Here are two statements that shouldn’t be true at the same time:
There are trillions of dollars of value locked up in unsolved problems. People need affordable housing, access to quality food, ROI-positive education and upskilling to take on modern jobs, cheaper healthcare, and improved financial literacy. Companies need better R&D, leaner operations, more efficient customer acquisition, carbon-free energy and transportation options. New breakthroughs in any of these areas would unlock massive value for society.
Financing is cheaper than ever. 10 years of ZIRP and a global savings glut have left financial markets famished for yield. Corporates continue to gorge on debt, yet rates have stayed low. In the VC world, a competent-seeming team can pick up a few million dollars at a $10M valuation with little but a pitch deck. Titanic amounts of capital are begging to be unleashed on value-creating activities.
Cheap access to capital should drive innovation and problem-solving. So how are both of these things true at the same time? In other words, why is it that “money in the 21st century simply doesn’t know what to do with itself”?
The Market for Solutions
One way to try to frame this contradiction is as a market failure. In this market, there are three players:
Customers — people who have problems they’d pay to solve
Builders — people or organizations with the ability and willingness to solve problems
Capital — money looking to make a return by financing Builders
When this market clears — that is, when a Customer, a Builder, and some Capital get matched up — the output is a potential solution to a customer’s problem. So we might call it the Marketplace for Solutions.
Ideally, all possible matches between capital, builders and solutions will be made as quickly as possible. But there are two reasons this might not happen.
The first is shortages. If one of the players in the market doesn’t exist in sufficient quantity, the other resources get marooned. Fuel can’t burn without oxygen; Builders can’t service Customers when Capital markets are dry.
The second is inefficiency. You could have plenty of Capital, Builders, and Customers, but if the gates to the market are too hard to find — or if the marketplace itself is too diffuse and disorganized — then matches don’t happen as fast as they could.
Can the Market for Solutions clear faster?
Based on the sheer quantity of capital and unsolved problems out there, it feels like there’s a lot of room for the Market for Solutions to clear faster than it is today.
This leads to two obvious questions: Why? And how can we fix it?
Here are some thoughts:
Make it easier to match Builders with Capital
The last few decades have seen a lot of financial innovation: P2P lending, crowdfunding, SaaS factoring, the explosion of micro VC and angel syndicates, ICOs. All of these have given Builders unique and valuable new ways to access Capital.
But it feels like there could be a lot more innovation here.
For example, say you’re building a product for a niche market worth “only” $50 million. Who will invest in you?
VCs won’t touch you because the math doesn’t work out — they need investments that have a shot at returning the portfolio.
Banks won’t touch you because they only know how to underwrite going concerns — businesses with operating history, years of financials, perhaps some collateral. If you can find a loan, the rate will likely be usuriously high. You can’t take risks with loans — debt spirals are too terrifying and the margin for error too thin.
With a great team, some signed customer LOIs and a clear path to a solution, a business like this is far from a risky gamble. And yet today, it doesn't get built (unless you can self-fund it).
It’s nontrivial to create a new asset class. But it feels like there’s still tons of room for creativity:
What if investors could directly fund product R&D within existing companies, taking risk in exchange for a future share of revenue?
What if new Builders easily get funding against a signed LOI or customer contract (a kind of “startup factoring”)?
If I want funding to develop a patent, why do my options look like this?
Other new asset classes have been devoured by the market. Think of how quickly SoFi went from serving P2P lenders to serving hedge funds. Look at the rise in direct lending. Look at the meteoric ascent of AngelList and syndicated private investing.
The Quantification of Everything has opened the door to all kinds of new underwriting, prediction, and securitization, and investing. Corporate investors, HNWIs and family offices are hungry to try new things. Anyone who can feed them will also expand the the Market for Solutions.
Make it easier for Builders to find Customers
It is still really hard for Builders and Customers to find each other. If you don’t believe me, just look at the cost of advertising. In an efficient world, Customers and Builders would be instantly matched at low cost. Instead, companies deploy hundreds of billions of dollars on marketing each year.
We are still in the stone age of distribution. The attempt to truly quantify ROAS is an effort barely two decades old. People complain that digital ads have gotten too expensive; likely what really happened was ads used to be artificially cheap.
The expense of digital ads merely reflects that the “true cost” of matching a Builder and a Customer is still high (despite near-zero marginal costs for ad networks). Breakthroughs in distribution efficiency could unlock tremendous value creation.
This is just the state of matching between existing Builders and Customers. What about Builders who want to service new problems, or use cutting edge tech to solve old ones? 
