#### Can startups reduce suffering in the world? When it comes to reducing suffering, the solutions can be of three types: - The solution reduces people's suffering, and they can afford to pay for it (e.g. cancer treatment) - The solution reduces people's suffering, but they CANNOT afford to pay for it (e.g. potential rare disease treatment which wouldn't make a big enough market for anyone to invest into) - The solution reduces non-human suffering and nobody wants to pick the bill for it (saving wildlife, an activity that doesn't benefit anyone) Solutions often comes from startups or startup-like groups (say activists), so ultimately startups are a path to reducing suffering (but obviously only _some_ types of startups are aligned to reducing suffering.) #### How should you invest your money for reducing suffering? Profits are a measure of value created in the world (this value may not necessarily be aligned with your ethical view, but it is value nonetheless and that's why people are paying for it). It's possible to align profit-making initiative with an ethical view, so that when profit increases, your ethical goals get fulfilled. Ideally, your money should be invested in 3 parts: 1. Money for yourself and family/friends 2. Money for startups that are directly aimed at reducing some sort of suffering 3. Money for non-profits that are directly aimed at reducing some sort of suffering, where there's no clear way of for-profit funding The question should be how to allocate money to these 3 categories and when to do how much. #### Should you maximize returns (and donate) or should you take a hit on returns but only support suffering reducing startups / companies? From first principles, returns will reduce if you take any other factor beyond "potential economic returns" while making investment decisions. For example, if shares of a cigarette company is available at good valuations but it doesn't align with your moral framework, your disinterest will reduce the demand in the shares and someone else can pick up the shares at a slightly lower value (and hence earn higher returns). However, this assumes perfect information and efficient markets. In reality, markets are semi-efficient. To decide whether to invest or to donate, one important factor is to consider what's the limiting factor in either one's success. That is, what role _you_ can play on either to help make a net new impact in the world. I feel the limiting factor in either is availability of capital outside the trendy sectors that are already overcrowded by other investors / philanthropists. ##### What most people with money are doing: > Competing to invest in the same "hot" startups or donate to organizations/causes that already have plethora of funding. ##### What you should strive to do with your money: > Prioritize [[Project ideas for reducing suffering]] and then figure out highest probability path for impact (could be starting your own or supporting an existing for-profit or non-profit initiative). Don't get hung up on donating v/s investing decision. Just find how an impact can happen. #### How much to donate or invest? Ideally, on your deathbed you should have 0 cash. In practice, this can translate into the following thumb rules: - **Have an egg's nest to survive a couple of years without cashflow**: Perhaps having remaining life expectancy years of living expenses put away is good enough to give mental comfort. Invest this money in long term index fund where it'll grow faster than inflation, preserving the purchasing power. - In my case, for example, assuming life expectancy to be 75 and annual expenses of Rs annual_expenses lakh, a nest egg of Rs nest_egg lakh. - So nest_egg = (75 - current_age) * annual_expenses - But as your age grows or expenses change, this figure will change too. - **All remaining money should be either invested in ignored suffering reducing projects (startups or non-profits).** Use any of the[[Measures of suffering]] to compare and prioritize (such as suffering saved in terms of lifespan time per $ invested) - If you're investing in startup, ignore returns potential because most startups fail and you'll likely not get your money back. Even if you get your money back, you'll anyway invest somewhere else (and the limiting factor is finding ignored causes, not money typically) - Just focus on *uncertainty-adjusted suffering-time saved per $ invested*. - **Amount of money available to donate or invest = Total net worth - nest egg (annual expenses \* remaining life expectancy) - Recalculate this every year - Yearly budget for donating or investing = amount of money available to donate or invest / remaining life expectancy. - Yearly budget = Rs (net_worth - nest_egg)/(75 - current_age) = Rs annual_corpus_for_donation_or_investment - **Unlock your startup equity's worth once you've discovered big, ignored cause where money alone can make an immense difference in reducing suffering**. Until then keep growing the equity's worth. ##### Another set of thumb rules could be this: - The forever portfolio suggests that you can draw 3-4% from your portfolio without emptying it in your lifetime. - So, amount of money to invest in a year = (if you don’t have active income), 3% of portfolio - annual expected expenses ans (if you have active income), 3% of your portfolio #### Summing up To sum up: - **Develop a framework to prioritize [[Project ideas for reducing suffering]]**. - Without a framework that guides on [[Measures of suffering]] and other related topics, making highest impact possible on reducing suffering will be impossible. - **Prioritize [[Project ideas for reducing suffering]]** using the developed framework. - Populate the list of projects that are ignored but have potential to reduce a lot of suffering in the world - **Pick ~2 projects per year and invest your time + money to make an impact**. Your involvement could take one of the following options: - Find out who else is interested in similar ideas and what support they need - If it's an existing team interested in pursuing a for-profit initiative but is constrained by capital (i.e. your capital can help them do something very specific to make a large impact in reducing suffering): - Invest in them and help them scale - If there's an existing non-profit - Apply your [[Philanthropy guidelines]] and see if zero-interest loan or project-based funding makes sense - Pitch them a specific project first (where you can get involved). If that doesn't work, see if a zero-interest loan can work for them - If there's nobody actively interested: - Depending on the project, incubate and provide seed funding for a new for-profit or non-profit