

Esther Dyson vs Bill Campbell: 2002 − 2012 - ryanmahoski
http://longbets.org/5/

======
vtail
Since it's obvious that Dyson's statement is _way_ too optimistic, I assume
that for her it is (was) a good marketing - you bet a lot by investing in
Russian startups, why not bet a little bit more to show to your future
partners how confident you are?

Here is why the statement is _way_ too optimistic:

\- Resources _always_ move to places where they can be used most effectively
(econ 101) unless there is a significant friction

\- For that type of resource (talented programmers/mathematicians) the
friction is very small

\- Russia has bad regulation and bad business environment in general

\- Specifically, very hard to get investments[1], and investors interests are
poorly protected[2]

\- Silicon Valley utilizes these resource much more effectively, so that even
other places in the US - NYC/Boston/Chicago - could not compete effectively

\- Also, managerial talent in Russia is concentrated on more profitable
business, like participating in natural resource explorations or working for
state-run monopolies - very profitable and risk free if you have the right
connections

Disclaimer: I'm Russian living in Silicon Valley. That may have affected my
judgement.

[1] I can share the following anecdote: When I was helping some friends to
find VC funding in 2008 in Russia, I learnt that most VCs in Russia require
_kick-backs_ (!) from startups that they're investing in - presumably as a way
to steal from their limited partners (and even provide some advice on how
these kick-backs could be recorded in accounting books).

[2] Khodorkovsky's and Chichvarkin's examples are probably the most well-known
on the West.

~~~
WildUtah
>> When I was helping some friends to find VC funding in 2008 in Russia, I
learnt that most VCs in Russia require kick-backs(!) from startups that
they're investing in<<

There are stories on HN all the time about US investors requiring the same.
There are fancy meals on the company's tab, first class airplane tickets from
all around the world for board meetings and various other abuses that HN
founders complain about.

I guess straight-up cash would be a novelty, but that probably comes from the
IRS scrutiny it would engender. Is an exacting tax authority part of the root
of American exceptionalism?

~~~
vtail
In this case, they were requiring 10%(!) of the investment as a kick-back.

Another interesting feature: there are plenty of 'funding advisors' that can
help connecting you to a right VC[1] for a fee, typically a few percent of the
funding.

Kick-backs are also typical if you are a mid-size company a need to get a
commercial loan.

[1] They all claim to have connections to some government-backed VC funds such
as government-backed Rusnano or Russian Venture Company.

~~~
bh42222
_Another interesting feature: there are plenty of 'funding advisors' that can
help connecting you to a right VC[1] for a fee_

Same in the US. I think Massachusetts might have a law against it?

But as another Eastern European currently in the US, I agree with you and know
what you are trying to say.

~~~
vtail
I'm wondering why such market exists in the US. Assuming there is enough VC
capital, why would you need an intermediary?

~~~
bh42222
The demand to pitch or meet a VC is far greater then VCs.

------
lucisferre
In the interest of being completely fair to Dyson, I'm not sure anyone could
have fully predicted just how bad of a regime Putin's would be. That said it
seems like a long shot just the same.

~~~
noilly
Exactly... the political and economic institutions of Russia have not
progressed and have likely regressed in the last 10 years. Who led Russia in
2002? Putin. Who is leading Russia in 2011/12? Still Putin and United Russia.
The Litvinenko killing and Khodorkovsky imprisonment are chilling indictments
of this regression. Also the run up of energy and commodity prices has only
increased the allure and hold of the Dutch disease in Russia.

~~~
dredmorbius
Hrm ... interesting thought: is a market dependent on financial services
analogous to one dependent on natural resources?

Particularly if those financial services are extractive in nature?

~~~
timiscool999
Maybe, but they look like two separate problems to me.

Russia's is a "resource curse": <http://en.wikipedia.org/wiki/Resource_curse>

Our current financial system looks more like a twist on a "rent seekers":
<http://en.wikipedia.org/wiki/Rent_seeking>

They're kind of similar, but only because resource curse countries end up with
a bunch of rent seekers and corrupt officials.

~~~
dredmorbius
I've got to mull this one over a bit. After several decades of study, I'm just
starting to really grok money and finance.

Notable WRT resources curse / Dutch disease is the Norwegian counterexample:
<http://ideas.repec.org/p/ssb/dispap/377.html>

~~~
bh42222
Norway had a strong law and order foundation _before_ they hit oil.

~~~
gwern
True, but the article the other day on Norway said that they squandered the
oil up until the 1970s? when they brought in a foreigner to advise them on how
to set up their current successful system. The law and order helped them
recover from their mistakes, yes, but it didn't stop them from making them and
if the oil had run out before they recovered...?

------
DevX101
Here's an interesting long bet: Warren Buffett has bet $1M that the S&P500
will outperform hedge funds over a 10 year period.

<http://longbets.org/362/>

~~~
nirvana
Unfortunately, the details are being kept confidential, so I'm not sure what
is being counted as "hedge funds". There's "hedge funds" that engage in very
risky investments, ones that engage in investments that wouldn't normally be
risky except that they incur counterparty risk, and then there's hedge funds
that could be fundamentally very conservative, even more conservative than
Buffett.

