Manifold Markets Founder - Predictions Markets & Revolutionizing Governance

1. 0:00 – 2:29

   Introduction

   1. DPDwarkesh Patel0:00

      Now, here is a question I've had for a while. Why- why don't companies who have direct incentive to get the best possible information on themselves, on the factors affecting their business, why aren't they using internal prediction markets if this is the best way to aggregate information?

   2. NANarrator0:17

      (Instrumental music)

   3. DPDwarkesh Patel0:23

      All right, this is gonna be fun. Uh, today I have the pleasure of speaking with- with my friend, Steven Grugutt. He's the founder of Manifold Markets, which has received a grant from Scott Alexander. Um, Scott has written thousands of word about these- thousands of words about these guys, and they've raised a two million dollar seed round. And, um, you know, i- i- it's an incredibly exciting project. So, um, Steven, why don't you tell us a little bit about Manifold Markets?

   4. SGStephen Grugett0:46

      Great. Uh, thanks so much for having me on this podcast, Omkesh. It's great to be on here after seeing other people like Tyler Cowen and David Deutsch. I guess first thing, I'm- I'm one of three co-founders of Manifold Markets. Um, but what we're- what we're doing is building a platform for user-created prediction markets. So the idea is that anyone can come onto our site and create a question about anything that they care about, and then they can, um, have their friends and other people on our site come bet on that, and that- the betting process, through the magic of our, like, market mechanism, will help, uh, you know, get the best and most calibrated probabilities, um, that you could find.

   5. DPDwarkesh Patel1:24

      So, um, l- let's talk about the mechanism here. So the, uh... Uh, correct me if I'm wrong, but the idea is you use real money to m- buy Manifold dollars. Uh, w- what is your reason for expecting that people will care a lot about how many Manifold dollars they have? Um, so w- what is your hypothesis about human nature and reputation that makes you think this is something people are gonna invest a lot of effort and time into calibrating?

   6. SGStephen Grugett1:45

      Mm-hmm. Yeah. Uh, so I guess- I guess to- to take a step back for people listening to this, uh, Manifold uses a- a play money currency. Um, if you sign up right now, we'll give you a thousand Manifold dollars, which is our in-platform currency, uh, to- uh, for you- for you to use and bet as you see fit. Um, but the- the reason why we think that, uh, play money can work is that peop- uh, people are driven more by, uh, status and competitiveness, um, than greed. You know, we- we kind of see ourselves as a social game where, uh, people can come on to hone their skills at predicting, and then demonstrate to others that they really do know more about what they- what they're talking about, and they can prove it with an ob- um, an objective track record, uh, from

2. 2:29 – 5:16

   Predicting the future

   1. SGStephen Grugett2:29

      their betting history.

   2. DPDwarkesh Patel2:30

      Yeah. That- that- that's a- that's a very interesting point, which makes me wonder, do you expect that in the future Wall Street firms will be enticed to get the top people on the leader boards on Manifold Markets to come work for them? One of the objections that Tyler Cowen has to, um, prediction markets is, you know, I- I... He- he's kind of tongue-in-cheek about this, but I- I remember at one point hearing him, uh, saying, "You know, if you guys are so good at predicting stuff, you would expect all these hedge funds to be trying to constantly hire you guys. The fact that they're not makes me think that, you know, this is kind of just a hobby. This is not, uh..." So I- I... Curious about your reaction. Do you- do you expect, uh, people to be coveting these, uh, these top predictors for their, uh, you know, for- for their prowess at, uh, predicting the future?

   3. SGStephen Grugett3:14

      Yeah, I'm obviously very biased, but I think something like that is possible. Um, I think the... We have a- a leader board right now. Our top predictors are actually quite good. The- the person who, uh, who's, uh, currently occupying the top slot, uh, won big on the Russian in- uh, on one of our markets on whether Russia would invade Ukraine in February. In the- so in the forecasting community in general, there actually is, like, a- as you would expect, um, a fair amount of overlap between the people who u- who are using these services and financial professionals who actually do manage money or trade- uh, trading as- as their profession. Um, so I'm not- don't entirely agree with the- with- with the premise of the question, or Ty- Tyler Cowen's earlier point. Um, although obviously our ti- uh, you know, as a play money platform, we do attract a fair number of hobbyists who, despite not having a financial background, still are quite good. I do believe that there's a lot of, like, untapped potential, um, in the- in these top predictors, and that sites like ours actually are able to identify them.

   4. DPDwarkesh Patel4:13

      In your experience, what has made people who are the top predictors so good at, uh, so good at the art? Um, i- is it just their domain knowledge? Uh, you know, I- I know there's different theories about how people can get good at predicting. Um, you know, based on you- your experience, what kind of traits do you identify here?

   5. SGStephen Grugett4:30

      Hmm. So per- or probably a big one is just, like, experience. Um, a lot of our- a lot of our top predictors have actually come from other sites, um, and have spent a good deal of time thinking about forecasting and prediction in general. Probably the first hurdle that most people have to overcome in- in order to start improving as a predictor is getting used to, uh, clarifying and crystallizing- crystallizing your views about the world. You know, if you're thinking about some political event, you can- you can, uh, very easily, m- uh, incorrectly, uh, you know, misremember that you got some event right or not. Um, but if you're not, like, actively putting out, like, numerical predictions and recording those to keep yourself- to keep yourself honest, it's very h- difficult to improve. So if you- you have to have- that's- that's a good first step, and a lot of our users already cleared that before- before joining our

3. 5:16 – 6:20

   Getting Accurate Information

   1. SGStephen Grugett5:16

      site.

   2. DPDwarkesh Patel5:16

      You know, w- we talked about whether, uh, if finance firms would want to hire these predictors, but it would be incredibly exciting if we lived in a world where, you know, news firms would want to hire the people who are very good at predicting. Scott Alexander actually has a very interesting post where he, um, where he h- h- where he speculates, what if you had investigative reporters who could short... Like, let's say they're- they discovered that some government has really fucked up. They could, um, they could, like, I don't know, short the market on the government's, uh, GDP in a year, and then, uh, release the information, and then benefit from ha- having that, uh, from their investigative journalism.... I, I don't know if you have... What's your reaction as to that, those kinds of ideas?

   3. SGStephen Grugett5:55

      Oh, I, well, I think that's great. I think that's great. I think that's a very obvious case of a pro-social benefit of markets using, using the, the market mechanism to... Or in some ways is kind of like providing a public good, um, or, uh, that wouldn't, uh, you know, uh, society otherwise wouldn't be able to produce. Getting accurate information about, uh, you know, corporate, uh, malpractices or whatever is, is very valuable to society. Anything that we can do to encourage that

4. 6:20 – 9:29

   Potentials

   1. SGStephen Grugett6:20

      is good.