As any in- or entrepreneur who has ever done customer development knows — the process of finding the “right” problem to work on is actually quite hard. If this CB Insights breakdown is to be believed, something like 70%+ of startups fail due to reasons related to the market — that’s how difficult it is to find “the right” problem. 
A big issue here is that the juiciest problems are locked behind the walled gardens — large systems and institutions. Monolithic entities are usually impregnable to smaller players understanding them, let alone making change. Unassailable size leads to stagnation, inefficiency, and rent-seeking. 
Again, it feels like there’s tons of room for creativity in how we improve distribution:
What if companies could submit anonymized data or contracts into “dark pools”, and receive programmatic recommendations for solutions?
Why aren’t there more Kaggle-like marketplaces where specialists can solve specific problems for enterprises?
What if there were incentives — or requirements — for large institutions to create sandboxes where authorized Builders can access real problems and testbed ideas?
What if we had a “US Department of Experiments” with the power to grant temporary waivers from Federal, State, and City laws — when safe and ethical to do so — for the purposes of learning what policy interventions actually work?
Generally, it feels like the handful of resources that address discovery and problem-finding (e.g. platforms for customer development, corporate innovation matchmaking, nonprofits and government initiatives) are nowhere near as vast or efficient as, say, the resources that match Builders with Capital.
Make it easier to become a Builder
We know there’s an abundance of Customers and Capital. But do we have enough builders?
In his recent piece IT’S TIME TO BUILD, Marc Andreessen chalks up much of America’s failure to build to “smug complacency” and “satisfaction with the status quo” (i.e. unwillingness to build), and the failure of our education system to produce enough smart graduates (i.e. inability to build).
This may be true. But I suspect that there are still millions of people with both the desire and the skills to build, but who can’t, for the reasons I mentioned above:
How many highly-educated, ambitious college grads and FAANG alumni start companies chasing low-value problems, because finding the high-value ones is too hard?
How many would-be innovators stay out of the Market for Solutions because the right risk financing doesn’t exist for them?
Don’t get me wrong — we still woefully under-invest in talent as a country. There is absolutely more we can do to bring builders into the market, and we suffer the opportunity cost of not doing so more and faster.
The private market has tried to offer some solutions. The wave of bootcamps and accelerators in the last decade was an attempt at this (albeit with a relatively small footprint and mixed results). And there seems to be another wave starting now. Programs like Pathstream help upskill people into tech jobs. On Deck is building an onramp for entrepreneurs to find cofounders, fund themselves, and even obtain healthcare while they build. ISAs are nudging the putrescent education establishment towards positive ROIs for students.
But even this is just the tip of the iceberg. How many tens of millions of Americans would be builders, but have fallen through the social safety net? You can’t build when you’re hungry. You can’t build when you’re homeless, or when your landlord is threatening to evict you. You can’t build when your public education has failed you. In a different world, the US might be pumping out 10x the risk-loving scientists, engineers, teachers and managers right now. But we haven’t made the upfront investment to get there.
So what now?
The opinions above form an incomplete picture, and there are doubtless many errors among the facts. If you take nothing else away from this essay, I hope it’s this: expanding the Market for Solutions will make all downstream problems faster and easier to solve. As such, it feels like one of the most important things we can do as a society.
Whose responsibility is this? Entrenched interests aren’t going to reform themselves. Giant government apparatus aren’t going to shrink themselves. Huge enterprises won’t cede their power willingly.
The best answer I have is, “those who can.” The initial action here has to come from people who have:
The safety net to take great personal risks
The knowledge required to build things that work
The command of audiences who can press the levers of democracy
The power to open up sandboxes within their institutions
The compassion to build things that serve others (even, perhaps, if there’s a short-term cost to themselves)
We need a sustained flow of jiu jitsu moves on the large systems that govern our world. And we need to take the patterns of success and scale them.
A good start might be compiling a more complete list of of orgs that expand the Marketplace for Solutions, and getting the leaders more organized. So if you’re working on something in this area, please reach out.
 I’m a startup entrepreneur, so this essay has a startup-centric skew. But founders are certainly not the only kinds of builders out there, and startups are definitely not the only kinds of things we need to build. My point is that even among those who are uniquely willing and able to solve problems, the Market for Solutions is not that efficient.
 Though, who knows? Some of these companies might have succeeded if they hadn’t taken on VC funding to chase a non-VC-fundable — but still valid — market.
 This isn’t to say all big systems are bad. Size imparts a certain kind of stability, which is important if a system failure would have a human cost. E.g. While there are probably more efficient ways to administer state employment benefits, the idea of letting risk-seeking outsiders experiment with the old system is very unappealing.