinations; in the long run critical prerequisite technology for space travel can efficiently move from a university lab into the private sector. Factor in open access publishing that isn’t locked behind a paywall while still maintaining academic integrity and you have an ecosystem that is as efficient as it is convenient.
Of course, angel and VC investing give nonprofits a bad rap for being inefficient and ill-equipped to “make the world a better place” though efforts are being made to reconcile these differences. What better way then to market-incentivize philanthropic gifts? It would be traded like any index – comprised of immediate or scheduled unfulfilled requests for goods and services – the principals of which are used to fulfill those requests. Chart activity would therefore be the average fulfilled request price for things like DNA sequencers, cyclotrons, latex gloves – all of equal importance for safe science. And because it’s parity men, women, minorities – anybody – can have equal access independent of affiliation without having to navigate the arduous and burdensome grant application process reputed to be the largest source of inefficiency and disparity – perhaps deservingly.
Fewer profit per share the more shares trades take can be collected from fees, share value can be offloaded onto a secondary market according to our risk model, and other financial products can be made on both the supply and demand side but the user experience is similar to an online bank merged with a cellphone payment platform: instead of checking a balance, users track usage. This implies the for-profit equivalent can be built to serve commercial and retail clients, thereby completing the tech transfer cycle, however it’s important that Elmhurst come first to clean up the process: there will come a day when anyone can walk up to a vending machine on any planet and purchase a candy bar without a balance in their account or the price being an object as we get better at computing the price influence on demand. In the short run, however, for a research team conducting a longitudinal study of bacterial evolution or celestial orbits an experiment can happen uninterrupted without needing to reapply for or find other sources of funding, especially relevant for federally-funded research that is increasingly susceptible to furlough. Even better you can have your budget immediately available in the field – be it Alaska, Antarctica, Moon, Deep Space, wherever there’s internet and your research takes you. Even Tennessee Valley Interstellar Workshop can bank with Elmhurst and publish on Papermache given its 501(c)3 status: we have taken steps to quantify reputations thru an investment vote market as an alternative to peer review and use in-text annotations and citations that enable transparency and accountability.
It’s worth mentioning there are rural parts of earth like Alaska, the oceans, Antarctica, and Siberia that are as logistically expensive to inhabit as Lower Earth Orbit. In the short run Elmhurst is a budget immediately available anywhere in the world: imagine being on-site doing field work and need an extra shovel, order it with Elmhurst and it’s delivered with drones. Logistics are an entirely separate operation actively pursued by Amazon, SpaceX, RocketLab, etc; Elmhurst merely provides the financial infrastructure to create more demand for interstellar systems. And of course this wouldn’t be possible without the internet; We would need a market capitalization worth of cash reserves for a brick-and-mortar version of our financial organization. Because we are using large market capitalizations like AAPL, MSFT, and AMZN for our risk management infrastructure we can minimize our overhead significantly. Elmhurst is so internet-dependent its usage also therefore relies on widely available internet. Forex’s volume is $4.8 trillion/day and its data stream is ~32kb/s with a standard REST API. These numbers are what we expect in terms of bandwidth expenditure and transactional processing if purchasing power is to be suitable for at least large telescope procurements. Other supply products like rerendering the 2-axis chart to be more game-like, integrating our API with existing in-game micropayment systems and maps that make it easier to spot trends, or a separate futures index for immediate or scheduled requests that exceed immediate purchasing power can be hedged against our philanthropic index and used to fulfill large requests on other planets – our users need not be confined to the area under purchasing power no matter how big or small it might be. This diversification lowers the risk of trading as much as invoices from different fields: the more Interdisciplinary research the less our traders lose.
What does this mean for the search for extraterrestrial life and interstellar travel?
VCs always say “we suck a sourcing” which is that they are not good at finding the next big thing. Until there is a reliable method for finding life on earth, the best bet is let them come to you. This isn’t to say we shouldn’t explore interstellar space, in fact it’s quite the opposite. To learn from peaceful colonization efforts that were based on discovery rather than conquest – Captain James Cook’s successful voyages in the South Pacific and New Zealander’s current harmonious relationship with Maori vs. Americans historic relationship with natives – we start to see why demand-side philanthropy is to me a driver of space exploration: The ELM Futures Index® finds new territory whereas ELM Philanthropic Index® establishes territory already discovered.
Assuming the tech transfer pipeline is now market-efficient critical research-based government organizations like NASA and the NSF would eventually become nonprofits instead of privatized thereby completely avoiding the effects of furlough and budget restraints. Research centers would then pivot to testing centers for private industrial space companies that have chosen to incorporate as nonprofits in preparation for market instead of navigate an incubator or accelerator program. Keeping academic publishing open access would enable transparency, public accountability, participation, and a culture of interdisciplinary science and research would develop from a community around Papermache peers. Poster-sessions would become full-blown conferences and best practices would then build on further discovery and detection in the form of dealmaking and IP spinoffs. The space-entry equivalent to shipping’s TEUs and cranes would minimize multi-modal handoff and enable rocket launches as frequent as aircraft launches: a pair of rocket stage-sized robot arms that mount fairings would act as a strongback to ready the stage onto a launchpad so payloads can be prepared safely and independently. These could be placed at any private spaceport on any planet and be scaled to meet changing rocket designs and make us as easy to detect as explore interstellar space. My third company, Red Rover Ventures, LLC, looks to pave this road from publishing to market by investing exclusively in nonprofits and is building an AI advisory platform to facilitate this process. A basic decision-flow model can be found here.
I would like to invite anyone to take a tour of the simulation we have built of both the philanthropic brokerage and publishing platform to get a better idea of how the two are related as there is much more information that we are learning about as we go along. This is an emerging field within an emerging field and we are drawing equally from economics as data science so expert input is appreciated. To me this is shaping up to be something you wouldn’t think twice before going to Mars without.