   2. DPDwarkesh Patel6:20

      Th- this is the question a lot of people will be interested in, and maybe you can't comment, but is there any potential, um, that eventually, uh, through crypto or offshoring or some other option, that the... s- somebody's ability to predict will somehow be able to get reflected back on them in some sort of monetary gain outside of the, you know, play money?

   3. SGStephen Grugett6:40

      Oh, on our, on our site? Um, I think that's, I think that's, uh, po-... Well, first of all, we, we are planning to do things like, uh, host tournaments with real cash prizes. You know, that's something that we are able to offer despite being a play money product. Uh, you know, we originally started as a crypto, a crypto idea before, uh, pivoting, pivoting back to Web2. You know, that's funny. We're, we're one of the first firms to pivot from Web3 back to Web2 for, like, usability, u- usability, um, reasons. But, uh, you know, cri-... Real money crypto, uh, uh, you know, creating a real money crypto offering is something that's on our back burner and something that's worth thinking about, that we're thinking, actively thinking about. It would probably be in the form of a, uh, separate product, um, though, rather than as an addition to our, our current offering.

   4. DPDwarkesh Patel7:24

      Uh, I, I, I'm curious, uh, what the usability concern was there. Is it like connecting the MetaMask wallet to your account? Uh, your, your current process is so easy, you can basically make a bet within, uh, you know, 30 minutes or 30 seconds of visiting the site. I, I'm curious what the concern was there with crypto.

   5. SGStephen Grugett7:40

      Um, I think there, there are several things. The first is just, like, onboarding. You know, most v-... You know, only a tiny chunk of, uh, you know, the global population actually has, you know, created a MetaMask wallet or a Solana wallet or a- or any of these things. And the process of doing that and transferring tokens to the wallet is actually pretty cumbersome and not yet very easy. So, that's kind of a huge hurdle just to start with. Then you have to add in all of the other, uh, frictions associated with being a crypto platform. It takes a while for transactions, uh, to be confirmed. Um, you have to... You know, if you're doing everything in a purely decentralized way, you will, will have to sign each transaction with your wallet, stuff like that. Uh, each of those things is just like an additional hurdle, you know, that will prevent, prevent users from, you know, being able to bet and enjoy their experience on the platform.

   6. DPDwarkesh Patel8:27

      Yeah, not to mention transaction costs, which would, uh, reduce liquidity, right?

   7. SGStephen Grugett8:29

      Yeah, yeah. Th- that's, that's a big one too. Um...

   8. DPDwarkesh Patel8:31

      Yeah. Um, eh, so, you know, one of the things, uh... Speaking of reputation, one of the things that seems interesting to me. My prediction over (laughs) the, uh, long term is that the reputation of the market maker, or market creator rather, will matter a lot, because in your website, they're the ones who get to resolve, uh, questions, um, or, I mean, you know, resolve markets. Uh, so what is equilibrium there? 'Cause is it just that there's gonna be a few trusted, uh, market creators, uh, who people trust to adju- adjudicate, uh, adjudicate what happened? Or w- you know, will anybody be able to have, create a big trusted market?

   9. SGStephen Grugett9:07

      I think it'll be kind of a, a bimodal distribution where you'll see a few huge market creators that are high trust and have, um, you know, huge volumes across, uh, a l- a lot of their markets. And then there'll be a very long tail of smaller individuals with less of a track record, and their markets will be participated on by people, you know, closer to them on the social graph, their friends or friends of friends and stuff,

5. 9:29 – 11:04

   Not using internal prediction markets

   1. SGStephen Grugett9:29

      stuff like that.

   2. DPDwarkesh Patel9:30

      Now, here's a question I've had for a while. W- why don't companies who have, uh, you know, a direct incentive to get the best possible information on their... uh, you know, on, o- on, on themselves, on the factors affecting their business, why aren't they using internal prediction markets if this is the best way to aggregate information?

   3. SGStephen Grugett9:48

      Yeah, this, this is a great question. Um, so, uh, first of all, a lot of companies have, uh, have tried using prediction markets internally, including Google, GM, um, uh, the CIA, um, and a bu- a bunch of other firms as well. But for the most part, you find that, um, they, they will use it. People will talk about it for a bit. Um, they will even praise the benefits of prediction markets, but ultimately they'll abandon them. Um, and I, I think the, the main reason for that, um, and the, you know, a very Hansonian point is that, uh, people literally don't want to know the answers to a lot of questions. So, in a, in a corporate context, that mostly manifest, manifests itself in, um, the mana-... the manager not wanting to, um... you know, the manager choosing a course or vision for their company and then not wanting to get negative feedback about that. Um, even if the feedback is mostly positive, you know, the fact... Or like, it still can, like, seed doubt on the part of employees and, you know, the introduction of a prediction market by itself might just, like, lower, lower the odds that that mission will be successful. Um, y- you know, even though one wouldn't think that just m- the addition of more information would actually change the outcome. Um, but I would say that, that's the biggest point. It steps on management's toes, and they

6. 11:04 – 13:31

   Doing the painful thing

   1. SGStephen Grugett11:04

      don't like that.

   2. DPDwarkesh Patel11:05

      I- interesting. It's almost the opposite of his point about consultants. So his point about consultants is that they basically put a pretty face from Harvard, uh... That they allow you to say, oh, th- th- this... You know, this highly credentialed person who talks well, um, supports what I'm doing, so, th- that, that's why we should go ahead and do it. Um, now, h- h- one question I've always had about this Hansonian view is, even if it's true, uh, you would expect some firms to do the painful thing or some managers to do the painful thing. Um, I mean, you're a startup founder. You know that, um, many of the most successful startup founders, um, will, you know, will go, go ahead and do something that is, you know, quite difficult, um, that they don't want to do. And, you know, we would expect over the long run for the market to be, uh, dominated by players who have done the thing that helps their company, right? Um, out of all the thousands of companies that are out there. So why... Uh, do you think in like a decade or two all the best companies in the world will have internal prediction markets? Or is the force, uh, from managers against this so strong that that's not gonna happen?

