Word Is Bond: What If Companies Bet On Their Future

How do we ensure that groups of people working on the same thing don’t do bad stuff to other people?

Fines and jail time are a pretty good solution. They hold organizations liable, to a certain extent. It seems that the leaders of an average organization would rather take minor precautions, pay due diligence, or hire people to take care of some risk than pay the government.

But the larger the problem gets, the less visibility it has, and the more expensive it is for the government to investigate, the ROI on the spent tax money drops. Especially when we couldn’t manage to even think of them a few years ago. Perhaps for good, regulation is a bit slow.

Fines are good for some things, but what if we could do better? Because I think we can, so long as we assume that democracy is perfect. And we already do in many other major decisions, so just let me add this one to the pile.

There are platforms where you can bet on any future outcome you can think of. Most of them are crypto-based, but I think that’s an implementation detail to what I’m about to discuss.

Given enough time, the truth reveals. A company’s financial health, the due diligence behind their products, the honesty and commitment behind the care they advertise to their stakeholders.

Given this, anyone who’s skeptical about the behind-the-scenes of a company can start a bet against it. And companies can boast and advertise about exactly how much they trust themselves to deliver what they have promised, by betting on themselves.

In other words, companies pre-emptively fine themselves in an act of “inherited depravity” for all the companies that failed before them.

And why would a customer [company] use a product [a bet oracle] that promises nothing but money with mediocre returns? …

Some people really believe the value of putting your money where your mouth is. These people are also customers, investors, partners and competitors. A lot of people don’t care if Google bets that Gemini 3.5 will not end the world by 2030, but a good population of LessWrong would be interested. Therefore, the company bet is an indirect input to their future profit, similar to advertising.

This can also be good for the company itself. Once a bet is placed by a manager, their direct reports now have a loss to manage. You might argue this is a toxic way to motivate, but loss aversion says pain potential works. Plus, it doesn’t have to be a huge amount. Think Beeminder.

… why the hell would companies fine themselves an amount that they would care if they lost?

They might not, and likely won’t, and that is OK. Each bet made by a company is a press release. It still conveys meaning, and the value of the bet represents an optimum in the bet-maker’s mind.

Isn’t it stupid for a company to not reinvest every dollar they make and continue to seek growth?

Entrepreneurial spirit hates cautiousness, concern, and regulation, not just because they blur visions and make things slow and complicated but also because they sound nerdy and uncool.

And that spirit would be right, because who the fuck really wants to slow down? Even the ones who are for decelerating find arson hot.

But you know what else is hot? Making that shit happen, despite the odds.

Skunkworks. The struggling small business with an awful credit history. Stardew Valley.

There’s a reason why CEOs like to overstate their early struggles and understate angel investments.

Instead of taking VC money and spending it on customer acquisition (giving away free shit) in the name of growth, you take it and you throw it right in the trash.

It sounds bad, but don’t tell me there isn’t a passionate, even romantic appeal.

Company investments do the same thing, but better.

I disagree that the profit made on company investment is a good indicator to track adherence to company / stakeholder / customer values. I’ll leave this to another discussion for another day.

…

In upcoming writes, I want to expand on this idea in threeavenues. 1) How the economics behind fines and bets (proactive fines) comparatively play out, with regards to the size of an organization and the scope of the outcome and 2) how stakeholders would interact with such bets and 3) possible principal-agent problems (who places the bet, and who makes the bet.)

Thank you for reading.