People sometimes think that Swarm only set out to disrupt venture capital. The truth is way more exciting. Swarm is about disrupting our idea of economics itself.
On the strength of ideas
The world is full of powerful ideas. Marx. Keynes. Von Mises. Szabo. Mandelbrot. All created rippling realms of ideas that continue to influence the world round. Sometimes they even cause revolutions.
Swarm is an idea. It has circulated in many forms in the past decade, most notably through the Santa Fe institute. It asserts that economics can be made like a science, that it can incorporate what we’ve learned about the design of systems and incentives. It especially emphasizes trust, as in this recently completed workshop on the Rebooting the Web of Trust.
This leads to a different vantage point. Rather than seeking to maximize profit at any given moment, Swarm Systems are fundamentally experimental and aimed at looking at the dynamics of overall ecosystem, which takes into account more than economics. Profit becomes a secondary effect of good system dynamics.
Building a web of trust
Why start with trust? Peter Thiel famously said that you should run your startup like a cult. Swarm is more like an core innovation in economics that will ultimately transform industries. The empty circle is indicative of how often we have to forget what we think we know to find out where we truly belong.
In the Confucian philosophical tradition, we extend ourselves out in concentric circles. You start by finding yourself, then you can extend that to others. That, among other things, is what has lead us to start with vibrant community.
This is especially relevant in a time when there is wide spread dissatisfaction with the status quo. People are gathering round and calling for a new sort of revised tribalism that takes into account values that are not found in contemporary society.
Short-term thinking creates bubbles and even aims for them. Sadly, much of what has happened in the cryptoeconomic world so far has been little more than tiny tweaks on existing systems. Bitcoin itself often mirrors the same motivations that lead to the subprime collapse. Different players, same story.
Swarm systems are build to stay. As noted in the literature on the topic, they are based on high internal cohesion. That’s why, like Zappos, we’ve even encouraged people to leave when they weren’t fully aligned. We’ve spent a lot of time building community and infrastructure — you know who is committed long term.
Many types of old economic problems are solvable with Swarm economics. For example, the famous Keynesian beauty contest is potentially solvable with dual track trust system — i.e. a ledger that includes not just money, but also social capital. As the Economist noted, what better than a blockchain to deploy these systems? What’s probably why the Economist also probably explained the ideas behind Swarm better than anyone.
Guess why some of our favorite clients are governments? Or why we founded the Decentralized Autonomous Society? Or why we looked past the speculative bubbles to build a more solid foundation?
Indeed, one of our experiments indicated that that running via an asset with speculative pressure and no transfer restrictions was not a good formula for long term success. That’s why the current build out contains something better.
Conventional economics leads to bubbles. Swarm economics leads to fractals. That’s not just incredibly cool, it’s immensely good sense.