For instance, if you ran a fund that simply bought BRK shares, and, each year,
bought just enough out of the money options to protect against a %10 decline
in BRK, that would be a hedge fund. Buying the puts is a hedging position, but
I would say that such an investment would be damn conservative, and certainly
in line with Buffett's investments strategy. (He cautions against derivatives,
but covering a long position with puts isn't what he means.)

~~~
pflats
> _Unfortunately, the details are being kept confidential, so I'm not sure
> what is being counted as "hedge funds"._

I wouldn't be surprised if they had simply agreed on a subset of prominent
hedge funds from '08 that the two agree represents whatever range of
investments they think is important. I'd assume they're unwilling to disclose
the methodology simply to avoid any accusations of outside manipulation or
something.

Makes sense to me, at least.

------
capkutay
Dyson's right about Russia having a wealth of talent, but I'm surprised he
didn't take into account the US University system and the amount of immigrant
talent it attracts each year.

~~~
troymc
The Dyson in this bet is Esther Dyson, who, last I checked, was female.

------
jerhewet
If you've been in the industry long enough (in my case, since 1975) you
realized a _long_ time ago that Esther Dyson doesn't have even the vaguest of
clues when it comes to the computer industry. The smart bet is to do the exact
opposite of whatever she predicts.

------
mathattack
In fairness, if you replace Russia with India, is it so far off? Remember that
there were many years of books with titles like, "The rise and fall of the
American programmer" that talked about the educational system in Eastern
Europe.

Thanks for sharing the site!

------
haberman
How have I never heard of longbets.org before? This site is fascinating.

~~~
celoyd
As you may already have discovered, it’s part of the Long Now, which is making
the 10,000 Year Clock[0] (about which a friend of mine wrote a play[1], and
which helped inspire Neal Stephenson’s sci-fi novel “Anathem”). It involves a
bunch of the smartest futurists around, including Stewart Brand (famous for
the “Whole Earth Catalog”), Danny Hillis (the Connection Machine), and Brian
Eno (producing Talking Heads and U2).

0\. <http://en.wikipedia.org/wiki/Clock_of_the_Long_Now>

1\. [http://www.seattlepi.com/ae/article/You-don-t-have-to-be-
a-s...](http://www.seattlepi.com/ae/article/You-don-t-have-to-be-a-scientist-
to-appreciate-1274154.php)

------
vnchr
Cached copy:
[http://webcache.googleusercontent.com/search?q=cache:http://...](http://webcache.googleusercontent.com/search?q=cache:http://longbets.org/5/)

------
6ren
mathematical skills ≠ business skills

------
javert
People tend to assume that in today's era, progress is inevitable. The is a
dramatic illustration to the contrary. Progress depends on a stable, pro-
business system of government. Which, in turn, depends on a certain kind of
underlying culture. (This is why I find Occupy Wall Street threatening.)

~~~
martythemaniak
OWS is a protest movement, the core of which is against corporations buying
laws. The corporations do this because they want to protect their inefficient
business models by enshrining their way of doing things into law. For example,
content owners wish to censor the internet so they can keep selling consumers
crap, while banks wish to tax everybody when they make a loss on their trades.

OWS is not anti-business, it is anti-corruption, and there's few things more
damaging to progress than corruption.

~~~
AJ007
You would never know that based on the signs being waved and the t-shirts
being worn.

~~~
jacoblyles
Yeah, I thought it was about "End Capitalism Now!" and "Bail out students", or
something like that.

------
lo_fye
Damnit, I thought I'd read Esther Dyson vs Bruce Campbell :(

------
nirvana
I found this one on bit coins: <http://longbets.org/611/>

Nobody has taken the other side of it. I'm skeptical (but intrigued) by bit
coins, but I wouldn't take the other side of this bet, simply because bit
coins have just started out and aren't yet a "fully mature form of money".
That is to say, its a lot easier for a penny stock, or any other cheap
commodity, to double (or outperform by 2 orders of magnitude) a global
currency or form of money that has millions of owners, and relatively stable
value.

~~~
jessriedel
The problem with longbets is that you can post a challenge without being
required to accept a bet. I emailed the organization and they helpfully
confirmed this.

>[Me:] "Must the makers of predictions (eventually) accept a challenger? I get
the impression that several of these predictions are dubious yet have been
sitting for awhile without forming a bet. It seems against the spirit of the
site to allow predictors to grand stand without having to put their money
where their mouth is."

>[Them:] "Predictors put their money where their mouth is by paying $50 to be
published. They do not, however, have to accept challenges to their
Predictions."

If it were up to me, they'd also allow bets with odds other than 50-50. Still,
I think it's a great site.

~~~
bermanoid
_The problem with longbets is that you can post a challenge without being
required to accept a bet._

That's pretty shady, especially since it sends a misleading message to see a
bet being offered with no challenger - without knowing about that part of the
policy, I'd assume that meant nobody had the balls to take them up on the bet,
not that they themselves didn't have the balls to accept any challengers!

Longbets should be removing bets from public display if too many reasonable
challenges have been submitted without an acceptance. I'd leave it to them to
decide what "reasonable" means, maybe something like falling within a certain
range of amounts (perhaps making the offerer specify this beforehand?), with
argument content that passes a cursory review.

I'd at least suggest that they manually review "bets" that pass a certain
threshold of page views and/or challenge requests, and tried to determine
whether the bets were proposed in good faith or not, up to and including
interacting directly with the people offering the bet and asking them for
explanations about why the challengers didn't meet their requirements.

~~~
nialo
Just posting some sort of list of unaccepted challenges would solve most of
this problem with relatively little effort, and seems like a large
improvement.

