Social Risk and Private Reward

Both optimism and pessimism are two different forms of delusion and in business, the game is to treat Triumph and Disaster with the same level of caution.

We all know funding is critical for innovation and the survival of SMEs, A lot of the funds spent for upstream research can be channeled back to the business through downstream commercialization.

One form of funding that should not be ignored is the government:

Google’s algorithm was funded by the National Science Foundation, Iphone smart technologies were also funded by the U.S government; GPS, touchscreen display and Siri. Apple also benefited from early-stage finance from the U.S. government's Small Business Investment Company program.

Venture capitalist only got involved long after the proof of concept had been established, in other words the government took more risk to spark innovation in a strategic area. Once the business is running, the stock market can be an excellent source of funds for expansion, growth and wealth. The same way Apple became the most valuable company for a couple of years.

Government plays several essential roles in the business ecosystem:

Regulating markets- They establish rules and regulations to ensure fair competition, consumer protection, and environmental sustainability.

Providing infrastructure- Governments invest in infrastructure (roads, utilities, etc.) that businesses rely on for operations.

Fostering innovation- Through policies, funding, and research, they encourage technological advancements.

Stabilizing the economy- Governments manage monetary policy, fiscal stimulus, and economic stability.

Promoting social welfare- They address inequality, poverty, and social issues.

The balance between government intervention and free-market dynamics varies across countries and industries.

However, an efficient market prices things accurately. The more informed buyers and sellers who behave in a logical fashion, the more efficient a market becomes. The stock market is somewhat efficient, meaning it prices stocks at rational levels over the long term. But on any given day, the stock market is driven by alternating cycles of fear and greed which distort prices away from their fair value. Day traders are simply gamblers who are one trade from disaster and the market is more efficient with investors.

A smart way to innovate and grow your business is to spread the upstream investment risk with government for a triumphant downstream reward which should benefit all stakeholders. 

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