Tyler Cowen’s Free-Market Think Tank Takes Innovative Approach to Tech Grants

Mercatus Center

Tyler Cowen wants to boil grant making down to the basics: Someone comes up with a good idea and impresses a benefactor, who quickly writes a check.

That’s the basic premise behind Emergent Ventures, a program Cowen runs out of the Mercatus Center, a free-market think tank based at George Mason University. Applicants write a simple, short application that outlines their plan, gives some basic biographical information and a ballpark budget.

Cowen, Mercatus’s faculty director, flags applications he thinks have promise, runs them by his group of informal advisers, and decides yea or nay. Winners of a grant are under no obligation to provide regular reports or updates, save a concise description of what they’ve accomplished.

“The formal overhead costs of running this are literally zero,” he says.

Cowen said Emergent Ventures has raised more than $4.25 million — including a $1 million gift from tech entrepreneur Peter Thiel through his foundation.

The Mercatus Center has a rich libertarian pedigree. One of the movement’s most prominent supporters, businessman and philanthropist Charles Koch, is on the board. Fueled by Koch money, experts at the center have long pushed for market-friendly approaches to health care, the environment, and the financial sector. And Thiel, the primary backer of Emergent Ventures, is a libertarian and a GOP megadonor.

Profit Motive

One of the benefits of receiving a grant from the center’s Emergent Ventures program, Cowen says, is that grantees will have access to a brain trust associated with the center and with his own well-established contacts among Silicon Valley’s tech elite. Cowen, a highly regarded economist who writes daily on his popular blog Marginal Revolution, doesn’t envision supporting a lot of traditional nonprofits. Instead, he tells the social entrepreneurs interested in applying that it’s OK to score a profit from their idea, calling a quick path to self-sufficiency a “feature, not a bug,” of any plan.

But the thrust behind Emergent Ventures isn’t ideological Cowen says. He’d simply like to get money out the door as quickly as possible to people who have a vision and need some support to bring those big ideas to fruition.

It’s a clear departure from what’s currently in fashion among institutional donors. Foundations often spend long hours tinkering with strategies to change broad societal systems. Some require grant applicants to enter monthslong challenges that are open to public input. Grant makers develop “scans” of the players involved in various social issues, employ consultants to develop measurements to determine success, and set up “feedback loops” to hear from other organizations and beneficiaries of grants.

Looking for the Overlooked

All that work isn’t necessarily a waste of time, Cowen says, but he thinks philanthropy needs an alternative approach that can identify talented individuals working on unusual or unorthodox projects that traditional foundations may overlook. The approach, Cowen believes, is a return to philanthropy’s industrial-era heyday, before the wide-scale professionalization of foundations.

“Earlier American philanthropy was typically vision-driven,” he says. “It had fewer layers of approval, much less bureaucracy, and was much less concerned with direct measurement of outcomes.”

The project was announced in September, and already Cowen has made grants to a handful of people, including Leonard Bogdonoff, an expert in machine learning and a longtime fan of graffiti art.

During the day, Bogdonoff works at a company that develops machine-learning software for computer engineers. Machine learning is an application of artificial intelligence that allows people to write programs whose output computers can modify when provided with new data. His side project is a database of graffiti art that uses machine learning to scour photographs and automatically populate database field descriptions like the style, location, and name of the artist.

Graffiti is transitory by nature, and many people look right past it, Bogdonoff says. But spray-paint tags and murals tell important stories about artists, communities, and social movements.

“There’s something special about the public display of art and the interesting layers of the world that go uninterpreted by people, even though it surrounds them,” he says.

Nasser Nasser/AP Images

Arab Spring Application

The use of machine language will allow Bogdonoff to compile information much more quickly on a large number of pieces of art. (He had indexed more than 250,000 images before Instagram, a major source of photos, changed its privacy terms, he said.)

Bogdonoff has a sense that the collection could prove valuable in charting different social movements. For instance, he says graffiti that was posted in Egypt during the Arab Spring was an important communication device in the fight against an autocratic crackdown.

But he’s unsure of the collection’s full value to society. The Emergent Venture grant, at $10,000, is relatively small, but Bogdonoff’s main goal is gaining entry into the network of intellectuals who surround Cowen.

“It’s not a make-or-break amount,” he says. “But I was more interested in the type of people who would be part of that circle. The access is much more valuable.”

Bogdonoff’s grant came from donors Cowen declined to identify who gave after Thiel announced his match. Currently the median grant is in the $10,000 to $25,000 range. Cowen says the support is likely to increase for grantees that show progress.

Meeting Experts

Harshita Arora, a 17-year-old computer prodigy, also sees the support from Emergent Ventures as a way to meet experts in her field.

Arora dropped out of school at age 14 and pursued her interest in computer programming. Within two years, she had served as an intern with Salesforce in her native India and traveled to the United States for a summer program for high-school hackers and entrepreneurs at the Massachusetts Institute of Technology.

She continued to develop a succession of computer applications, including Crypto Price Tracker that tracks the values of more than 1,000 cryptocurrencies. The app went viral and was acquired by Redwood City Ventures, a venture-capital firm where Arora serves as a consultant.

Arora decided to remain in the United States to be closer to a group of technology experts who were serving as her mentors. She was granted an 0-1A visa, which is reserved for extremely talented people in the arts, sciences, business, or sports.

Freedom to Explore

Over the past year, Arora has pursued a new interest: computer-brain interfaces. By attaching a series of electrodes to a person’s scalp, she can track electric currents flowing in the brain and correlate them to specific commands. Ultimately, her goal is to build a drone with a robotic arm that people with disabilities can use to perform basic functions through the power of thought.

Most of her living expenses and computer equipment are already taken care of for the time being. Arora plans to use her money from Emergent Ventures (she declined to say how much she received) to travel to conferences and meetings with experts in her field to more fully develop her plans.

“Most of the people I admire spend a good amount of their time doing exploration, not knowing what they definitely want to do,” she says. “So I think I will spend some time exploring.”

Both Arora and Bogdonoff embody Cowen’s focus on developing talent. Although Emergent Ventures may make larger grants in the future, Cowen says small initial grants help identify people with highly developed skills and vision. He’d like to use the fund to nurture that talent and hook smart people up with mentors.

Cowen is looking for ideas with the potential to “radically advance prosperity, opportunity, liberty, and well-being,” according to the Mercatus announcement of the grants.

But the goal isn’t to create a breeding ground of right-leaning social entrepreneurs, Cowen says. Of greater interest to Cowen is learning about the process by which people come up with moonshot ideas. By learning about and encouraging innovation, Cowen believes the nation’s economy can shake off something he’s called the “Great Stagnation” and return to an era of relatively healthy economic gains.

Emergent Ventures may offer some insight, he says. So, too, could a philanthropy guided by public intellectuals with other perspectives, including Malcolm Gladwell, Paul Krugman, and Steven Pinker.

“I want to see a dozen or 20 other people set up their own version of this,” he says. “I’ll consider this a success if we’ve inspired people to do something similar.”

Correction: A previous version of this article incorrectly said that Charles Koch was chairman of the board of the Mercatus Center board. He is a board member.