This morning, I dreamt that I was telling a room of startup founders that we’re trying to be out in front of something that has already replaced us, thus our goal is wrong.

I got out of bed and started working out some puzzles with Claude, mainly about whether anyone in the AI race is worried about what happens when they’ve extracted everything, because you can’t squeeze blood from a turnip.

It wasn’t about ethics or morality; it was about game design. Yes, we can go into the integrity of CEOs, but the system is incentivizing behaviors, so I found an incentive that hadn’t been optimized yet. 

Here’s Claude’s summary of the puzzle it was helping me solve and the solution it helped me come up with:

THE PUZZLE:

The digital economy is collapsing into a two-layer system:

Layer 1: Foundation model companies that control AI capability. They’re in an existential race – whoever wins gets to AGI/superintelligence first potentially wins permanently. This forces maximum value extraction to fund the race.

Layer 2: Everyone else – apps, content creators, services, institutions. They’re competing in increasingly commoditized markets because AI makes execution easy. Margins collapse toward zero. No economic agency.

The squeeze:

• Value concentrates at Layer 1 (capability bottleneck)
• Layer 2 has shrinking purchasing power
• Eventually there’s nothing left to extract (“blood from a turnip”)
• System becomes unstable – either collapses or sparks social uprising

Additional dynamic:

• Crypto makes everything fungible and fractionalized
• Exclusivity no longer creates value
• This leaves two bottlenecks: capability (Layer 1 controls) and attention (what people actually focus on)

THE SOLUTION:

The race isn’t linear (win capability once, done). It’s cyclical:

Capability → Creative Use → Attention → Insights/Data → Next Capability Breakthrough

Creative builders are the key to the attention layer:

• They generate novel, engaging work that attracts eyeballs
• They discover use cases Layer 1 can’t predict
• They create cultural gravity that makes technology matter
• They produce the feedback loops necessary to win ongoing capability races

Right now, creative builders are stuck in Layer 2:

• Grinding for survival
• No resources to create freely
• Competing on price, not creativity
• Their potential is wasted

The solution structure:

Resource creative builders NOW (not after winning the race):

• Give them community infrastructure
• Provide integrated tools and AI assistance
• Support them materially so they can create instead of just surviving
• Let them experiment and build interesting things

This solves both problems:

1. Attention race: Creative output attracts users, generates culture, drives adoption
2. Turnip problem: Resources flow back to Layer 2, maintaining purchasing power and preventing collapse

The incentive alignment:

Layer 1 that resources creative communities:

• Gets faster feedback loops
• Discovers novel applications
• Builds stickier ecosystem
• Generates attention that funds next capability push
• Avoids societal collapse that threatens them
• Wins the ongoing race (not just first race)

Layer 1 that only extracts:

• Might win first capability race
• Loses attention battle
• Feedback slows
• Turnip dries up
• Falls behind in subsequent races

It’s not altruism – it’s survival strategy for an infinite game.