   3. SGStephen Grugett12:04

      Hmm. So I, I would say there are two parts. I would say the first is a, a rational concern on the part of managers to not use prediction markets because it undercuts their mission. Part of, uh, it's not merely an irrational quirk, uh, of human nature, although or m- perha- perhaps it is in general, but it's not an irrational quirk of the manager's part in choosing not to use them for a certain context. Um, the second part is, they're actually, uh, I think they're, the, the areas where prediction markets more clearly add value without distracting from the mission or hurting management are where they're used for, for their informational aspects or, um, to do like market research. You know, questions where you need to like survey... A broad survey of, like, what consumer behavior will be, how our competitors will behave, that sort of thing. I think that's a, a much clearer example of where prediction markets can provide value in a corporate setting, um, which, you know, um, you know, doesn't fall prey to most of these downsides. So and then the question becomes like, why, why hasn't that happened yet? Um, and I would say p- part of that is just like, uh, part of that is actually just a usability, um, usability concerns. It's actually very hard to create a product that's extremely simple and easy for, like, all of your employees to use that doesn't require too much thought but can still yield, like, reasonable results. Um, and I would say part, you know, part of our goal with Manifold really is to, like, bring the bar down lower such that more and more people can participate in prediction markets and it be a, like, a, a pleasant,

7. 13:31 – 14:52

   Decision Making Process

   1. SGStephen Grugett13:31

      fun, and, uh, easy to use experience.

   2. DPDwarkesh Patel13:33

      Yeah, yeah, th- that it definitely is. Um, you know, I was about to suggest ma- you know, m- maybe it would help Zuckerberg to know, maybe he could like subsidize the market to find out how many VR devices there will be in the world by 2030 to help make, help him make his, um, you know, Metaverse plans, but may- you know, maybe he doesn't wanna know that, or maybe at least he doesn't want that publicly known (laughs) . Um, uh, so, y- you know, o- one question I have is, in what situations is it best to have a single person, uh, compound all the, uh, available knowledge and is it... Wh- in what cases is it best to kind of decentralize the decision making process by having a market?

   3. SGStephen Grugett14:13

      Hmm. I would say that, uh, in general, uh, like if you're making a decision in the real world, it's often very difficult to operationalize what the success criterion is down into one thing that the market can then measure and a- measure and be used to act upon definitively. Um, I, I would say... So that, that's kind of the big- the biggest case for, you know, like, personal discretion or, like, hu- uh, human involvement in decision making. Uh, or I... Or in general, I think, like, prediction markets work best when, uh, people are creating, creating markets on a variety, uh, o- of metrics and then using human intuition to figure out what the best p- uh, course of action is to proceed,

8. 14:52 – 16:23

   Grugett’s opinion about insider trading

   1. SGStephen Grugett14:52

      um, using that information.

   2. DPDwarkesh Patel14:53

      I'm curious, what is your opinion about, um, insider trading in Congress, for example? I, I know this is like a big debate. Um, do you think it serves like a useful price discovery function or too much of a hazard of adverse selection? Uh, well, uh, k- kind of a tangential point, I'm just curious about your opinion.

   3. SGStephen Grugett15:09

      Hmm. Um, I would say in general my, my view of insider trading is, uh... Or I, I basically have Matt Levine's view, is that it should be viewed as a, like, taking from shareholders rather than a, like, fairness or equity, uh, type of discussion. Um, uh, I, I do think in general, like, inser- insider trading obviously does benefit price, uh, efficiency, but there, there are other things that we care about. We also don't want, um, uh, in general our corporate shareholders to be profiting from, um, you know, from, uh, certain types of information and all those. In the case of like, um, you know, con... or like, uh, you know, con- congressional betting or, uh, or, uh, insider trading by elected representatives, I think that's, uh, for the most part not, not cool. We would prefer for them to be compensated directly through salary or other things which are more open and transparent to the public rather than, you know... Uh, you know, this is kind of a way of profiting or a, you know, or a, uh, like a roundabout way of, of corruption in some sense, you know. You can make a deal with some company and then trade on that and instead of... The money d- never directly passes into your hands but you're privy to this insider information, um, and the net effect is, is, uh, you know, equivalent to this

9. 16:23 – 18:17

   The Role of prediction markets

   1. SGStephen Grugett16:23

      practice which we would not normally condone.

   2. DPDwarkesh Patel16:25

      Now, uh, one place where I'm skeptical of prediction markets is when we're talking about, um, questions that resolve over a long period of time and which the, um, which there's no good base rate for so the market hasn't really been trained on that kind of question. One example would be, what are the odds of catastrophic AI by, like, 2030? Which I'm sure is a question on your website. And, um, I- I'm not sure how much credence I put into the, uh, prediction on this question. Um, I, I, w- uh, I mean, uh, one, because I- I'm not sure why I would expect that much, um, uh, good information to be aggregated here in the first place, would it just be... Uh, I mean, w- what is the information they're going off of? Um, s- uh, and, um, and second, uh, I guess more important is like, you know, um, why would somebody bet, uh, yes because the best case scenario if they bet yes is they die anyways, right? They have nothing to gain, uh, if catastrophic AI happens. So, um, in, in these kinds of scenarios, w- what do you think is the role of prediction markets? Do you have these kinds of concerns? Uh, what are your thoughts?

   3. SGStephen Grugett17:25

      Oh, I think, yeah, both of those concerns are very valid. Um, I think... Uh, part of this is just like a fundamental, like, human constraint, is if things are very far in the future, we care about them less. Um, it doesn't really... Uh, you know, that's true in prediction markets but it's also true in every other domain as well, and ever- every other forecasting tech- technique as well. You know, um, you know, uh, the interest rate is, uh, like a fact about human nature, um, or like s- discounting of the future is f- like a fundamental, um, facet of human nature, um, and there you can twiddle with the mechanism h- here on the margins here or there but I don't think it'll fundamentally change that. For your, for your second point though, uh, y- uh, y- your other point is, is very well, well taken too, that you can't, you can't like bet, bet on an apoc- uh, be- bet on apocalypse, you know. You're not gonna be there to, to collect your winnings.... uh, the money is worth less in that universe, so you-

   4. DPDwarkesh Patel18:16

      (laughs)

   5. SGStephen Grugett18:16

      ... you should

10. 18:17 – 20:33

    Dealing with the Speculators

    1. SGStephen Grugett18:17

       rationally, uh, bet against it.

    2. DPDwarkesh Patel18:19

       Actually, it's, uh, B- Bryan Caplan and Eliezer Yudkowsky actually do have a bet on, um, an AI apoc- uh, apocalypse. The bet is about whether there will be, like, um, you know, catastrophic AI, I think, by 2030 is the exact bet. And so he, uh, Bryan pays Eliezer now and if by 2030 there hasn't been, uh, catastrophic AI, then Eliezer pays Bryan, you know, uh, the, the sum that Bryan paid plus more, based on, like, the ratio of their bet, uh, (laughs) which I thought was a, w- which I thought was an interesting idea. Uh, uh, just going off this topic a little more, you know, o- one of the things that Scott Alexander brought up in one of his blog posts is when you have these kinds of bets that resolve over the long term, let's, it's, it doesn't have to be as, like, uh, as far-fetched as AI, you know, AGI. It could just be something like who's going to be president in 2024. He pointed out that, at least at the, the, the time that he wrote it, um, Dwayne Johnson had, like, a 9% chance of being elected president, um, which seems high-

    3. SGStephen Grugett19:13

       (laughs)

    4. DPDwarkesh Patel19:13

       ... except why would somebody get their manifold dollars, um, held up in a question that won't resolve for four years, or, I mean, two years now? The ability of speculators to correct prices is diminished because they don't want their money to be held up in questions that won't resolve for a long time. Um, how, h- w- how are you guys d- dealing with that kind of problem?

