Prediction Markets Are the New Public Markets

SPVs, HPS, OpenAI, UpsideOnly. [image: Bloomberg] com/s/c/-UkwmjIAMBevH4Vhrx6-PdCe3K6A3g-NKbul6iaogG7fcNoIJ_-3wXl_84uUofstBcOBoliYJxK84CA11BUpYfQXaqrk525UGeHaL72iJqNYhLOMtUusLrqFWf0bmWZ8FFAeFqevFhTVz4CfXTJ1fnBaJ390ZVi4jpZ28HVNbpDf7B46QxYHyUsFmhKDIbTMY8WqMvRDDZtgxPD-aNbkDQ-4eK_7rXBF6VNJVdsmAgCC19TEBpu9PGJMwBVA6LFglwgX0vxO65VYHEJa6BsCuXPbSJBN8XZra-ZzBa9o2ZSXBCfWDQXAqen_fx4W1D8RKgGCZDiRhmwW6tzwYSxyJ6guXAwGRzervmDxL7yetiRhCSM8trEsR8I6zQ/uopxj4nfoc7sqcE9eQc5LOXKPj1xbZAM/20> com/s/c/Fk687OCzsMyngI36GXwSYA4s9IOeNNn-Xhy_cyMlNglHyW5NE9mI9G7HJpCEEsQ1h79TH5teSzDb-eTkcO0KEuPb_ThWOxDlPlwi9eW04cGnVVlI9RDVs1BGRQP9GGNapkmEujKr4i1agm-x9x-khjKIFJKzcKwIwKLgZWHFud_yizo4zMXR5ucOAIvHz6vvPvyjTi3jeUXHO3o3uJYkqEpWoRAHwZYCrN3wQ_fz9BMG9U71kolcxUTqBsHLfos5zw4qUDdLpX4POoocgJuOjFV_JYcyEyx-QBkNRiENh_VoCMbZ-73ppJVCGMeBKM1BqVunNCK88W_zljzePEf_VMaMJhsF9G3il7oDedjshXh3W8fj7ZApJ77wGlVytUWz0E8g2X2J78OECa4oq4o0XHCLpRhvyjqamN3-EbfVpa1r6jELJ0mz7dLnoEFQoStt5sbw9Uh5KpWuHGu-TPvev0dgQHYnX8BUJ5Xmv64CXpq_q2gjvA9wyWEi0DSiDOBu-HxRm3Qi9XxhRJ-b0JrimprDFtZ2PGdXZhR7VQYdeihE5zAgKXZP0yDrmib-EGXk3D4GGDzDC3r1IqUWSK06ulJpmrRG81QiOsXtOeVO9MYxvpclsDQKK8RZ39Vc1zzxHV4Fgh08uf4LKD8tSyoCOpG80ZyUQE6cK5040wDzzfzqxYiz0QnV4LuyaV2ka4jXaUca-3jYi1qJukk/isarqK2V8VG71SHm6ATB8JxMCSYMOvGO/20> com/s/c/I3bAofeSk7rUxB5l5ieejAO8stklSOJwy_0sxbxJZR4LWwgBOiBC1tKbgHtV9wXmRPvuDmtDWF-ouT9zIuS6nfaL4pLnRsIUre3X2RFQgj4LRMtvsaK--Pxy3pa7pKTdF85OwIXoUegG6TGd7z41xLNLk3vr-SxwBE-tB_ofbkoywWiAzY5-QdEoSI3uW29jWL-qSQXDb7ZcK7oaAoJJfqIsVtH9dYrSO5mlla9tY53BZ00lZF0zVtxNS1FcCeRZf-FzZFNylnWfeljFJ5yUYboDJ9GEoNuaxnMMH1s4qsbU4UOvo6WYj1BnvRYXokIJmDCK74xof9Xu_Ep5bhdor9HXwnHaHXVUvMCVqqzB4DvkYP63nR4cl5q2BZtn6qAclBGgJmoGQTrsdrYsSk1O9Dr0rUCK8K08MJcBr1Be1X67aLnRHo0xYwvnrt2BeVqW2dgWeAvCWl-9-MVhoUAVb3wUd2CpNeelam5XoPQEc7T8xychIbFzguwGbyLJs_2FEE1TDNzIyNTTnmkBez-5cMz25CprGzTofvHwgeV3ERqw9MrXZw7MVDbaeju1VmAwLBTBZWKyxLRh6McZXBbA-gJuL4rhnfvhKfbd4va3XxYj4MowcobNHtibdxZU8TydXnoW_CSCxz49kp2YUWCcVTzIIJXA7dUPObjl7Z72zoUSzxxSQFuOD6DNomr4kYGCVZe0x0V9xIS6-7s/Kv3BkQ0FYZV-Ryczuwcl6LOVV9OumLDt/20> Private predictions In the 1930s, the problem with US stock markets was that investors didn’t get enough information. The solution was new rules that created the US Securities and Exchange Commission and required companies to disclose various information — audited financial statements, updates on material events, etc. — if they wanted to sell stock to the general public. Companies that didn’t want to raise money from the general public didn’t really have to disclose anything, but the general public had most of the money, so most companies that wanted to get big had to go public and disclose the required information.

In the 2020s, the problem with US stock markets is apparently that not enough companies want to do that disclosure. “Private markets are the new public markets,” I often say: It is relatively easy for hot tech startups to raise lots of money from institutional investors, without ever selling to the general public, and so many of them do. They don’t go public, they don’t file disclosures, and they just raise money in private markets. This arguably creates two problems: 1. Hot tech startups create a lot of value, and if they don’t sell shares to the general public, then the general public doesn’t get any of that value.

SpaceX and OpenAI and Anthropic all have gigantic valuations; all of their growth so far has been captured by employees and founders and venture capitalists and other big investors, not by the general public. [1] <#m_5454345054624107210_footnote-1> 2. There are good social externalities in having companies be public and disclose their information. Society — journalists and politicians and activists and ordinary people — can learn important stuff by reading public-company disclosures; those disclosures are not of interest *only *to shareholders. A lot of people worry about the first problem (not so much the second) and try to think of solutions.