Tag: brokerage

The Flight Of The New Entrepreneur

On April 20, 2011

Structural Folds: Generative Disruption in Overlapping Groups

Entrepreneurship is the invisible hand of Capitalism. Basically, this means that you can have all the Land, Labor, and Capital in the world, but unless you have entrepreneurs to interact with it, you don’t have much of an economy.

Social Contract Broker

Most social contracts are made today by Brokers who have the ability to connect supply and demand. Brokers, for the most part, gain their influence from the natural or unnatural divisions that may normally restrain information from the supply side to the demand side, and vice versa. “Social Brokers” are extremely important for exchanging information across different parts of a community that do not normally intermix. However, such “Trust Economics” depends on a closed system where community accountability is strong.

Trust economics and an open economy are mutually exclusive.

In an open economy, the job of the broker shifts to the job of administrating social accountability – a completely different animal. The moral hazard, of course, is that communities with great entrepreneurial potential are instead brokered for profit. Many “special interests” have crept up through the years in everything from banking, real estate, second-hand markets, international trade, airlines, politics, and even corporate M&A activity – that protect broker interests. As a result, brokers create structured holes at the expense of social inter-cohesion.

A Different Approach

At Social Flights, we take a different approach. We unite several completely different communities; travelers, vendors, and airplane operator around a shared airplane asset. In the middle, we place a community leader – an entrepreneur who is enabled to see all the diverse connections and combine information in new and useful forms.

Instead of forming better brokers as a principle driver of economic growth, Social Flights introduces a Value Game that forms a greater degree of intercohesion among disparate communities simulating a closed economy within an open economy.

The Social Flights Manifesto

We know that there are millions and millions of entrepreneurs in our communities who can create tremendous value if they are given a game that they can win – or not get ripped off. The underlying entrepreneurial force is that people will always combine several old ideas in new ways to create the new ideas that incite new actions. We depend on entrepreneurs to drive these ideas and drive these actions. For this reason, it is in our best interest to set them free and keep them free.

The Social Broker’s Commission: Social Profit

We create an environment where it is in the best interest for communities to share deep information in a closed economy where trust dynamics can take effect. Then we provide a way to transport their trust economy into the open economy. But it goes much farther than that – it goes as far as an airplane can take you.

(Note: this article was inspired by segments of two wonderful papers titled: Structural Folds: Generative Disruption in Overlapping Groups, by Bala ́zs Vedres Central European University and David Stark Columbia University and Structured Holes Versus Network Closure as Social Capital – By Ronald S. Burt, University of Chicago)

Crowdsourcing The Brokerage House

By Admin

On February 15, 2011

In General Information

The broker/trading model is a familiar class of business methods. The broker advertises the availability of someone else’s inventory of assets but withholds information from the market as a means to control the transaction. The broker does whatever is needed to pay the supplier as little as possible while also charging the customer as much as possible. The Broker can then collect a fee for producing absolutely nothing of value except control over a transaction.

The Value Game introduces a new class of business methods that disaggregates the broker/advertising model by increasing information delivery to a community rather than withholding it.

The Value Game Revenue Model

For example; Private aircraft charters are held under the weight of a powerful Broker Industry that scrapes 30-40% of the value of created by thousands of hard working professionals who actually operate the airplanes. By deploying The Value Game, Social Flights was created as a new air transportation company that organizes four types of communities and enables them to interact with each other around a shared asset (an airplane). During this process of interaction, complete information is provided to each party, rather than being withheld, and everyone plays towards their convergent goals rather than divergent goals. As a result, the Social Flights application creates Social Currency, which is then readily converted to money.

Social Flights Revenue is derived from the interaction of four communities:

The Travelers

The Operators

The Partners

The True Value Data

Traveler:

Social Flights brings travelers of similar intentions together in Travel Tribes to share flights at wholesale market value. Air transportation is deployed to the social graph rather than the airline hub & spoke system. Communities that are underserved by commercial airlines are now empowered to interact in new ways.

Operator:

In the past, an aircraft operator would pay a listing service, a Broker, and a marketing department to sell charter services. Instead, an operator would simply reallocate some of their marketing budget to Social Flights in return for a high volume, reliable, and risk free marketing venue.

Partners:

The cornerstones of the value game are 3rd Party entrepreneurs who scour the community for inventory of hotels, entertainment, recreation, business opportunities, and anything else to support travelers playing the game. Not unlike Groupon, Social Flights facilitates the application of discount coupons that can be applied to the passenger’s itinerary corresponding to their normalized travel intentions.

True Value Data:

Social Flights creates a valuable and unique form of business intelligence defining how much value, in dollars, that people place on their time. This results in a conversion factor between social currency and financial currency – something that has never been achieved before. Such data will induce a huge amount of innovation as time/money currencies fuel new Value Games around many other shared assets.

Winners and losers

The traveler wins with complete information, point-to-point time travel, and an empowered community.
The operator wins with less overhead, less risk, and steady cash flow.
Thousands of social entrepreneurs are empowered to deliver support inventory to a new community market.
All communities win as such information about the time-value of money helps people reallocates their intentions in the emerging new economy.
Social Flights earns their revenue by empowering communities in Social Currency.

OK, so what exactly does the Broker Produce?

If It Ain’t Broker, Don’t Fix It.

By Admin

On February 25, 2009

In General Information

The function of the innovation economy is to improve information. This has the derivative effect of improving knowledge which, by definition, fuels more innovation. Monetization is easy if we simply improve information between any buyer and any seller in any market, anywhere.

…If it is, please do

For example, the job of a broker is to mediate the transaction between a buyer and a seller. There are real estate brokers, mortgage brokers, stock brokers, etc. Unfortunately, it is not always in the best interest of the broker to provide perfect information to both sides of the transaction. Rather, the broker provides the minimum amount of information needed to complete the transaction, within which they build their commission for rendering such filtration services.

Any B-school undergrad can tell you that a market is most efficient when the buyer and the seller have exactly the same information as the other when making a transaction; this is called “perfect information”. As such, “supply and demand” can do its magic. Resources of production can be perfectly allocated in the glorious capitalist system. The financial meltdown has shown us that the more complex the product is, the greater the deficiency in perfect information becomes.

The Holy Grail:

The great opportunity for social media is the ability to improve information in almost every transaction conceivable and create wealth. The next generation of social media strategists will rise to tremendous heights in this domain of the Innovation Economy. However, the Holy Grail of information improvement is the knowledge asset market itself:

For example: Corporations have a great deal more information about employees than employees have about corporations. People are encouraged to compete with each other, not to cooperate, for that carrot on a stick. They are trained to keep their salary a secret. The “job statement” is in a secret code language that is only understood inside the company, not in the general work force. Managers “broker” information by filtering it on the way up and on the way down the corporate structure. It is little wonder that corporations are having a tough time with the social media stuff.

When the layoff comes, the outsourcing begins, or the life change happens, the resume is often no better than a bingo card in a key word lottery. By the way, customers have even less information than the employees. Peanuts anyone?

The mothers of Invention

The knowledge market is the mother of all imperfect information markets. Social media is a single iteration away from greatly improving information in all knowledge markets. Nothing happens without applied human knowledge, as such, the potential capitalization of the next generation of social media applications is as big as the market itself – and it will challenge the very structure of the traditional corporation and associated filtration services.

The Next Economic Paradigm

Tag: brokerage

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