    5. SGStephen Grugett19:34

       Hmm. I, I, I would say, like, so in general, the best way to tackle these long-term, more speculative questions is to try to break them down and address, uh, the proxy variables that are most relevant, um, to, you know, to predicting th- their success in the future. You know, so instead of asking, like, "Will the AI apocalypse happen in 2030- or, like, in 2050?" You can ask, like, "Will OpenAI's GPT-4, like, exceed, you know, this number on this benchmark," et cetera. Or similarly, for, like, The Rock, like, um, instead of asking, like, "Will The Rock be the president in, like, 12 years," or whatever, 20, whatever, uh, you could ask, like, "H- what are his polling numbers today?" Like, "What are his favorability ratings? Has he in-," like, "Will he indicate interest in running, uh, uh, show interest in running, uh, as a politician?" Et cetera, et cetera. And those are much more short-term questions which you can use to, you know, get a sense of, um, uh, you know, of the, the longer, the longer term, more speculative questions that,

11. 20:33 – 22:24

    Criticism of Prediction Markets

    1. SGStephen Grugett20:33

       um, you know, that interests you.

    2. DPDwarkesh Patel20:34

       Okay. So, um, you know, T- Tyler Cowen has this other criticism of prediction markets, um, that, listen, these prediction markets are tied to financial markets that you actually could bet on, right? So I, I, I don't know if you think somebody's gonna be, has a higher or lower odds of being president, maybe that has effect on, um, you know, G- GDP or something, and that has effect on, you know, stock prices, right? Um, and so then he says, "Well, if you're so good at doing, uh, so good at betting in prediction markets, why don't you just bet in, ah, the financial instrument that are linked to whatever question you're interested in?" And Bryan Caplan's response to this is, um, "There's so many different things that can affect any given financial instrument that it's not, it's n- you know, it's not easy to, uh, explain, okay, because I think, A, about, you know, uh, you know, Dwayne Johnson becoming president, I can invest in asset B." I feel like that defense of prediction markets is a criticism of your response that you just gave where you're saying short-term prediction markets, uh, can substitute for your, uh, interest in long-term prediction markets.

    3. SGStephen Grugett21:40

       Uh, I would say yes and no. So, like, uh, asset, you know, asset prices of, uh, you know, of major, major financial commodities and equities and other instruments, you know, are affected by way more factors than another prediction market on a more isolated question on some proxy variable that you care about. You know, the, the nice feature of prediction markets is that you really can isolate the particular risk that you care about, you know? And even if it's just discussing, like, one proxy variable, um, that's related to the overall picture, you can still get a much better understanding of the thing that you care about by picking multiple well-targeted, like, proxy variables and creating markets on those, rather than, like, oil prices, you know, which tell you many

12. 22:24 – 26:10

    The world when people cared about

    1. SGStephen Grugett22:24

       things, too many things.

    2. DPDwarkesh Patel22:25

       Okay, so l- lay out your vision for me of, like, 10, 20 years. We, you know, we have, uh, prediction markets are not only, you know, much more liquid and more people participate in them, and it's kind of, uh, everybody kinda knows what a prediction market is. So, like, people understand what it means when you say, um, you know, this prediction mark- uh, y- uh, uh, you know, B- Biden p- I guess it wouldn't be Biden then, but whoever the president is passing this bill-

    3. SGStephen Grugett22:47

       We don't know.

    4. DPDwarkesh Patel22:49

       ... had, uh, huh? (laughs)

    5. SGStephen Grugett22:50

       (laughs)

    6. DPDwarkesh Patel22:51

       Uh, well, one of the many things that would need to happen other than, you know, a constitutional change would be, um, m- major advances to longevity research.

    7. SGStephen Grugett22:58

       (laughs)

    8. DPDwarkesh Patel22:59

       Um, (laughs) oh, yeah. So what, what would the world look like, um, if people actually cared about, uh, you know, prediction markets and if it was, like, common knowledge, uh, w- what the market thought about any given situation that was happening?

    9. SGStephen Grugett23:13

       Well, I, I would guess, say first of all, I would say that would probably be a much better world, you know? Um, you know, across a wide variety of domains, I think it's, it's, it's better, better in n- in nearly but not all cases when people are grounded in terms of, of, of facts and, like, well-calibrated predictions instead of, like, pure speculation or, like, uh, you know, ideologically biased thinking. Um, but, you know, more, more concretely, I can imagine a world where you, you know, the average, like, news article, blog post, CNN station, if that's still around (laughs) in, uh, 10 or 20 years has, like, an embedded prediction market on whichever topic that they're discussing. And it'll just, like, allow people to, you know, immediately get a sense of what, like, the most grounded or, like, it'll, it'll immediately ground the opinions that pe- people are hearing in fact, um, and make it easier to have more productive conversations, um, and ultimately allow them to better understand the world.

    10. DPDwarkesh Patel24:11

        Um, I, I, I, I hope that's the case. Um, you know, there's a pessimistic take that people are not consuming politics to understand what's happening, um, or, uh, and that they, they will almost resent you for presenting th- them with this kind of information.

    11. SGStephen Grugett24:26

        That's true. Or, uh, certainly, I'm, I'm not implying that a large part, or even, like, a majority of the consumption of political news is based on a desire for accurate information. Um, you know, I think that would be a very, very naïve view of how, uh, you know, humans operate. Um, but y- but at least a small part of that is. You know? At least some portion, um, of people's desire to consume news actually is to legitimately understand the world, you know? And insofar as people are attempting to do that, you know, prediction markets, uh, can, can help.

    12. DPDwarkesh Patel24:59

        Uh, I, I really hope so, and I, I think that actually could be true. Um, whi- which is very exciting. So, uh, o- one question I have is, these trades that people do on your, uh, market, um, you know, 4% of the, uh, uh, 4% of, uh, the tr- what is traded, uh, or the trader's winnings, they go to the market creator, and 1% are just burned. Correct me if that's wrong. Um, but that seems like a negative sum, uh, bet, um, which means that ... Uh, w- are you concerned that that would reduce liquidity because people, uh, people have to get over a higher threshold of confidence, um, before they're willing to bet on any given market?

