Bringing It All Back Together

Early-stage companies are exercises in experimentation, iteration, and figuring things out. You try one thing, it sort of works, but you see a tangential opportunity and go after that. Sometimes that leads to a full-on pivot, other times it leads to an evolution of the opportunity.

This process can create multiple products, services, projects, and it can look messy. I love it when founders bring it all back together into one cohesive package. That doesn’t always happen, but when it does, it is a thing of beauty.

That happened this week with our portfolio company Numerai. I saw this tweet by Numerai founder Richard Craib:

If you have not been following Numerai, let me explain.

The initial idea behind Numerai was to build a quant hedge fund using “the crowd” to surface the machine learning models. They do that by running the Numerai Tournament and taking the best models and operating a hedge fund with them. That is what Numerai does and that business is working well.

Along the way, Numerai observed that incenting the players in the tournament with a crypto-asset they could stake on their models was a better way to crowdsource the best models. So they made a crypto-asset called Numeraire.

Numeraire is a crypto-asset that you can trade, own, and, if you are playing in the tournament, stake.

So then Numerai was in several businesses, the hedge fund business and the crypto business.

And then the team observed that there was a generalization of the thing they had built that had much broader applications – a decentralized marketplace for predictions. So they created a protocol called Erasure that allows anyone to build markets for predictions.

It started becoming a fairly messy story.

But last week it all started coming back together when team successfully ported the Numerai Tournament to operate on the Erasure protocol.

This accomplishes several things. First, it starts to tie all these loose threads together and the story becomes easier to understand. And also, you have a very successful application, the Numerai Tournament, running on Erasure. So developers can see what Erasure is good for and can start building other things on it.

I am excited for the Numerai team. And I quite like this example of how things get messy as you expand the opportunity but you can clean things up by bringing it all back together and would encourage founders and teams to look for opportunities to do that whenever possible.


Comments (Archived):

  1. Vendita Auto

    I know my limitations so I ask are there parallels with today’s post and :”Yeah, It’s Still Water”https://www.epsilontheory.c…

  2. pointsnfigures

    Prediction markets are powerful markets. Years ago before the govt banned them, the Iowa Prediction Markets were super interesting to economists.

  3. William Mougayar

    Well, the trick is that they should be able to iterate swiftly as a necessary first condition.

  4. Richard

    Super smart – the prediction product is a awesome addition. If executed well it could have the size of a platform along the lines of Twilio.

  5. prankeapple

    Kik didn’t work out so now you’re shilling Numerai? It’s definitely got a nice aesthetic, and has a hipster cool kind of je ne sais quoi. But at the end of the day, a hipster shitcoin is still a shitcoin.You can do better than this my man. Have a look at the stuff happening in Cosmos. Check out NEAR Protocol. Look at the amazing innovation happening in the DeFi space. Zero-knowledge technology as well is seeing amazing innovation after innovation just waiting to be productized.