Tuesday, April 7, 2020

📈Convexity Machines 🤖 Roles & Characteristics

In Convexity Machines - Short Post I set some basic criteria for what I've dubbed "Convexity Machines."
  1. Convexity Machines are digital environments with user-generated randomness
  2. Users have potential for large gains (status/$)
  3. Users’ mishits are small/harmless
  4. Optionality exists to select gains, forget losses
Now, this post will continue this arcane breakdown and cover
  • The 4 Primary Roles in a Convexity Machine
  • Specific Characteristics of Convexity Machines

This will set us up to begin trying to understand specific startups as Convexity Machines 💪


After going deep on those two items, we'll wrap with some attempted simplification.

As you read through this, some products to keep in mind and guide your thinking:

The 4 Primary Roles in a Convexity Machine


 #1) Platform
- This is the digital environment where all the action occurs
- It sets constraints for what is being created and how

#2 Creators
- These are the most important people on the Platform
- They are playing the Platform's game, and optimizing their creations for that same game
- They tacitly compete with each other for resources (attention, status, and reward)

#3 Crowd
- These participants are curators
- They like/heart/view/etc... Creators's output
- Members of the Crowd are often Creators too

#4 Selectors
- They choose which Creators to reward with money, endorsements, or other rewards
- The entity exists off-platform

Moving on to specific characteristics, we are going to use this 👆new vocabulary.

Specific Characteristics of Convexity Machines


+ Convexity Machines are digital environments with user-generated randomness
  • No gatekeeper limits participation
    • Creators/Crowd members can join effectively unhindered
    • The number of Creators/Crowd members is effectively unlimited
  • Uncertainty of what will be created
    • Output is Creator-determined and unlimited
    • Output is only bound by the format constraints set by the Platform [note: These constraints are crucial. First, they must encourage creativity. Second, these constraints enable Selectors have some idea of what they are going to the Platform to select (buy).]
+ Creators have potential for large gains (status/$)
  • Creators have potential for large intermediary and final gains
    • Intermediary gain - Status 
      • The Crowd grants status, and signals the value of the Creator, with likes/views and other legible engagement
    • Final gain - Money (and probably more status)
      • Selectors are looking for Creators with the most on-platform status to reward
  • Selectors exist off-platform to bestow those gains 
+ Creators’ mishits are small/harmless
  • Creators are largely unscathed when the Crowd doesn't bestow views/likes/etc... 
  • Small/harmless losses include: time, energy, small amounts of status
+ Optionality exists to select gains, forget losses
  • Optionality exists for both Creators and Selectors 
    • Creator optionality
      • Option, but no obligation, to keep or delete/ignore any creative output
      • Option, but no obligation, to accept Selector attention
    • Selector optionality 
      • Option, but no obligation, to select any single Creator and forget the rest

Specific Characteristics - simplified (a little)


As I can't seem to shake this way of looking at some startups, I'll begin analyzing startups using these simplified terms.

Convexity Machines are digital environments with user-generated randomness
  • No gatekeeper limiting participation
  • Uncertainty of what will be created
Creators have potential for large gains (status/$)
  • Creators have potential for large intermediary (status) and final ($) gains
  • Selectors exist off-platform to bestow those gains
Creators’ mishits are small/harmless
  • Creators suffer minimal losses (i.e. time, energy, maybe a little status) from creations that don't generate status 
Optionality exists to select gains, forget losses
  • Optionality exists for both Creators and Selectors
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