    13. SGStephen Grugett25:39

        Yes. Yeah, like, your ... Fee, fees impede, do impede the efficiency of the market in some sense. You know, there are people who, on the margins, would trade, um, if there were no fees, who don't when there are fees. Um, that, that certainly is true. Um, but part, part of the reason why we have fees is, like, to encourage things that we like. You know, we have a creator fee. The creator earns a commission on trades that incentivizes them, uh, to create and resolve more markets. Uh, we currently have a liquidity fee as well, which feeds into the liquidity pool, which y- you can think of

13. 26:10 – 28:49

    Grugett’s Profile Background/Experience

    1. SGStephen Grugett26:10

       as subsidizing the entire market.

    2. DPDwarkesh Patel26:12

       I, I'm curious, how ... W- what, what is your background? So, you know, one of your co-founders is your brother. Um, wha- do you guys have some sort of financial background or mathematical background? 'Cause, you know, I was looking at, um, you know, some, y- your technical documentation. And I, I'm not claiming to have understood it, m- most of it, but (laughs) I saw the formulas there that were there (laughs) .

    3. SGStephen Grugett26:32

       (laughs)

    4. DPDwarkesh Patel26:32

       I, I visually skimmed it. Um, and-

    5. SGStephen Grugett26:34

       (laughs)

    6. DPDwarkesh Patel26:35

       ... uh, d- do you ... Uh, h- how were you guys able to, um, get into this field?

    7. SGStephen Grugett26:40

       So, I, I guess, I, I studied computer science in school, then I went to work for SIG, or Susquehanna, it's, um, an options trading firm, for a little bit. Um, then I left to go work, um, for my friends, like robot- Robo Advisor startup, where I wrote their, like, um, y- you know, their portfolio optimizing software. Um, yeah, so I, I have some, uh, financial experience as well. And all, all three of us are, are technical, you know, and, and, um, and also have a previous background doing other entre- entrepreneurial things as well too. So we're all, we're kind of like full stack entrepreneurs, I guess you could say.

    8. DPDwarkesh Patel27:16

       Uh, c- can you talk a little bit about your, uh, previous entrepreneurial experience?

    9. SGStephen Grugett27:19

       (laughs)

    10. DPDwarkesh Patel27:19

        I think, uh, listeners might be interested.

    11. SGStephen Grugett27:21

        Sure. Um, so right before this, um, my brother and co-founder, James and I, were working on our, um, app called Throne. It's a subscription group chat app for online creators. So people like you, um, or like Instagram creators or DJs or anyone who's built up an audience online, um, the idea was that, you know, they can set up a, a private group chat with their, their audience where they're paying a subscription fee to join. Um, and, uh, basically, our, um, you know, the, the premise of our, of our, uh, you know, app is that we provide a much better chatting experience for larger groups. So it's designed, uh, designed to accommodate like the, the creator's entire audience and make that a, a seamless experience.

    12. DPDwarkesh Patel28:06

        Yeah. I have a friend who has a popular fantasy football channel, and he has, um, y- you know, he has a very profitable Patreon where, um, basically from the, the point of the Patreon is it'll give you the link to the invite to the Discord, uh, (laughs) -

    13. SGStephen Grugett28:21

        (laughs)

    14. DPDwarkesh Patel28:21

        ... which is... which seems convoluted. And thi- this product where you're just basically combining those two services, um, th- th- that, that seemed very

    15. SGStephen Grugett28:28

        Um, it's still going, uh, slightly ... Basically, we couldn't get the growth that we were hoping for. Um, or r- the, the ultimate cause is it's kind of too late. Like, the creator market is already saturated, um, with all different sorts of tools. Most creators are already monetizing one way or another and aren't keen on moving... monetizing

14. 28:49 – 30:17

    User Result Market

    1. SGStephen Grugett28:49

       using, um, a new platform.

    2. DPDwarkesh Patel28:51

       Um, w- so when it comes to the Manifold markets, I mean, the idea for having, um, prediction markets, even the idea for having prediction markets with play money, I believe, has been around for a long time, right? What took so long for somebody to make a user experience that was so, um, comfortable as yours? Or is there something else that, uh, you know, prevented somebody from making a Manifold markets much earlier?

    3. SGStephen Grugett29:13

       I would say the ... Yeah. I would say the other, uh, key piece of the puzzle that peop- other people were missing is the idea of user resolved markets. Um, which on the surface sounds a little bit crazy, that you just allow anyone to come and create a market on any question, where they are also the judge of that question and can resolve it in any way that they want. You know, that obviously opens the door to fraud and abuse and people taking advantage of the system, and the fact that there is a possibility of fraud basically has prevented other people from, like, even exploring this option. And, um, instead, they're opting for oracles or centralized authorities deciding the outcome of all markets. But of course, that, like, severely limits the scalability and, and reach, uh, you know, of a prediction market platform if users can't go on and create their own thing. So it was really realizing that user resolved markets actually can work, um, that led us, led us down this path. You know, there is a small amount of fraud, but it's actually quite small and manageable. Um, if you, uh, you know, allow users to choose which markets to participate in, um, they, for the most part, are making pretty good decisions about where,

15. 30:17 – 32:59

    The most important mechanism

    1. SGStephen Grugett30:17

       where to allocate their, their time and money.

    2. DPDwarkesh Patel30:19

       There's this great essay called Unix is Worse is Better. I, I don't know if you've gotten a chance to look at that. The, the basic point the author makes is...You know, if you, if you ask, like, "Why has Unix been so successful?" You know, um, you, you can say, oh, y- uh, the, um, I guess, uh, some of the features and, um, s- some of the design decisions are arbitrary, they're somewhat in-optimal in certain situations, um, a- and then, um, but then you w- it seems that m- maybe it was those bugs that actually allow Unix to be the kind of thing that can actually run on real computers. Maybe it's not, uh, (laughs) maybe it's not optimal from the, uh, the perspective of somebody who wants something super elegant and beautiful. Um, and, you know, uh, Grin has a really good blog post about this, uh, Bitcoin is worse is better, um, where he, uh, makes the same point about, uh, you know, Bitcoin. Like, some of the... I- I- I'm not remembering the details right now, but some of the de- uh, you know, some of the actual constants involving, like, y- you know, block size or whatever, they're pretty arbitrary. But the fact that just somebody just put the out the arbitrary numbers, um, meant that innovations that could have been around, um, years before in terms of cryptographic rule- tools actually got instantiated in like a, in a product like Bitcoin. Um, and it kinda seems like you're taking a similar attitude towards prediction markets, um, e- even if it's somewhat arbitrary to let users resolve markets, you know, th- that, that's better than having some sort of oracle structure which is super convoluted and hard to use, and may, may sound good in theory, but is kind of impractical as something that people would want to use.

    3. SGStephen Grugett31:47

       Yeah, I, I... That's e- that's exactly correct. Um, I think the, the most important thing for, or, or n- or, you know, not, not just for us and not just for prediction markets, but for creating a, like, a usable platform is making sure that the key mechanism is something simple and easy to understand more so than handling every possible edge case perfectly. You know, as long as it's, uh, the core experience is extremely simple and easy to use and user-friendly, um, you know, that, that matters much more than, like, the 1% of cases, you know, where, you know...

    4. DPDwarkesh Patel32:20

       Uh, but I'm curious if this is something you learned at your previous startup. Uh, uh, wh- what, uh, did, did you guys make this mistake and now you've learned to avoid it, or, uh, d- uh, y- curious how you came to that realization?

    5. SGStephen Grugett32:32

       You know, uh, I don't know. I don't know that I can think of a good example that's directly relevant. Although we did, like... Simplicity of, um, uh, I guess, like, both the business model and our user interface for our previous chat app were big considerations. You know, the idea of having... Or, like, a subscription model is kind of like the minimum viable, um, business for, like, a creator to support themselves in a real way, um, over time, that might be one manifestation

16. 32:59 – 40:30

    The 100 manifold dollars

    1. SGStephen Grugett32:59

       of this principle in action, but I don't know.

    2. DPDwarkesh Patel33:01

       Okay. So one concern somebody could have about Manifold markets is, um, y- you know, you said you were giving out 1,000 Manifold dollars. Um, somebody could, you- do, you know, just, I don't m- maybe even make a bot that... I'm not giving anybody ideas, um, but (laughs) make a, uh, just, like, create 1,000 different accounts, make different trades on all of them, um, and, or make a sequence of different trades on all of them, and in one of them, they just make, y- you know, a series of the best trades that anybody has ever made on the platform, and now they're on the top of the leaderboard.

    3. SGStephen Grugett33:33

       It, it's certainly true that if you're giving away free money, uh, you know, that's not a, you know, economically sound mechanism. Uh, we currently do do some things to prevent, uh, abuse and, like, bot behavior. I'm not gonna tell you what those things are. Um, (laughs) if we end up open-sourcing our code though, the cat will be out of the bag. You can, you know, see for yourself, uh, what abuse practices we have in place. Um, I would say that we're not necessarily committed to maintaining our, you know, free giveaway or, or, or, like, free sign-up bonus indefinitely. You know, part of th- that, that's definitely partially a, um, you know, a growth and, like, just starting off thing. Um, in the beginning, most of our users are, uh, have been very well-behaved and haven't abused, abused this system. You know, if more and more people... If Manifold becomes like a, a key nexus for people trying to weigh in on the future, we may have to be more strict with our policies.

    4. DPDwarkesh Patel34:26

       It kind of reminds me of the PayPal story where they had to, they were giving, like, the, uh, 10, $20 bonuses for people for signing up, and it b- basically meant they got exponential growth, but they were losing money faster. I guess in this case, er- you're not, like, losing real money, but, uh, I, I don't know. Maybe you're diluting, uh, the d- diluting the reputational value that the best people in the leaderboard have, at least for now maybe.

    5. SGStephen Grugett34:48

       Yeah. I would say one of the other things that we're interested in, or like, the, the concept of a global leaderboard becomes less important over time the larger our site gets. You know, a lot of the markets that people bet on are personal markets or markets between friends. You know, what you as an ind- individual care about, um, uh, in terms of, you know, ranking who the top traders or predictors are really is not all of the markets that we have in our platform, but the subset of markets that interest, uh, that are of interest to you. We, we actually just removed or, like, we, uh, yeah, used to have this feature called Communities where you could cr- um, create a community centered around a collection of different markets and we would show the leaderboard just for those markets. Um, you know, and that's a way of judging, uh, you know, or, uh, it's a way of assessing the abili- the ability and skill of predictors within some particular domain that you care about rather than globally. We'll probably bring that back in some capacity in the future.

    6. DPDwarkesh Patel35:44

       Uh, c- can you, can you give an example of that? Like, I guess something like fantasy football or something?

    7. SGStephen Grugett35:47

       Yeah, yeah. So one, one thing you might care about is, like, who is the be- like, Russia/Ukraine, who is, like, the best, like, uh, you know, U- like, geopolitical and war predictor? You know, and what, uh, the one way to assess that would, to just be, to, like, hand-pick a few markets, um, about the inva- wha- about the invasion and, you know, the, you know, subsequent, you know, course of events during the war, and then, um, just see how much profit people have made within those markets. And I think that, that will actually give you a reasonable estimate of, um, you know, who, who the top predictors are there versus just, like, a global thing. You know, uh, for a while, one of our, like, top, uh, markets on our site was about whether this guy, uh, would allow, like, whether this stray cat would, uh, allow its, like, this random human to pet it. You know, totally, totally random stuff like that. You know, if you're, if you're trying to assess who the best, like, geopolitical thinkers are, who the best economic thinkers are, you may not care about the stray cat.... um, but a lot of people really do care about the stray cat, uh, in, in other-

    8. DPDwarkesh Patel36:48

       (laughs)

    9. SGStephen Grugett36:49

       ... contexts. So, it's a-

    10. DPDwarkesh Patel36:51

        Yeah.

    11. SGStephen Grugett36:51

        ... it's a, a fine balance to strike.

    12. DPDwarkesh Patel36:52

        Uh, a- a- another interesting part of your platform is, so p- people can buy more play money, um, and I guess the concern is even within these, uh, even within these subdomains where people are being compared, that, you know, the, the, the actual, the, the actual proficiency of a person could be distorted by the fact that somebody else could just, um, buy more Manifold dollars. And, um, as a result, may- may be able to have a higher profit. I guess you can measure it maybe by, um, you know, percentage gain on the total amount of money or something. Um, but yeah, yeah, I'm curious on your thoughts about this.

    13. SGStephen Grugett37:33

        So in, in general, I'm, uh, you know, pretty pro efficient markets. You know, if you think about what's happening when a whale comes in and buys up a huge amount of money and, like, bets it on the wrong side, what they're essentially doing is just, like, providing a huge subsidy and bonus to the people who are actually correct. You know, market, markets are a mechanism which i- is like the most efficient way of solving the whale problem. If you are too much money, and you are not very smart, and are very confident, um, in your views of the world, like, the markets have a very fast and easy solution for you, um, to solve, to o- (laughs) you know, to obviate that problem, where you will no longer have so much capital, um, you know, to, to, you know, s- throw about.

    14. DPDwarkesh Patel38:14

        There's a direct analogy to this actually, uh, as I'm sure you're aware in, uh, you know, like, uh, real markets, um, where, like, a pension fund or some other s- sort of big fund needs to, like, rebalance its books or something. So it'll, it'll need to just, like, dump a bunch of stock, and, you know, l- liquidity providers can make money off the big trades that the, um, y- you know, that these big funds need to make. So I, I guess then you wouldn't be, you wouldn't be interested in schemes like, I guess, quadratic, um, q- g- like it's just some decaying, um, some, some decaying value of the Manifold dollars that you can buy in one account. So, like, the nex- the marginal, um, the marginal Manifold dollar costs more than the one before it. Um, you, you think this would, uh, inhibit, uh, price discovery, right?

    15. SGStephen Grugett39:02

        Yeah. Although, I ha- I have toyed with some other, um, interesting, like, monetary schemes in the past. Um, so one, one idea I had is, uh, introducing demurrage or, like, um, basically negative interest rates on cash balances. So, like, you could imagine a world wh- where, like, uh, where the, your, your purchasing power kind of erodes over time. You know, if you made a s- a bunch of, like, really good predictions this year, you know, it's not necessarily the case that you should be, like, rewarded by ha- you know, having all of that cash forever, you know, maybe some portion of that uninvested... those uninvested cash balances erodes by, you know, 20% a year or something like that. Um, I think it's a really cool idea in principle, but in practice, like, users absolutely hate, um, you know, losing money for any reason at all. So it's kind of like a non-starter. Um, (laughs) but it, it's, it's in- interesting to think about.

    16. DPDwarkesh Patel39:54

        Sorry, I- I'm not sure I understood. If the re-explanation, um, is unnecessary, then we can just cut it out of the final. But just for my benefit, can you, can you clarify w- what you were, uh... yeah, yeah.

    17. SGStephen Grugett40:05

        Sure. So, so the idea is like, um, uh, at certain times you'll have just, like, uninvested cash, you know, that's sitting in your account.

    18. DPDwarkesh Patel40:12

        Yeah, yeah.

    19. SGStephen Grugett40:13

        Um, the, the idea is to just, like, charge you, charge you for that-

    20. DPDwarkesh Patel40:17

        Ah.

    21. SGStephen Grugett40:17

        ... to charge, charge a sales tax at the rate of like 20% a year. But, like, maybe like once per, once per day at midnight, you lose, you know, whatever, whatever amount that is, a small fraction, a, a small

17. 40:30 – 46:28

    Efficient financial markets

    1. SGStephen Grugett40:30

       fraction of your, your uninvested cash.

    2. DPDwarkesh Patel40:33

       Um, okay. So w- what, you know, one thing that makes, um, financial markets really efficient is you have these big firms that are putting up, in large amounts of capital to recruit the top talent in the world, um, because it's worth it for them. You know, they're, they're running like these supercomputer simulations, um, and, um, you know, they, it, like, it's, it's expensive to do all this stuff, right? Um, uh, but it's, you know, it's worth it if you're getting like 0.001% of like a trillion-dollar market. In the case where you have play money, what is the incentive for... I- I get that people who are hobbyists or, um, are in other ways motivated to this might w- choose to do it and, like, ch- choose to engage in it, uh, um, themselves. What, what would incentivize somebody to put in the kind of effort it takes to g- have efficient, uh, financial markets and-

    3. SGStephen Grugett41:24

       Mm-hmm.

    4. DPDwarkesh Patel41:24

       ... you know, cost, and time, and so on?

    5. SGStephen Grugett41:26

       Yeah. So I would say that in general, people are willing to put a lot of time and effort, um, into virtual economies irrespective of financial gains. You know, if you look at th- look at things like World of Warcraft or earlier, like Second Life, which has like virtual real estate, people are willing to, you know, invest the equivalent of hundreds of thousands or millions of dollars, uh, in, in, in this game, game world. I feel that people's, you know, uh, people's ability to drill in and focus and work on things that are of interest to them, um, you know, is just like a very, very powerful force, even if it's not directly tied to a financial payout.

    6. DPDwarkesh Patel42:03

       So what is the point by which Manifold's own internal decision-making will be informed by, um, prediction markets involving, I- I don't know, the firm's, uh, uh, predictions about the firm?

    7. SGStephen Grugett42:15

       Oh, it, uh, it is already. Um, we, you know, we actively create markets on all sorts of things which are of interest to us, you know, most... So most recently, we created a market on whether we would be able to complete our fundraising round by the end of April. Um, you know, that was a cool market. The market, the market believed in us for the most part. I don't think we like fell lower than like 85%, somewhere around there. Um-... for, but we, we, uh, you know, internal, we, uh, we, we actually do in, try to dogfood, dogfood our markets as much as possible. We have a new market now, and whether we'll be able to onboard three employees, I think, before the end of June, something like that. Um, you know, that, that's a number that, that we, like, try to keep our, uh, eye, eyes on. I guess probably the first, the first big dis- uh, case where, like, the market actually, you know, substantively informed our, our decision about how, how to act as a company, um, was, um, an early market we created on whether, whether we should try to monetize by selling the fake, uh, by selling our, the play money. You know, we, uh, initially, we weren't sure whether that would be a good thing to do at all, whether users would hate it, or it would seem scammy or whatever. Um, but we, we created a predi- uh, a prediction market on, on this subject, uh, I think free- phrased in conditional terms that if we did introduce this, would we ... if we introduced the feature, would we keep it for, you know, some period of time? Um, and the m- the market, the market seemed to think that we would. So that actually was a, a factor which played in, played into our decision.

    8. DPDwarkesh Patel43:44

       Yeah, I'm asking these questions in probably the wrong order, so (laughs) th- this is probably one of the initial questions I should've asked you. But talk me through the timeline of developing Manifold Markets. So how long ago was it launched? Um, and, like, what, what were you ... You said in the beginning it was supposed to be, um, based on crypto. W- when did you guys change your mind? What, what is the timeline here?

    9. SGStephen Grugett44:04

       Yeah, so this company began long, long ago, way back in December of 2021.

    10. DPDwarkesh Patel44:10

        In Egos far away?

    11. SGStephen Grugett44:11

        Yeah. (laughs) Yeah, it's a, it's a very, very new company. Um, basically decided to ditch crypto after, like, a f- maybe, like, a week, uh, a week's worth, um, of, you know, speculation and research. Um, most- mostly because we ... or part of it is that we just, uh, thought we could build a play money prototype very quickly and we could just, like, test that and see, see what the experience is like. And if we wanted to, we could continue further on into crypto. Um, and partially, it's just based off of, uh, you know, re- reading about the, you know, regulatory nightmare that is, uh, prediction markets and, and crypto. (laughs) Um, and partially, it's the, the usability concerns with crypto. Um, but basically, we, uh, we all, like, in the month of December, we came up with the original idea. Um, we applied and received, uh, the ACX grant from Scott Alexander, um, and we timed it such that right, right when the, uh, the grant announcement came out, we had a working prototype, um, of, of our prediction market system ready to go. And then we were able to on- onboard a bunch of users from the ACX community, um, immediately, which formed the, the base of our platform, you know? And, and since then, we've been growing and, you know, respond, you know, uh, you know, responding to u- user concerns and improving, uh, improving our site to be evermore usable.

    12. DPDwarkesh Patel45:36

        I, I, I know you guys use something called a dynamic pari-mutual, uh, betting system. I, you know, I, I looked into it in the paper. I, I think I understood, like, maybe a quarter of it. Um, so is, uh, w- w- what was it like, uh, experience, uh, of learning as you went or is it something you guys were already familiar with?

    13. SGStephen Grugett45:52

        No, defin- definitely the former. You know, we, we had heard, uh, I had heard of Uniswap and some other mechanisms. I had heard of, like, Hansen's Log Market Scoring Rule and some other things. But I, I didn't actually delve into the details until quite recently. You know, originally, we actually came up with the idea for, um, dynamic pari-mutual, uh, buy or sell, thinking about it from first principles. And then, then we later, like, I went back through the literature and read a bunch of papers and realized that it was called dynamic pari-mutual, um, and found a more elegant, uh, implementation, um, of a dynamic pari-mutual system based, you know, based on a quadratic cost function,

18. 46:28 – 48:02

    Manifold Markets Job/Career Openings

    1. SGStephen Grugett46:28

       um, that I hadn't considered previously.

    2. DPDwarkesh Patel46:31

       Yeah, you'll, you'll, you'll have to talk me through it over dinner, um, the next time. (laughs)

    3. SGStephen Grugett46:34

       (laughs)

    4. DPDwarkesh Patel46:35

       Yeah, so you s- you mentioned that you are hiring. May- maybe, uh, maybe there are some people in my audience who might be interested. Um, so do you ... You wanna talk about what kinds of roles you're interested in hiring for, what w- other kinds of things that might be, uh, involved in recruiting?

    5. SGStephen Grugett46:50

       Sure, yeah, yeah. So we ... Right now, we're looking to onboard a few people to our team. We're looking for full stack developers, um, who preferably have front end, a lot of front end and, and, uh, potentially React experience. We're looking for a, uh, community manager that would be someone to help us manage our Discord, uh, help write blog posts, help with our Substack, um, help reach out to people on social media and organize online events. You know, someone with, you know, a previous background in doing this at a startup would be great, but we're open to people from other backgrounds as well. Um, and then we're, um, uh, then we're looking for a head of growth or someone who has, um, you know, experience, uh, scaling up, um, scaling up an early to mid-stage startup. You know, we're, we're looking for, you know, someone who, you know, who's, who's take ... who has helped, uh, you know, take the company from, you know, like, uh, to, like, one, like, $1 to $10 million annual recurring revenue or around, like, 50,000 monthly active users, something, somewhere in that neighborhood. But yeah, if you, if you are interested in prediction markets, um, and Manifold in particular, I encourage you to reach out to us. You can either email me at jo- or email us at jobs@manifold.markets

19. 48:02 – 50:53

    Objectives of Manifold Markets

    1. SGStephen Grugett48:02

       or me personally, steven@manifold.markets.

    2. DPDwarkesh Patel48:05

       Excellent, excellent. Um, and any other topics involved with prediction markets or Manifold that we have not discussed yet that you, you would like ... you, you know, you wanna touch on?

    3. SGStephen Grugett48:15

       Mm, I guess they're, um ... One of the things that we've seen from launching this site is that users have come up with all sorts of, like, exotic ways to use prediction markets that we hadn't previously considered. So part, part of that, or, like, prediction markets obviously can be used on, you know, predicting the future, basic yes or no questions. But some, uh, exotic things you can do are, like, uh, getting users to help, like, research topics for you, um, of in ... uh, you know, do ... You can create a market on ... phrase these types of things in a market-based way, and then people can propose certain answers and other users can bet on them.That's an interesting feature of our site. People have hacked our platform to do things like create lotteries, um, to play games. We did Manifold Plays Wordle where we created a series of prediction markets on which word we should guess next. Um, you know, people... Yeah, there, there are just, like, all sorts of other things, non-prediction type things you can do with a, with a... this market mechanism which are really cool.

    4. DPDwarkesh Patel49:11

       That is an interesting idea. Um, I'm not sure how th- th- that was conducted, but, like, I could imagine s- uh, for, you know, a researcher saying, "Um, will, will my conclusion on a paper of this question be, um, X or Y?" And, um, and then to move the market, somebody would not only have to bet, but also, like, maybe put in the comments section the data that makes them think it's X or Y (laughs) which can be the basis of the paper. Um, so you're basically getting research assistants. Um, that, yeah, that is very interesting.

    5. SGStephen Grugett49:38

       Cool, yeah. Yeah, I would say, uh, r- relatedly, one of the, um, the new types of markets we've introduced is the, uh, this concept of a free response market, you know. So in addition to a yes or no market where you're just betting on something will happen, we have this idea of a free response market where you ask a broad, open-ended question, and people can submit an answer. And when they're submitting an answer, they're also placing a bet on that answer, and other users can bid, you know, bid up, um, you know, different answers, um, that the, the market creator will then, will then, will then choose, you know. And that really opens up the, you know, the space of possibilities towards allowing, you know, a much wider, wider array of questions.

    6. DPDwarkesh Patel50:17

       Um, uh, Stephen, thanks so much for coming on the podcast. And, um, yeah, so that's manifold.markets, right? Any other places or links, uh, uh, that people should be aware of?

    7. SGStephen Grugett50:29

       I think, I think that's the big one, manifold.markets.

    8. DPDwarkesh Patel50:31

       (laughs)

    9. SGStephen Grugett50:32

       Uh, you can join right now, and we'll give you a thousand Manifold dollars to, uh, bet on any market you like or create your own.

    10. DPDwarkesh Patel50:39

        Excellent. Thanks so much, Stephen.

    11. SGStephen Grugett50:41

        All right, thank you.

    12. NANarrator50:47

        (instrumental music)

Episode duration: 50:53